118th EAAE Seminar "Rural development: governance, policy design and delivery" Ljubljana, 25-27 August 2010

SHORT SUPPLY CHAIN: ANALYSIS OF THE COMPETITIVENESS OF ORGANIC HORTICULTURAL FARMERS AT ITALIAN REGIONAL LEVEL

Bertazzoli A., Ruggeri A., Samoggia A.* *Alma Mater Studiorum - Università di Bologna, Department of Agricultural Economics and Engineering, Food Science Campus, Piazza Goidanich 60, Cesena, (Italy)

Corresponding author: [email protected]

Paper prepared for presentation at the 118th seminar of the EAAE (European Association of Agricultural Economists), ‘Rural development: governance, policy design and delivery’ Ljubljana, Slovenia, August 25-27, 2010

Copyright 2010 by Bertazzoli A., Ruggeri A., Samoggia A.. All rights reserved. Readers may make verbatim copies of this document for non-commercial purposes by any means, provided that this copyright notice appears on all such copies

771 Abstract: The paper focuses on the competitiveness of organic horticultural farms implementing short food supply chain (SFSC), by analysing the organisational structures adopted by farmers and their economic performance. The collection of data based on face to face interviews with farmers and the review of the rural development plans of three central Italy regions. Results show that farms prefer a combination of organizational structures that involve both business to consumer and business to business strategies. A high number of farms realise direct selling to consumers implemented through in farm selling and market distribution channels. Nonetheless, farms performing the highest turnover take advantage from the support of informal or formal network of producers. At policy level intervention towards strengthening SFSC’s competitiveness is still lacking. Keywords: short chain, direct selling, horticultural, organisation, economic performance, JEL: Q18, Q13, R11

1. Introduction and objectives The globalised agri-industrial food system has become the leading force shaping the context in which farming operates, but there is evidence that some producers and consumers search for an alternative to the system. Direct selling by producers and short chains offer alternatives in which a high number of producers and consumers find mutual economic and social satisfaction. At European level rural policies are increasingly identifying in the food chain an effective approach for economic development. Still, whereas there is wide research on consumers’ interest over organic productions and over food chain approaches, there are still unsatisfactory investigations over effective innovative and economically sustainable management practices at organic farm level. The objective of the paper is to analyse the competitiveness of organic horticultural farms implementing short food supply chain, by focusing on the economic and organisational characteristics. Thus, the research will shed some light in exploring current trends in short chain development and economically performing approaches to organic production selling1. The paper also aims at providing a picture of the policy framework that concern the farms object of the study. To this extent it includes the analysis of rural development programmes initiatives for the promotion of short chain and organic productions at Italian regional level. 2. Theoretical framework 2.1. SFSC definition According to the literature analysis, a shared definition of short food supply chain (SFSC) is still missing due to the peculiar characteristics of each product chain, and the several aspects that SFSC embodies, as marketing strategies, relationships, organization, and environment. Starting from the definition of Marsden et al. (2000) and Renting et al. (2003) there are three dimensions of SFSC: face to face, spatial proximity, spatially extended. Face to face dimension refers to the purchases with face to face contact among consumer and producer, including also the virtual

1 ORT-BIO - Analysis of the entrepreneurial systems that enhance the short supply chain and reduce the energetic consumption of the horticultural organic productions. Partners: CRPV (Centro Ricerca Produzioni Vegetali) Cesena (Forlì- Cesena), PROBER (Associazione dei produttori biologici dell’Emilia-Romagna) Bologna, CRA-ORA Unità di ricerca per l’Orticoltura, Monsampolo del Tronto (Ascoli Piceno), DSEEA (Dipartimento di Scienze Economico Estimative e degli Alimenti), Facoltà di Agraria, Università di Perugia, Perugia. Funding: Italian Ministry of Agriculture Food and Forestry. Duration: the project started in October 2009 and it is still on going. The general objective of ORT-BIO is to support organic farms specialized in horticultural productions to improve their performances. The specific objective is to identify financial, organisational, agronomic and efficient energetic solutions to increase farmers’ profitability and to enhance the short supply chain efficiency. The project activities are located in Emilia- Romagna, Marche and Abruzzo regions. The results of the present paper refer a research first step. Further research’s developments will focus on the selection of 10 farms within the 65 farms interviewed, taken as case studies and selected for the dynamic attitude towards innovation and towards competitive organisational choices for SFSC.

772 one operated with on line trading. Spatial proximity refers to those products that are produced and retailed in a specific geographical area, and that embed the customer to the territory of production. Spatially extended relations refer to the products that have a specific origin of production that allow the consumer to recognize them, but can be retailed out of the production area (e.g.: fair trade products, PDO, etc.). The differentiated structure of each category is characterized by spatial, temporal, demand and associational/ institutional degrees of extension (Renting et al. 2003). Several authors interchange SFSC with direct selling (Sini 2009). In particular Gilg and Battershill (2000) identify three declinations of direct marketing, that refer to the application of the SFSC and Marsden’s dimensions, that are ”true direct selling”, “arms length direct selling”, and “regional labelling schemes”. The first classification refers to selling directly to final consumers (farmers market, mail order, home deliveries, etc.); the second one includes selling to those outlets (restaurant, specialized shops, tourism route, etc.) which can benefit from the fact that is a farm product. The latter includes those products that are certified for denomination of origin (PDO, PGI, etc.). It is important to underline that among SFSC marketing channels, there are also several solutions driven by the consumers’ mobilization and organization. As the producer reacted to globalized food chain crisis and price shocks, as well consumers with a high level of education and medium high purchase power have driven farmers to respond to the request for direct access to quality products, see box schemes on consumers associations (Sini 2009). According to the several typologies of SFSC, direct selling or the face to face dimension applied with the typology farmers’ market is considered as one of the main interesting solution to support the matching of demand and offer. Producers located in remote rural areas can directly access the market and create relationships with the consumers (Sini 2009) in dedicated areas for direct selling farming. Another solution that is also considered as innovative is the box scheme. As mentioned in advance this type of solution is driven by consumers that group into purchase’s team to order and collect food directly from the producers. Considering the organic production, short supply chain (Renting et al. 2003) is placed as one the most competitive possibilities for organic farmers to create a favourite channel of communication with consumers that favours trust and liability, with the capability of exploiting all three dimensions of SFSC illustrated. Furthermore organic production associated with SFSC is often considered as a strategic relation in terms of engendering rural development with the empowerment of environmentally friendly and social/cultural attitudes (Gilg and Battershil 2000) compared to mainstream food chains’ impact. This approach also induces some authors to make the concepts of quality, local, and territory often as interchangeable (Goodman 2009), despite obviously, not every product case can establish a full positive set of externalities (Sini 2009). 2.2. Short Food Supply Chain (SFSC) as instrument in rural development Looking at the CAP evolution, increasing attention has been placed on structural and cohesion funds and community initiatives up to the creation of a specific pillar devoted to rural development (Ilbery et al. 2004) and an increasing investment within 2007 and 2013 on its related categories. The application of the short food supply chain to agriculture is considered as one of the most important tools to strengthen rural development, by positively interacting with the key issues that are the economic, social and environmental ones (Goodman 2009). CAP rural development policy also focuses on multi-functional farm solution, in order to exploit non-farm related activities as possible source of income to compensate unfavourable pricing dynamics and difficulties to access the market by lagging rural regions (Cicatiello 2009). Multifunctional approaches are considered among others: agri-tourism, cultural activities, open farming day. Through these initiatives farmers can support their core business by activating new services to improve direct relationships with consumers and also to differentiate their activities to find new sources of income (Sini 2009). In order to increase SFSC impact, Goodman (2004) pointed out two main aspects as necessary be strengthened, that are: first, the capability of strengthen producer-consumer relations both by a spatial and temporal point of view; second, the need to make SFSC able to contribute to European rural development strategies by extending SFSC’ sustainability rather than satisfying exclusive niches. Referring to the latter mentioned aspect, the market share of SFSC products is still a minimum slice

773 compared to generic food commodities (Knickel 2005), able to satisfy a middle-up educated typology of customer. Academic literature, and to some extent, also national and European co-financed initiatives (e.g.: LEADER) focus either on producer-consumer relations within SFSC, or highlight the economic and social contribution of SFSC to rural development. Limited efforts were placed on measuring the capability of SFSC to contribute to agricultural farmers’ competitiveness (organizational and financial aspects) over time. SFSC is considered as the improved connection between production vs. territory and producers vs. consumers, and identified as a successful application of “alternative food networks” (AFN) (Goodman D. 2009). Renting et al. (2003) defined AFN as “the creation of networks of producers, consumers and other actors that embody alternatives to more standardized industrial mode of food supply”. To this extent several authors exploited the embeddedness and relationship marketing definitions in order to identify the reasons for the creation and sustainability of alternative food networks (Kottila and Ronni 2008, Ilbery et al. 2003). As Goodman (2003) specifies, embeddedness and trust are the key concepts to understand the quality turn in alternative food practices, despite the debate on their application is still widely open. Embeddedness could refer to the production side by focusing on the typology of product such as local, quality product, fair trade product, environmental friendly product, as well as to the typology of relations that occur within the food supply chain, between producers (Chiffoleau 2009), and between producers and consumers (Goodman 2003). 2.3. SFSC Competitiveness Focusing on the analysis of SFSC as tool to improve farmers’ competitiveness, few papers have tried to focus on capturing the critical financial and organizational challenges that a producer shall face in managing SFSCs. The main advantage of SFSC pointed out refers to the increased proportion of value added of food production captured by the primary producers (Marsden, Banks, Bristow, 2000), with particular regard to family or small farming activities (Sini 2009). One of the key aspects relating to the farms applying direct selling refers to the necessary change of attitude by farmers from an organizational and cultural point of view. The involvement of the agricultural entrepreneur both on the field work as well as in the commercial activities implies that the farmer is not anymore just a producer, but also a sales and marketing responsible (Gilg and Battershil 2000). To this extent, by applying Porter’s value chain model, the farm operates several functional activities that overcome those related to its pure core business and that contribute to increase products’ value, to maximise value creation, and to build relative competitive advantage (Porter 1985). The combination of these interdependent activities, linked by relations of a functional nature, gives rise to the business’s value chain. The concept of competitiveness can be thus applied as “the capacity of a farm to optimize and coordinate its activities in a better way than its competitors” (Bertazzoli et al. 2010), so to deliver higher value to customers. Direct selling is the most explored approach to explore SFSC competitiveness. Verhaegen and Huylenbroeck (2001) have compared different direct marketing solutions applied by farmers with the use of cost/benefit analysis. Results show that the ones that base on farmers’ networks are able to enhance direct selling’s competitiveness along time. Considering the organizational aspects, Chiffoleau (2009) provided a first attempt to focus on producers’ embeddedness (Granovetter 1985) and to explore the different potential positive and negative relationships that can grow between producers that lead to grouped direct marketing solution (farmers market and box schemes). Results of the study show that embeddedness of sales activity based on technical and friendship relations, favours cooperation, innovation and the sustainability of local food systems. In synthesis, the few studies who treated the competitiveness issue within SFSC, ended up highlighting the positive role of collective and cooperative structures in order to achieve farmers’ competitive and innovative managerial and marketing practices. As mentioned there are several ways of shortening the supply chain that have developed within the past 15 years and farmers show high dynamism in adjusting to new methodologies of selling. Yet, literature lacks a critical analysis aimed to understand which is the most effective set of economic and organisational choices for farmers who aim at being competitive over time through the adoption of SFSC. In addition, given the objectives of this paper, we have developed a revised version of

774 Marsden’s dimensions of SFSC, which focuses on the set of organizational patterns adopted by organic horticultural farmers for SFSC and direct selling strategies. 3. Methodological approach 3.1 SFSC classification adopted Literature review contributed only partially to the development of the SFSC definition and classification tailored to the objectives of the present paper. The paper focus on the competitiveness of the various organisational structures of SFSC urged the development of a dedicated classification (table 1). The classification captures one of the crucial elements of the competitiveness, that is how a farmer reaches and sells to the consumer, whether it is thanks to his own links or thanks to a formal or informal network or group of farms. Furthermore, it highlights who is the final customer, that is whether it is a final consumer, or another economic agent. In particular, 1A is the so-called true direct selling or face-to-face selling. This is the shortest chain possible to arrange. 2A maintains the face-to-face relationship between farmer and consumer, but the farm has the support of a network of farms to reach the consumer. In this case the chain is still the shortest chain possible. 1B is often included in the literature as one possibility of SFSC. The chain is a bit longer compared to the 1A and 2A, but it is plausible that between the farmer and the final consumer there is only one intermediate node. In other words, the SFSC customer is not necessarily who eats the product, but is identified in who will then sell the product to the final consumer. 2B captures 1B characteristics, but the farm needs the farms’ network in order to reach the purchaser. In addition, among customers, this group includes other chain economic operators (cooperatives, consortium, retailers) who stretch the chain, making it in someway longer. In these cases, the chain nodes might become, but not necessarily, more than one. In this research, 2B farms were mostly dealing with Ho.Re.Ca, local retailers and specialised shop; when the prevalent organisational structure included only cooperatives, consortium or large retailers, farms were not included in the analysis. Therefore, in the present research sample, these consumers/purchasers are residual. Given these adjustments, 2B can still be considered a category of SFSC. Table 1: Classification of SFSC selling organisational structures

HOW Single SFSC Networked SFSC Single farm direct selling Selling thanks to a network of farms 1.A. Direct selling to final consumer 2.A. Direct selling to final consumer (selling mainly farm’s produce) thanks to the farm’s network (with the

possibility to sell produce of the (for example: in-farm selling, farmers’ Business to network’s other members) market, outside markets, local fairs, home consumer delivery, to agri-tourism and educating (for example: farmers’ market, outside (b2c) farms’ visitors, box schemes) market whose access is made possible TO thanks to the network, home delivery, WHOM true direct selling/face-to-face box schemes whose access is ensured by the network, informal offer group) 1.B. Direct selling to SFSC’s other 2.B. Selling to SFSC’s other economic economic agents agents thanks to the farm’s network (the

network can sell products of all network (for example: Ho.Re.Ca., local retailer, Business to components) specialised shops) business (for example: Ho.Re.Ca., local retailer, short food supply chain (SFSC)/arms (b2b) specialised shops, cooperatives, length direct selling consortium, large retailers)

775 3.2. Materials The present paper bases both on primary and secondary data. Primary data refer to direct interviews with farmers, and secondary data refer to the analysis of rural development plans (RDPs) of the Italian regions where farms are located. The research survey aimed at collecting information on the farms’ structures and on the producers’ attitude towards SFSC implementation. The survey was carried through a closed questionnaire filled by the researcher with face-to-face interviews which lasted around 1 hour. The adoption of this technique allowed collecting standardised information, but also qualitative information the researcher took note of. The data were collected by guaranteeing an anonymous treatment of the information, necessary to reduce pressure and increase reliability of the interviewed. Farm’s owners were the respondents in 99% of the cases. Table below details questionnaire’s contents2. Table 2: Structure of the questionnaire3 Farm and Personal data: - Age and percentage of occupation of the entrepreneur and relatives employed in the farm - Address and region - Number of total employees - Arable area - Area extension of product typologies (vegetable and fruit) - Farms related activities (agriturism, cultural activities, open farming, educational farming) - Operational context within the surrounding area (presence of local markets, other farms implementing direct selling) - Achieved organic certification year SFSC organisational structure and selling channels adopted: - Favourite selling channel adopted (to final consumer, to other economic operators (see Table 1 for details) - Details for all selling channels adopted - Percentage of sales for each selling channel adopted - Total revenues Degree of satisfaction for selling implementation in relation to: - Relationship with customer - Price - Unsold product - Personal satisfaction

Researchers analysed RDPs 2007-2013 of Emilia-Romagna, Marche and Abruzzo that are the three concerned regions for the survey implementation. Documents’ content analysis aimed, first, at identifying programming measures admittedly targeting SFSC, and, second, at analysing whether measures with wider objectives, targets, and beneficiaries, could fund SFSC initiatives. 3.3 Sample The survey has been conducted in three selected regions located in the centre of Italy. A total of 65 farms were interviewed with a face-to-face approach. Farms were selected with the support of privileged stakeholders. Some of these are also project’s partners, such as organic farm producers association and public and private research centres that have a deep knowledge of the characteristics of the area surveyed and of the organic farms active in those territories. Farms’ selection aimed to guarantee the identification of a sample able to provide the representation of all categories of SFSC selling organisation structures, and to include farms regionally acknowledged for their dynamism in promoting innovative and effective approaches to organic horticultural selling. The selection has also

2 As part of ORT-BIO wider research project, the questionnaire included data collection also on topics aimed at farms’ energetic assessment and agro-economic characteristics which are not treated in the present paper. 3 Farmers were asked to declare which of these selling techniques were used, and which was the prevalent selling technique, that is which technique allowed them to make the highest annual turnover.

776 followed a geographical criterion, which is a minimum of 2 farms per province, and according to the farmers’ availability to take part to the survey4. Table 3: Sample information and data 65 farmers interviewed: - Emilia Romagna: 33 - Marche: 21 - Abruzzo: 11 Average age: 47; 6 farmers are less than 35 year-old Average number of personnel employed for field work or selling activities: 2 8% of farms employ from 6 to 43 people 50% of farms employs relatives part-time to support the farming activities

4. Results 4.1. SFSC competitiveness Farms turnover and dimension By analysing classes of turnover coming from SFSC activities, farms create three groups. Each group contains around 1/3 of total number of farms interviewed. The first group can be named “the poor” (24 farms below 10.000 euro per year), the second are “the reasonably well-off” (22 farms between 10.000 euro and below 40.000 euro), and the third are “the rich” (19 farms above 40.000 euro per year) (see table 4). Table 4: Farms’ turnover concerning farms’ SFSC activities. 10.000- 20.000- 30.000- More than Total Turnover (€) 0-9.999 19.999 29.999 39.999 40.000 N° of farms 24 13 5 4 19 65

The average arable area is 16 ha and the number of farms per classes of arable area shows that the vast majority of farms are rather small (35 out of 65 farms) compared to the average Italian indicator for used arable area that is 10Ha. Table 5: Farms’ arable area 5 ha <10 10 ha < 15 ha < Arable area < 5 ha ha 15 ha 20 ha > 20 ha Total N° of farms 18 17 17 5 8 65

By crossing data on turnover and dimension of farms (table 6), results show that, since the turnover data refer to SFSC activity only – mainly horticultural, excluding revenues from other crops - obviously data on farm’s average arable area does not follow the trends of the classes of turnover. Whereas data on the arable area dedicated to vegetable and fruit generally are positively correlated with the growing trend of the increase of turnover. The only exception is “the rich” group who seems specialised on horticultural activity rather than on fruit. It is worth underlying that these results could be biased by the limited number of farms included in some categories of the sample.

4 In the provinces of Rimini (Emilia Romagna) and Chieti (Abruzzo) researchers interviewed only one farm each, because of the unavailability of farmers to arrange the interview. For the same reason, Parma province (Emilia Romagna) was not surveyed.

777 Table 6: Number of farms per annual turnover and arable area. 10.000- 20.000- 30.000- More than Total Turnover (€) 0-9.999 19.999 29.999 39.999 40.000 N° of farms 24 13 5 4 19 65 Average total arable area 11 10 13 11 22 16 Average vegetable arable area 1,33 1,71 2,25 1,66 9,46 3,2 Average fruit arable area 1,24 2,48 4,69 4,03 1,61 2,8

SFSC: selling organisational management The elaboration has, at first, focused on the concentration of enterprises for all organizational structure defined (see table 7). At second, the analysis focused on the main relevant organizational structures perceived by the farmers as strategic, to be interpreted as the organic structure that performed the highest turnover (see table 8). Results show that farms choose different categories of organization in order to maximise their revenues and that often opt for a mix of different categories. On average, farms choose two organisational structures. According to table 7, almost all farms implement direct selling to consumers -1A (60 out of 65), and 35 out of 65 declare 1A is the organizational structure producing the highest annual turnover (table 8). Despite 27 enterprises include selling to SFSC’s other economic agents -1B, only 5 of them consider this typology as a priority one (see table 7 and 8). It is interesting to notice that almost all farms adopting direct selling to consumer through the network of farms - 2A also consider it as the main selling approach (12 out of 13, see table 7 and 8). Finally 26 farms adopt selling to other SFSC economic agents through the farms’ network - 2B, but only 13 out of 65 consider it as the main selling strategy. Table 7: Number of organizational structures adopted by farms. 1A 1B 2A 2B Total 60 27 13 26 126 Table 8: Number of farms per organizational structure producing the highest annual turnover. 1A 1B 2A 2B Total 35 5 12 13 65

As mentioned, farms were asked to list all adopted selling organisational structures. Farms opted for a maximum of four solutions. Table 9 underlines a set of combinations from one up to two solutions, selected according to the highest contribution to the total farm’s turnover. Data show that 20 farms implement only 1 selected selling strategy (17 only 1A and 3 only 1B or 2B), focusing on farms opting for a combination of organizational structures, the majority (45 farms) select a mix of strategies. 21 farms opt for 1A+2B and these are the farms that differentiate strongly both customer (final consumer or economic agent) and approach to customer (single or group). The other favourite combinations are 1A+1B and 1A+2A. These are chosen by companies who, respectively, prefer not to belong or to sell thanks to networking group, that is they rather work on their own or focus on the consumer, and want to reach it either alone or thanks to a facilitating network. Finally, no farms adopt 2A+2B and 1B+2A. This happens mainly because it is extremely rare that farms decide not to do in- farm selling or markets. Table 9: Main preferred combination of structures5. Only 1A Only 1B Only 2A Only 2B farms 17 1 1 1 20 1A+1B 1A+2A 1A+2B 2B+2A 1B+2A 1B+2B Total farms 12 11 21 0 0 1 45

5 Note to the table: within 45 farms, 9 adopt a third organisational structure and 3 choose up to 4 solutions.

778 By crossing the annual turnover classes and the organizational structures declared as providing the highest turnover (see table 10), results show that the majority of farms that choose structure 1A belong to lowest class of turnover. The majority of farms implementing 1B are included in the class 10.000-19.999 €; and the farms most concentrated in 2A and 2B declare a turnover above 40.000 €. These results are rather interesting as they suggest there is a correlation between the propensity of working in a cooperative and collaborative network with the farms’ profitability. Table 10: Number of farms per turnover’s classes matched with the favourite organizational structure. 1A 1B 2A 2B Total 0-9.999 (€) 19 1 1 3 24 10.000-19.999 4 3 3 3 13 20.000-29.999 1 1 0 3 5 30.000-39.000 4 0 0 0 4 More than 7 0 8 4 19 40.000 Total 35 5 12 13 65

As the survey was carried out on three different regions, here below (see table 11) it is provided the distribution of farms per organizational structure producing the highest annual turnover and regional location. Despite the sample is not representative of the regions, the geographical analysis distribution provides interesting information of the geographical clustering of farms. Results show that the majority of farms choose structure 1A in all regions. 1B farms are mainly located in Marche region, while the adoption of networking structure so to achieve the consumer and other chain operators are clearly stronger in Emilia Romagna region. Abruzzo’s farms appear to be the least open to networking opportunities. Table 11: Main organizational structure by regions 1A 1B 2A 2B Total E-R 15 1 11 6 33 Marche 12 4 1 4 21 Abruzzo 8 0 0 3 11 Total 35 5 12 13 65

SFSC selling channels According to the methodological framework, the different organizational structures refer to various distribution channels. Business to consumer includes in-farm selling, markets, box scheme and home delivery. Business to business includes Ho.Re.Ca., local retailer, specialised shops, cooperatives, consortium and large retailers. Results show that selling agricultural products in farm is the most common distribution channel (see table 12). Moreover, focusing on direct selling to consumer the second adopted channel is the market (28 farms included). It is worth specifying that, according to the interviewees declarations, exclusively organic markets (despite in Marche and Abruzzo organic markets are less common than in Emilia Romagna) are preferable so to avoid direct on site comparability of organic produce prices with the often cheaper conventional food prices. Several interviewees declared that box schemes are time absorbing, both in terms of box preparation and the management of the relationship with the consumer. This qualitative information supports the questionnaires’ findings according to which only 18 farms opt for the box scheme typology (see table 12). Focusing on distribution channels, cooperative or consortium, Ho.Re.Ca. and retail channels are the most used channels in case of business to business strategy compared to processing industry. As mentioned, it is important to specify that cooperatives/consortiums and industry processors represent a

779 high number, but they were included only when they were then selling directly to the final consumer, or they represented a residual activity.

Table 12: Concentration of farms per each distribution channel adopted Selling to consumer Selling to chain operator Sales In-farm Market Box Home Cooperative/ Retail Ho.Re.Ca. Processing channel selling scheme delivery Consortium* industry* N° of 40 28 18 11 27 26 26 5 farms

Considering that structure 1A, direct selling to final consumer, is often assumed by the literature as the most exemplificative application of SFSC, here below it is provided a focus on the farms that adopted 1A as main organizational structure (see Table 13). In particular, table 13 illustrates the favorite distribution channels used by farms that carry out direct selling to final consumer. In-farm selling and markets are the most used, followed by box schemes and home delivery. These results show a rather traditional approach consumer. Table 13: Focus on 1A typology: concentration of distribution channel (n. farms). In-farm selling Market Box scheme Home delivery Total 27 15 11 6 59

Farmers’ satisfaction Finally, researchers asked farmers to declare their satisfaction concerning produce selling price, unsold products, relationship with customer and the personal one. These data have been crossed with the favourite organisational structure (see Table 14). Results show that considering all the areas enquired, 1B and 2A farms are the most satisfied ones. The least satisfied appear to be the farms who adopt the 1A organisational selling structure. By considering the single area enquired, satisfaction towards price is highest in 2A structure; satisfaction for low losses of unsold product is high in all organisational structures; relationship with customer is highly performed in 1B; personal satisfaction is positively perceived mainly in 1B and 2A. It is noteworthy to underline that reasons for lower levels of satisfaction concerning prices were given either because of too low prices compared to sustained costs, or because of too high prices compared to the market acceptability. Table 14: Satisfaction analysis towards organizational structure Price satisfaction Unsold product Relationship Personal satisfaction with customer satisfaction 1A Low-medium Medium-high Medium-high Medium 1B Medium High High High 2A High High Medium-high High 2B Medium-high High Medium- high Medium-high

Satisfaction about unsold products is considered as almost high in every organisational structure. In addition, interviewees consider the use of SFSC as an efficient tool to avoid retailer’s quality standards that often prohibit organic products to reach the market. As mentioned, satisfaction for relationships with customers is higher in 1B. Despite farmers consider this as a determinant issue in order to develop consumers’ culture and information on their products and their cultivation techniques, it is also perceived difficult to deal and make customers able to accept products that are more expensive than conventional ones and visually less appealing.

780 4.2. SFSC in Rural Development Plans According to the paper’s objectives, the analysis also concerned the review of the rural development plans (RDPs) for three regions where the farms surveyed operate. The results below provide a picture of the specific policy approach devoted to SFSC, at regional level. The three regions surveyed adopt different approaches towards short food supply chain concept and that they grant notable different degrees of relevance to SFSC as strategic tool to improve farms’ competitiveness. Nonetheless it is noteworthy to mention that SFSC strategy, in each RDP analyzed, is used as an instrument for local production and quality production support and promotion. Emilia-Romagna - Short food chain aspects are included in RDP’s Axe 1: Improve farm competitiveness. The use of the short chain approach is part of the general strategy for competitiveness’ strengthening developed by projects promoted by of single farms. In particular, according to the key priorities of Axe 1, the SFSC becomes a tool to develop enterprise modernization and quality productions. Specific measures within Axe 1 could be activated by farmers to want promote SFSC initiatives: - Measure 121 aims at supporting and improving farms’ modernization: process and product innovations that allow to reduce production costs and to meet consumers’ request, including the development of new methodologies to commercialize products; - Measure 132 aims at supporting farmers’ participation to quality food systems: within this measure SFSC is also mentioned as tool to improve quality products competitiveness. Marche - The RDP gives great importance to SFSC strategy. SFSC support is identified as a priority objective within all Axes of the programming document and in particular according to Axe 1, that is, improving farms’ competitiveness. Wide space is devoted to farms’ aggregation initiatives within food chain patterns and the documents conceptualises different typologies of chain, namely micro chain, local chain and macro chain. These are mainly differentiated according to the number of enterprises or economic agents included along the chain. Following the categorization provided, SFSC is identifiable with the micro chain typology. The chain approach is considered as a strategic implementation instrument to be realised through both singular and collective projects. Abruzzo - This region’ RDP does not include specific measures for SFSC support and development, but the concept of short chain is mentioned among the informative materials used to prepare the plan and within the suggested strategy to develop rural areas. This might show that there is a starting interest on this topic, but not developed yet. SFSC is only mentioned as a strategic tool for diary local products commercialization, without any specific strategy devoted to its development. In synthesis, the three RDPs variably support SFSC initiatives, but none of them seems to focus on supporting a specific organisational pattern of cooperation among farmers. SFSC is seen as an instrument effective in itself, with no specific guidance or advice for farmers to support one or the other solution. It seems that there is no adequate knowledge and understanding of the different implications on farms’ competitiveness and innovation that single or relational SFSC initiatives can have. 5. Final remarks The paper aimed at approaching short food supply chain adoption by farmers, by focusing on the organizational related aspects. As outcome of the literature review SFSC is considered a key aspect for agribusiness and rural developments. Despite an increasing attention of academics towards SFSC analysis, a shared definition of the term is still missing. The main issues analyzed refer to the positive relationships stimulated between producer and consumer, improved awareness towards local and quality food and increased proportion of value added captured by the producer. The literature also links rural development to strengthened adoption of SFSC and its improved sustainability. The paper has focused on implementing a methodological approach to analyze competitiveness of organic horticultural farms, by combining farms organizational structure and marketing strategies. The survey conducted has based on data collected through face to face interviews to 65 farmers

781 located in Emilia Romagna, Marche and Abruzzo regions. According to the first data elaboration, the main results achieved show that still the majority of farms perform a low turnover. Furthermore they adopt direct selling to consumer mainly by acting without any supporting network. Those farms that have chosen a networking approach are able to achieve better economic performances, by organizing direct selling through a network of producers. In general farms opt for a combination of distribution channels. In-farm selling and markets are the favorite ones for business to consumer, while cooperative/consortium and retail are the most used for business to business strategy. Focusing on farms implementing direct selling without a networking organization, the main distribution channels adopted are in-farm selling, market, and box schemes. Looking at the performances of farms by analyzing their geographical location, it is notable that in Emilia Romagna region farms implement the highest mix of organizational structures with a strong tendency towards networked farms structures. The focus on rural development policies applied by the three regions surveyed provides a clear framework concerning the strategic policy’s approach towards SFSC. In accordance with the theoretical framework, the relevance of SFSC as a tool to improve rural development and farmers’ competitiveness is growing. Nonetheless there is still not a shared definition applied by policy makers on this issue, as well as a shared strategy to strengthen SFSC effectiveness. Furthermore there are missing guidelines to foster SFSC adoption by farmers and indicators to measure the performances of SFSC. The study based on a circumscribed number of enterprises, that limited the analysis to a draft picture of SFSC performances, and it is not yet able to support robust recommendations’ adoption. Nonetheless, the use of face to face interviews has allowed to enhance data elaboration and contribute to improve a reliable understanding of the present state of art concerning farms performances, related to SFSC implementation. The further step of the research activities shall at first focus on a case study analysis of farms adopting the four different organizational structures, with regard to their effective capability of improving farms’ competitiveness. The impact evaluation would allow providing suitable recommendation to develop technical policy tools to support farms improved competitiveness that adopt SFSC.

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