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Philippe BOYER, septembre 2011Philippe BOYER, septembre 2011
The French Observatory on formation of Food The French Observatory on formation of Food Products’ Prices and MarginsProducts’ Prices and Margins
Objectives, methods, first resultsObjectives, methods, first results
Eurostat7 octobre 2011
• 2
Outline of presentation
Context of setup for the Observatory
Methods
Objectives
First results : Bovine meat
Pork meat (fresh meat and ham) : extracts
Dairy products : cf. presentation 20 october 2011
Poultry (extracts)
Fruits and vegs (extracts)
• 3
Context : recent prices volatility, prices disconnection
● From 2007 : « volatility » of agr. prices ; 1st, increase in consumer prices during, divergent evolution in 2009, new increase in 2010
New debates about prices transmision in the food chains
Food products prices indexes at agricultural level, industry level and consumption level
base 100 in 2005
90
95
100
105
110
115
120
125
130
135
2005
_01
2006
_01
2007
_01
2008
_01
2009
_01
2010
_01
2011
_01
Consumer prices Agricultural prices Food industry prices
Source : INSEE, traitements FranceAgriMer
• 4
Objectives : transparency, dialogue, references
« Transparency » : the « good functioning » of free market economy presupposes a « good information » of all stakeholders
« Dialogue » : to improve interprofessional dialogue, based on objectives and shared datas.
« References » : to contribute to produce reliable economic information for chain stakeholders, consumers and policy makers.
Law on modernization of agriculture and fisheries (july 2010) : «… to inform chain stakeholders, consumers and policy makers about prices and margins formation during commercial transactions in the food chains, … »
• 5
Organization
Steering comitee studies orientation and validation
Chairman : Philippe CHALMIN, Professor, Economics University of Paris-Dauphine ;
-30 members, representatives of various agrifood chain stakeholders, organizations and unions (agriculture, industry, wholesale and retail trade), public administrations, economic research, public statistic services, consumers ;
-Product-specific working groups involving farmers, processors, wholesalers, retailers and consumers
Works realization
FranceAgriMer, (public agency in charge of implementing agrifood sector policies)-Public statistic services (National Institute of Statistics and Economic Studies, INSEE) ;-Agricultural professional institutes.
• 6
Method / principle : retail prices analytic decomposition
RETAIL PRICE
VAT
RETAIL GROSS MARGIN
2° INDUSTRY GROSS MARGIN
1st INDUSTRY GROSS MARGIN
AGR. RAW MATERIAL
VALUE
Net result at retail level
Net result in industry
Net resullt in industry
Production costs at retail
level
Coûts de production hors achat produit
Industry production costs
Net result at agri. level
Agriculture production
costs
Industry production costs
• 7
Method / concepts : « gross margin » = part of added value
1a
1b
2a
3a
4
57
1a : sales of processed product « a »
1b : other sales of products
2a : purchase of « a » product
3a : gross margin on « a » product
4 other intermediate goods
5 added value
6 other costs
7 net result
6
From GM to AV From AV to net result
• 8
Methods / concepts : values in agricultural product unit (ex : from carcass to meat)
1 unit of final product at retail level…
1 / (1 – rD ) unit of product at industry level…
Physical losses (yelds, …) at industry level : (1 – rT )
1 / (1 – rD ) (1 – rT ) unit of product at agriculture level…
Agricultural price
=
+
+
Physical losses (yelds, …) at retail level :
(1 – rD )
Value at industry level =
Industry price ( 1 – rD )
Value at agriculture level = Agriculture production price
Value at retail level =
Retail price ( 1 – rD ) ( 1 – rT)
Industry gross margin per agri. product unit =
Industry price . (1 – rT ) - agricultural price
Retail gross margin per agri. product unit =
Retail price . (1 – rD ) . (1 – rT ) – industry price . (1 – rT )
Retail value, in agricultural product unit
• 9
Methods / concepts : analysis in terms of agri product unit : cow carcass
Carcass entry slaughtering reconstituted carcass at retail level
• 10
Methods / concepts : values in retail product unit (ex.: from piece of meat to raw material)
1 unit of produit final product at retail level…
1 / (1 – rD ) unit of product at industry level…
Physical losses (yelds) at industry level : (1 – rT )
1 / (1 – rD ) (1 – rT ) unit of product at agriculture level…
Cost of agri. raw material per unit at retail level =
Agri. price / (1 – rD ) (1 – rT )
Gross margin at industry level per par unit at retail level = industry price / (1 – rD ) - agri. price / (1 – rD ) (1 – rT )
Gross margin at retail level per unit at retail level = Retail price - industry price / (1 – rD )
Retail price
=
+
+
Physical losses (yelds) at retail level :
(1 – rD )
Value at industry level =
Indus. price / ( 1 – rD )
Value at agri. level =
Indus. price / ( 1 – rD ) ( 1 – rT)
Value at retail level = Retail price
• 11
Loin value in the carcass Loinchop
Secteur industriel
Secteur distribution
chop
Methods / concepts : analysis in terms of final product unit : piece of pork meat (loin)
• 12
Methode / concepts : cost in raw material for dairy industry
Industry gross margin on consumer product (CP) = CP receipt – CP raw materiel cost
= CP receipt – ( total milk buying cost – net receipt on industrial products IP )
= CP receipt – [total milk buying cost – (receipt PI – processing costs PI ] )
Receipt
CPNet receipt
IP
Gross marginCP
Processing costs PI
Receipt
IP
Total milk buying cost CP raw
materiel cost
• 13
Methods / sources : retail price decomposition
RETAIL PRICES
VAT
RETAIL GROSSMARGIN
INDUSTRY GROSS MARGIN
AGRI RAW MATERIAL
VALUE
Net result
Net result
Net result
Production costs in retai tradel sector
Coûts de production hors achat produit
Production costs in industry
Net result
Production costs in
agriculture
Production costs in industry
●●FADNFADN
●●Farms Farms networknetworkof professionalof professionalinstitutesinstitutes
●Industry sector statistical accounts
●Distribution sector statistical accounts (supermarkets)
●Ad hoc surveysof rays accounts
●Consummers or distribution panels
●Prices statement in shops
●Quotations of agri prices
●Quotations of industrial prices,
● ad hoc surveys of industrial prices
Technical data : yeld, losse ratio…
Technical data : yeld, losse ratio…
• 14
Methods / sources / retail prices : consummers’ panel vs statement in shops
Retail price of pork chop in hyper & super markets
4,00
4,50
5,00
5,50
6,00
6,50
7,00
7,50
8,00
20
03-0
1
20
03-0
6
20
03-1
1
20
04-0
3
20
04-0
8
20
04-1
3
20
05-0
5
20
05-1
0
20
06-0
2
20
06-0
7
20
06-1
2
20
07-0
4
20
07-0
9
20
08-0
1
20
08-0
6
20
08-1
1
20
09-0
3
Year, 4 weeks
€ / kg
Consummers’panel Mobile mean Statement in shops rays
Sources : FranceAgriMer, KantarWorldpanel
• 15
Results / product folow up at present
Bovine meat : medium cow carcass reconstituted at retail level (fresh pieces and frozen minced steak)
Pork fresh meat : loin products : chop, fillet and roast
Pork delicatessen : ham
Dairy : 4 consumer products: semi-skimmed h-milk, butter, yogourt, emmental
Fruits and vegs (fresh) : apricot, strawberry, apple, peach, cherry, banana… ; carrot, cauliflower, concomber, lettuce, tomato…
Poultry : chiken (whole and cuts ; standard and label), turkey (whole and cuts)
• 16
Results / observation system
Monthly follow-up of prices at various levels od the food chain
Monthly calculation of gross margins at various levels
Annual or quaterly follow-up of production costs :
Costs in specialized industry sector,
Analytic costs in supermarket rays,
Production costs in agriculture, or operating expenses in specialized farms
Website and annual report for Parliament
• 17
Results / cow meat : prices and gross margins par kg carcass
Source : FranceAgriMer, KantarWorlpanel, OFPM
Prices and gross margins per kg of medium cow carcass reconstituted at retail level
0,0
0,5
1,0
1,5
2,0
2,5
3,0
3,5
4,0
4,5
5,0
5,5
6,0
6,5ja
nv-9
8
janv
-99
janv
-00
janv
-01
janv
-02
janv
-03
janv
-04
janv
-05
janv
-06
janv
-07
janv
-08
janv
-09
janv
-10
janv
-11
€ / kg carcass
Aggregated industry-retail gross margin Carcass price entry slaughtering
Retail price of reconstituted carcass Industry gross margin 2nd processing stage.
Industry gross margin 3rd processing stage. Distribution (supermarkets) gross margin
• 18
Results / cow meat : retail price decomposition
Source : FranceAgriMer, KantarWorlpanel, OFPM
Components of value of kg carcass, medium cow
0,0
1,0
2,0
3,0
4,0
5,0
6,0
7,0ju
il-10
août
-10
sept
-10
oct-
10
nov-
10
déc-
10
janv
-11
févr
-11
mar
s-11
€ / kg carcass
Distribution gross margin
3rd processing industry gross margin
2nd processing industry gross margin
Carcass value entry slaughtering
• 19
Results / bovine meat : Costs in specialized industry sector
Evolution and components of industry gross margin per kg of carcass eq. processed
Sample of slaughtering-cutting specialized firms in beef sector, FranceAgriMer
0,0
0,2
0,4
0,6
0,8
1,0
1,2
1,4
1,6
1_98
1_99
1_00
1_01
1_02
1_03
1_04
1_05
1_06
1_07
1_08
quarter_year
Net income (before corporate tax)
Taxes on products and others
Depreciation an interest
Labour costs
External costs (energy, etc.)
Source : FranceAgriMer
• 20
Results / Distribution costs
Under development, survey in distribution firms : direct costs in the rays, general costs coverage by ray.
Difficullty : scope of survey (head office, buying group, shops), industrial operations in back-store (meats), various kinds of analytic accounting …
Now, only available information : Statistical sector accounts
Hyper & supermarkets sectorCosts structure in 2007
78%
8%
8%
4%
Net income beforecorp.tax
Goods for sale
Intermediate goods
Labour costs
Depreciation, financialcosts, others
Source : Insee
• 21
Results / bovine meat : agricultural production costs
Receipts and costs for 100 kg of livestock (bull-calf) in 2009, 2 systems
45 35
3029
3435
89 €73 €
20 €
22 €
25
20
46
43
219 203
78 €
66 €
106 €
83 €
0
50
100
150
200
250
300
350
400
Receipts Costs Receipts Costs
Suckling-fattening farms
« Limousin »
Suckling-fattening farms
« Charolais » > 1,4 cattle unit / ha
€ / 100 kg live
Direct subsidies
Livestock receipt
Labour (familial labour value evaluation)
Farm land and capital rents
General costs
Buildings and installations
Farm implements
Breeding costs (vet, etc.)
Crops costs
Animal feed, included cereals (market price evaluation)
• 22
Results / pork meat (loin) : gross margins
Source : FranceAgriMer, KantarWorlpanel, OFPM
Gross margins on pork loin products (roast, chop) at different stages
0,00
0,250,50
0,75
1,00
1,251,50
1,75
2,00
2,252,50
2,75
3,003,25
3,50
3,75
4,004,25
4,50
jan
v-0
0
juil-
00
jan
v-0
1
juil-
01
jan
v-0
2
juil-
02
jan
v-0
3
juil-
03
jan
v-0
4
juil-
04
jan
v-0
5
juil-
05
jan
v-0
6
juil-
06
jan
v-0
7
juil-
07
jan
v-0
8
juil-
08
jan
v-0
9
juil-
09
jan
v-1
0
juil-
10
€ / kg loin final product
GM retail : roast (super-hyper market) Mobile mean 12 monthsGM retail : chop (super-hyper market) Mobile mean 12 monthsGM slaughtering-cutting industry, chop Mobile mean 12 monthsGM slaughtering-cutting industry, roast Mobile mean 12 months
• 23
Results / viande porcine (longe) : pork chop retail price components
Source : FranceAgriMer, KantarWorlpanel, OFPM
Pork chop retail price components
0,0
0,5
1,0
1,5
2,0
2,5
3,0
3,5
4,0
4,5
5,0
5,5
6,0
6,5
7,0
7,5
8,0
jan
v-0
0
juil-
00
jan
v-0
1
juil-
01
jan
v-0
2
juil-
02
jan
v-0
3
juil-
03
jan
v-0
4
juil-
04
jan
v-0
5
juil-
05
jan
v-0
6
juil-
06
jan
v-0
7
juil-
07
jan
v-0
8
juil-
08
jan
v-0
9
juil-
09
jan
v-1
0
juil-
10
€ / kg final product
Loin value in carcass GM slaughtering-cutting industry GM retail (including 3rd cutting) VAT
• 24
Results / ham : gross margins
Source : FranceAgriMer, KantarWorlpanel, OFPM
Goss margins on ham at different stages
0,0
0,5
1,0
1,5
2,0
2,5
3,0
3,5
4,0
4,5
5,0
5,5
6,0
jan
v-0
0
juil-
00
jan
v-0
1
juil-
01
jan
v-0
2
juil-
02
jan
v-0
3
juil-
03
jan
v-0
4
juil-
04
jan
v-0
5
juil-
05
jan
v-0
6
juil-
06
jan
v-0
7
juil-
07
jan
v-0
8
juil-
08
jan
v-0
9
juil-
09
jan
v-1
0
juil-
10
€ / kg final product
GM slaughtering-cutting industry GM ham industry GM retail (super-hyper market)
Mobile mean Mobile mean Mobile mean
• 25
Results /ham : retail price components
Source : FranceAgriMer, KantarWorlpanel, OFPM
Ham retail price components
0,0
1,0
2,0
3,0
4,0
5,0
6,0
7,0
8,0
9,0
10,0
11,0
12,0
13,0
jan
v-0
0
juil-
00
jan
v-0
1
juil-
01
jan
v-0
2
juil-
02
jan
v-0
3
juil-
03
jan
v-0
4
juil-
04
jan
v-0
5
juil-
05
jan
v-0
6
juil-
06
jan
v-0
7
juil-
07
jan
v-0
8
juil-
08
jan
v-0
9
juil-
09
jan
v-1
0
juil-
10
jan
v-1
1
€ / kg final product
Ham value in carcass GM slaughtering-cutting GM Ham industry VAT
• 26
Results /poultry : value entry slaughtering and retail price : turkey filet
Source : FranceAgriMer, KantarWorlpanel, OFPM
Value live exit farm turkey and retail price of filet
0,80
0,85
0,90
0,95
1,00
1,05
1,10
1,15
1,20
janv
-03
mai
-03
sept
-
janv
-04
mai
-04
sept
-
janv
-05
mai
-05
sept
-
janv
-06
mai
-06
sept
-
janv
-07
mai
-07
sept
-
janv
-08
mai
-08
sept
-
janv
-09
mai
-09
sept
-
janv
-10
mai
-10
sept
-
janv
-11
€ / kg HT
6,50
6,757,00
7,25
7,507,75
8,00
8,258,50
8,75
9,009,25
9,50€ / kg HT
Value entry slaughtering (live animal) Retail price of filet (super-hyper market, VAT non included)
NB : at the moment, industry prices non avaiable
• 27
Results /poultry : Aggregated gross margin indicator for turkey filet
Source : FranceAgriMer, KantarWorlpanel, OFPM
Aggregated gross margin indicator for turkey filet
6,00
6,25
6,50
6,75
7,00
7,25
7,50
7,75
8,00
8,25
8,50
janv
-03
juil-
03
janv
-04
juil-
04
janv
-05
juil-
05
janv
-06
juil-
06
janv
-07
juil-
07
janv
-08
juil-
08
janv
-09
juil-
09
janv
-10
juil-
10
janv
-11
€ / kg
Retail price (VAT n-incl) – Value entry slaughtering
• 28
Results /Dairy products
See next presentation, Bruxelles 20 october 2011
• 29
Results / Fruits and vegs : prices
ROUND TOMATO – Shipping and retail prices
0,0
1,0
2,0
3,0
4,0
00_1
0
00_3
8
01_3
0
02_2
2
03_1
4
03_4
2
04_3
4
05_2
6
06_1
8
07_1
0
07_3
8
08_3
0
09_2
2
10_1
4
10_4
2
year_# week
€ / kgShipping Retail in super-hyper mkt, VAT n-incl
• 30
Results / Fruits and vegs : prices : retail gross margin trend
Retail and shipping prices linear relation for round tomato
(2000-2010)
PD = 1,05 PE + 0,86
R = 0,88
0,00
0,50
1,00
1,50
2,00
2,50
3,00
3,50
4,00
0,00 0,25 0,50 0,75 1,00 1,25 1,50 1,75 2,00 2,25 2,50 2,75
PE
PD
• 31
2012 program
Costs in super-hypermarkets rays analysis : survey under development
Datas improvement : - industry prices in poultry sector, - more realistic model for pork chain (retail-ready cuts processed by industry),- distributors brands vs national brands in dairy products, - agriculture production costs (FADN, econometric model)
New products and food chains : - fisheries (fresh fish, cuts, smoked salmon, sardine or tuna preserve…), - wine (without geographic indication)
Thank you for your attention