2nd Nordic Workshop on Entrepreneurship
in Regional Food Production Bodø, Norway
- May 5 - 6, 2003

Leif Helge Kongshaug
Parliamentary Secretary at the Royal Norwegian Ministry of Agriculture

Ladies and Gentlemen,

It is a great pleasure, and indeed an honour, to have been asked by the conference organizers, Nordland Research Institute in cooperation with Bodø Graduate School of Business, to open the 2nd Nordic Workshop on Entrepreneurship in Regional Food Production.

As I understand, the conference is a continuation of an initiative taken in 1998 when Nordland Research Institute arranged a 1st Nordic Symposium on regional small scale food production. And it certainly touched the right chord ...

We have observed an increased interest in regional food production in the Nordic countries. This is a subject for research at several Nordic research institutions. To join efforts in research and to integrate research with the practical and political field, in a Nordic context, is useful. And that is why we now gather in Bodø - to share experiences and to make mutual progress.

Some history

Seeking perspectives for the future, it is always important to have an eye looking into the past.

In April 1900 Ole Anton Qvam took office as the first minister to head the Royal Norwegian Ministry of Agriculture. The Norwegian Parliament - Stortinget - in December 1899 decided to establish a separate Ministry of Agriculture. Apart from the steadily increasing workload, the most important reason was the strong need to politically manage the modernization of the traditional agriculture.

In my opinion that is strictly the core of the items to be addressed during this conference too - even if a century has passed, and the political challenges that we are facing, have changed.

The multifunctional agriculture

From the day the Ministry of Agriculture was launched, its responsibilities were far-reaching; besides pure agricultural affairs - also forestry, veterinary affairs, and agricultural education. And the responsibilities have become increasingly diverse, broad-based and public-orientated.

The Ministry has been closely associated with the emergence of regional issues in the politics, as well as issues of environmental protection. Food quality, public health and research have become equally important items as the development and the administration of our agriculture. The Ministry - previously essentially handling trade and industry affairs - today appears as a modernized ministry, placing its consumer policies on a par with those for trade and industry.

Moreover, measures in the agricultural sector are not only based on income considerations, but aim first and foremost at ensuring a sufficient level of public goods, such as food security, high standards of plant, animal and public health, viability of rural areas, sustainable growth, environmental protection, agro-biological diversity, cultural heritage and land conservation, demanded by the society. These additional functions cannot be disassociated from agricultural production activities themselves. We are talking about the multifunctional agriculture.

Throughout its history, agriculture has presumably influenced our physical surroundings more than any other human activity. The traces left behind by millennia of agricultural activities represent valuable cultural monuments and cultural landscapes, and make up an important part of our cultural heritage. Between these are building culture and - not least - food culture. This rich cultural heritage facilitates green tourism initiatives and regional food production.

Agriculture in the Nordic countries - the importance of viable rural communities

In several Nordic regions agriculture makes a basic contribution to employment and viability. Furthermore, the scope for market creation is limited. Most of these regions are not able to compete in worldwide markets. Production costs are high compared to most other countries. All the disadvantages stemming from a harsh climate, a short growing season, long distances, a difficult topography, a low population density and a small-scale structure, combined with the generally high cost level, result in a low degree of competitiveness at world market prices.

Norway is the northern-most country in Europe - meaning a relatively short growing season; in Troms 140 days - Østfold 190 days. The population density is the second lowest in Europe. Arable land is scattered all over the country and represents a small fraction of the total area. Just one third of the arable land is suitable for cereal production. About three quarters of farm income is derived from livestock production, whilst about one quarter from crop production. The production is almost entirely destined for the national market.

Despite tough conditions - we want farming and husbandry to take place in the entire country. And we are eager to carry it through. In 2000 a project was initialised in Northern Norway: Agricultural buildings in Arctic areas, aimed at developing new construction techniques to reduce the construction costs, to ease operation and to improve the conditions for the animals. And last week I had the pleasure of opening the first new specimen cow house in Pasvik.

In Norway, although agriculture only contributes to around 4 % of the total employment at the national level, it is a main employer in many rural communities. As a result of upstream and downstream linkages, agriculture contributes to substantial employment in other sectors.

Agricultural employment is gradually decreasing, and substantial efforts have been made to diversify the economy and generate alternative employment opportunities in the rural areas. This is of great relevance, as several rural communities have critically low population levels.

Vitalization of the countryside

Promoting the economic and social viability of rural communities is considered an important policy objective. And as politicians, we have had a vast combination of economic, legislative and administrative measures - as well as training, education and research - at our disposal.

We recognize that innovation is the key to increasing the dynamics of today’s rural economy. This is our aim - to create a new policy for a new time. We should vitalize the countryside.

To reach these goals, it is of course fundamental that people still can make their living there. And in that context I am not only thinking of what we might call traditional rural activities. All kinds of trade and activities in rural areas should be promoted - not purely the agriculture.

An increasing number of people want to spend their lives outside the busy cities - due to the qualities life in rural areas offer - make their living - but they don’t necessarily want to farm ... Let me quote my minister, Lars Sponheim: 20 acres and IT is as good as 100 acres and cows.

An effective and modernized agriculture

Nevertheless - an effective and modernized agriculture still have to play the most crucial part. To meet the needs of the modern society, agriculture shall:

• produce safe and healthy food of high quality in the light of consumer preferences
• produce other goods and services in accordance with the sector’s overall resources
• produce public goods as viable communities and environmental and cultural benefits
• secure sustainability and a long term food security

We want to make agriculture not only competitive, but also socially relevant in a way that can be a response to the onward march of globalisation. We know that development in agreements concerning international trade, as well as the amount of economic resources society are able to put into agriculture, are limitations for the traditional measures used in agricultural policy.

We still have to face structural changes in the production of the common agricultural goods. The possibilities for developing new sources of income lay within other production activities.

Essentially measures should be based on the following principles:

• Farmers should resume their role as businessmen.
• Farmers should be suitably rewarded for the services they perform for society.
• Farmers should spend the bulk of their working day in the field, and not filling in forms.

We should make farmers more competitive and promote a more market-oriented production. Farmers should utilize the market - not only the agricultural agreement. It is time to reform our policy tools so as to best serve the interests not only of farmers, but also of other citizens.

Far from leaving farming, farmers would be more likely to switch - at least in part - to new, more profitable products. Instead of following the product or animal specific subsidy signals, farmers’ decisions would be increasingly directed by the market conditions.

Hopefully farmers’ incomes would rise as a result of a more efficient allocation of the public economic resources and for producing what the consumer want. This is not a gamble anyway, but a calculated risk, one that aims to give farmers the returns they deserve from our policy, and to give the public the return they demand on their investment.

Regional food production

One important aim of the modernized policy is to make farmers add value to their products. In addition to, or instead of, producing raw materials for the bulk market, they should process their raw materials into products that are paid a better price. Regional food branding makes consumers more interested in the origin of food, helping to improve their understanding of the rural economy and rural community issues. In that context - as this conference will prove - regional food production will become more and more important. What should then be done ?

It would help if we start from a common understanding of the term regional food production. Regional food is food produced within a particular area, marketed as coming from that area. However, it may be sold either within or outside that particular area. The product is perceived to have a distinctive quality because of the area in, or the method by which, it is produced.

Examples of cases where such quality criteria would be satisfied include:

• organic or ecologic production methods;
• protected status, i.e. denominations of origin or certificates of specific character in accordance with the relevant regulations;
• adherence to a quality assurance scheme whose criteria exceed the legal requirements,
  i.e. animal welfare schemes, hygiene schemes, traceability schemes.

It is increasingly important to promote sustainable and adaptable farming through domestic and international actions. We would like to see an increasing number of local food producers, more employees, a faster turnover and last - but not least - an increased market share.

How to establish a market ?

Local or regional food producers are almost all small and medium sized enterprises (SMEs), and are often micro operations. Their lack of scale means that they often have insufficient resources to respond to market opportunities and often are slow to increase competitiveness. They require assistance in raising their profile and increasing the awareness of their product. Support can facilitate growth from SME status into larger companies - or even into exporting.

Such support may be projects aimed at encouraging retailers and the food service industry to source regional food and promote it themselves. They could also be aimed at facilitating small producers’ access to the food supply chain and at increasing the efficiency of the distribution. Undoubtedly, distribution has been a major stumbling block for a lot of small food producers.

It is important to develop clusters of producers and to encourage collaboration between them. Such clusters should be aimed at spreading best practices and promoting ideas and inventions. But not only inventions - to resuscitate old regional food traditions and recipes is a key object.

Projects designed to increase consumer awareness of the rich variety of regional foodstuffs that are available and of the wider beneficial effects of buying them, are equally important.

More emphasis should be placed on co-ordinated strategies, with tourism an important aspect. A greater culture of regional food production attracts tourists, both domestic and from abroad, especially when combined with adventures. The Eat, View and Experience scheme is popular, and really an effective instrument to make the products known - hence opening new markets.

It is important to promote the presence of a food culture so that high quality food may take a natural and increasing share of the purchases of the consumers - at home - as well as abroad. Our rich Nordic food traditions - regional food that has a story to tell - might create success. Why shouldn’t we be proud of our traditions ?

What markets are available ?

Let me mention four crucial elements: to plan a market strategy, to develop a unique product, to set the right price and to create a suitable market; one which the producer is able to serve, and which is suitably large to buy what is served. And that all depends on the ambitions …

Many regional food producers are farm-based. Regional food thus offers an opportunity for the farmers to diversify into added-value products that provide a reliable source of income. With fewer middlemen, a higher proportion of the end price remains with the producer.

It is equally important to create local markets where several producers present their products.

Some producers may wish to serve specialized retail outlets - we have seen examples of such retail outlets in several Norwegian cities. And some regional food products might even be so successful that they can become a natural part of the assortment in the chain supermarkets. Even if supermarkets up until now mainly have damaged regional and local food identities …

Why be shy ? Successful regional food producers are well placed to enter the export market. And let me feel free to declare: What I previously mentioned as disadvantages when talking about our agriculture’s low degree of competitiveness at world market prices, might be turned into advantages when talking about competitiveness in high quality segments of the market. Cloudberries ripened in the light of the midnight sun, dark red strawberries sweeter than sugar after long summer days, tasty meat of lambs breathing fresh air and grazing in the mountains, mussels and trout from our world famous fjords and reindeer from the wilderness of Lapland. Any one feeling the teeth water ?

The Norwegian programme for value creation in the food sector

As a response to the all challenges I have mentioned, a national programme for value creation in the food sector was started in 2001 in order to develop the production of high quality food. In 2001, NOK 100 mill were canalised from the agricultural agreement into the programme. In 2002, the budget increased to NOK 140 mill. The programme is planned to last ten years.

Through its strategies, which in the first section of the programme are connected to regional development and food culture, the aim of the programme is to support local farmers and the processing industry in their development of high quality food that gives an increased income. At the same time the programme is supposed to broaden the selection of Norwegian food, being competitive by their qualitative attributes rather than being competitive on price alone.

Six strategic areas were defined within the first section of the programme:

• Developing new products and enterprises.
• Developing distribution and market channels.
• Building entrepreneur competence in the primary production and food industry.
• Building entrepreneur networks.
• Establish a national legislation for protected food products based on geographic origin, tradition and speciality (Similar to Regulation (EC) no. 2081/92 and 2082/92).
• Examine the institutional framework influencing entrepreneurs in the food sector.

As early as July last year the Government passed a new regulation on Protected Designation of Origin, Protected Geographical Indication and Traditional Speciality Guaranteed.

I presume later speakers will give you more profound details about the rest of the programme.

Are the consumers prepared to pay ?

Food safety and quality issues are of increasing concern to modern consumers and citizens. Consumers not only expect food to meet their nutritional needs, to be wholesome and tasty. They expect food to be produced and processed in accordance with good farming practices, with greater respect for the environment and for the welfare of animals.

And equally important: They expect to be able to choose amongst a wide variety of food. Sometimes they need fast food - a hot dog or hamburger when running to catch the next bus, sometimes they want a convenient dinner directly from the micro-wave before going training, and sometimes they want to sit down with their family or friends enjoying a subtle dinner.

My assertion is that consumers are prepared to pay for the right product for the right occasion. If not for all of the foodstuffs they consume, at least for an increasing part of them ...

Let’s go ahead …

When looking at the three interwoven components of food - i.e. safety, quality and nutrition - we can see how they become equally important keys to food production and consumption.

The most important competitive advantage of food from the Nordic countries is that it is safe, due to our standards of public and animal health and our clean and unpolluted environment. My prediction is that safe food and sustainable production combined with Nordic traditions, can pave the way for successful entrepreneurship - if we are willing and able to employ it.

To end my speech today - allow me to give one advice: Never compromise with food safety. It takes years to build the confidence of the consumers, and only seconds to destroy it.

I am aware that we all have a lot of work to do. We should recognize that the measures of the past don’t solve the challenges of the future. So is life - so is research - and so is politics, too. Still, I think that we are lucky to have unique possibilities - the main task is to utilize them.

Thank you for your attention. I wish you all the best - and good luck with the conference.