Swiss council outlines future agri policy
The report “Overall view on the medium-term development of agricultural policy” from the Swiss Federal Council has outlined various approaches to the future development of agricultural policy.
One of these aims is to ensure that the greatest possible share of added value is received by the dairy and other types of farmers. The factors, which can contribute to this, are highlighted in a study by Agridea (Réviron et al., 2017).
The study shows differentiation at downstream processing or trade level does not guarantee that farmers receive more money for their raw materials. From the point of view of processors, it is legitimate for them to pay the benchmark price set by the industry organization for a generic agricultural product, as they are responsible for the innovation and commercial success of the final product.
Farmers therefore benefit from downstream differentiation, especially, when the ingredient of agricultural origin is already a “differentiated” raw material and this is considered by the processor to be indispensable for the quality of the final product.
The Agridea studies have found that transparency on margins in the value chain can have a positive effect on the distribution of value added within the chain. Knowing these margins does not always trigger changes in the behaviour of processors and/or retailers. But when the different actors negotiate on an equal footing, this usually has a positive impact.
For Swiss agricultural policy this means that in the future an even stronger focus should be placed on the promotion of projects, which already aims at product differentiation at the farm level. This is the best guarantee that as much of the added value as possible results in work at the farms.