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Smallholder product quality certification in absence of the State: “Frango colonial” in Santa Catarina, Brazil

Guy Henry CIRAD-Amis, ProsPER Cone Sul Campinas-SP, Brazil Denis Sautier CIRAD-Tera Montpellier, France Glauco Lindner IPAGRI Rio Sul-SC, Brazil

E-mails : [email protected] [email protected]

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Smallholder product quality certification in absence of the State: “Frango colonial” in Santa Catarina, Brazil ABSTRACT

Small-scale/family agriculture’s insertion into demanding product markets has been the overall line of R&D for a group of Brazilian-French researchers, including this theme on 5 experiences with farmyard chicken quality assurance management, in the state of Santa Catarina, Brazil. Results show the importance of established, detailed, transparent and accountable technical product & system norms for success. Also, that small-scale farmers men and women) do have the in-house capacity to manage a quality assurance system. Furthermore, it is important that the government rapidly adapts the old (1999) very broad “frango caipira” norms to be as specific as possible, and to establish appropriate quality control practices. Recent associative developments within the sector are crucial to accelerate the success of this new opportunity for family agriculture.

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Introduction The state of Santa Catarina, situated in the south of Brazil, presents at least two remarkable characteristics that are of interest here: (i) it has a long and important history of “family agriculture” (agricultura familial) development, and (ii) it plays a lead role in agro-industry, and especially, the meat industry, being the home state of Brazil’s largest poultry and pig processing firms (Sadia, Perdigão). The first characteristic is explained by: (i) the ethnic groups that mainly settled the area industrious Portuguese, Italians and Germans, (ii) The availability, quality and size of the agricultural smallholdings : 10-20 ha, (iii) The goals and objectives of state research, development, extension and finance institutions, besides NGOs and universities: aiming at small farmers, processors, organized in associations and cooperatives, and (iv) these institutions record of experimenting with different rural development models. The second characteristic also evolved from a combination of factors: climatic (altitude), human resources (entrepreneurial spirit, management, and labor), availability of cheap feed grains, relative proximity of large urban markets, etc.

During the 90’s, a decentralization towards south-west Brazil set in, causing a marked decrease in poultry and pig numbers in Santa Catarina state. At the same time, experiences from Europe brought evidence of promising opportunities of organic farming for small farmers. Hence, during the latter part of the 90’s, various organic farm products started being professionally produced and marketed (similar in São Paulo and Rio de Janeiro states). The interplay of these two key characteristics have brought about a set of conditions, in turn, forming the backdrop of our research topic: the development of small-holder agriculture through differentiated (farmyard) chicken production and marketing, following different technological and organizational models.

Problem Statement

Earlier work by Torne-Celer (2000), Le Sourne (2001) and Farina et al. (2001), has given evidence of the confusion that exists regarding names, labels, norms and standards, certification and consumer perceptions of farmyard chicken (products) in several states of Brazil. While in São Paulo state, these products are generally called “frango caipira” (and some “frango natural”), in the southern states of Santa Catarina and Rio Grande do Sul they are “frango colonial“ or “frango verde”. While there exists a formal government regulation (1999) about the technical norms for “frango colonial”, these norms in general are neither used, nor respected, nor

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being referenced. In addition, no quality control is being conducted to verify that norms are being respected. At the same time, new farmyard chicken products continue to appear in retail markets, proclaiming new names and quality assurance labels and priced at 75-150% above conventional chicken product price levels (Torne-Celer, 2000).

This situation has given rise to anger and frustration at poultry producer levels, enticing them to get together to form an Alternative Poultry Producer Association (AVAL) and soliciting universities to analyze current limitations and opportunities in the farmyard chicken supply chain and its actors (Edir N. da Silva, personal communications).

At the same time, on-going research by a number of Brazilian (UFSC, USP, BNAF, ..) and French (Inra, Cirad, UM2) partners has related to questions regarding the (possible) commercial insertion of family agriculture : (i)Which are possible ways for sustainable insertion of family farming into markets? (ii) On what specific attributes is this based: cheap (family) labor, innovative capacity, mobilization of territorial resources, intrinsic qualities of products? (iii) The emergence of new niches in differentiated markets can open promising new opportunities? (iv) Which are the technical, social-economical and organizational prerequisites for family agriculture to profit from these new opportunities (Sautier, 2000; Cerdan & Sautier, 2001)? Hence, this paper discusses the research conducted in the state of Santa Catarina during 2002 assessing the “frango colonial” supply chain, its quality assurance systems and its implications for smallholder farming. More specifically, the objectives are :

1. Characterize the “frango colonial” sub-supply chain, and analyze its principal limitations and opportunities, especially related to quality assurance management, 2. Develop recommendations regarding improved quality assurance (certification) aspects in the supply chain, to benefit especially small farmers. Procedures and methods 1. Analysis of existing relevant literature, especially the results from recent “frango caipira” consumption and “filière” studies in São Paulo and Santa Catarina state (TorneCeler, 2001; Le Sourne, 2001; Farina et al., 2002) 2. Identify the pertinent government regulations related to “frango colonial”, norms and standards, certification, verification and control instruments, etc. 3. Executing a Rapid Sector Appraisal (RASA) with a multidisciplinary team of (i) 5 preselected “frango colonial” production groups/associations, consisting of small farmers 4/14

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(Table 1), (ii) Assessment of consumer and retailer perceptions, (iii) Execution of key institutional informer interviews. For the interviews, a semi-structured questionnaire was used, complemented by focus group sessions with actors, at the production, distribution and consumption level. The RASA approach of analyzing agro-product supply chains, or parts of these, has the basic economic underpinnings from IO-theory, and is an elegant and cost-effective “coat rack approach”, combining different useful analytical tools (RRA, SWOT, etc). See Henry & Freud (2000) and Henry et al. (2000), for further details on the RASA methodology. Furthermore, see Sautier (1999). 4. A first preliminary inventory of frango caipira experiences in Santa Catarina was conducted and discussed by Le Sourne (2001) in 2000. A further detailed validation of these results, combined with interview checklists (focus groups and key informants), was conducted in may of 2002. Full information collection in the 5 principal sites and in additional towns with key informants, took place from may-august 2002. 5. Analyze data, formulate recommendations, and validate these with principal chain actors in informal workshops. The latter is still pending the availability of key actors. Table 1 – Type, place and number of information sources, interviewed for the research MAFRA

Type of info source

CANOINHAS PORTO UNIÃO Associative

Public

Public

Public

Producer (groups)

8

4

4

4

Traders/retailers

3

2

2

2

Consumers

6

6

6

6

Other key informants

4

3

4

3

Locality

(technicians, government workers, researchers, association representatives)

Source: Field research, 2002

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ORLEANS PERITIBA

OTHER various

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Results Summary description of experiences Key characteristics of the 5 experiences are summarized in Table 2, showing marked differences, especially between type of organization, assistance, norms, experience, product, distribution etc. Differences in number of associated producers, age, education level, gender, farm experience, etc. are not shown here, for sake of brevity. The authors believe that one of the most significant impact variables between the experiences, is the type and source of organization and assistance. Table 2. Characterization of the organization of farmyard chicken production in 5 cases, in the state of Santa Catarina – mai/2002. CANOINHAS + PORTO UNIÃO Associative

MAFRA

ORLEANS

PERITIBA

Public

Public

Public

Origin and initiative coordination Organizational form of producers

Association

BNAF

Association

Association

Town government Association

Town government Individual

Technical assistance source Received technical assistance intensity Technical norms applied Origin of technical norms Compliance with norms Product name (+ label) First sales date

ECOVIDA

BNAF

Low

High

Town government Medium

Town government Medium

Very broad

Explicit but few

Explicit

Local

Explicit + detailed BNAF

EMBRAPA

Low

High

Town government Medium-High

Frango caipira

Frango colonial 'BNAF' 10/ 2001

Frango caipira 'dalle Colline' 2001

Frango verde

Supermarkets + town butcher shops

Town + regional supermarkets

Consumers + regional supermarkets

Locality Key Characteristics Type of experience

Principal distribution channels

1998 Town market + individual consumers

Medium-High

06/ 2001

Source : Field research, 2002 Product description and perception

Different actor groups have different perceptions about the product of interest. Here we will discuss perceptions from 4 sets of actors: government, experts, producers and consumers. First, it will be useful to start by analyzing the government’s formal position regarding technical norms. These were formalized by the Federal Government in 1999, through its department for the inspection of animal products, of the Ministry of Agriculture, circular DOI/DIPOA n°007/99 (Le

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Sourne, 2001). This describes the norms of a product to be labeled “frango caipira” or “frango colonial”, as follows : §

Feed ingredients: consist exclusively of products of vegetative origin. The use of growth promoters is strictly forbidden.

§

Production system: first 25 days as a traditional chick raised inside. This is followed by a semi-free extensive system (open air) whereby each animal has a minimum space of 3m²,

§

Age at slaughter : a minimum of 85 days

§

Genetics : exclusively breeds for this specific purpose

The second set of actors, branch specialists and researchers, arrive at the following consensus of (more specific) key elements for describing “frango caipira” (Torne-Celer, 2001; Le Sourne, 2001): •

A specific caipira breed, characterized by being rustic in different aspects,

•

A production system in semi (open air) liberty and with pasture access,

•

A feed without added growth promoters or antibiotics,

•

A slaughter age much higher than conventional/industrial chickens,

•

With intrinsic quality attributes including :

•

-

Yellow skin color,

-

Firm meat with less fat.

With subjective quality attributes, including: -

A superior taste,

-

A healthier meat,

-

A more authentic, more natural (animal welfare sensitive) production system

The third and fourth group of actors are the interviewed producers and consumers, having the following perceptions about “frango caipira / colonial” (Table 3 and 4). Table 3 - Producer perceptions of principal “frango caipira/colonial” (considering max 3 characteristics per person), from 5 experiences in Santa Catarina state– aug/2002. Key characteristics defining “frango caipira”

Raised free Fed with corn Fed with greens and on pastures Fed without hormones Fed without feed concentrate

MAFRA

PERITIBA

50 25

ORLEANS

% 50 25

75 25

100

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CANOINHAS

PORTO UNIÃO

100 50 50

50

50

50

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Firm meat Meat with distinct taste Longer life cycle Meat is healthier Skin color

100 25 50 25

25

50 25 25

75

25 50

25

Table 4 - Consumer perceptions of principal “frango caipira/colonial” (considering max 3 characteristics per person), from 4 experiences in Santa Catarina state– ago/2002. Key Characteristics

MAFRA

PERITIBA

ORLEANS

CANOINHAS

% Raised free Fed with corn Fed with greens and on pastures Fed without hormones Fed without feed concentrate Firm meat Meat with distinct taste Longer life cycle Meat is healthier Different breeds Naturally raised Skin color

33,3 83,3 16,7

66,6 33,3 33,3

33,3 33,3 -

16,7 66,6 33,3

16,7 33,3

50,0 16,7

16,7 16,7

16,7 33,3

16,7 16,7 33,3 16,7 -

16,7 16,7 50,0 -

83,3 50,0 16,7 -

33,3 16,7 16,7 16,7 16,7 16,7

Analyzing these different actors’ perceptions, the following points can be made: §

The current government norm although specific, seems limited in its parameter range.

§

For both producers and consumers, the characteristics “raised free” and “fed without hormones” seem to be relatively important. Hormones in this context represents antibiotics and growth promoters.

§

Another characteristic that share both groups agreement is “firm meat”. Together with the relative importance of “fed without hormones”, these aspects relate directly to product quality.

§

Consumers seem to have a notion that these chickens are typically raised on corn, while producers know that there are alternative non-concentrate feed sources as well.

§

Other characteristics regarding system, health and product, seem to score relatively lower with both producers and consumers.

§

An overall assessment points to the remarkable similarity of options between producers and consumers.

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Production system norms

As was noted in Table 2, the norms’ source, level of detail and specificity, and compliance with them, differs greatly between the 5 experiences. Table 5 shows producer perceptions regarding different norms. Additional points that can be made, are : §

There exist very significant differences of perceptions between experiences !

§

In Mafra and Peritiba, there seem to exist more consensus among producers (showed by more occurrence of 100%), than in the other 3 experiences, indicating clearer (or better knowledge of) sets of norms in the first two experiences.

§

Much more consensus for the importance of “green area space” and “breed” (for some), than on “time between lots”, which is very important regarding sanitation and subsequently: disease occurrence (widely known, especially in industrial poultry production).

§

Overall concern for feed related norms, but with large differences in consensus per experience.

§

Peritiba producers suffered major chicken disease outbreaks. This explains their exclusive importance to the “vaccine” norm.

§

Not shown here, but very important is the fact that there exist no evidence nor indication of the application of sanctions in cases of infringement of the established norms. Producers were asked but remained very vague in their answers, whereas technicians, sometimes “made publicity” about the strictness of the norms, without much concrete evidence to back this up.

Table 5. Relative importance of producer perceptions of the key norms to be used for “frango caipira/colonial” production, Santa Catarina – august/2002. Norms

Size of chicken barn Green area space Breed Number of chicks per lot Number of lots Time between lots Time to slaughter Slaughter place type Origin / use of ration Use of alternative feed sources Use of vaccins

MAFRA

PERITIBA

ORLEANS

CANOINHA S

PORTO UNIÃO

50

75

100 100

100 100

25 50 75

75 100

100

75

50 50

100

% 25 50 25

-

100

25 25 25 50 -

50 50 50 50

25

-

100

-

-

-

75

Note: Percentages indicate the share of producers interviewed (per experience), understanding a specific norm to be an obligatory element in their list of norms.

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Interest to small producers Some key financial parameters of the production system, are summarized in Table 6, whereby most importantly the net profit per produced bird needs to be noted. These are up to 6 to 8-fold higher than conventional/industrial net profits. These results basically drive the motivation of the small producers. Table 6 - Selected financial parameters for “frango caipira” production, in Santa Catarina – august/2002. Locality Average

MAFRA

PERITIBA

ORLEANS CANOINHAS

550,00 247 0,88 0,41 311,75 2,45

930,00 537 0,46 0,50 581,25 2,39

3.855,00 350 0,90 0,40 488,67 2,50

87,50 36 0,73 50,00 3,20

575,00 65 0,74 86,25 2,50

0,8-1,0

1,0-1,5

1,0-1,5

1,5-2,0

1,5-2,0

Parameter

Investment (R$ /lote ) Lot size (# birds) Chick price (R$ /unit) Slaughter costs (R$ /bird) Revenues per lot (R$) Sales price at farm-gate (R$ / bird) Estimated net profit (R$/bird)

1.199,50 0,71 0,44 310,35 2,61

PORTO UNIÃO

Note: US$ = 3,0 R$ (during data collection period) The significant opportunity for small scale producers for additional income from “frango caipira/colonial” raising through product (quality) differentiation and price premium, is also reflected in the following (translated) statement from EMBRAPA :"While the integrated producers of conventional (industrial) chickens sell to the slaughterhouses (who then sell to distributors at 1 R$, and these who sell to consumers at 1,40) at 0,70 R$/KG, the “frango caipira” producer can expect to sell at 1,40 R$ to the slaughterer (and 2,80 for the distributor and 3,20 for the consumer)" (Gazeta Mercantil, 7 august 2000). This statement can also be validated and further advanced from earlier findings (Le Sourne, 2001), referring to (a) the significant investment outlay differences necessary for industrial versus “frango caipira” production projects (40,000 R$ versus 1,000 R$), and (b) the savings that can be realized (30% on average) in feed costs by the use of pasture in the “frango caipira” system. Given that feed costs represent on average, 65-75% of total costs (industrial system). An additional argument for small scale agriculture, is the opportunity for women (with otherwise low opportunity costs) to venture into “frango caipira” production. In the researched 5 experiences, women and couples (women/men) represent more than half of all producers.

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Consumer perceptions The perceptions of consumers regarding quality attributes of (new) products and subsequent acceptance of the price premium, is crucial for the sales success of the product (and return to producers).

Table 7 evidenced that the majority of consumers believe (i) the product to be “caipira”, (ii) the label information, and (iii) a quality assurance label. In addition, they are willing to paper more for this – in the range of 0,47 – 0,88 R$/KG. Two points seem relevant to make here: §

Obtained results seems to be in line with earlier research on (organic product) consumer perceptions of quality attributes in São Paulo city (Farina et al., 2002), which showed a willingness-to-pay for a similar product, much higher, given that (more well-off) consumers attached relatively more importance to quality than to price.

§

An issue regards the cause for the relatively high levels of consumer confidence, as shown. The authors believe that a certain bias may exist in the results, first of all due to the small sample size that was used.

Table 7 - Consumers perceptions of “frango caipira/colonial”. Locality Perception of the product

MAFRA

PERITIBA

ORLEANS CANOINHAS %

Belief that the product really is “caipira”?

YES NO

66,67 33,33

100 0

83,33 16,67

100 0

Confidence in the product label explications ? Confidence in a quality guarantee label?

YES NO YES NO

83,33 16,67 66,67 33,33

100 0 66,67 33,33

83,33 16,67 66,67 33,33

No label information 66,67 33,33

Would pay more for such YES NO label?

50,00 50,00

75,00 25,00

75,00 25,00

100 0

How much more for a labeled “frango caipira”? (R$/Kg)

0,80

0,47

0,55

0,45

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Problems and opportunities

In the research analysis, two kind of information sources are used to formulate the principal constraints of the sub-supply system, (i) actors observations, and (ii) expert opinion. Table 8 shows results of the first source, interviewed producers. Some points of interest are: §

Relative importance of problems regarding cash-flow, credit, and inputs and other costs. This is followed by market uncertainty and production system related issues.

§

Only 1 explicit mentioning about quality assurance, evidencing a seemingly lack of reflection (and preoccupation) on this issue.

Table 8 - Principal problems of current and past “frango caipira” experiences according to producers, Santa Catarina, august 2002. Locality Problem Purchase inputs while revenues enter after only 90 days Diference between price received by farmer and paid by consumer Complying with payment dates for feed purchases Absence of our own slaughter house High price of production inputs Chicken diseases Market uncertainty Frost occurences Inspection / certification Production structure (barns, technology, etc) Use of non-appropriate breeds Lack of investment credit Use of conventional feeds Lack of technical assistence

MAFRA

PERITIBA

ORLEANS

CANOINHA S

PORTO UNIÃO

u u

u

u u

u uu u

u u uuu u u uu u u

uuu u u

Note : u is relative frequency of observation However, the second source, expert opinion, could add the following major constraints : •

Production norms and standards adherence is not very strict. While on paper these may exists, in practice there seems plenty of exceptions to the rule. This is linked to the lack of clarity, understanding and implementation (and control) of technical norms.

•

The large variation of names, norms, systems and products between experiences confuses consumers or would-be consumers. These need to be standardized. Control is needed to eliminate “counterfeit” products.

•

The chain lacks pertinent information and education at all levels.

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A large opportunity exists for even better returns to small-scale producers if the major current constraints could be alleviated. This is in line with Torne-Celer (2000).

Conclusions •

The need for full acknowledgement, respect and legal compliance by all actors to official and specific product norms and standards regarding “non-conventional” poultry products is very great. These “new norms” (formulated with the help of AVAL) are currently being reviewed by the government.

•

AVAL’s future role is crucial in providing a platform for dialogue with government representatives. The idea of a specific AVAL quality assurance label is of great interest. However, proper mechanisms by the government, are needed for protection and control.

•

Besides the education of producers (once rules and regulations are standardized), the need for better information to consumers (and distributors, traders, etc.) is equally important

•

Small scale producers (both men and women) in general seem to have the basic capacity and interest to invest into “frango caipira” production and abide by quality assurance norms (if transparent and controlled).

•

In the short run, current “frango caipira” producers enjoy substantial rents from this novel activity. It is not clear if most consumers do understand, have real confidence, and do benefit from current products.

•

In general, small-scale / family agriculture can significantly profit from this opportunity based on product differentiation through quality management, however, this is only feasible with (i) the assistance of technical and finance institutions, (ii) once government norms, regulations and control mechanisms are properly in place, (iii) a continuing interest in organizing themselves, through which efforts can be directed to the organization (and integration) of an efficient sub-supply chain.

•

The final phase of this research - presenting and validating preliminary results to principal actors in order to formulate final recommendations – is scheduled to take place through a series of small workshops beginning to mid 2003, in SP and SC states.

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References Cerdan, C. et D. Sautier, 2001. Réseau localisé d’entreprises et dynamique territoriale : Le bassin laitier de Gloria (Sergipe, Brésil). Etudes et Recherches sur les Systemes agraires et le développement, 32: 131-144. Numéro spécial Inra-Cnearc-Cirad sur Développement agro-alimentaire localisé. Farina , T., Faga de Almeida, S, Farina, E.M.M.Q. and G. Henry, 2001. A Percepção dos Consumidores de Frangos ‘Alternativos’. In: Proceedings of the III International Workshop for Agri-chain Management, 25-26 October 2001, Riberão Preto-SP, Brazil, Edition USP-FEA/Pensa Henry, G. and E. Hanak-Freud. 2000. Rapid Agro-sector Analysis : Simple tools for complex challenges. In: Proceedings of 16th Symposium of the International Farming Systems & Extension Association. Santiago, Chile, 27 - 29 November 2000. Henry, G., Fontaine, G. and Bliska, F.M. de Mello. 1999. Rapid Sector Analysis : The case of the jerkbeef sector of São Paulo State, Brazil. In: Proceedings of the II International Workshop for Agri-chain Management, 10-11 November 1999, Riberão Preto-SP, Brazil, Edition USP-FEA/Pensa Le Sourne, D. 2001. La différentiation par la qualité des produits d’agriculture familiale comme stratégie au insertion de marché : Etat de Santa Catarina, Brésil. Unpublished MSc thesis. CNEARC, Montpellier, France Sautier, D. 1999. Diagnostic rapide de commercialisation pour les produits de l'agriculture familiale. In: Scott G, Griffon D. (coord.) Méthodes de recherche en marketing agroalimentaire dans les pays en développement. Editions CIP - CIRAD. Sautier, D. 2000. Territorialité et valorisation des produits. In : Semaine "Brasil 2000" Echanges scientifiques et coopération franco-brésilienne. Semaine "Brasil 2000" - Echanges scientifiques et coopération franco-brésilienne. Atelier : l'avenir du monde rural : terre d'exode ou foyer de développement? 2000-10-16/2000-10-17; Paris, France. Torne-Celer, S. 2001. Filière avicole brésilienne : Importance et difficultés des productions de type « fermier » et « naturel ». Unpublished MSc thesis, CNEARC, Montpellier, France Torne-Celer, S., Henry, G., Nepomeceno da Silva, E. and D. Pallet. 2000. Mudanças na Produção de Frango: Novos Produtos e Mercados. UNICAMP-FEA workshop, Desafios na Produção de Frangos: Exigências de Qualidade. 2 outubro 2000, Campinas-SP, Brasil

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