The competitiveness of the European food chain has traditionally been strong, but since 2000 it has been under pressure. Competing economies like the US, Canada and Australia are performing better than the EU in terms of innovation and productivity.
The relative worsening of the competitive position of the European food sector makes the need for innovation that much greater. Current and future competitiveness depend in particular on the chain’s capacity for innovation.
Competitive relationships
The chain’s performance is influenced by a number of factors, including changes to the competitive relationships within the chain. The concentration in Large Multiple Retailers has intensified the competition within the chain. This is potentially accompanied by price pressure and dishonest business practices. The chain is constantly under surveillance by competition authorities and other government bodies seeking to prevent this.
To this end, LEI carries out policy evaluations, benchmark studies and background studies.
The most important topics within this research theme are:
Competitiveness
The economic strength of sectors and chains can be determined on the basis of indicators which measure aspects such as costs, productivity, export capacity and innovation capacity. Comparisons over time and between countries can demonstrate how the competitive position of a sector is developing.
Our research
The competitive position can be explained by linking it to explanatory variables such as consumer demand, technological development, and policy. LEI accomplishes this by means of comparative competition analyses and other benchmark studies.
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Innovation
Innovation is an important determinant of competitiveness and economic growth. The Dutch agribusiness sector has always been knowledge-intensive and innovative. The innovations carried out by businesses depend on changes in the chain structure, in buyer and consumer demand (such as for sustainability), and in innovation policy.
Our research
LEI research focuses on incentives for and obstacles to innovation in the primary sector and the processing industry and on evaluation and monitoring of innovation activities and policy. Forms of research include an annual questionnaire among farmers and horticulturalists, action-oriented research among entrepreneurs and knowledge institutes, and qualitative and quantitative research into the degree of innovation in the sector.
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Competition and price-forming
Large Multiple Retailers (LMRs) have been highly concentrated in most European countries since the 1990s. This has strengthened the negotiation position of LMRs as opposed to that of their suppliers, in part because of the LMR’s control over the shelf and the rise of store brands.
Price-forming
The intense price competition in the supermarket channel puts pressure on price-forming throughout the chain. This arouses discussion as to why the difference between the consumer price and the farm gate price is so great and whether consumer prices are even linked to farm gate prices.
In order to strengthen the position of medium and small businesses within the chain, European governments are currently looking into whether improvements to preconditions are called for. This has to do with issues such as competition policy, transparency, and the harmonisation of contract legislation.
Our research
In relation to this theme, LEI carries out research and policy evaluations into price transmission, price composition, and market strength in particular.
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