Claudio Soregaroli, Stefano Boccaletti, Alessandro Varacca 14 November 2012 WP5: Coexistence implications within the EU and international supply chain Stakeholder dialogue workshop
Feb 22, 2016
Claudio Soregaroli, Stefano Boccaletti, Alessandro Varacca14 November 2012
WP5: Coexistence implications within the EU and international supply chain
Stakeholder dialogue workshop
Claudio Soregaroli November 2012
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WP5: Who is involved
UNICATT – UNIVERSITA’ CATTOLICA DEL SACRO CUORE
IPS - INSTITUTO POLITECNICO DE SANTAREM
TUM - TECHNISCHE UNIVERSITAET MUENCHEN EVD - EIDGENOESSISCHES
VOLKSWIRTSCHAFTSDEPARTEMENT
JRC -JOINT RESEARCH CENTRE
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WP5: Motivation Coexistence has implications
downstream within the national and international supply chain that are pivotal in determining scenarios for the EU agricultural, food and feed industry
Consumer’s preferences (demand) are the driving force. Firms need to comply with market requirements (positive or negative labelling – public or private mandatory/voluntary standards)
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WP5: Economic problem International supply chain and EU supply
chain They are interdependent and face the
economic risk of adventitious presence (AP) of GMOs
The economic risk is influenced by: Endogenous factors
Actions taken by firms to control risk of AP Exogenous factors
Asynchronous approval, threshold levels, enforced liability, imports from non-EU countries…
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WP5: Purpose To evaluate implications of coexistence
and segregation along the supply chain under an industrial organization and institutional perspective.
Taking into account the structure of the chains and exogenous factors (approvals, thresholds, liability…)
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WP5: StructureStructure of the supply chain for maize and soybean
Governance
Economic risk of AP- Asynchronous approval- Liability- Traceability - Thresholds- Imports
Scenarios
Case studies- Maize (Portugal)- Milk(Switzerland andGermany) WP2
Implications for the EU industry
WP4
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WP5: Description of work (1) Description of the international (soybean and
maize) and EU supply chains Objective is to identify:
1. the structure of the chain, with a clear picture of the economic agents involved and their linkages;
2. Identify the relevant governance aspects with particular focus on segregation and “GM-free” labelled foods
3. contractual arrangements, standards, quality management procedures, market failures, transaction costs…
involvement of stakeholders, data availability from secondary sources!
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WP5: Description of work (2) Factors influencing the economic risk of
adventitious presence (differentiated by crop, trait, and supply chain)
Subtasks: 1. Legal issues, their costs and possibilities for
reducing them (TUM)1. Three levels: farm, supply chain and WTO
2. Up-date of the JRC-IPTS report on GM crops in the pipeline (JRC-IPTS)
3. Overview of the technical traceability requirements and their relevance to firms (JRC-IHCP)
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WP5: Description of work (3) Case studies
1. Description and analysis of the maize bread supply chain in the context of maize coexistence in Portugal (IPS)
2. Description of the market for conventional and “GM-free” labelled milk in Switzerland and Germany (EVD)
Detailed description of the structure and focus on costs
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WP5: Description of work (4)
The final goal is to
evaluate implications of coexistence and segregation along the supply chain
provide scenarios and implications for the EU feed and food industry
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WP5: First year of work Countries covered
EU: Germany, Italy, Portugal, Switzerland Non-EU: Brazil, Argentina (USA, Ukraine...)
Objective: description of supply chains Method:
Use of secondary data sources (statistics) Literature review (supply chains: maize and
soybean, GM and non-GM) Qualitative unstructured survey on key agents at
different levels of the supply chain
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Survey on key agents of supply chain
Step 1: Literature review
Step 2: Questionnaires setting up Building on available literature One common framework for all countries
Step 3: Questionnaires drafts tested with industry experts
Step 4: Interview with representative stakeholders
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Questionnaires Type: open questions Structure:
One general structure adapted to the type of respondent
Questions cover the supply chain structure, the market of commodities and processed products, supply chain deals and pricing mechanisms, GM and non-GM products and their segregation, certifiers and certifications, liability long the supply chain
Selection of respondents: Relevant players, associations, snowball
selection
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Questionnaires for Italy (1) EU supply chain: main actors interviewed
Multinational trading companies Domestic oilseeds crushers Compound feed producers Livestock breeders Retailers Certification bodies
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Questionnaires for Italy (2) Other actors interviewed:
One Brazilian oilseeds crusher focused on non-GM soybean processing
One port shipping agent One market broker One crereal food processor One representative of a national association
of processors
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Italy: Soybean meal (average situation)
Source: Own elaborations based on: ISTAT (2012), Assalzoo (2010), and expert interviews
000 tons% over available
soybean meal
Production from domestic seeds 350 9.3
Production from imported seeds 950 25.3Imported as GM 2280 60.8Imported as non-GM 170 4.5Available soybean meal 3750Exported 190 5.1Apparent consumption 3560
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Italy: Maize (average situation)
Source: Own elaborations based on: ISTAT (2012), Assalzoo (2010), and expert interviews
000 tons
% over available
maizeGrains production 9900 81.5Grains import 2250 18.5Available maize 12150Grains export 770 6.3Apparent consumption 11380
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Italy: Maize flour (average situation)
Source: Own elaborations based on: ISTAT (2012), Assalzoo (2010), and expert interviews
000 tons
% over available
flourDomestic flour production 9392 82.8Flour import from EU 1583 14.0Flour import non-EU 368 3.2Available flour 11343Flour export 80 0.7Apparent consumption 11263- feed 8740- other uses 2522
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Italy: Structure of the supply chainSoybean / soybean meal Maize
Domestic Domestic
Retailers/consumers
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Italy: Traders and crushers International traders
5 Multinational trading companies: Bunge, Cargill, Dreyfus, Nidera, Noble.
Only Nidera supplies non-GM soybean meal Non EU non-GM soybean meal comes from Brazil Two main ports: Mestre (Venice) and Ravenna
Domestic crushers 5 domestic crushers
2 only process domestic soybean - non-GM 1 has a dedicated plant to domestic soybean 1 (Bunge) only crushes GM soybean 1 crushes non-GM and GM soybean
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Italy: Compound feed industry Almost 260 industries, but 3 are the main players
in terms of volumes, 2 integrated downstream (Veronesi and Amadori) 1 multinational integrated upstream (Cargill)
Inputs: they source soybean meal from domestic crushers and
international traders they source maize from domestic farmers or elevators
(often cooperatives) Outputs:
local markets matter market niches can be exploited
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Italy: Supply chain deals Personal relationships are very important Middle-men operate as an “outsourcing” of
the purchasing department (especially for SMEs and large stock breeders)
Trust on supplier and its flexibility are seen as the most important attributes... after price!
There is no evidence of long-term contracts, orders are processed for each supply and based on market price
Price shocks are largely transmitted downstream
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Italy: market for non-GM soybean World supply for non-GM soybean product
decreasing: non-GM price premiums on the rise (higher costs of IP and
less economies of scale)
Source: International trading companies, Industry representatives, interview by UNICATT staff, 2012
HP non-GM premium for soybean meal over the price of the regular pellet 46 protein in the market of Paranagua
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Italy: market for non-GM products It is a small market, its size is becoming smaller in latest years
(niche), and it is concentrating on fewer dealers Only one international trader involved and domestic crushers
rely on domestic production paying soybeans with no premium Two kind of structures emerge for compound feed processors:
large firms with dedicated plants and small specialized firms other SMEs outsource production of non-GM feed
Dedicated plants of compound feed processors usually work at full capacity, however they don't sell all of the product as non-GM
Most of the market is driven by Coop, the largest Italian retailer. No mark-up at the consumer level.
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Retailer case study: COOP Italia (1) Non-GM Private labels:
Animal products: poulty meat, beef, pork, milk, eggs, farm fish, some cold cuts and cheeses.
Processed meat/eggs so far excluded 0.9% treshold (fed without GM feedstuff) Negative labeling Certified
Grocery products 0.1% treshold No negative labeling: corporate policy Certified
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Retailer case study: COOP Italia (2) Non-GM Animal PL Products:
Technical specifications imply vertical coordination Suppliers qualification guidelines: suppliers shall
deal with other qualified subcontractors only Certification:
BVQI, CSQA Audits on:
RetailerSlaughterhousesFeed Producers
Retailer price: in line with that of regular animal products (no premium charged at the consumer level)... This implies....
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Final remarks Only soybean supply matters (coexistence in
producing countries and segregation practices)
No price premium at the consumer level for non-GM products implies lower margins
Upstream the supply chain there is little incentive to produce for non-GM feed
What would happen if coexistence is allowed in the country? (maize, soybean...)
Except for organic production, will any liability issue be relevant?
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Thanks for your attention!