Are you aware of the implications of the new Spanish Food Supply Chain Act?

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The  Spanish Ministry for Agriculture showed its commitment to ending up with abusive trading practices when the ‘measures for a better functioning food supply chain Act’ was published in August 2013.

In the words of the current Minister, Isabel García Tejerina, the objective of this regulation is providing legal certainty and transparency to business operations and balancing the supply chain in favor of the small producers who are its weaker part.  

The scope of this law has deep implications for growers and trade operators and has created much of a stir in the spanish agrifood industry. We are at a legal framework of great importance for an strategic sector of the Spanish economy and it directly or indirectly affects foreing companies that are purchasing Spanish fresh food.

The highlights of this regulation

The law shall apply if one of the parties is a SME or a primary grower. Trying to avoid a number of practices resulting from the asymmetry observed among the food market operators, several issues have been regulated.such as unilateral changes and unanticipated commercial payments, the provision of commercially sensitive information or the brand management. 

  

It should be noticed that the Act expressly excludes from its scope the activities like food transportation and product deliveries made to agricultural cooperatives.

 

The main dissuasive measures implemented are fines from 3000 Euros - for minor infringements- to 1.000.000 Euros, -in the case of very serious infringements-. At the same time, this Act calls for a written formalisation of those commercial dealings above the 2500 euros treshold. 

The truth is that many of the practices gathered in this law are already regulated by other legislation (including the Unfair Competition Act)  but t is still early to assess whether this accumulation of legal remedies will be effective and beneficial to the market or will otherwise complicate the legal analysis to the point of generating uncertainties. However, the Ministry for Agriculture has created the ‘Agencia de Información y Control Alimentarios’ (AICA. In English: Agency for Information and Food Control) which is an autonomous body that monitors the enforcement of the Food Supply Act. 

Practical implications. Concern in the food industry 

When one year has passed since the entry into force of the law,  from this moment the AICA is beginning to examine irregularities and impose sanctions. 

This is a major concern within the food sector, where it is day-to-day practice that providers deliver a product and not until the the end of the campaign the final price is fixed. Other situations, like when providers are obliged to finance their distributors´ promotions or commercial support, will be also under the spotlight.

However, some companies see this new situation as an opportunity to enhance their Corporate Social Responsibility policy and give added value to providers and clients. Therefore, if your company is already doing -or planning to do- business with Spanish food growers, it is highly advisable to check out the ‘measures to improve the functioning of the food supply chain Act’ following this link, or seek for legal guidance.

A sketch of the production of cherries in Spain

As we are facing the final stage of the winter and the fields are about to spring up, we,the team of Lady Godina believe that there is not better time than now to understand a little better how the Spanish cherries are grown. 

Maybe you have difficulties when it comes to figure out where and how cherries are grown in Spain. Even for many Spanish proffesionals from this sector there are wide knowledge gaps. No worries.

We are always trying to go ahead so we have done some technical research that -we hope!- could be a useful tool for your business.

 


According to the oficial data provided by the Spanish Ministry for Agriculture, in 2012 the cherry cultivation area in Spain was around 32.000 Ha. Two thirds of this area are rain-fed cultivations and the final third of the surface is irrigated.

As for the regional breakdown of the cultivated surface in Spain, Aragon is the leading region (34,9%), being follwed by Extremadura (29,7%) and Catalonia (10,8%). And looking at the graph below, we will also check out that Aragón has by far the largest irrigated surface of the total (11.175 Ha.).

Source: Encuesta sobre Superficies y Rendimientos Cultivos (ESYRCE). Encuesta de Marco de Áreas de España. Ministerio de Agricultura, Alimentación y Medio Ambiente. Gobierno de España

If we look at the official figures available, we find out the average productivity of the Spanish cherry crops have ranged from 3.200 to 4.300 kg/ha. along the last decade. Whereas the average yield varies from year to year depending on the weather conditions and especially on the agrarian improvements carried out by the farmers.

For instance,  in 2012, almost 60 % of the plantations were low-density crops ( < 600 trees/ha.) and 30% of them were high-density crops (600-1200 trees/ha.). Very high density-crops meant only 2’5% of the total. 

At this point, Aragon is the region with the greatest percentage of high density crops (54%). In fact, when compared to the other regions, Aragon shows relevant differences: intensive cherry farming makes up 42%  in Catalonia and only 8% in Extremadura. 

Does the supply and demand law rule the olive oil market?

Spain: First producer of the world

Spain is by far the main producer of oilve oil in the world. Our country leads the ranking of producing nations with around 55% of the worldwide olive harvest.

 

Nevertheless, since the southern Spain went through a drought, last crop here went down to 825.000 tn, meaning only almost 50% of the Spanish harvest we had last year (2013).

Everyone who is familiar with this sector knows that olive oil market is subject to enormous competition. Yet, the supply and demand law could temp the Spanish olive growers to increase their prices. 

 

Spain: aspiring to the title of ´first exporter of the world´

But, in the end,  they operate in a global scene so the said policy will surely bring them undesirable consequences.

With an eye on its eternal rival, Italy, in the last years Spanish olive oil packers have been struggling to conquer and strengthen markets abroad. And it is crucial a smart decision-making when you want to preserve a leading position, even if a poor crop comes -as it is the case lately-.

For instance, Spain is trying to be a leader in the United States olive oil market, which is the first importer of the world for this product (38% of the imports).

Evolution of total U.S. Olive Oil imports per country

Source: International Olive Council -http://www.internationaloliveoil.org/-

 

The 2012/13 season was not good and, as can be seen in the table above, Spain lost near to 10% of its market share in the United States. Reducing the supply and not keeping competitive prices has a price to pay too: a client thrown away. Playing in a such a competitive game simply means that customers have the upper hand.

Needless to say the effort and high costs of getting new customers, the broad consensus within the olive oil Spanish experts is that sacrifices must be done. In order to assure our competitive position in the world, the major packers/exporters are led to buy somewhere else around the Meditteranean sea at the expense of the  trade margins –mainly of the local growers-.  

The crude oil price fall will improve the competitiveness of the Spanish agrifood sector

The current low crude oil prices are the big story for 2015.  As Kenneth Rogoff (Professor of Economics at Harvard University) pointed out, “they are a once-in-a-generation shock and will have huge reverberations [1]. And  it seems that this downward trend is expected to continue for the first half of the year. Today, Brent barrel stands at US$47 but some financial analysts forecast an even deeper plummeting down to US$30 in the coming months.

Source: www.euroinvestor.com

Leaving aside the causes of this phenomenom, the global fuel price slump can actually be seen as an opportunity for the ailing European economy. However, the effects will not be symmetrical: they will not be the same for every country in the EU; nor will they affect every economic sector to the same extent.

In particular, mediterranean countries like Spain, which economies are highly dependent on oil imports, are going to be the great winners of this tendency[2]. In the other hand, highly energy-intensive activities, just as in the case of freight transport, will benefit the most.  Therefore, agrifood Spanish companies will probably translate these lower transportation costs into more attractive prices for their clients.

Although the future is always uncertain and the behaviour of this commodity has an outstanding speculative component, the fact is that, at the present day, diesel fuel price is around 20% lower than a year ago. This situation cannot only be verified when one goes to the petrol stations but when the Commission's Energy Market Observatory statistics are consulted.

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[1] http://www.bloomberg.com/news/2015-01-07/oil-at-40-means-boon-for-some-no-ice-cream-for-others.html

[2] http://elcomercio.pe/economia/mundo/cuales-paises-ganan-y-cuales-pierden-petroleo-barato-noticia-1783352

Arbequine: the Queen of the Aragonese hills

Now that the olive harvest is taking place in northern Spain and the first olives of the season are being milled, it is the best time to speak about the Arbequine variety.

This renowned early and tiny variety of olive is the preference among the virgin olive oil gourmets. It is not in vain that many of them refers to the arbequine juice as the Beluga of the olive oils.

 

Since not every olive juice is the same, we encourage you to check the critical factors that boost this wonderful elixir to the gastronomic Olympus:

1. The best flavour, aroma and palete possible. It has a very  pleasant round taste, boasting a fresh fruity sweetness rounded with a distinctive bitterness. In mouth it feels silky and it leaves an intense long finish. It usually displays a nose of ripe fruit and almond.  It is just delicious when eaten raw over a crunchy slice of toasted bread.

2. It is popular for its green tones, especially when the olives are harvested at the earliest stages of maturation.

3. The arbequine oil is characterized by the inestability of its chemical compositition. Since this variety is more sensitive to oxidation, the fragile balance of its sensory attributes demands proper conservation conditions. Fresh and dark environments increase the product lifetime.   .

4. The growing region. The above said, the arbequine variety displays different sensory features depending on the type of soil and climate conditions associated to the place we find the plant. Arbequine trees require cold and continental climate in order to perform at their best. The vally of the Ebro (Aragon, where Lady Godina is situated) meets naturally these requirements so we can find traditional arbequine crops that need less use of chemicals.  

5. Here in the heart of Aragon, the tradicional cultivation system is the most widespread. For centuries, when the agriculture mechanisation and the artificial irrigation did not exist, the ancient groves followed a low density plantation pattern  (between 80 and 120 trees per ha.) that still remain the same nowadays.  

6. Although traditional cultivation does not allow high production rates, arbequine olive stands out among others for its high fat yield. Once the milling process is done,  we obtaing small but excellent product.

7. In the same way as wine, it is sometimes interesting mixing different varieties of oil - such as Picual or Empeltre among others -  in order to obtain a coupage of more complexity.  

Aragon, a great place to make bussiness in the agrifood sector

Lady Godina comes from La Almunia de Doña Godina (10.000 inhabitants), a small but beautiful and full of life town in the heart of Aragon. 

Apart from the outstandind cherries and extra virgin olive oil produced in our homeland, La Almunia is a slow city that might surprise you for hosting a University Center (EUPLA), where more than 40.000 students have completed their degree on Engineering throughout its 40 year history. 

Or you may find intersting that La Almunia is just 20 minutes drive away from PLA ZA (Zaragoza) , the largest logistics platform in Europe, with a 13.000.000m2 area that benefits from its intermodal transport connections (railways, roads, and air routes).

In sum, the mix of product,  location and innovative aproach is the key for our competitive strenght. As this video states: Aragón, come and connect!

http:// www.youtube.com/watch?v=RpwRQiNGgo4

9 Keys for a better understanding of the Black Truffle

1. The scientific name for this highly regarded-gourmet delicacy is Tuber Melanosporum but it is also known as the Perigord Truffle and many people refer to it as the kitchen black diamond.

Source: http://www.cestaysetas.com/wp-content/uploads/2013/02/Tuber_melanosporum.5.jpg

2. Properly speaking, the black truffle is the edible fruiting body of an underground ascomycete fungus.  As these fungi cannot produce enough organic material on their own, they must live in association with a host plant. They show predilection for growing close to the roots of oak, holm oak and hazel trees.

Source: http://www.agrimundo.cl/wp-content/uploads/121119_boletin_agregados_trufas_n3-corregido-listo-para-despacho1.pdf

They also require very precise wheater conditions - enough cold and precipitations -  along with certain types of soil at a specific altitude range.  These are the reasons why this elusive wonder is mainly found in the southwest mediterranean Europe [1]. 

3. Although traditional gathering methods still remain the same, wild truffle today has almost been replaced by modern truffle farming.

 

Source: http://cultivosforestales.com/blog-setas/wp-content/uploads/2013/10/plantacion-de-encinas-con-trfa.jpg

 
However, there are no oficial records nor reliable data that allow us to quantify exactly the amount of cultivated production. Both producers and gatherers tend to underestimate their business figures.


4. Most of the harvested truffle comes from Spain, France and Italy. In view of the experts, the global production is about 100 tn. 

5. Destroying the myth. Contrary to the popular belief, Spain is the world´s leading grower of black truffle. Our country provides around 40% of the total crop. At the same time, Aragon -the region where Lady Godina comes from- contributes with two thirds of the aggregated Spanish harvest.

 

The small aragonese town of Sarrion -in the province of Teruel- is considered to be the capital of the black truffle and hosts the most relevant fair of this sector in Spain: Fitruf

6. Mora de Rubielos, Graus and Morella. These three small towns fix the price of the Spanish black truffle through their local markets. Sellers and buyers comes to an agree in a very traditional way as the supply and demand law is strictly followed.

The imbalance of these measures - the supply represents only 10% of the demand -  plus with the negative impact of the climate change[2] result in a relatively high price per kilogram around -500 €/kg on average-.

That said, the French black truffle is around 40% more expensive than the Spanish. Every year a significant amount of the Spanish production is imported by French and Italian brokers who trade with it. 

7. This is a seasonal and short life-time product. The gathering time takes place from november 15^th to march 15^th.

It should be noticed that, when not processed, fresh truffle gradually loses its properties within a 10-day window. Furthermore, a recent survey conducted by scientists of the University of Zaragoza (Aragon)  underline that, once defrosted, black truffle loses its aroma within just 24 hours[3].

8. The organoleptic features of the truffle are directly connected to the bacteria living on its surface, as a new piece of work suggests[4]. Since each type of soil is inhabitated by a diverse population of bacteria, verifying the origin of the truffle is vital to ensure the expected quality. 

9. Beware if you don´t want to be ripped-off. Other medium and even non-existent culinary value truffle varieties can also be found in the markets.   Regarding the first ones, Tuber Brumale (winter truffle) and Tuber Aestivum (summer truffle) are of fairly good quality too so they fetch high prices as well. Anyway, they cannot be compared to the genuine black diamond. 

Tuber Brumale. Source: http://www.delbosquealacocina.com/index.php?option=com_content&view=section&layout=blog&id=41&Itemid=159

 

Tuber Aestivum. Source:  http://setas-hongos.blogspot.com.es/2012/10/tuber-aestivum-trufa-de-verano.html

By contrast,  cheap asian substitutes -practically without aroma- are distorting the markets and causing confusion among consumers. Chinese companies are selling their native fungi varieties like Tuber Indicum (chinese truffle) at a much lower range of prices -around 30€/kg-. 

Because of that it is really useful asking for technical advise during the buying process, as dishonest european dealers try to cheat their customers by mixing genuine with fake black truffles[5].

Tuber Indicum. Source: http://www.gourmetkerqus.com/cms/es/generic/tuber-indicum

If you are interested in purchasing fresh black truffle or need any other information, we will be pleased to advise you. You can contact us on our website: ladygodinatc.com 

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[1] http://www.micofora.com/index.asp?idioma=EN&opc=39&

[2] http://www.gastronomiaycia.com/wp-content/uploads/2012/11/Estudio_producion_trufa_negra.pdf

[3] http://www.diariodeteruel.es/noticia/57507/multiples-notas-armonizadas-marcan-el-aroma-de-la-trufa-negra

[4] https://trufflefarming.wordpress.com/2014/11/02/what-percentage-of-truffle-aroma-comes-from-bacteria/ 

[5] http://www.businessinsider.com.au/chinese-fakes-are-being-passed-off-as-the-real-thing-but-this-time-its-800kg-truffles-2014-3