Quality production in the dairy sector in : the Ragusano

Filadelfio Basile1, Vera-Teresa Foti1

1 Università degli Studi di - Dipartimento di Scienze Economico Agrarie ed Estimative, Italia

[email protected]

Contribution appeared in Sylvander, B., Barjolle, D. and Arfini, F. (1999) (Eds.) “The Socio-Economics of Origin Labelled Products: Spatial, Institutional and Co-ordination Aspects”, proceedings of the 67th EAAE Seminar, pp. 351 - 358

October 28-30, 1999 Le Mans, France

Copyright 1997 by Basile and Foti. 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.

Quality production in the dairy sector in Sicily: the

Filadelfio BASILE and Vera-Teresa FOT/1 Universita degli Studi di Catania - Dipartimento di Scienze Economico Agrarie ed Estimative, Italia

INTRODUCTION Piacentino, Provo/a dei Nebrodi, etc.) are without any kind of acknowledgement or qualitative indication. They Dairy-cheese products have a remarkable position in would deserve an adequate legal qualitative appellation the varied scenario of Sicilian typical and quality produc­ because of their distinct peculiarity, authenticity and tions, and well represent the remote traditions linked to excellence. pastoral economics. Pastoral economics was widely present in Sicily and even today it characterises some Within the dairy-cheese sector, our research has addres­ backward areas, where the peculiar socio-environ­ sed one of the most valuable Sicilian products, which is mental conditions have favoured the continuation of strongly rooted in the historical memory of the area of traditional animal breeding, as characterised from the production : the Ragusano cheese. The production and type of farm organisation and management, and from seasoning area includes the territory of the province of the products obtained. Sicilian cheese represents a Ragusa and the municipalities of , good example of typical natural products. However, the and in the . inadequacy of the forms of concentration of supply and of aggregated supply's management, the fragmentation This has been established by the Ministerial decree of of the supply, the backwardness of the distribution the Italian Minister for Agriculture (MIRAAF) of May, 2m! system and the absence of adequate forms of protection 1995 (on the acknowledgement of protected denomi­ and promotion of the products, impede the development nation of cheese) and the following EC Regulation of the sector and limit its achievements, as well as n° 1263 of July, 1fil 1996 (on the acknowledgement of making more difficult the placing of the product outside the protected denomination of origin : PDO). the original areas of production. Most of these dairy­ cheese products are characterised by good quality and Territorial analyses through direct surveys have been authenticity, as well as by the amount of direct and carried out inside the whole area of production in order to indirect income they generate (particularly when the better characterise the area of production of the Ragusano. quantity supplied is large). In light of this, it is desirable to adopt adequate initiatives in order to obtain proper Once the area has been located and the principal acknowledgements. characteristics of the sector specialised in the production of Ragusano have been examined, it has Among Sicilian we include only two been possible to make direct surveys on the structural kinds ( Siciliano and Ragusano) that have the and the productive aspects of animal breeding and of protected denomination of origin (PDO). Other Sicilian farms specialised in milk processing. Inquiries to and products (Caciocaval/o Pa/ermitano, Canestrati vaccini, assistance from local public and private bodies, as well F. BASILE, V. T. FOTI as private farms (individual and associated) have to the location and boundaries of the area of production. contributed to clarify the main aspects of the sector. Direct surveys have been carried out to investigate the dimension of the farms and of the cattle stock (types of After presenting the analysis of the results of the breeds by municipality) ; the results of the analyses territorial surveys, the paper identifies the principal have been integrated and strengthened with the data aspects of the market (technical-commercial characte­ from official statistics and of other bodies. All this ristics, prices, distributive channels, etc.) and introduces information has allowed us to determine the main some proposals for the promotion of the product. structural characteristics of dairy farms, the total milk production and the corresponding quantities that have CHARACTERISTICS OF THE AREA OF been destined to transformation in cheese inside and PRODUCTION outside the farms, and to those destined for transfor­ mation in Ragusano in the individual farms and in the In the enclosed cartography (Figure 1) we find the data cheese factories (Table 1 and Figures 2 and 3). and the elements that have been observed with respect

Figure 1 : Localisation of the area of production of the Ragusano

LEGEND A

__Commune's limits

--Province's limits

--Area's limits

352 QUALITY PRODUCTION IN THE DAIRY SECTOR IN S!CIL Y: THE RAGUSANO CHEESE

Table 1 : Principal structural characteristics of dairy farms (1998) *

Farms with dairy farming (n.) 1,500 Milk cows (n.) 31,500 Average milk cows per farm (n.) 21 Average milk production (t/unit) 4,5 Total milk production (t) 142,000 Transformed milk (t) 70,000 - In farms (t) 18,000 - Outside farms (t) 52,000

* Our calculations on data acquired by direct research

Figure 2: Total and transformed milk by destination (1998) *

Milk transformed in "Ragusano" Not 16% Other uses o transformed transformed milk 51% milk 84% Total milk: 142,000 t

* Our calculations on data acquired by direct research

From the results of the surveys we can remark : increased due to the growth in absolute terms of the • The substantial prevalence of small and medium­ stock of dairy-cattle and to the reduction of the total sized dairy farms with a number of heads up to 25 ; in number of fodder-crops and livestock farms speciali­ fact, the average size of cattle stocks has recently sed in the dairy-cheese sector ;

Figure 3 : Transformation's place of milk transformed in "Ragusano" (1998) *

In farms Milk transformed 77% in "Ragusano" 11,000

* Our calculations on data acquired by direct research

353 F. BASILE, V. T. FOTI

• The predominance of the semi-intensive system of As we can see from the results of the analyses, the rearing (also referred to intermediate type) which development of the sector, is quite slow because of the accounts for 75%-80% of the total, and the moderate accumulation of structural elements of delay. Among role of intensive systems of rearing (15%-20%), and these are: of wild or extensive cattle rearing (5%) ; • The great number of production and transformation • The considerable importance of specialised farms units of the cheese; (70%-75%) in the production of milk and other dairy • The process of ageing of the operators of the sector ; products (various types of cheese, cottage cheese, • A scarcely efficient bureaucracy. etc.), as opposed to livestock-mixed farms (25-30%) ;

• The strong importance of "coltivatrice" farms (70%- On the other hand, the lack of adequate technical­ 75%) on own or leased land ; in this context, it is agronomic assistance prevents the improvement of the useful to remark that leasing of small land plots or milk yields, and the improvement of feeding techniques, whole large farms is quite widespread ; the fertility of the soil, the introduction of technological innovations, the professional growth of the operators, etc . • The number of milk cows equal to 31,500 ; among these we found the clear predominance of the Frisona CHARACTERISTICS OF THE MARKETS breed grown in purity (44.5%) and of cows (usually named Meticc1) that have been obtained from the As far as product's sales are concerned we identified cross between Frisona, Modicana and other races both "short" and "long" distribution channels. The short (31.8%) ; the presence of Italian Bruna (a typical distribution channels relate to direct sales at the farm, or breed for milk production) is in strong expansion via a co-operative, to retailers, wholesalers and (19%). On the other hand, the presence of Modicana consumers. This can also take the form of sales points (a pre-eminently milk breed, which was used to and stalls connected to the firm, for instance within the produce most of the milk used in the production of the framework of farm holiday activities. Ragusano in the past) is evidently decreasing (2.2%) ; The long distribution channels relate to the sale of • The total yearly production of milk equal to 142,000 t ; product to the wholesaler possibly via the service of an • An average yearly milk production of 4.5 t per head intermediary or an operator paid by commission. In the ranging from 2 to 10 t/head ; latter case, the product for sale is transferred to the warehouse of the agent hired to sell the product. • Total milk quantities destined to transformation equal to 70,000 t (25% transformed within the farms and 75% in The economic agents which intervene in the sales and the cheese factories). Specific surveys have allowed an distribution circuit are shown in figure 4. evaluation of milk transformed in Ragusano : about 11,000 t, of which 8,500 transformed inside farms and The information we collected on the distribution process 2,500 t in cheese-factories. Assuming an average of of the product allows an analysis of the quantities of 10% for the yields from milk, we obtain the total Ragusano marketed via the economic agents shown in production of the Ragusano (1,100 t). figure 4.

354 QUALITY PRODUCTION IN THE DAIRY SECTOR IN SICILY: THE RAGUSANO CHEESE

Figure 4 : Channels of sale

Producer

Commission Agent

Retailer

At present, about 30-35% of the product is sold with the • Fresh (up to 15 days); service of commission-paid agents ; about 15-20% is • Seasoned (up to 3 month} ; sold directly from the producer to the retailer, the large • Old (more than 3 months}. scale retailers and/or the final consumer. Finally, about 50-60% is sold directly from producer to wholesaler. Obviously, the longer the conservation period, the higher the market price of the product. Figure 4 highlights that a large part of the production is Price trends, in constant 1998 Italian lira (and in Euro) dealt with by several operators. Clearly, this implies a are presented in figure 5 for the period 1980-1998. significant rise of marketing costs, which contribute significantly to the rise of the price to the consumers. Following the initial positive trend during the early 1980s, prices have followed an oscillating pattern with a Several reasons push the producer towards using the slight tendency to decline. The negative trend has "long" and indirect distribution channels. These are the become particularly evident during the last four years. low degree of concentration of agricultural supply, the This overall pattern applies to the three product low tendency to innovate, the inadequate policies to categories examined (fresh, seasoned and old}. The improve the sector, the small dimension of the individual price change from year to year is in part related to the farms, which are also poorly linked to the lower stages quality of the cheese in each year. In turn, this is mainly in the production and marketing chain, and the lack of determined by the quality of the fodder used in the adequate facilities for product storage. All of these production of milk. The quality of the fodder changes characteristics force the producer to use "long" and according to the climatic characteristics of each year, indirect distribution channels, with the resulting subs­ which determine its vegetative growth. The prices tantial increase in costs and the price to the consumer. changes are also related to the quantity of cheese The use of the more direct distribution channels would produced in the various year and to the stocks of instead allow significant reductions in distribution costs, cheese unsold during the previous year, since the and a reduction of the price to the consumer. existence of large stocks will determine a decrease in the price level. Finally, the price variations are also Regarding the analysis of wholesale product prices, it related to the changes in the price of certain other should be pointed out that the cheese is classified in such as Pecarina, and Parmigiana "fresh", "seasoned" and "old" depending on the period of Reggiano, which especially effect the price of higher conservation. quality Ragusano product.

355 F. BASILE, V. T. FOTI

Figure 5: Evolution of average annual wholesaler prices (1980-1998) *

10 0:::= 9 "'.!3 8 ""t:"' .."' 7 =0 ".... 6 :="' = 5 :;"' ;::: 4 .....= ~ 3 =0 00" ~ 2 ,....~ 1

0

*Our elaboration on data coming from the Chamber of Commerce of Ragusa

CONCLUSION The results of the surveys on the Ragusano cheese have highlighted both elements of strength and In the agri-food economy of Ragusa, the livestock sector weakness, as well as some opportunities for develop­ holds an important role. This is because of ad hoc pecu­ ment and factors of risk. The elements of strength liarities that characterise some local productions (for include the highly typical and traditional character of the example the Ragusano cheese, the Provo/e, the beef products, which derives mainly from the feeding system and pig breeds, etc.), and because of the role that this employed, the specific characteristics of the factors activity covers in less favourable areas, particularly in employed, the traditional working techniques and the those areas in which there are poor financial resources role played by the Consorzio per la ricerca sulfa filiera and limited alternatives to the prevalent productions. !attiero casearia and the Consorzio di tutela. The role of the first of these two institutions is to facilitate the In the backward areas it is necessary to define a policy improvement of the quality of the product. The role of of "Integrated Rural Development", also taking into the latter is mainly the promotion of the Ragusano. consideration the environmental protection and the socio-economic equilibria. The main factors of weakness seem to be : • The high structural fragmentation of the sector, and The brief conclusions of this study represent a useful particularly for what concerns the production, source to private and public operators involved in the transformation, preservation and commercialisation of development of policies to support the sector. the cheese ; the considerable number of small and medium-sized enterprises, and their small technical-

356 QUALITY PRODUCTION IN THE DAIRY SECTOR IN SICILY: THE RAGUSANO CHEESE

economic dimensions, do not allow the exploitation of the prevailing feeding system (which has to be from increasing returns to scale ; open pasture land}. This also depends on the develop­ • The difficulty in the enforcement of the laws on the ment of the demand for quality products and from the hygienic procedures pertaining to the transformation protection of these products at the European level. of milk ; in this respect, however, in line with the existing E.G. directives, the Sicilian Region has The risk factors originate from the severe health introduced a derogation which should facilitate the legislation, from the reduction of retail outlets where processes of adaptation to the laws in force ; most of the Ragusano is sold, and the high importance of price in the factors regulating consumer's demand. • The low contractual power of producers ; • The high variation of the quality of the cheese ; The development of valid policies to support the sector • In the poor links between the various stages of the should aim to expand the potential markets for the pro­ production and marketing chains ; ducts. In particular, it is desirable to introduce policies in • The limited introduction of technological innovations ; order to facilitate : • The inadequacy both of the forms of concentration of • The development of collective bodies to exploit supply and of the aggregate management of increasing returns to scale and reducing the impact of quantities supplied ; current structural constraints ; • The competition by other substitute typical products • The strengthening of the vertical integration in the such as Pecorino ; production and marketing chains ; • The low consumer knowledge of these products, • The standardisation of quality, with particular care for which is due both to the modest amount of advertise­ management and technological factors ; ment and the inadequate distribution system. • Quality certification ;

The opportunities for development originate from the • The technological innovation, in order to improve the possibility of producing a "biological" cheese, depending efficiency of the ageing process ; on the type of rearing employed (semi-intensive) and The increase in market visibility.

NOTE

(1) The work is the result of full collaboration and therefore both authors accept full responsibility for it. The actual writing of sections 1 and 3 is attributable to Filadelfio Basile, while sections 2 and 4 to Vera Teresa Foti.

357 F. BASILE, V. T. FOTI

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