Global competition is a challenge to food chain competitiveness

How do Finnish food and the food chain that produces it - from field to table - cope under the pressures of globalisation? This was the central question of the report published on 19 January 2017 titled Critical success factors of the Finnish food chain.

According to the report, the relative cost competitiveness of the Finnish food industry and trade is good, and their profitability is better than in reference countries.  The small production volumes of individual farms is a key factor that undermines the competitiveness of domestic primary production. The greatest challenge faced by the entire food chain currently is rapidly increasing international competition.

– In terms of growth competitiveness, the most central challenge to the entire food chain is its focus on the domestic market. Up till now, the sector has only resorted to export activities once the domestic market can no longer absorb the entire production volume, notes Petri Peltonen, Under-Secretary of State from the Ministry of Economic Affairs and Employment.

Peltonen stresses that while foreign competition in our domestic market is constantly gathering strength, merely adapting is no longer sufficient. Our food chain must set out boldly to stake a claim for itself in export markets.

– Finland’s country image, which builds on purity and authenticity, lays a good foundation for food exports. This is not enough, however. We must build up our knowledge of the target markets and identify rapidly changing consumer trends much better than today. The joint efforts of the entire food sector are required to open the export market. In this, Finpro’s Food from Finland programme plays a vital role. The programme has been successful in finding routes to international growth, in particular for SMEs in the food sector. Experience has shown that even small companies can make it on the global scene with a product that stands out positively, says Minna-Mari Kaila, Director-General from the Ministry of Agriculture and Forestry.

In practice, lower prices resulting from improved productivity in primary production spill over to the other links of the food chain and down to the consumer, whereas an increase in production costs caused by the primary production operating environment is not reflected in consumer prices. International competition in the food trade has lowered producer prices further. This accelerates the change in the farm structure – and the trend towards larger unit sizes should also be encouraged in the future.

– The results of the report will be utilised in the preparation and implementation of the government’s Food Policy Report, Kaila notes.

The production of this report, which investigates the cost and growth competitiveness of the Finnish food chain, by the Research Institute of the Finnish Economy and the Natural Resources Institute Finland was part of implementing the Government's plan for analysis, assessment and research 2016.

The report can be accessed at http://vnk.fi/valtioneuvoston-selvitys-ja-tutkimustoiminta/julkaisut
A summary of the report is contained in the press release http://tietokayttoon.fi/ajankohtaista/tiedotteet
The event can be viewed live and as a recording at https://tem.videosync.fi/2017-01-09-seminaari

Further information:
Petri Peltonen, Under-Secretary of State, Ministry of Employment and the Economy, tel. +358 (0)50 626 63
Minna-Mari Kaila, Director-General, Ministry of Agriculture and Forestry, tel. +358 (0)29 516 2013
Esa Tikkanen, Development Director, Ministry of Economic Affairs and Employment, tel. +358 (0)50 040 5459