The ins and outs of the European food chain

Distributors log every movement of every item of food to ensure traceability. [EFEAgro]

The 44 million workers in the EU’s food chain are vital to ensuring European citizens have access to sufficient quantities of high-quality food. From farmers to retailers, the sector is constantly evolving to keep up with the major challenges of the future. EURACTIV’s partner EFEAgro reports.

Producers are the first link in the food chain. The European Union has close to 11 million agricultural producers. The market has become increasingly broader, more diverse and more globalised, a reality that has its advantages and disadvantages. One of which is the price volatility that affects agriculture and livestock farmers.

In this case, the European Commission is looking for concrete measures to strengthen the position of producers in the food chain and to end unfair trading practices; as well as to improve transparency in the market and cooperation between producers. In fact, they are holding a public consultation for all those interested to contribute their strategies and proposals.

More cooperation between producers

One potential solution is to strengthen the production and sale of foods with official quality labels and for producers to work together in order to strengthen their hand in negotiations with the food industry and distributors.

A good example of such an initiative is in Guadarrama, where 350 livestock farmers produce under Guadarrama’s Protected Geographical Indication (PGI) for meat. They share an extensive production model, but have not yet joined forces to be more competitive in their marketing.

Extensive farming in Spain. [EFEAgro]

The secretary of this PGI, Lorenzo Vilas, is clear: “If they were more unified and had a joint marketing effort, which is the ideal, they would be able to sell at a higher price.” At the moment, some sell to specific locations, others to cooperatives or to shopping centres, each one dealing only with his or her own product.

Improving profits would help guarantee the survival of farmers and help them deal with other challenges they face, such as generational change, another major challenge the agri-food sector is attempting to approach through the Common Agricultural Policy (CAP).

Industry and Innovation

One step up the food chain is the industrial or processing sector. In agri-food factories big and small, raw materials are received from agricultural producers, processed and then placed in the hands of distributors. According to FoodDrinkEurope’s latest report, the agri-food industry is the biggest sector in the European Union and expects to grow by 2.5-3.5% per year until 2025.

At the moment, the industry is worth around €102 trillion per year, out of the EU’s total of trade volume of €538 trillion.

Half of the value of the agri-food industry is in the hands of small and medium-sized businesses – some 285,000 across the EU – which are increasingly innovative in their quest for diversification and profitability.

This is the case of the entrepreneurs from La Virgen de Madrid, who have broken into the market, making handcrafted products their hallmark.

“The new business models complement sectors that were very inactive,” says César Pascual, one of the company’s founders. For these entrepreneurs, investment in handcrafted products has proved successful with respect to raw materials and manufacturing processes, but also in bringing their product to market by cutting out some of the links in the food chain.

Packaging beer at La Virgen brewery. [EFEAgro]

In fact, many barrels and bottles of La Virgen beer arrive directly at bars or shopping centres without the involvement of third party distribution companies. Its factory is open for visits and has a bar for tastings. Soon, La Virgen de Madrid is planning to open four locations in Madrid.

The labyrinth of logistics in distribution

At the top of the pyramid are the distributors, who depend on the evolution of consumers and their needs and tastes when buying food. For this reason, conventional food distribution must respond to important logistical efforts to react to the daily movement of millions of goods.

Its role in the chain and its business is to give consumers access to the products they demand.

But the efforts of distributors go much further. As the director of the Obrador de Valdemoro of El Corte Inglés, Julio César Yanes explains, this link in the food chain is also “a guarantee of the traceability of food products”.

In this company’s Madrid logistics centre alone, the figures are overwhelming: 500,000 square metres of surface area, 12 kilometres of conveyor belts, three million units moved per day. Technology such as high speed classifiers, lasers and scanners are essential tools in tracking every movement of each food item.

Part of the distribution centre’s 12km of conveyor belt. [EFEAgro]

In order for everything to function, Yanes says “everything must happen at the right time with the objective of guaranteeing a successful flow,” and with technology to ensure that “every physical movement comes with an administrative one. This is exactly what gives us that guarantee of traceability.”

Everyone from producers to consumers to the industry, distributors and public and private institutions has a key role to play in supporting the survival of this food supply chain in the European Union. And the EU itself is working to improve it, with contributions from all sides, and using the Common Agricultural Policy as a fundamental tool.