The governance of transitions in agri-food systems: Evidence from the processing tomato supply chains in Spain and Italy

Mantino, Francesco; Forcina, Barbara Article The governance of transitions in agri-food systems: Evidence from the processing tomato supply chains in Spain and Italy Italian Review of Agricultural Economics (REA) Provided in Cooperation with: Firenze University Press Suggested Citation: Mantino, Francesco; Forcina, Barbara (2024) : The governance of transitions in agri-food systems: Evidence from the processing tomato supply chains in Spain and Italy, Italian Review of Agricultural Economics (REA), ISSN 2281-1559, Firenze University Press, Florence, Vol. 79, Iss. 1, pp. 15-32, https://doi.org/10.36253/rea-14953 This Version is available at: https://hdl.handle.net/10419/325674 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/ Italian Review of Agricultural Economics Vol. 79, n. 1: 15-32, 2024 Firenze University Press www.fupress.com/rea ISSN 0035-6190 (print) | ISSN 2281-1559 (online) | DOI: 10.36253/rea-14953 REA ITALIAN REVIEW OF AGRICULTURAL ECONOMICS ITALIAN REVIEW OF AGRICULTURAL ECONOMICS Citation: Mantino, F., & Forcina, B. (2024). The governance of transitions in agrifood systems: evidence from the processing tomato supply chains in Spain and Italy. Italian Review of Agricultural Economics 79(1): 15-32. DOI: 10.36253/ rea-14953 Received: December 13, 2023 Revised: April 15, 2024 Accepted: May 09, 2023 Copyright: © 2024 Mantino, F., & Forcina, B. This is an open access, peerreviewed article published by Firenze University Press (https://www.fupress. com/rea) and distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited. Data Availability Statement: All relevant data are within the paper and its Supporting Information files. Competing Interests: The Author(s) declare(s) no conflict of interest. Guest Editor: Bernard Pecqueur, Marcello De Rosa, Catia Zumpano ORCID FM: 0000-0001-5338-4333 BF: 0009-0000-3519-4413 Agrifood system between global and territorial vision – Research article The governance of transitions in agri-food systems: evidence from the processing tomato supply chains in Spain and Italy Francesco Mantino, Barbara Forcina* CREA – Research Centre for Agricultural Policies and Bioeconomy, Italy *Corresponding author. E-mail: barbara.for[email protected]v.it Abstract. The paper aims to analyse the functioning of territorial agri-food chains through an institutional lens. The approach tries to explore the influence of endogenous and exogenous factors on the capacity to respond to complex transition challenges. Our working hypothesis is that agri-food supply chains are embedded in the territory they belong to, economic performances and market competitiveness are strongly influenced by a combination of organisational capabilities and good governance solutions. These topics are developed by examining the innovative socioeconomic features of two of the largest world and European supply chains: the processing tomato supply chains of Northern Italy and Extremadura (Spain), both representing most of the processed tomato national production, governed by an overarching organisation gathering producers and processing firms on a parity basis, characterised by an innovative path developed to face the changing conditions of policies and markets. The paper shows how governance capabilities and their implications on the competitiveness and chain’s performance need to be explored by combining qualitative and quantitative analysis and indicators. Keywords: localised agri-food systems, supply chains, governance, indicators. JEL codes: O13, Q18, R11. HIGHLIGHTS – Territorial differences affect economic and governance models, which in turn influence agri-food chains capacity to address sustainability challenges and remain competitive. – Indicators of the processing tomato supply chain in Northern Italy and Extremadura confirmed that systemic responses, cooperation networks and collaborative forms of governance are crucial to support mechanisms of adaptation to external changes. – Inter-branch organisations ensure cooperation, price stability and better conditions for primary producers. 16 Francesco Mantino, Barbara Forcina 1. INTRODUCTION This paper focuses on the role played by local governance in the competitiveness of localised and highly specialised agri-food supply chains. Its original contribution consists in understanding of the influence exerted by endogenous and exogenous factors on the capacity to respond to transition challenges. These topics are developed by investigating the socioeconomic features of the processing tomato supply chain, with a specific focus on the areas of Northern Italy and Extremadura (Spain). Firstly, in 2022 Italy was the second world producer of processed tomato after California, and the biggest supply chain in Europe. In the same year, Spain was, instead, the fourth world producer and second European one, and Italy’s main competitor on European and world markets. Secondly, the Northern Italian supply chain accounts for over half of the Italian production. It is distinguished by a long, successful, and innovative organisational and technological path in an attempt to adapt to changing conditions in policies and markets. It is therefore interesting to compare these developments with those in Extremadura, which accounts for 80% of the Spanish processed tomato. Moreover, in both Italy and Spain, processing tomato represents a strategic crop not only for the high relevance of production and processing, but also for vertical and horizontal supply chain relations.Finally, in both Northern Italy and Extremadura, the processed tomato system is characterized by geographical proximity, distinctive governance patterns, consolidated relationships between producers and processing industries, historical local roots and identity. The paper aims to understand how economic and governance models influence the capacity of agri-food supply chains to address current sustainability challenges and remain competitive. Our working hypothesis is that agri-food supply chains are embedded in the territory they belong to and that supply chain governance models affect the efficiency and resilience of the supply chain. This study particularly focuses on the following research questions: 1. What are the differences between the two territorialized agri-food chains in terms of competitiveness factors? 2. How do supply chain organisation and governance arrangements affect their capability to compete? 3. How are socioeconomic and environmental transitions impacting the two areas, and which responses are they providing? The study is developed in three sections. The first one (section 2) briefly reviews some of the most important strands of literature dealing with the agri-food supply chain. This section examines the theoretical framework suitable for considering the role of local governance in the Localized Agri-Food Systems (LAFS). The following section (section 3) describes the methodology followed in this study and deepens the understanding of the territorial and socioeconomic features of territorial supply chains. Section 4 explores the functioning of the processing tomato sector of the two major European players (Italy and Spain) and compares the specialised areas of Northern Italy and Extremadura in terms of supply chain structure and organization, power distribution along the supply chain and competitiveness factors. Finally, section 5 aims to analyse how the different governance arrangements within and beyond the two supply chains can influence the capability of responding to the relevant transition challenges in the two areas. 2. THEORETICAL FRAMEWORK Agri-food systems are complex entities affected by local and spatial conditions, human behaviour, attitudes and decisions. They involve multiple distinct stages and different interrelated markets, actors and governance systems (Sexton, 2013), and are increasingly characterized by differentiated and quality-driven activities and products (Saitone, Sexton, 2010). In turn, higher transaction costs entail higher and more explicit coordination in the chain to codify products, enhance trust and reputation, and lower opportunism. The combination of different activities of firms and economic agents finds expression in complex organisational systems, the supply chains, belonging to a broad category called hybrid institutions (Carbone, 2017), that is entities performing tasks that cannot be undertaken by markets or by the firms on their own (Ketchen, Guinipero, 2004). In the streams of literature concerning supply chains, the concept of Localised Agri-Food Systems (LAFS) has gained relevance. LAFS can be a useful methodological framework to study the tomato supply chains. Initially, the concept of LAFS was strongly focused on the production system and interactions among firms within a given territory: this can explain why it was strongly influenced by the concept of cluster, adopted by Porter (1990, 2009) to define the spatial proximity of many production units and their reciprocal relationships. Spatial proximity, specialisation of territorial systems and their complex interplay were also at the centre of studies on the new economic geography in Krugman (1995), on the one side, and in the Italian school of 17 The governance of transitions in agri-food systems: evidence from the processing tomato supply chains in Spain and Italy local development driven by Becattini’s works, focusing on the concept of Marshallian industrial district (Becattini et al., 2009), on the other. LAFS emerged in the mid-1990s as a concept referring to geographical concentrations of specialised farms, food-processing units, distribution networks, and private and public entities in a determined place. LAFS also appeared in the French literature, but as SYAL, or Systèmes agro-alimentaires localisés. Three distinctive features characterise LAFS: (a) place, (b) social relationships, and (c) institutions. The specificity of LAFS is in the spatial features of products, people, institutions and social relations that are embedded in food production. Place is considered in its widest meaning as used in the French school, that is the “terroir”. Social relationships relate to trust and cooperation among actors. Institutions include all private and public agents promoting actions regulated by formal and informal rules. CIRAD-SAR (1996: 5) defines LAFS as follows: “production and service organizations (agricultural and agri-food production units, marketing, services and gastronomic enterprises, etc.) linked by their characteristics and operational ways to a specific territory. The environment, products, people and their institutions, knowhow, feeding behaviour and relationships networks combine within a territory to produce a type of agricultural and food organization in a given spatial scale”. The subsequent debate on LAFS (Muchnik et al., 2008; Perrier-Cornet, 2009; Resquier-Desjardin, 2010) clarified that LAFS differ from the notion of clusters in three respects (Pecqueur, 2013; quoting Muchnick, 2002): a) the creation of externalities related to the density of firms located in a place, and the proximity between actors; b) the presence of skills, work relations, and the know-how of individuals and companies which are founded on a common history and transmitted in collective knowledge, practices, rules and representations; c) the methods of regulation, based on a collective organisation as specific resource of the system, and a source of stabilisation and reproduction. Another relevant difference is the relationship within the territory underpinning LAFS, compared to the concept of Système Productif Localisé (SPL) and Industrial District (ID) of the French literature (Courlet, 2008). In SPLs and IDs, the concentration of economic activities in a relatively small area is emphasized. Conversely, in LAFS, Resquier-Desjardins (2010: 14) says that: “the notion of geographic concentration, because of the dispersion inherent to rural territories, must be relativised: the spatial boundaries of the SYAL can be wide and sometimes concern an entire region, or simply some micro-areas in a region, constituting an archipelago territory […]. Moreover, if the link to rurality contributes to defining the relationship with the territory, the territory belonging to SYAL is not necessarily exclusively rural: the cities may be part of the territory of a SYAL and play a pivotal role […]”. Relaxing the geographic concentration is particularly relevant for the two processing tomato supply chains examined in this study, both widespread in a very large territory and not relying on specificities linked to PDOs or GPIs, but on other types of production sustainabilityrelated qualifications. Governance of the supply chain has always been at the centre of the research on localised systems, notably under the LAFS conceptual category. Governance is deemed crucial to pursue strategies for competitiveness, resource sustainability and conservation over time. Definitions of governance in the literature concerning the localised systems imply different components: a) the notion of territorial resources involved in the governance process; b) the objectives/outputs of governance; c) the coordination of relevant actors; d) the multiple levels involved. Regarding the notion of territorial resources, it is common to consider the concerned “territory” as a broad “source of resources” (Muchnik et al., 2008), where different resources are included (social, cultural, natural, etc.). Other authors prefer to distinguish generic resources and specific assets for the concerned system (e.g. soil, quality characteristics, specific skills and know-how, geographic identity, etc.) (Perriet-Cornet, 2009; Pecqueur, 2013). Torres Salcido, Muchnik (2012) refer to “a collective action on appropriation and building of tangible and intangible territorial heritage”. Governance implies the achievement of different objectives. Some authors point out the value appropriation of territorial resources and the well-being associated with their valorisation (Torres Salcido, Muchnick, 2012). Objectives also include promoting production and consumption that are less harmful to natural and cultural diversity. The coordination of different collective actors is a crucial component of the concept of governance. Muchnik et al. (2008) identify governance with methods and rules allowing more stable coordination of individual and collective actors. Torres Salcido, Muchnick (2012) put more emphasis on the role of governance mechanisms within the LAFS, defining an ideal type of LAFS as “an agri-food system (production/transformation/services) in a specific territory in which actors try to set up coordination and collaboration processes in partnership terms, with internal management and regulation but with strong ties to public managers and companies”. Besides coordination, Pecqueur (2003) points out governance as a dynamic process leading to mediation of inter- 18 Francesco Mantino, Barbara Forcina ests (“institutional compromise”) between public and economic actors (farmers, processors, service providers and marketing operators). It is particularly relevant where actors with very different powers and often conflicting strategies compete to distribute the value-added achieved at the local level. Power relations within the supply chain can differ according to the sector and the capacity to control the production specificities and assets of the chain. According to Perrier-Cornet (2009), the stability of LAFS over time strongly depends on a minimum power balance among the actors managing the territorial assets and their capacities to activate these assets. The presence of Producers Organisations (POs) favours the increase of the value added of productions of their associates and permits the collective representation of farmers’ interests. Producers, in fact, are in competition with each other but are also in a weak position relative to the food industry and commercial operators. However, as POs may also harbour inefficiencies (especially in the absence of direct commercialization), a fairer supply chain would require the presence of Inter-Branch Organisations (IBOs) to coordinate the different actors/ steps by facilitating the dialogue and promoting good practices and market transparency. Like in the case of Local Action Groups for the LEADER and Operational Groups for the European Innovation Partnerships (EIP-AGRI), “intermediate local bodies” play a relevant role in brokering initiatives for the rural population and policy delivery. We hypothesize that IBOs can play a similar role by ensuring coordination of the supply chain actors and relations with other territorial actors. The notion of governance also involves considering the broader relations of the supply chain within the territory (territorial governance). Territorial governance is receiving progressively more attention due to the increasingly multifunctional nature of agri-food chains and the linkages of the supply chains with other sectors, natural resources, infrastructures and population activities (Muchnik et al., 2008; Pecqueur, 2003). It means that supply chain activities can have positive and negative relations with municipal/regional authorities, research and training institutions, civic associations, regional development agencies, institutions regulating access to labour markets, etc. Good networks with all these agents can benefit, developing a sustainable and competitive supply chain. Moreover, analysing local tiers always leads us to discover the importance of multi-level relationships and the role of external networks (with regional/national institutions, other areas, etc.) (Mantino, 2021). Cooperation networks and collaborative forms of governance represent crucial adaptation mechanisms to external changes. In recent research funded within the Horizon Europe framework project RUSTIK (Rural Sustainability through Integration of Knowledge for Improved Policy Process), Mantino et al. (2023) reviewed a series of studies exploring how local systems have different capacities to respond to shocks, risks and opportunities. The policy system can influence transition processes in different ways: by defining a set of goals (i.e., environmental goals to be reached by a certain period), and/or implementing regulations, incentives and advice/information campaigns which aim to facilitate and enable transition possibilities and pathways, etc. Likewise, local systems have different capacities to comply with and use policy transition goals, incentives and regulatory tools. In our approach, the main hypothesis of research is that LAFS are able to face the relevant transitions through the capability of setting up better contractual relations within the supply chain and between the actors of the supply chain and other territorial actors. Figure 1 illustrates the theoretical framework followed in this study. The focus is on mechanisms of response to challenges and opportunities for transitions. In particular, the analysis tried to distinguish between individual responses provided by single actors (like processed tomato industries) and collective responses by coalitions of actors. In this regard, this analysis focuses on those institutions that have the capacity to mediate between contrasting interests. Collective responses, in this methodological approach, seek to activate what Camagni, Capello (2013) call “territorial capital”: “In a general but compact definition, territorial capital may be seen as the set of localised assets – natural, human, artificial, organizational, relational and cognitive – that constitute the competitive potential of a given territory” (p. 1387). In this stage of the research, given the complexity of disentangling all the territorial capital components, the investigation of collective responses focused on the analysis of how local actors found new governance arrangements and activate their policy networks to face the transition challenges. The construction process of these collective responses, as described in Section 4, was not achieved in a short period but has taken place over a long time, strongly influenced by the evolution of the Common Agricultural Policy. However, the response mechanism requires the mediation of interests and the creation of new coalitions among stakeholders with different functions along the supply chain and the consequent setting up of governance arrangements ensuring an improvement of the general well-being. 19 The governance of transitions in agri-food systems: evidence from the processing tomato supply chains in Spain and Italy 3. MATERIALS AND METHODS: DATA COLLECTION AND GENERAL CHARACTERISATION OF SUPPLY CHAINS To respond to the research questions, this study envisaged an extensive collection of information about the supply chains’ internal structure and their attitudes and capabilities to respond to transition challenges. In the period 2011-2022 competitiveness and resilience of agri-food systems have been profoundly challenged by climate change and international instability (in 20202022, mainly related to the COVID-19 pandemic). Data collection concerned: a) the structure of processed tomato production; b) the degree of differentiation of tomato production; c) the volume and composition of exports towards European and international markets; d) the supply chain organisation (importance of cooperation, types of economic operators at the different levels, types of contracts, relationship with markets). Information is not always available from current institutional sources and had to be collected through an extensive analysis of different sources at the international level (i.e., World Processing Tomato Congress, Tomato News, etc.), national and local (Ministry of Agriculture, Regional Statistics, organisations representative of the supply chain, current publications, websites of tomato industries, etc.). More specific information has been gathered in the two areas (Northern Italy and Extremadura), notably by organisations representative of the supply chain (Inter-Branch Organization for Processed Tomato of Northern Italy, and Centro Tecnòlogico Nacional Agroalimentario Extremadura ‒ CTAEX and Mesa del Tomate for Extremadura). This information has been complemented by interviews with relevant local stakeholders aiming to gain insights into current strategies/projects addressed to the main transition challenges. Following a preliminary desk analysis, online semistructured interviews with local experts have been organised on the following topics: a) the organisation of the supply chain; b) the role of bodies responsible for management of inter-branch relationships; c) number of operators in each supply chain and their juridical nature (private/cooperative); d) formal and informal relations of cooperation/collaboration within the supply chain and in the broader territory; e) current and future strategies/ projects regarding research, knowledge exchange and markets, which have been promoted by collective actions in the single supply chain. Information regarding the IBO of Northern Italy has been collected within the framework of the Horizon Europe research project RUSTIK. Regarding Extremadura, data have been gathered through a complementary desk analysis and interviews to achieve comparable inforFigure 1. Mechanisms of response at territorial level to the transition challenges and opportunities: a theoretical framework. Source: rearranged by authors from Mantino et al., 2023. 20 Francesco Mantino, Barbara Forcina mation as far as possible. Data collection required a parallel work of harmonisation to ensure robust comparability of indicators. Nevertheless, harmonisation sometimes turned out to be unfeasible because of huge differences in available basic information and databases at the national/ regional level. Triangulation between official data sources, specific data at the local level and interviews allowed reasonable comparisons to be made, indispensable for the purpose of this work, though often not completely exhaustive. Limitations in analysing data come from the granularity of information needed to make comparisons at the local/territorial level. LAFS often cannot be identified within the current administrative units (region/ province), and this requires that researchers collect direct information on the ground or use available information at the lower level of granularity (LAU, municipal). These limitations hold true, particularly for economic data (production and export/import). The supply chain of Northern Italy covers four regions (Emilia-Romagna, Lombardy, Piedmont and Veneto) (Figure 2), about 38,000 hectares (average 20202022) under tomato production, 2,000 producers and 21 processing firms, almost 3 million tons of tomato processed in paste (concentrate), pulps and puree representing 58% of the country’s processed tomato and 25% of the European production. Although the production area is quite large (Figure 2), there is a concentration in the Emilia-Romagna region, notably in the provinces of Piacenza, Parma and Ferrara. The supply chain of Extremadura is more geographically limited since it covers two provinces (Badajoz and Caceres) (Figure 3), with 60% of total production concentrated in six municipalities. It accounts for about 22,000 hectares under tomato (average 2020-2022), about 1,000 producers and 14 companies processing 1.9 million tons of tomato (62% of the Spanish tomato production). 4. ANALYSIS OF THE SUPPLY CHAINS This section aims to respond to the first two questions concerning the differences between the two territorialised agri-food chains and the supply chain’s organisation and governance arrangements effects on their capability to compete. 4.1. The evolution of organisational forms of the processing tomato supply chain: the cases of Northern Italy and Extremadura. The evolution of supply chains in the two areas is quite diverse, but with some relevant common features. The origins of the Northern-Italian supply chain can be traced back to the beginning of twentieth century, thanks to the development of agronomic practices and technologies, the birth of the first processing company in 1906 (in 1912 they became ten) and the creation of a widespread farm advisory system (implemented by farm advisors grouped in associations called Comizi agrari – Agrarian Committees – and Cattedre ambulanti – Itinerant Professorships). Technological innovation in the tomato district has been substantially promoted and supported by two Experimental Farms (“Vittorio Tadini” set up in the area of Piacenza in 1928 and “Stuard” operating in the area of Parma since 1847) and the Experimental Station for the Food Preservation Industry (SSICA) established in Parma in 1922. The organisation of the tomato district (see section 4.2) has grown in the direction of LAFS, fostered by factors like geographical proximity, sense of ownership, common interests, shared values and rules, exchange of information and knowledge, etc. (Canali, 2012; Giacomini, Mancini, 2012; Arfini et al., 2007). The local development process has involved the broader industrial system since a parallel growth of the processing machinery industry has taken place, allowing better conservation of the nutritional and healthy qualitative features of preserved tomato (Sandei et al., 2022). The birth of the Experimental Station was promoted at that time by industrial companies to enhance the quality of tomato production in the context of rising demand from national markets. The supply chain in Extremadura has more recent origins. The first processing tomato companies were set Figure 2. The processed tomato production area in Northern Italy (hectares, 2022). Source: Inter-Branch Organisation for Processed Tomato of Northern Italy. 21 The governance of transitions in agri-food systems: evidence from the processing tomato supply chains in Spain and Italy up in the early 1970s and grew thanks to several factors. The region had been previously well-equipped with water reservoirs and irrigation infrastructures. Tomato production developed in the Guadiana River Basin in the 1960s thanks to abundant water resources, so that the irrigated area reached about 110,000 hectares. Tomato could also benefit from the favourable dry and warm climate of the area and increasing European demand. Access to the European Community in 1986 and external investments from multinational firms triggered the growth of the tomato industry (Universidad de Extremadura, 1987). The development of the supply chain has been even more significant in the last two decades thanks to substantial private investments and continuous CAP support. CAP’s role gave impetus to the supply chain in both areas. Both Italian and Spanish literature point out this role in three different turning points. The first turning point, called “growth through production expansion”, was initiated in 1978 by the creation of the support regime for the processed tomato (Commission Regulation No 1515/781), envisaging a pay1 European Commission (1978). Commission Regulation (EEC) No 1515/78 of 30 June 1978 fixing for the 1978/79 marketing year the ment per ton of fresh tomato delivered to the processing industry, and a minimum price set by the European Commission (EC). This system was based on contracts between primary producers and processors, to bring about market stability for a certain period and income stability for producers. In the second turning point, the EC revised this system since huge market imbalances were increasingly generated by production surpluses. In this period, called “growth through production rationalisation”, the EC set country production quotas (Council Regulations No 2200/96 and No 2201/96 concerning the Fruit and Vegetables Common Market Organisation2) at the processing industry level and delivered EU price support only to those industries stipulating contracts with Producer Organisations, which became the direct beneficiaries of amount of production aid for tomato concentrates, peeled tomatoes, tomato juice, peaches in syrup and prunes and the minimum price paid to producers, ELI: https://data.europa.eu/eli/reg/1978/1515/oj. 2 European Council (1996). Council Regulation (EC) No 2200/96 of 28 October 1996 on the common organisation of the market in fruit and vegetables. ELI: https://data.europa.eu/eli/reg/1996/2200/oj; European Council (1996). Council Regulation (EC) No 2201/96 of 28 October 1996 on the common organization of the markets in processed fruit and vegetable products. ELI: https://data.europa.eu/eli/reg/1996/2201/oj. Figure 3. The processed tomato production area in Extremadura: municipalities (left) and relative distribution of surface and production by municipality (right) (2020). Source: Alda Bueno S. (2021) (pp. 37-39). 22 Francesco Mantino, Barbara Forcina support. This new regime gave further impetus to the diffusion of POs, concentration of industrial installations and increasing productive capacity of the remaining industries. The third turning point (“growth through better governance”), was shaped by the Fruit and Vegetables Common Market Organisation (CMO) reform and the decoupling of direct support, put forward by the Fishler’s Commission (2007), that meant a deep revision of the sector. The decoupling mechanism implied a reduction of EU support and market stabilisation through inter-branch agreements and cooperation. The aggregation of tomato producers into POs had already started in the 2000s, when producers and processors associations formalised inter-branch contracts to set granted quantity of products, reference price and qualitative characteristics for the annual campaign. In this phase, the institutional novelty was an intermediate body to ensure the good functioning of inter-branch relations. In Northern Italy, a first interbranch association (the District of processed tomato of Northern Italy) was set up by POs and processing industries in the provinces of Parma, Piacenza and Cremona just in the year of CMO reform (2007). In the subsequent four years, the district area was extended to other Northern Italian provinces and went beyond the EmiliaRomagna region by including POs and tomato industries of Lombardy, Piedmont and Veneto. In 2011, this association was transformed into an Inter-Branch Organisation (IBO), formally acknowledged by Emilia-Romagna Region and then approved by the European Commission. In Extremadura, relations between tomato growers and processors were handled by the “Comisiòn Interprofessional Territorial del Tomato para Industria”, set up in 1992 as a governmental agency to control and monitor the fulfilment of inter-branch contracts. In 2001, it was reorganised and became the Association “Mesa del Tomate” (Tomato Bureau), grouping POs, cooperatives and processing industries, mainly in charge of quality control of tomato delivered to industries and focusing on commercial aspects and on pesticide residues (Llerena Ruiz et al., 2021). Nowadays, all processing tomato producers belong to POs, are affiliated with Mesa del Tomate and benefit from the scheme. The Mesa del Tomate has been managing inter-branch contracts (quantity, reference price and qualitative characteristics) and mediating between the different partners (Branthôme, 2017). Extremadura shows a parallel process of diffusion of POs linked to the CMO reform. Cooperatives, either individually or as associations of cooperatives (Cooperativas Agro-Alimentarias Extremadura, formerly named Unión Extremeña de Cooperativas Agrarias – Unexca) have also applied to be acknowledged as POs. The birth of the cooperative processing industry in Extremadura is, however, more recent than in Northern Italy (2002-2003). In conclusion, the CAP support and related reforms had a substantial role in accompanying and influencing the economic and institutional dynamics of the tomato sector in both regions. The organisation of supply chains is summarised in Figure 4 (Northern Italy) and Figure 5 (Extremadura). Based on qualitative analysis of the existing literature and interviews with experts and local stakeholders, these figures outline the main components of the two supply chains under analysis (represented in the grey areas of the two figures) and relations3 with other actors in the broader territorial context (green areas). In 2022, the main actors of the Italian supply chain are farmers and cooperatives, grouped in 12 POs, and 21 processing industries, partly cooperative and partly private, having direct relations with foreign and national markets. The IBO is a mediator and bonding agent between the chain’s actors. A key initial role to create IBO was played by the province of Parma. The importance of non-sectoral actors is witnessed also by the inclusion of local authorities and research and training bodies among IBO’s associates and Advisory Board. Research and experimental institutions have always been accompanying technological and agronomic enhancement both in agricultural practices and industrial processing. Three research centres (two experimental farms and one experimental station for food processing industries) and the Agriculture Departments of the local Universities (Parma and Piacenza) currently implement field trials on new tomato cultivars, more sustainable plant-protection treatments, training and advisory activities, and a broader range of industrial research from the first processing to innovative packaging materials and by-product recycling. The networks between the IBO and regional research and experimental centres are often structured through specific research projects, under the form of European Innovation Partnerships (EIP-Agri) funded by rural development measures. Broader networks within the area also include Irrigation and Reclamation Consortia operating across the river Po Valley, which have been formalised through specific protocols of understanding, notably to manage the tomato irrigation needs in the peak season. Beyond formal relationships, frequent meetings and day-by-day contacts with water authorities are functional to advocacy initiatives aiming to influence the regional policies for water infrastructures. Two-thirds of the cultivation and most of the 3 Relations have not been measured as regards the intensity since, at this stage of the research, the main objective was undertaking an inventory of main actors and understanding their role in the supply chain. 29 The governance of transitions in agri-food systems: evidence from the processing tomato supply chains in Spain and Italy mental centres support farmers in using DSS (Decision Support Systems), such as sensor technology, weather stations and other innovative devices, to increase efficiency in monitoring and using irrigation water. In this regard, the IBO seeks to voice the problems of the supply chain and advocate policy interventions (like restructuring irrigation networks or creating new reservoirs). IBO policy networks have been activated to mobilise available funds at regional and national level (the Rural Development Plan in Emilia-Romagna and the National Resilience and Recovery Plan). In conclusion, the IBO connects the supply chain actors with territorial and policy networks beyond the sectoral borders. In Extremadura, the governance of water shortage remains within the sectoral borders: irrigation associations (comunidades de regantes) annually agree with POs on the quantity of land that can be irrigated in the case of water scarcity. 5. CONCLUSIONS The first objective of this paper was an understanding of the nature of the two Local Agri-Food Systems. Through a comparative analysis, this study focuses on the importance of inter-branch relations of two supply chains in the processed tomato sector. Processed tomato supply chains of Extremadura and Northern Italy represent two different examples of inter-branch organisation within European agri-food production and diversified relations between the supply chain and territorial development. The social and economic relevance of these supply chains and their relationships with the broader territory make us analyse them under the conceptual category of LAFS. Despite significant differences in origins and socio-economic history, these two LAFS show several similarities in the development pattern, and the capacity to compete with other prominent international producers, like China and California. In the change process, CAP’s role was to accompany the rapid growth and foster organisational adjustments through the diffusion of POs and inter-branch contracts. The role of sectoral and territorial factors can explain the different competitiveness and response to change and transition in the two areas. The governance solutions have indeed been quite different. Still, in both cases, the inter-branch governance ensured a climate of cooperation, price stability and better conditions for primary producers. Demographic and socioeconomic macro-trends and climate and digital changes in the last decade have created new challenges for local systems. Likewise, these systems have different capacities to comply with and use policy transition goals, incentives and regulatory tools introduced recently by the EU Green Deal and related strategies. This study sought to understand how the two areas have been responding to transitions by focusing on cooperation networks and governance, factors which authors like Camagni, Capello (2013) include in the broader concept of territorial capital. Cooperation has been developed within the supply chain (sectoral governance) and the broader territory (territorial governance). This study confirms the importance of both governance levels but concludes that territorial governance becomes increasingly essential as transitions involve challenges that overcome agro-industrial borders. Demographic change’s influences on the labour market, and water management of increasingly scarce resources due to climate change, etc., cannot be faced only within the supply chain’s actors and need the involvement of larger social and political networks. Furthermore, this study highlights the relevance of systemic responses, rather than individual ones (performed by single economic operators). This becomes possible when the intermediate body created to govern inter-branch relations shows capabilities to take on wider challenges and undertake coherent initiatives. In practice, the overarching inter-branch organisation, despite its nature being mainly private, plays a public role by acting in the more general interest of the local community and generates immaterial public goods (trust and cooperative attitudes). This intermediary body works as a trigger for further supply chain consolidation and competitiveness achievements. These conclusions provide relevant elements for policy design in terms of how to foster/acknowledge IBOs as effective change agents, underlying the importance of supporting systemic responses through public incentives that also cover transaction costs of intermediate bodies. It should be recalled that CAP instruments (notably the Rural Development Policy) support the creation and running costs of local development agencies (i.e., the Local Action Groups of LEADER initiative and the Operational Groups of the European Innovation Partnerships). Still, CMO regulations foresee no similar support for inter-branch organisations, despite their relevant role in promoting local projects, advising relevant actors and brokering among local stakeholders. Furthermore, among the systemic long-term actions, research and knowledge transfer investments may bring higher added value than extremely dispersed subsidies to farmers (Beck et al., 2020). This study has shown that interbranch organisations are also proactive in promoting projects in line with transition challenges and participating directly with them. 30 Francesco Mantino, Barbara Forcina Finally, there are also relevant implications for future research, in terms of need to combine quantitative and qualitative approaches to the study of localised agri-food chains and define appropriate governance indicators at territorial level. Governance indicators are not a new topic in the literature on territorial development (see, for example, the case of the LEADER approach), but further efforts should be addressed to extend indicators to relations between supply chains and local territories. Differential characteristics in terms of inter-professional contracts, policy networks, research networks, relations with other institutional actors (i.e., water management bodies), etc. need to be better defined and quantified as competitiveness factors of supply chain districts. 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