Food Supply Chains in Lagging Rural Regions of Finland : an SME Perspective

An essential component of the food production sector in lagging regions consists of small-scale enterprises located in rural areas. A high proportion utilise traditional production methods, emphasising local identity and distinctiveness, thereby differentiating products and servicing niche or segmented markets. Such enterprises frequently integrate with other sectors of the local economy, such as raw material suppliers, distributors, tourism and catering, thereby enhancing local activity. Thus, the assessment and development of food supply chains from rural small and medium sized enterprises (SMEs) is crucial, not only from the perspective of SME performance, but also for the economic health of the region. The development of marketing and distribution systems for products from SMEs is one of the most essential activities for business operations. A critical problem for many rural SMEs is market access. Distance from major centres of population, low output volume and the dispersed nature of enterprises add to the dilemma. Recent changes in the retail sector have accentuated the problems and may ultimately threaten the competitiveness and viability of many rural food SMEs in particular, and the regions in general. There is greater emphasis on supply chain management which involves the integration of business processes, from end-user through to the original product producer and their suppliers. Retail chains have increasingly recognised that integrated and highly managed supply chains can be a major source of competitive advantage. Competition between individual businesses within and between stages in the supply chain is being replaced by competition between chains. This now means dedicated suppliers and exclusive contracts ensure that the benefits of investing in machinery, people, systems and programmes designed to maximise consumer satisfaction are retained and distributed appropriately between chain members. Such developments tend to militate against the involvement of small enterprises with major retailers, thereby limiting access to major markets and having implications for rural development. The objective of this report is to review and evaluate factors influencing supply chain development and performance in Finland, their likely evolution and impact on small-scale food enterprises and rural development in terms of benefits and problems. The report starts by introducing the theoretical framework and methodology of the study and then the food supply chain environment in Finland. After that different stages of food chain are presented based on empirical findings. The empirical data of the study was collected by face-to-face interviews. Different stages of food chains include: SME processors, intermediate chain members, commercial customers and institutions. The report is concluded by a presentation of different supply chain strategies of rural food SMEs. Various case examples are given to better illustrate the great variety of strategies

Key Factors Influencing Economic Relationships and Communication in Finnish Food Chains

The aim of this report is to discuss the role of the relationship type and communication in two Finnish food chains, namely the pig meat-to-sausage (pig meat chain) and the cereal-to-rye bread (rye chain) chains. Furthermore, the objective is to examine those factors influencing the choice of a relationship type and the sustainability of a business relationship. Altogether 1808 questionnaires were sent to producers, processors and retailers operating in these two chains of which 224 usable questionnaires were returned (the response rate being 12.4%). The great majority of the respondents (98.7%) were small businesses employing less than 50 people. Almost 70 per cent of the respondents were farmers. In both chains, formal contracts were stated to be the most important relationship type used with business partners. Although for many businesses written contracts are a common business practice, the essential role of the contracts was the security they provide regarding the demand/supply and quality issues. Relative to the choice of the relationship types, the main difference between the two chains emerged especially with the prevalence of spot markets and financial participation arrangements. The usage of spot markets was significantly more common in the rye chain when compared to the pig meat chain, while, on the other hand, financial participation arrangements were much more common among the businesses in the pig meat chain than in the rye chain. Furthermore, the analysis showed that most of the businesses in the pig meat chain claimed not to be free to choose the relationship type they use. Especially membership in a co-operative and practices of a business partner were mentioned as the reasons limiting this freedom of choice. The main business relations in both chains were described as having a long-term orientation and being based on formal written contracts. Typical for the main business relationships was also that they are not based on the existence of the key persons only; the relationship would remain even if the key people left the business. The quality of these relationships was satisfactory in both chains and across all the stakeholder groups, though the downstream processors and the retailers had a slightly more positive view on their main business partners than the farmers and the upstream processors. The businesses operating in the pig meat chain seemed also to be more dependent on their main business relations when compared to the businesses in the rye chain. Although the communication means were rather similar in both chains (the phone being the most important), there was some variation between the chains concerning the communication frequency necessary to maintain the relationship with the main business partner. In short, the businesses in the pig meat chain seemed to appreciate more frequent communication with their main business partners when compared to the businesses in the rye chain. Personal meetings with the main business partners were quite rare in both chains. All the respondent groups were, however, fairly satisfied with the communication frequency and information quality between them and the main business partner. The business cultures could be argued to be rather hegemonic among the businesses both in the pig meat and rye chains. Avoidance of uncertainty, appreciation of long-term orientation and independence were considered important factors in the business cultures. Furthermore, trust, commitment and satisfaction in business partners were thought to be essential elements of business operations in all the respondent groups. In order to investigate which factors have an effect on the choice of a relationship type, several hypotheses were tested by using binary and multinomial logit analyses. According to these analyses it could be argued that avoidance of uncertainty and risk has a certain effect on the relationship type chosen, i.e. the willingness to avoid uncertainty increases the probability to choose stable relationships, like repeated market transactions and formal written contracts, but not necessary those, which require high financial commitment (like financial participation arrangements). The probability of engaging in financial participation arrangements seemed to increase with long-term orientation. The hypotheses concerning the sustainability of the economic relations were tested by using structural equation model (SEM). In the model, five variables were found to have a positive and statistically significant impact on the sustainable economic relationship construct. Ordered relative to their importance, those factors are: (i) communication quality, (ii) personal bonds, (iii) equal power distribution, (iv) local embeddedness and (v) competition

Key factors influencing economic relationships and communication in European food chains (FOODCOMM) : review of sausage and rye bread chains in Finland

Finnish agri-food chain is going through many structural changes. Incomes of farms have decreased and thus the number of farms has declined. However, the average size of farms and numer of animals have grown. Production of rye has decreased but production of pork meat has increased steadily. Feed, bakery, meat, wholesale and trade sectors are concentrated and mostly national, but the market entry of foreign traders and processors has increased significantly suring last decade. Although large processing companies dominate in the sausage and rye bread markets, the significant majority of companies are small or medium-sized. The Finnish food markets are stable and saturated and the consumption do not increase, but food habits are becoming more uniform with those of other European consumers and health issues as well as organic food have become important factors in consumer choices. Globalisation, the tight competition situation and changes in consumption habits put also pressures on the Finnish agri-food chain. Thus, the Finnish pigmeat sector and bakery sector are relevant cases in point due to their recent structural changes and present market situation. Pork meat to sausage chain in Finland Structural features: The pigmeat chain has undergone significant structural changes in the past decade. The number of pig farms has declined and the trend is predicted to continue. At the same time, the number of sows and fattening pigs sold per farm has increased to achieve greater efficiency. Surplus production is mainly exported, because the pigmeat market in Finland is saturated. The price of pork meat largely corresponds with the EU average. The primary sector is seeking routes through which to achieve greater efficiencies due to problems of profitability. The processing industry and the retail sector are also continually seeking greater efficiency, for example through joint ventures abroad. Economic relationships: Pig producers are generally well organised with strong horizontal and vertical links. They have horizontal organisations, which represent their interests and raise their professional skills at the national and local level. Producers are owners of three dominant Pigmeat processing cooperatives who act as intermediaries for the commercialisation of meat between farmers and processors and processors and the retail trade. Also other private processors and producers have close and deep relations. In general the relationships are stable and confidential and both are eager to have close relationships to predict production and permit better negotiation with the trade. Also considerable development work, collaborations and integration can be found especially in cooperatives. Furthermore, both formal and informal relationships exist in the horizontal and vertical relations. In terms of producers and processors, the relationship includes almost always written and long-term contracts and there is a mutual trust between partners. With processors and retailers, the contracts are also written but with less trust and less balanced negotiation power than in producer – processor relationship. Still, trust is the important element, although the negotiations have become more complex and price dominates negotiations. However, the relationships are stable because of mutual dependency especially between big processors and retailers and quite long-term or at least there is a certainty of continuation. Communication: Written contracts are common in the Finnish pig chain, but personal contacts are appreciated among all partners because of feedback and deep information. The communication is often personal and regular, especially among farmers. Technology is widely used in communication in farms but also in pig houses and business: processors and retailers have electronic data exchange systems and the computer handles many routines especially in big enterprises. Information and communication technology (ICT) will be also part of the efficiency strategy which the Finnish sausage chain needs to stay in business. Influencing factors: The main influencing factors for the Finnish sausage chain are developments towards concentrations in the feed, the processing and the trade sectors. Also structural changes and competitiveness of domestic primary production and reductions of the financial support are very important. However, it is expected that consumers prefer to buy domestic sausage and pig meat in consumer packages from a multiple retail chain also in the future, as sausage is an important part of Finnish cuisine. Rye corn to rye bread chain in Finland Structural features: Rye consumption is the highest in northern growing areas, where rye is used in bread. While rye production in Finland has increased slightly in recent years, it has decreased on the long term. Because of low profitability, rye production is nowadays low compared with consumption of rye bread. The Finnish bakery industry consists of many small local bakeries, few medium-sized and few big bakeries. There are a few nationally known brands or products but people also prefer local products. The processing sector is going through structural changes because of overproduction and efficiency problems. Also the retail sector is suffering from price wars and hard competition, but it has resources to facilitate large horizontal or vertical collaborations. Economic relationships: Horizontal relationships among rye producers are strong. The relationship between producers and processor is also personal and stable and there is a certainty of continuation partly because of lack of actors. The power is not always in balance especially in a spot market situation, where more mistrust exists. Usually rye farmers trade with one or a few malt houses or mills and quite often they have written contracts. Contract relationships are often personal, stable and long-term or there is a certainty of continuation. Also mutual trust and collaborations among producers and between producers and processors are common. The relationships between bakery industry and mills can be characterised as stable, long-term, informal, confidential and personal. This might also be due to the lack of actors or because of habits and long-term personal contacts. Although bakeries and mills have a tendency to maintain stable relationships, the competition situation has put pressure on price negotiations. Two big bakeries dominate more than half of the market, although their power is limited. Horizontal cooperation among bakeries is insignificant. However, the relationship between retailers and processors is strong and strategic, for example there is information exchange regarding sales, trends and consumer behaviour. Retailers have very stable relations with local bakeries because of mutual dependence. Mutual trust and confidence, for example in delivery certainty are seen as important elements of a satisfying relationship. Many relationships are long-term, although contracts are not always long lasting. Because of tough competition, the negotiations between bakeries and retailers are complex, but the situation is hardest among small local bakeries. The retail sector has the highest negotiation power. Communication: Written contracts are common in the Finnish rye bread chain, but personal contacts are still appreciated among all partners because of feedback and deep information, for example in research and development (R&D). Contacts are often personal and regular, especially among farmers and between bakeries and retailers. Compared with the pig chain, the information flow is not as efficient and producers need to be more active in the search for information. Technology is widely used in communication and manufacturing processes. Processors and retail have electronic data exchange systems and computers handle routines especially in big enterprises. Influencing factors: The sustainability of rye production depends on price of rye and on the agricultural support received by farmers. A reduction in support or price will have significant consequences for the mill, malt and bakery industries because then nearly all raw materials have to be imported. Other threats to the rye-bread sector are a) centralisation of trade, b) hard competition between domestic and imported raw materials and products, c) high production costs in Finland, d) high costs of raw materials and e) decrease of consumption. However, consumers are interested in functional products, health issues and pre-cooked products. This coupled with consumers’ predilection for domestic products will be an important competition factor for the Finnish rye bread chain

Selvitys elintarviketurvallisuuden tutkimus-, kehittämis- ja koulutustarpeista Etelä-Pohjanmaalla

Tässä raportissa tarkastellaan selvitystä, jossa kartoitettiin elintarviketurvallisuuden varmistamiseksi tarvittavia tutkimus-, kehittämis- ja koulutustarpeita Etelä-Pohjanmaan elintarvikeketjussa. Menetelminä käytettiin teemahaastatteluja, joiden avulla pyrittiin selvittämään elintarvikeketjun eri toimijoiden näkemyksiä elintarviketurvallisuuden nykytilasta, tulevaisuuden uhkatekijöistä ja elintarvikeketjun vahvuuksista. Lisäksi kartoitettiin elintarviketurvallisuutta edistävää vuorovaikutusta, kehittämis- ja koulutuspalveluita sekä näihin teemoihin liittyviä tulevaisuuden tarpeita. Haastateltavat valittiin elintarvikeketjun eri toimijoista siten, että otoksessa oli edustettuna koko elintarvikeketju eli edustajia alkutuotannosta, jalostajista, vähittäiskaupasta, ravintoloista ja ruokapalveluyrityksistä sekä kuljetusyrityksestä. Selvitystyö osoittaa, että Etelä-Pohjanmaan elintarvikeketjun toimijat ovat tiedostaneet elintarvikkeiden turvallisuuteen vaikuttavat riskitekijät varsin hyvin. Alkutuottajien omat riskit kohdistuivat tuotantovälineisiin ja eläimiin, kun taas muualla ketjussa riskien koettiin sisältyvän varsinaiseen toimintaprosessiin, kuten kylmäketjuun, hygieniatasoon, tuotteiden käsittelyyn sekä tavaran vastaanottoon ja varastointiin. Yhteisenä riskinä kaikki toimijat mainitsivat työntekijöiden osaamisen. Koko tuotantoketjun suurimpina elintarvikkeiden turvallisuutta vaarantavina riskeinä mainittiin mm. kylmäketjun katkeaminen, ulkomaiset tuotteet, työntekijöiden puutteellinen ammattitaito sekä heikkolaatuiset raaka-aineet. Todennäköisimpiä elintarviketurvallisuuteen vaikuttavia riskitekijöitä tulevaisuudessa ovat mm. epidemiat, tuontielintarvikkeet, ympäristöriskit, pitkät kuljetukset ja suuret tuotantoyksiköt. Etelä-Pohjanmaan elintarvikeketjun vahvuuksina pidettiin pohjoista sijaintia, kattavaa elintarvikesektoria ja lyhyitä etäisyyksiä. Tuotteiden turvallisuuden varmistamiseksi on tehty paljon työtä koko ketjussa. Omavalvontaohjelma on yleisesti käytössä kaikilla ketjun toimijoilla ja se muodostaa pohjan turvallisten elintarvikkeiden tarjonnalle. Tulosten mukaan huomiota tulee jatkossa kiinnittää erityisesti poikkeamien nopeaan havaitsemiseen, tarvittaviin korjaustoimenpiteisiin ja jälkihoitoon. Tulevaisuuden tärkeimpiä tutkimus-, kehittämis- ja koulutusteemoja elintarviketurvallisuuden varmistamiseksi Etelä-Pohjanmaalla ovat selvityksen mukaan hygieniatason varmistaminen koko ketjussa, kylmäketjun toiminta ja laatu, tuotteiden laadun valvonta, työntekijöiden osaaminen, raaka-aineiden laadun varmistaminen ja ympäristöriskeihin varautuminen

Talvivaaran kaivoksen aluetaloudelliset vaikutukset Ylä-Savon seutukuntaan, sen kuntiin sekä Rautavaaran kuntaan

Tutkimuksessa tarkastellaan Sotkamon Talvivaaran nikkelikaivoksen aluetaloudellista merkitystä. Tavoitteena oli esittää ehdotus konkreeteista toimenpiteistä, joilla Ylä-Savon kunnat ja Rautavaaran kunta voisivat mahdollisimman paljon hyötyä kaivoksen tuomista mahdollisuuksista. Kunnissa toimivien yritysten valmiutta osallistua urakkakilpailuihin ja saatujen urakoiden määrää selvitettiin internet- ja puhelinkyselyn avulla. Näiden tietojen pohjalta suoritettiin RegFinDyn-aluemallilla laskelmia kaivoksen tuomista henkilötyövuosista. Lisäksi tarkasteltiin logistiikkaa, liikennettä ja maankäyttöä, pää- ja aliurakoitsijoiden suhdetta, investointipäätöksiin vaikuttavia tekijöitä ja paikallisten pankkien koordinoivaa roolia. Yrittäjäkyselyn tulosten mukaan kaivoksen asioista tiedetään suhteellisen vähän ja tarjouskilpailuihin ei ole ollut mahdollisuutta osallistua. Kaivoksella on menossa pääasiallisesti maanrakennusvaihe ja pääurakoitsijoita on tässä vaiheessa 25. Niistä kymmenellä on aliurakoitsijoita, yhteensä noin 36. Tutkimuskohteena olevista kunnista ei ole yhtään pääurakoitsijaa ja vain 3 aliurakoitsijaa. Näiden kotikunnat olivat Iisalmi, Kiuruvesi ja Vieremä. Kyselyiden ja mallilaskelmien mukaan kohdekunnista olevia työntekijöitä on tällä hetkellä noin 42 ja koulutuksessa 11. Toimintavaiheessa pendelöijiä voisi olla noin 70 eli noin 20 % kaivoksen pysyvästä työntekijämäärästä. Toimenpidesuosituksissa korostuu tarve havahtua asiaan ja lisätä yritysten ja kuntalaisten informaation määrää. Muina tärkeinä tekijöinä korostuvat liikenteen infrastruktuurin parantaminen, pendelöinnin tukeminen ja alueen yritysten investointien koordinointi paikallisten pankkien kautta