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Why do European consumers buy food the way they do? Which key factors drive Europeans’ food consumption patterns and how could they be used to create pathways toward sustainability? The VALUMICS project’s evidence-based report provides insights to what influences consumers the most in their food choices. The report ‘Food consumption behaviours in Europe’ brings together data across various countries, such as the United Kingdom, Germany, France and Italy. Through in-depth literature research, focus groups and expert consultations, the report provides a better understanding of the status quo, trends, motivations as well as barriers and opportunities towards more sustainable food consumption behaviours in general. The focus is on five product categories: Beef, dairy, salmon, tomatoes and bread. Findings indicate that food consumption behaviours can be largely attributed to price considerations, family eating habits, health concerns or social contexts of consumers. The report highlights that environmental awareness and values play little to no role in the consumption patterns. “Certain changes can only be made by politics, or the EU in this case, which should impose high sustainability limits and standards: for example, banning disposable plastics is a good start. Until certain management practices are allowed, it is difficult to behave more sustainably because everyone else can be more economically competitive” noted one of the experts interviewed for the report. Other actions suggested in the report include fostering stronger communication channels between producers and consumers, with the potential for increasing the resilience of food value chains as well as using behavioural insights to inform strategies and action plans for more sustainable food consumption. The report ’Food consumption behaviours in Europe’ is the first in a series of VALUMICS publications focusing on analysing food consumption. The upcoming reports look into successful interventions for sustainable food behaviour, multi-stakeholder recommendations toward more sustainable food consumption, and food retailer interventions to support this shift.

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This study provides the findings on technical efficiency, firm heterogeneity, the exploitation of economies of scale, the impact of technical change, as well as total factor productivity development on both agricultural and processing levels of the selected European agri-food supply chains. The analysis is based on two-stage stochastic frontier modelling. The first stage uses country-specific input-distance function models to estimate the economies of scale, persistent and transient technical efficiency, as well as the impact of technical change and the development of total factor productivity in selected countries. In the second stage, meta-frontier approach is used to compare the technical efficiency and the total factor productivity levels among the countries in the European agri-food chains. Afterwards, the impact of technological change on the prices and quantities as well as on the rents and welfare effects is evaluated and main actors in innovation processes are discussed. The study covers 12 European countries: Austria, Belgium, the Czech Republic, Finland, France, Germany, Ireland, Italy, Romania, Spain, Sweden, and the United Kingdom. It is focused on the analysis of cereals, milk and salmon production, and five food processing sectors: processing and preserving of meat and production of meat products, manufacture of dairy products, manufacture of grain mill products, manufacture of bakery and farinaceous products and Italian tomato processing. The research is based on the individual firms/farms data and covers the period 2006-2018. Country���s input distance function estimates reveal differences in food-producing and processing technologies among the countries but no significant inter-sectoral heterogeneity on the country level. While the agricultural level is characterized by predominantly increasing returns to scale, food processors in general do not exhibit significant economies of scale. In addition, the results indicate that large companies have optimal size on both agriculture and food-processing levels. On the other hand, small and middle-sized companies have a substantial potential to improve their productivity by increasing scales of operations, leading to lower unit costs and increasing profitability. The technical change significantly positively contributes to the production possibilities in food processing industry in majority of the countries as well as in the salmon production. On agriculture level, the technological regress is revealed especially in milk production in the majority of analyzed countries. Biased technical change is pronounced in the half of the analyzed countries and is predominantly labour-saving in the food-processing industry and the cereals production, and capital-using in the milk production. The overall efficiency is high in agriculture as well as in food processing. However, significant differences among the countries in the efficiency of inputs use were revealed. In particular, the overall technical efficiency estimates are between 77% and 95% in agriculture, 73 and 95% in food processing industry and about 84% in salmon production. That is, farmers may reduce their costs from 5% up to 27%, firms in the food processing industry from 5% up to 23%, and salmon producers by 16% to produce the same volume of output. The decomposition of overall technical efficiency reveals that many farmers are falling behind the most efficient ones in the log-term in the majority of analyzed countries. The developments in technical efficiency are rather stochastic in the analyzed countries. Thus, idiosyncratic developments in technical efficiency are observed in agriculture as well as in food-processing industry. The technical efficiency fluctuations may result from shocks associated with the introduction of new technologies, changes in human capital as well as shocks connected with weather conditions and climatic changes. The meta-frontier analysis did not reveal any significant differences in overall technical efficiency among the countries. This holds for food processing as well as for agricultural level. That is, the most efficient farmers and food processors in the analyzed countries have similar level of technical efficiency. The total factor productivity (TFP) estimates show significant differences among countries. However, the predominantly negative total factor productivity change is observed in the analyzed period in agriculture as well as food processing industry. The manufacture of bakery products, where the productivity is followed the positive development path in the majority of analyzed countries, is the exception. The scale effect represents the main source of the total factor productivity change in the majority of analyzed sectors and countries. Changes improving scale efficiency and bringing technological progress are required to change this negative TFP development and consequently to generate further economic growth and to increase consumers��� welfare. Finally, the meta-frontier analysis shows that TFP differences among the countries exist on both agricultural as well as food processing level. The scale efficiency component is the main source of these differences. The technical change has positive impact on output quantities. Moreover, it reduces the average costs in food processing industry. The opposite is true for agriculture where the technological regress was estimated. However, the price developments and estimated figures on technical change in the analyzed food chains suggest that the total welfare effects increased in analyzed period. Finally, large companies were identified as the main actors of food chains development., Cechura, L., ��akova Kroupova, Z., Rumankova, L., Jaghdani, T.J., Samoggia, A., Thakur, M. (2020). Assessment of Economics of scale and technical change along the food chain. The VALUMICS project funded by EU Horizon 2020 G.A. No 727243. Deliverable: D5.6, Czech University of Life Sciences, Prague, 169 pages.

The aim of this report is to provide insights into price dynamics and power relationships between actors of selected Food Value Chains (FVC). Following the main focus of the VALUMICS project, provided analysis refers to salmon, tomato, dairy and wheat case studies in selected EU and non-EU countries. The analysis presented in this deliverable greatly rely on the previous deliverables (e.g. BARLING and GRESHAM, 2019, Deliverable D5.1) and work conducted in the project, and will further be used as an input for proceeding work packages that focus on quantitative modelling and foresight exercises. Thus, results presented in this report should be considered as a piece of a large puzzle that aims to provide an in-depth understanding of food value chains and network dynamics under the VALUMICS project (www.valumics.eu). 2. The report is structured in a way to cover both price transmission and market power analysis for each case study separately. Thus, the results are presented under four main sections referring to a specific case study. The section on methodology is kept separately as the same price transmission, and market power methodology has been used for each case study. 3. For the salmon case study, the aim was to analyse the transmission of price changes along the FVC, which in this case presents a global value chain, from Norway towards most important EU importing countries, i.e. France and Poland. France is one of the biggest consumers of salmon in Europe, while Poland is the largest secondary salmon processing country in the EU. Both countries have significantly different structures of their domestic salmon FVCs which was also in the focus of the analysis. The price transmission results indicate that the salmon export price in Norway influences price formation in both France and Poland. Within the French salmon fillet market, the retail sector dominates price formation. It has a strong influence on the prices at the secondary processing level, which sometimes might result in squeezed margins for the processing companies. In contrast, the retail market is disintegrated with the domestic wholesale market in Poland as the latter is exclusively focused on the re-export of processed salmon, where most of the processing companies are directly owned by Norwegian salmon producing companies. Concerning the market power analysis, the results indicate a certain level of market imperfectness. Nevertheless, identified results significantly vary depending on the current economic/political or natural events (e.g. distribution of licenses, Russian import ban, different diseases affecting salmon production, etc.). 4. For the processed tomato case study, the main focus is on price relationships and market imperfections along the processed tomato value chain. As Italy is the largest processed tomato producer in Europe, as well as the largest exporter of processed tomato products, the analysis is primarily conducted for the north Italian processed tomato value chain. The results indicate that the upstream actors of the chain, i.e. producers and processors aim at strengthening market concentration and social collaboration through Inter-Branch Organisation (IBO), ensuring higher competitiveness and sustainability through a mutual agreement that is beneficial for all. This was confirmed by both price developments and margins obtained by producers and processors after 2011 and establishment of the IBO, and in the reduction of market power imbalances between them. The results further indicate that price dynamics present at the producer and processing levels are not reflected on the retail level. This fact was confirmed again by identifying the price margin that is three times higher for the wholesale-retail level compared to wholesale-producer level. One of the reasons might be that retailers are not part of the IBO, and the price-setting mechanism is entirely different. Most of the retail purchases go through auctions where processors usually need to squeeze their margins during the negotiation process. Overall, the tomato processing case analysed in the present research shows that the sustainability, integrity and resilience of the chain are related to the managerial governance of the chain. Thus, chain actors can contribute to finding a balance between competition and collaboration, so to aim for all chain actors��� higher level of competitiveness. 5. For the dairy case study, the main focus is on getting the in-dept understanding of price dynamics and market imperfections for the three largest milk producers in the EU. Thus, the analysis considers dairy value chains in Germany, France and the UK. Understanding developments in these markets would greatly reflect the EU dairy sector in general. The obtained results indicate that milk producers face a negative price/cost ratio in the long-run, indicating that they don���t have strong bargaining power towards processors. One of the reasons could be that producer could act as shareholders of the cooperatives involved in milk processing, and thus have completely different incentives when it comes to the purchased milk price level. Concerning price dynamics along the value chain, the results indicate that changes in raw milk producer prices are almost completely transmitted towards wholesale butter and cheese prices. The short-run price dynamics show that raw milk prices are faster in adjusting the disequilibrium with the wholesale skim milk powder (SMP) prices compared to other dairy products. The results of market imperfection analysis indicate a certain level of oligopsony and oligopoly at different levels of the dairy value chains in all three countries, especially between producers and processor. 6. For the wheat case study, the analysis refers to the integration of the French wheat market with the world market, primarily focusing on integration with the Black Sea countries that are emerging as global leaders in wheat export. The results confirm that, when it comes to price formation, the French market is the leading wheat market transmitting price signals to other markets in Russia, Ukraine, Canada, the USA and Argentina. Furthermore, despite being leaders in wheat export volumes, the Black Sea wheat prices in Russia and Ukraine are adjusting to price changes in France, the USA and Canada. One of the main assumptions is that creation of the futures exchange in the Black Sea region might significantly change the current situation on the global wheat market where consequently France might lose its dominant price formation role. Concerning the analysis of market power along the French and UK wheat value chains, the results indicate a certain degree of market imperfections for milling and bakery industries in both countries. Higher market imbalances are identified for the French milling industry compared to the UK case. Similar results are obtained for the baking industry in both countries. 7. Overall, it is difficult to draw some general conclusions as each case study refers to the specific commodity, with considerably different underlying governance structures of the respective value chains. There is some evidence that producers tend to have better bargaining power in the value chains characterised with strong cooperation (coordination) on the upstream level (e.g. processed tomato and salmon case studies). On the other side, strong integration of the value chains on the upstream level, inevitably lead towards some sort of market imperfections that usually result in an unfavourable position for producers (e.g. dairy and wheat case studies)., Miranda Svanidze, Luka�� ��echura, Ivan ��uri��, Tinoush Jamali Jaghdani, Gudrun Olafsdottir, Maitri Thakur, Antonella Samoggia, Gianandrea Esposito and Margherita Del Prete (2020). Assessment of price formation and market power along the food chains. The VALUMICS project funded by EU Horizon 2020 G.A. No 727243. Deliverable: D5.5, Leibniz Institute of Agricultural Development in Transition Economies (IAMO), Germany, 113 pages.