boccaletti karantininis chain reaction

7/28/2019 Boccaletti Karantininis Chain Reaction

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Quality Signals and Agri-Food Chain Reactions

ByStefano Boccaletti

Istituto di Economia Agro-AlimentareUniversit Cattolica del S. Cuore

29100 [email protected]

Tel: +39-0523-599228Fax: +39-0523-599282

AndKostas Karantininis

Department of Economics & Natural ResourcesThe Royal Veterinary & Agricultural University (KVL)

Rolighedsvej 23, DK-1958 Frederiksberg CKbenhavn, DANMARK

Tel: +45-3528-2276, Fax: -2295, Mob: +40-897237e-mail: [email protected], web: http://www.flec.kvl.dk/kok/

Keywords: Quality Assurance, PDO, Chain Organisation

SummaryIn this paper we examine how dairy supply chains are organised in order to handle or as aresponse to quality signals. Several quality signals are examined, these include, PDO, private

brands, and organic products. Several organisational forms and agri-food chain reactions aremet in our 12 case studies from seven European countries. These organisations range fromcooperatives, to private firms to umbrella organisations. They also include state agencies, as wellas certification agencies. The variety of these organisational forms for similar types of qualitysignals, may appear paradoxical under the neoclassical lens, it is more normal however, if


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Theoretical background Coase was probably the first to recognise that the way economic activities are organised relies on the levelof transaction costs. This simple concept may help to understand why some transaction are governed byvertical integration, meanwhile at the other end of the possible organisational arrangements others are left

to the marketplace. In particular, it is demonstrated that for a given transaction, the higher the transactioncosts are, the higher is the degree of internalisation, i.e. of internal control operated by the firm. One of thekey explanatory factors at the basis of the transaction costs theory is opportunism: without asset-specificity, Williamson (1985) argues that a market based governance structure would offer the necessaryincentives to minimise costs; on the opposite, a fully internalised governance structure, such as verticalintegration, would not offer the same incentives. In this case the problem of control at the differentrelevant stages becomes crucial for an efficient functioning of the structure.On the other hand, whenever idiosyncratic transaction-specific investments characterise the activity of the

parties involved in the transaction, the possibility of ex post opportunistic behaviour arises, and then the

market itself does not guarantee the solution to the hold-up problem typical of a double monopoly. Two possible solutions to the problem are vertical integration (Klein et al., 1978) or the design of completecontracts: the choice of either one or the other solution or an intermediate arrangement will depend onrelevant economic factors such as economies of scale, product complexity, degree of asset specificity, ecc.In most cases, high specification costs make the writing of complete contracts rather unfeasible: they mustguarantee that ex post parties earn a fair rate of return on their (specific) investments in order to promoteex ante those specific investments; but they must also guarantee ex post an efficient volume of tradetherefore preventing monopolistic pricing behaviours.To give an example, whenever food products are differentiated and therefore rely on specific and

uncertain quality characteristics, often referred to as experience or credence attributes (Nelson, 1970), thenthe definition of complete explicit contracts is impossible.If contracts are incomplete, then the parties may not have sufficient incentives for undertaking thenecessary specific investments and final products may not fulfil the expected characteristics.Even in those cases where renegotiation is permitted, sub-optimal investments may still be a problem(Hart and Moore, 1988): ex post each party would try to appropriate the common surplus preventing theefficient realisation of trade. With these negative expectations, the necessary incentives for an efficientlevel of ex ante investments is missing.In this paper we examine the governance of contractual relations within the context of transaction costs

economics, in particular of those transactions responsible for the achievement of proper quality standardsin final products. We consider 12 case studies in the European dairy industry and we attempt to:

- define the relevant stages for the definition of the specific product quality signalled by producers/organisations;

- describe the transactions at each stage with particular emphasis on structure and contractualarrangements governing the transactions;

- specify the transactions characteristics which may be thought to affect the type of governancestructure chosen by the organisation within the framework of Williamsons transaction costsapproach and further extensions offered in the literature.

Williamsons model revisitedWilliamson (1986) defines a model which tries to explain which transactions are located where and whatare the determinants of both different transaction types and locations. The model considers a three wayclassification of contracts: classical, neoclassical and relational categories of contract law.


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Classical contracts. In these contracts, efficiency is achieved through the marketplace, which is able tocoordinate prices and quantities of generally simple or standardised food and agricultural products, whichcan be defined as generic both in terms of supply and usage, i.e. with suppliers which are basically

undifferentiated and with direct use or processing unspecific in terms of inputs (Williamson, 1989).. Thisarrangement characterised agricultural supplies in the past, but the change from a commodity-orientedfood sector to a consumer oriented one has resulted in increasingly differentiated products, with profoundmodifications in the coordination activities (Streeter at al., 1991).

Neoclassical contracts. In this case the principal has a strong interest in maintaining the relationship, butwithout the support of a third institutional party the transaction specific contractual costs may be veryhigh.These contracts may for example refer to long term contracts involving some degree of asset specificity,where future contingencies are not identified and therefore where remedies and contractual adaptations are

(imperfectly) implemented only when contingencies arise.In this case, simple classical contracting under a pure market governance structure would fail to offer thenecessary provisions. The emerging governance structures may lead towards vertical integration or other contractual schemes which preserve trade between separate parties but provide for additional governance,i.e. with the intervention of a third party for arbitration. Clearly, with products showing increasingcomplexity, for example in terms of quality, such contractual schemes may become more and moreincomplete, failing to guarantee the economic efficiency of the transaction.The possibility of existence of this type of contracts in the food industry is very much dependent on theinstitutional environment and on the regulations which characterise different food sectors. For example,

whenever the evaluation costs of performance are very high and therefore some relevant clauses would not be included in contractual arrangements, the existence of a reliable third party offering its services interms of product/process certification, assistance in disputes, etc., would make neoclassical contractingfeasible.

Relational contracts. As the degree of asset specificity, contract length and complexity increase evenfurther, then transaction specific costly contractual arrangements tend to emerge. In this case, relationalcontracts imply a sort of continuous adaptation to the characteristics of the relationship, while in the

previous case neoclassical contracts referred to the original agreement. These contracts imply either bilateral governance structures, where the autonomy of the parties is maintained and transactions are

coordinated using explicit contracts, or unified fully integrated governance structures (verticalintegration), where the parties merge into a unified governance structure.Summarizing, Williamson identifies three types of governance structures, each one attached to one of thecontract types defined above: non transaction specific (classical contracts), semi-specific (neoclassicalcontracts) and highly specific (relational contracts). Moreover, the choice of the adequate form of governance structure depends on three main transactional parameters: uncertainty, frequency of transactions (occasional or recurrent) and investments specificity 1 (specific, mixed, non specific).Whenever transactions involve non specific investments, as for example in the case of standardised

products, the specific identity of the traders is not relevant: alternative buyers and sellers can be easily

found and the coordination offered by market prices is enough to preserve from opportunism, both withoccasional or recurrent transactions.On the other hand when some kind of specificity in the investments is required in order the transaction to

be accomplished on an occasional basis, then the high set up costs that a highly specific governmentstructure would involve cannot be supported. In this case neoclassical contracts represent the feasibleinstrument to ensure the continuity of the transaction.Following the traditional transaction costs approach, costs from implementation of highly specific


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Another relevant variable interacting with those considered in Williamsons heuristic model, is trust, eventhough he recognises its importance. The relationship with the other variables could be heavily modified.In particular, whenever trust is the result of long term relationships, parties have an incentive to economiseon governance (Dasgupta, 1988). In other words, heavy investments in bilateral trust may imply high exit

costs from the transaction: to initiate a new relationship could result in new investments in trust and in amore complex governance structure for the parties involved, i.e. higher transaction costs.Whenever trust is present, relatively simple governance structures could do the job even with specificassets and relatively complex transactions. Contingencies may not be included in explicit contracts butinstead could be part of informal implicit contracts.The fact that trust is built up over time makes the past length of the relationship an important proxy for it,

but some authors (Heide and John, 1990) show that it is the expectation of long term commitment rather then past trading that matters in the degree of cooperation between parties.The shortcoming of the transaction costs approach is that it considers the minimisation of transaction costs

as the only determinant of the type of governance structure, while the reality is way more complex andseveral other explanatory variables can be added to those identified above. Referring for example toagency theory, two relevant problems in a contractual relationship are adverse selection and moral hazard,and both these problems are particularly relevant in agro-food sectors. The first arises from theinformation asymmetry that usually characterises the parties involved in a contractual relationship, whilethe second originates from the difficulties that the principal has in observing the agents behaviour, i.e.from the possibility of a sub-optimal degree of effort (Milgrom and Roberts, 1992). In order to give adimension to these two negative effects, the organisational approach to control suggests two possiblemeasures (Eisenhardt, 1989):

- the assessment of the agents behaviour (task programmability);- the assessment of outcomes (task separability).The first identifies the principals ability to read the activities operated by the agents directly, i.e. howthe agent is doing his job. A high level of programmability indicates that a transaction is well understood

by all parties and often repeated. In this case, the relationship does not require intense discussion andnegotiations and it will be easily accomplished by impersonal coordination mechanisms. Therefore higher

programmability means lower coordination requirements.The second refers to the analysis of the activities, i.e. to the possibility to infer from the outcome howthings were carried out by the agent. Therefore, it shows the ability to determine and measure the value of

the contribution of each agent and thus the reward that should be given to each participant in thetransaction. Also higher separability means lower coordination requirements.If the principal has the capability to carry out both these activities at a good extent, then the problem of control arising from information asymmetries could be solved and the resort to complex governancestructures unnecessary.Mahoney (1992) proposes a theoretical framework which merges both transaction costs fromWilliamsons approach and measurement costs from the agency approach. He excludes frequency basedon the fact that when asset specificity is either high or low, the effect of frequency on governance structureis indeterminate. Moreover, also external uncertainties have an unclear effect on governance structure. The

matrix he proposes includes three variables, asset specificity, task programmability and task separability,and allows for six different forms of vertical coordination: Spot market, relational contract, long termcontract, clan, joint venture, hierarchy.

Differentiation strategies in the European dairy industryThe crucial factors for the determination of final quality are milk characteristics and processing methods.


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certification and control bodies may reinforce the implementation of such contracts. In cheese productiondeliveries are usually recurrent, so frequency does not seem to be a relevant explanatory variable at leastin this phase.The main characteristic of non industrial processed foods such as the cheese products considered in our

analysis is that product differentiation within the same product group is generally quite difficult. In fact,the degree of product substitution in a fairly competitive market is very high and therefore thespecification of a particular quality standard relies on two main factors: the definition of an institutionalquality level usually linked to the geographical origin of the product, protected by law from external freeriding behaviours, or investments in reputation by individual producers, usually sufficiently large size sothat they can make the necessary investments in reputation, with the development of a firm specificquality usually signalled by means of registered trademarks.These two factors allow the definition of three strategic groups of firms/organisations depending on their quality differentiation strategies:

- Firms differentiating through collective brands such as PDOs2

;- Firms differentiating with their own brands/trademarks;- Firms differentiating with both collective and own brands.The cases included in this study can be classified into these three strategic groups.

Designations of origin and other collective institutional quality signals. Collective reputation throughdesignations of origin is common for traditional dairy products and allows to build a collective reputationfor all the producers entitled to use a common commercial name which indicates the geographical

provenience of the products. Clearly, in this case the objective of the governance structures which assurethe final product quality has to undertake two main tasks:

- to provide the necessary level for those quality characteristics which make the differentiation possible.For PDO products these characteristics are related to the geographical area where the production process takes place. The crucial stages refer to the supply of raw milk to processors and the supply of intermediate products at different levels along the production process. For these purposes, thedimension of the governance structure is essentially vertical either through direct vertical integrationor explicit contractual arrangements.

- To offer an adequate control system in order for the collective quality reputation to be maintainedtrough time, i.e. to avoid free-riding behaviours. Therefore, it is of great importance to define a proper governance structure in terms of horizontal relationship among producers of the same quality. This

particular task is peculiar for production systems where the main objective is the preservation of acollective reputation.Trademarks and other company specific brands/marks. The name of the product represents a halo thatsummarises the specific quality characteristics which are intended to make the product different fromcompetitors. The idea is to build specific reputation through intangible investments aimed to increase the

product value perceived by final consumers.In this case, similarly to the previous one, the relevant stages for quality differentiation are the relationshipwith the supply of raw materials and the other intermediate stages along the production process.On the other side, the problem of free riding does not show an horizontal dimension, even though some

sort of opportunistic behaviours can still be a problem in vertical transactions.Collective and own brands/marks . In this case, the purpose is to position the product at a usually higher quality level with respect to the other products which benefit from the same collective reputation. For example, within a particular designation of origin, a firm could decide to develop a biological version of the product or could use its own umbrella brand to accrue reputation regarding particular quality aspects,i.e. food safety. Firms become mainly interested in the reputation built on their own brands, which givesnon collective direct benefits independently from the behaviour of the other producers.


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Complexity of the quality signal(s). In all cases, the degree of complexity of the final quality level to beachieved could be thought to be responsible for the adoption of different governance structures. In

particular, two will be the dimensions directly related to governance structures:- The degree of uncertainty of the quality attributes, for example how easy will be for buyers to

observe and detect the level of effort that seller put in for assuring the pre-defined quality standards,which is directly related to the type of attributes involved in the definition of quality. If monitoringcosts for relevant attributes are high, then stricter governance structures will be necessary.

- Which parties are mainly in control of the relevant attributes: if the quality of raw materials isimportant, then the (external) governance of supplies becomes crucial, while if attributes are directlycontrolled within the buying company, the priority goes to internal governance.

Asset specificity. This variable is directly related to the type of quality signals implemented.With collective institutional brands we basically have four types of specific assets: human, site physicaland brand capital. The first refers to the knowledge of traditional production methods which represents a

specific asset resulting from a learning by doing historical process inherited generation after generation. No other workers can guarantee the preservation of these traditional methods and therefore the quality of final products is strictly dependent on this specific asset.Site specificity refers to specific local conditions for production: usually, the quality of products withdesignations of origin cannot be replicated outside the area especially if origin itself is a qualityindicator to final consumers. Moreover, following the original Williamsons idea, the nearby location of raw material suppliers and processors allows to economize in terms of transaction costs such astransportation costs.Physical specificity of the traditional production assets is another important constraint: these products are

obtained using traditional techniques and equipment specifically developed for these products during theyears: the possibility of transferring the same technology on other productions is very limited.With firm specific trademarks, asset specificity is mainly due to physical specificity and brand namecapital. The adoption of technologies functional to the quality of final products may constraint companiesto adopt governance structures which assure for example particular quality standards for raw materials.Heavy intangible investments on the trademark may also constrain the firm to adopt a proper structure for governing quality: the risk involved if the effective quality perceived by final consumers is not in line withthe quality signalled is directly related to the amount of these investments. Moreover, in order for thesecosts to be recovered in the long run, the firm must be able to impose a price premium on the product, and

this capability relies on the possibility of extracting a higher willingness to pay from consumers, whichoriginates from a higher marginal utility, i.e. from a compatibility between signalled and perceivedquality.In the third case, when both signals characterise the product, all the specific assets described above may be

present at the same time.Task programmability and task separability. Also in this case there is a substantial difference in the threequality signalling situations. In the case of collective brands, there are two problems in the task

programmability of those activities contributing to final quality. The first is related to the verticaltransactions of raw materials and intermediate goods: the capability to observe the degree of effort that

agents put in their activity can be rather low for those activities distant from the principal: a cheese maker may not be able to directly monitor and control the behaviour of milk suppliers simply relying on spotmarkets, i.e. without some sort of vertical contracting and proper control structures. Task separabilitycould be possible if the relevant quality parameters of raw materials such as milk, which represent theoutcome of suppliers, were measurable by buyers easily and at low cost.The second problem is related to the fact that task programmability within the group of companies usingthe collective brand is generally quite low and free-riding behaviours may emerge, due to the presence of a


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trademarks not directly linked to geographical areas. Therefore, traditional markets may work only if thefinal quality signalled by the trademark depends mainly on the processing phase and not on thecharacteristics of raw materials. If this is the case, opportunistic behaviours leading to low task

programmability may still be present within the processing phase: to avoid high transaction costs firms

may have an incentive to adopt quality systems such as HACCP or ISO 9000 procedures.

The empirical analysisThe questionnaires used dealt directly with all the variables which represent the main characteristics of negotiations at the relevant stages for the definition of final quality, such as asset specificity and frequencyof transactions. They also allowed to infer the degree of uncertainty affecting transaction, i.e. the

possibility of gaps between contracts and effective specifications. As we mentioned before, the cases have been classified in three groups depending on the differentiation strategies adopted. Table 1 summarizes the

characteristics of the 12 cases included in the analysis. First strategic group: organisations signalling quality with collective brandsIn the cheese sector collective brands refer essentially to Protected Designations of Origin (PDO). The fivePDOs included are: Parmigiano Reggiano (Italy), Cantal (France), Comt (France), Stilton (UK) andKourellas (Greece).In all cases the owner of the collective brand is an external non-commercial organisation with thefollowing main activities:- quality control at all stages along the chain;- technical assistance to producers;

- promote the product and facilitate demand/supply equilibrium.The existence of such a third party improves the coordination of the production chain and reduces thenecessity of complex and burdensome governance structures.The attributes signalled refer to traditional methods, origin and specific sensorial quality. The idea of quality resulting from these attributes is not particularly complex, but its variability may represent a

problem.Stage 1: relationship between milk suppliers and processors.Milk producers are often members of processing cooperatives. The governance structure can be referred toa bilateral relational contract, but in most cases with the supervision of the external organisation.

Contractual clauses include the specification and respect of a quality protocol, the definition of prices anda system of penalties-incentives as well as a system of controls. This contractual form allows to reducemoral hazard problems especially for those attributes which cannot be directly measured on the milk delivered and the technical assistance provided by the organisation helps farmers to keep up with theevolving characteristics of final products. Systematic on-farm controls operated both by the processingcoops and the organisation make sure that farmers follow the production protocol especially in terms of animal feeding. The membership to the coop is usually a long-run relationship, and the trust built betweenfarmers and cooperative reduces the necessity to resort to penalties or exclusion. This is particularly truefor small cooperatives relying on milk producers located in a very narrow area and therefore with high site

specificity, which obliges farmers to fulfil the processors requirements. When particular quality attributesare required, formal certification procedures guarantee that farmers followed proper productiontechniques: a common example is the organic version of a PDO product, where an external certification

body defines the production protocol and the necessary controls and often defines also contracts withanimal feed producers, a critical input in the organic milk production.Stage 2: relationships among processing phasesThe problem of free riding becomes crucial at this stage: the governance structure has the objective of


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One case, Veenweide/Wildeweide (The Netherlands), refers to a collective brand not related to thegeographical origin of the product.The relationship of processors with suppliers is characterised by implicit (oral) contracts: control on milk quality is a sufficient mechanism to limit opportunistic behaviours. Moreover, site specificity is also an

incentive for farmers to adhere to the processors specifications. Only for organic producers a writtencontract with an external certification body specifies the production protocol. In this case milk production

becomes crucial for the definition of organic cheese quality and the external certification body solves themoral hazard problem. At the farm level, animal feeding is the critical transaction for the production of organic milk and therefore the certification body defines contracts with feed suppliers.In the other cases the relevant stage for the assurance of final quality is the processing phase. Thesupervising organisation in charge of the collective brand management defines licenses individual

processors to use the brand under strict control procedures, with contracts tacitly renewed every year. Inthis case, asset specificity mainly refers to collective brand capital but also site specificity in terms of

location nearby the processing plants plays an important role.The contractual relationship governing the relevant stages is comparable to the PDO case: also in this casethe organisation in charge of the collective brand offers an efficient quality control system in order toavoid free-riding behaviours which characterise collective reputation.Second strategic group: producers signal quality with individual brandsThree cooperatives, Alfuegal Pitu (Spain), Bauermarkt Chiemgau (Germany) andMolkereigenosssenschaft (Germany) base their differentiation strategies on own brands.The main attributes signalled to consumers usually refer to superior overall sensorial quality, safety(organic production), regional origin.

The main quality signal is an umbrella brand, but further certification marks are added in order to signalcredence attributes such as safety or organic production.Stage 1: relationship between milk suppliers and processorsGenerally, milk quality specifications are achieved through membership of farmers in a cooperative: theyagree to produce according with protocols defined on the basis of a quality target. Penalties represent anincentive to respect the contract. Whenever particular quality attributes are required in the milk supplies,for example organic production or other ecological techniques, external bodies provide the necessarycertification and the possible moral hazard problem is therefore solved through in-field control.Stage 2: relationships among processing phases

Processing phases are usually linked to each other with strict relational contracts, which define the processing techniques and specifications. The relationship between cooperatives at different levels is veryclose to a completely vertically integrated system: such a governance structure allows a substantialreduction of transaction costs in presence of high asset specificity and potential opportunistic behaviours,i.e. with low task separability and task programmability. Moreover, cooperation offers a very flexibleinstrument for coordination when the size of production units is very different at different stages along thechain, i.e. when the minimum efficient scale of production is different. Whenever internal control of

production phases causes transaction costs to increase, external certification bodies are involved, such asin the case of HACCP adoption for safety and ISO 9000 procedures for quality system certification.

Third strategic group: producers signal quality with both collective and individual brandsSometimes processors add further asset specificity on brand capital in order to individually differentiatethe product: in this case two quality signals coexist, one indicating a sort of minimum quality standardcommon to all PDO products, the other signalling some above average characteristics of the product.In this group we include three cases, Epirus Dodoni SA (Greece), West Country Farmhouse Cheddar (UK), North Holland Gouda cheese (Netherlands), all cooperatives, where a registered trademark and aPDO are both signalling quality at the same time, but apparently with the prevalence of the first one. In


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penalties/incentives allows to control the milk standards and external bodies may provide certification for those quality characteristics regulated by law, such as organic production.Stage 2: relationships among processing phasesThe processing phase is also critical: processing cooperative are usually vertically integrated within the

commercial cooperative. Particular attributes such as safety are guaranteed through external bodies.Certification of the quality system includes adoption of HACCP and ISO certification in order to avoidopportunism, problems from bounded rationality and also other technical inefficiencies.Overall, this group seems to adopt more integrated governance structures with respect to the previous one,and the main reason is probably the higher degree of asset specificity and complexity of the quality signal.In order to position their production differently from the PDO definition the owners of the trademark mustincrease the standards. This implies complex contractual arrangements, and the risk of market failure isreduced through vertical integration. If a market failure should happen, it would be for example difficultfor a firm to recover from the heavy loss caused by the use of very specific assets.


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ReferencesCoase, R. 1960. The problem of social cost, Journal of Law and Economics , vol. 3, n. 1.Dasgupta, P. 1988. Trust as a commodity, in: Gambetta D. ed., Trust, Making and Breaking of

Cooperative Relations , Oxford, Blackwell.

Eisenhardt, K. 1989. Agency theory: An assessment an review, Academy of Management Review , vol. 14,n. 1, pp. 57-74.Hart, O. and Moore, J. 1988. Incomplete contracts and renegotiation, Econometrica , vol. 56, pp. 755-786.Heide, J.B. and John, G. 1990. Alliances in industrial purchases: the determinants of joint action in buyer-

supplier relationship, Journal of Marketing Research , vol. 27, pp. 24-36.Klein, B., Crawford, R. and Alchian, A. 1978. Vertical integration, appropriable rents, and the competitive

contracting process, Journal of Law and Economics , vol. 21, pp. 297-326.Mahoney J.T., 1992. The choice of organizational form: Vertical financial ownership versus other

methods of vertical integration, Strategic Management Journal , vol. 13, pp. 559-584.

Milgrom, P. and Roberts, J. 1992. Economics, Organisation and Management, Englewood Cliffs, PrenticeHall. Nelson, P. 1970. Information and consumer behavior, Journal of Political Economy , vol. 78, pp. 311-329.Streeter, D., Sonka, S. and Hudson, M. 1991. Information technology, coordination, and competitiveness

in the food and agribusiness sector, American Journal of Agricultural Economics , vol. 73, n.5, pp.1465-1471.

Williamson. O.E. 1985. The economic institutions of capitalism, New York, The Free Press.Williamson O.E. 1986. Economic Organisation: Firms, markets, and Policy Control , New York,

Harvester Wheatsheaf.

Williamson, O.E. 1989. Transaction cost economics, in: Handbook of Industrial Organisation ,Schmalensee R. and Willig R.D. eds., North Holland, pp. 135-182.


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Table 1 (contn)Quality signal Stilton cheese West Country Farmhouse

CheddarLegal form of the organisation Producers association

(Stilton Cheese Makers Association)

Producers association(Farmhouse Cheesemakers

Ltd) Main activity of the organisation Promotion of Stilton cheese Marketing of farmhouse

cheddar Main products Stilton cheese Farmhouse cheddarSize of the organisation (turnover) 6 producers 11 producersType of quality signal Collective trade mark Collective brandIs the product awarded formal quality certification?

Yes: PDO Yes: PDO

What does the quality signal intend to guarantee

- Geographic origin- Production methods- Distinctive

organolepticcharacteristics

- Geographic origin- Production methods- Distinctive

organolepticcharacteristics

Who is the owner of the quality signal?

Producers association andState

Producers association andState

Who is the user of the quality signal?

Producers part of theassociation

Producers associated toFarmhouse Cheesemakers

Ltd. At what scale is the product known?

International National

At what scale is the product

distributed?

International, with largest

market in the UK, butexport to EU, USA, Canada,Soth Africa, Australia and

New Zealand

National (little export to

EU)

What is the market share of the main product/s?

1.5-2% of total UK cheesemarket

Appx. 3% of total UK cheese market

Change in the market share during past 5 years

Market share has remainedfairly stable

Market share has decreased

Evaluation of the quality signal Consumer and marketresearch are responsibility of

the producers association

Research commissioned toMendip Dairy Crest (large

UK creamery)

boccaletti karantininis chain reaction

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