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Do Food Quality Schemes and Net Price Premiums Go Together?

Sylvette Monier-Dilhan, Thomas Poméon ORCID logo, Michael Böhm, Ruzica Brečić, Peter Csillag, Michele Donati ORCID logo, Hugo Ferrer-Pérez, Lisa Gauvrit, José M. Gil, Việt Hoàng, Apichaya Lilavanichakul, Edward Majewski ORCID logo, Agata Malak-Rawlikowska ORCID logo, Konstadinos Mattas, Orachos Napasintuwong, An Quỳnh Nguyễn ORCID logo, Kallirroi Nikolaou, Ioannis Papadopoulos, Stefano Pascucci, Jack Peerlings, Bojan Ristic, Kamilla Steinnes, Zaklina Stojanovic, Marina Tomić Maksan, Áron Török, Mario Veneziani, Gunnar Vittersø and Valentin Bellassen ORCID logo

Abstract

This article addresses the issue of the profitability of Food Quality Scheme (FQS) products as compared to reference products, which are defined as analogous products without quality label. We approach this question by taking into account the level of the value chain (upstream, processing, and downstream), the sector (vegetal, animal, seafood) and the type of FQS (PGI, PDO, Organic). We collected original data for several products produced in selected European countries, as well as in Thailand and Vietnam. Comparisons depending on value chain level, sector and FQS are possible by using two comparable indicators: price premium and net price premium (including cost differential). The following principal conclusions were reached: 1) Price is higher for FQS products than for the reference products, regardless of the production level, the type of FQS or the sector; 2) Price premiums generated by FQS do not differ along the value chain, nor between sectors (vegetal, animal or seafood/fish); 3) Price premium for organic products is significantly higher than for PGI products, and this conclusion holds at upstream and processing levels, taking into account the costs directly related to production; 4) All organic products and almost all PDO and PGI products analysed benefit from a positive quality rent; 5) At upstream level and processing level, the relative weight of intermediate consumption in the cost structure is lower for organic products than for reference products.

JEL: Q01; Q18; C12

Corresponding author: Thomas Poméon, US ODR, INRAE, 31326, Castanet-Tolosan, France, E-mail:

Funding source: This project has received funding from the European Union’s Horizon 2020 research and innovation under grant agreement No 678024.

Acknowledgments

The authors would like to thank all the people and institutions who collected or provided raw data for this publication. Unfortunately, they are too numerous to be exhaustively listed here but they will hopefully recognize themselves through the list of data sources and the associated book. Statistical analysis was conducted using the Stata and R softwares.

Appendix 1

Table A1:

List of available products.

Case studiedKind of productFQSUpstreamProcessingDownstream
Buon Ma Thuot coffeeVegetalPGIYesYesYes
Doi Chaang coffeeVegetalPGIYesYesYes
Gyulai sausageAnimalPGINoYesYes
Kastoria appleVegetalPGIYesYesNo
Kaszubska StrawberryVegetalPGIYesNoNo
Lofoten StockfishÿSeafoodPGIYesYesYes
Sobrasada Porc NegreAnimalPGIYesYesNo
Ternasco de AragonAnimalPGIYesYesYes
Thung Kula Rong-Hai HVegetalPGIYesYesYes
Cornish cotted creamAnimalPDOYesYesYes
Comte cheeseAnimalPDOYesYesYes
Dalmatian prusutAnimalPDOYesYesNo
Kalocsai paprikaVegetalPDOYesYesYes
Opperdoezer Ronde potatoVegetalPDOYesNoNo
PDO olive oilVegetalPDONoYesYes
Parmigiano ReggianoAnimalPDOYesYesYes
Phu Quoc Fish SauceSeafoodPDOYesYesYes
Saint-Michel bay musselsSeafoodPDOYesNoYes
Zagora appleVegetalPDOYesYesNo
Organic flourVegetalOrganicYesYesYes
Organic pastaVegetalOrganicYesYesYes
Organic porkAnimalOrganicYesNoYes
Organic raspberriesVegetalOrganicYesYesYes
Organic riceVegetalOrganicYesYesYes
Organic salmonSeafoodOrganicYesYesYes
Organic tomatoesVegetalOrganicYesYesYes
Organic yoghurtAnimalOrganicYesYesYes
Total69252321
Appendix 2

Table A2:

Data sources and reference product.

Case studiedReference product
Buon Ma Thuot coffeeNon-PGI coffee from Dak Lak province in Vietnam
Doi Chaang coffeeNon-PGI coffee from the same province
Gyulai sausageNon-PGI Hungarian sausage
Kastoria appleKissavos apples (non-GI apples from another region)
Kaszubska StrawberryNational average in Poland
Lofoten StockfishÿClipfish (cod) in Norway
Sobrasada Porc NegreNon-PDO sobrasada in the region (Islas Baleares)
Ternasco de AragonNon-PGI lamb in the same region (Aragon)
Thung Kula Rong-Hai HNon certified rice from the same region (90% of GI rice is organic as well)
Cornish cotted creamConventional cream in Great Britain
Comte cheesePGI Emmental cheese produced in Central eastern French area
Dalmatian prusutLocal non-PGI firm
Kalocsai paprikaImported Chinese pepper milled in Hungary
PDO olive oilNational average in Croatia
Opperdoezer Ronde potatoRegular potato in neighbouring IJsselmeerpolders region
Parmigiano ReggianoBiraghi cheese (similar non-PDO cheese)
Phu Quoc Fish SauceNon-PDO fish sauce from same region
Saint-Michel bay musselsNational average for TSG Bouchot mussels
Zagora appleKissavos apples (non-GI apples from another region)
Organic flourNational average in France
Organic pastaSimulated conventional farms with sample characteristics and conventionnal pasta facotry in Poland
Organic porkNational average in Germany
Organic raspberriesConventional raspberries in Serbia
Organic riceNon-organic rice in France (mostly PGI)
Organic salmonConventional salmon in Norway
Organic tomatoesConventional processed tomatoes in the same region (Emilia-Romagna)
Organic yoghurtNational average in Germany

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Received: 2019-09-23
Accepted: 2019-12-27
Published Online: 2020-12-03

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