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Jean Ayral is former Director of the Direction agroalimentaire du Centre français du commerce extérieur (Agri-Foodstuffs Directorate of the French Foreign Trade Centre (CFCE)) and Chairman of the Association pour le développement des échanges internationaux de produits et techniques agroalimentaires (ADEPTA - Association for the development of international trade in agri-foodstuffs products and technology). The opinions expressed in this article are those of the author. .

With a turnover of FF 816 billion in 1999 (+1.7% in comparison with 1998), i.e. some 19% of industrial turnover excluding energy, the foodstuffs industry is by far the leading industrial sector in terms of activity, ahead of the chemicals, automotive, mechanical engineering, electronics and aerospace industries.

With 21.1% of the turnover of the European Union’s agri-foodstuffs industries, France is in top place in Europe just in front of Germany (18.6%) and well ahead of the United Kingdom and Italy.

Industry’s third-largest employer

The agri-foodstuffs sector is the third-largest industrial employer with 405,000 employees, an increase of 0.5% over the previous year.

With some 4,250 companies, including many SMEs (small and medium-sized enterprises) – 93% have fewer than 200 employees – the foodstuffs industry is present throughout France: SMEs account for 43% of the total turnover of the foodstuffs industry and for 37% of the sector’s exports; the 85 largest firms generate 41% of these exports. Another feature is that 28% of the industry is located in rural areas, compared with 15% for the other industrial sectors.

Agriculture’s leading customer

France's foodstuffs industry processes over 70% of French agricultural output and is playing an ever-growing role in increasing the value of farm produce. Since 1993, the foodstuffs industry’s added value has exceeded that of agriculture: the agri-foodstuffs industries generate 15% of the added value of French industry as a whole (FF 230 billion in 1997), and are thus in top place in terms of industrial added value.

As well as being agriculture’s chief customer, the agri-foodstuffs sector is also the leading purchaser of road transport, packaging and advertising space, as well as the main supplier of the retail and catering trades.

Its contribution to France’s foreign trade balance is also essential. With exports of FF 166.9 billion, in 1999 the foodstuffs industry had a positive foreign trade balance of FF 50.6 billion: this balance accounts for nearly 82% of the global agri-foodstuffs surplus and breaks down as follows:

- European Union: FF 28.3 billion (56.0%);

- Non-EU countries: FF 22.3 billion (44%).

Export-driven sector

Although over 80% of its turnover comes from the home market, the growth of the foodstuffs industry has been supported in recent years by exports which accounted for 20.4% of its turnover in 1999. Since 1998, France has been the leading world exporter of processed food products.

Foodstuffs consumption in France

The share of foodstuffs in the final consumption of households has been falling regularly for 15 years. According to France's national accounts, it fell in value from 20.4% in 1980 to 16.6% in 1997.

There has nevertheless been little change in foodstuffs consumption patterns; consumption of meat fell, however, by three points to the benefit, in particular, of dairy products and fish. Since 1980, the volume of final household consumption, taking all products together, has increased by an average of 2.3% per annum, while foodstuffs consumption was up by only 1.3%. There has been a major increase in the consumption of non-alcoholic drinks. Fewer potatoes and less sugar are now purchased, while coffee and tea consumption has remained much the same. In 1998, household consumption of foodstuffs increased by 1.5%.

Consumers demand quality food

When it comes to food products, quality is a complex and evolving notion. It covers many aspects, including not just "food safety", taste and gastronomy, but also fair trade in the markets and trust between suppliers and customers.

Economic and social dynamics are bringing changes in these various aspects. Against an economic backdrop of market saturation in the developed countries, quality is becoming a key element of business strategy and a deciding factor in consumer choices.

France anticipated the development of distinctive labels to denote high-quality products. Genuine local products, such as those covered by the appellation d’origine contrôlée (AOC – registered designation of origin), a French label which dates back a long time, exemplify aspects of local culture, history and production methods and the respect of local traditions. It is an expression of their diversity and part of the national cultural heritage.

There are great differences in consumers’ habits and behaviour, as there are in the art of cooking. This cultural diversity is part of peoples' heritage, and we need to safeguard local expertise and the specific local forms it takes, which are capable of supporting original, or indeed irreplaceable, economic activities. It was for this reason that in 1992 the EU introduced protection for this type of product.

In France for many years now, this quality-first policy has laid the foundations for a genuine agri-foodstuffs sector production ethic, and given the sector legal instruments enabling identification of the origin of products, development of specific production methods and protection of designations. Specific legislation on environmental and public health issues has, moreover, been brought in to incorporate any approach promoting the sustainable management of resources into the notion of quality.

Appropriate legal instruments

French legal instruments in the form of authoritative marks to identify quality products, of which the first was the appellation d'origine contrôlée (AOC), followed in the 1960s by the labels agricoles ("agricultural labels"), have since the 1980s also included the certification de conformité (certification of conformity) and agriculture biologique (AB - organic farming). To qualify for these officially recognized marks it is necessary to comply with specifications, verified by certifying bodies approved by the public authorities following a favourable opinion from the CNLC (Commission des labels et de certification des produits agricoles et alimentaires - Commission for the Labelling and Certification of Agricultural and Food Products).

Protection afforded by these four marks (AOC, labels, conformity certificate, organic farming) is directly extended by European regulations under which legal defence of the names of products may be linked to a geographical origin or result from traditional or organic production methods.

The PDO (protected designation of origin) offers the same kind of protection in the EU as the AOC in France, the PGI (protected geographical indication - GI (1)) denotes products also with local links, but weaker ones than the PDO, and the CSC (Certificate of Specific Character) denotes products which do not have geographical links, but are produced in a traditional or particular way.

Under the Act of 3 January 1994 on the recognition of the quality of agricultural and food products and its implementing decrees, France sought to ensure that French quality marks were wholly consistent with the legal protection provided by EU rules in order to limit constraints and procedures for producers, and prevent consumers from being faced with too many quality marks.

Consequently, any application for protection by a PDO has to be accompanied by an application for a national AOC. Any application for protection by a PGI or a certificate of specific character can be made only as part and parcel of an application for a label or a certification of conformity. The Institut national des appellations d'origine (INAO - National Institute for Designations of Origin) and the Commission des labels (Labelling Commission) are very well versed in European procedures and issue opinions on the forwarding by the French Government of PDO, PGI and CSC applications to the European Commission.

Finally, the notions of geographical indication and designation of origin have clearly become better known in recent years. Many countries support the idea that the GI labels identify products from a specific locality and are indicators of a quality essentially attributable to their geographical origin and, as such, are a public good and a heritage which needs to be conserved and protected. This means that everyone must ensure respect and protection of all GIs.

The notion of GI, as defined by the World Trade Organization (WTO (2)), includes both the designation of origin and the GI in the strict geographical sense, depending on the strength of the link binding the product to its original area. The GI is an intellectual property right in exactly the same way as a patent or trade mark.

The quality of food products is monitored at all stages of the food chain.

Regulatory checks

In France, the production and distribution of foodstuffs are regulated by legislation setting out minimum specifications for the design, layout and equipment of premises, as well as rules on staff hygiene and hygienic engineering for food manufacturing establishments. Compliance with these conditions is certified by the award of an official health approval.

State officials regularly check businesses' compliance with these rules. Health and safety checks are therefore carried out from the production of a product to its sale to the consumer. 5,200 public authority officials are responsible for monitoring quality and safety.

Following efforts to harmonize inspection and certification systems in order to promote the globalization of trade in food, European rules have been adapted with the leitmotif being that food operators bear full responsibility for the food they produce and the introduction of a system to enable them to ensure the safety and quality of the foodstuffs they produce or handle. This involves both applying the principles of the HACCP (Hazard Analysis and Critical Control Point) system and use by producers of quality assurance, in particular in the form of company certification.

So the quest for quality in all its various aspects is a basic priority, both in order to enhance the value of products and satisfy the demands of French and foreign consumers, one to which the French authorities attach the utmost importance.

A national assessment agency

Set up under the Act of 1 July 1998 on improving the monitoring of health and of the safety of products for human consumption, the Agence française de sécurité sanitaire des aliments (AFSSA - French Food Safety Agency) came into operation following the decrees of 26 March 1999 and 1 April 1999 specifying its organization, operation and management.

AFSSA assesses "the possible health and nutritional risks presented by products for human or animal consumption" including those "which may emanate from water intended for human consumption, and the processes and conditions of production, processing, conservation, transport, storage and marketing of foodstuffs" or from "animal diseases or infections, plant health products, veterinary medicines, in particular extemporaneous preparations, and medicated feed, pest-control products for agricultural and other similar uses, fertilisers and growth media" and "packaging and materials likely to come into contact with the above-mentioned products".

To carry out its tasks, this national public agency, supervised by the Ministers for Health, Agriculture and Consumer Policy may address any issue and propose any measure conducive to safeguarding public health to the relevant authorities. Inter alia, it provides the government with the expertise and scientific assistance it needs and investigates the cases the government submits to it.

Consulted about health monitoring and screening programmes, it may propose priorities and recommendations. As well as using its own laboratories, it can also call upon those of State services responsible for monitoring the safety of foodstuffs.

Against the background of the internationalization of the markets and growing competition, investment is the key to development. Modernizing plant, improving product quality and promoting products and brands are priorities.

In 1999, tangible investment (modernization and purchases of new equipment) rose to FF 24.3 billion in 1999. Financial investment was some FF 10 billion per annum, taking account of restructuring and setting up company locations abroad.

Promotion, and research and development (R&D)

One of the main features of the foodstuffs industry, however, is its high level of intangible investment (promotion, advertising, R&D, training) totalling around FF 14 billion: advertising investment alone was estimated at FF 10.6 billion in 1999.

Although growing, research by firms, estimated at some FF 2.4 billion in 1998, is still not sufficient: it is essential if there are to be genuine innovations giving manufacturers’ brands an edge over retail brands and increasing firms' margins. For several years now, public research budgets have been around FF 1 billion. Innovation is always a key component of the competitiveness of firms in the foodstuffs sector. SMEs have been particularly dynamic in this area and have been responsible for half the innovations on the market.

Thanks to its constantly growing investment over the past ten years, the foodstuffs industry is also ensuring its presence abroad. From 1986 to 1999, French investment abroad increased from a few hundred million francs to close on FF 25 billion, in partnership with local operators. Since then, investment flows have tailed off slightly, but the amounts continue to be large: between FF 2 and 3 billion per annum.

Investment in equipment by the agri-foodstuffs industries

Over this period, investment in equipment accounted for between 56% and 59% of the agri-foodstuffs industries' total investment, ahead of that in buildings, transport equipment, etc. The market has remained relatively stable for a long time throughout the sector. Indeed, total investment in equipment and other fixed assets, the only category for which figures are available since 1989, varied between FF 14 and 16 billion.

Process and plant machinery accounted for some FF 7 billion, and packaging for some FF 3.5 billion, the remainder going mainly to plant maintenance. Three sectors - dairy, beverage and meat - accounted for over 50% of investment in equipment.

Recognized technology

French equipment is particularly highly reputed in some technological fields: membrane separation, mixing of liquid and paste products, evaporation, extrusion and, in the packaging field, bottling and crating. It also enjoys a high reputation in some sectors such as dairy products, bakery trade, wine, grain storage, and packaging of fruit and vegetables.

The strengths most often cited include:

• regular upgrading of equipment; 
• versatility and adaptability to new technological developments and to specific demands; 
• flexibility, with the possibility of custom designing equipment; price and quality of services.

French equipment benefits from the high-quality image of French foodstuffs abroad. This plays a not-inconsiderable part in its export performance; the internationalization of businesses is, moreover, making equipment from other countries widely acceptable.

In terms of type of equipment, there are now emerging market opportunities particularly for machines enabling or facilitating traceability, smaller machines which can be installed in production areas for products with the AOC designation (when the relevant specifications require all operations to take place in the same region) and, in the packaging field, machines able to produce or fill simpler and less polluting packaging.

Sixth place in the world for equipment

French equipment is often the prime mover of technological innovation in the foodstuffs industry and, in this respect, is a major factor in the growing importance of the French foodstuffs industry in the international arena. Thanks to our firms' expertise and the internationally recognized quality of their technology and products, French companies can participate in foreign development projects - like those of other major industrialized countries such as the United States, Germany, Japan, the Netherlands, Italy and others.

In international trade in agri-industrial equipment, France is ranked sixth in the world.

A service tailored to the new needs

National and foreign industries also want a complete service: equipment suppliers have to ensure that their products continuously comply with the relevant specifications and do so over a long period. There is simultaneously an increased demand for added value. Lastly, while the worldwide standardization of factories and processes is not currently being challenged for basic commodities such as sterilized milk, sugar, oil, etc., this does not apply to products produced in smaller volumes.

Some of the major agri-foodstuffs companies are now keen to tailor these products to targeted markets, and thus their specific cultures. In some cases, this may be done through modifications at the end of production lines or even simple changes to packaging. However, in others it may also require modifications to core or secondary processes – something which is fully within the capabilities of French equipment manufacturers.

(1) A geographical indication is a sign on goods which have a specific geographical origin and possess qualities or a reputation due to place of origin.

Ministère de l'Agriculture et de la Pêche (Ministry of Agriculture and Fisheries): www.agriculture.gouv.fr

Centre français du commerce extérieur (French Foreign Trade Centre): www.cfce.fr

Association nationale des industries alimentaires (National Association of Foodstuffs Industries): www.ania.net

Agence française de sécurité sanitaire des aliments (French Food Safety Agency): www.afssa.fr

Agence nationale de valorisation de la recherche (French Agency for Innovation):  www.anvar.fr/port/html/f_por05.htm (English site)./.