Market Analysis Report
“Stimulating innovation in the food supply-chain through
smart use of ICT: assisting SMEs participate in digital
supply chains in the Single Market”
Report of WP2 V2.0
August 2012
Table of contents
Glossary………8
Executive summary ... 10
I. Introduction ... 13
II. Methodology ... 15
III. Market presentation ... 20
III.1 Fresh Fruits and Vegetables ... 22
III.2 Cereals ... 26
III.3 Dairy products ... 29
III.4 Main stakes of the agricultural sector in Europe ... 32
IV. Current Situation ... 34
IV.1 Use of ICT solutions underpinning B2B transactions in the food supply chain ... 34
IV.1.1 Adoption of ICT solutions: survey and interviews results ... 34
IV.1.2 Specific implementation of B2B transaction needs in the dairy sector ... 44
IV.2 Existing ICT standards, specifications and B2B solutions related to food supply chains at European and international level... 47
IV.2.1 ICT Standards work... 47
IV.2.2 Specification work and B2B solutions ... 53
V. Analysis ... 64
V.1 Overview of expectations related to ICT: survey and interview analysis ... 64
V.1.1 Expectations in the ICT development ... 64
V.1.2 Projects and problems encountered in relation with ICT ... 67
V.1.3 General opinion on ICT development promoters ... 70
V.1.4 Main challenges to resolve according to the companies surveyed ... 71
V.1.5 Challenges, drivers and potential solutions according to the workshop participants………72
V.2 Major challenges among the existing ICT solutions and systems ... 75
V.2.1 Interoperability Challenges ... 75
V.2.2 E-invoicing ... 76
V.2.3 Certification ... 77
V.2.4 Environmental impact ... 77
V.2.5 SMEs integration ... 78
V.2.6 Relevant reports or studies ... 78
VI.1 Foresight business scenarios ... 82
VI.1.1 agriXchange ... 84
VI.1.2 Consumer driven supply chain networks ... 86
VI.1.3 SmartAgriFood... 87
VI.1.4 Opportunities for eBusiness and eCommerce of agro-food products ... 88
VI.1.5 Agriculture information systems ... 88
VI.1.6 Precision agriculture, integrated pest management ... 89
VI.1.7 Transparent_Food project... 90
VI.1.8 ENORASIS ... 90
VI.1.9 Internet of Things (IoT) ... 91
VI.2 Impact of ICTs in the structure and market dynamics of the sector ... 93
VI.2.1 Fluidity of the value chain ... 93
VI.2.2 Immediate benefits ... 93
VI.2.3 Mid-term benefits ... 94
VI.2.4 Strategic benefits ... 94
VI.3 Perspectives from the market ... 94
VII. Conclusions ... 96
VIII. References ... 100
IX. Annexes ... 103
IX.1 Characterization of the survey sample ... 103
IX.2 More detailed data from the survey analysis ... 105
IX.3 Questionnaire ... 110
IX.4 List of experts/stakeholders surveyed ... 114
X. De Heus Sp. z o.o. ... 114
XI. ANP (Associação Nacional dos Produtores de Pera Rocha) ... 115
XII. Associação dos Produtores de Maça de Alcobaça... 115
XII.1 Summaries of the interviews per country ... 117
XII.1.1 France ... 117
XII.1.2 Germany ... 117
XII.1.3 Greece ... 119
XII.1.4 The Netherlands ... 119
XII.1.5 Poland ... 122
XII.1.6 Portugal ... 123
XII.1.7 Spain 125 XII.2 Characterisation of the supply chains ... 127
List of figures
Figure 1: Information gathering ... 15
Figure 2: Power repartition in the European agro food chain (Grievink, 2002) ... 21
Figure 3: Force map in the agro food supply chain (by sector) ... 21
Figure 5: Number of wholesalers and retailers in the fruits and vegetables value chain ... 25
Figure 6: SMEs in fruits and vegetables manufacturing industries ... 26
Figure 7: Cereals general value chain ... 27
Figure 8: Presence of SMEs in the Grain Manufacturing Industry in the study countries ... 29
Figure 9: Dairy products supply chain ... 30
Figure 10: Number of dairies by volume collected in the study countries ... 31
Figure 11: Presence of SMEs in dairy industries of the study countries ... 31
Figure 12: Issues and factors with impact on the supply chains ... 33
Figure 13: Adoption of ICT solutions in B2B transactions by companies surveyed in different sectors, results weighted. ... 35
Figure 14: Adoption of ICT in B2B transactions by companies surveyed in different countries (except Belgium and Poland, less than 10 answers) ... 36
Figure 15: Types of electronic messages and technologies used in B2B transactions ... 38
Figure 16: Ongoing projects in fresh fruits and vegetables companies surveyed from the Netherlands ... 40
Figure 17: Types of messages electronically exchanged in the French cereals industry ... 42
Figure 18: Adoption of ICT among the French dairy companies surveyed ... 43
Figure 19: Example of GS1-128 label (example from GS1 US Guideline) ... 45
Figure 20: The UN/CEFACT eBusiness Standards Stack (VOGEL, SCHMIDT, LEMM, & OSTERLE, 2008) ... 49
Figure 21: Illustration of VANs ... 53
Figure 22: EDI and Web EDI exchanges ... 55
Figure 23: High level interview overview of the ebXML specification set functionality ... 56
Figure 24: Market places ... 57
Figure 25: AS functioning ... 58
Figure 26: Technical vision of B2B communication... 58
Figure 27: Machine communication via Weihenstephan Standards ... 60
Figure 28: Potential future collaborative process (iTradeNetwork, 2012) ... 62
Figure 29: Interest of companies in having a stronger integration ... 64
Figure 30: Messages considered as the most important for the automatic exchange of data .. 65
Figure 31: Opinion on messages to be exchanged electronically depending on the use or not of ICT ... 66
Figure 32: Identified benefits of the automatic exchange of data ... 67
Figure 33: Problems encountered by companies for their projects implementation ... 69
Figure 34: EPIPHYT functioning ... 81
Figure 35: Example of a technical aspect ... 83
Figure 36: Geofertilizer use case modelled in the axTool (extracted from “The aX Tool for information exchange in the agri-food sector) ... 84
Figure 37: Generic value chain ... 93
Figure 39: Building blocks for the eFoodChain framework ... 99
Figure 40: Poster with the challenges prioritized ... 131
Figure 41: Poster with the drivers prioritized ... 132
Figure 42: Poster with the solutions classified (green - importance/impact; red – complexity of implementation) ... 133
Figure 43: Priorities in the Fresh Fruits and Vegetables supply chain ... 134
Figure 44: Priorities in the Dairy supply chain ... 134
List of tables
Table 1: Production of fresh fruits and vegetables in the studied countries, compared to the
production in Europe ... 16
Table 2: Production of cereals in the studied countries, compared to the production in Europe ... 17
Table 3: Collection of milk in the studied countries, compared to the production in Europe ... 17
Table 4: Companies invited to fill in the survey per country ... 18
Table 5: Operators, employees and turnover of the European agro food chain, 2010 ... 20
Table 6 : Top 15 Food Retailers in Europe, 2010 ... 20
Table 7 : Production, turnover and import-export values for the fresh fruits and vegetables sector in the studied countries ... 24
Table 8: Rate of organisation of Producers’ organisations, Association of Producers Organisations and Producer’s Groups... 24
Table 9 : Production, turnover and import-export values for the cereals sector in the study countries ... 27
Table 10: Number of companies and employees in the cereal manufacturing industry ... 28
Table 11: Production, turnover and export value of the dairy industry in the study countries . 30 Table 12: Percentage of electronic messages automatically processed ... 34
Table 13: Adoption of ICT in B2B transactions in the fresh fruits and vegetables sector ... 39
Table 14: Respondents to the survey in the Dutch Fresh fruits and vegetables sector ... 39
Table 15: Adoption of ICT in B2B transactions in the cereal sector ... 40
Table 16: Respondents to the survey in the French cereal sector ... 41
Table 17: Adoption of ICT in B2B transactions in the dairy sector ... 43
Table 18: Respondents to the survey in the French dairy sector ... 43
Table 19: Important data identifier for the dairy chain ... 45
Table 20: Core issues and solutions for the dairy chain ... 45
Table 21: Interest of different sized-companies in a stronger integration ... 65
Table 22: Number of companies with projects depending on the sector ... 67
Table 23: Types of projects ... 68
Table 24: Three main problems encountered with projects, for each sector ... 69
Table 25: Promoter to the digital supply chain growth ... 71
Glossary
B2B: Business-to-Business. A B2B transaction is the term describing any transaction made electronically between two companies by electronic message exchanges and/or web transactions.
B2C: Business-to-Consumer. A B2C transaction is the term describing any transaction made electronically between a company and individuals by electronic message exchanges and/or web transactions.
B2G: Business-to-Government. A B2G transaction is the term describing any transaction made electronically between a company and the government or the public administration by electronic message exchanges and/or web transactions.
ebXML: Electronic Business using eXtensible Markup Language, modular suite of specifications enabling enterprises of any size and in any geographical location to conduct business over the Internet.
EDI: Electronic Data Interchange, general term for any electronic exchange of structured data that can be processed automatically by a computer, i.e. enables machine to machine communication.
EDIFACT: Electronic Data Interchange For Administration Commerce and Transport, specified by the United Nations, is one of the most commonly used formats for EDI messages.
Electronic Business: Application of information and communication technologies (ICT) to transform business processes, improve productivity and increase efficiencies. It enables an organisation to easily communicate and transact with its business associates; automate and integrate information exchange and conduct business in a secure manner.
Electronic Business Standards: Technical specifications, principles, and models accepted and developed nationally or internationally that define the parameters within which parties conduct electronic business.
Electronic Commerce: Subset of electronic business dealing with conducting online commerce (i.e., buying, selling, transporting and paying).
Electronic Government: Subset of electronic business that includes inherently regulatory processes (e.g., customs).
ERP: Enterprise Resource Planning, integrated software solution that is used for managing the business information in a company. It usually includes several functional modules such as accounting, materials and production planning, inventory management, order processing, etc. G2G: Government-to-Government. A G2G transaction is the term describing any transaction made electronically between two governments or governmental agencies by electronic message exchanges and/or web transactions.
ICT: Information and Communication Technology, term referring to the information technology (IT) and communication technology (CT) and the merger between computer networks and telephone networks.
Interoperability: The ability of two or more systems or components to exchange information and to use the information that has been exchanged (IEEE – Institute of Electrical and Electronics Engineers).
Memorandum of Understanding on Electronic Business: Full benefits for consumers, industry and government demand a coherent set of Information and Communication Technology standards which are open, interoperable and internationally accepted. To this aim, a
Memorandum of Understanding (MoU) on electronic business in support of e-commerce has been signed by the four main organisations which develop international standards in this area: ISO, IEC, ITU, UN/ECE, with full participation from international user groups. More information may be obtained from the MoU site at: http://www.itu.int/itu-t/e-business/mou
MRP: Material Requirements Planning, software-based system to manage material requirements for production processes.
Trade Facilitation: systematic rationalization of formalities, processes, procedures and documentation for the international trade.
UN/CEFACT (United Nations Centre for Trade Facilitation and Electronic Business): subsidiary intergovernmental body in the United Nations, mandated to develop a program of work of global relevance to achieve improved worldwide coordination and cooperation in the areas of trade facilitation recommendations and electronic business standards.
WebEDI: system whereby an established EDI format is converted into a format that can be viewed and understood by a human via a web page.
Web service: software system designed to support interoperable machine-to-machine interaction over a network (World Wide Web Consortium – W3C definition).
XML: eXtensible Mark-Up Language, syntax for describing structured data vocabularies and basis for contemporary EDI implementation.
Abbreviations
CEN: European Committee for Standardization ebXML: Electronic business XML
EPC: Electronic Product Code GLN: Global Location Number
GTIN: Global Trade Identification Number
ISO: International Organisation for Standardization SSCC: Serial Shipping Container Code
Executive summary
The European agro-food industry is a major player in the European economy, being essential for economic, social and environmental welfare as well as for the health of European citizens. An optimised food supply chain is crucial for consumers and for ensuring a sustainable and equal distribution of value added along the chain, thus contributing towards raising its overall competitiveness.
The overall aim of the eFoodChain project is to improve the competitiveness and efficiency of the agro food industry in Europe by stimulating an innovative and seamless use of ICT along its value chain. SMEs, that represent more than 99% of companies and generate approximately half of the industry turnover, are the focus of this action as the objective is to facilitate their participation in the global digital food value network and enable them to become international business partners.
This document is the first release of the Work package (WP) 2 (Market analysis) report of the eFoodChain project. The goal of WP2 is to conduct an in-depth market analysis in terms of the current use of ICT (Information and Communication Technologies) and eBusiness solutions currently used in agro-food supply chain management. This analysis is focused on the current situation regarding the adoption of e-Business solutions in European SMEs (Small and Medium Enterprises) of three agro food sectors: fresh fruit and vegetables, dairy products and cereals. A preliminary release of this report was presented and discussed in an expert and stakeholders workshop that took take place in Brussels on the 9th of July 2012. The findings and conclusions from that workshop are reflected in this release of the report and were used to validate the main results from WP2 that will now be used as input for the other WPs of the project, and particularly to WP3 (Framework development).
In order to present an in-depth perspective of the adoption of eBusiness solutions by SMEs in the agro food sector, several analyses have been conducted:
Particularity of each supply-chain, globally and at national level through literature review and individual interviews with relevant stakeholders.
Relevant projects and initiatives at European and National level, through literature review, web search and knowledge of the partners.
Adoption and use of eBusiness solutions by SMEs along the whole supply-chain through an online survey and interviews.
Promoters and obstacles to the development of eBusiness solutions in the agro food sector through individual interviews.
The analysis conducted covers different stakeholders in each of the supply chains, from producer to retailer, in 10 European countries: Belgium, France, Germany, Greece, Italy, the Netherlands, Poland, Portugal, Spain and the United Kingdom. This analysis is based upon different types of sources:
Market characterisation through analysis of statistical data for the three sectors, at national and European level.
Literature review and desk research on projects and initiatives, and other existing documentation.
One online survey (translated into nine languages).
A series of interviews carried out with agro food companies and ICT solutions providers.
Collected information was complemented with the expertise of the partners of the eFoodChain consortium.
The analysis involved the dissemination of the project and contacts with more than 4000 organisations, more than 350 responses to the on-line survey, individual interviews with 44 agro-food organisations and 26 ICT solution providers. The organisations involved varied in size, core business structure and needs for ICT and B2B transactions.
The analysis of all collected information and reaching of major conclusions was difficult due to a low response rate and to a wide range of organisations involved in the survey. Given the difficulties to get equal results from each sector in every country involved in the study, the analysis was in a second stage focused on specific cases that were selected due to their representativeness: fresh fruits and vegetables in the Netherlands, cereals and dairy products in France.
The first finding from the study was related to the characteristics of the three sectors targeted by the project. It is clear that part of the agro-food industry in these three sectors – Fresh Fruits and Vegetables, Dairy products and Cereals – is very heterogeneous concerning their supply chains, companies and business practices, and forces along the supply chain. This heterogeneity, although enriching the potential impact of the eFoodChain project, creates additional challenges concerning the development a unique framework for the three sectors. The results highlight a real heterogeneity of the ICT adoption and use amongst sectors and along the supply chain, with significant differences between upstream and downstream. Also, the use and integration of B2B standards by ERP providers is limited.
The Cereals and the Fresh Fruits and Vegetables industries seem to be well advanced, but the dairy industry appears less involved in the implementation of ICT solutions for B2B transactions. Moreover, a huge gap has been noted along the value chain. In general, the use of electronic data exchange is very low at the producer level (and almost inexistent in some countries such as Portugal, Spain or Greece) while there is almost a full use concerning the retail level. But even at the retail level this is mostly limited to the exchange of financial information, whilst the exchange of logistics messages is still very limited (but increasing for example in the case of dispatch advice and SSCC).
Food safety and certification processes, with several standards being used demanding for different but overlapping sets of information, are mostly done manually with a few exceptions of some web platforms. Traceability in times of crisis (food safety & security) as well as the integration of “sustainability data” (use of resources) along the food chain are important drivers for further data integration.
The main challenges and trends identified are related with further developments in EDI support for logistics, safety and certification messages and processes. Although standards and technologies for the data exchange are currently available, only few actors really use them and the issue of efficiency of ICT solutions for all actors of the value chain is crucial.
Given the existence of different standards, problems related to harmonization and interoperability remain and are one of the main barriers to the integration of agro-food SMEs in the digital supply chains. Simpler and more affordable solutions are needed in order to give SMEs full access to digital supply chains.
From this study it was possible to conclude that the priorities for intervention are mainly in the upstream area, although other aspects also include the wholesalers and the direct connection between producers and the market. Opportunities to improve the supply chain, through more and better integration of SMEs in digital transactions, were identified as being mostly in the areas of food safety and quality (B2B, B2C and B2G), product and production certification (B2B and B2G), exchange of laboratory tests and quality results (B2B and B2G), and sustainable production and products (B2B and B2C).
There is currently a growing awareness of the benefits associated with more and better integration in the supply chain, including SMEs, and the eFoodChain project can capitalize and take advantage of this trend. The needs and requirements for the eFoodChain framework will be derived from the results of the market research presented in this report. At the same time, the interviews conducted with several stakeholders across Europe have enabled to identify possible pilots, some of them involving cross border messages exchange, that will be further explored in the coming months.
I.
Introduction
The European agro-food industry plays a substantial role in the European economy. It is essential for economic, social and environmental welfare as well as for the health of European citizens. Moreover, it is a significant contributor to employment and growth. A special feature concerning this industry is the importance of SMEs, as they represent more than 99% of companies and generate almost half of the industry turnover. SMEs are really major players of the agro food industry in Europe that need to be taken into consideration.
The efficient functioning of the food supply chain is particularly important amidst the current economic and financial crisis. In the longer run, a better functioning food supply chain is crucial for consumers and for ensuring a sustainable and equal distribution of value added along the chain, thus contributing towards raising its overall competitiveness.
Despite significant developments and increased usage of ICT (Information and Communication Technologies), there is much inefficiency today in the value chain management (or supply chain management) of almost every sector of the economy. Many companies are using incompatible eBusiness processes, ICT systems, infrastructures and data exchange models. The validity and acceptance of data models underpinning business transactions (Catalogues, e-Ordering, e-Invoicing, etc.) still follow national rules, making cross-border transactions difficult. Moreover, security, authenticity and integrity considerations lead to an operational risk and thus to a lack of trust. This results in a fragmented technological outlook, with a multiplicity of incompatible business standards, data models and ICT solutions and with very low interoperability levels, especially across borders. This gap is still filled in by manual, paper-based processes, especially in small providers in the supply chains, resulting in a highly inefficient, time consuming and costly business organisation.
The overall aim of this project is to improve the competitiveness and efficiency of the food industry in Europe by stimulating an innovative and seamless use of ICT along its value chain. In particular, SMEs are at the centre of interest of this action, as the objective is to facilitate the participation of SMEs in global digital food value network and enable them to become international business partners.
More specifically, the actions’ objective is to complete a common framework for digital value networks, i.e. framework for interoperability among different ICT solutions and systems currently in place in the food industry, building on existing ICT systems and standardization achievements and joining them in a seamless architecture at European and/or international level.
Its ultimate objective is to create an innovative, seamless eBusiness environment that will stimulate and enable the uptake of ICT and eBusiness technologies, notably by SMEs, in this highly SME-intensive sector.
The project’s main operational objectives are to:
provide an in-depth market analysis in terms of the current use of ICT and eBusiness solutions underpinning the agro-food supply chain management;
develop a framework for a digital food supply chain, which will set the principles and rules for interoperability among business processes and data exchange models in
order to allow for seamless, paperless information and data flows underpinning B2B transactions along the food supply chain;
demonstrate the feasibility and validate the framework for a digital food supply chain, through the set-up, monitoring and evaluation of sectorial and cross-border pilot-prototypes;
establish a governance model for the maintenance of the framework and its follow-up; propose policy recommendations for mass market adoption after the end of this
action;
organise a European conference to present and validate the framework for digital food supply chain and the results of the pilot-prototypes;
promote awareness raising and dissemination of the framework and the results achieved.
Through this market analysis, the consortium aims to:
provide an estimation of the current situation and the trends in the adoption of ICT solutions underpinning B2B transactions in the food supply chain;
develop foresight business scenarios on how the business landscape in this sector will look like in the future and how emerging ICT technologies are going to empower business transactions;
assess the impact of ICTs in the structure and market dynamics of the sector, notably the shaping of the global food supply chains and their potential repercussions for the enterprises in the sector.
The scope of the study is the whole supply chain, from producer to retailer, of three sectors: fresh fruits and vegetables, dairy products and cereals. Ten European countries are studied: Belgium, France, Germany, Greece, Italy, the Netherlands, Poland, Portugal, Spain and the United Kingdom.
II.
Methodology
The analysis is based upon results gathered in three ways:
• literature review and desk research on existing projects and initiatives relevant to the eFoodChain project;
• two series of interviews with specific stakeholders:
o agro food SMEs using or not eBusiness;
o ICT solutions providers.
• one survey which has been disseminated (Figure 1) among agro-food communities in the chosen countries, with a great focus on distribution through partners’ networks (by email and phone call follow-up phases) and through various national industry associations and targeted stakeholders with different positions in the value chains:
o producer;
o processor;
o logistics service provider;
o retailer;
o supplier of services / technology / equipment / materials.
Figure 1: Information gathering
The construction of the survey and its implementation were made according to the following workflow:
18th of January: 1st DRAFT QUESTIONNAIRE
prepared by AGRO EDI Europe and INOVA+ All partners commented and provided
feedback
AREFLH / INOVA+
incorporated the improvements
25th of January: validation of the questionnaire => Start PILOT IMPLEMENTATION Each partner "tested" the questionnaire and
completed it with 2 companies
Revision and improvement of the questionnaire /
+ translations by each partner
5th of March - FINAL QUESTIONNAIRE(included in annex IX.3) available online:
Dutch version https://www.surveymonkey.com/s/efoodchain_nl English version https://www.surveymonkey.com/s/efoodchain_en French version https://www.surveymonkey.com/s/efoodchain_fr German version https://www.surveymonkey.com/s/efoodchain_it Italian version https://www.surveymonkey.com/s/efoodchain_de Polish version https://www.surveymonkey.com/s/efoodchain_pl Portuguese version https://www.surveymonkey.com/s/efoodchain_pt Spanish version https://www.surveymonkey.com/s/efoodchain_sp Greek version Not available online, (dissemination by email, phone calls and physical meeting) INESC Porto incorporated the questionnaire
into the online survey tool
All Partners started an intensive campaign to obtain as many responses as possible
As demonstrated above, the market analysis conducted was focused primarily on the following ten European countries: Belgium, France, Germany, Greece, Italy, The Netherlands, Poland, Portugal, Spain, and the United Kingdom. In the scope of the project it was not feasible to scrutinise in detail the situation in all Member States, neither would it be justified as the share of some of them in the European agro-food production and processing is very small.
In relation to the three sectors targeted by the project- fruits & vegetables, cereals and dairy industry - the ten countries selected for the analysis represent a significant share, as it is demonstrated by the statistical data in the tables below (source: Eurostat).
Table 1: Production of fresh fruits and vegetables in the studied countries, compared to the production in Europe 2010 Fresh fruits and
vegetables (1000t)
2010 Fresh fruits and vegetables (1000t) EU-27 47 203 NL 2 936 BE 947 PL 3 946 DE 1 849 PT 1 925 EL 3 358 UK 1 457 ES 9 980 Other 4 032 FR 3 692 Selected countries 91% IT 13 081 other 9%
All the studied countries belong to the top 15 European fresh fruits and vegetables producers. Table 2: Production of cereals in the studied countries, compared to the production in Europe
2010 Cereals (1000t) 2010 Cereals (1000t) EU-27 284 720 NL 1 887 BE 2 933 PL 27 299 DE 44 293 PT 1 092 EL 4 098 UK 23 387 ES 19 642 Other 73 889 FR 65 240 Selected countries 74% IT 20 960 other 26%
Eight out of the ten studied countries are among the top 15 European cereals producers. Table 3: Collection of milk in the studied countries, compared to the production in Europe
2010 Milk collection (1000t) 2010 Milk collection (1000t) EU-27 136 320 NL 11 656 BE 2 963 PL 9 142 DE 27 461 PT 1 901 EL 1 369 UK 13 237 ES 6 458 Other 27 348 FR 23 647 Selected countries 80% IT 11 138 other 20%
Eight out of the ten studied countries belong to the top 15 European milk producers, and the studied sample includes the 6 biggest producers.
Although non-exhaustive, the overall study of the 10 countries offers a representative understanding of the current situation in terms of ICT adoption in the European agro-food industry. Nevertheless, the project does not limit its analysis to this selected sample, and although focusing on these 10 Member States, it also takes into consideration data from other regions and it will conduct further exploration of the situation in additional countries, namely through stakeholder consultation and expert interviews. Such supplementary analysis might at later stages offer valuable additional input for the development of the eFoodChain framework. In order to collect responses to the survey, lots of companies have been solicited, and informed about the eFoodChain project.
Depending on the countries, communication has been made using the Internet channel (information on partners’ websites and newsletters such as DPA, AGROEDI or AREFLH, newsletters of associations, project website, social media such as LindkedIn), e-mailing (and dissemination through mailing lists of sectorial representatives associations), and by more classic ways as phone calls and physical meetings (Table 4).
Moreover, many cooperatives or producers’ organisations have filled in the survey, representing their producers’ associates or members: the results have to be weighted considering this bias, as one cooperative answered for hundreds or thousands of producers. In total, thousands of European agro-food companies have been approached and informed about the eFoodChain project and were requested to complete its Market Analysis survey. Table 4: Companies invited to fill in the survey per country
COUNTRY N. of companies approached and invited to complete the survey N. of respondent s to the survey
Types of companies Type of contact
France 400 81 SMEs, agro-food
associations, producers’ organisations E-mail, phone calls, physical meeting
Germany > 2000 12 SMEs, associations,
Producers’ organisations
E-mail, Newsletter, phone calls
Greece 111 31 SMEs E-mail, phone
calls
Italy 600 51 SMEs, producers’
organisations, institutes E-mail, phone calls, physical meetings Netherlands and Belgium
500 78 and 3 SMEs, Producers‘
organisations
E-mails
Poland 70 9 SMEs, agro-food
associations, chambers
Portugal 270 35 SMEs, sectorial
organisations, agro-food associations, chambers and institutes E-mail, phone calls, physical meeting
Spain 150 16 SMEs, producers’
organisations, institutes
E-mail, phone calls, physical meetings
UK 300 27 SMEs E-mail, phone
calls
International-wide
(no credible
estimation available on the real number of organisations reached; nevertheless a potentially high number of companies was at least made aware)
All types of agro-food stakeholders with presence on LinkedIn and similar networks Post and announcements on the professional online networks (e.g. agro-food related LinkedIn groups)
Some limitations of the analysis need to be noted. First, the participation of SMEs in the survey has been voluntary, which could suggest that companies would be mainly represented by those already interested in eBusiness. SMEs which do not use B2B transactions yet, may not have been motivated to fill in the survey. Secondly, the companies contacted were, mostly, somehow linked to the partners’ networks, afact that would involuntary impose some kind of “filter” done through this choice of companies, even though the supply chains have been targeted. Depending on the scope of the work of each partner, one sector could be overrepresented for some countries, despite the effort to have responses to the survey from companies of each sector.
It is obvious that the results obtained, regarding the large scope of targets, cannot be considered as statistically representative of each sector in each country. Yet, the results have been validated through interviews with experts in each country and by desk research.
Additionally, the eFoodChain workshop hosted by the European Commission on the 9t of July 2012 in Brussels also served as an opportunity to validate the obtained results and conclusions with pertinent high-level experts. The event gathered in total around 40 participants, representing various sectors and value chain positions within the European agro-food industry. The workshop discussions and constructive feedback received have helped to reshape the Market Analysis Report into its current version, and will also be very valuable for the next stages of the project, namely framework development. Other sections of the report display in more detail the feedback obtained through an interactive exercise conducted, for example in terms of validation of identified challenges and drivers, but generally in can be stated that opinions of the workshop participants, to a wide extent, coincided with the presented project findings reached until now.
III.
Market presentation
The agro food chain associates the three sectors that are agriculture, food manufacturing and distribution (combining wholesale and retail). Considering the whole supply chain, the agro food employment, with nearly 25 million employees, represents almost 10% of total European employment (Table 5).
Table 5: Operators, employees and turnover of the European agro food chain, 2010 Operators (1000) Employees (million) Turnover (billion €) Agricultural holding 13.700 11.1 334
Food and drink industry 274 4.2 929
Distribution (wholesale and retail) 1084 8.1 2002
( Eurostat, DG Agriculture Statistical and Economic Information Report, 2010)
The agriculture sector is represented by a majority of small exploitations, with only 5% of European farmers holding more than 50 hectares. Italy, Poland and Greece have an average size of farms smaller than 10 hectares. In the studied countries, only Germany, France and the United Kingdom have an average size of farms higher than 40 hectares. Agricultural companies exist, but remain very small in the majority of countries, yet some large collective or corporatized farm structures exist for example in Poland, resulting from the former collective and state farms.
The agro food sector is not only the biggest manufacturing industry in Europe with a turnover of 929 billion Euros, but also the leading manufacturing employer with more than 4 million direct jobs. A special feature concerning this industry is the importance of SMEs, as they represent more than 99% of companies, and generate almost half of the industry turnover. SMEs are really the major players of the agro food industry in Europe that need to be taken into consideration. Given this high representation of SMEs in the industry, the importance of general food retail shall also be noted. In fact, food retail in Europe has become highly concentrated in the last decades: 15 big retailers share about 50% of the market (Table 6). Table 6 : Top 15 Food Retailers in Europe, 2010
Rank Retailer Turnover (billion €) Headquarter
1 Carrefour 90.1 France 2 Metro 67.3 Germany 3 Schwarz 54 (2009) Germany 4 Tesco 53 UK 5 Rewe 50 (2009) Germany 6 Aldi 46 Germany 7 Edeka 44 Germany 8 Auchan 43 France 9 ITM 35 France 10 E.Leclerc 35 France 11 Casino 29 France 12 Sainsbury 28 UK 13 WalMart 21 USA 14 Morrison 19.3 UK 15 Systeme U 17.8 France
Consequently, the relationships along the value chain are influenced by this concentration, and the power distribution between all actors in the value chain isn’t equal. As presented in the Figure 2 (Grievink, 2002), a high number of producers and consumers have to face a low number of retailers and buying desk, who keep power upstream and downstream.
Figure 2: Power repartition in the European agro food chain (Grievink, 2002)
To face this low number of actors in the middle of the value chain, producers are more and more organising themselves into cooperatives. This organization of the producers, into some sort of producers’ organization (association or cooperative), allows them to get more power in negotiations in the supplier-farmer of farmer-processor relationship. However, there is still a huge unbalance in the negotiation power in the supply chain, which also affects the decision of adoption of new solutions or technologies in the supply chain. This force map is represented in Figure 3 and shows that the balance of negotiation power is different in the 3 target sectors. However, concerning the decision to adopt new solutions and technologies in the supply chain, this is concentrated downstream in the chain.
Figure 3: Force map in the agro food supply chain (by sector)
FFV
Producer
Processor
Retailer
Dairy
Producer
Processor
Retailer
Cereals
Producer
Processor
Retail
Even though direct sales and short supply chains are developing, meaning that B2C relationships are already present in the supply chain, the most common type of business in the agro food sector is still B2B. This is in relation with the fragmentation of the market, with much inefficiency in the supply chain, but also with the customers’ infidelity with the suppliers and the abrupt variation that can happen with the value of products (Bejjani, 2000).
Another important relationship that has to be accounted for, concerning the information flow in the supply chain, is with the government or authorities. B2G (and G2G in cross border trade) is also a very important aspect that has to be considered. Currently, multiple requests of information are made to the different players: from different bodies, in different formats and with different purposes.
Other important aspect to consider is related to the behaviour of the different actors in the supply chain. These soft factors, like cultural resistance change, confidence and trust, are very important to understand some of the business practices along the supply chain and the reasons for so few innovative solutions. These soft factors have a high variability along the supply chain and all of them, although important when it comes to select or design a solution for supply chain management, are not dependent on the technology but on people.
III.1
Fresh Fruits and Vegetables
The production of fresh fruits and vegetables is one of the most important activities in the European agro food system, as it produces around 18% of the total value of the European agricultural production (Eurostat 2009). The demand for fresh, healthier and safer convenience foods has stimulated the sales of fresh vegetables and fruits, which are sold either directly to the consumer or processed in products like salads, ready-to-eat meals, etc.
The value chain is influenced by the perishability of the product and by consumer requirements: the time from producer to consumer has to be as shorter as possible and many parallel distribution channels have to exist (Figure 4).
The fresh fruits and vegetables value chain creates unique supply chain challenges resulting in a highly complex and inefficient process due to a lot of manual steps and process breaks. It starts with special practical and legal requirements like temperature compliance or food traceability and products are very sensitive and react badly to the wrong transportation or environment. Especially when it comes to short life span products such as fruits or vegetables, the whole supply chain needs to be able to react quickly to change in demand and supply caused by harvesting cycles influenced by seasonal changes or climate conditions. The lack of standardization in product codes is another challenge, which has been in focus over the last years by institutions like GS1, to come up with standard product codes. Still, most of the labelling schemes are not standardised. The rise of EDI (Electronic Data Interchange) has helped to standardize the exchange of documents in the value chain, at least for the larger organisations who can afford to invest in that technology. Still, the fresh supply chain is characterized by a variation in sizes of suppliers from large multi‐national companies to small farms or a local grocery around the corner. Not everyone can leverage product code standardization or EDI. These challenges and complexities often result in a very manual process with lots of compromises and a lack of transparency. At the end this leads to a very cost intensive process in a very low margin business, a huge challenge for all participating in this kind of food supply chains. (iTradeNetwork, 2012). Yet, disturbed by the recent food crises, consumers have adopted a new behaviour characterized by precaution. This is expressed by a need for transparency and trust: origin, traceability, quality marks.
Across the 10 studied countries, Italy and Spain are the biggest producers (Table 7). France, the Netherlands and Poland are also important producers.
Regarding consumption, Italy and Spain are also the largest consumers in Europe, with a third of European market. Yet, being the biggest producers, their imports are relatively small. France, Germany and the United Kingdom represent also a third of the European consumption. Germany and the UK aren’t important producers, so they depend much on imports and do not develop export.
Belgium isn’t a big producer, but has chosen to develop the fruit trade through re-export, such as the Netherlands do.
Table 7 : Production, turnover and import-export values for the fresh fruits and vegetables sector in the studied countries Volume (1000 t) Turnover (billion €) Export value (billion €) Import value (billion €) 2008 2010 Belgium 2 410 2 023 2,7 6,6 5,6 Germany 6 272 5 539 9,5 4,3 13,2 France 5 205 8 692 7,8 4,3 8,3 Greece 6 633 6 606 1,3 1,3 0,8 Italy 30 995 30 407 9,8 6,3 4,0 Netherlands 5 089 4 643 4,3 10,7 6,5 Poland 9 273 7 977 4 2,2 1,8 Portugal 4 139 4 551 0,5 0,6 0,9 Spain 28 818 27 864 7,5 10,4 3,2 UK 2 986 2 666 5,4 0,9 9,1 TOTAL 101 821 100 969 52,8 47,6 53,3
Source : Eurostat, FAO-Stat Agriculture 2008
Fruits and vegetables producers are mostly small farmers, with less than 5 hectares for 70% of the farmers (Eurostat, 2007). Given that, the importance of producers ‘organisations is crucial to balance the relations along the value chain. The rate of organisation, defined as the percentage of producers who are members of a producer organisation, is heterogeneous among the studied countries (Table 8). Poland, Portugal and Greece have less than 15% of organisation, while the average is around 35%. The two biggest producers, Italy and Spain, are below 40% of organisation. The Netherlands is a particular case, with a rate of organisation of 100% because of transnational producer’s organisations (SERFIOTIS, 2008).
Table 8: Rate of organisation of Producers ‘organisations, Association of Producers Organisations and Producer’s Groups.
Belgium Germany France Greece Italy Netherlands Poland Portugal Spain UK Organisati on rate (2007) 89,1% 34,4% 46,3% 11,2% 37,9% 100% 3,8% 11,3% 31,9 % 43,9 % Source:(SERFIOTIS, 2008)
This rate of organisation is naturally increasing in most European countries, whereas it is decreasing in France, Greece, Germany and the United Kingdom.
Other important stakeholders of the fresh fruits and vegetables value chain are wholesalers and retailers. A real heterogeneity exists among the studied countries regarding the number
of companies (Figure 5): France and Spain have lots of wholesalers and retailers comparing to the other studied countries. On the contrary in Italy, which is the biggest producer in Europe, there are very few wholesalers and retailers specialized in fresh fruits and vegetables.
In France, hypermarkets, supermarkets and food stores control about 60% of the market share while the super-discounters cease to advance (12%). Moreover, the distribution is strongly concentrated since the first five retailers now control half of the French fruit and vegetables market (INRA, 2004).
Figure 5: Number of wholesalers and retailers in the fruits and vegetables value chain
However, a few years ago, short value chains stated to develop, especially regarding organic fresh fruits and vegetables. For example, in Italy the first fruits and vegetables producer in Europe, a network called “Campagna Amica” has been launched in 2009 by Coldiretti to enhance direct sales. In 2010 through this network, 16.000 local producers have sold their products directly to more than 8 millions of consumers, for a turnover of 320 million €. This type of business is more and more based, especially in the urban areas, upon Internet transactions (from individuals buyers or organised groups of individuals buyers) to organise the logistics and remain competitive.
If the extended value chain including manufacturing industries of fruits and vegetables is taken into consideration, SMEs are highly represented in all the countries studied (Figure 6).
Figure 6: SMEs in fruits and vegetables manufacturing industries
SMEs represent indeed more than 90% of the companies in every country. Regarding the employees in SMEs, a real heterogeneity exists within countries. In such Mediterranean countries such as Greece, Italy and Spain (no data available for Portugal), SMEs not only represent almost all the companies, but also the majority of employees in the sector. On the contrary, in the UK and the Netherlands, though SMEs make up more than 90% of companies, they account for less than 40% of the employment in the sector: the few big companies are in charge of the major part of the fresh fruits and vegetables process and sales.
III.2
Cereals
Cereals, and their numerous derived products, are one of the most important staple foods for people in the world. Their importance for animals feed is also very important, and some new uses of cereals are being developed such as vegetable based chemistry or bio energy.
Cereals accounted for some 30 % of the EU’s utilized agricultural area in 2007, and more than 50% in some specific regions (e.g. centre of France, Poland).
The cereal industry comprises, after the cereal growing, all cereal grain processing (including the manufacture of grain mill products, starches and starch products), the production of cereal food (including the production of bakery and farinaceous products). Cereal products are a key element of the processed food and beverage industry, typically representing the largest manufacturing industry.
The supply chain for cereals is complex with over ten processing stages (Figure 7): grain seed development, farming, storage, processing (milling), product processing, retail, etc.
Figure 7: Cereals general value chain
In Europe, three types of cereals make up more than 85% of cereals production: wheat (46% of all cereal production), barley (22%) and grain maize (18%). France and Germany are the biggest producers of cereals in the studied countries (Table 9), especially for wheat and barley. The turnover is clearly more important than for the fruits and vegetables sector, as the French and German turnover is almost 30 billion€. France is the major exporter of cereals of the studied countries, before Germany who has the second more important turnover. Spain and Italy are rather importers of cereals despite a quite important volume produced.
Table 9 : Production, turnover and import-export values for the cereals sector in the study countries Volume (1000 t) Turnover (billion €) Export value (billion €) Import value (billion €) 2008 2010 Belgium 3 113 3 042 5,5 1,0 1,8 Germany 50 105 44 413 29,2 2,6 1,9 France 70 108 65 676 29,5 6,9 0,9 Greece 5 238 4 499 3,4 0,2 0,4 Italy 21 613 18 996 26,6 0,8 2,4 Netherlands 1 963 1 804 6,9 0,5 2,4 Poland 27 664 27 120 6 0,1 0,6 Portugal 1 310 1 124 2,5 0,04 0,8 Spain 23 937 19 335 9,9 0,001 2,7 UK 24 282 20 929 19,1 0,8 1,2 TOTAL 229 334 206 939 138,6 12,95 15,14
Within the cereal sector, different subsectors can be defined. Human alimentation (through milling or brewing and malting industries) represents only a part of the cereals consumption, (for example in France: 25%). Animal breeding is traditionally the most important destination for cereals, with for example more than half of the French production. Finally, starch manufacture, and the different sub products (beverage or confectionery industries but also chemical industries such as biogas production), is another use for cereals.
The number of companies is not directly related to the production or the turnover. In fact, it represents up to 50.000 companies in France because of bread production and in Italy because of pasta production. Yet there are less than 3000 companies in the UK and the Netherlands (Table 10).
Table 10: Number of companies and employees in the cereal manufacturing industry Number of manufacturing companies Number of employees Belgium 4943 22.801 Germany 16.154 213.337 France 50.597 187.898 Greece 10.476 25.064 Italy 48.549 129.234 Netherlands 2375 29.582 Poland 7755 -- Portugal 7379 49.253 Spain 11.285 76.355 UK 2004 108.222
Source: Eurostat 2007, -- : no data available
As data on SMEs aren’t available for the whole cereal manufacturing industry, we can take into consideration the grain and starches manufacturing industry. The high representation of SMEs might be noted for each study country (Figure 8). Yet, these SMEs don’t represent the majority of employees of the sector, except in Poland, Greece and Italy. In Belgium, the Netherlands and the UK, although representing the majority of companies, SMEs account for less than 40% of employees.
Figure 8: Presence of SMEs in the Grain Manufacturing Industry in the study countries
III.3
Dairy products
Europe is the biggest producer of milk in the world, and Germany is the most important European producer.
Many different dairy products are derived from milk: different types of milk, butter, cheese and yogurt are a few examples. In Europe row milk for processing comes mainly from cows and, to a lesser extent from goats or sheep. The dairy products supply chain (Figure 9) runs from the breeder to the consumer, and includes milk process, transportation and retail. Moreover, the dairy products supply chain (from dairy farmer to processor to retailer) has processing and packaging safeguards in place to eliminate potential health risks. Some farmers still process themselves their milk (especially for cheese production) and sell it through short circuits directly to the consumer.
Figure 9: Dairy products supply chain
Germany and France are the most important producers of milk in the studied countries, while Portugal and Greece are the smallest producers with less than 2 million of tons collected. Although it isn’t such a big producer as France or Germany, the Netherlands exports dairy products almost as much as France.
Table 11: Production, turnover and export value of the dairy industry in the study countries Volume collected (1000 t) Turnover (billion €) Export value (billion €) Import value (billion €) 2008 2010 Belgium 2 849 3 067 4,2 2,0 2,4 Germany 28 692 29 665 27,8 6,1 4,6 France 24 376 24 206 27,9 5,0 2,2 Greece 2 095 2 100 2,1 0,3 0,8 Italy 12 116 11 345 17,7 1,5 2,9 Netherlands 11 303 11 649 9,6 4,6 1,7 Poland 12 445 12 298 6,2 1,0 0,1 Portugal 2 077 2 065 1,7 0,2 0,4 Spain 7 374 7 544 10,7 0,6 1,6 UK 13 719 13 960 9,7 0,8 2,4 TOTAL 117 047 117 898 117,6 22,2 19
Milk collection is done in dairies, and most of them have a small capacity except in Germany and Belgium, where a third of dairies collect more than 100.000 tons of milk (Figure 10). In all other countries, the large majority of dairies collect less than 5000 tons of milk, except in Poland where dairies are a little more important. Greece, which has a small production of milk, has a high number of dairies, but still less than Italy. It is consistent with the importance of SMEs in the industry. More than 90% of companies are SMEs in every study country (Figure 11). Moreover, in Italy these SMEs make up 76% of the employment.
Figure 10: Number of dairies by volume collected in the study countries
In Europe, about 58% of milk collection is controlled by cooperatives. These cooperatives are very different from traditional producers groups, as they actually control more than the collection, usually with processing industries and distribution through adapted brands.
Within the studied countries, German and Polish milk collections are even more controlled by cooperatives than in the rest of Europe, with control of 70% and 75%. The Netherlands has a special feature, with only one cooperative, Friesland Campina, controlling more than 80% of milk collection.
Moreover in France, since 2011, the implementation of a written contractual commitment, formalized for a minimum of 5 years between producers of milk and milk buyers is now mandatory. This conclusion of contracts should help establish lasting relationships in the sector, but it preserves the volatility of the milk price.
The future of the milk industry in Europe will depend on the abolition of the milk quotas on one hand, which could lead to a complete de-regulation and globalisation of the milk production, and on the increase of third countries consumption on the other hand. It leads to a real need of modernization from the producer to the distributer to remain competitive, and it highlights the importance of export in the upcoming years. Moreover, the safe and security demand from the consumer is high, notably after such scandals as the Chinese melamine milk scandal from 2008.
These opportunities are crucial for cooperating associates who want to produce additional volumes of milk at a marginal cost. They are key for the dairy cooperatives which will have to collect, value and pay these additional volumes without degrading the profitability of their core business. The adoption of new ICT solutions in the supply chain, preferably with cross border integration, may help to exploit these new opportunities.
III.4
Main stakes of the agricultural sector in Europe
Regarding the structure of the three sectors described, one important issue is the situation of SMEs. They represent a huge majority of enterprises in almost each sector, even though depending on sector and country, and they employ more or less people. So, allowing these SMEs to be fully integrated in the agro-food supply chain is an essential point.
Moreover, the agro-food supply chain is nowadays a European and multi-sectorial value chain. So, the integration of SMEs is not only the main point, but also the interoperability of communication processes among different sectors and across borders.
Another specificity of the agricultural sector is the perishability of products and the sanitary concern. Such examples of sanitary crisis as the “cucumber crisis” in 2011 reveal not only the risk related to good quality products in terms of human health, but also the importance in economic terms for the whole sector to have an efficient traceability. The European regulation 178/2002 laydown the general principles and requirements of food law, establish the European Food Safety Authority and lay down procedures in matters of food safety. In this regulation the concept of traceability is also addressed: “the traceability of food […] and any other substance incorporated into a food shall be established at all stages of production,
processing and distribution. […]To this end, such operators shall have in place systems and procedures which allow for this information to be made available to the competent authorities on demand.”
Other specific issues that also have an important impact in the choice and adoption of new solutions in the supply chain are the unbalance in the negotiation power, and the trust and confidence issues already described previously.
This description of the agro-food market and of the supply chains of the target sectors of the eFoodChain project, without being exhaustive and complete, enables to conclude on its complexity (with factors like market regulation changes and other soft factors like trust and confidence) and heterogeneity (with many differences between sectors and countries in the practices and size of the players).
Figure 12: Issues and factors with impact on the supply chains
This complexity and heterogeneity has to be taken in to account, not only on the market analysis that is the focus of the report, but also when identifying the needs and deriving the requirements for the eFoodChain framework.
IV.
Current Situation
IV.1
Use of ICT solutions underpinning B2B transactions in the food
supply chain
In order to analyse the adoption of ICT solutions in the food supply chain for the direct support of B2B transactions in food supply chains, a survey was conducted in ten European countries during two months. Even though the results can’t be statistically significant, it must be mentioned that some of the respondents are associations and cooperatives representing thousands of producers or large groups with lots of processing factories and having a global vision on the subject at hand.
Moreover, in order to confirm and detail results obtained through the survey, interviews with experts or key stakeholders were leaded in many European countries.
Both the survey and interviews targeted the level of adoption of electronic data interchange messages for product information, catalogues, orders, deliveries, payments and track and tracing of food products in B2B transactions through several means (EDI, XML, Web-EDI, ebXML and market places).
IV.1.1 Adoption of ICT solutions: survey and interviews results
IV.1.1.1 Global trends in the use of ICT
In a first look to the survey results, the use of ICT in B2B transactions by agro-food companies seems to be quite common: among the companies surveyed, a large majority exchange electronic business messages with their business partners.
In general (Table 10), less than half of the companies using ICT in B2B transactions automatically process incoming/outgoing electronic messages, although a third of the companies using ICT automatically process the majority of their electronic messages. This is true concerning financial messages. But when it comes to logistics messages the landscape is quite different in most countries. Yet, a not insignificant part of the companies still have no messages automatically processed at all (Table 12).
Table 12: Percentage of electronic messages automatically processed Percentage of messages
automatically processed companies % of
0% 9%
1-25% 44%
26-45% 20%
46-100% 27%
Differences within and between sectors
As explained in the methodology, some respondents represented more than one company: cooperatives or organisations answered the questionnaire for their members. So, it is important to take into account this weight in the analysis. This allows us to provide an analysis on thousands of companies, and to present the level of adoption of ICT in B2B transactions in
the three sectors and between upstream (producers and cooperatives) and downstream (all other companies: processors, distributors, logistics service providers…) of each value chain, as presented in the Figure 13.
Figure 13: Adoption of ICT solutions in B2B transactions by companies surveyed in different sectors, results weighted.
There is a clear difference of adoption between upstream and downstream in each sector. Less than 60% of the surveyed producers and processors use ICT for their business transactions, compared to up to 81% of the distributors (Annex 8).
At first sight, the fresh fruits and vegetables sector has quite well adopted ICT for B2B transactions even in upstream in a lesser extent.
On the opposite, in the dairy sector, the producers represented in the survey don’t use ICT for B2B transactions compared to retailers or processors (downstream level): 86% of them use ICT for their B2B transactions. For example, Danone, the 1st dairy group in the world, offers to its suppliers and manufacturers a range of EDI messages for automation and paperless information flow, from order to invoice (Danone, 2010). Such big groups usually have policies of ICT systems deployment in their subsidiaries. Danone Group has established a Supplier Relationship Management solution covering the process of analysis of expenditures, supplier selection, contract management and analysis of supplier performance. The objective is to structure and strengthen the internal purchasing processes and relationships with suppliers. In the cereals sector the difference is also significant between producers and the rest of the value chain.
Differences between small and big companies
The deployment of ICT solutions in B2B transactions is less common in small companies (Annex 10): almost all big companies already use ICT in B2B transactions, compared to less than 60% regarding small companies (less than 50 employees). This can be explained by several reasons:
the fewer information flows exchanged by smallest companies, which tend to have less business partners,
the lack of skills within small companies, which can’t afford to employ ICT specialists, some cultural resistance at the producer level to new technologies and eBusiness (with
fears related to confidentiality).
Differences among countries
However, these results need to be nuanced regarding each country, as presented in Figure 11. It must be kept in mind that these results don’t aim to be representative of a whole country, regarding the low number of companies having responded to the survey.
In Portugal, for example, and according to the interviews carried with major actors in the food supply chain and ICT services providers, only companies dealing with big retailers exchange electronically financial messages (due to the fact that it is made mandatory by the retailers). In Spain also, the companies surveyed insisted on the low level of adoption of ICT solutions on the upstream of the sectors, as explained below in the report. In addition, it might be noted that in Greece, clearly less companies currently use ICT solutions in B2B transactions than what the survey reflects.
In Poland, a research was conducted in 2009-2010 by the Agriculture University in Warsaw by Dr. Tomasz Ząbkowski and Dr. inż. Piotr Jałowiecki focusing on ICT solutions in logistics of agro-food SMEs. This study confirms what was stressed by the interviews: the use of ICT solutions to support logistics activities is still very low in the country. It seems that the main barrier could be the insufficient knowledge level of the respondents.
Figure 14: Adoption of ICT in B2B transactions by companies surveyed in different countries (except Belgium and Poland, less than 10 answers)
Interviews and discussion with experts allow us to describe more precisely the situation in Portugal, which is very similar to the situation in Spain and Greece. Electronic and automated data exchanges at the beginning of the supply chain (close to the “farm”) are practically non-existing in Portugal. The majority of agro-food producers are still traditional small producers, among which the adoption of ICT (not only for B2B transactions) is very low and where cultural background and resistance to changes, combined with the lack of resources, skills and investment do not facilitate the modernization of current data exchange practices (these are mostly manual and paper-based, even though a trend is being noticed on the use of SMSs by mobile phones). Producers collaborating in cooperatives and other forms of associations seem to be more open to apply new ICT solutions, but such innovations are usually initiated with a
top-down approach and still meet barriers in execution. Producers’ organisations already have their own information management system, where the information from the individual producers is manually introduced, and to some extent already exchange electronic business messages with big retailers and distributors. However, these messages do not cover all types of information but are exclusive to financial related information (order, invoice, etc.). This structured exchange of electronic messages is mostly supported in EDI and integrated with the producers’ organisation information management system.
While moving upwards in the supply chain, the level of adoption of digital data exchanges increases, resul
