How do food choices made in Europe affect people working to produce that food elsewhere?
The following section that describes the performance metric Equity amongst food chain actors and producers was embedded in Deliverable 6.3.
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Performance metric 1: Equity among food chain actors and producers
The SUSFANS conceptual framework (D1.1) distinguishes between the conditions and structure of the food system and the outcomes of the system. This distinction is an important one for guiding the analysis of equity considerations for the food system. The conditions and structure are related to how the different actors in the system deal with each other and who holds the power within the system for deciding on the conditions in which food system actors, such as the primary producers and the food chain actors, carry out their activities.
Based on a clustering of the thematic issues presented by Tirado von der Pahlen et al. (2018) it is suggested that the fairness and equity considerations among supply-side actors can be assessed under a number of sub-themes (Table 9). (1) Ethical norms and standards in commerce apply to a range of principles, codes, agreements that jointly affect how the costs and benefits from commercial activity are shared with society at large. This would inclue contentious issues such as the access to advanced technologies such as high-yielding seeds or fortified foods, or investments into the consumer concerns such as animal welfare and reduced food losses. Examples of available metrics in this area are the Access to Seeds Index, and Access to Nutrition Index, which assess the performance of agri-food corporations in this domain. (2) Fair commerce relates specifically to the involvement of the end-consumer – or buyer in the business to business environment – in this cost-benefit sharing through transparency measures and fair pricing. (3) Perspectives on producers’ rights in the food system reflect that the majority of producers are small-scale farmers and fishermen; particularly in the Global South. In the global discourse, there is a tendency to see farmers as being marginalised in their rights to operate on indigenous knowledge systems, using traditional varieties and diverse farming systems. In effect, farmers rights are typically limited in terms of access to land titles (or fish stock), and affordable inputs of good quality, and safety nets to overcome periods of downturn. These seem natural additons to the framework presented in the table below. (4) Workers‘ rights can be related to living wages and reliable terms of employment.
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In SUSFANS, an original contribution has been made to operationalise and quantify a metric that reflects on the equitable distribution of market power between chain actors in agriculture and food. Garrone and Swinnen (2018) analyse the mark-up dynamics over time across the food supply chain, i.e. farmers, processors, wholesalers and retailers. An important issue for food value chains which has received much attention in the past decade (in the public debate and among policy-makers) is how risk and uncertainty caused by price volatility affect the functioning of food and agricultural markets – and the need for governments to intervene. In managing risk strategies, food chain companies are ultimately more concerned about the stability of margins (increase in input price or decrease in output price) than price volatility (Assefa, Meuwissen, and Oude Lansink, 2017). Garrone and Swinnen (2018) contribute empirical evidence on the evolution and the volatility of mark-ups along the value chain. |
Garrone and Swinnen (2018) estimated firm-level markups of various companies in the EU food chain (i.e. farmers, processors, wholesalers and retailers), using the methodology of De Loecker and Warzynski (2012), and measure the markup volatility in the food chain. They used firm-level data from the Amadeus database, which is compiled by a commercial data provider, Bureau van Dijk (BVD)17, and contains company account data. The analysis used data from more than 100,000 firms in the food supply chain of France and Italy between 2006 and 2014. The period 2006-2014 was characterized by major price volatility in global agricultural and food markets. France and Italy were selected because they are the two EU countries for which the quality of data along the supply chain is best and which are important producers of agricultural products and food in the EU. A key insight from that study is that mark-up volatility was much higher at the farm-level than at other levels of the food chain. In both countries, at the farm-level the mark-up volatility was 4-5 larger than at the retail level. A wider application of the metric to inform policy on market functioning and competition is recommended, even though there are a gaps in data availability and quality. The projection of this metric into future or counterfactual food systems scenarios is at this point, outside the frontiers of science.