Sustainable Development Processes and Alliance Strategy by

Agricultural Small and Medium Enterprises

Track 4.2: Key Issues In The European Context

Abstract

Small and Medium Enterprises are the most widespread class of agricultural enterprises in

Italy and in the European Union as well. This diffusion, and their relationships with local

heritage, makes them one of the main actors in Sustainable Development Processes in Rural

Areas across Europe. These enterprises' survival is related to their effectiveness as players in

modern markets where they have to compete with big Modern Grocery Retailers that operate

in tightly integrated supply chains.

In this theoretical paper we focus on sustainable development processes and we deal with

alliances as a way to increase agricultural SMEs competitiveness without endangering

sustainability. We analyze these alliances forms using the lens of Resource-Based Theory

with a Market-Driven Management approach to understand if these alliances models succeed,

or hinder, each single agricultural enterprise in developing the needed capabilities to compete

in the market without endangering the social perspective or the environmental one.

Keywords: Agricultural Enterprises, Alliances, Growth, Sustainable Development, Resource-

Based Theory, Strategy

1 of 49 1. Introduction

Small and Medium Agricultural Enterprises have a relevant role in sustainable development processes in rural areas both in developing countries (Ruben, Slingerland and Nijhoff, 2006;

Latouche, 2007) and in developed ones (McCullough, Pingali and Stamoulis, 2008, Tasch,

2009).

These enterprises overcome several hindrances in competing in the market that are driving them towards a more intense way of growing crops usually obtained exploiting bigger fields or developing horizontal alliances. At the same time these “solutions” harm bio-diversity and do not help sustainable development processes.

The first, and maybe the most relevant, difficulty small and medium agricultural enterprises must face derives from the way agricultural supply chains do work; these supply chains are usually managed by some big modern food retailers that focus on having a stable and large supply of fresh, raw materials, and processed ones too, ensuring year-round availability

(Reardon, Timmerd and Berdegue, 2008). Usually small agricultural entrepreneurs themselves can't warrant a large and continuous stream of products so they cannot enter in direct supply contracts with these retailers (Dolan and Humphrey, 2002) and so they have to sell their produces to raw commodities' brokers that will later aggregate the crops and sell them to industrial processors or to distributors (Maloni and Brown, 2006).

So farmers are only one of the players in a more complex model of supply chain (King and

Phumpiu, 1996) where they have only a small negotiation power as they have to confront with those bigger and more efficient distributors the consumers are used to buy from.

These entrepreneurs, usually, aggregate in various models of agreements and alliances to increase their negotiation power. Agricultural enterprises can adopt these strategies to leverage their relational capabilities to create more value for customers, and strengthen their

2 of 49 strategic independence in the supply chain. These two factors are essential in getting, and keeping, a competitive advantage position in the market.

In this theoretical paper we have focused on sustainable development processes and the strong relationship between their “three pillars”, or circles, and the alliances between agricultural firms; we have used the lens of Resource-Based Theory (Barney, 1996) with a

Market-Driven Management (Day, 1994) approach to understand how these various classes of alliances succeed, or hinder, each single agricultural enterprise in developing the needed capabilities to create and sustain a competitive advantage without endangering none of the two other perspectives.

In order to assess sustainable development potential in alliances involving agricultural enterprises we have later developed an interpretative framework that will be used to assess the general effects alliances and agreements in the agricultural value chains can have on sustainable development processes, focusing on the analysis of market-driven capabilities these firms have and how they can exploit alliances to strengthen them.

The framework will be used to analyze various examples of alliances between Italian agricultural small and medium enterprises. These examples are used only to highlight the theoretical aspects of the framework itself so even if they regard only Italian Agricultural

Enterprises the related analyses cannot be applied only to Italian firms but they can be easily generalized to the European ones as the Europan Agricultural Market too is mainlt made of

Small and Medium Agricultural Enterprises with the same difficulties of Italian ones.

2. Sustainability

The concept of sustainable development traces back to the Brundtland Report (WCED, 1987) when it was held that a development process can be considered a sustainable one only if it

3 of 49 “meet(s) the needs of the present without compromising the ability of future generations to meet their own needs.” (WCED, 1987: 43). Sustainability is, therefore, based on the idea of considering inter-generational equity into decision-making processes considering future generations as today enterprise's stakeholders (Freeman, 1984).

Several authors have modelled the concept of sustainability using multi-dimensional frameworks, whose “dimensions” where used to identify various perspectives to assess each on their own (Hopwood, Mellor and O'Brien, 2005; Pawlowsky, 2006). The most widely used approach to sustainability, in this stream of research, is Elkington's Triple Bottom Line (1992,

1997) which identifies three main dimensions, or pillars: Economical sustainability,

Environmental sustainability and Social sustainability.

This model acknowledges that sustainability cannot only be limited to factor in natural resources and heritage we pass on to next generations but it has to consider also the effects development processes have on two other dimensions: the economic and the social one.

In the Triple Bottom Line model (Elkington, 1997) the three pillars are usually represented as the vertex of a triangle and they rest on the same level, so that if one fails even the other two cannot be fully satisfied. This model has been criticized because it supports the notion that each perspective can be considered apart from the other two, neglecting to see the strong intertwining between them (Lethonen, 2006).

Moreover, the model provides no guidance on how to arbitrate between the unavoidably conflicting objectives of economic rationalism (profitability), social justice and ecological equilibrium (Upton 2002).

In order to assess these factors the bioeconomy model (Passet, 1996; Lethonen, 2006) was developed. It represents sustainable development as three concentric circles:

 the innermost circle is the one of economic sustainability;

4 of 49  the middle one is the social one;

 the outermost one is the environmental dimension.

Both the Triple Bottom Line Model and the Bioeconomy Model are represented in the following figure 1.

Insert figure 1 here

The Bioeconomy Model defines economic activities as the needed core of development. They are a needed factor in order to increase quality of life but, according to the model, the economic growth must be sought without endangering the social dimension and both of them must be acted upon without sacrificing the environment and the natural resources (Lethonen,

2006).

Differently to the Triple-bottom line model, the Bioeconomy one has a clear hierarchy asking managers to consider the outer circles as limits to their decision-making processes regarding the more internal ones. This endogenous hierarchy helps managers to open their decisions making processes (Drucker, 1967) to factor in the sustainability effects since from the phase of definition till the one of decision1.

Alliances and agreements can help agricultural enterprises to exploit their social capital, the whole set of relational resources a given enterprise has, in order to get a better market position and be economically viable. If these strategies have to help creating a sustainable development process they must be able to respect and foster a sustainable approach in the other two.

1 Drucker (1967) identifies a six-steps decision-making process that have the following phases: the classification of the problem; the definition of the problem; the specifications; the decision as to what is “right”, the action, the feed-back.

5 of 49 3. Resource-Based Theory and Market-Driven Management

Resource-Based Theory (RBT) (Wernerfelt, 1984; Barney, 1991)2 is a theory of the firm that explain competitive advantage as coming from the resources a given firm is able to exploit in its strategies. This theory can be further complemented with a Market-Driven Management

(MDM) (Shapiro, 1988; Day, 1994)3 approach to focus management attention on the relationships the firm has with the other players in the market.

The Bioeconomy model asks entrepreneurs to keep the economic perspective at the core of their decision-making processes emphasizing the need to coordinate each enterprise's activity toward gaining a competitive advantage.

Gaining, and sustaining, a competitive advantage (Barney, 1996) implies that the enterprise can continuously market products that its customers value more than those from its own competitors (Barney, Peteraf, 2003) furthermore it must succeed in gathering this value or, at least, a meaningful share of it (Barney, 2007).

According to RBT managers have to continually update their resources' portfolios in order to respond to competitive pressures and innovation4. Relationships are seen as a source of new resources that can help enterprises get access to meaningful resources even after their internal development windows of opportunity have been closed (Hamel and Prahalad, 1994).

Furthermore relationships themselves, even non commercial ones, are part he enterprise's portfolio of resources becoming a support tool to enhance learning processes (Nonaka and

Takeuchi, 1995).

External sourcing of resources trough alliances and agreements asks enterprises to bear costs 2 RBT is a theory of the firm inspired by the idea of Penrose (1959: 15) that a firm is just a bundle of resources that managers use as leverage to achieve competitive advantage in the market. 3 Market-Driven Management (MDM) (Deshpande and Webster, 1989, Connor, 1999) derives from Drucker's Marketing Concept (MC) (Drucker, 1954): the main functions of the enterprises as a whole, and not of only some of its functions, are to satisfy consumer needs and to support innovation processes. 4 The theory prescribes three ways to carry on this continuous innovation process : acquiring resources on ideal strategic factor markets (Barney, 1986); internally developing them (Hamel and Prahalad, 1994); using relationships to get access to new resources without owning them (Ireland, Hitt, Vaidyanath, 2002).

6 of 49 too; it asks entrepreneurs to have a lower control on their strategies in order to accommodate for partners' needs and asks them to bear the cost related to developing capabilities and other resources dedicated to managing cooperation more effectively (Das and Teng, 2000; Gulati,

2007).

Management should use enterprise's portfolio of resources to shape a strategic path for creating, and sustaining (Amit and Schoemaker, 1993), a competitive advantage over competitors (Peteraf and Barney, 2003).

To sustain a competitive advantage an enterprise needs to have an initial heterogeneous allocation of resources and some ex-post limits to competition (Peteraf, 1993); Barney (1991) holds that ex-post limits to competition can have two main sources: barriers to imitation and barriers to substitution.

The first hampers the ability of competitors to reduce the gap with the firms observing its behavior and using the observed data as a guide for reshaping their own portfolio of resources5. The latter class of ex-post limits to competition sustains competitive advantage created by a specific company hampering attempts by competitors to create a set of alternative resources that can perform the same functions at similar levels of efficiency.

External relationships can become a source of complementary resources, according to Dyer and Singh (1998) and they may help reaching a competitive advantage when they let the firm exploit and heterogeneous resources' portfolio created from several partners. Alliances allow several companies to belong to the same network, creating a web of relationships, establishing a climate of trust that can even be based upon threat related to face misconduct consequences on the network as a whole (Burt and Knez, 1995).

5 A particular barrier to imitation, which is useful in hyper-competitive markets (D'Aveni, 1994), is the firm's ability to continuously innovate its own products to constantly increase perceived customers value; this enables a Dynamic Competitive Process (Johannessen, Olsen and Olaisen, 1997) allowing the leading firms to modify its offer before competitors can reduce the gap, thus preventing any reduction of the first mover advantage.

7 of 49 Strategic alliances, i.e. "voluntary agreements between firms involving exchange, sharing, or co-development of products, technologies, or services" (Gulati, 1998: 293), should be managed, according to RBT, considering relationships as reciprocal bonding (Gulati. 1998), that the single enterprise can use to shape its own social network, assuming a more pro-active strategy and moving from a path-dependent to a path creation one (Garud and Rappa, 1994).

Alliances and networks have two other advantages: usually getting advantages from relationships urges enterprises to intensify their web of relationships so to play a more central role in the network, getting easier access to new alliances opportunities; developing a network of relationships helps in creating relation-specific capabilities (Dyer and Hatch,

2006) that can be used to prevent knowledge leaks even in the presence of a high absorptive capacity (Cohen and Levinthal, 1990), thus reducing risks.

Market-Driven Management (MDM) can support RBT asking managers to create several points of contact between the enterprise and the other players in the market and in the supply- chain. This kind of approach helps to relate with customers using the right competences in each interaction event6.

Sciarelli (2008) affirms that an MDM approach requires management to organize and use the resources and capabilities to create, and sustain over time, an offer of products / services that customers value more than competitors' ones.

MDM can lead an enterprise to undergo innovative processes up to change the structure of the market it operates into, redefining the role each players has in the value chain. The redefinition of the value chain should be directed to better satisfy customers needs taking, into account market evolution and identifying consumers' latent needs before competitors, creating a sustainable competitive advantage over time.

6 MDM approach asks enterprises to avoid being only customer-led considering all the forces in the market at a given time in their decision-making processes (Slater and Narver, 1999).

8 of 49 Following this approach the enterprise should excel in some capability to understand the evolution of the market as a whole (Outside-In Capabilities), generating knowledge used in strategy definition and marketing policies (Spanning Capabilities) and taking advantage of still not fully exploited resources, skills and knowledge of the business assets (Inside-Out

Capabilities) (Day, 1994).

Using MDM as a guide for assessing resources' value allows us to get a better focus on the central role Outside-In Capabilities have. These capabilities can be ordered from channel bonding ones, those resources needed to benefit from close relationships with other market players and to exploit them to foster innovation processes (Sivadas and Dwyer, 2000), to customer linking ones, skills needed to create and maintain close relationships with customers

(Day, 1994) and in the end we have the market sensing capabilities, needed to correctly assess market evolution into strategic path definition and to sustain competitive advantages and anticipating demand bubble creation (Corniani, 2002).

Using this combined approach we hold that the more an alliance will help its partners to develop relational market-driven capabilities the more it will help them to gain a competitive advantage.

4. Alliances in Agriculture

One of the most relevant issues agricultural entrepreneurs have to overcome in order to be competitive in the market is how agricultural supply chains today do operate and how technological innovations have changed the way they are managed.

The changes in supply chain structure, and management are related to three main factors that have decreased the competitiveness of agricultural firms, mainly the small and medium ones,

9 of 49 in their local markets:

 the new logistic systems and the new warehousing technologies (McCullough, Pingali

and Stamoulis, 2008);

 the loss of value given by customers to the quality marks (Lenucci, 2009)

 the increasing diffusion of the modern grocery retailers (MGR) chains (Reardon,

Timmer, Barrett and Berdegué, 2003).

The new technologies and the increased potential in sourcing derived from the modern organization of logistics have enabled international competitors, mainly from other countries in European and in the Mediterranean area too, to enter in the various local markets where they can compete exploiting their lower cost of labour.

The second factor, linked to the great number of different quality brands we have in Europe, has lessened the negotiating power of farmers as customers give less and less value to the place of origin of the crops eliminating a meaningful source of differentiation farmers could exploit before while dealing with distributors and retailers.

The last one, seen as a natural evolution of the agricultural market (Reardon, Timmer, Barrett and Berdegué, 2003), is related to MGRs becoming the main crops channel of distribution.

Dealing with bigger players down the supply chains lowers the small farmers' negotiating power and endanger their strategic independence as MGRs focus on having a stable and large supply of fresh, raw materials, and processed ones too, ensuring year-round availability

(Reardon, Timmerd and Berdegue, 2008).

Usually the small farmers themselves can't warrant such a large and continuous stream of products so they cannot enter in direct supply contracts with these retailers (Dolan and

Humphrey, 2002) driving them to sell their produces to raw commodities' brokers that will

10 of 49 later aggregate the crops and sell them to industrial processors or to distributors (Maloni and

Brown, 2006).

As a consequence small and medium agricultural entrepreneurs are nly one of the many players in a more complex model of supply chain where they have a really small negotiation power as they have to confront with those bigger and more efficient distributors the consumers are used to buy from (King and Phumpiu, 1996).

Other factors urging agricultural entrepreneurs to aggregate are linked to the increased intensity of competition (McCullough, Pingali and Stamoulis, 2008) and to their own limited endowment of resources that drives these enterprises to search innovation avoiding costly research and development processes and preferring to find new ways to exploit existing technologies (Audretchs, 2001). In order to increase the success rate of these processes, and to share the related risks with other market players, these enterprises can use cooperative efforts such as alliances and agreements with other enterprises in similar situations (Sivadas and Dwyer 2000).

Moreover Smeltzer, Fann and Nikolaisen (1988) have found that relationships often are the main source of market information small enterprises have access to as they use them to overcome their lack of the needed resources to start a systematic analysis of the environment.

Gall and Schroder (2006) highlighted that, in agriculture too, alliances' survival is linked to developing a mutual trust between alliance members, thus avoiding risks of free-ridership occurring when a member decide to limit its participation to alliances' costs while still pretending to fully get the derived benefits. Usually alliances in the agricultural supply chain use tight production regulations in order to get two different effects: lessen the menace of opportunistic behaviors by some members; increase and level the quality of crops each partner share wit the others.

11 of 49 Sporlerder (1992) observed a rising trend in the number of cooperation initiatives involving agricultural enterprises. When these alliances aggregate several agricultural firms (Farrell and

Tozer, 1996) we refer to them as horizontal alliances while we call them vertical alliances when they are used to tighten links between some agricultural enterprises and other players in their supply chain (Holmlund and Fulton, 1999).

Another way to increase these firms economical viability without endangering social and environmental sustainability is to redesign the supply chain in order to support more sustainable actions; these experiences, usually called alternative food supply chains to highlight their differences with traditional ones (Marsden, Banks and Bristow, 2000; Renting,

Marsden and Banks, 2003; Ilbery and Maye, 2005), redesigning the supply chain to cut-off the MGRs; as in these supply chains there are fewer tiers than in the traditional ones they are called Short Food Supply Chain (SFSC) too.

The full breadth of the agricultural alliances can be summed up in the following figure 2.

Insert figure 2 here

Horizontal alliances can be further subdivided in two main models of agricultural alliances:

 production oriented alliances;

 processing oriented ones.

In the first case, agricultural enterprises come together to share resources, machineries and farm equipment allowing all participants to use them for some days over the year.

These alliances are based on the main idea that production resources, mainly machineries, are needed only for a limited time each year so they can be shared between several farmers if

12 of 49 they succeed in scheduling the various phases of the whole production in a given area.

Each farmer benefits from this alliance using the whole combined resource's portfolio of all the partners to purchase more effective technologies as new machineries, or GPSs systems.

Each member gets access to more valuable resources, able to do the needed work in less time with an increased productivity.

Moreover the partners can pool their need of chemical treatment so to lower the price they pay for each single dose and further reducing the overall costs of production.

These alliances are not only focused on making production more efficient but they can be used by small agricultural entrepreneurs to achieve those quantity of crops needed to supply the distribution centers of the MGRs. The European Union, in the reform of Agricultural

Common Market, has used this model for the Producers' Organizations (PO), later enlarged in the Associations of Producers' Organizations (APO) too.

In European design POs are mainly used to concentrate agricultural raw commodities in order to enhance the competitiveness of these players in the supply chain (Cioffi and Coppola,

2008).

Using a market-driven perspective these alliances help agricultural firms to develop channel bonding capabilities, linking several producers together, but they are not designed to help the single farmer to increase his resources portfolio, neither in developing customer linking capabilities, as they do not have any contact with the final customer, nor in getting market sensing ones, as the governance body is the only one dealing with distributors and the only one to decide which crops the whole alliance has to produce.

The second form of horizontal aggregation, processing oriented horizontal alliances, is used by producers to increase their added value entering in the market for processed foods and, in the last few years, fresh-cut produce.

13 of 49 In these alliances the governance body needs to face the difficulties of several supply chains stages and the members have to increase their financial participation to buy processing factories.

Producers succeed in getting more value integrating more supply-chain tiers and moreover they can use a brand to differentiate their processed products and to increase their negotiating power with MGRs.

This class of alliance merges agriculture with industrial processes and it asks farmers, sometimes through an apt definition of prices policies, to focus their production on specific cultivars that have a better yield in transformation processes. When these cultivars cannot be easily sold in the fresh commodities markets farmers are actually limiting their own strategic options and tightening their dependence on the processing phases and on the alliance itself thus weakening their overall positions.

Moreover the need to keep giving their own products to the processing factory each single year limits the producers ability to use integrated farming systems as they cannot rotate productions further limiting their contribution to environmental sustainability.

Using a market-driven perspective these alliances help in creating channel bonding capabilities and, considering the alliance governance body as a brand new subject, even market sensing ones can be developed. On the other hand customer linking ones will be created only if the new subject decides to deploy a pull strategy. Moreover these last two classes of capabilities, market sensing and customer linking ones, only rarely will trickle- down to the single agricultural entrepreneur furthermore binding him to the alliance itself.

These two classes of horizontal alliances can be found together in the biggest examples as part of the participants will confer their produce for getting access to a groupage activity while some other will prefer to get them processed.

14 of 49 The second option for agricultural enterprises to aggregate is to find new partners in the value chains creating vertical alliances. These alliances consists of creating a stable relationship with a processing firm or with a distributor and they are often seen as a win-win situation.

The very same structure of these agreements and alliance asks entrepreneurs to develop channel bonding capabilities.

On one side there are several reasons for farmers to enter an agreement with a processing enterprise or a distributor. The main reason for these alliances is to secure the sale of their own products even before starting to sow them. Moreover these agreements help small sgricultural entrepreneurs defining the mechanics for prices determination, letting them have reliable policies on produce's quotations and eventual bonus for quality and productivity.

But these agreements can help the agricultural enterprises in operations too. They receive more detailed instructions on which crops to sow from their partners and, usually, they get to be supported by one or more expert technicians paid by the partner.

If these alliances are signed with processing enterprises, farmers have the further advantage to get free access to higher quality, still patented, cultivars.

On the other side processing enterprises, and distributors too, have distinct advantages to enter these agreements. Above all they neglect the inherent risks of not growing the right cultivars and they get a better control on the production processes of the materials, helping their planning processes.

A third main class of alliances is made of those agreements between agricultural enterprises and customers in order to redefine the supply-chain they work in cutting out other tiers and creating SFSCs (Marsden, Banks and Bristow, 2000; Renting, Marsden and Banks, 2003;

Ilbery and Maye, 2005). These alliances cut off intermediaries, and redefe the structure of the supply-chain, so the value created have to be shared only between the producer and some

15 of 49 consumers (Payne, 2002).

These alliances are based upon new relationships and they help satisfy the modern needs of a more traditional approach to quality coming out of a greater awareness of health risks linked to intense production systems (Marsden, Banks and Bristow, 2000), they can even be seen as the result of a renewed interest in local cultures and in products made with traditional methods (Gilg and Battershill, 1998). These models link consumer buying experiences to the local area increasing social sustainability establishing a win-win relationship between the farmer and the urban consumer (Norberg- Hodge, 1999).

These very same producers-consumers relationships are strengthened trough repeated interactions, with the positive side-effect of spreading a better knowledge on how to evaluate raw commodities (Venn et al., 2006). In fact, according to Ilbery and Kneafsey (1999), they help to shift quality definition on issues such as authenticity, tradition and healthiness of the produces.

These practices help agricultural firms in creating a more balanced ecosystem (Norberg-

Hodge, 1999) which leads to greater protection of environmental sustainability (Hinrichs,

Gillespie and Feenstra, 2004 ) and to a reduction of their ecological footprint.

SFSCs help small farmers to enter a protected market niche, based on moving the foundation of differentiation from product brands to the location where the products have grown up

(Holloway and Kneafsey, 2000) creating the bases for a barrier to imitation that cannot be easily overcome from players in the modern supply chains (Ilbery and Kneafsey, 1999) and helping to overcome the dilution of value that even quality marks products are suffering

(Lenucci, 2009).

SFSCs have been criticized in two main ways. A first critique highlights that SFSCs are only a way to go back to more natural practices, without really innovating the agricultural system,

16 of 49 as the direct trade between producers and consumers was fairly common till the '80s and it became less used as it was far less efficient than MGRs.

Another critical point is linked to their limited real impact on the market itself (Tippins,

Rassuli and Hollander, 2002). They are used together with more modern formulas, so the industry as a whole is only affected in small niches (Renting, Marsden and Banks, 2003).

The most common forms of short chain are: Solidarity Purchasing Groups; Community supported Agriculture and Farmers' Markets.

Solidarity Purchasing Groups (SPG) are a model of distribution channel geared toward seasonal agricultural products, sometimes organic ones too, organized by an agricultural entrepreneur who start selling his crops to a group of consumer.

The agricultural entrepreneur agrees to deliver a certain quantity of produce grown on his farm to each consumer at pre-determined intervals - weekly or fortnightly. This type of direct distribution can also be performed by a single manufacturer, but most producers are organized into groups, also structured in order to expand the basket of products offered and to share the risks of dealing directly with consumers.

These class of vertical alliances seems to be very useful for supporting sustainable development. They drive farmers to develop channel bonding capabilities in order to sell their production as a more attractive set of produces; they have to develop customer linking capabilities as the direct relationship is their main way to obtain information on market evolution. In spite of this, SPGs do not urge farmers to develop market sensing capabilities as relationships with consumers are mainly commercial ones.

A more integrated version of these alliances is the Community Supported Agriculture (CSA), in which a group of several consumers and farmers decide to share together management and

17 of 49 production of crops.

In general, these initiatives are promoted by those consumers who already have experienced some form of SFSC, usually SPGs, and now want to get more deeply involved in them. They often use a more structured system of governance, such as the form of a consumer cooperative.

Consumers using CSAs share some of the entrepreneur's risks as the crops are pre-paid on the baasis of total costs of production processes carried on in the next period. In some cases part of the price is due in labor, usually during harvest and sowing.

A variant of this model is the pick-your-own, or U-pick, where consumers are actively involved in the production, as they have to personally pick up the products they want to buy, often in this form of short chain; however, the consumer is not directly involved in selecting the crops cultivated.

These last model of SFSC is surely the most involving one for consumers and producers too.

Trough continuous interaction on selecting crops to grow, on producing and harvesting them the two social actors can become quietly close.

Moreover, this model asks for a deep involvement of consumers into the decision making processes of the agricultural enterprise, increasing the whole portfolio of resources the enterprise has access to, and helping them to develop market sensing capabilities.

The third model of SFSC is even the most popular one: farmers' market, also known as greenmarkets.

Only in the United States of America there are more than 5000 Farmer markets each year, sustaining more than 19,000 farmers as the only distribution channel they have access to.

Farmers' Markets are a set of predetermined locations, where a group of small agricultural entrepreneurs will meet with clients to sell their raw commodities without intermediaries.

18 of 49 A more stable variant of this SFSC is the permanent farmer's market: facilities that sell local products for the manufacturer without the need for his direct presence, but relying on staff from the local association of farmers.

Farmers' Markets share the same evaluations of the general SFSCs initiatives regarding economic viability as agricultural entrepreneurs and consumers can share between them all the added value.

According to the Bioeconomy model these various alliances can be fully sustainable only if, beyond helping farmers to reach a competitive advantage position, they help these entrepreneurs to factor in social and environmental impacts in their decision-making processes and in their operations.

5. Sustainable development and agricultural practices

In order to get a full evaluation of sustainable development processes linked to agricultural enterprises we have to understand how the various way to produce crops affect sustainability.

The first studies on the effects of sustainable development processes in agriculture and rural areas trace back to the early 90s (Lélé, 1991; Schaller, 1993; Yunlong and Smit, 1994). Most often these worls have been focused on the strong link between the main resources an agricultural enterprise has, the land and the crops it can produces on that very same land, and the protection of the local environment.

In spite of this relationship between the two topics, Tillman, et al. (2002) have found out that the environmental negative impacts of new agronomic practices go often unmeasured and, therefore, they are not taken into account in decision making processes by each single enterprise. This has lead to several negative effects on environment and on the human health as well (Rasul and Thapa, 2004) as a consequence of soils and groundwater contaminations.

19 of 49 The main lines of actions farmers have followed to intensify production have been

(McCullough, Pingali and Stamoulis, 2008):

 a wider use of fertilizers and other chemical treatments;

 implementing new technological solutions in order to extend the period of production

and harvesting;

 growing new, improved, varieties (cultivars).

With the first line of action farmers have reduced the negative impacts of pests and several other plants diseases with several positive effects: they could grow more crops and they got higher quality ones too. So chemicals increased the productivity of the land both in terms of quantity of crops grown and in their general value as they helped farmers to get bigger and most valued crops.

The inherent dangers of abusing chemicals utilization in agriculture has prompted single countries before, and later the European Union as a whole, to regulate the utilization of these compounds with a continuous monitoring effort of their effects on human health. Some chemicals have been banned by nations and some others' utilization has been limited imposing strict Maximum Residue Limits (MRLs) in foodstuffs marketed in the Union. In the

European Union, there have been MRLs for trading Raw material since 1976 (Council

Directive, 76/895/EEC) while similar regulation have been issued for processed products and composite foodstuff since 1997 (Council Directive 97/41/EC).

Another negative aspect of chemical treatments for the economical sustainability of agricultural enterprise is that they can lead to soil overexploitation, making it progressively less and less fertile and, therefore, requiring a greater and greater amount of chemicals to

20 of 49 maintain the same productivity level that was previously reached (Rasul and Thapa, 2004).

Some authors (Latouche, 2007; Tasch, 2009) hold that this rising need of using chemicals to sustain the new production levels can end up in a dependence on chemical treatments and it can limit farmers' decision making processes.

Another side effect from the utilization of chemical treatments in agriculture is the pesticide drift (Skinner et al., 1997). The consequence of imperfect deployment, usually associated with air-based deployment techniques, are various negative effects on water and soil linked to an excessive amount of nitrates in the soil with negative effects on biodiversity and potentially making water non-potable.

The second line of action agricultural entrepreneurs can choose to enhance productivity is to make greater use of machineries and greenhouses. Using these tools agricultural entrepreneurs can overcome the impact of higher wages and can stabilize production year- round.

Making intense utilization of these techniques can increase environmental impacts as a consequence of more CO2 emissions linked to fossil fuels utilization.

One way to reduce these negative effects is to couple these techniques with the utilization of renewable bio-fuels, mainly cellulosic ethanol, instead of fossil fuels. According to Robinson, et al. (2008) the negative effects are only reduced and, moreover, this pave the way to the issue of displaced production of crops from food to other uses. On the contrary Heaton,

Dohleman and Long (2008) consider this issue as not so meaningful as it only focus decision making processes on finding the right balance between fuel-oriented crops and food-oriented ones without a significant effect on field productivity for the latter class.

The last innovation farmers have used to increase the productivity of their fields has been to

21 of 49 develop and utilize high-yield cultivars or pests-resistant ones, sometimes obtained genetically modifying the original plant strain. The negative effects related to using these are linked to their impact on biodiversity limiting the natural environment ability to regenerate itself (Dale, Clarke and Fontes, 2002).

Bennet and Balvanera (2007) have highlighted that all the intense production systems can have a deep impact on ecosystems both on a local scale and on a global one. On the other hand there are several alternatives available today that are trying to increase fields' productivity without endangering environment. These alternatives have been applied as a set of practices included in the so-called Integrated Farming Systems (IFS) that have reached some interesting productivity results for small farmers (Behera and Mahapatra, 1999) while some other authors have found some more mixed-blessing results (El Titi and Ipach, 1989).

IFS aims to solve productivity issues using methods of prevention and treatments not based on chemically synthesized products without forcing farmers to follow the most stringent protocols used into organic farming. These systems, which can be dated back to the late 70s, sustain their effectiveness focusing on two main points:

 production techniques;

 pest control.

The first set of activities asks farmers to shun from intensive production of a single cultivar in a given field favouring traditional techniques as crop rotation but integrating it with co- production of crops and other farming activities on the same fields.

An example of this is the practice of intra-row seeding, using other cultivars to maintain the right amount of nutrients into soil, to reduce the need of fertilizers. Another variant is to grow animals in the same field, goats or fish usually.

22 of 49 On the other hand following this principle can cause a negative economic effect as the producers have to reduce automation and, moreover, some studies (Deike, Pallutt and

Christen, 2008) have found out that the net energy efficiency of these tecniques is not so low as expected.

The other principle of IFS is to substitute chemical treatments with other practices useful to control and lessen the impacts of pests on the crops.

One technique developed is the mating disruption or the diffusion in the field of selected pheromones that inhibit pests reproduction cycles; another methodology developed is the deliberate inclusion of predatory insects in the field, like the ladybug, that can help in protecting the crops from several infections.

Thanks to recent developments on selecting the right species on defining their proper utilization and identifying the most effective time-frame of application, these techniques can achieve results comparable to the ones reached by traditional intensive agriculture for both cost and effectiveness.

On the other side they require more care from entrepreneurs as the time frame of each application has far more impact on the effectiveness of these treatments than the one related to chemicals.

Even if the environmental and the economical perspectives in evaluating sustainability of development process for agricultural enterprises have taken a central position, there's a distinct stream of research on social sustainability of agricultural management practices.

Authors in this stream of research hold that agricultural enterprises have to walk in a fine thread between the first two perspectives and the social one; they have to help improving quality of life (McCullough, Stamoulis and Pingali, 2008) without compromising cultural

23 of 49 identity and traditions in the local area (Yunlong and Smit, 1994), as contributing to create new jobs in the local area.

Other authors have highlighted how agricultural enterprises, alike to family firms (Mussolino,

2008), do not have a clear cut line of separation between the economic perspective and a more social one (Carbone, Gaito and Senni, 2005).

Sustainable development processes in rural areas requires to exploit agricultural entreprises need to create a synergistic link with other local actors increasing cooperation intensity in the area (van der Ploeg, et al., 2002).

Other authors go one step further (Senni, 2005; Di Iacovo, 2008) extending agriculture role in rural development as a solution to local areas' social needs. This point of view, which builds upon the concept of multi-functionality in agriculture, acknowledges that agricultural enterprise can be managed using the third sector models, as cooperatives of ex-convicts or those employing mentally disabled people, that can be a vehicle to experiences of regenerative welfare where agricultural enterprises become a tool for sustaining social development in a given area (Di Iacovo, 2007).

6. A Resource-Based and Market-Driven Interpretative Framework for

Sustainability of Alliances in Agriculture

In order to more thoroughly understand these alliance models effects on sustainability, using a perspective akin to the bioeconomy model, we have designed an interpretative framework building upon RBT and MDM to analyze opportunities, and risks, related to agricultural alliances and agreements in the current European market.

Alliances help enterprises to get a more sustainable competitive advantage when they help

24 of 49 them to focus on developing and exploiting, market-driven capabilities.

These capabilities must manifest and support the various circles of the bioeconomy model in order to help managers address sustainability issues in their decision-making processes.

The first perspective is the one linked to Economical Sustainability. Efforts in this perspective have been historically rooted, as shown in section 4, to increase the land productivity; we use this element as the first step in this dimension.

Our literature review shows that these efforts do not always end up in increased profitability for the agricultural enterprise, in part due to a lack of negotiating power in the market and on the other side for an increased need to utilize chemicals and other treatments in order to sustain their production level. So we held that economic sustainability should not only focus on increased production but it should, instead, be more driven by an increase in profitability.

The other step in the economic sustainability dimension is the one linked to the strategic independence of the agricultural enterprise not only for them to be able to capture more value but as a way to help them in focusing on the effects their own choices have on the other, intertwined, perspectives.

Later comes the second perspective, the social one. An attention on the social dimension is needed to ensure that enterprises are able to preserve their role in the society while creating economic value without endangering the ecosystem.

The first step in this dimension is related to preserve the connections between an enterprise and its environment as a source of jobs in the rural area, carrying on a function that closes the gap between the economic and the social perspectives.

The second step consists of creating synergies between several social actors in the local community (van der Ploeg, et al., 2002; Carbone, Gaito and Senni, 2005) increasing the social capital available in the area (Lin, 2001). A more positive evaluation should be given to

25 of 49 the alliances model that helps not only in the creation of new social capital in the area but can start some kind of regenerative welfare processes.

In the outermost circle we have the perspective on environmental sustainability. This perspective asks farmers to care for the environment, limiting the utilization of intensive agricultural productions methodologies to avoid soil overexploitation.

A furhter step would be to drive entrepreneurs to turn on IFS solutions as these are more environmentally conscious than traditional ones and, last but not least, the environmental sustainability perspective asks agricultural managers to help the protection of local area biodiversity.

In the following figure 3 we give a rough estimate of each type of alliance trough our framework according to the literature we have reviewed in the previous sections.

Insert figure 3 here

As noted in the section 4 we have identified six different types of alliances between agricultural enterprises, divided in three main classes. We present 5 short examples of alliances between Italian agricultural enterprises to get a first test on the theoretical results.

These examples have been based on several sources of primary data, mainly interviews with agricultural entrepreneurs taking part in the alliance, other data have been collected trough informal interviews during the 2010's edition of the MacFrut7, the biggest Italian agricultural convention and exhibition; as secondary data sources we have used the related web-sites if available8.

7 The official site of the convention is http://www.macfrut.com/eng/index.php 8 The only notable exceptions to these data gathering processes have been related to the Solarelli's initiative by Apofruit, where we have no direct interview with the farmers and to the SFSC initiatives that have been more thoroughly scrutinized but that, obviously, were not touched by our data gathering processes during the MacFrut 2010.

26 of 49 The following figure 4 sums up the data sources of the various examples and how they relatte to each type of alliance.

Insert figure 4 here

6.1 Examples of Horizontal Alliances

The first example of horizontal alliances is the PO APO - Lucania, a Producer Organization located in the local area of Potenza, in southern Italy. It is managed as a cooperative and it was founded in 2005.

This alliance is a production-oriented ones coordinating the activities of 162 small producers operating in the Basilicata region, and in Puglia Region too, producing fruit and vegetables, mainly tomatoes.

Its management enforces a strict protocol of MRLs, monitored trough many agronomic controls during the year, with two main effects: the risk of free riding behavior by the PO's farmers is lower; the produce quality reaches the needed standards to sell them in Europe.

These strict protocols help agricultural entrepreneurs to work together and increase the level of trust each single entrepreneur has in the PO as a whole helping them in developing channel bonding capabilities as shown by the fact that the agricultural entrepreneurs do not want to leave the PO altough the recent distribution issues.

Another advantage they get from the frequent controls by PO agronomists is to get a continuous check-up of their crops' healthiness and open them to early treatments of pests reducing eventual damages and related costs.

Besides assisting farmers in production the cooperative also provides a facility for calibrating

27 of 49 and packaging raw commodities in plastic and paper boxes and has an internal laboratory for assessing the quality of the conferred produce.

The cooperative sells crops in Italy through some large retailers, although its most important customers are exporters of fruit and vegetables to Central Europe, mainly in Germany and in

Russia, MRGs. Selling only to brokers with multiple-years contracts do not help neither the farmers nor the PO as a whole to develop the other two classes of MDM capabilities.

Moreover during 2010, to cope with further difficulties in marketing their products in Italy, due to a more intense foreign competition (mainly from Spain, Portugal and Algeria), the cooperative has created a center for direct sales that should be considered as a weak form of

SFSC helping its farmers to enter in a different class of alliance.

This alliance seems a mixed blessing as it succeed in increasing economic profitability but it obtains this advantage only limiting its own independence trough contracts spanning trough several years. It's interesting that they are acknowledging the limits of this strategy and are trying to increase the links with local customers trough direct sales. Focusing their actions on a given local area they succeed in creating new jobs and in increasing cooperation in the local area so we judge it to reach the first two levels of social sustainability.

The environmental circle seems to be similar to the theoretical model as they need to focus on a limited number of crops in order to become a viable partners for the MGRs they sell their produce to with the negative effects on biodiversity, at the same time, they try to increase their value using strict controls on the MRLs9.

An example of processing oriented horizontal alliances is one of the largest cooperatives in

Italy: CO.PAD.OR. from Parma.

9 We have considered the strict control imposed by the protocols on MRLs lower than the law in a similar way to

28 of 49 CO.PAD.OR. is an agricultural cooperative founded in 1987 when some farmers in Parma and Piacenza acquired a processing plant for producing tomato paste and sauce. Today, the cooperative members cultivate around 4,000 hectares of land, resulting in more than 300,000 tons of product in a harvesting campaign concentrated in just 60 days.

To ensure quality of production, moreover, the cooperative uses several agronomists that routinely take samples both of produces, mainly tomatoes, and of the land to perform chemical, physical and microbiological tests to control for the needed quality.

CO.PAD.OR prices for conferred produce are linked to a set of quality indicators known beforehand to the producers. This helps them to generate trust between the producers and to develop theirs channel bonding capabilities.

The CO.PAD.OR sells its products trough different distribution channels; they have some industrial products, used by some of their competitors too; there's an Ho.Re.Ca. Business units and another one dedicated to sell their products in the consumer market.

At the same time CO.PAD.OR succeed in creating the other two classes of MDM capabilities.

They have strongly invested in creating brand awareness for their products trough the Berni brand and they have developed market sensing ones too as its management has been ready to innovate and follow the new requests from the market creating new products as the

Conditoast in the Condiriso line of products or the new grilled vegetables lines. As for the theoretical evaluation these latter capabilities only rarely trickle down to agricultural entrepreneurs.

CO.PAD.OR. experience is a mixed-blessing regarding social sustainability as the processing plant has surely created new jobs in the local area and has helped to attract new investments by other industrial enterprises10 but these advantages are more linked to the processing plant than to the agricultural enterprises.

10 Near the plant of CO.PAD.OR. another PO, Valfrutta, has opened its own plant to share the infrastructures.

29 of 49 As for the theoretical models CO.PAD.OR exploits price policies to drive producers in selecting, growing and selling only a limited number of high yield crops11. A positive effect on environmental sustainability derives from the short harvesting campaign that limits the utilization of greenhouses and the related emissions of CO2.

Sometimes larger horizontal alliances, mostly association of producers organization, can be subdivided in several enterprises, each using a more limited set of resources to sustain both production and processing as needed.

An example of this type of aggregation is given by the AOP APOFRUIT Italia based in

Cesena. APOFRUIT is an association of producer organizations, and sells more than 300,000 tons of product, mainly fruits, for total revenues of over 250 million Euros.

The cooperative focuses its activities mainly on fruit, vegetables cover slightly more than 3% of contributions, treating both common cultivars and those registered as PGI and PDO.

In addition, the cooperative has also started a dedicated organic production line using a subsidiary, Canova S.r.l., which have access to three dedicated processing plants and two logistics platforms in Italy.

The organic line has also allowed the cooperative to start production of processed products, with particular reference to the Fresh Cut Produce, as for Fruit on the Beach, a project consisting in providing fresh-cut fruits to business, retailers, including beach resorts, over all

Adriatic Coast in summer 2010; this project has supported Canova's investments in fresh-cut produces, complementing its line of pre-cooked meals launched in late 2009 with the brand

“Almaverde Bio”.

The real new initiative in 2010 has been launching a new brand: Solarelli.

11 These negative effects are made less dangerous as the area has a long tradition of cultivating mainly a few tomato's cultivars.

30 of 49 Solarelli is a line of fresh, unprocessed products that will be marketed under a specific brand within MGRs. The turning point, compared with similar previous initiatives, is that the cooperative has provided the business unit with a budget dedicated to promoting the brand in the media in order to develop a differentiation strategy for its own fresh products12.

The stated objective of this product line has been to make their brand known to the customers so to start a pull strategy, in order to increase the association negotiating power in dealing with buyers from the MGR.

The various subsidiaries of APOFRUIT have the same conferment protocols-backed effects on creating, and strengthening, relationships between the various value chain players. On the other hand the positive effects from developing the other two levels of MDM capabilities are limited to the subsidiaries themselves as for the processing oriented horizontal alliances.

APOFRUIT policies do not asks farmers to became involved with the AOP for several years but they give each partner the freedom to decide autonomously if they want to confer their products in the various lines the cooperative subsidiaries are selling; obviously to get access to the most valued ones, as Canova and Solarelli, each farmer must follow a given production protocol.

Trough the various plants and the higher prices it can pay to agricultural entrepreneurs,

APOFRUIT is able to create new jobs in various local areas both at a central level and in the single agricultural enterprises but it does not have any specific policy to help the creation of new synergies in the local areas.

This alliance is found less sustainable in the third circle, the environmental one, as AOP

APOFRUIT deal explicitly with them only in the Canova Srl lines without addressing them in the other brands.

12 Solarelli has been promoted as sponsor in some prime-time national television shows and by buying some promotional slots before, or after, evening edition of the news.

31 of 49 6.2 Example of Vertical Alliances

A typical example of these alliances is “Emilia-Romagna's Hi-Quality Durum Wheat

Agreement” proposed from Barilla SpA to 10 different Producer Organizations and supported by the Emilia-Romagna Region.

Under this agreement, at the 5th edition for 2010-2011 cereal campaign, Barilla commits to buy 70.000 tonnes of wheat, leaving producers the option to choose between three alternative mechanisms for determining the price. In this way, according to estimates of Emilia-

Romagna Region, producers will get a premium, on average, of 30% compared to current market prices.

In spite of being welcomed by agricultural entrepreneurs, our framework shows that this alliance is not very sustainable. It is created to develop and exploit relationship between the processor, Barilla, and the farmers increasing their channel bonding capabilities.

The farmers are not acknowledged and the choice of the specific grain cultivar is left to

Barilla further limiting the independence of the agricultural entrepreneurs. Moreover farmers are not given any way to create relationships with customers and they are not asked to develop market-sensing capabilities as Barilla study the seed and decide which ones it will use in its own meshes.

Moreover this agreement does not provide any support to environmental sustainability as the strict protocol of agronomic controls is only designed to increase the quality of the wheat.

32 of 49 7.3 Example of Suppy Chain Redefining Alliances

As an example of this third class of alliances we refer to the farmer markets organized by the nonprofit organization “Fondazione di Campagna Amica” promoted by Coldiretti, the largest organization of Italian farmers at national and European level; this experience of short food supply chain, which goes by the name of “Mercati di Campagna Amica”, is held in various locations in the city of Naples and its province each reached on average every two weeks

(there are 2 to 3 market days each week).

In these markets, access will be granted only if agricultural entrepreneurs let organizers control the quality and safety of their produce and if they let them carry on an investigation on the real quantities of products they can get from their fields. Another meaningful rule farmers must follow is that products must be sold at a price at least of 70% of the average sale price of the same cultivars as observed in the market by a national public monitoring.

Organizers use these safeguards to reduce free-ridership and to avoid price-based competition.

Obviously farmers' markets help agricultural entrepreneurs in developing channel bonding capabilities but they are useful in developing customer linking ones too.

Moreover continuous relationship with customers helps small agricultural enterprises in diversifying their own production in order to capture a greater share of the food budget from each single client deterring intensive production practices and indirectly benefiting biodiversity. Trough continuous interactions the agricultural entrepreneur learns the needs and the tastes of its clients helping him to increase his relational capital and the related market-sensing capabilities.

The very same structure of the SFSC helps each single entrepreneur to increase the profitability of its crops but, as the agricultural entrepreneurs itself sales his own crops, this

33 of 49 alliance does not directly create new jobs; on the other hand it creates synergies with other local actors that can use the fairs as a meeting point and as a place where they can, in some avenues, play live-music or organize small educational lessons.

As a last source of differentiation Fondazione di Campagna Amica asks agricultural entrepreneurs selling in their markets to use only integrated farming procedures in growing crops.

8. Conclusions

The following figure 5 is used to represent how the various examples of alliances are rated using our interpretative framework.

Insert figure 5 here.

As you can see the model highlights how local experiences creating a deeper consumer's involvement into agricultural enterprise's sustainability can help developing a more complete set of capabilities while still supporting sustained competitive advantage.

Moreover the examples shows that the framework we have developed is able to explain the general effects alliances and agreements in the agricultural value chains have on sustainable development processes, focusing on the analysis of market-driven capabilities these firms have and how they can exploit alliances to strengthen them.

The purpose of our model was not to define a general, always usable, set of indicators to evaluate but, instead, to create a framework of analysis that can give scholars, and managers too, the main direction to use in their own, specific, analysis.

34 of 49 Our observation confirms that, using a RBT - MDM perspective, the full scope of market- driven capabilities can be more easily developed in the SFSCs experiences and in the most broader, and bigger, horizontal alliances (indicated as Prd&PrcHA in the last two figures).

On the other side Short Food Supply Chains experiences seem more apt in leveraging market- driven capabilities to get a more balanced growth process in all the three sustainability circles directly for the entrepreneur and not mediated by the brands or the relationships the alliance as a whole owns.

The main reason behind these results relies on their ability to leverage collaboration with other producers to stimulate development of customer linking capabilities and, sometimes, even market sensing ones.

Another result of these analysis has been to find that horizontal alliances are able to create a better social sustainability than vertical ones, mainly due to their effect on creating synergies between actors in the same local community.

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44 of 49 Figure 1 – The triple bottom line and the bioeconomy models.

Source: Our elaboration from Lethonen, 2006.

45 of 49 Figure 2 – Alliance models between agricultural enterprises.

Horizontal Alliances Vertical Alliances Suppy Chain Redefining Alliances Production oriented Horizontal Price Setting Vertical Alliances Solidarity Purchasing Groups

Alliances Farmers' Markets

Processing oriented Horizontal Community Supported Agriculture Alliances Source: Our Elaboration

46 of 49 Figure 3 – Assessment of the main agricultural alliances models using the tridimensional interpretative framework for sustainable development.

Source: Our Elaboration

Legend:

 PrdHA = Production oriented Horizontal  Prof. = Increase in enterprises' profitability

Alliances  Indip. = Increase in strategic indipendence  PrcHA = Processing oriented Horizontal  Jobs = New Jobs created in local communities Alliances

 Prd&PrcHA = Production oriented and  Snrg = Synergies between Local Actors

Processing oriented Horizontal Alliances  RgWlf = Regenerative Welfare

 PrSVA = Price Setting Vertical Alliances  NIP = Not incentivating Intensive Productions

 SPG = Solidal Purchasin Groups techniques

 FM = Farmers' Markets  IFS = Integrated Farming System

 CSA = Community Supported Agriculture  Biodiv = Ecosystems' Biodiversity Defense

✔  ChBnd = Channel Bonding Capabilities  = The assessment is mostly positive

✔  CstLnk = Customer Linking Capabilities  # =The assessment is considered positive for the alliance itself and not for each single farmer  MktSns = Market Sensing Capabilities  ✔/✘ =The assessment is mostly negative but the

alliance can have some business units that can be

evaluated positively

47 of 49 Figure 4 – Alliance models and data sources of the related examples

Source: Our Elaboration

Legend:

 PrdHA = Production oriented Horizontal Alliances

 PrcHA = Processing oriented Horizontal Alliances

 Prd&PrcHA = Production oriented and Processing oriented Horizontal Alliances

 PrSVA = Price Setting Vertical Alliances

 SPG = Solidarity Purchasing Groups

 FM = Farmers' Markets

 CSA = Community Supported Agriculture

 DI = Direct intervieews to farmers

 MF'10 =Inteviews and leaflets taken at MacFrut 2010

48 of 49 Figure 5 – Assessment of the examples of agricultural alliances using the tridimensional interpretative framework for sustainable development.

Source: Our Elaboration

Legend:

 ChBnd = Channel Bonding Capabilities  ✔ = The assessment is mostly positive

 CstLnk = Customer Linking Capabilities  ✔# =The assessment is considered positive for the

alliance itself but not for each single farmer  MktSns = Market Sensing Capabilities  ✔/✘ =The assessment is mostly negative but the  Prof. = Increase in enterprises' profitability alliance can have some business units that get a

 Ind. = Increase in strategic independence positive assessment

 * = This is true only for the direct sale initiative  Jobs = New Jobs created in local communities

 Snrg = Synergies between Local Actors

 RgWlf = Regenerative Welfare

 NIP = Intensive Productions techniques

 IFS = Integrated Farming System

 Biodiv = Ecosystems' Biodiversity Defense

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