Public/ Private Institutional Partnerships for Regional Food System Organization

Introduction

In the modern institutional framework, nearly all of the world’s farmers and food businesses experience the effects of global competition and price pressures. Many of the negative effects of large-scale industrial agriculture are left to be remediated through private non-profit organizations or other private efforts, such as market-based eco-labels. While eco-labels draw some academic criticism because they utilize the dominant system to their advantage (Gunderson, 2014; Guthman, 2007), many ecolabels are a conscious attempt to counter the effects of the global marketplace by protecting farmer’s interests, the environment, animal welfare, and/or certain types of foods (Barham, 1997).

However, due to their marketability, alternative food systems and eco-labels face intense competition as well as the pressure to gain economies of scale, which could ultimately defeat their original purposes. At the same time, non-profits are facing increasing funding difficulties, and as a result are offering less programming or are focusing on helping to establish self-sustaining alternative food systems (including eco-labels.) In light of this, the question arises of what institutions are needed to provide the social benefits that will remediate the effects of our food system and bring us to long-term sustainability?

The answer may lie, in part, in consciously designed public-private institutional partnerships such as France’s Label Rouge. This is because in such a system, standards can be codified in the law and public oversight can be provided effectively with a low cost to the government. Also, a brand can be developed that has a strong and unique type of legitimacy due to public/government support. Furthermore, the private side can do most of the “heavy lifting,” provided the system is designed to function well within the marketplace.

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Label Rouge eggs in a French supermarket

Overview of Label Rouge

France’s Label Rouge quality label is associated with nearly 500 products including fruits, vegetables, flours, breads, and animal products. Poultry was its flagship product; in the late 1960’s, French poultry farmers worked with the government to create the institutional basis for the Label Rouge program. In order to achieve Label Rouge status, any group must establish a collective entity called a “quality group” to oversee the production of the product. The quality group many times consists of various actors in the value chain, including farmers, farmer cooperatives, processors, feed mills, and hatcheries for the poultry groups. The group must apply for the label by providing a specific plan of production to the government. This plan will detail everything from the genetics that will be used to the space requirements of animals (outdoor and indoor.) It will also detail the product’s processing standards and food safety plan (Westgren, 1999).

To achieve Label Rouge status, a product must prevail in regularly administered consumer taste testing against a standard, which is usually the conventional version of the product. For example, Label Rouge chicken is judged against standard chicken (the type that we typically find in U.S. supermarkets.)

Products sold under the label generally achieve a significant price premium. For example, as a result of its reputation for high quality, Label Rouge poultry products can command nearly twice the price as its conventional counterpart. According to the poultry website (English version here) more than 60% of whole chickens purchased by French households are Label Rouge birds.

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Label Rouge chicken is 8.10 Euros/kg here (approx. $4.05/lb, Spring 2015)

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Price of conventional chicken is 3.70 Euros/kg in the same store (approx. $1.85/lb, Spring 2015)

This system has obvious interest for those of us working to develop local/regional food systems. Interest in free range, pastured, and non-industrially raised animals is high in the U.S. and is a potential driver for rural economic development. We experience a higher degree of seasonality in Michigan than in France, which creates a challenge for raising year-round outdoor poultry. However, other meats can potentially be raised year round (such as grass fed beef) and the standards and requirements for raising animals could be designed to vary by season, as is the case with certain organic systems (notably dairy.) Also, as the state with the second-highest agricultural diversity, Michigan has plenty of other products that would be good candidates for a public/private quality label program, such as apples, potatoes, flour, breads, and dried fruits, among others. It is also possible that a program for Michigan could be developed that would market seasonality as a strength versus a handicap.

So what are the key aspects of Label Rouge and other similarly organized French models (such as Geographic Indications) that could be transferred to regional food system efforts in the United States? What institutional mechanisms can help to obtain similar outcomes, where high quality, regionally produced products are made available in grocery stores, and farmers are able to retain enough of the revenue to make a decent living? In addition to reviewing the available literature, I went to France in May 2015 to interview knowledgeable industry, government, and academic personnel in order to answer these questions.

One observation about these models is that their standards are effectively codified in the law at various levels. The overall Label Rouge program is codified in the French Rural Code, (see Section L. 641-1), as are the different programs for geographic indications.

IMG_1622For the other levels, the quality group must create the plan of production, as mentioned before. The French government and others, including third party certifiers, work with the quality group to create the standards for a particular product (referred to as the “specification,” e.g. Gers chicken.) In the case of Label Rouge, once the government approves the standards, the specification is actually codified into the law by a formal decree which states the official name of the product. As a result, the specification/product enjoys a particular type of legal protection- this is the second level of codification. Finally, once the specification is codified at the second level, its standards become regulations that the group must follow, which is the third level of official codification.

It is extremely difficult to change these regulations/standards once they are adopted; the relevant authorities are very reluctant to make changes, unless those changes will lead to a product’s higher quality. Cost savings alone is not enough for a change to be approved. In any event, a simple change to one of the standards can take 3 to 10 years to be approved.

The upshot of this is that these French models are extremely resistant to green washing. The standards cannot be chipped away at, and the brand cannot be transferred or sold to a competitor who will cheapen the production using lower cost ingredients or production processes. Unfortunately, that is exactly what happens with many other eco-labels and quality products. This is because their firms (or their brand names) can be acquired by other food system businesses in order to exploit their marketing potential.

Label Rouge Institutional Structure pdf

Pic LR inst strctr

Another observation about the Label Rouge is the low cost, yet effective public oversight of the program. When interviewing several industry and government agents, I was told that the entire Label Rouge program is carried out on the public side with approximately 20 to 30 full time government sector jobs. Considering the enormous amount of business done under the Label Rouge, this is an encouraging fact. The program serves over 64 million people in metropolitan France (Wikipedia population estimate) and has a high recognition rate (up to 94% according to a 2009 study, noted here.)

This leads to the observation that these models may enjoy a valuable type of legitimacy with consumers because of their support and involvement by the government. During my interviews, industry, government, and academic respondents seemed confident that government backing gives the Label Rouge added strength, and several of people I talked to or interviewed noted that they, themselves, trust that the label delivers the high quality, safe products it promises. This is an area where research is needed to establish whether and to what extent public involvement in an eco-label can provide legitimacy with consumers, thereby increasing their marketability.

A final observation with these models is that the private side does most of the work within the competitive marketplace. While there is oversight and approval by the French government and the government owns the Label, the businesses involved in the quality group own all the means of production, manage the day-to-day operations, govern themselves via the quality group, and freely contract with buyers (such as supermarkets) (Menard, 1996). Third party (private) certifiers are used to insure that the standards are kept up; the French government also oversees these certifiers. For Label Rouge, there is competition inside the quality groups (for example, several processors and feed mills might vie for the farmer’s business,) between the quality groups (for example, Gers poultry and Landes poultry compete for the same consumers in the supermarket,) and with other branded labels (the organic label, for example.)

To summarize, public/private partnerships for local and regional food system businesses can provide advantages to consumers and farmers if the proper legal and organizational mechanisms are in place. Standards can be codified and regulated by the government in such a way that they are resistant to green washing, and the brand can develop added legitimacy resulting from the government’s involvement. A program can be designed where effective but relatively inexpensive oversight is provided by the government, while private businesses provide the capital needed for the production, the day-to-day management of the business operations, and the lion’s share of marketing for its products and the program.

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Landes bird on the way to the oven

Bibliography

 Barham, Elizabeth. “Social Movements for Sustainable Agriculture in France: A Polanyian Perspective.” Society & Natural Resources 10.3 (1997): 239-49. Link

Gunderson, Ryan. “Problems with the Defetishization Thesis: Ethical Consumerism, Alternative Food Systems, and Commodity Fetishism.” Agriculture and Human Values 31.1 (2014): 109-17. Link

Guthman, Julie. “The Polanyian Way? Voluntary Food Labels as Neoliberal Governance.” Antipode 39.3 (2007): 456-78. Link

Menard, Claude. “On Clusters, Hybrids, and Other Strange Forms: The Case of the French Poultry Industry.” Journal of Institutional and Theoretical Economics (JITE) / Zeitschrift für die gesamte Staatswissenschaft 152.1 (1996): 154-83. Link

Westgren, Randall E. “Delivering Food Safety, Food Quality, and Sustainable Production Practices: The Label Rouge Poultry System in France.” American Journal of Agricultural Economics 81.5 (1999): 1107-11. Link

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