Integrated supply chain projects and multifunctional local development: The creation of a Perfume Valley in Tuscany

Scaramuzzi, Silvia; Belletti, Giovanni; Biagioni, Paola Article Integrated supply chain projects and multifunctional local development: The creation of a Perfume Valley in Tuscany Agricultural and Food Economics Provided in Cooperation with: Italian Society of Agricultural Economics (SIDEA) Suggested Citation: Scaramuzzi, Silvia; Belletti, Giovanni; Biagioni, Paola (2020) : Integrated supply chain projects and multifunctional local development: The creation of a Perfume Valley in Tuscany, Agricultural and Food Economics, ISSN 2193-7532, Springer, Heidelberg, Vol. 8, Iss. 1, pp. 1-16, https://doi.org/10.1186/s40100-019-0150-8 This Version is available at: https://hdl.handle.net/10419/240264 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. 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If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by/4.0/ RESEARCH Open Access Integrated Supply Chain Projects and multifunctional local development: the creation of a Perfume Valley in Tuscany Silvia Scaramuzzi 1* , Giovanni Belletti 2 and Paola Biagioni 2 * Correspondence: silvia. [email protected] 1 Dipartimento di Scienze e Tecnologie Agrarie, Alimentari, Ambientali e Forestali, Università di Firenze, Piazzale delle Cascine, 18, 50144 Florence, Italy Full list of author information is available at the end of the article Abstract Marginal rural areas are undergoing major pressures from the effects of globalization, especially when no alternative has been found to conventional extensive agriculture and a lack of investments and vision squeezes the income of farmers. The objective of the paper is to show how Integrated Supply Chain Projects (Progetti Integrati di Filiera (PIF)), Italian rural policy tools funded in the framework of EU’s Rural Development Policy, can integrate supply chain innovation and territorial integrated strategies, fostering a multifunctional development of marginal rural areas towards a newly discovered identity. The case study is the PIF “Flora Aromatica Santa Luce” funded by the Tuscany Regional Administration RDP in 2016. The project aims at creating a new supply chain of organic aromatic plants in the Santa Luce Valley (PI). The integration is based, on the one side, on the creation and valorization of the new supply chain product, represented by an organic cosmetic line made with lavender essential oil, and, on the other side, on the territorial development of the Valley, in an economic, social, environmental and touristic perspective. From a theoretical point of view, the approach used was based on the new rural development paradigm, assuming that the processes of broadening, deepening and regrounding, together compose the main axis of rural development. The canvas model was used in order to identify a business model for the new supply chain and the territorial development of the area, while, at the methodological level, a participatory action research (PAR) approach was adopted. Results show how a supply chain project (like a PIF) can enhance innovation and stable commercial relationships within the supply chain and support processes of vertical and horizontal coordination, but also stimulate extended territorial strategies supporting the integration processes between agriculture, processing and other economic activities following a territorial multifunctional development logic. At the same time, key benefits for the policymaker and local administrations can also be identified in particular for marginal rural areas where farmers and other local actors are weaker and collective action is more difficult. Thanks to the PAR approach, a PIF can stimulate participation of farmers to relevant RDP measures but also allow convergence of individual actions towards wider regional and local strategic objectives. Keywords: Local development, Integrated Supply Chain Project, Multifunctionality, Rural development policy, Rural tourism, Business Model Canvas, Officinal plants, Lavender © The Author(s). 2020 Open Access This article is distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution, and reproduction in any medium, provided you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license, and indicate if changes were made. Agricultural and Food Economics Scaramuzzi et al. Agricultural and Food Economics (2020) 8:5 https://doi.org/10.1186/s40100-019-0150-8 Introduction Marginal rural areas are undergoing major pressures from the effects of globalization, especially when no alternative has been found to conventional extensive agriculture and a lack of investments and vision squeezes year by year the income of farmers. The EU’s Rural Development Policy 2014–2020 identifies as main strategic objectives the improvement of the competitiveness of agriculture, a sustainable management of natural resources and climate action and a balanced territorial development of rural economies and communities, including the creation and maintenance of employment (Reg. (EU) n. 1305/2013). In order to increase the competitiveness of the agri-food and forestry system, Italy, in its 2014–2020 partnership agreement, has defined a strategy based, on the one hand, on the support for the organizational and structural growth of the single enterprises and, on the other hand, on the increase in investments in the agricultural, agri-food, forestry, aquaculture and fisheries supply chains (Dipartimento per lo Sviluppo e la Coesione economica 2014). Special attention is paid to the creation and consolidation of supply chains, which emphasizes the intention to give continuity to the positive experience of integrated supply chain design, the tool for the implementation of rural development interventions introduced by the National Strategic Plan (NSP) for the programming period of 2007–2013 (Cristiano and Tarangioli 2010). The objective of this paper is to show how an Integrated Supply Chain Project (Progetto Integrato di Filiera (PIF)) can not only stimulate innovation in the supply chain, but at the same time activate a process of multifunctional development of a marginal rural area towards a newly discovered identity, as a tourist destination. The case study is focused on Santa Luce Valley, a hilly area on the boundaries between the provinces of Pisa and Livorno, Italy. Its economy is still largely tied to conventional agriculture, which is the main production activity in these hills. Farms mainly produce oil, wine, honey and cereals. In Santa Luce, old traditions and many forgotten professions are still present, while the importance of tourism is very marginal, though being geographically positioned very close to Pisa and coastal marine resorts. In particular, the case study analyses the Integrated Supply Chain Project “Flora Aromatica Santa Luce”funded by the Tuscany Regional Administration in 2016. The project aims at creating a new supply chain of organic aromatic plants in the Santa Luce Valley (PI). The integration is based on the creation and valorization of the new supply chain product, represented by an organic cosmetic line made with lavender essential oil, and, on the other side, on the territorial development of the Valley, in an economic, social, environmental and touristic perspective. The authors, as partners of the project, were involved in the building process of the supply chain project, providing for scientific expertise and methodological tools to producers and other actors involved. In this paper, we critically analyse the process and the results of this building process. The paper starts from describing the theoretical approach and then goes in-depth into the case study description and main results, then end with a final discussion and main conclusions. Theoretical approach The Integrated Supply Chain Projects (PIFs) are formal agreements between the actors of an agro-industrial chain, instrumental for the creation and the consolidation of Scaramuzzi et al. Agricultural and Food Economics (2020) 8:5 Page 2 of 16 networks and of new governance forms aimed at solving specific problems and at managing, in an integrated way, relevant issues such as safety, quality and environmental protection. Partners are required to formally sign a supply chain agreement in which shared objectives and strategies are specified, but also obligations, roles and responsibilities of the individual actors. Fostering the integration of economic operators, PIFs aim to better coordinate the various chain rings, enhancing the market access of agricultural producers (Cristiano and Tarangioli 2010;D’Alessio 2010). PIFs are promoted within the regional Rural Development Programmes (RDPs) funded by the European Agricultural Fund for Rural Development (EAFRD) in the wider framework of the partnership agreement between the Member State and the European Union. RDPs offer a set of measures that are usually singly activated through specific tender notices. On the contrary, PIFs are based on “multi-measure”tender notices, which have to be jointly applied for by specific partnerships. Regional administrations may decide to activate different measures, according to their regional strategies. 1 This kind of tender notices allows to meet the specific needs of both the farming and manufacturing/retailing sectors involved while maintaining consistency between the project objectives and the regional strategy (Zezza 2016; European Network for Rural Development 2012). The integration between the economic operators and the sharing of a development programme allows reducing the transaction costs related to the exchange of information and materials, thus improving the overall efficiency of the supply chain. The coordination of actors encourages faster dissemination of both information and innovation; the definition of stable supply chain relationships, instead, allows to meet the needs of the different stages of production and to obtain superior quality products. The repetition of commercial exchanges between the same parties has the further effect of reducing the risk of opportunistic behaviour within the supply chain (Ventura et al. 2011). The strategic and systemic logic promoted by PIFs is able to increase and multiply the impact of the single interventions in support of the agricultural and forestry sector. In fact, through this tool, it is possible to realize a critical mass of investments that individually the supply chain operators would not be able to guarantee (Cristiano and Tarangioli 2010). PIFs therefore facilitate the achievement of general objectives of innovation, modernization, restructuring and improvement of the quality of production in the agri-food sector and encourage, at the same time, adequate employment and territorial development (Ventura et al. 2011;D’Alessio 2010). The integrated design is by its nature complex, requiring intense concertation of the parties, both in the programming phase and in the project implementation phase. The involvement of actors belonging to different sectors requires further efforts in defining specific procedures, management and levels of accountability in project implementation for each area of intervention. Inadequate or insufficient organizational efforts are likely to produce duplications, fragmented policies, delays, conflicts and unsatisfactory results; therefore, a 1 In the case of Tuscany, the PIF call activated the measures: 3.1 “Participation to quality standards for agricultural and food products”; 3.2 “Information and promotion activity”; 4.1 “Support to farm investment”; 4.2 “Investments for processing, marketing and/or development of agricultural products”; 6.4 “Support to investment for the creation and development of non-agricultural activities”; 8.6 “Support to investment in forest technologies, processing, mobilization and commercialization of forest products”; 16.2 “Support to pilot and cooperation projects”. Scaramuzzi et al. Agricultural and Food Economics (2020) 8:5 Page 3 of 16 careful assessment of the actual opportunities that this tool can offer in the context of reference and the attitude of the single actors to the planning and sharing of development strategies is required (Zumpano 2007; Tarangioli 2010). The complexity of PIFs is also reflected in the formal administrative procedures required that attain at the presentation of the project phase, implementation phase, reporting phase and final control. This complexity, besides disorienting potential beneficiaries, often disincentives the regional administrations themselves from adopting this type of integrated design tool (Tarangioli 2010). In the programming period for rural development 2007–2013, in fact, there were only 14 regions that allocated the resources to the PIF (Zezza 2016). What is particularly relevant for marginal rural areas is that PIFs may generate competitive advantages not only for the supply chain but also for the whole territory, where the activities of the supply chain are located. This is true in particular when the supply chain is short and concentrated in a specific territory, the initiative is based on local specific resources, and when this territory is a marginal rural area with few opportunities and poor dynamic. A horizontal and multifunctional integration of other actors of the territory is therefore requested. Theories of rural development inspired by Ploeg (Ploeg and Renting 2004; Wiskerke and van der Ploeg 2004) highlight this need for integration by speaking about redefinition of farm boundaries (Ventura and Milone 2004; Knickel and Renting 2000) according to three dimensions: deepening (more value added can be generated per unit of product through such mechanisms as quality production, on farm processing, new short circuits), broadening (inclusion of new agricultural-linked activities that are located on the interface between society, community, landscape and biodiversity, such as agro-tourism, energy production and delivery of different services within the rural economy) and regrounding. The latter, in particular, advocates for a re-articulation of relationships of the firm with its context, with other firms and other actors in the local rural space, allowing for new forms of value creation. This is, for example, the case of wine routes (Brunori and Rossi 2000). Diversification and especially agri-tourism development are implicit in the objectives of the PIFs, taking into account that they activate specific measures dedicated to these goals in order to support farmers in investing in such activities. Successful rural tourism is characterized by a tight link between the territorial capital and the services offered in the rural location (Belletti and Berti 2011). Territorial capital can be defined as the stock of specific resources (tangible and intangible) that can be used by people belonging to a specific community and that are available for mobilization in projects (Belletti and Berti 2011). Rural territorial capital can be broken down into seven main components (Berti 2009; Belletti and Berti 2011): the environmental capital, the economic capital, the human capital, the social capital, the institutional capital, the cultural capital and the symbolic capital. In rural destinations, stakeholders are supposed to be highly interrelated (Baggio et al. 2010) and are often characterized by a high competition of small firms that are obliged to cooperate in order to integrate the services offered in a complex tourist product (Belletti et al. 2013;Tolstad2014). An integrated approach in the construction of the product (Cawley and Gillmor 2008; Kastenholz and Fingueiredo 2014)andinthedesignofthegovernance of the system is therefore essential (Saxena and Ilbery 2008;Bellettietal.2013). Scaramuzzi et al. Agricultural and Food Economics (2020) 8:5 Page 4 of 16 The need to design organizational and governance structures to enact commercial opportunities (George and Bock 2011) leads to the identification of a business model for the system. In order to analyse and improve the organization and governance of the system, the authors make use of the Business Model Canvas (BMC) as a strategic tool that helps to define the organizations’business models according to a customeroriented approach (Osterwalder and Pigneur 2010). BMC allows, with a simple and effective visual language, to enhance the logic that an organization adopts to create, offer and capture value, with special reference to revenues, reputation and identity. The BMC is a graphic scheme consisting of nine blocks, each corresponding to one of the following core elements of the business model: 1. “Customers”are the market segments for which the organization wants to create value through targeted proposals. 2. “Value proposition”describes the set of products and services designed to create value for the identified customer segment and how they are proposed to the target. The value proposition is the heart of the model and outlines a complete picture of the tangible and intangible features of the enterprise’s supply, which aims to meet the needs or solve the problems of its customers. 3. “Channels”describe the means through which the value proposition reaches the selected customer segments (communication channels, distributors or sales channels). They represent the meeting place between the enterprise and the recipients of the offer; therefore, they must be selected in the most effective way always taking into account the characteristics of the market segment to which they are addressed. 4. “Customer relationship”describes the modalities with which the enterprise considers to acquire and to retain customers and the type of relationship that wants to build with them. 5. “Revenue streams”summarize the revenue streams that come from a value proposition for which customers are willing to pay a price. It then defines the actual ways in which the enterprise captures value. 6. “Key resources”are the tangible and intangible assets indispensable to delineate and offer the value proposition (human, intellectual, physical, financial resources). 7. “Key activities”are the main activities that the company has to implement to determine its competitive advantage. 8. “Key partners”are the external strategic partners that provide the organization with key resources or that realize key activities for their business model. 9. “Cost structure”describes the costs of implementing the business model, essentially related to the last three blocks described. In the definition of Osterwalder and Pigneur, “a business model describes the rationale of how an organisation creates, delivers, and captures value”(Osterwalder and Pigneur 2010, p. 14). Pölling et al. (2017) state that BMC permits researchers to analyse the organization and performances of farms, both economically and socially. It also allows for the definition and comparison of key success factors, barriers, competitors and business ideas and innovations. In the Perfume Valley project, in order to identify a business model for the new supply chain and the territorial development of the area, Scaramuzzi et al. Agricultural and Food Economics (2020) 8:5 Page 5 of 16 we therefore thought BMC could be a correct tool. As a matter of fact, the model has a customer-oriented perspective and is a useful framework to identify key resources, activities, partners and target customers, for the design of a common strategy for the supply chain product and the entire Perfume Valley territory. Furthermore, the value proposition, at the centre of the BMC, describes how to offer and capture the value itself. The immediacy of the visual scheme allows to focus the attention on the key elements of the business, to highlight their reciprocal relationships at a qualitative level, to easily identify any critical issues by speeding up the problem-solving processes (Osterwalder and Pigneur 2010; Osterwalder et al. 2014; Amanullah et al. 2015). Methodology In order to apply the BMC, we adopted a participatory action research (PAR) approach with the goal of involving the local community in sharing and analysing their environment on the one side and to identify their strategic goals and plan their actions on the other side. In particular, PAR seeks to understand and improve a specific context or situation by changing it (Chambers 1994; Baum et al. 2006) thus generating an ongoing collective and self-reflective action research process, in collaboration with academic researchers and made by, with and for people affected by a particular problem. It helps them create awareness and emphasizes co-learning and active participation among stakeholders, so that they can become active and leading subjects for the development and transformation of their immediate surroundings and reality (Kindon et al. 2007; Kindon et al. 2009; Padilla and Ramos Filho 2012). Thus, plural, shared and participative knowledge production becomes an instrument of social and/or organizational transformation (Baum et al. 2006; Greenwood et al. 1993). The following phases were followed: (a) critical analysis of the existing literature; (b) 20 in-depth interviews with local stakeholders in order to identify the main actors to be involved in the process, strengths and weaknesses of past projects and possible perspective strategies to be carried out; (c) a direct online survey submitted to 253 firms, associations and other public and private stakeholders; and (d) 5 knowledge circles (Mittendorff et al. 2006). The sample of 253 firms, association and other public and private stakeholders is the result of a dedicated activity carried out within the project aiming at building a database of all the local private and public actors, related to tourism, cultural and wellness activities and mapping them. The municipalities involved in the PIF and the neighbouring ones (Santa Luce, Orciano Pisano, Castellina Marittima, Casciana Terme-Lari, Chianni, Crespina Lorenzana, Pomarance, Fauglia and Riparbella) have been considered. The main online search engines (i.e. Google), numerous tourist web portals and institutional sites of municipalities and local tourist offices were examined in order to reconstruct the panorama of current and potential tourist services supply in this hilly area of Tuscany. The relevant data were identified in each municipality and divided into 4 broad categories: (1) accommodation services—both hotels and non-hotel; (2) food and beverage—catering, farms and commercial activities of agri-food products; (3) other local businesses and associations—special focus on activities related to wellness (wellness centres, spas), commercial activities related to cosmetic and herbal products and sports activities; and (4) local public administrations. Scaramuzzi et al. Agricultural and Food Economics (2020) 8:5 Page 6 of 16 The sample is almost identifiable with the universe of firms and actors existing in the territory. The online survey was based on two questionnaires prepared for two different groups of activities: the first consisting of accommodation facilities, catering, farms and commercial activities, and the second one for personal services; sports; recreational, cultural and association activities; travel agencies and tour operators; passenger transport; car hire; consortia; and public institutions. The “knowledge circles”were structured and moderated by two facilitators who shortly presented the thematic field and then lead the group discussion, stimulating the acquisition of information and knowledge sharing about (a) the “territorial capital” 2 of the locality, (b) defining shared development strategies for the valorization of the capital and (c) sharing a strategic agenda with mutual engagement. The case study: Flora Aromatica Santa Luce project The “Flora Aromatica Santa Luce”project was funded by the Tuscany Region through the 2015 tender notice for “Integrated Supply Chain Projects”. The project involves 16 actors for a total cost of investments of 1.1 million euros and a public funding of 689.000 euros. The project leader is the processing firm Flora, specialized in the production of aromatherapy products and natural and organic cosmetics. Eleven farmers, 2 research institutes, 1 farmers’organization and 1 commercial firm specialized in marketing of cosmetic products are participating. The project aims to contribute to the economic, social, environmental and tourist valorization of the hilly area on the boundaries between the provinces of Pisa and Livorno, Italy. The area has undergone a very relevant progressive depopulation after the Second World War, and the economy is still largely tied to conventional agriculture, which is the main production activity of these hills. The main agricultural productions in the area are olive oil, wine, honey and cereals. In Santa Luce, old traditions and many forgotten professions are still present, while the importance of tourism is very marginal, though being geographically positioned very close to Pisa and coastal marine resorts. The main actions of the projects are (a) the partial (from 1 to 2 ha per farm) and progressive reconversion of the agricultural area, currently devoted to the conventional cultivation of cereals and organic and biodynamic crops of officinal plants for the extraction of essential oils of great value; (b) the construction of a new local supply chain for the extraction of high-quality essential oils and production of cosmetics; and (c) an integrated local development of the “Perfume Valley”. Flora is committed to purchasing all the inflorescences produced by the farms’partners of the project for the production of essential oils to be used for the creation of a new cosmetic line for 8 years at market price. The strength and innovation of the “Flora Aromatica”project consists, therefore, in the establishment of a completely new agro-industrial chain for the territory of the Tuscany region with broad market prospects. The economic development of actors directly involved in the chain is not the only goal of the project, which also aims to generate positive externalities over the entire territory relying on the concept of multifunctionality in agriculture. The choice of 2 See paragraph 2 for the definition of the territorial capital. Scaramuzzi et al. Agricultural and Food Economics (2020) 8:5 Page 7 of 16 lavender as the main crop is justified, not only by the high market demand for its essential oil, but also by the extraordinary landscaping value of its blooms, which can become a source of tourist attraction. The multifunctional goal of the PIF is to give birth to the “Perfume Valley”, creating a new symbolic capital of the rural area at the borders between the provinces of Pisa and Livorno and valorize it as a new tourist destination. All the farmers involved in the PIF are also interested in the development of such a multifunctional goal (many of them have an agri-tourism, but also recognize the importance of direct selling, besides wine and olive oil, also lavender products together with visual and emotional experiences to valorize them), the processing firm leading the project (especially for the increase of the brand image and direct selling) and of course the commercial firm acting as a marketing strategy developer. In this paper, we will focus our attention in particular on the results of the creation process of the Perfume Valley (funded by measure 16.2 “Support to pilot and cooperation projects”): a new thematic and “multi-experiential”tourist destination, aiming at integrating the supply chain development with the territorial valorization of the area. Results The Business Model Canvas was adopted as an operational guideline in order to structure the information and results of the project. In terms of value proposition, the “Perfume Valley”was identified as a thematic and “multi-experiential”tourist destination, based on the concept of an integrated and multifunctional product territory built around the lavender. More in detail, we shared with the actors the idea of structuring the valorization of the Valley and the communication message on the multiple tourist experiences that can be carried out in the territory, thanks to the integration of different actors that supply diversified goods and services, in a territory whose specific identity is based on the lavender. Through the PAR approach, we identified the resources of the territory aiming at increasing the awareness of local actors about the potential of the area and sharing knowledge in order to build an integrated touristic product. The actors involved in the process were, in terms of number and diversification of activities, far beyond the ones benefiting from the PIF financial support and identified in Fig. 1within the left rectangle. In fact, in order to share the project goals, the perspective of territorial enhancement and the main characteristics of the business plan, we activated and stimulated the actors of the territory through in-depth interviews submitted to the key stakeholders (coming from different sectors and the local public administrations), online surveys and focus groups (see par. 2 for methodology). Great appreciation and proactivity were immediately manifested by the actors of the PIF in order to activate other actors through mail and word of mouth so as to make the following focus groups as effective as possible in terms of qualitative and quantitative participation. The first focus group was just devoted to farmers involved in the project and the processor leading the project in order to stimulate their involvement and commitment to the goals. The second focus group involved both farmers belonging to the chain and not, but interested in enhancing tourism, and the project leader, in order to identify, in a participatory way, the components of “territorial capital”of the locality; to share the “experiences”each of them can offer to the tourists; and to define shared development strategies for enhancing the value of the capital. The third, fourth and Scaramuzzi et al. Agricultural and Food Economics (2020) 8:5 Page 8 of 16 Funding The Integrated Supply Chain Project “Flora Aromatica Santa Luce”was funded by the Tuscany Regional Administration on the 2014–2020 Rural Development Funds - Call “Progetti integrati di Filiera –PIF annualità 2015”, approved through Decree n. 2359, dated 26 May 2015 “Regulation (UE) n. 1305/2013” Availability of data and materials The data that support the findings of this study are available on request from the corresponding author [SS]. 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