survey Ital. J. Food Sci., vol. 27 - 2015 1 - Keywords: agri-food, consumer, market, marketing - ANALYSIS OF A DIRECT SELLING NETWORK FOR AGRIFOOD PRODUCTS P. RAPISARDA*1, M. RIZZO1 and A. SCUDERI2 1Department of Economics and Business, University of Catania, Italy 2Departement of Agrifood and Environmental Systems and Management, University of Catania, Italy *Corresponding author: placido.rapisarda@unict.it AbstrAct sicily has become a food and wine area of great interest. However, conflicts within the supply chains have caused the selling process to become long and complex to the disadvantage of farm- ers, thereby leading to an information asymmetry between producers and consumers. In order to meet the new needs of the agrifood sector, we developed a theoretical model of organ- ized direct selling that goes beyond regional boundaries, which is an alternative model to farmers’ markets and that helps to promote the creation of a network among the operators of sicilian agri- food supply chains. the aims of this study was to verify the potential of the proposed theoretical model based on a sWOt analysis, which was achieved by collecting data from interviews with the producers involved in the sicilian agrifood supply chains, and with the main stakeholders involved. 2 Ital. J. Food Sci., vol. 27 - 2015 IntrOductIOn Farmers have always tried to shorten the supply chain between producers and consum- ers. they started by setting up consumer coop- eratives and farmers’ points of sale1. recently, farmers have incorporated e-commerce within their selling activities, as well as farmers’ mar- kets, box schemes, pick-your-own initiatives, and community-supported purchasing groups (Abel et al., 1999; AguglIA, 2009; brunOrI et al., 2009; lA trObe, 2001). national and international studies make nu- merous references to these practices, which have focused on producers, consumers, those outside the established sources of supply, which have been compare with consolidated distribution systems (MurdOcH et al., 2000) with respect to environmental or legislative issues. In particu- lar, these studies focus on short supply chains, direct selling, alternative food networks (HOl- lOWAy and KneAFsey, 2004), short food sup- ply chains (rentIng et al., 2003), community- supported agriculture (rAFFAellI et al., 2009), and food community networks (lOMbArdI et al., 2012; PAscuccI, 2010). One of the main features that are debated frequently concerns the effective advantages of short supply chains for producers, consumers, and the community as a whole. Producers may have higher economic margins compared with those in the traditional agrifood supply chains, where different mediators take away part of the producers’ margins (VAn der PlOeg, 2006). However, a feature that is often ignored is the fundamental difference between the roles, tasks, attitudes, and capacities of farmers and market experts, who have specific skills to address the market in an effective manner. It is inconceiva- ble in terms of education, culture, or tradition for farmers to occupy specific commercial roles or to confront the “unfair” challenge of the large- scale retail trade, which has been present in cit- ies for decades. Instead, it is possible to suggest the organization of an innovative market system, which can use its available efficiencies to move agriculture closer to urban consumers in differ- ent but stable ways, because consumers are in- creasingly keen to retain the precious nutrition- al value of food in general and of the “Mediter- ranean diet”2 in particular, where unescO has recognized the latter as an intangible heritage of humanity (grOssO et al., 2013). At present, the food industry and large-scale retailers are trying to exploit the information asymmetry that exists to direct consumption to- ward their needs and targets. this can only be overcome by farmers, particularly the produc- ers of high quality food with good organoleptic characteristics (Abel et al., 1999; Hunt, 2007). the real advantages for consumers of short sup- ply chains are lower prices but also better infor- mation about the nutritional value of raw mate- rials, the characteristics of the production pro- cess, agri-industrial processing techniques, and food preservation techniques (HInrIcHs, 2000; lA trObe, 2001). Accordingly, our goal was to design an exper- imental model of direct selling that may repre- sent an innovative method for agrifood products and to promote the products from specific areas, thereby implementing an alternative networked commercial system that can communicate ef- fectively and reliably with consumers about the value of the food produced. AnAlysIs And reFerence cOntext Italian legislation has supported the direct commercialization of agrifood products since the 1960s (law no. 59 of 1963) and legislative decree no. 228 of 20013 simplified the relative procedures for farmers who practice direct sell- ing4 (AlAbrese, 2008). subsequently, a decree has been applied to farmers’ markets only (bellettI et al., 2010). the growth of these markets was supported fur- ther by the Ministry of Agricultural, Food, and Forestry Policies on november 20, 20075 but the current economic recession is limiting food habits and life style, and reducing the purchas- 1 For example, citrus fruit producers’ organizations in the province of catania promote a network of points of sale in north-eastern Italy, which are run directly by the members (rizzo and Mazzamuto, 2009). 2 Hedonistic reasons accompany healthy ones in defining the value of food products. the increasing number of press col- umns and television formats dedicated to food confirm the widespread research into the pleasure of good food and con- viviality, as well as best sellers and editorials about regional recipes and the increasing number of concept stores where furniture, atmosphere, and menus make consumers feel relaxed and comfortable while enjoying simple, traditional, but creative meals based on the Mediterranean diet. 3 Article 4 of l.d. no. 228 dated 18 May 2001, “Orientation and modernization of the agrifood sector, according to art. 7 of law, no. 57 dated 5 March 2001”. 4 the new decree also allowed direct selling for products not produced directly by the farm itself. the previous law, no. 59/63, “rules for Farmers to directly sell Agrifood Products,” limited selling by farmers to the products obtained exclu- sively from their farms. they were identified as “owners of the land where they grow, their cooperatives or associations.” 5 this is an unprescribed decree since the legislative competence concerning commerce and agriculture is limited exclusive- ly to regional governments according to article 117 of the constitution. Only regional governments can issue rules and regulations about this matter. thus, it is a decree aimed at guidance that is not mandatory (Alabrese, 2008). Ital. J. Food Sci., vol. 27 - 2015 3 ing power of families (FAntuzzI and brugnO- lI, 2010). Producers use direct selling as a way to sell their products in nearby markets. there are two reasons for this: first, the greater the distance from the origin of the food, the greater the prob- lems of information asymmetry between produc- ers and consumers become, while the informa- tion and communication costs related to prod- ucts and production techniques are also higher (brIAMOnte, 2010; gArdInI et al., 2007; guIdI, 2008); second, producers are hampered by the lack of organization, logistics, and the availa- bility of finance when operating in distant mar- kets. this makes it difficult for small-medium enterprises to place their products and oper- ate at national and international levels (cHIF- FOleAu, 2009). several regional governments have issued spe- cific regulations and financially supported mar- ket development6, including numerous measures in the rural development Plan (rdP). In sicily, measure 321/A1 of the 2007/2013 rdP, sup- ports the development of equipped public are- as for farmers’ markets of typical products and handicrafts. Fig. 1 shows the intervention areas, which include 85 projects and a total investment of 9 million euros to develop farmers’ markets, 79 of which will be activated in local Action groups (lAgs) areas and the remaining six in other ar- eas. However, direct selling within farmers’ mar- kets has limits and critical points (VerHAegen and VAn HuylenbrOecK, 2001; cHIFFOlAeu, 2009). thus, previous studies have noted that farmers’ markets provide a direct relationship between producers and consumers, which may guarantee fresh products, because of their ex- cellent locations and temporal discontinuity, but they do not provide an effective organization for selling, they do not obtain appropriate sales volumes, and they do not meet demand in full (brunOrI et al., 2009). Farmers’ markets are of- ten combined with village fairs and with folklor- istic and cultural characteristics, but they are rarely oriented towards a modern organization7. the exclusive selling of products grown and consumed in the same area cannot allow for temporal continuity or completeness in terms of product diversification and the quality level, which is the basis of the modern distribution Fig. 1 - Farmers’ market in sicily (source: data elaboration 2007-2013 rdP sicily). 6 the sicilian regional government intervened on this issue by article 83 of l.r. 11/2010, by allowing direct selling, par- ticularly by certified farmers who carry out their activities within the sicilian territory. 7 the regulation gives municipalities central powers to organize, authorize, and finance such markets. despite the marginal role assigned to regional governments by national legislation, the majority have regulated and financially sustained farm- ers’ markets. 4 Ital. J. Food Sci., vol. 27 - 2015 system thanks to the evolution of preservation techniques, transportation systems, and logis- tics (HInrIcHs, 2000). several studies (rIzzO and VeccHIO, 2008) have shown that this approach is not a sustain- able alternative because the volumes are too small. these low volumes are due to the lack of temporal continuity of production and the in- capacity of the local agrifood system to offer an articulated range of products. If direct selling of agrifood products is to gain a higher econom- ic weight, it cannot be confined to the farm lo- cation itself or to the neighboring area. Italian legislation has not limited direct selling to local products alone, which has allowed it to spread throughout the territory of the republic after communication with the municipality to which the farm belongs8 (tudIscA et al., 2014). recently, the sicilian regional government is- sued a regulation (article 10 of law 25/20119) that goes beyond regional boundaries to sup- port and promote “the direct and market selling activities” of sicilian agrifood products via net- worked regional structures (section 1), that may interact in synergy with analogous networked structures at the national level (section 5) and at community level (section 6). PrerequIsItes OF tHe netWOrK MOdel the european agrifood sector, particularly fruits and vegetables, has not experienced con- sumption increases for many years. by con- trast, demand has diversified greatly where the dynamics have affected the structure of the of- fer (csO 2012 data). consumers are increasingly keen to look for products that better meet their needs and their respect for a renewed linkage between pur- chasing processes. the points of sale within the framework of the complex income dynam- ics suggest new market segmentation models, which are function of a different “perception” of the quality-price relationship. Indeed, quality now includes aspects that go beyond its tradi- tional concept, which was bound only to the or- ganoleptic characteristics of products (brunOrI et al, 2009; cHInnIcI et al., 2013). An orientation toward “responsible” purchas- ing has been added to the reasons to buy, espe- cially from the particular segment of consum- ers who have a mature awareness of high value products because of their organoleptic, nutri- tional, healthy, evocative, ethical, and solidarity- based characteristics compared with commod- ities (dI VItA et al., 2013). this value is derived from, either jointly or singly, the fact that prod- ucts come from specific territorial contexts (Abel et al., 1999), where they are grown with tradi- tional and/or organic production techniques, thus the offer is organized directly by producers who bet their reputation on their products and they only receive a premium price. Accordingly, sicily’s pedoclimatic character- istics may allow it to produce a wide range of agrifood and zootechnical products, which may satisfy all the nutritional needs of the regional market, but also the national market. sicily is a food and wine “continent” because of the wide range of high quality agrifood products it offers and its millennial culinary tradition. based on its range of high quality agrifood products, sic- ily (graphic 1) is the third highest ranked re- gion in terms of the number of registered prod- ucts (28), especially for fruits, vegetables, oils, and cheeses. despite the acknowledged excellence of sev- eral quality products, the tendency for territori- al specialization and exploitation has not dimin- ished, especially in those territories where the community politics for years have favored mon- ocultures destined for “global” markets. In sicily, this tendency has caused (Fig. 2) the sellable gross production (sgP) to rely on a few typical products, i.e., citrus fruits, grapes, oil, wine, vegetables, and a wide range of zootech- nical products, which together comprise 70% of the sgP of sicilian agriculture, while 30% of the sgP includes other fruits, vegetables, and livestock, which have lower value despite their high quality. Although sicily may rely on a good range of agrifood products, its supply chains are inade- quate due to a lack of organization and produc- tion volumes. thus, it cannot account for a sig- nificant market share. In many cases, single companies cannot face the problems related to the planning and man- agement of the necessary promotion and com- munication activities. In addition, they cannot easily obtain the necessary information about the market situation and consumers’ preferenc- es in order to tailor their offer according to con- sumer needs. For example, it is difficult for them to standardize their quality, arrange for suita- ble packaging, ensure the constant presence of their product, or adopt an advanced traceability system (HAusMAnn and de AMIcIs, 2007; rAPIs- ArdA and rIzzO, 2010). All of this would require 8 the first national organization to undertake direct selling and overcome these critical points was sponsored by coldiretti, an organization that represents Italian farmers. coldiretti, via its initiative called “campagna Amica,” is promoting points of sale throughout the national territory. these points of sale are gathered in a single commercial network that offers con- sumers the products of their members regardless of the geographical location of the growing area within Italy. 9 regional law dated november 24, 2011, no. 25, issued on gurs no. 50 of december 2, 2011, entitled: “Interventions to support Agriculture and Fishing. regulations for handicrafts, cooperation, and commerce.” Ital. J. Food Sci., vol. 27 - 2015 5 resources, competencies, and a critical mass of products that sMes often lack. the only way to overcome these problems is via group initiatives (gAlIsAI et al., 2009; lOMbArdI et al., 2012) that combine production as well as some steps of the distribution processes and logistic arrangements (bellettI and MArescOttI, 2012). based on these requirements and legislative interventions of the sicilian regional govern- ment, we aimed to develop an organized direct selling (Ods) theoretical model, which goes be- yond regional boundaries and provides an alter- native to the farmers’ markets, thereby promot- ing the creation of networks among sicilian ag- rifood supply chain operators. the model is structured and includes the fol- lowing subject typologies. - Subjects in the supply chains: farmers’ as- sociations: these subjects have to organize the offer and services for each farmer’s direct shop10 (from product preservation to shipment). - Subjects for farmer’s direct shop manage- ment: specific or pre-existing companies will or- ganize the farmer’s direct shops at national and international levels, such as the organization of promotional events and the management of mar- ket activities. they will have the functional pre- requisite of collaborating with the subjects of the supply chains to guarantee the direct selling of products and to form a network that agrees to perform all of the other related activities. - Network junction: this is the organizational structure required to deal with the relationship between the subjects of the supply chains and graphic 1 - PdO, PgI and tsg registered prod- ucts in Italy (Source: Qualivita data direct elaboration). 10 direct selling shop, a “closed area,” which is independent and included in an articulated structure with dedicated corner for the subjects of the supply chains to carry out their activities. graphic 2 - sicilian gross sellable productions (2012) (source: Inea data direct elaboration). 6 Ital. J. Food Sci., vol. 27 - 2015 the subjects of the farmer’s direct shop manage- ment to coordinate and organize common activi- ties, and to ensure that regulations are observed (rIzzO and gIudIce, 2013). this Ods model allows the possibility of over- coming the limits of the most common short supply chains in the Italian territory, by join- ing producers as subjects in the supply chains, which are separated based on products, and by proposing the management of the direct selling commercial activities via a direct selling shop manager, who is a third subject. this theoretical management model is based on the network junction, the function of which is to coordinate the bidirectional inputs from the subjects of the supply chains and the subjects of the farmer’s direct shop management. the re- sults of this information exchange will generate the product typology, the packaging typology, and the selling price, as well as linking produc- ers directly to the subjects of the farmer’s direct shop management, who have direct daily con- tact with consumers. All of the subjects of the supply chains will be represented inside farm- er’s direct shops with promotional and tasting initiatives for their products. In order to make the model stronger and more significant, side activities are included within the agrifood product direct selling scope, such as the following: - tasting and distribution of quality regional agrifood products; - Organization of “satellite market spots” with- in the commercial area of reference of each farm- er’s direct shop; - Promotion of regional quality production within the hotel, restaurant, and café (Ho. re.ca.), and ethical purchasing groups (gAs) commercial scopes of reference; - Acting as a structure that manages the or- ganization of promotional activities at a region- al level, including territorial marketing and cus- tomer retention; - Acting as an intermediate logistics centre to carry out e-commerce activities. this network includes a union point where producers and consumers meet to increase knowledge of the organoleptic and nutritional qualities of products based on tasting as well as on information that, thanks to modern It tools, has become widely available and is articulat- ed and updated in real time. In order to comply with the aim of this research and combine tradi- tion, culture, gastronomy, and diet inside farm- ers’ direct shops, traditional promotional activi- ties will be developed, such as tasting, cultural, educational, and gastronomic activities involv- ing the products and the territory. the truly innovative element is the promotion- al function of farmer’s direct shops, which will be integrated within the market and promotional activities, thereby producing a synergy between promotion and selling to help overcome the limits of the promotional activities carried out by pub- lic and/or territorial bodies, which often develop out of the commercial logic of private operators. Integration, in addition to the physical level, is a common operative project between the public promotional activity and the private commercial activity, which is a highly innovative element of the model suggested to the regional government. MetHOdOlOgy We decided to verify the potential of the pro- posed theoretical model by carrying out a sWOt analysis using data collected from interviews with producers and the main stakeholders in- volved with sicilian agrifood supply chains. sWOt analysis is a strategic planning tool used to evaluate the strengths, weaknesses, op- portunities, and threats related to the Ods mod- el in order to fulfill its goals. the sWOt analysis includes: - strengths: the aspects of the model that help to fulfill its goals; - Weaknesses: the aspects of the model that hamper the fulfillment of its goals; - Opportunities: useful conditions outside the model that help to fulfill its goals; - threats: external conditions that may dam- age the performance of the model. the analysis used aimed to meet the goals of our research. In fact, it links the knowledge of the context where producers operate to the pol- itics of the economic development and promo- tion of agrifood products. the analysis group collected information con- cerning the difficulties of sicilian farmers, com- mercial solutions, market dynamics, the specif- ic needs of producers who adopt short supply chains at organizational and management lev- els, and objective and official data related to the agrifood system, which was obtained from the main research institutes of Ismea, Inea, Istat, the Osservatorio sulla Vendita diretta, and nomis- ma. this study helped to identify the strengths and weaknesses of the most widespread forms of short supply chains, specific data concern- ing sicilian agrifood productions, the impor- tance of this phenomenon, legislative aspects, and the fiscal and administrative supports of direct selling. direct interviews were conducted during 2013 in collaboration with the technical assistance op- erational sections (sOAts) of the sicilian region- al government, which allowed the nine provinces of reference to select farms that were interested in the proposed direct selling model, where 126 operators in the sicilian agrifood supply chains were interviewed either jointly or singly. the number of interviews was quite signifi- cant compared with the number of operators involved. the answers to the questionnaire and sWOt analysis entries were selected based on Ital. J. Food Sci., vol. 27 - 2015 7 the number of times they were iterated. Answers were given according to the personal experienc- es of the interviewees. the originality of this research concerns the definition of a functional model of direct selling that includes producers, market managers, and consumers, as well as the creation of farmer’s direct shops with the primary function of sell- ing agrifood products, but also with a wider and complex economic meaning, which combines articulated functions, such as “farmer’s direct shops”, promotion, marketing, and tasting that are linked to the production territory. results the results of this study show that “local Food” has emerged as an increasing interest due to the economic weight it is gaining in terms of “proximity,” i.e., the physical distance between producers and consumers, but also because of the growing importance consumers allocate to the quality of products that come from a specif- ic territory. numerous typical sicilian products possess the necessary characteristics to develop their own local market and to find places in the market that differ from their original roles, es- pecially if they are characterized by clear trace- ability, sufficient critical mass, and the will to create a network of all supply chains and ser- vices for farms. the sWOt analysis highlighted the main strengths, weaknesses, and threats, but also the opportunities that the proposed model offers to support sicilian agrifood productions and to strengthen the role of producers in the supply chains (table 1). the sWOt analysis suggest that the Ods model has a strategic meaning and it may achieve the following. Promote a base of knowledge and excellence beyond the regional scope, thereby spreading in- formation and stimulating consumption. Improve the competitiveness of producers who cannot easily find commercialization channels table 1 - sWOt analysis of the organized direct selling experimental model. source: elaborations of direct surveys and nomisma dat Table 1 - SWOT analysis of the organized direct selling experimental model. Source: elaborations of direct surveys and Nomisma data Strengths Weaknesses ▪ Wide product range ▪ Creation of a network between producers and consumers ▪ Selling far from the place of origin guaranteeing the origin of products, quality, freshness, product seasonality ▪ Valorization and promotion of products within the selling stage ▪ Higher added value for producers along the value chain ▪ Daily selling activity ▪ Logistics organization ▪ Remote management of points of sale ▪ Logistics and transportation costs Opportunities Threats ▪ Creation of alternative selling channels ▪ Promotion of the territory of origin ▪ Possible interaction with local bodies and associations to develop community initiatives to the advantage of the territory ▪ Diversification towards non-agriculture- related activities (Ho.Re.Ca; catering) ▪ Advertising of the Mediterranean Diet and of the “born in Sicily” label ▪ Management cost of points of sale ▪ Purchase frequency ▪ Management of returns Author 30/9/y 14.59 Formattato: Tipo di carattere:Times 8 Ital. J. Food Sci., vol. 27 - 2015 beyond the regional scope, thereby motivating production differentiation in sicilian agriculture and making traditional producers economically sustainable. Indeed, the latter remains an ex- pression of the biodiversity of specific territori- al contexts. exploit the well known advantages of short supply chains to allow the agrifood world to be- come closer, both significantly and stably, to the growing segment of consumers who look for and buy quality agrifood products. stimulating farmers’ associations to concen- trate, organize, and commercialize their offer, thereby improving the performance and com- petitiveness of members. In addition, several weaknesses of direct sell- ing in farmers’ markets may be overcome by cre- ating an organized network that strengthens the role of producers within the supply chains. However, the weaknesses and threats show that there is a need to strengthen the concept of di- rect selling within farmer’s direct shops. by con- trast, the model may become distorted given the difficulties of maintaining the producer-consum- er relationship directly from a legislative-fiscal point of view. Overall, this model is an example of organized supply chains with defined roles and a vertical distribution strategy directly from producers to consumers, thereby providing the opportunity to design intervention proposals and strategies to define the offer based on the specific charac- teristics of the demand. cOnclusIOns the research results allowed us to evaluating our experimental model that aims to promote a network of direct selling operating promotional farmer’s direct shops and points of sale through- out the national territory, thereby promoting si- cilian agrifood products. this is a step forward compared with today’s “country markets” be- cause it shortens the physical distance from the field to the table and optimizes the organization- al and economic structure of this sector. the proposed short supply chain management model provides tools that are more flexible for producers, by overcoming the current difficulty of being present in different places at the same time to meet consumers. A direct relationship with the farmer makes product commercializa- tion easier but not all farmers are ready to as- sume this role. Indeed, many would prefer to continue playing their existing role, which is to dedicate themselves to their production activi- ties because they lack sufficient time, resourc- es, or the correct attitude to participate in sell- ing activities. sicilian farmers may not face price competi- tion, but the hypothetical shortening of the dis- tribution chain by proposing direct contacts be- tween the consumer (national, according to the whole range of the legislative intervention un- der study) and the producer (sicilian) cannot be separated by the segmentation of a specific tar- get group of consumers. thus, the proposal of a “pact” as a sign of a philosophy that favors some qualitative aspects but does not aim to make it prevail over the price-quality relationship that is a prerequisite of large-scale retailers cannot be a characteristic element of the supposed dis- tribution model’s competitiveness. this verification model could be a combined governance model for regional planning. to evaluate the replicability of the model, it will be necessary to establish the trend in the relationships within the network and the evolu- tion of the organizational system, as well as de- termining the extent to which this might help to develop the technical, organizational, and re- lational capacity of each farmer, as well as to preserve/reproduce local resources and biodi- versity. reFerences Abel J., thomson J. and Maretzki A. 1999. extension’s role with farmers’ markets: working with farmers, consumers and communities. 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