Developing the typical dairy products of Thessaly. Diagnosis and local strategy

Developing the typical dairy products of Thessaly Diagnosis and local strategy

January 2014

Developing the typical dairy products of Thessaly Diagnosis and local strategy

January 2014

REFERENCES This publication has been produced as part of the LACTIMED project with the financial assistance of the European Union under the ENPI CBC Mediterranean Sea Basin Programme. The contents of this document are the sole responsibility of the University of Thessaly (UTH) and the Mediterranean Agronomic Institute of Montpellier (CIHEAM-MAIM), partners of LACTIMED project, and can under no circumstances be regarded as reflecting the position of the European Union or of the Programme’s management structures. LACTIMED aims to foster the production and distribution of typical and innovative dairy products in the Mediterranean by organising local value chains, supporting producers in their development projects and creating new markets for their products. The project is implemented under the ENPI CBC MED Programme, and is financed, for an amount of EUR 4.35 million, by the European Union through the European Neighbourhood and Partnership Instrument. The European Union is made up of 28 Member States who have decided to gradually link together their knowhow, resources and destinies. Together, during a period of enlargement of 50 years, they have built a zone of stability, democracy and sustainable development whilst maintaining cultural diversity, tolerance and individual freedoms. The European Union is committed to sharing its achievements and its values with countries and peoples beyond its borders. The 2007-2013 ENPI CBC Mediterranean Sea Basin Programme is a multilateral Cross-Border Cooperation initiative funded by the European Neighbourhood and Partnership Instrument (ENPI). The Programme objective is to promote the sustainable and harmonious cooperation process at the Mediterranean Basin level by dealing with the common challenges and enhancing its endogenous potential. It finances cooperation projects as a contribution to the economic, social, environmental and cultural development of the Mediterranean region. The following 14 countries participate in the Programme: Cyprus, Egypt, France, Greece, Israel, Italy, Jordan, Lebanon, Malta, Palestinian Authority, Portugal, Spain, Syria and Tunisia. The Joint Managing Authority (JMA) is the Autonomous Region of Sardinia (Italy). Official Programme languages are Arabic, English and French. © Copyright LACTIMED 2014. No part of this publication may be reproduced without express authorisation. All rights reserved for all countries. Electronic version available on: www.lactimed.eu

AUTHORS  -

Report written by: Main authors: Dimitris Goussios, University of Thessaly, Konstantinos Tsiboukas, Agriculture University of Athens, Theodosia Anthoupoulou, Pantuion University of Athens; Contributions: Vasileiadis Anastasios, expert in entrepreneurship ("Marketing systems and weaknesses of marketing strategies" section, pp. 44-45), Dimitra Gaki, University of Thessaly (parts 1.2.3., pp. 16-18 and 2.2.2., pp 44-48);

 -

Implementation of fieldwork: Main experts: Dimitris Goussios, Konstantinos Tsiboukas, Theodosia Anthoupoulou, Dimitra Gaki; Junior experts: Goulas Apostolos, Louka Konstantia, Poutsiakas Nikolaos, Makris Georgios, Seggi Chrisavgi, Mardakis Prodromos and Faraslis Ioannis;



SWOT analysis (in addition to the aforementioned experts): Tsampra Maria, University of Patras, Perucho Lola, veterinarian;



Creation of maps: Mardakis Prodromos, University of Thessaly;

 -

Layout and proofreading: For the CIHEAM-MAIM: Selma Tozanli and Hamid Bencharif; For ANIMA: Jeanne Lapujade. 2

Developing the typical dairy products of Thessaly Diagnosis and local strategy

January 2014

GLOSSARY AND ACRONYMS AEI AGROCERT AGROVIZ CAP CRSN DAYOK EEC EFET EKKYZ ELGO DIMITRA ELOGAK ELSTAT ETHIAGE EVOL GDP GMO EX TAXES IACS ISO KEK LEADER LSU LTD MINAGRIC OGEEKA DIMITRA OPAACH OTEX PDO PEP PGI R&D RICA SME SVET SWOT THESgala THESgi INC TAXES TUI UAL UE YAAT

University, Institute of Higher Education Agricultural products certification and supervision organisation Cooperative union division of the Trikala regional unit specialising in feed production Common agricultural policy French national strategic reference framework Directorate of agricultural and veterinary economics European economic community Unified actor of food control Animal feed movement control laboratory Hellenic agricultural organisation "DIMITRA" Hellenic milk and meat organisation Hellenic statistical services National institute of agricultural research Volos dairy cooperative Gross domestic product Genetically modified organism Excluding taxes Integrated administration and control system International standardisation organisation Training centre Liaison between actions for the development of rural economy Livestock unit Limited company Hellenic ministry of rural development and food Agricultural training organisation "DIMITRA" Integrated programmes for the development of the PIDER rural space Technico-economic orientation of farming Protected designation of origin Regional operational programme Protected geographical indication Research and development Farm accountancy data network Small and medium enterprise Thessaly business and industry association Strengths weaknesses opportunities threats Thessaly livestock breeders' group Thessaly farmers' group All taxes included Technological university institute Utilised agricultural land European union Minister of rural development and food

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Developing the typical dairy products of Thessaly Diagnosis and local strategy

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CONTENTS 1. THE DAIRY CHAIN IN GREECE AND THESSALY ...................................... 6 1.1. THE DAIRY CHAIN IN GREECE .........................................................................................6 1.1.1. Animal feed ....................................................................................................................................... 6 1.1.2. Dairy production: milk, yoghurt, butter and ice cream ...................................................................... 7 1.1.3. Cheese production .......................................................................................................................... 10

1.2. MARKETING SYSTEM AND POLICIES FOR THE DEVELOPMENT OF THE DAIRY CHAIN ............13 1.2.1. Marketing system ............................................................................................................................ 13 1.2.2. Price formation ................................................................................................................................ 15 1.2.3. National development policies of the dairy chain ........................................................................... 16

1.3. THE THESSALY DAIRY CHAIN .......................................................................................18 1.3.1. Position of the territory in the national dairy chain .......................................................................... 18 1.3.2. Dairy farming ................................................................................................................................... 19 1.3.3. Fodder crops ................................................................................................................................... 22 1.3.4. Dairy processing ............................................................................................................................. 25 1.3.5. Large companies in the territory ..................................................................................................... 27 1.3.6. Related industries ........................................................................................................................... 29

2. THESSALY FIELD SURVEY ...................................................................... 32 2.1. SAMPLING AND METHODOLOGY ...................................................................................32 2.1.1. Sample representativeness ............................................................................................................ 32 2.1.2. Data processing method and results .............................................................................................. 36

2.2. CURRENT STATE OF THE INDUSTRY AND STRATEGIC PRIORITIES FOR ITS DEVELOPMENT ...36 2.2.1. Summary of survey results ............................................................................................................. 36 2.2.2. Public and private support to the dairy chain .................................................................................. 45 2.2.3. Strengths and weaknesses of the Thessaly dairy chain ................................................................. 49 2.2.4. Priorities proposed by the different actors ...................................................................................... 51

2.3. THE DAIRY CLUSTER PROJECT .....................................................................................54 2.3.1. Opportunity to create a dairy cluster in Thessaly ........................................................................... 54 2.3.2. Priority objectives ............................................................................................................................ 56 2.3.3. Search for a relevant "clustering" process ...................................................................................... 57 2.3.4. Two-phase action plan .................................................................................................................... 58 2.3.5. Resource mobilisation..................................................................................................................... 59 2.3.6. Potential partners ............................................................................................................................ 60 2.3.7. Terms of governance and leadership ............................................................................................. 61

REFERENCES ................................................................................................ 64 4

Developing the typical dairy products of Thessaly Diagnosis and local strategy

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APPENDICES ................................................................................................. 70 APPENDIX 1: SPECIFICATIONS OF THESSALY’S TYPICAL DAIRY PRODUCTS .............................70 General characteristics of Thessaly dairy products .................................................................................. 70 Specification 1 – GRAVIERA AGRAFON (ΓΡΑΒΙΕΡΑ ΑΓΡΑΦΩΝ) PDO ................................................. 71 Specification 2 – FETA (ΦΕΤΑ) PDO ....................................................................................................... 71 Specification 3 – TELEMES (ΤΕΛΕΜΕΣ) PDO ........................................................................................ 72 Specification 4 – ANTHOTYROS (ΑΝΘΟΤΥΡΟ) PDO ............................................................................. 73 Specification 5 – GALOTYRI (ΓΑΛΟΤΥΡI) PDO ...................................................................................... 73 Specification 6 – MANOURI (ΜΑΝΟΥΡI) PDO ......................................................................................... 74 Specification 7 – MIZITHRA (ΜΥΖΗΘΡA) PDO ....................................................................................... 75 Specification 8 – XINOTYRI (ΞΙΝΟΤΥΡI) ................................................................................................. 75 Specification 9 – KEFALOTYRI (ΚΕΦΑΛΟΤΥΡI) PDO ............................................................................ 76 Specification 10 – MPANTZIOS (ΜΠΑΤΖΟΣ) PDO .................................................................................. 76 Specification 11 – TSALAFOUTI (ΤΣΑΛΑΦΟΥΤI) .................................................................................... 77 Specification 12 – NIVATO (NIβATO)....................................................................................................... 77 Specification 13 – YOGHURT (ΓΙΑΟΥΡΤI) ............................................................................................... 78

APPENDIX 2: LIST OF ACTORS AND INSTITUTIONS SURVEYED ................................................79

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1. The dairy chain in Greece and Thessaly 1.1. The dairy chain in Greece The dairy chain plays an important role in the Greek food industry. The particularity of Greece compared to other EU countries is the predominance of small ruminants in livestock breeding and the deficit of dairy cow products (and meat) despite the strong technical modernisation of livestock farms and dairies. Thus, with the exception of fresh drinking milk, most traditional dairy products (yoghurts, desserts and cheeses) are made from goat and sheep's milk with iconic products, such as Feta PDO and yoghurt (traditional sheep's milk yoghurt and drained cow’s milk yoghurt). In recent years, these products have had an increasing demand on foreign markets (EU, USA and Canada), due to the recognition of their specific quality, their health benefits and their integration in the Mediterranean diet. Traditionally, Greece produces a wide range of cheeses (70 are registered, including 21 PDO certified), different types of yoghurt (traditional and new), creams and other dairy desserts, farmer’s cheese pies and other local specialties. Regarding cheese, Greek consumers have never lost touch with their national tradition: cheese is an integral part of the daily diet in the various categories of the population throughout the year (festivals, regional customs and religious diets). Thus, the economic crisis has not affected the dairy chain significantly compared to other food and retail dairy chains. Conversely, according to a survey of the retail actors, a new perspective opens for identity products that better meets the specific price/ quality ratio at a time when consumers are rationing their food budget.

1.1.1. Animal feed Animal feed analysis focuses on the sources of production and supply (pasture, fodder and feed concentrates), the relationship between supply and demand, the distribution channel, and finally, the extension system and support to farmers. Animal feed is a key factor in Greece as it represents a significant share of the costs of raw milk production, estimated at between 60% and 80% depending on the level of intensification of livestock breeding and the availability of surfaces for certain agricultural self-sufficiency in feed (Tsiboukas K., 2003 and 2006). The power of the semi-extensive system of small ruminants (low milk yield) is essentially based on rangelands and relatively little on purchased foods. The semi-intensive system of small ruminants (high milk yield) is itself essentially practiced in barns with use of feed concentrates and fodder, and self-sufficiency in reduced animal feed. The situation is even more critical for large, intensive dairy cow breeding (over 100 head) where feeding in confinement relies almost exclusively on purchased food. Concerning Greek self-sufficiency in feed, three stages have marked the relationship between agriculture and breeding in recent decades: 

The radical shift from the cultivation of wheat and barley to durum wheat following the accession to the EEC in 1981 (subsidies) and the phasing out of subsidies for the purchase of grain for animal feed;



The end of production aids and the transition to aid per hectare (MacSharry reform of the CAP);



Decoupling of production aids following the CAP reform of 2003.

Since the introduction of decoupled aids, Greek agriculture has entered a restructuring phase. This latest event, associated with the parallel development of the dairy chain, marked the entry of agriculture into a new period of increased fodder production and its convergence with the national demand for animal feed. This offer is growing rapidly thanks to the agricultural capacities of the plain regions (Thessaly, Macedonia, Thrace and Western Greece), their high level of modernisation (mechanisation and modern irrigation) and the effectiveness of the extension services. A political incentive for fodder crops has also been established by the Ministry of Rural Development and Food (MINAGRIC). The development of fodder crops focuses on corn, alfalfa and legumes, often used as intermediate crops, is partly at the expense of cotton areas. Progress is also significant for silage techniques and practices. Thus, a tendency to re-territorialise fodder production and livestock breeding is observed, enhancing the quality and identity of dairy products. Almost half (47.9%) of the utilised agricultural land (UAL) is used as rangelands (Table 1), while the area devoted to the cultivation of corn and grain for animal feed does not exceed 8% of the UAL. It should be noted that the cultivation of wheat has declined in favour of durum wheat, a popular and well-paid agricultural product on the international market by companies producing pasta and semolina. The production of low-quality wheat, barley, oats and other grains are used for animal feed. Finally, fodder crops such as alfalfa, vetch hay, etc. cover 5.1% of the national UAL. 6

Developing the typical dairy products of Thessaly Diagnosis and local strategy

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Table 1: Percentage of Greek agricultural land devoted to animal feed Crop type Durum wheat Spring wheat Barley Oats Other cereals Corn Alfalfa Pasture Rangelands Total UAL

Surface (ha) 392,610 139,881 107,559 71,762 41,454 177,943 78,092 210,462 2,705,108 5,647,142

% of the UAL 7.0% 2.5% 1.9% 1.3% 0.7% 3.2% 1.4% 3.7% 47.9% 100.0%

Source: Integrated Administration and Control System (IACS) of European Agricultural Aids

Self-sufficient in fodder, Greece imports cereals for animal feed (Table 2), especially inferior quality corn, barley and wheat. It also imports soybean (its culture is almost non-existent in the country) (Sekliziotis, 2013), of which 20% is used for feeding ruminants. Soybean meal is around 20% of the mixture concentrates for ruminants, which weighs significantly on feed costs. Faced with the sharp increase in the price of soybean meal in 2012 (0.6€/kg), farmers seek to replace it, at least partially, by cakes produced in the country (cottonseed meal and sunflower) and leguminous seeds (landraces). In 2012, a pilot project to grow non-GMO soybean was launched in Eastern Macedonia (Kavala) in light of the diversification of rotations required by the new CAP 2014-2020 (greening). Table 2: Self-sufficiency in cereals and maize for animal feed in 2011 (million tonnes) Crop type Durum wheat Spring wheat Barley Oats Corn

Production 1,179 403 317 177 2,112

Import 91.77 823.67 176.10 9.15 420.13

Export 338.34 8.13 0.06 0.02 30.76

Consumption 932.43 1,218.54 493.04 186.14 2,501.37

Self-sufficiency rate 126.44% 33.07% 64.29% 95.09% 84.43%

Source: PASEGES, self-sufficiency of food products in Greece, 2012

The majority of animal feed suppliers are farmers-producers of fodder, maize and cereals installed near animal farms. Retailers, often private veterinary services offices, provide imported feed concentrates (corn, soybean meal etc.) and minerals. The national industrial production of feed fails to meet the demand: product mixtures are expensive and farmers have little confidence in their quality. In addition, large farms have their own grain mills and mixers. Concerning popularisation, the transition from a public system to a private system complicates the coordination between research, dissemination and monitoring of breeders. Private services (veterinary services offices) are also active in the sale of veterinary products (medicines) and feed, which skews their technical advisory services. Thus, the efficiency of the technical advice needs to be improved.

1.1.2. Dairy production: milk, yoghurt, butter and ice cream As indicated above, the Greek dairy production in Europe has a unique specificity: the quantity of small ruminant milk (1.1m tonnes) exceeds that of cow's milk (0.75m) - see Table 3. Table 3: Evolution of livestock production in Greece between 2001 and 2011 Year 2001 6,923,047 Number of milked sheep Dairy 682,632 Milk production (tonnes) sheep Productivity per female treated breeding 99 (kg/ head) 3,946,875 Number of milked goats Dairy 460,208 Milk production (tonnes) goat Productivity per female treated breeding 117 (kg/ head) 215,607 Number of milked cows Dairy 757,692 Milk production (tonnes) cow breeding Productivity per female treated 3,514 (kg/ head) Source: Ministry of Agricultural and Food Development

2003 7,090,799 682,265

2005 6,631,920 676,671

2007 6,696,395 681,359

2009 6,653,312 724,843

2011 6,851,719 744,860

96

102

102

109

109

4,060,980 476,512

3,871,929 443,316

3,768,873 424,921

3,571,729 411,695

3,405,900 383,925

117

114

113

115

113

219,799 768,415

251,358 745,974

214,113 788,322

197,600 755,279

178,268 757,069

3,496

2,968

3,682

3,822

4,247

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Almost all cow's milk is delivered to dairies/ cheese factories (90%) and the majority of sheep’s milk is processed into cheese (70%). Goat’s milk is less sought by the latter1 (it can represent up to 30% of the milk used for the manufacture of Feta): in 2008, shipments of goat’s milk decreased by 35% (see Table 4). The rest of the milk of small ruminants is either self-consumed or used on the farm (cheese and yoghurt). Table 4: Milk delivered to dairies/ cheese factories (% of milk produced) Type of milk Sheep’s milk Goat’s milk Cow’s milk

2001 72% 52% 91%

2008 72% 35% 90%

Source: ELSTAT

Greece is highly deficient in products based on cow's milk (Table 5). Domestic production is mainly used as drinking milk (Tables 6 and 7) although a large part of the UHT milk consumed (which has recently increased at the expense of fresh pasteurised milk) is also imported. Table 5: Trade balance of cow's milk, cream and other dairy products, except yoghurt, butter, ice cream and cheeses (m€) Year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Import 257 299 294 299 303 349 363 329 338 352

Export 33 37 52 59 63 88 75 71 79 81

Source: ELSTAT

Table 6: Evolution of the apparent consumption of cow's milk from 2000 to 2009 (thousands of tonnes) Type of milk Pasteurised fresh milk Condensed milk High-pasteurised milk UHT milk Total

2000 405 256 47 24 732

2005 508 242 90 21 861

2006 490 244 149 20 903

2007 411 223 196 19 849

2008 397 256 235 23 911

2009 393 252 248 24 917

Source: ICAP Group S.A., market estimates

Table 7: Evolution of apparent consumption (per capita/ year/ kg) of the main dairy products between 2000 and 2009 Type of milk Pasteurised fresh milk Condensed milk High-pasteurised milk UHT milk Yoghurts

2003 44.81 24.86 6.72 1.95 9.21

2004 45.74 23.83 7.7 1.87 8.9

2005 45.84 22.83 8.12 1.89 9.09

2006 44.04 21.93 13.39 1.82 9.17

2007 36.81 19.92 17.54 1.68 8

2008 35.37 22.82 20.97 2.09 8.22

2009 34.88 22.36 22.05 2.11 7.82

Source: ICAP Group S.A., market estimates, ELSTAT

The short term consumption of fresh pasteurised milk (five days, according to the administrative acts of the Ministry of Commerce in force until mid-2014) led dairies to supply cow’s milk on the domestic market (the short period of consumption does not allow fresh milk to be imported), which explains the high price charged by the farmers2. The additional cost of unsold quantities contributes to the relatively high price of fresh milk paid by the consumer, i.e. between 1.3 and 1.6€ per litre3. Thus, over the past decade, some dairies have turned to the production of UHT milk. This trend is followed by consumers looking to budget their money by taking advantage of the lower price of UHT milk and reducing the costs of waste with the ability to store milk for a long time. The Goat’s milk contains less fat than sheep's milk, which implies additional costs for cheese factories (higher transport costs and storage compared to sheep's milk). 2 Greece is the fifth most expensive country in the European Union for raw cow's milk. 3 For more details, see the second part of this report on the field survey results. 1

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use of raw milk in the manufacture of products by different processing units and by the farms is presented in Table 8. Table 8: Use of raw milk (thousands of tonnes) Year 2001 2008

Milk, cream, other dairy products 621 698

Different types of yoghurt 120 163

Butter 2 2

Cheese 265 265

Source: ELSTAT

Part of the production of cow's milk, and to a lesser extent sheep and goat’s milk, is used for the manufacture of yoghurt, both industrial (large dairies) and artisanal (small dairies and farms). Large dairies use mostly concentrated milk or imported powdered milk for the manufacture of their products. In addition, nearly 15% of yoghurts and desserts consumed are imported, according to figures from 2009 (Table 9). Table 9: Evolution of the consumption of yoghurt (tonnes) Year 2000 2005 2006 2007 2008 2009

Production* 100,000 108,000 114,500 103,372 102,289 95,453

Import 2,708 8,087 8,801 11,217 13,411 14,565

Export 7,982 15,384 21,291 25,160 23,468 22,015

Apparent consumption** 94,726 100,703 102,010 89,429 92,232 88,003

* Dairy production/ ** Apparent consumption = Production + Import-Export Source: ELSTAT, ICAP Group S.A. estimates, Ministry of Agricultural and Food Development, Eurostat, ELOGAK

Yoghurt occupies a more and more important place in the Greek dairy chain. During the last decade, large dairies managed to triple their export of yoghurt with strong growth in demand on the European and the U.S. dairy markets. Considered beneficial to health and well-being, "Greek" yoghurt has started to be eaten for breakfast in North America. However, the Greek group FAGE implanted in 2008 a manufacturing yoghurt in the U.S. to meet the growing demand. Yoghurt is the only Greek dairy product with a positive trade balance (Table 10). Table 10: Yoghurt trade balance (m€) Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Import 30 38 35 49 49 54 49 59 70 71 64 59

Export 28 29 30 35 48 48 57 74 67 60 68 69

Source: ELSTAT

The production of ice cream is also increasing. Dairies import concentrated and powdered cow’s milk for their production. 20% of ice cream consumption (it depends heavily on tourism flows both at national and regional level), or about 3.8 kg/ person/ year is imported (Table 11).

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Table 11: Ice cream trade balance (m€) Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Import 14 20 18 34 31 31 26 33 38 37 35 35

Export 7 7 5 6 7 7 8 12 14 15 17 13

Source: ELSTAT

Butter consumption is low; the Greeks use plenty of olive oil in their local cuisine. The quantities of butter from cow's milk consumed are almost all imported (Table 12) and primarily intended for collective catering and tourism. Table 12: Evolution of butter consumption (tonnes) Year 2000 2005 2006 2007 2008 2009

Production 1,500 1,600 1,700 1,456 1,200 1,200

Import 5,088 10,421 10,016 9,205 10,280 10,429

Export 22 65 47 56 270 59

Apparent consumption 6,566 11,956 11,699 10,605 11,210 11,570

Source: ICAP Group S.A., market estimations

Table 13: Butter trade balance (M €) Year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Import 23 25 27 30 30 33 34 29 34 39

Export 0.1 0.1 0.4 0.2 0.2 0.2 0.6 0.2 0.5 0.5

Source: ELSTAT

1.1.3. Cheese production Cheese is the main product of Greek dairy production and concerns almost exclusively the milk of small ruminants. Cheese consumption per capita approaches 30 kilos per year, making the Greeks the main cheese consumers in the world. Based on data from the Greek Statistical Agency (ELSTAT), the average monthly household expenditure on these products represents approximately 8% of the total monthly expenditure on food. For Greek consumers, cheese is not a simple dietary supplement, but a staple of the food traditions.

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Map 1: Production of PDO cheeses by town in Greece in 2010

Source: prepared by the authors

In 2011, national cheese production amounted to 287,000 tonnes. Industrial production, booming in recent years, represented 73.2% of total volume. Farm production contributed in turn to 26.8%, with annual fluctuations. Compared to other EU countries where direct farm marketing has become an institutionalised form of marketing (ICAP, 2012), farmers’ markets and direct farm sales are not yet recognised in Greece as formalised and generalised sales channels. However, the relatively high market share of products that farmers are able to achieve through informal channels shows the commitment of consumers to local production and trust in livestock farmers with whom they have established personal ties (subjective criteria of quality and food safety). More generally, this important part confirms the trend towards "re-territorialisation food and agri-food systems". Table 14 shows the strong increase in national dairy production (+19.5%) and export (56.7%) between 2006 and 2011.

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Table 14: Evolution of the consumption of cheese (tonnes) Year 2006 2007 2008 2009 2010 2011

Production 240,100 255,515 265,189 269,065 286,615 287,000

Import 96,811 118,245 112,494 125,015 118,665 113,884

Export 31,280 39,875 41,360 41,654 43,247 49,025

Apparent consumption* 305,631 333,885 336,323 352,426 362,032 351,859

% 2.3% 9.2% 0.7% 4.8% 2.7% -2.8%

* Apparent consumption = Production + Import-Export Source: ELSTAT, ICAP Group S.A. estimates, Ministry of Agricultural and Food Development, Eurostat, ELOGAK

Import increased between 2006 and 2009 (29.1%) and declined after 2009 (-8.9%), but remained at relatively high levels: 32.4% of total consumption. A significant share of import is intended for collective restaurants and delicatessens. Table 15: Cheese and curd trade balance (m€) Year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Import 304 294 310 338 346 381 403 364 388 405

Export 132 119 131 138 155 176 199 204 221 238

Source: ELSTAT

Imported cheeses (mainly processed cheese or cheddar) are used in baking or as a cooking ingredient (ICAP, 2011)4. Export of Greek cheeses is significant: about 17% of national production in 2011. Feta PDO is the main Greek cheese exported. The final achievement of the Feta PDO by Greece in 20055 has contributed to significant growth in the production of Feta as well as sheep’s milk (see Table 3). More broadly, recording 20 Greek cheeses as PDO products have played an important role in the penetration of these products in international markets. Recognition of their distinctive quality in this certification has allowed them to be valued at a higher price on the market (premium price) in a fair, competitive environment. Previously, Greek Feta was subject to fierce, and often unfair, competition from white “Feta” type cheeses from Northwest European countries. On the Greek market, a wide variety of national and/ or imported products is sold cut and packaged. Feta accounts for over 40% of the cheese consumption in Greece. It is a staple food, with multiple flavours and organoleptic characteristics that satisfy all tastes. Feta accompanies every meal, served only at the end or used as an ingredient in traditional dishes, including appetizers (Saganaki and meatballs) and cheese puffs (pita). More generally, soft cheeses represent the bulk of national cheese production (65-70%). Hard and semi-hard cheese holds a weaker position in the order of 20% followed by "processed cheese" (13% -15%).

ICAP (2011), annual report on the "Situation and prospects of SMEs in Greece”. In 1996, the EU recognised Feta as a PDO product of Greece and provided for an adjustment period of five years for the other member states that produced “Feta” type cheeses (based on cow's milk). The same year, Germany, Denmark and France had recourse to the European Court against the decision of the Commission, arguing that Feta is a "generic" product, which involves basic processes found in all Balkan countries under different denominations. In 1999, the European Court, challenging the legality of the award process of Feta PDO to Greek producers, cancelled the issuance of this appellation. Under the new 1070/99 regulation, Feta has been removed from the list of European PDOs. After new approaches on the Greek side, it was decided in 2003 to renew the Greek Feta PDO label (Regulation 1829/2002). The main arguments in favour of “Greek” Feta were that Feta has been produced in Greece since antiquity (according to historical sources) from sheep and goat’s milk and according to the perceptions of European consumers, Feta is associated with Greece, Feta manufacturing processes were codified in Greece much earlier than abroad, and production of Greek Feta covers more than 60% of the total cheese production in Greece (80% of total production of cheese from sheep and goat's milk), which shows the close relationship of the Greek territory and Feta in its natural and cultural environment (predominantly mountainous areas and semi-arid rocky mountains, considered a symbol of Greece by the Greeks). Shortly after the second issuance of the Feta PDO to Greece, German and Danish governments and German, Danish and French producers’ organisations had recourse to the Tribunal of the European Community against the Regulation 1829/02. The Court ruled in 2005 in favour of certification of the designation of Greek origin. Dairy industries producing Feta type cheeses of member countries of the EU had a transitional period up until 2007 to completely eliminate the word “Feta” from their labelling. 4 5

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Regarding distribution, 75% of sales (national and imported) are made at the fresh products counter as cut and packaged cheese6. For national cheeses, the percentage rises to 89%. Nevertheless, there is a gradual shift towards packaged products, despite the fact that the price per kilogramme is relatively high: the rhythms of modern life encourage consumers to buy refrigerated and pre-packaged supermarket products rather than queue up in their local cheese shop. In summary, between national and imported products, the consumer chooses first Greek cheeses from his country (more than two thirds of consumption) for consumption at the table, and second, imported products (cheaper) for cooking, baking, and preparing toast. Greek cheeses are "anchored" in food traditions. Consumers select cheeses that offer high-added value (heritage, Belletti & Marescotti, 2009) in terms of taste and the wider organoleptic characteristics (odour, texture and colour) of the region of production, and quality. The price is the last criteria taken into account, according to the head of the cheese counter in the supermarket chain investigated. The socio-economic crisis has led households to ration their food budget and encourages a "rapid Hellenization of the food basket". With the support of the national consumer market and the protection of jobs, new opportunities are opening up for Greek SMEs as they offer high quality and original favours in their cheeses (AGROTERRA, 2013). "The Greek turning point" concerning consumption is confirmed by the ICAP sectoral report of cheeses in 2009, which notes that the demand for cheese is more related to the type of cheese and the region of origin rather than commercial brands. However, the growth in sales of packaged and pre-packaged products had led to the emergence of a demand for "recognised brands" that the consumer seeks on the supermarket shelves. Therefore, large dairy companies spend significant sums to promote their PDO product brands and play on the cultural heritage by highlighting images of mountain pastures, pastoral livestock and traditional cheese-making techniques. Advertising has a significant influence on the demand by attracting consumers to targeted commercial logos or towards new types of products. This is confirmed by customers of supermarket chains. More specifically, information leaflets are placed in stores to inform consumers about the quality and nutritional characteristics of traditional Greek dairy products and the PDO certification while the advertising industry groups focus on the support offered to Greek producers, including small producers (ICAP, 2012). Recently, more and more companies offer low-fat cheeses. Technological developments and improvements in production facilitate the satisfaction of various applications (light cheeses, specialty cheeses made from vegetable fat, soybean Lenten cheese, etc.). Sales of organic cheeses are also experiencing strong growth, mainly Feta and fine cheeses with high-added value and cheeses for niche markets termed "gourmet". Although their future is uncertain due to the economic crisis, these niche markets are dairy chains with high growth potential.

1.2. Marketing system and policies for the development of the dairy chain 1.2.1. Marketing system The marketing system for dairy products is characterised by the dominance of a few large wholesalers (flow of national production and import) and supermarket chains in the retail trade (10 amongst them are national). Thus, the market works in oligopolistic conditions at the expense of both producers (farmers and SME processors) and consumers. Denunciation in 2007 of the cartels governing the dairy market has brought the situation to light7. In 2005, after complaints by an association of dairy farmers in northern Greece, the National Competition Commission discovered an illegal agreement between eight large industrial dairies and nine supermarket chains to lower the price of milk paid to producers and maintain more generally, commodity prices at low levels while increasing final prices paid by consumers. The size and level of organisation of processing units (dairies) determine how their products are distributed on the national market. Large dairies are both producers and importers of certain milk products in order to diversify their portfolio (including yoghurts and dairy desserts); they market their products primarily through their own networks and use their own transport. A portion of their goods nevertheless channelled through local representatives and wholesalers. The enterprise network covers almost the entire Greek territory while local representatives serve remote distribution centres and warehouses (Georgakopoulos, 2012). Smaller-sized companies usually collaborate with networks of representatives, intermediaries and wholesalers, but some sell their products directly to the local and regional market (mini-markets, dairies, restaurants) or sell directly to cheese shops. 6 7

Packaged products in Greece appeared only two decades ago. http://www.tovima.gr/finance/article/?aid=179611

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Regarding export, including Feta and "Greek" yoghurt (drained cow’s milk yoghurt), large industrial groups such as FAGE, VIVARTIA and OLYMPOS (Thessaly) market their products through importers and distributors of Greek food products abroad. It is interesting to note that small and medium-sized dairies are mobilising to find opportunities abroad based on their relations and family networks (international food fairs, knowledge networks, the Greek diaspora communities, etc.) failing the consortium to promote specialty products with a designation of origin (regional or national). Thus, although some products are highly appreciated in foreign markets and are regarded as a central element of the Mediterranean diet, farmers and processors struggle to capture a greater share of the value created in the international value chain by lack of a strategy to promote the specific collective attributes of these products. The field survey conducted in Thessaly with processors confirmed the trend of Greek companies to turn towards export because of the shrinking of the national market due to the fall in the purchasing power of consumers and adjustment measures. It is certain that large, unobstructed profits throughout the value chain could help producers return to the territory, especially in Thessaly. The distribution channels of dairy products can be distributed as follows: 

Wholesale

Large dairy groups usually agree and sell directly to large supermarket chains and large retail groups abroad without going through wholesalers. In the dairy chain, three to four large dairy groups cover 90% of sales in Greece. Cheese wholesalers covering the entire national territory through retail networks are also importers of foreign cheeses. The majority of dairy export (yoghurts, desserts) and cheese (mainly Feta) are exported through subsidiaries of large Greek food companies located in the U.S., Canada, UK, Italy, Germany and the Netherlands. 

Retail and distribution network

Supermarkets have experienced rapid development and now make the majority of the total sales. This development has led the dairy and cheese industries to turn towards packaging to adapt to the new market trends. In fact, retailing has undergone significant restructuring in the 1990s with supermarket takeovers and mergers and the entry of multinational giants in the Greek groups’ equity. Outside the major supermarket chains, there are also convenience store chains selling traditional, local food in large urban centres (such as Critica Crete, Naxos Naxiotika and Mytilinia Mytilene, named after their region of origin), shops specialised in traditional Greek products (delicatessens) and shops selling organic products. Finally, some small outlets such as dairies, bakeries, kiosks, service stations, etc. hold a significant proportion of the sale of dairy products for daily consumption (fresh milk, yoghurt, desserts and small-packaged Feta). Cheese SMEs seek markets in the country and abroad through personal contact, usually without any particular promotion strategy. 

Local, regional and national informal distribution networks

These networks are based on personal relationships between farmers and cheesemakers on the tourist markets and nearby networks of compatriots in major cities. They represent approximately 25% of the cheese production of farms. 

Tourism market and other professional channels

This is basically commercial catering areas (restaurants, taverns, hotels and pastry shops) and food service companies (catering). These markets are particularly important for small and medium-sized production units in tourist areas. In conclusion, it appears that the dairy and cheese companies, regardless of size, act individually in the absence of a coherent strategy for the promotion of the special identity and profile of dairy products (Feta, Kaseri and Greek yoghurt) and their area of origin supported by a professional partnership or regional and national actors. This lack of a common strategy results in a loss of added value for producers and territories and an accumulation of economic spin-offs related to improving the image of the typical products (Feta, Greek yoghurt, etc.) and quality associated with the origin (Feta Kalavryton or Ladotyri Mytilinis PDO) downstream of the dairy chain (trade). At the institutional level, an effective framework is lacking to encourage entrepreneurial spirit of SMEs and develop processing units (increased export). The conclusion of the study "A Trade Promotion Strategy for Greece", made in 2013 on behalf of the Greek government, stated the major obstacles in the area of trade and export promotion including: 14

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

Administrative barriers to export;



Lack of effective support of marketing strategies;



Low share of export, which does not allow Greek SMEs access to foreign markets;



Promotion actions that target smaller markets without considering the strategic issues;



Lack of coordination between the relevant departments;



Lack of a unified trade policy at the national level (branding);



Lack of economic diplomacy8.

1.2.2. Price formation Milk prices in Greece, for raw material for processing units as well as the consumer product (fresh pasteurised milk), is amongst the highest in the EU (Table 21). Raw milk from Greek cows is the most expensive after that of Cyprus, Malta, Italy and Finland (according to Eurostat). For sheep’s milk, Greece ranks third after Portugal and France. Finally, the price of goat’s milk is the highest in the EU (Vallerand F., Dubeuf J.P., Tsiboukas K., 2007). Table 16: Evolution of the price of cow, goat and sheep’s milk, and Feta between 2002 and 2011 (€/ kg) Year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Cow’s milk 0.34 0.35 0.35 0.36 0.36 0.35 0.41 0.42 0.37 0.42

Goat's milk 0.50 0.50 0.52 0.54 0.55 0.51 0.56 0.58 0.58 0.56

Sheep's milk 0.82 0.85 0.88 0.90 0.92 0.87 0.94 0.96 0.97 0.95

Feta 4.23 4.31 4.97 4.70 4.83 4.71 5.06

Source: ELOGAK and Ministry of Rural Development and Food

Several institutional, structural and organisational factors generate weaknesses and distortions in the market at the expense of producers (farmers and processors) and regions producing identity products. In the absence of collective arrangements for the negotiation of farm prices (lack of co-operatives, farmers’ groups and interprofessional union of the dairy chain), the price and time of milk collection are fixed as a result of individual negotiations between farmers and processors. The use of formal contracts is nearly universal in the case of cow's milk, while for milk from small ruminants, economic and financial relations are based primarily on oral agreements. Another shortcoming of the price formation system is that the farm price of milk from small ruminants does not vary according to the quality (application of a single price), except for some cheeses that take into account the casein content. Thus, the seasonality of milk production (six months) and the relatively low price of Feta are constraints for cheese development given the low profits generated by processing activities. In 2012, the cost of raw material to produce one kilo of Feta (4 litres of sheep’s milk) was about 4 € while the price of wholesale was around 5.20 € ex. taxes and the retail price in supermarkets9 for a kilo of unpackaged bulk Feta was around 7.50 €. Thus, the value created seems to focus on both ends of the chain: milk producers upstream and distributors and retailers downstream. In the middle, processors make very small profits (Vakoufaris H., 2010). However, with regards to farmers, it is important to note that 60% to 80% of the costs of producing milk are related to feed costs, and due to the lack of fodder resources. The majority of revenue from milk production thus amounts to feed suppliers in different ways, whether they are farmers, traders and transporters. Thus, despite low growth between 2002 and 2012 (Table 16), the price of Feta and other cheeses made from sheep and goat's milk is used only to reimburse the production costs. The consumer price of Greek cheese is often even lower than many cheeses from imported cow's milk. Fieldwork in Thessaly has revealed that small and medium processing units that sell their products in local and regional markets through their own contacts and through loyal customers obtain higher profits than that of the national market through networks of wholesalers and large retail chains. A more territorial marketing strategy allows SMEs to better use their PDO products (strict specifications on the quality of the raw materials) and

8 9

http://news.kathimerini.gr/4dcgi/_w_articles_economy_2_04/05/2013_519475 Traditional packaging of Feta is in 60 kg wooden barrels or 16 kg steel drums. In retail, the cheese is sold in bulk.

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withstand competition from large units that benefit from economies of scale through the specific quality of their products.

1.2.3. National development policies of the dairy chain Development policies (rural development programme, investment laws, the French national strategic reference framework - CRSN through its sectoral and regional programmes) related to the dairy chain are part of the EU policies and especially the second pillar of the Common Agricultural Policy ("Baltatzis" rural development programme - RDP), and have funding for both primary production and processing. The programme aims to improve the competitiveness of agriculture, environment and landscape, the quality of life in rural areas and diversification of the rural economy. The "Baltatzis" RDP is the main engine of the Greek agricultural development mainly for funding the modernisation of production units at the various levels of the supply chain and improving the environment of these units. MODERNISATION OF PRODUCTION UNITS AT DIFFERENT LEVELS OF THE DAIRY CHAIN 

Modernisation of livestock farms

Restricted improvement plans for livestock operations, provided for by measure 121 of the RDP, funds the construction of new barns and storage facilities and the purchase of mechanical equipment (milking machines, milk cooling tanks, oil electric generators, labs for the preparation of fodders, small systems for the biological treatment of wastewaters, weighing scales, grinders, mixers, grain silos, tractors and tractor/ towing tools). Considered complex and highly bureaucratic, traditional farm improvement projects were not very attractive (4,100 applications approved nationally), while funding for restricted improvement plans for livestock farms are considered more flexible, functional and effective. Indeed, they do not require prior authorisation, are not subject to the bureaucracy and therefore are not delayed. Although the application process has been simplified, the lack of liquidity of farmers has hindered the provision of funding. Many large farms (> 1,000 head) took the opportunity to use these grants to partially fund their facilities and equipment, the total cost often exceeded 250,000€ (maximum funding of the improvement plans). 

Creation, modernisation and relocation of dairies and cheese

The new investment law (3908/2011) and measure 123A of the RDP encourage investment in processing and marketing of agricultural products 10. The funding provided was used by both dairy companies (thus reinforcing the production of milk and dairy products) and by production and fodder marketing companies. The two programmes have substantially contributed to the modernisation of the dairy chain, although the implementation of the second is hampered by bureaucracy and slow implementation (late payments). In areas of application of the LEADER and OPAACH programmes (integrated programmes for the development of the PIDER rural space), integration in the context of funding investment projects in dairy processing has contributed to the modernisation of traditional units. These investments have effectively solved the problems of safety and certification of products, thus increasing the competitiveness of the recipient units. 

Creation and modernisation of small industrial/ domestic artisanal units

These units are part of the industry because they process/ promote milk for the production of other products. Funding under measures 311 and 313 (Area 3 of the RDP) are generally used in addition to the benefits granted by the Investment Act. These units also call for funding under measure 312 (Area 3 of the RDP) for their networking. 

Promotion of dairy products

Promotion of dairy products so far has been scattered and random. It is organised centrally or regionally without any specific purpose. The current economic crisis promotes better organisation of this type of action. Better planning is still necessary to improve the effectiveness of these interventions. 

Entrepreneurship and the organisation of producers

Measure 133 concerns the actions to improve the operation of production units (breeding, processing), the organisation of producers and promote entrepreneurship.

10

Since 2000, 180 investment projects were completed (the amount of public expenditure is 50% of the budget) including 27 in Thessaly. For the period 2000-2006, the average amount of investment reached 1,473 € (3,373 € in Thessaly), while for the period 2007-2013, it was 820 € (1,092 € in Thessaly).

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IMPROVEMENT OF THE ENVIRONMENT PRODUCTION UNITS Under the previous programmes, the RDP provided funding for the improvement of milk production, but these measures have faced many difficulties in implementation due to the following structural problems: 

Ageing population of livestock farmers

The population of livestock farmers could be rejuvenated by applying measures 112 (incentives for young farmers) and 113 (early retirement) of the RDP. 

Lack of training and information

As the implementation of measure 111 of the RDP (vocational training and information) was ineffective, it was abolished. 

Difficult conditions for practising livestock farming

Livestock activities were supported in terms of revenue through the implementation of measures 211, 212 (compensatory indemnities) and 214 (Action 1.3: Specific incentives for diversification of farms). 

Management and maintenance of pastures

The application of measure 125 (action 4) concerning the improvement of pastures was ineffective. A state of the project, the funding planned seemed to provide solutions to the major problems of management and pasture maintenance (lack of shelter, herdsman housing, livestock breeders’ pathways, drinking troughs, rainwater reservoirs, fencing and small technical jobs). A series of obstacles prevented them from obtaining the expected results including the overlap of responsibilities between the departments of rural development and forest inspection, poorly defined ownership, the undefined use of pastures and the low budget of the measure with respect to the extent of the pasture land. 

Rural roads

Rural roads were renovated (openings, bridges, earthworks, paving and cementing) in the context of measure 125A of the RDP with obvious results since all livestock facilities are now connected to the roads. 

Rural electrification

Meanwhile, measure 125 (action 3) could have allowed sheepfolds access to a direct, continuous electrical connection and without any obstacles, but the budget for this measure was not sufficient given the extent of the needs in many parts of the country. 

Risk of extinction of certain animal breeds and agricultural resources

Grouping, under measure 214 of actions 1.3 (livestock diversification), 3.1 (preservation of indigenous endangered animal breeds) and 3.4 (protection of agricultural genetic resources), enhances the activity of farming and contributes to the protection of Feta and all PDO dairy products. The proper application of this measure is still hampered by bureaucratic problems, late payments (and delays in general), the discontinuity between programming periods and low funding. 

Weak development of the organic dairy chain

The transition from conventional to organic livestock farming has been supported by actions 1.1 (organic farming) and 1.2 (organic livestock farming) of measure 214 of the RDP. Funding provided satisfactory covers of income losses that usually accompany this transition. However, the lack of coordination in the implementation and promotion of these actions on each territory has created many problems. Moreover, the low penetration of organic dairy products on the market and the significant price differential between conventional and organic products remain major problems. In this sense, measure 132 of the RDP promotes the implementation of control systems for food quality, livestock activities or the processing company. In addition to these funds, the National Fund for Entrepreneurship and Development (ETEAN) contributes to the improvement of the liquidity of small businesses with actions such as the "entrepreneurship fund", which provides loans mainly for export, and the "rural entrepreneurship fund ", which provides loans to rural companies. In addition, under the "national contingency reserve" programme, a tender was launched to train 8,500 unemployed youths on issues concerning rural economy, with a budget of € 2 million. Lastly, the "development of human potential" programme provided training, reformation and support for the rural population (in terms of diversification, competitiveness, innovation, cooperation, information, green economy, etc.). 17

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1.3. The Thessaly dairy chain 1.3.1. Position of the territory in the national dairy chain The Thessaly region, located in the centre-east of mainland Greece, has an area of 14,037 km2 (50% of plains) and a population of 730,730 inhabitants, with a density of 52.06 people per km 2. The plain of Thessaly, the largest in Greece, is completely surrounded by the Olympus, Antihassia, Pindus, Orthrys, Pelion and Ossa mountains (Map 2). Thessaly has identified 76,503 farms (crops and livestock), against 803,000 in Greece (9.5% of farms in the country). Map 2: Geographical features of the Thessaly region

Source: prepared by the authors

The geographical concentration of the dairy herd within the region (Map 3) corresponds almost exactly to the distribution of extensive mountain pastures (Map 4). This strong correlation between the location of herds and pastures shows the central role of grazing in the Thessaly ruminant breeding system. In the plain, there is a high overload on the pasture in several places because of the high density of ruminants per hectare due to lack of pasture. Thessaly has a great tradition of manufacturing cheese, including Feta. This tradition is related to the fact that much of its farmers and cheesemakers are nomadic or semi-nomadic (Sarakatsanes, Vlachs, etc.) and only settled in the 1960s. Meanwhile, all farms practiced mixed farming (dairy sheep and cows) in the region until the 1970s.

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Table 17: Structure of ruminant livestock in Thessaly as part of OTEX* (2011) OTEX

Sheep

Goats

Cattle

Mixed breeding

Cropsbreeding

Number of farms Age of head Economic size (UDE) UAL (ha) Cereals (ha) Maize (ha) Alfalfa (ha) Other hay production (ha) Pastures (ha) Dairy cows (head) Other cattle (head) Sheep - reproductive females (head) Goats - reproductive females (head)

2,465 50 20.53 32.35 0.97 0.06 0.08 0.31 30.66 0 0.09 191.23 5.03

1,156 51 20.25 38.05 0.59 0.05 0.05 0.25 36.87 0 0.09 1.65 166.62

1,544 47 70.43 96.5 1.37 0.53 0.22 0.86 92.94 9.39 68.97 9.67 5.27

653 51 24.85 31.47 2.68 0.41 0.33 1.09 23.82 0.1 1.83 77.84 22.26

1,628 52 17.84 17.53 2.71 1.21 0.69 1.51 9.67 0.01 0.73 49.27 6.34

Mixed ruminants breeding 2,727 52 22.51 49.58 1.65 0.31 0.23 0.83 45.86 0.09 1.12 112.93 45.71

Total 10,173 51 28.45 457.030 15.834 4.114 2.565 7.834 418,061 14,834 112,237 927,212 362,664

* Technico-economic orientation of farming Source: Integrated Administration and Control System (IACS) of European Agricultural Aids

1.3.2. Dairy farming THE HERD By applying the typology of the Farm Accountancy Data Network (FADN) to the data of the integrated administration and control system (IACS) of European agricultural aid, there are 10,173 farms specialising in ruminant livestock in Thessaly. Table 18 shows, for each OTEX, the average farm structure. Table 18: Number of sheep, goat and cattle farms by herd size in Thessaly No. of units

Number of sheep farms by herd size

Number of goat farms by herd size

Number of cattle farms by herd size

1-5 51-150 151-350 351-700 700-1,500 1,500-2,000 >2,000 Total 1-50, 51-150 151-350 351-700 700-1,500 1,500-2,000 >2,000 Total 1-7 8-20 21-50 51-100 101-200 201-300 >300 Total

Year 2011 4,957 2,077 2,100 530 25 1 0 9,690 4,228 1,668 925 317 29 2 1 7,170 753 294 404 503 279 52 18 2,303

Source: Integrated Administration and Control System (IACS) of European Agricultural Aids

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1997 6,309 2,840 1,900 182 5 0 0 11,236 5,156 807 812 186 11 0 0 6,972 1,344 242 234 74 13 1 1,908

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During the recent period, these three types of livestock showed different trends: 

Sheep breeding

Between 2001 and 2011, the number of milked females was maintained and female productivity increased by 10% while the number of farms fell sharply (-27%) during the period 1997-2011 (Table 18). Small and medium semi-extensive farming11 (1-50 and 51-150 head) was particularly affected due to changes in the CAP European aid system after 2005 (from a grant per head to a single payment per farm). On the other hand, the number of large herds (151-350 and 351-700 head) increased in response to the growing demand for sheep’s milk by dairies following the definitive award of the Feta PDO to Greece by the EU. This is recent investments in semiintensive and intensive farms (barn feeding) of breeds with high milk productivity (Chios, Karagouniko and, to a lesser extent, Frisarta) with a mechanised milking system. 

Goat breeding

Goat farming is declining both in terms of number of milked females, milk productivity per capita and the number of farms (-41%) between 1997 and 2011 (Table 18). This fall has particularly affected very small herds (1-50 head) due to changes to the CAP and the low demand for goat’s milk. It concerns generally extensive farms of local breeds with low milk productivity, with a diet based on the bush land pastures, a hand milking system and rudimentary barns. 

Cattle breeding

Cattle breeding, which was progressively integrated into the dairy chain from the 1980s, experienced a sharp decline in the number of dairy cows (-17%) and a parallel increase in the yield (21%). The number of small farms (< 20 cows) decreased significantly due to the pressure of large dairy groups on farms to bring them to enlarge their size and increase their production in order to minimize the cost of milk collection. However, this selective policy does not cover the national quota of cow's milk (832,000 tonnes against a production of around 750,000 tonnes). As the breeding system of dairy cows is intensive, only one breed is used (Holstein international breed) and machine milking is widespread. Feeding is done in the barn with a mixture of corn silage and concentrates. Thus, farms are oriented either towards a "monoculture" logic with an intensive farming system based on a single animal breed or towards a mixed activity (crop-livestock, mixed ruminant livestock and mixed farming), with a more extensive system and different animal types, of which the choice is determined by the quality of the pastures used (bush land, etc..). Comparison between Thessaly’s percentage of these three types of dairy females in the national herd and the total national farms shows that the average sheep and cow herd size in the region is higher than the national average. Indeed, the number of sheep in Thessaly represents 14% of the national herd and the number of sheep farms in Thessaly represents only 11% of the total national farms. Similarly, the relative percentage of cows shows a positive difference between the number of head (17%) and the number of farms (12%). Table 19: Number of dairy cows in Thessaly and share in the national herd in 2011 Type of animals

Number of animals (head) 958,872 368,778 14,854

Reproductive female sheep Reproductive female goats Dairy cows

Percentage of the Thessaly in the national herd 14% 10% 17%

Source: Integrated Administration and Control System (IACS) of European Agricultural Aids

Table 20: Number of dairy farms in Thessaly and percentage in the national total in 2011 Thessaly Greece % Thessaly/ Greece

Sheep farms 9,690 88,719 11%

Goat farms 7,170 70,335 10%

Cow and heifer farms 2,303 19,194 12%

Source: Integrated Administration and Control System (IACS) of European Agricultural Aids

During the recent period, Thessaly has indeed become an important dairy area for Greek dairy groups, especially due to the local production of feed, which was developed after the entry into force of the CAP in 2005, and the decoupling of aids that favoured the substitution of corn and alfalfa crops for irrigated cotton areas. Thus, the role of livestock in the region, as throughout Greece, tends to grow stronger. 11

These farms are characterised by a diet based primarily on grazing in rangelands (2.7 million ha in Greece) during the period from March to November, breeding in often rudimentary buildings and manual processes.

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DAIRY PRODUCTION Between 2005 and 2010, gross milk production in the primary dairy chain has increased in Thessaly while gross agricultural production has decreased, resulting in an increase in the proportion of milk in the formation of regional agricultural GDP, which increased from 8% to 10% (Table 21). This positive trend is confirmed by the data in Table 22. Table 21: Gross production of raw milk production in Thessaly (M €) Year

Gross milk production

Gross agriculture production

2005 2010

143.12 161.39

1750.19 1613.52

% raw milk production/ total agriculture 8% 10%

Source: ELSTAT

Table 22: Gross production of dairy processing* in Thessaly (M €) Year 2002 2005 2010

Gross production of dairy processing 143.26 242.05 313.96

Gross production of agribusiness 564.39 656.60 669.31

% dairy processing/ food industry 25% 37% 47%

* Processing units with more than 10 employees Source: ELSTAT



Sheep and goat’s milk production

At regional level, sheep and goat farming contributes to 58.6% of the total gross value of livestock production. Thessaly produces 104,132 tonnes of sheep’s milk and 40,011 tonnes of goat’s milk, 18.8% and 20.3%, respectively, of the national production. It also produces more than 30% of the national Feta, which uses 85% of sheep and goat’s milk produced locally. The 75 dairy farms/ cheese factories in Thessaly collect 94,560 tonnes of sheep’s milk (64% from the Larissa regional unit) and 24,983 tonnes of goat’s milk (63% from Larissa). The total milk production of small ruminants, 90% of sheep’s milk and 62% goat’s milk, are processed by the institutions of Thessaly; the rest is used on the farm (or consumed as fresh milk). Larissa is the first Greek regional unit for delivery of sheep's milk (11% of deliveries in the country) and the third for goat’s milk (10%). 

Cow’s milk production

The concentration of dairy cow farms is significant in Thessaly (17.5% of the whole country). According to ELOGAK data in 2009 (Table 23), the Larissa regional unit alone accounts for 64.6% of these farms, which produce nearly 10% of the national production of cow's milk. Table 23: Dairy cow breeders in Thessaly (2009) Regional units (exdepartment) Larissa Trikala Karditsa Magnesia Thessaly Greece

Dairy cows 19,000 4,728 3,302 2,397 29,427 149,000

Milk production (tonnes) 65,000 18,216 7,800 6,726 97,220 670,000

Source: Department of Rural Development of the Thessaly Region

Given the degree of openness of Greece and Thessaly’s contribution to national production, the dairy chain has significant development opportunities. All cow's milk produced in Thessaly is processed, with the exception of a small amount corresponding to the producers’ personal consumption. Milk is delivered to large dairy industries such as DELTA, FAGE, OLYMPOS, EVOL and TRIKKI and small Thessaly dairy companies, which mainly produce pasteurised fresh milk as well as dairy products, such as cheese, yoghurt, cream etc.

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1.3.3. Fodder crops The UAL in Thessaly is 861,000 ha, or 15% of the national UAL. 50% of the area is devoted to rangelands; they are located mainly in mountainous and semi-mountainous areas (Map 3), the agricultural area in the plain being mainly devoted to crops. Map 3: Pasture area (ha) and its percentage of the common UAL

Source: prepared by the authors

Almost all of the pastures in Thessaly are publicly communal and collective owned (joint ownership by the state and the municipalities). This land tenure and strict forest laws explain the major problem of the pasture demarcation faced by farmers. This results in conflicts between the forest service and the latter, especially for goat breeding. OVER-EXPLOITED PASTURES Over-exploitation observed in plain is due to the narrow surfaces of the pastures in this area. Dairy farming is highly intensive; this over-exploitation is mainly due to the weight and density of extensive sheep and goat farming.

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Map 4: Distribution of the area of pasture and dairy females (in LSU*) in 2010

* Livestock unit Source: prepared by the authors

Thus, the load on the rangelands12 is about 1 LSU/ ha for all OTEX animals. These are therefore highly dependent on the market for animal feed13. This problem could be solved by the recovery of old pastures and by the creation of artificial grassland (irrigated) on communal pastures. These old pastures have been cleared and are available for lease to farmers following the decline of plain farming in the 1970s to 1980s. In semi-mountainous areas, old pastures cleared in the 1960s gave increasingly poor yields due slopes, leaching, depletion and soil erosion. The sharp decline in yields and reduction from 2014 of the gap between aid for cultivated areas and grazing areas should encourage the transformation of these surfaces into pastures. In the plain, increasing herd sizes have already pushed farmers to demand the reinstatement of the land to the previous use. Finally, the new law governing the Deme activities (basic local government) provides the implementation of improvement projects and the creation of artificial pasture on communal pastures. FODDER CROPS Table 24 shows that 32% of the area devoted to "other cereals" in Greece are in Thessaly, while 16% of corn, 14% of alfalfa and 15% of other crops for hay production are located in the region.

12

Most pastures are owned by the state; their management was entrusted to the municipalities who rent to local farmers at low prices. Dairy cow feed in practice is stable throughout the year, while for small ruminants, feeds are mainly used during the winter months (November to March). 13

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Developing the typical dairy products of Thessaly Diagnosis and local strategy

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Table 24: Distribution of the UAL in Thessaly (2011) Type of crop Spring wheat Durum wheat Rice Other cereals (for animal consumption) Corn (irrigated) Alfalfa Other crops for hay production Tobacco Cotton Industrial tomatoes Rangelands Total UAL

Surface area (ha) 15,977 104,132 8 36,143 28,152 11,065 30,567 1,636 118,992 2,033 429,251 860,757

% of the UAL in Thessaly 1.86% 12.10% 4.20% 3.3% 1.3% 3.6% 0.2% 13.8% 0.2% 49.9% 100%

% of surface area in Greece 11% 27% 32% 16% 14% 15% 11% 39% 51% 16% 15%

Source: Integrated Administration and Control System (IACS) of European Agricultural Aids

Map 5 shows the distribution of crops for the production of feed in Thessaly by town (2011). The development of fodder crops generally follows the request of local farms for animal feed. Organic farming is underdeveloped in Thessaly; the presence of organic fodder crops is still low. Agriculture in Thessaly, its good level of modernisation and in particular, its irrigation system, is able to meet the increased needs for fodder, both in quantity and quality. As part of restructuring of the agricultural dairy chain, there is an integration of corn, alfalfa and other traditional and native crops in the rotation systems. This trend is fostered by the demand for fodder by farms in the region and by the presence of more than 70 feed production units. Some of these are installed in small agricultural centres in the region and have direct relationships with producers. Map 5: Area devoted to crops for animal feed production in Thessaly (2011)

Source: prepared by the authors

Meanwhile, we are witnessing the consolidation of fodder producers, with the best example of THES-GI (Thessaly land), which includes more than 1,000 producers and cooperates with cooperative dairy farmers whose milk production reaches 150 tonnes per day.

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Developing the typical dairy products of Thessaly Diagnosis and local strategy

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Faced with the serious concerns of the dairy chain actors in terms of the quality and cost of food, meetings and information seminars are held on these issues throughout Greece, including Thessaly. Thus, in 2012, the farmers' cooperative dairy THESGALΑ organised a seminar in Larissa on the topic: "Soybean and legume crops in Greece: application methods in ruminant feeding". In the same period, a seminar of the branch of the cooperative union division of the Trikala regional unit specialising in feed production (AGROVIZ), focused on the soybean crop. The strength of the fodder supply in Thessaly is based not only on its ability to meet the growing demand in quantity, but also in quality (protein) and its successful integration into each small farm. Fodder production still suffers from poor information services, lack of farmer training and also a mechanism to support and monitor the use of food and adapt the ration to the needs of the herds. The absence of such a mechanism complicates cooperation between research centres and farmers, and the production of specific qualities of feed products in Thessaly, which hinders the improvement of milk yield and the dairy product quality.

1.3.4. Dairy processing Dairy processing in Thessaly is characterised by the maintenance of traditional cheese production transmitted from generation to generation by the active and close relations between farmers’ networks and by the presence of cheese factories in small territories; this promotes the resilience of the dairy chain, particularly in times of crisis. The strong dairy tradition is reflected in the local cuisine (cheese puffs) and extends the possibilities of synergies between dairy chains and territorial anchoring of the added value. Dairy products traditionally made in Thessaly are: 

Fresh organic and non-organic goat and cow's milk;



Various types of cheeses, semi-hard or soft, PDO or conventional products;



Yoghurt, milk products from sheep, goats or cows, which are both traditional and European (different varieties: reduced fat, mixed with fruits, cereals, honey, etc.);



Butter, cream, rice pudding, etc.

These dairy products are found throughout Greece. This is particularly the case for cheese in brine (Feta, Telemes and Mpatzios), soft cheese (Galotyri), semi-hard cheese (Kaseri), hard cheese (Kefalotyri, Graviera and Kefalogravriera), cheese whey, reduced fat cheese (Anthotyro and Mytzithra) and sour cream cheese (Xinomytzithra). Numerous farms also produced in the past local sub-products like Tsalafouti. Some dairies still do so today. Thessaly, like Greece, so has a rich range of dairy products, including cheese certified according to the European institutional framework. Specifications of the 13 main cheeses made in Greece and Thessaly are presented in Appendix 1. Only one PDO cheese is produced exclusively in Thessaly: "Agrafa Graviera". This typical cheese comes from a well-defined area in the Pindos in western Thessaly. The other nine Thessaly PDO products have national recognition, the main one being Feta. All dairies therefore comply with the production standards (HACCP, ISO) and the rules defined in the PDO specifications approved by the EU. In accordance with these regulations, the cheese must be made with milk from local breeds and fed with the flora of the region. The binding nature of these rules for Thessaly causes a delay in the regional dairy chain in identifying and promoting its specific resources (natural and cultural) on the labels, symbols and other information material to consumers in order increase the added value of the regional heritage (Barjolle and al., 2010; Bérard and Marchenay, 2006, especially since Thessaly, through its geography, its traditions and manufacturing techniques, is part of the "Mediterranean diet" area. LOCATION AND CONCENTRATION OF CHEESE FACTORIES IN THESSALY According to ELOGAK (2010), 75 cheese factories/ artisan dairies (13% of units in the country) are located in Thessaly, which constitutes an important productive potential by its high degree of concentration and its processing capacity of locally produced milk. These units are located throughout the Thessaly region, with a higher concentration in the centre and north (Map 6). Another feature of Thessaly is that 66 processing units produce PDO cheeses, or 18% of the national production capacity (Table 25).

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Developing the typical dairy products of Thessaly Diagnosis and local strategy

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Map 6: Distribution of cheese factories (Feta) in Thessaly (2010)

Source: prepared by the authors

Table 25: Distribution of cheese factories between the regional units of Thessaly (2010) Regional units Larissa Trikala Magnesia Karditsa Thessaly Greece Thessaly’s share of the national total

Artisanal dairies/ cheese factories (a) 41 16 13 5 75 597 13%

Units producing PDO cheeses (b) 37 15 12 2 66 357 18%

% b/a 90% 94% 92% 40% 88% 60%

Source: ELOGAK

Production amounts to 30,300 tonnes of Feta PDO14, which shows the strength and capacity of the Thessaly dairy chain to move towards quality products. Two units are cooperatives, which have existed for many years, producing a wide range of products (fresh milk and organic cheese, and other dairy products) and make great efforts to export. Table 26 shows the distribution of cheese factories producing PDO products according to their milk processing capacity.

According to the ELOGAK data (2010), approximately 94,625 tonnes of sheep’s milk and 25,418 tonnes of goat’s milk are delivered to dairies and cheese factories. 14

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Developing the typical dairy products of Thessaly Diagnosis and local strategy

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Table 26: Size of PDO producing cheese factories in Thessaly (2010) Quantity of processed milk (tonnes/ year, sheep’s milk equivalent) > 8,000 2,680 – 8,000 1,600 – 2,680 400 – 1,600 < 400

Number of units 6 9 4 29 18

Number of milk suppliers* > 384 384 128 80 16

% milk collected 53% 27% 5% 13% 2%

% Feta produced 52% 27% 3% 15% 2%

* This concerns fictional herds of 125 dairy sheep/ farm, with a lactation period of 165 days/ year. Source: ELOGAK

Also according to ELOGAK (2010), four PDO cheeses are produced in Thessaly (Table 27), but Feta accounts for 95% of regional production while only a third (33%) of national production (31,000 tonnes against 95,000 tonnes). Thessaly has indeed a long tradition of Feta production and more and more companies are turning towards export. . Table 27: Production of PDO cheeses in Thessaly (2010) Type of cheese Kaseri Galotyri Manouri Feta Total

Quantity (tonnes) 666 83 896 31,316 32,961

% 2.0% 0.3% 2.7% 95.0% 100.0%

Source: ELOGAK

To the significant amount of the milk processed by the 75 Thessaly artisanal cheese factories and dairies, the considerable quantity of milk processed into cheese or yoghurt in the traditional way by farmers themselves (estimated at more than 4,000 tonnes) and distributed directly to end consumers must be added. The dairy chain contributes significantly to regional employment, which is more pronounced at the national level (Table 28). Thessaly represents 14% of employment on farms in Greece and 13% of employment in dairy processing, while it contributes only 7% of national employment in the food industry. These differences reveal the specialisation of Thessaly in dairy processing. Table 28: Distribution of staff employed by the dairy chain in Thessaly and Greece (2012) Livestock breeders Dairy processing Agri-food industries Agro-industrial dairy chain Trade/ services dairy chain

Thessaly 12,336 1,491 7,740 6,408 9,931

Greece 89,297 11,285 105,048 109,196 141,392

Thessaly/Greece 14% 13% 7% 6% 7%

Source: ELSTAT

1.3.5. Large companies in the territory The development of the dairy chain and the weight of the Greek market are partly related to the presence of large companies, which play an important role, both nationally and internationally. Their current position is the result of a concentration process started 30 years ago following a weakening of the multitude of small local, semi-cooperative and semi-state businesses. These large companies have based their growth on the rise of the urban demand for cow's milk and fresh dairy products (from cows). Today, processing cow's milk is dominated by five major groups: DELTA, FAGE, FRIESLAND, MEVGAL and OLYMPOS. The latter is based in Larissa, the regional capital of Thessaly, and owns a large dairy in Larissa and a large cheese factory in Trikala (cheeses made from milk from small ruminants). These two production units are located in Thessaly. OLYMPOS has another dairy in Thrace (Rodopi) and two milk processing units in the Balkan countries (Bulgaria and Romania). DELTA, a VIVARTIA subsidiary and the first Greek agri-food holding, has a large dairy in Elassona in Thessaly (milk from small ruminants) and two large dairies in Athens and Plati Imathias in Macedonia. It also had the largest dairy plant in Cyprus until 2012 (sold). FAGE has a large cheese factory in Trikala in Thessaly (semi-hard cheeses) and two dairies in Athens and Amideo Florinas in Macedonia. 27

Developing the typical dairy products of Thessaly Diagnosis and local strategy

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With the exception of the MEVGAL group, whose dairy pool is in northern Greece (Macedonia and Thrace), these large groups collect their cow’s milk in Thessaly. They manufacture a wide variety of dairy products and have a well-organised distribution network with a large fleet of refrigerated trucks. They created their own commercial networks established in Greece and especially in Thessaly, and are also present on the European and U.S. markets. Encouraged by the growth of the export of dairy products, including drained cow’s milk yoghurt, the large Greek groups are making significant efforts to strengthen their presence abroad: 

FAGE has made a major advertising campaign for the launch of "Frugo" yoghurt in Britain;



The EVOL cooperative, headquartered in Volos, in Thessaly, is increasing the productive capacity of its facilities (including yoghurt) to tackle the U.S. market;



OLYMPOS is preparing the implementation of a yoghurt factory in the U.S.;



KRI-KRI is investing to better penetrate the market in the Netherlands, Great Britain and Italy.

These investments result from the rise in "Greek yoghurt" in foreign markets. In the U.S., sales doubled in 2006 following the launch of this product by the Greek company FAGE. This has encouraged multinational giants, such as Kraft Foods and General Mills, to strengthen their presence in the U.S. market by introducing new yoghurts. The total annual sales of "Greek" yoghurt in the U.S. were estimated at 1.5 billion USD in 2012, representing 36% of total sales of the yoghurt in the U.S. (6.5 billion USD) according to the investment company Alliance Berrnstein. In New York, 28 companies produce "Greek" yoghurt. Faced with these large dairy groups, small dairy SMEs producing pasteurised milk and dairy products from cow's milk (yoghurt, cream, etc.) have forged local branding, particularly in the recent period. Some of these SMEs have a cooperative status15. Despite competition from large groups, they maintain a large share of the national market (20 to 25%). However, their distribution networks are usually limited to local and regional markets. Figure 1 shows the position of these groups and regional SMEs on local and international markets. Figure 1: Industrial dairy chain strategic groups Cheese factories

Strong e OLYMPOS TYRAS KOLIOS

Dairies

FAGE DELTA MEBGAL NESTLE DODONI

OLYMPOS DODONI SERGAL EVOL ΤΡΙΚΚΙ

Branding

FAGE DELTA MEBGAL NESTLE

SERGAL EVOL

Low Local

Target market

International

Local

Target market

International

Source: prepared by the authors; Lazani Adamadia (2009). "The Dodoni cooperative and its contribution to the development of the dairy influence area." Thesis, Harokopio University, Athens.

Thus, regional businesses, especially cooperatives, have a better reputation, a strong distribution network and good access to the local market. EVOL, a cooperative established in Magnesia (Thessaly) producing pasteurised and fresh milk, is a good example of this success. Similarly, SMEs producing cheese in Thessaly have forged strong links in the local market and have their own local distribution network.

15

These SMEs are Farma Koukaki, Eurofarma, Neogal Coop Lamia and TRIKI. The latter two are based in Thessaly.

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Developing the typical dairy products of Thessaly Diagnosis and local strategy

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1.3.6. Related industries In Thessaly, the relationship between the dairy chain and related industries is underdeveloped. However, the potential associated with these companies and the first signs of cooperation open important perspectives. A total of 60 food companies have expertise in the application of certification systems (integrated, PDO, PGI). Some of these companies process products associated with the dairy chain, such as oil, hot peppers, almonds, kiwis, cottonseed meal16 (Agrocert, Regional Directorate for Agricultural Development). However, Thessaly dairy companies have established links with related industries located, in their vast majority, outside the region. For the supply of agro ingredients (enzymes, etc.), almost all transactions are made with foreign companies, including French and Italian companies. For the manufacture of barrels, the supplier is a factory in Metsovo, a small town on the border of Thessaly and Epirus. An enzyme company is located in Karditsa, founded following a company division, and includes a laboratory and biotechnology industries for the development of medicinal and aromatic plants. Finally, a whey development project for manufacturing energizers for athletes was recently launched. Nationally, the weight of the agri-food dairy chain explains the presence of large companies. These could form partnerships with companies in the dairy chain to diversify their product portfolio on international markets and develop a competitive advantage. This tendency to penetrate international markets with a "basket of goods" was confirmed by the field survey. National and European support for the creation of partnerships between academic laboratories and companies helps to create entities for the establishment of cooperative R&D. Active companies within the region cover a relatively wide range of productive activities, with more pronounced concentration in some driving sectors to penetrate international markets while controlling the Greek market. EQUIPMENT SUPPLIERS In Greece, numerous companies manufacture stainless steel products 17 and equipment18. In the absence of national enterprise, the dairy chain is dominated by two foreign companies: the German company Westfalia and the Swedish company DeLaval (ex-Alfa Laval), which market milking machines. However, these machines meet the needs of large livestock operations and are not suitable for many small and medium farms 19. Due to the lack of industrial supply, small farms are slow to adopt new technologies. The presence of the irrigation industry, which offers environmental friendly technologies, such as microirrigation, is important and contributes to the efficient use of water, and to seed and hay development. PACKAGING AND MULTI-SERVICES COMPANIES The printing and packaging materials industry is attractive for national companies. It includes the production and marketing of paper food packaging, cardboard and cans, food bags and composite materials, label printing services, brochures and catalogues, and graphics, media, marketing and consulting services. COMPANIES USING SUB-DAIRY PRODUCTS In recent years, new companies have specialised in the development of milk sub-products, including casein (in powder form), used as an adhesive (glue) in the timber industry. This activity is of great importance for the national economy, unlike the use of casein in the manufacture of paper, textiles, plastics and paints, or wine, which does not allow casein producers to generate profit due to decreasing prices. Other companies also use the ingredients for the production of whey protein powder (Elliniki Proteini SA), food for bees (EvangelopoulosKarditsa), bakery energy products, and organic protein products with high-added value. Finally, in recent years there has been a strengthening of relations between the dairy chain and the functional products dairy chain, with the involvement of biotechnology laboratories (University of Crete, Thessaly, etc.). In the pharmaceutical dairy chain, cooperation with the dairy chain is also progressing nationally (in particular with the University of Crete) and regionally in response to the recognition by research findings of the benefits of certain properties of milk for the immune system.

16

In this category, women's cooperatives play a special role since they produce products with strong, local characteristics based on sheep's milk and other dairy products (butter, cheese, etc.). 17 These include: INOX VESSEL HELLAS (production of stainless mechanical equipment, mainly tanks for industries processing and storage of liquid foodstuffs, beverages and chemicals) Αφοι Πραπόπουλοι ΑΕ ALPHA STEEL (centre of professional equipment). 18 Milk tanks, TANK CONTAINER, stainless containers with screw cap, refrigeration tanks, etc. 19 These companies offer machines with 24 places while smaller farms need machines with 2/4 places.

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Developing the typical dairy products of Thessaly Diagnosis and local strategy

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AGRI-FOOD BUSINESS The agri-food dairy chain, which includes a large number of dynamic companies, has close links with the dairy chain, but these links are limited to the use of milk as raw material. Three important examples can be cited: 

"Tyropitas" producers (modern industries and artisanal units) (cheese puff pastries, popular in Greece and consumed daily as a snack) buy from small cheese factories and distribute their products through a dense network of national sales outlets, which covers the whole of Greece. Two companies are distinguished: BARBA STATHIS SA and Alpha-Kozanis. In addition to its national distribution network, Alpha-Kozanis exports to 28 countries (Europe, USA and Australia) and works closely with a medium-sized Thessaly cheese factory (Tzafetas), which provides the raw material (cheese and mytzithra);



Many artisanal units located throughout Greece use yoghurt for making Tzatziki, a kind of very refreshing salad made from cucumber and garlic, and massively consumed by the Greeks and tourists;



ALMI ABEE, founded in 1996, produces peppers stuffed with cheese, a traditional entry highly demanded by European markets.

Dairy products are also used by the food industry as ingredients in baking, cakes, cold meats and animal feed in the form of milk powder and whey. They are found in the following areas: 

Biscuit factories, which export much of their production and use of condensed and/ or butter milk;



Dietary supplement industries;



Artisanal bakers;



Frozen pasta industries (with companies like Barba Stathis20, Nutriart21 and Viotros SA22)

The result is a dichotomy: facing the major competitive companies in international markets, and relying on the quality and authenticity of their products, there are thousands of small-scale units scattered throughout the national territory, and particularly in the Peloponnese, which produces Tarhana soup and noodles made from fresh sheep’s milk. Large companies have shortcomings compared to traditional Greek workshops. In the words of the artisans, eggs and milk used are imported by major modern industries. The development of small-scale units is undeniable because their products are widely preferred by Greek consumers. The main problem with these artisanal units is their inability to expand their market beyond their territory. Encouraging them to cooperate and to network could lead to other markets. The increase in demand for dairy products, recognition of their nutritional value and the consolidation of the Greek dairy chain already seem to have a positive impact on cooperation with related industries in the dairy chain. The impact is much less visible in Thessaly. Small-scale economies created by these industries in the area can contribute to strengthening this cooperation. This development opens up new opportunities for improvement in terms of comparative differential advantages and as well as marketing. The dynamism of related industries is powered by their ability to innovate and use R&D to produce traditional foods or new products (functional milk-based products, ingredients and/ or dairy products). The Thessaly dairy chain must be prepared to take advantage of this trend. REVIEW The cheese factory/ dairy chain in Greece is characterised by a high concentration in Thessaly and a strong specialisation in the production of Feta. However, the region fails to fully exploit the benefits of the Feta PDO label and benefit from the added value created thereof (lack of collective promotion and marketing strategy structures). The development of the dairy chain is based, firstly, on a strong pastoral traditions and the presence of significant livestock (number of farms, local breeds, milk production covering the dairy/ cheese factory needs) and, secondly, livestock competitiveness thanks to the local production of abundant fodder and animal feed. This highlights a major strength of the dairy chain in Thessaly. 20

Barba Stathis has a leading position in the Greek market and supplies the market with frozen pasta brand "golden pasta". The industry is supported by its own scientists, collaborating with Greek research centres. Its trademark "7DAYS Bake it" (for the international market) is one of the most requested by the markets of the Balkans and Europe (Spain, Germany, Sweden, Belgium, Switzerland, etc.), but also the United States, Canada and Australia. The brand also offers amongst others, small cheese pasta (VIVARTIA, branch of MIG). 21 The development of this sector and its strategic adaptations to move towards export is testified by the 2009 merger of three large companies with a leading position in the Greek market (Katselis, Allatini and ELVIPET) and the creation of Nutriart. Amongst its products are also frozen dough and confectionery. 22 Viotros SA is the largest industry in the production and packaging of cheese and alternative cheese products based on vegetable fat. It occupies a dominant position in the European market.

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Developing the typical dairy products of Thessaly Diagnosis and local strategy

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For cow's milk, the local production of animal feed enhances the development trend and the concentration of cattle farms, creating a major dairy cattle pool for Greece, which supplies all major national dairy industries, but also cheese factories/ local dairies. However, the pattern of rapid growth of cattle farms imposed by large dairies could influence the evolution of the dairy chain, particularly in the current financial crisis.

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Developing the typical dairy products of Thessaly Diagnosis and local strategy

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2. Thessaly field survey 2.1. Sampling and methodology 2.1.1. Sample representativeness The investigation has focused on the main actors (target groups) of the dairy chain in the territory. These groups include farmers, processors and suppliers, and also support structures, allied industries, distributors, tourist operators and food outlets. For each of these groups, a survey sample was defined on the basis of specific project goals and criteria related to the specificities of the Thessaly dairy chain. All regional and local authorities (demes and region) were also encountered. The issue of representativeness of the sample of farmers was the most problematic due to the large number of farms in the area (> 10,000). Faced with this problem, a systemic approach was adopted and farms were grouped into three distinct production systems. LIVESTOCK BREEDING FARMS To ensure the representativeness of the sample farms, two characteristics of the Thessaly dairy chain were taken into account: 

The existence of two national production systems

Most farms maintain a traditional sheep and goat extensive breeding system. There are mainly farmers from the mountains, descendants of former Pindos nomads, who settled permanently in mountainous and lowland areas from 1920 and mostly after 1960. These farmers can be divided into two subgroups: the older generation without any succession; the new generation, who has taken over in recent years due to the resumption of livestock. This second subgroup strengthens a) the possibility, on a local scale, of extensive production meeting the expectations of consumers who want safe, quality products and b) the development, since the reform of the CAP of 2003 (decoupling) and particularly since the beginning of the crisis, of modern sheep and cows barns funded through European aid. The survey sample slightly favoured semi-intensive farms as a new system yet little studied. 

The role of small geographical units of territorial cohesion, structured around a small town, in the development of the distribution and the consolidation of farms

Such units are generally located at the boundary between the Thessaly plain and the mountain areas. Historically, they have played a mediating role between urban lowland and mountain areas, whose economy was based on a strong breeding. This relationship, as well as the settlement of nomads in these areas, explains to a large extent the current specialisation in milk production. Despite the intervention of major national and multinational dairy companies in Thessaly, powerful relationships persist between pastoralists and small local dairies within these areas for the collection of milk. This is why the survey was not only interested in the whole of livestock production systems in Thessaly, but also their concentration within the historical territorial units farms, questioning the level of informal consistency of these units and the strength of relationships between farmers and processors. Based on these elements, the sample was defined by taking into account, amongst others, the altitude (plain, semi-mountain or mountains) due to the close relationship between the existence of pastures and the location and type of operating system (Table 29).

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Developing the typical dairy products of Thessaly Diagnosis and local strategy

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Table 29: Distribution of the farmers’ sample in the territory Territories

Production system

Regional units

No. 1 2 3 1 2 3 4 1 2 3 4 5 1 8

Trikala

Larisa

Karditsa Magnesia Total

Breeding territories Kalampaka Farkadona Pyli Elassona Tempi Tyrnabos Farsala Sofades Karditsa Palamas Mouzaki M KAR Velestino Almyros

Extensive/ succession 2 1 1 2 3 1 1 2 1 1 2 4 1 1 23

Intensive sheep 2 1 1 3 5 2 2 2 2 3 2 1 1 27

Intensive cattle 1 1 2 1 2 7

Total 4 3 3 5 8 5 4 4 3 3 5 6 2 2 57

Source: prepared by the authors

Map 7: Distribution of livestock farms by pastures’ altitude P = plain (37%) M = mountain (23%) SM = semi-mountain (9%) SM/P = location in the plain but close to semimountain pastures (31%)

M P

Source: prepared by the authors

SM

SM P

P

Map 8: Distribution of the sample according to breeding territories

Elas

Kal Tempi Tyr/Lar Far

Pal

O Kar

Vel

Mouz Fars Sof Alm Source: prepared by the authors

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Developing the typical dairy products of Thessaly Diagnosis and local strategy

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ANIMAL FEED PRODUCERS Of the 56 companies producing and marketing animal feed located in Thessaly, a sample of 15 companies was selected based on the following criteria: capacity, volume of feed concentrates, size (small, medium and large). From this sample, 12 companies responded and were surveyed. They are distributed as follows in the area: 

Trikala: 27 companies in total => 4 respondents (1 small, 2 medium and 1 large), 2 cooperatives;



Karditsa: 4 companies in total => four respondents (3 small and 1 medium);



Magnesia: 8 companies in total => 2 respondents (1 large and 1 medium);



Larissa: 17 companies in total => 2 respondents (2 medium).

PROCESSING UNITS Of the 75 processing units located in Thessaly, 20 cheese factories/ dairies of different sizes were surveyed, represented 26.7% of the total number of units. The main selection criteria were size, location, type and number of products. They permitted the establishment of an initial list (Table 30). Table 30: Distribution of processing units by annual volume of processed milk Milk volume

No. of units

1st sample

1

0-500

8+9

2

2

501-1,000

11

2

3

1,001-2,000

18

5

4

2,001-3,000

9

4

5

3,001-7,000

6

4

6

9,000-12,000

5

3

7 Total

13,000-60,000

9 66+9

5 25

Class

Unit name Zacharis (Far), Tsantilis (M-Lar), Farma-Notas (Μ-Lar), Voskos (El) Veroukas (Alm), Pedis (Kal), Tsaknakis (Ver), Gaitanidi (Kar) Laitsia (Vel), Karakanas (Stef), Bebezas (Trik), Vlahogiannis (Kal), Tahas (Tempi) Kissas (Mouz), Kaltsoudas (Kal), Yfantis (Fark), Mitsiou (Elas) ΑAvramoulis (Tempi), Dalakouras (Alm) Divani (Trik), Tzafetas (Tyr) Pilio-Tyrokomiki (Vel), Lytras (Lar), Giotsas (ELas) Roussas (Alm), Noussias (Lar), EAS (Trik), Bizios (El), Vigla Olympe (El)

Final sample

%

4

24

3

27

3

17

3

33

3

50

2

40

2 20

22

Given the structure of this population, the focus was on two cheese factory groups: 

Small cheese factories (sample of 25% of classes 1 and 2), due to their high number (28 units processing less than 1,000 tonnes of milk, 37% of the total number of units) and their strong local roots (milk, fodder, short circuits);



Medium-sized cheese factories (from 2,000 to 12,000 tonnes), which combine both a strong local presence and an ability to move towards national and international markets (40% of sample classes 4, 5 and 6).

The third group the one of large companies, has a much more national and international profile. The group is slightly under-represented because of the managers’ refusal to answer the questionnaire. This problem was partially circumvented by semi-structured interviews with the Union of Agricultural Cooperatives of Trikala, Kissas, Tzafeta, Laitsos and Zaharis. Medium-sized dairies appear as a strategic group because of their large numbers and their positioning between the two ends of the chain, which have no real contact. Their strategy regarding the upstream and downstream industry has been analysed in depth. A particular interest has been devoted to their position in the territory, for the following reasons: 

SMEs base their strategy on the traditional close relationship with the productive potential of farmed areas within the Thessaly area;



A high concentration of processing units is observed in northern Thessaly (14 companies surveyed, 70% of the sample), particularly in the North East (8,40% of the sample).

Modification of the original sample is due to: 

The fact that the data used initially applied only to companies producing under the PDO;

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Developing the typical dairy products of Thessaly Diagnosis and local strategy

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During the pre-survey, 9 other companies not producing under the PDO were identified (Table 31). Amongst them, the most representative were selected based on their products (yoghurt, cream, etc.), their size and their location. Table 31: Distribution of processing units by type of production and by regional units PDO Others Total



Larissa 37 4 41

Trikala 15 1 16

Karditsa 2 3 5

Magnesia 12 13

Thessaly 66 9 75

Greece 357 240 597

% 18.5 3.75 12.5

The refusal of large companies to be available for a meeting was justified by foreign travel or work overload (Table 32). Table 32: Distribution of processing units surveyed by the annual volume of milk processed Quantity of processed milk (tonnes/ year - sheep’s milk equivalent) > 8,000 2,680-8,000 1 600-2,680 400-1,600 < 400 Total

Units surveyed

Units

Number 1 2 3 8 5 19

6 9 4 29 18 68

% 16.7 22 75 27.5 27.7

SALES AND CONSUMPTION OUTLETS The survey conducted in large and small urban centres of Thessaly focused on the following categories of dairy product sales outlets: 

Traditional points sale of artisanal yoghurt (6 respondents);



New types of stores (small cheese supermarkets/ delicatessens) (3 respondents);



Cheese factories (7 respondents);



Mini-markets (2 respondents);



Restaurants and catering (2 respondents). Table 33: Distribution of artisanal dairy product sales outlets by type and consumption centres in Thessaly

Types of sales outlets Small cheese supermarkets Dairies Dairies/ cold meats Dairies/ cheese factories Cheese factories Groceries/ traditional products Delicatessens Restaurants/ catering

Karditsa 1 1

Trikala 1 1 2 1

1

Larissa

Magnesia

2 5 2 1 1

1

Total 2 2 2 3 5 2 2 2

WHOLESALERS AND SALES REPRESENTATIVES To understand the role and image of Thessaly dairy products for consumers, interviews were conducted with potential buyers in a large supermarket chain (AB Vasilopoulos), with the largest importer of Greek food in the U.S. and Canada (Krinos SA), as well as one of the largest traditional Greek products retail store in the centre of Athens ("Mediterranean food grocery store"). NUMBER OF INTERVIEWS AND INVESTIGATIONS IDENTITY The following figures show, respectively, the number of persons who responded to the survey and the number of people who participated in an interview for each target group of the industry: farmers (57 questionnaires, 10 interviews), farmers’ groups (3 questionnaires, 5 interviews), dairies (19 questionnaires, five interviews), sale and consumption outlets (17 questionnaires, 3 interviews), consulting companies (1 interview), distributors (2 interviews), livestock feed producers (12 questionnaires, 2 interviews), related industries (2 interviews), tour operators (2 interviews), mayors and deputy mayors (4 interviews), R&D laboratory (3 questionnaires, 3 35

Developing the typical dairy products of Thessaly Diagnosis and local strategy

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interviews), research and training centres (5 questionnaires, 1 interview), consular chambers (3 questionnaires, 3 interviews), development agencies (1 questionnaire), consumer unions (2 questionnaires), regional offices (2 questionnaires, 7 interviews), members of the Regional Council (3 interviews), Secretary General of the Thessaly Region (2) and the Ministry of Agriculture (1)23.

2.1.2. Data processing method and results Data collected on farms, cheese factories/ dairies and sales outlets were entered into an Access database, and then processed in Excel. RICA methodology was applied to the calculation of the technical-economic orientation of the 57 livestock farms in the sample. It concerns mono-specific farms (sheep, goats and cows), with mixed small ruminants and mixed ruminants (Table 34). Table 34: Technico-economic orientation and herd size of the sample Types of livestock Sheep Goats Cows Mixed small ruminants Mixed ruminants Total

No. farms 38 6 5 6 2 57

Dairy sheep (head/ EA) 328

Dairy goats (head/ EA) )

Dairy cows (head/ EA)

Other cows (head/ EA)

148 189 215 368

65 13

30

25

2.2. Current state of the industry and strategic priorities for its development 2.2.1. Summary of survey results This chapter examines the problems faced by different parts of the dairy chain in Thessaly to identify weaknesses and blockages, resources and skills to develop and the priorities proposed by actors. Analysis is based on the results of the survey of fodder producers, breeders, processors and distributors (specific questionnaires) as well as representatives of institutions and some large dairies (semi-structured interviews). MANAGEMENT OF PASTURES AND THE LIVESTOCK FEED SYSTEM The problem of identifying and delineating areas of pasture compared to forest areas persists on a legislative level, preventing effective long-term management and often discouraging the establishment of young farmers. The asset in Thessaly in this area is the abundance of pastures of which the fodder quality could still be improved as part of a specific programme. Breeders can also ensure the supply of fodder crops of the Thessaly plain by self-production or through local marketing channels. In both cases, access to fodder is characterised by a close proximity within a radius of 1 to 20 km for small units and 25 to 100 km for the largest. The shorter the supply radius, the more these transactions are based on interpersonal relationships. In the second case, farmers often struggle to meet the cost of fodder purchased, which is relatively high given the proximity of cultivated land in the plain. This is relatively expensive due to the intervention of various intermediaries in the marketing chain, such as transporters sometimes also playing the role of an intermediary business, creating real asymmetry in the market. The recent law on the liberalisation of public transport should address these distortions in the market for fodder. On the other hand, farmers find meeting their financial obligations to fodder suppliers increasingly difficult due to the domino effect of the economic crisis and the lack of liquidity in the market: cheese factories no longer pay in advance or are slow to reimburse farmers (because they have not themselves been paid by the distributors); the latter lose their credibility with the fodder producers and thus the availability of fodder necessary for the proper conduct of their livestock. Finally, dairy companies are often involved in acting as guarantors for livestock breeders to farmers. Two main critical points have emerged regarding upstream livestock operations: poor management of pastures and an unbalanced livestock diet, which play both on livestock productivity and the quality of the milk produced. However, the Thessaly region is rich in resources for livestock feed: pastures in mountainous and semimountainous areas (but of mixed quality due to overload problems or abandonment), communal grasslands in lowland areas (but monopolised by profitable arable crops), plain land with high productivity for cereal crops and legumes (but no economic interest in the productivist model supported by the CAP system subsidies). The 23

See Appendix 2 for a detailed breakdown of responses to questionnaires and interviews by actor category.

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Developing the typical dairy products of Thessaly Diagnosis and local strategy

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renewed interest in farming (productive impasses in agriculture, increasing demand for dairy products) and recent trends in crop restructuring in the plain require rethinking of the sustainable management of pastures and improvement of the livestock rations in order to reduce production costs and increase milk yields. As mentioned in Part 1 of the report, several favourable conditions are satisfied on this point: 

The local authorities of the new demes from the administrative reform of 2010, which are in charge of their territory’s communal pastures, seem willing (interviews with mayors) to make plans for fodder improvement and rational management of pastures, and to resolve confrontations between agricultural and forestry services on the land status of pastures resulting from the ambiguity of the institutional framework. They also seem determined to recover the old, cleared pastures and communal grasslands (leased to farmers).



The Ministry of Rural Development and Food has launched a political incentive for fodder crops. This device should facilitate better regionalisation of fodder production and the farming system, and thus enhance the quality and identity of dairy products.



Increasing fodder and legume products locally will enable the development of rations better adapted to the needs of livestock.

LIVESTOCK BREEDING: FARM CONDUCT STRUCTURE AND SYSTEMS Two production systems are practiced for small ruminants: semi-extensive and semi-intensive. The first system traditionally practiced (including transhumant herds) is the most common in Thessaly and the most studied. It is based on local breeds and rudimentary buildings (often sheet metal because of the ban on construction in the communal lands standards). Food is mainly from rangelands, except in winter (November to February), where grain and hay are used. Pastoral areas represent 81% of the UAL and are part of the communal land. As cropland does not cover the needs of the winter feed, farms buy 70% of their feed concentrates and 76% of their fodder. This dependency requires them to apply in September24 to cheese factories for advanced payments of between 30 and 50% of the value of the milk produced to pay their local suppliers (producers of cereals, corn and alfalfa hay). Figure 2: Performance of dairy sheep semi-extensive systems (litres/ head)

Source: prepared by the authors

As milking is manual, the system requires hard work, mainly within the family. The proportion of farms using hired labour (immigrants) is very low (four out of 17 semi-extensive farms). Furthermore, the generational transmission seems to be assured as only five of the 17 farms concerned have no successor. Milk productivity is around 100 litres/ sheep milked. The low yields are due to an unbalanced diet, breeding with non-selected animals (lack of services and technical support) and the accommodation conditions of rudimentary herds. The lack of technical assistance in feeding and breeding (especially with Karagouniko and Frisarta breeds) is reflected in the large variations in milk yield between farms (Figure 2). The economic viability of this operating system is supported by European grants (40% or more of family farm income) and the fact that farms of this system, according to the Feta PDO regulation, are the only legal suppliers.

24

The balance is settled in the month of July-August.

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Developing the typical dairy products of Thessaly Diagnosis and local strategy

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Figure 3: Performance of dairy sheep semi-intensive systems (litres/ head)

Source: prepared by the authors

The development of the semi-intensive system is recent (2000s) and has favourable economic results for breeding small ruminants related to the final registration of Feta as a PDO cheese and also new directions of the CAP of 2005 (decoupling). The latter favoured the partial release of irrigated land previously used for cotton crops (heavily subsidised under the previous CAP) for the production of feed (corn and alfalfa), as well as research by farm of the income derived from the market (including small ruminants with high milk productivity). Therefore, 17 of the 28 semi-intensive farms in the sample were created over the past 10 years. Mechanised processes are widespread; milk yield is around 260 litres/ sheep (Table 35) and the treatment period up to eight months. Many farms organise births for milk production throughout the year. But, as for semi-extensive farms, the lack of effective and continuous counselling on feeding and genetic improvement (especially with the Chiotiko breed) causes large variations in the milk yield (Figure 3). Table 35: Average structure of sheep farms in the sample by farm system Sheep farm system No. of farms in the sample UAL (ha) Cropland (ha) % UAL leased/ UAL % Cropland leased/ UAL % Pastoral Land/ UAL % Rangelands leased/ UAL No. head/ farm Milk yield (litres/ head) % of feed concentrates purchased/ total consumption of feed concentrates % of fodder purchased/ total fodder consumption

Semi-extensive 17 44.2 8.3 91% 10% 81% 79% 258 96

Semi-intensive 28 31.9 18.3 77% 37% 41% 34% 356 257

Total 45 33 14 83% 27% 57% 53% 319 206

70.30%

59.70%

65.83%

76.15%

49.74%

58.23%

The feeding system differs from the semi-extensive system. Feeding is done mainly in barns; farms have pellet mills, grain elevators, etc. for the manufacture of rationed feed concentrates. To cope with the increased demand for food, farms grow cereals, corn and alfalfa (soybean meal, minerals, etc. are purchased from specialised traders). Farms attempt to produce the food needed (on average 59% of the UAL is devoted to these crops), but must still buy 60% of feed concentrates and 50% of the fodder used (local producers). This dependence on the market forces them to request from the cheese factories monthly payments for the milk delivered in order to have the necessary liquidity. Thus, farms face significant depreciation (buildings and equipment) and food costs, often exceeding 80% of the total cost of milk, which requires them to develop the dairy productivity of their herds (feed and genetic improvement). For goat farming, semi-extensive and semi-intensive production systems are similar to those of sheep farms, with the only difference that in the semi-extensive system, goats are fed mainly in bush land pastures (Table 36). These operations therefore depend very little on the food market (only 21% of feed concentrates and 14% fodder are purchased).

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Table 36: Average structure of goat farms in the sample by farm system Sheep farm system No. of farms in the sample UAL (ha) Cropland (ha) % UAL leased/ UAL % Cropland leased/ UAL % Pastoral Land/ UAL % Rangelands leased/ UAL No. head/ farm Milk yield (litres/ head) % of feed concentrates purchased/ total consumption of feed concentrates % of fodder purchased/ total fodder consumption

Semi-extensive 4 110.6 8.1 97% 4% 93% 93% 77 143

Semi-intensive 10 6.7 2.5 71% 19% 63% 63% 100 293

Total 14 36.4 4.1 93% 6% 89% 89% 93 258

20.54%

64.74%

54.36%

14.27%

75.66%

61.24%

Table 37: Average structure of cattle farms in the sample by farm system Cattle farm system No. of farms in the sample UAL (ha) Cropland (ha) % UAL leased/ UAL % Cropland leased/ UAL % Pastoral Land/ UAL % Rangelands leased/ UAL No. head/ farm Milk yield (litres/ head) % of feed concentrates purchased/ total consumption of feed concentrates % of fodder purchased/ total fodder consumption

Medium 2 23.9 12.3 91% 46% 49% 46% 43 4,709.3

Large 4 27 27 78% 78% 0% 0% 230 10,005.4

Total 6 26 22.1 82% 68% 15% 14% 168 9,552.7

69.57,%

81.35%

80.32%

70.57%

85.96%

84.62%

Two dairy cow farms groups can be distinguished according to their size (Table 37): medium and large. The medium-sized farms have an average of 43 Holstein dairy cows, with poor milk yield (4.7 tonnes/ cow). They try to reduce inputs (feed) by also using grasslands (49% of UAL) and producing feed, reaching a selfsufficiency rate of 30%. Large farms (driven by the dairy industries), have an average of 230 Holstein cows with a stable food supply and a milk yield of 10 tonnes/ cow. To cope with their significant needs for food, they cultivate all their available land and have all the necessary equipment for silage. However, their self-sufficiency is very low (19% for grains and 15% for fodder). These operations are very sensitive to changes in the price of milk because of their need for cash to buy food and pay their rapid expansion-related debts. Some are members of the Thessgala regional cooperative for dairy production, which was created to negotiate the price of milk with dairy industries. The cooperative works with another regional cooperative, Thess-gi, recently established and specialised in the production of feed, to ensure regular supplies. One of the farms produces yoghurt and markets it. Finally, the crisis has forced many farms to turn to the production of a traditional type of "Feta" cheese, but made from cow’s milk called "Telemes" in collaboration with cheese factories in the region. One of the strategic issues for the Thessaly dairy chain is the ability of livestock farms, especially small ruminants, to improve productivity and strengthen their local roots. In this sense, the specifications of Thessaly PDO cheeses have a structural character. However, the first finding of the survey is the low yield of the extensive farms with strong, local roots. One of the action priorities for the development of the dairy chain must therefore be strengthening this anchorage, particularly in intensive farms, for the genetic potential quality and livestock feed. The field survey also revealed that the actors of the livestock feed dairy chain do not highlight the importance of nutrition and ration in the higher milk yield. Farmers rely on traditional methods of livestock feeding. They acquire purebred animals to increase yields, but neglect to adjust the ration to the needs of their herds. Bilateral and/ or group meetings and exchange of views with all parties involved led, firstly, to assess the yield losses (10 to 15%), and secondly, to examine the possibility of developing an appropriate structure and effective technical assistance. Participants aware of the potential of improving the efficiency of local breeds recognised the importance of such a structure, especially as Thessaly offers competent services and fodder crops and feed in sufficient quantity and of high quality. 39

Developing the typical dairy products of Thessaly Diagnosis and local strategy

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Finally, the lack of dialogue and coordination between the different partners of the feed dairy chain related to the fragmentation of representative bodies and the Greek administrative system reform in progress seems problematic. Recognising the need for major organisation in this area, bringing together all the fodder producers, breeders and processors, the actors have agreed on the need to create a technical centre and extension in Thessaly. PROCESSING: DYNAMICS OF MODERNISATION AND INERTIA IN TECHNICAL AND ORGANISATIONAL INNOVATION The survey sample included 19 Thessaly cheese factories/ dairies selected in the SME category. These companies were divided into three subgroups according to their size (capacity for milk processing), their organisational characteristics and their strategy: five medium-sized dairies (2,500-7,500 tonnes), six small processing units (700 to 1,300 tonnes) and eight very small units (70 to 400 tonnes), including one cooperative. Eleven of 19 have a collective partnership structure. Four units were created in the 1970s while five smaller units were founded after 2005. 

Investment in the modernisation of technical structures

Almost all small and medium-sized processing units have made investments to modernise their facilities and equipment (production chain, vehicle fleet, photovoltaic panels and construction of facilities) through EU funding programmes (or co-funded), mainly in the years 2000 to 2009. Very small sample units are not included because most of them were founded after 2000. Overall, facilities and equipment including processing, pasteurisation and refrigeration are fairly recent (early 2000s), even in cheese factories installed for over 40 years. These units conform to all EU regulations concerning the quality of milk processing. They have trucks to supply raw milk from farms and refrigerated trucks for the distribution of the finished products. 

Personnel and specific services

The staff employed varies with the size and production capacity. The larger the company, the more the number of permanent employees decreases and temporary employees increase (workers and truck drivers). All companies have at least one certified technician specialising in dairy processing (two years of university studies or university degree). However, no marketing specialist/ product promotion has been identified amongst the companies surveyed. This activity is carried out by the owner. Product promotion at the regional level is often supported by the refrigerated truck drivers distributing the products. For all chemical and microbiological analyses, processors rely on private laboratories (except most cheese factories, which have their own chemical laboratory managed by a specialist). They also rely on control offices, quality certification (HACCP) and accounting companies. All units are also subject to controls by three para-governmental facilities, AGROCERT, ELOGAK and EFET, for certification of their PDO products and the health and safety of their milk. 

Milk supply: collection pools and price formation for the livestock breeder

Milk collection systems are organised on various radii depending on the size and capacity of the processing units. For larger units, the radius can reach up to 100 km, while for very small units this distance does not exceed 10 km (Table 38). Table 38: Structure of cheese factories/ dairies surveyed in Thessaly by size Quantity of milk processed (tonnes/ year, sheep’s milk equivalent) > 8,000 2,680-8,000 1,600-2,680 400-1,600 < 400 Units 6 9 4 29 18 Units surveyed 1 2 3 8 5 Permanent employees (average/ unit) 16 11 8 6 4 Temporary employees (average/ unit) 7 10 12 1 1 External employees (average/ unit) 4 2 4 3 2 Average number of small ruminant breeding farms of different sizes providing milk/ farming Small (< 50 sheep/ goats) 7 2 10 4 Medium-sized (50-250 sheep/ goats) 340 35 136 25 8 Large (> 250 sheep/ goats) 80 168 32 14 Average number of dairy cow breeding farms of different sizes providing milk/ farming Small (< 20 cows) Medium-sized (20-150 cows) 1 1 Large (> 150 cows) 1 Milk collection radius (km) 100 70 50 30 10

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Developing the typical dairy products of Thessaly Diagnosis and local strategy

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Increased milk needs and the need to reduce the cost of collections has led medium-sized processors25 to buy from medium or large farms. They often ask farms, especially with high productivity, to produce milk throughout the year in order to work 12 months/ year, to fully exploit their productive capacity and thereby reduce the burden of facilities and equipment depreciation. Competition between processors for the supply of milk from small ruminants forces the most dynamic units to extend their collection radius of beyond the boundaries of their regional production pool. They offer more favourable conditions for farmers and small dairies/ cheese factories through more timely payment of milk and thus attract new suppliers. Small dairies/ cheese factories sourcing mainly from small and medium-sized semiextensive farming based on long-term interpersonal trust are often founded on an intergenerational basis of pastoral and cultural knowledge. Their collection pool is local (10-30 km) and largely coincides with the boundaries of the new pastoral tradition demes, such as Elassona, Velstino, etc. (Map 9). Since a large part of the units produce yoghurts, cream and milk, they are also supplied by one or two local dairy cow farms each. This forged territorial system concerns both medium-sized units and small and very small units. Meanwhile, medium-sized and large units are supplied in raw milk outside the territory within a radius of over 100 km. The connection between local farmers and cheese factories is often based on traditional, long-term relationships (many cheesemakers are descendants of old herder families of nomadic ethnic groups, such as the Vlachs and Sarakatsanes). Each cheese factory has developed its own dairy pool according to its capacity and funding is based on oral agreements, which is not the case between dairy farmers and dairies. The price of milk from small ruminants is set between December and January, two to three months after the start of the milk year. Producers receive an advance in September, which corresponds to approximately 30% of the value of the milk produced, to buy feed (corn, grain, hay) needed for winter. The remaining milk is paid in cash or by check in July (end of the dairy year) and the date of payment is negotiable. This practice is becoming more and more widespread due to the effects of the crisis on corporate liquidity26. Map 9: Location of the 19 processing units in the sample D 5 Elas

Β 2

D 4 D 2

E 2 Mouz Far D 1

E E 54 3 Tyr/Lar C D 1 3 Far E k 4Β1 Pal Α1 2 ar 1

D 6

Tempi

Vel

Sof Far

C 5

E 1

Far s

Alm r A2

Red: cow’s milk; black: sheep’s milk and/ or no cows A, B, C, etc.: company size Source: prepared by the authors

Regarding the price of milk paid to the farmer, there are no major differences between the cheese factories: from 0.95 to 0.98 €/ litre of sheep’s milk and 0.55 to 0.58 €/ litre of goat’s milk. The quality premium is applied by a single cheese factory. In contrast, the price of milk may be reduced in case of lower quality (low casein). Most cheesemakers believe that milk quality has much improved over the last decade, with a decrease in microbes and an increase in the casein content. Cheesemakers distribute cooling tanks for farmers, which facilitates the collection and transport of milk by their own trucks. Two cheese factories differ from the rest of the sample offering 0.10 €/ litre to farmers that carry milk to the cheese factories by their own means. 25

These needs are shared by the large units, which are not included in the sample. Faced with this situation, we are witnessing the emergence of a movement from below and to the formation of cooperatives and producer groups by small ruminant farmers to collectively negotiate the price of milk and sign contracts with cheese factories. This movement is still at the initiation stage. Also, some cheese makers question the system of cash advances due to the banking crisis and the resulting shortage of funding. 26

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Developing the typical dairy products of Thessaly Diagnosis and local strategy



January 2014

Range of products and packaging

Medium-sized cheese factories within the sample size specialise in the production of three to four standardised quality cheeses wherein the Feta PDO dominates. The vast majority of volumes produced are absorbed by nationwide supermarket chains. Small and very small units have a more diverse range of products, including typical local cheeses, such as "Nivato" and "Galotyri", traditional sheep or cow’s milk yoghurt and cream mainly sold on the local and regional market through personal contacts. In all cases, a minority of the production is destined for foreign markets, thanks to the spontaneous participation of the processor in international food fairs. For product packaging and packing, cheese factories have changed from packaging Feta in barrels (60 kg) to metal cans (16 kg) and in trays or vacuum. For other cheeses, the general practice is selling in bulk (in containers or vacuum, depending on the product type), especially as Greek consumers retain the habit of buying bulk cheese by weight and without packaging. However, given the success of small quantities of cheese packed due to lack of time to queue in supermarkets, cheesemakers consider the possibility of changing their packaging to improve the promotion of their production. It is interesting to note that some companies have changed the type of packing and packaging of their products although they all have their own packaging equipment. Amongst those having made changes, only two have incorporated any innovation: airtight and wood packaging. Most processors consider that the product packaging needs to be improved, both in terms of size, quality of packaging materials or labelling. However, due to the low profits generated for the cheesemakers due to the high cost of milk and low retail prices paid by the retailer, the cost of these changes is prohibitive. Despite the modernisation of technical equipment and the progress made in the field of packaging (from the Feta barrel to the Feta vacuum), the cheese factories surveyed appear to be behind in the modernisation of their organisation and their marketing techniques (rudimentary operational, logistics, etc.). In addition, their low level of innovation in products (lightweight, functional, identity, etc.) and presentation (packaging and labels) do not allow them to meet the new demands of niche markets. MARKETING SYSTEMS AND MARKETING STRATEGY WEAKNESSES The analysis of responses to the questionnaire by processing enterprises (especially small and medium-sized dairies and very small dairies producing yoghurt and cream) highlights weaknesses in marketing strategies. They are mainly related to the lack of specialised marketing executives within companies. Only two of the 19 companies surveyed had permanent employees for this activity, two others use an external service provider, while three others train their own staff in marketing techniques. This explains the lack of a business development culture in these companies. However, the main problem is the lack of an overall marketing strategy. None of the companies surveyed have developed any integrated programme for the promotion of cheeses and other dairy products. Therefore, the actions needed for recovery of the products, pricing, distribution channels and the system of promotion and presentation of products have not been achieved. Companies would also benefit from improving their distribution networks and discovering new ones. In fact, their sales networks are generally limited to personal relationships they have forged with local wholesalers and retailers. The target markets are primarily local or regional, marketed through conventional channels: supermarkets, restaurants, supermarket chains, sales representatives in Greece. However, most dairy companies, even very small ones, manage to export through their relational networks, although the volumes are very low. Some also participate in fairs and exhibitions to promote their products abroad. The lack of trade promotion is confirmed by the results of the sales outlet survey (cheese, grocery stores, etc.) in Thessaly (detailed below). The majority of owners said that the presence of local dairy products in their store is due to their own initiative. As regards the sale of products, the majority of traders believe that the supply is adequate and the delivery time fast enough. Table 39 summarises the results of the survey, analysed according to the methodology by Anterasian and Phillips (1988) on the level of improvement of the various levels of the value chain.

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Developing the typical dairy products of Thessaly Diagnosis and local strategy

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Table 39: Level of improvement of each element of the value chain of dairy products 1 Low level × × ×

Value chain level

Value selection

Value evaluation by customers Selection of targeted customers Value perceived by customers

Product Distribution Price Advertising Value Sale communication Promotion – public relations Source: prepared by the authors Value supply

2

×

×

× × × × ×

× × × × ×

3

4

5 High level

× × × ×

× × ×

× ×

One of the first levels of improvement concerns the value perceived by the consumer. The consumer buying the product must feel sure of his choice and pay a price lower than the profit it will bring. Another problem is the pricing policy applied: the cost of products is high due to the cost of the raw material and poor logistics; therefore the product arrives at the end consumer at a high price while processing profits remain low. The case of Feta is a good example: the cost of raw material (3.9 € for 4 litres of sheep’s milk) is 75% of the price of Feta sold to wholesalers and supermarkets (5.2 €/ kg ex. taxes in barrels or metal cans), which represent more than 85% of the quantities marketed. The retail price of supermarket Feta is between 7.5 and 8.5 €/ kg incl. taxes. Feta in brine in plastic trays (0.5 kg, 1 kg and 2 kg portions) is in turn sold at 5.8 €/ kg ex. taxes. Finally, Feta under vacuum is sold at 7 €/ kg ex. Taxes (0.2 kg and 0.3 kg portions). In addition, many cheesemakers mentioned the problem of late payment by the distribution network of up to eight months, according to one processor. However, the head of a large supermarket chain said that the delays did not exceed 90 to 100 days. Other problems relate to the promotion and presentation of products, most of which are sold cut at the fresh products counter in supermarkets and other large retail outlets. Promotion activities performed by the processors are almost non-existent. The situation is the same in small outlets, such as shops specialising in traditional cheeses, where processors could enhance their products in a more organised manner through posters, information leaflets, free samples, etc. These actions are necessary insofar as processors themselves recognise that there is strong competition in the market, sometimes unfair, and it is important to highlight the specific quality and traditional ways of manufacturing their products. However, only seven of the 19 companies surveyed, mainly medium-sized, responded that they were interested to collaborate with R&D facilities to introduce innovations in marketing and promotion. The high cost associated with these actions seems to be an obstacle for Thessaly SME dairies. In conclusion, local cheese factories/ dairies were able to improve the quality of their products through their modern facilities and strict enforcement of the ISO and HACCP systems rules and regulations. However, their products do not reveal their local character (specific quality-related attributes of the natural environment) or the integrated heritage value. Furthermore, the packaging and logos used do not sufficiently promote the image of the place of production. This is confirmed by the cheese purchasing manager of one of the largest supermarket chains in Greece, which also has the largest Greek food import companies in the U.S. and Canada and the largest traditional Greek food store in the historical centre of Athens. The heads of other supermarket chains have also mentioned that, despite the strong Thessaly pastoral tradition, cheese originating in the territory is not reflected, according to the average consumer, by the taste and organoleptic characteristics which may result. The old tradition of breeding and dairy processing seems to have disappeared from Thessaly under a productivist agricultural system, supported by EU grants and processing modernisation/ industrialisation. Thus, the range of products tends to decrease due to the orientation of processing to Feta PDO and other products at the national level. Meanwhile, the specific quality linked to the place of production gives way to a standardised taste. Thus, although they source dairy products and cheeses from large companies in the region and enjoy the high-quality standard, distributors find that, in the current state, Thessaly "has nothing to say particular" about its local products due to the lack of a coordinated promotion strategy.

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Developing the typical dairy products of Thessaly Diagnosis and local strategy

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LOCAL, NATIONAL AND INTERNATIONAL DISTRIBUTION CHANNELS The marketing networks and systems of Thessalian processing companies’ differ according to their size (Table 40). SOHOs and SMEs surveyed primarily promote their products locally and regionally in supermarkets, creameries and small outlets, as well as nationally in large supermarket chains. They also export, but alone and in limited quantities. On the national market, processing units deliver small qualities of their finished products with their own trucks (one to two vehicles), which increases the cost of transport due to the small size of orders (especially local orders). The transport rates for small and large orders, especially for remote areas, are also high. Locally, cheesemakers deliver their products directly to retailers without intermediaries. This is an asset that strengthens the bonds of trust between traders and cheese. Export is expensive for most SMEs and represents a significant economic risk. Major regional units (not included in the sample), in addition to their correct position in the regional market, sell most of their production to large supermarket chains highlighting their strengths: sufficient quantities of regular deliveries and standardised quality. They also sell their products through wholesalers and other types of businesses, and are present on international markets, including Europe and America. Similarly, the large Greek dairy industries based in Thessaly, such as OLYMPOS, distribute their products themselves across the country to all kinds of outlets from large supermarkets to small shops, bakeries and convenience stores with a private fleet of refrigerated trucks of all sizes. They also have storage facilities and transhipment systems with modern equipment and computerised management systems. In addition, they use the services of either wholesalers or local representatives to reach remote areas and areas difficult to access. They may also appeal to the 3PL (Third Party Logistics). These large dairies operate at a supra-local level and do not develop territorial links. They do not communicate the Thessaly identity of the products or inter-sectoral cooperation.

Volume of processed milk (in tonnes/year- sheep’s milk equivalent)

Table 40: Products and types of cheese factory/ dairy marketing surveyed in Thessaly Units surveyed

No. of product s

> 8,000

1

6

2,6808,000

2

3

1,6002,680

3

4

4001,600

< 400

8

5

5

5

Type of marketing in Greece                    

Supermarkets Wholesalers Supermarkets Wholesalers Supermarkets Wholesalers Retailers Artisanal manufacturers of cheese puffs Supermarkets Wholesalers Retailers Local stores Local outlets Own outlets Artisanal manufacturers of cheese puffs Local sores Delicatessens Local outlets Own outlets Taverns

% export units 100% 50%

Type of access to export    

Sales representatives International fairs Personal contacts International fairs

100%

 Personal contacts  Sales representatives

38%

 International fairs through the Greek consular

-

-

Source: prepared by the authors

To explore the position and image of the Thessaly cheeses on the market, managers of food stores were interviewed: 16 creameries, grocery stores and convenience store managers in Thessaly, the head of the third largest supermarket chain in Greece (founded in Athens in 1953 and has a strong tradition of selling typical Greek cheeses or import) and the owner of a supermarket of typical food products from all over Greece located in the centre of Athens. The survey revealed that very small and small cheese factories penetrate better than large ones in local outlets (creameries, supermarkets) and retain a loyal clientele. Two thirds of the creamery providers are very small processing units. The initiative to introduce local products comes back to retailers and not to cheese factories. In some cases, traders choose a product in response to consumer demands. Of the 16 surveyed, 15 responded that the most important criterion in their choice of suppliers was the quality of the product, 11 highlighted their 44

Developing the typical dairy products of Thessaly Diagnosis and local strategy

January 2014

personal relationships with cheese factories and only three cited the price (Figure 4). The local origin of the products also seems to play a role in their choice. Figure 4: Criteria for the selection of suppliers by traders

Despite the crisis, the demand has not been particularly affected. Products that resist the best are those of small and very small units, due to the loyalty of their customers. Although the quantities purchased are lower, customers are numerous. With the crisis, consumers judge the quality/ price ratio and tend to turn to local labels. One grocery store out of the 16 traders surveyed mentioned having replaced Feta by "white cheese" while four creameries reported an increased number and amount of typical products in their store. Traders believe that prices are fair considering the quality of local products (prices may be even higher in some cases). However, some believe that the standardised products of the major national food groups are expensive compared to the quality offered. However, even if the price matches the quality, cheeses are increasingly difficult to include in the household budget. Traders believe they are in competition, and unfairly, with supermarket chains and multinationals. They survive thanks to a loyal customer base that knows the origin and recognises the quality of the product. It is then a territorialised system of production and marketing. On the other hand, interviews with major distributors showed their indifference to typical local products, and more broadly the SMEs. This indifference is not only due to availability issues in quantity and regularity of deliveries but also, and especially, to the fact that they cater to a wide audience with quality products and standardised tastes. Therefore, there is no room in their line-up for new PGI certified products around which an identity and image should be built. So, they simply buy from medium and large cheese factories/ dairies in Thessaly Feta PDO cheese and other national reputed cheeses, such as Kasseri and/ or Manouri, as well as sub-products, such as Anthotyro. The owner of a large Athenian store selling Greek local products was interested by the prospect of a Thessaly cluster of typical dairy products. It acknowledges the specific quality of local products and is wary of mass production by large industries based on a strategy of economies of scale. In summary, Thessalian SOHO and SME dairies seem to have reliable outlets and development opportunities in local and regional markets (including the catering and tourism market), as well as the export markets (including Feta PDO). Large national companies are major suppliers to supermarkets because they handle large volumes of cheese and other traditional dairy products of standardised quality, such as Feta, Kasseri, Graviera, Manouri, etc. The increasing demand on foreign markets for typical Greek products, such as Feta PDO and drained yoghurt, leave much scope for all professionals in the dairy chain to expand their markets, provided they have sufficient production capacities, specific quality linked to origin (natural and cultural resources, image of the area of production), marketing skills and inter-professional collaborations.

2.2.2. Public and private support to the dairy chain SUPPORT FEATURES According to Porter (1998), a dairy chain is based on core activities and supporting activities, with the aim of creating value and a competitive advantage 27. The activities include supporting the various links in the chain (farms, dairy and cheese companies, dairy product retail, etc.) in the areas detailed below. 

Company management

The gap between large companies and SMEs is significant in this area: unlike large companies, SMEs are not supported on planning systems and development goals. The lack of entrepreneurial culture and cooperation

27

http://www.strategy-train.eu - Small Enterprise Strategic Development Training.

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between actors blocks the transmission of knowledge and know-how developed in research and education, except when isolated and random. Funding for dairy companies is either on equity or subsidies from government programmes. Modernisation efforts have produced visible results. Quality management remains a priority for most companies. These seek to implement integrated systems of quality management (ISO, HACCP) from the collection of raw materials to the preparation of finished products. Support for dairy enterprises in entrepreneurship is provided by the Chambers of Commerce and Industry and the Association of Business and Industry of Thessaly (SVET) and focuses on training, promotion and networking. These actions are not systematic or coordinated as they depend on external funding. In terms of promotion, they are often limited to information on trade fairs organised in Greece or abroad. Networking efforts affect both processing units and farmers, and concern the definition and monitoring of rules and obligations (quality agreements, producer groups, etc.). Finally, the accounting, financial and legal support of local dairy units is entrusted to private actors, such as accountants, business advisers and lawyers, which shows the absence of public support services for companies. 

Human resources management

Thessaly dairy companies, due to their small size, are run by a small number of people, most of who are within the family circle of the owner-manager. In livestock breeding, the presence of trained youths is becoming more frequent. In cheese/ dairy companies, both owners and employees are trained and specialised. One of the main problems of this dairy chain is the lack of staff training and education. While structures such as DEMETER OGEEKA form and inform the rural population on technical issues, their work has been devalued in recent years due to reduced funding. In addition, training on marketing techniques, the adoption of new technologies and production processes remains incomplete. Continuous training of processing and trade companies is provided by private training centres (ΚΕΚ) or by organisations, such as the Association of Business and Industry of Thessaly (SVET) or the Chamber of Commerce and Industry (more rarely). 

Technological development

Recent progress has been made by Thessaly dairy units to modernise their facilities, imposed by Greek legislation and the increased needs they felt. Most of these were covered by co-funded programmes28 encouraging companies to rethink their production systems by developing new technologies and using innovative and environmentally friendly technologies. However, companies invest little in research, development or production re-planning. For example, despite the need to improve the conditioning and packaging of dairy products, no action has been taken in this direction in most processing units. 

Supplies

To address the emerging needs of production, companies are forced to modernise their facilities and equipment. Thus, livestock farms are dependent on two milking machine import companies. For their part, processors and retail dairy products have the choice between several companies producing equipment in the country. In terms of raw milk, small businesses, through their relationships with farmers, have an opportunity to control the supply. Control is more difficult in larger units whose supply radius is wider. Finally, for packing materials, large processing units have a competitive advantage over smaller ones because they can develop economies of scale. INSTITUTIONS AND SERVICES The investigation revealed that the organisation and functioning of public services are penalised by the slow administrative restructuring of Greece. The reform of 2010, which established Thessaly as a regional authority, has also intensified personnel reduction. Nevertheless, the region has a comprehensive institutional and regulatory framework and has almost all the services necessary to support the various links in the dairy chain, including the primary link. The actors in these public institutions are numerous and active.

28

Under the Development Act, the Regional Operational Programme (PEP), the National Strategic Framework, the "Alexandros Mpaltatzis" Rural Development Programme.

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Developing the typical dairy products of Thessaly Diagnosis and local strategy



January 2014

Thessaly Region services

The Thessaly Region is involved in the dairy chain through the services of the Directorate General (DG) of the rural and veterinary economics and the DG of development, which apply existing policy and regulations, acting alone or in collaboration with other organisations. They contribute to: 

The recovery of pastures: public notice on the right of pasture use, compliancy, capacity to accommodate animals, ownership;



The operation of livestock farms: animal health controls, management and implementation of rural development programmes on the modernisation of farms, the adoption of agro-environmental measures, organic farming, etc.;



The production and control of feed produced and distributed: administrative control and fraud control of fodder production companies by supervisors, in cooperation with the three EKKYZ;



The operation of dairies and companies marketing feed products: licensing operating companies involved, controls of the conditions of production and marketing of dairy products with the Hellenic Feed Authority (EFET).

The whey management board of the Thessaly Region monitors and controls the management of waste from dairy farms in the region and acts to solve treatment and whey recovery issues to avoid environmental problems. 

Local authorities

Local authorities, through the Office of Rural Development, intervene at the level of: 

The recovery of pastures: granting occupancy rights to pastures, improved infrastructure (rural roads, drinking troughs, etc.);



The functioning of farms: cooperation with public services, particularly in terms of information.



Control services

Control services perform analyses of the different parts of the dairy chain: 

Genetic improvement of animal: the Animal Genetic Improvement Centre of Karditsa (KGBZ), a decentralised service of the Ministry of Agriculture (YAAT), implements breeding programmes in collaboration with cooperatives of pure-bred sheep and goats;



Fodder production: testing and fodder distribution laboratories of Larissa (EEKYZ), under the Ministry of Agriculture, are responsible for the proper implementation of the national fodder production and transport control programme. Samples are chemically analysed and are dispatched to programme supervisors (DAYOK - DG of rural and veterinary economics) and/ or national or international accredited laboratories to solve any issues related to toxins, remaining pesticides, heavy metals, traceability of genetically modified fodder etc.;



Operation of livestock farms: the Hellenic milk and meat organisation (ELOGAK), under the Ministry of Agriculture, monitors the quality of the milk produced (adulteration, microbes, toxins and urea) and informs producers on the purity of their milk and their livestock productivity;



Operation of dairies and food shops: the Greek Food Authority, in partnership with DAYOK and the veterinary laboratory, ensures compliance with HACCP and ISO standards and the harmonisation of milk quality, and performs controls on milk and dairy products (cheese, yoghurt), and DNA controls as well as veterinary drug residue and animal-based feed mixture controls, in cooperation with the veterinary laboratory of Larissa, a decentralised service of the Ministry of agriculture.



Research and education structures

National research structures installed in Thessaly have a numerous specialised and qualified personnel, and conduct research focused on the various dairy chains of the dairy chain: 

Pastures/ fodder: ETHIAGE, Institute of plants for animal feed, conducts applied research on fodder (introduction of new improved varieties, etc.) and pastures (grassland management techniques, etc.);



Training/ education: the training centres of the Greek Dimitra agriculture organisation, within the DG of education and training, are responsible for training and educating the rural population on the Ministry of agriculture programmes and the region concerned;

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Developing the typical dairy products of Thessaly Diagnosis and local strategy

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

Research: the University of Thessaly (research units and laboratories and the Polytechnic Faculty, Faculty of Agricultural Sciences and the Faculty of Health Sciences) and the Institute of Technology of Larissa (departments of plant production, animal production and food technology), through their qualified scientific personnel, conducting research on the production of fodder and food ration on the health and reproduction of animals, production and safety of dairy products and the technological innovation and management of dairy companies.



Information, support and networking organisations

In Thessaly, several organisations conduct information campaigns, and provide support and networking amongst various actors in the dairy chain: 

Livestock farms: chambers of commerce and industry, and development agencies fund livestock projects and carry out information and awareness campaigns for farmers on the implementation of integrated management systems, development networking and starting a processing business;



Producer organisations (ThESgala, ThESgi, etc.) defend the grievances of their members while ensuring the quality of their products through the establishment of rules. Thus, they control the quality of milk, provide technical assistance for improvement, manage the supply of fodder and tools, control fodder quality, take actions for the decrease in production costs and negotiate the selling price through contracts established with the dairy industry;



Dairy companies and animal feed stores, chambers of commerce and industry and, development agencies fund projects of these companies and support the implementation of quality systems, targeted information campaigns, training, consultancy and business awareness on networking and funding sources for modernisation and promotion of their activity (OPAACH, LEADER European programmes);



Consumers: consumer unions, which are voluntary organisations, disseminate information aimed at protecting consumers.

CONCLUSION The current support system from the state and local government structures covers all areas of application of the development policies in the dairy chain. However, this system is not effective because of the lack of applications and information caused by the reduction of human scientific potential (despite qualified staff) and financial resources. In knowledge and innovation, the results are limited even though Thessaly has a network of structures to support all levels of the industry. The national and regional coordination of the support to marketing systems also presents weaknesses in the organisation of political marketing. Chambers of commerce and industry, and producer and traders organisations try to overcome these shortcomings, but the actions conducted do not specifically target the dairy chain. The main problem lies in the lack of a unified structure and an overall response (surveys, transfer of know-how, expert advice, etc.) that would promote cooperation and exchanges between regional actors (R&D, public services, consular services, private services, etc.). Following the privatisation of industry advisory services, the public system now only carries out bureaucratic activities, such as monitoring and management of European aid, and it has lost vital points of direct contact with producers and entrepreneurs. This loss is partly filled by private consultancy and advisory offices. The current problem is related to inefficient interaction between the public and private centres of the support and advice system. The lack of integration of productive units to a single effective advice, support and R&D system has a negative impact on the cooperation between the different actors in the chain and its overall operation. This problem intensifies with the discontinuity of funding and support for business projects, initially due to the crisis, so that actions are often fragmentary and without results. This discontinuity reduces the reliability of the system and jeopardises compliance with the specifications of quality products. Regarding R&D, the survey revealed a lack of accompanying measures to develop research, promote its result and disseminate them to companies. There is also a lack of programme coordination of comparative research on rural areas, especially on industries related to dairy chain activities. Meanwhile, the means established for regrouping and training researchers regionally are sporadic and uncoordinated. The need for an institution capable of organising and disseminating research results is very real. Creating the conditions necessary to encourage cooperation between research centres and training for the benefit of dairy companies helps to overcome the barriers identified. Thessaly has not yet managed to gather, in the very dynamic, national business that is the dairy chain, a critical mass of resources and expertise to strengthen its position in the global economic competition. Although the creation of a centre of expertise has already been proposed in the past, these efforts have not yet had significant results. The lack of an innovation and cooperation centre with companies contributes to the lack of 48

Developing the typical dairy products of Thessaly Diagnosis and local strategy

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coordination and focus of research on the Thessaly dairy chain. Insufficient coordination between the numerous support structures and their non-participation in the projects aimed at the creation of a centre of expertise aggravates this situation. Concerning support services and research, we can conclude that: 

In terms of agriculture and livestock, establishing mechanisms for public awareness and support, and encouraging the development of R&D units in the region would improve production systems, including the quality of raw milk and regularity of deliveries to processing units;



In the dairy chain, skilled resources in processing technology, engineering, computer science, management, etc. are plentiful. In contrast, high-level skills in R&D are still insufficient, which does not encourage the development of research and joint activities, such as conferences.

2.2.3. Strengths and weaknesses of the Thessaly dairy chain The SWOT analysis describes the strengths and weaknesses of a dairy chain while evaluating opportunities and threats likely to influence its development. The intersection between strengths and opportunities reveals the strengths of the dairy chain and its growth prospects in the medium term. As for weaknesses and threats, they represent constraints on which actors should work to create opportunities. UPSTREAM OF THE DAIRY CHAIN 

Territory: preservation of territorial links and the quality of soils, and improvement of productivity to meet the demand of the dairy chain and attract young farmers;



Genetic improvement29: maintenance and improvement of local breeds to fight against introduced breeds and strengthen the distinctive products;



Power: improvement and support of the joint Thessaly/ Mediterranean feeding system based on grazing, fodder and feed concentrates production with particular attention to quality and the territorial dimension (proximity between production and consumption);



Ration: feed rations adapted to the animal and the herd to increase lactation while reducing production costs through a quality and territorial anchorage strategy.

DOWNSTREAM OF THE DAIRY CHAIN 

Dairies/ cheese factories: use of the qualitative and territorial characteristics of dairy products through the promotion of an authentic and distinct Thessaly identity;



Trade and export: search for a balance between the requirements of large distribution networks and promotion of the Thessaly dairy products identity ;



Related industries: strengthening cooperation between the dairy chain and the food and pharmaceutical industries, with an innovation and biotechnology epicentre;



Structures and mechanisms: creation of a framework for cooperation and exploitation of research results between research centres, industrial enterprises and intermediary support structures;



Dairy chain: strengthening the competitiveness and diversification of markets while maintaining the quality, authenticity and the territorial dimension of production.

ASSETS FOR THE DEVELOPMENT OF THE THESSALY DAIRY CHAIN 

Large concentration of sheep and goat livestock, as well as dairy companies (real dairy pool);



High production capacities of the 75 dairies in the region, which have modern facilities;



Close and traditional relations between farmers and processors in small territorial units;



Research centres and services covering all areas of the industry;



Educated and trained human capital;



Wide range of markets for the products of the dairy chain;

29

The "second order" objectives on increasing competitiveness through productivity gains in the upstream sector (farms) were included because of the importance of a) local semi-extensive system in the cost, quality and identity of local dairy products b) the loyalty of the Greek market.

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Developing the typical dairy products of Thessaly Diagnosis and local strategy

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

Strong recognition of Feta;



National/ regional gastronomic tradition giving prominence to dairy products;



Emergence of synergies between dairy companies, related industries and research laboratories;



Territorial anchoring and specificity of resources determining the quality and authenticity of dairy products;



Capacity for the adoption of regulations concerning good environmental practices and traceability;



Local, regional and national market loyalty for Feta and preference for regional sales outlets for small, local cheese factories;



Growing demand for Feta and Greek yoghurt in international markets;



Reorientation of the regional intensive agricultural system to fodder, favourable to the development of animal breeding;



Distribution networks established at different market levels, including short circuits;



The new CAP.

CONSTRAINTS TO INCLUDE IN A RESISTANCE STRATEGY 

Low intensity collaboration and synergies between dairy companies and related industries;



High costs associated with traditional distribution networks;



Lack of support for the internationalisation of enterprises despite a growing demand in foreign markets;



Liquidity problems caused by the economic and financial crisis;



Discrepancies between quality and price of dairy products;



Lack of a marketing strategy for the dairy chain;



Dominance of large retail chains in the retail trade;



Production of milk becoming insufficient due to the increasing demand for dairy products abroad;



Low bargaining power of Thessaly companies against major retail chains;



Lack of effective professional organisations and cooperatives to rebalance the relationship between the different links in the chain (for example, knowledge of the fodder trade by carriers);



Deficit of agricultural extension services;



Lack of a regional centre of expertise and innovation;



Emergence of cartels cooperating with major retail chains;



Lack of innovation limiting the added value of products.

TOWARDS A TERRITORIAL STRATEGY The Thessaly dairy chain of has a dual nature, characteristic of productive systems of the Mediterranean: small farms, strongly regionalised, and maintaining both formal and informal relations; also, a high concentration of family-run processors, closely related to farmers in small dairy pools and flexible enough to penetrate different markets (local and international). The field survey and SWOT analysis reveal the dilemma facing the Thessaly dairy chain: maintaining its local roots and revealing its specificities, or seeking productivity gains through economies of scale. This dilemma could lead to a dichotomy between small and large actors. Given the structural and relational characteristics of the dairy chain, and the results of the field survey and SWOT analysis, it would be appropriate for Thessaly to adopt a territorial strategy with the following objectives: 

Strengthen the quality model to develop a strategy to avoid relying on specific assets of the territory and a cross-sectoral and multidimensional territorial governance system;



Support the industry through a territorial approach reconciling competitive advantage and differentiation;



Develop the territory as an innovation device by combining concentration and proximity, thus encouraging social and territorial relations.

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Developing the typical dairy products of Thessaly Diagnosis and local strategy

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Figure 5: Porter analysis applied to Thessaly TERRITORY

Productivity

3

2

Lower cost

Terroirs

1

Distinctive products

4 COMPETITIVENESS

Source: prepared by the authors

Thus, the connection between organisational proximity and geographical proximity facilitates the emergence of a territorial model of the organisation of actors. The development of a sustainable strategy based on quality must be based on the interactions and interdependencies between the dairy chain and Thessaly around two main areas: a) planning and competitiveness and b) productivity and territory. Area a) stimulates these interactions through cooperation, actions, innovations and training; area b) aims to achieve a balance between the specificities linked to productivity and territory, enabled by new technologies and techniques. However, the major innovation would be to achieve competitiveness and growth by two entries: a) research and techniques for reducing production costs (and therefore increasing productivity); b) identification of resources with highly specific and distinctive characters, not transferable or reproducible, and usable as raw material or the final product.

2.2.4. Priorities proposed by the different actors The findings of the SWOT analysis helped actors to better understand the determinants for the future of the Thessaly dairy chain, its positioning and its relationship with its external environment. AGREEMENTS AND CONFRONTATIONS The main problem that the diagnosis faced was the difficulty in making the processors deviate from their microchannels and their personal and family itineraries. These processors, including large companies, expressed reluctance about possible cooperation as part of an integrated strategy, with a coordination structure that would focus downstream of the chain. They are, however, aware of their dependence on farmers for compliance with the specifications of PDO products and the development of the milk supply. Another dispute that seems to oppose small processors to large companies concerns milk collection. The weaknesses of the dairy chain, the priorities proposed by actors and the ambitions of each one’s priorities were expressed without major confrontations between them. However, divergent views and objections arose regarding not the idea, but the form of the grouping to adopt: partnership or cooperative. Mistrust of farmers and processors concerning the cooperative form is certainly related to lack of contacts and especially the weakness of support and innovation structures, and networks on issues requiring a more significant critical mass. The individualism of processors aggravates this situation. In the absence of professional organisation, the dairy chain is capable of guiding research activities towards the objectives targeted by its actors and furthering innovation. The lack of support structures and cooperation is also a problem for the diversification of dairy products. Indeed, processors and distributors have expressed their willingness and ability to take into account new consumer trends that emphasise "healthy" food and traditional products, and meet the new strategies of the major dairy groups established in Greece, and the competition of countries producing low cost, "Feta" type cheeses. Differences between small and large companies concern the importance given to the territorial dimension of the chain. Small entrepreneurs consider it crucial to comply with the regulations of PDO products and increase the added value of their products. They seek the protection of productive and territorial support of their leading product, Feta PDO, and the development of a strategy to consolidate its position on international markets. The largest companies state that they are hampered by the terms of the PDO specifications, which they regard as a constraint due to the asymmetry between the supply of milk defined by regulations and the growing demand for the finished product. 51

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Indeed, upstream of the dairy chain, extensive, traditional and organised small-scale dairy pools have difficulty in following the dynamic and ambitious growth targets of large companies, increasingly incorporated into international markets. However, the increase in added-value products, including Feta PDO, seems to be one of the answers to this asymmetry. Production productivity and competitiveness would increase, based on new technologies, territorial specificities and innovation. However, all actors recognise the need to establish a centre of expertise and innovation as a prerequisite to any effort to develop strategies and action plans for the dairy chain. This division also facilitates support initiatives, and individual and group projects. PRIORITIES 

Supporting the sheep and goat farming system, supporting the production of Feta

The first strategic priority on which all parties agree is the importance of strengthening the role of Feta based on the PDO regulations, strengthening the links of the production system with the territory and meeting the quantity and quality expected by the market, in short, demonstrating the territorial dimension of production. This is therefore an increase of the supply of quality milk to meet the PDO specifications. The supply growth also avoids competition between small and large companies for milk collection. Representatives of public services and research centres having demonstrated the possibility of improving the productivity of livestock, especially small, local breed ruminants, breeders and processors have agreed to: 

Ensure quantity, territorial anchorage and quality of milk supply through:

-

A gradual increase in the productivity of milked females by genetic improvement of local breeds and feed rations based on local resources; Payment and funding operations facilitation for the supply of fodder and feed concentrates; Improve control systems and evaluation of the quality of milk by companies to regain farmer’s trust.



Improve the installation conditions for young farmers by:

-

Enhance the breeding potential of the region and its tangible and intangible characteristics with the aim of increasing productivity and the milk supply; Introduce incentives for extensive systems; Promote integrated small-scale dairy pool projects; Create effective and capable support structures to support the installation of breeders.



Repositioning the industry on current and new markets



Better manage the market demand and diversification

Diversification of markets, local to international, is an advantage for the dairy chain, but requires effective and efficient management. Increased penetration of international markets therefore requires better regulation of the supply over demand from major distribution channels (entrepreneurs and distributors). 

Diversify dairy products around the product leader, Feta PDO

The majority of actors agree on the need to orient the diversification of dairy products to a new type, such as alicaments, and strengthen cooperation with related industries. This orientation implies: -

Identifying and developing new products and markets; Adopting a strategy based on the creation of a range of products around Feta; Relaying R&D centres and companies to introduce innovations and improve knowledge; Exploring new markets with new products developed in collaboration with related industries and research centres (industrialisation of traditional dishes).



Improving marketing activities

The weakness of marketing activities is highlighted by all the actors surveyed. Entrepreneurs have difficulties in valuing their products in new international markets and strengthening their presence in existing markets. Promotion activities are sometimes organised, such as participation in international fairs, but do not fit into a long-term strategy. Improvement of product marketing therefore involves: -

Strengthening the bargaining power of companies with major distributors; Improving business resources; Facilitating cooperation between small companies and supermarkets.

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Developing the typical dairy products of Thessaly Diagnosis and local strategy



January 2014

Cooperating to create a critical mass and/ or economies of scale

The various actors do not agree on the issue of cooperation. However, the investigation revealed specific and urgent needs, particularly in the following areas: 

Better control the product packaging link

This is to better understand the demand for contractors to adapt packaging and the design. 

Reduce the cost of transporting products

Transport costs for dairy products are very high because each company delivers its products itself. This problem is expressed mainly by small companies. 

Work with actors in the dairy chain and related industries included in the Thessaly dairy chain borderlands

Such cooperation would bring together the significant industrial and artisanal food potential of Thessaly. 

Facilitate access to credit and investment

Forming partnerships facilitates the search for effective ways to access funding sources and reabsorb the liquidity problem due to the crisis that affects all links in the chain. Upstream, the problem arises from the absence of contracts between farmers, fodder producers and processors, while downstream, this problem hinders investment and export. 

Develop a marketing strategy to increase the added value products while ensuring their competitiveness

The actors agree on the need to preserve the quality, authenticity and identity of dairy products without specifying how to do it together. Distributors in turn pointed out the fact that Thessaly has no "milk and cheese identity" recognised in international markets. Faced with these challenges, it is necessary to: -

-

Overcome individualism and develop marketing strategies and promotion; Build the Thessaly dairy identity to meet the "non-distinctiveness" of its products, particularly in international markets; Better use the territory and milk product specificities by highlighting the image of the land and extensive sheep and goat production systems based on quality and traceability; Face competition from products of the same type, but of lower quality and price, especially from neighbouring countries; Compensate by the market cost of maintaining the quality of the dairy products; Obtain PDO certification for Greek yoghurt; Increase consumer awareness.



Develop efficient structures for coordination, support and innovation

-

Small companies are more favourable than others to cooperation between businesses, chambers of commerce and research and training centres, including: 

Establishment of a regional centre of expertise

This centre would aim to unite the support structures, development agencies, cooperatives and networks around individual and collective projects. It would cover the entire Thessaly food dairy chain and contribute to the improvement of advice and support for new technologies, management, marketing and distribution of products. 

Improve the innovation capacity in the Thessaly dairy chain

A regional centre of innovation would provide technical, regulatory and commercial information on the food and dairy chain, and propose solutions to small companies on identified areas of innovation so that they gradually adopt an approach to innovation, with an aim to: -

Guide and coordinate research activities towards the goals targeted by the dairy chain and to innovation; Create new products based on innovation and new technologies; Create the conditions and means to attract investment in the region; Improve the attractiveness of the Thessaly dairy chain for highly qualified professionals.

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

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Strengthen the territorial nature of the dairy chain and its sustainable contribution to the rural economy

This priority is proposed by local authorities (demes and the region), as well as all entrepreneurs surveyed. It involves: -

Strengthening the links with the dairy pools to the dairy chain through multi-sectoral projects; Keep small livestock farms and dairies while making them competitive; Develop the dairy chain’s relations with related Thessaly industries in targeted areas (food, medicinal plants, biotechnology, etc.).

The priorities identified by actors in a more or less consensual manner clearly show the need to reposition the industry in a national and international context, and the need for a critical mass and effective support structures to solve major problems by appropriate actions. These priorities can be divided into four main themes: 

The territorial dimension;



Access to new markets;



Ad hoc cooperation;



Support and coordination structures.

The cluster strategy should therefore incorporate these priorities.

2.3. The dairy cluster project 2.3.1. Opportunity to create a dairy cluster in Thessaly The concept of the cluster is relatively unclear. The opportunity to create such a structure depends on the strengths and weaknesses of the industry concerned, the objectives of its actors and their willingness to reposition the industry in a regional, national and international environment. Thus, the ultimate goal is to explore new opportunities that strengthen the position and development of the dairy chain. In the case of the Thessaly dairy chain, this objective is in a context of an increasingly open market and increased competition. This context is determined by the objectives and regulations of the European Union, and indirectly by the decisions of the WTO, as well as new consumer trends and technology. International markets are characterised by hyper-segmentation to meet the demand growth and differentiation of consumer tastes and preferences. Although they do not have the level of diversification and specialisation found in France for traditional products, the countries of northern Europe control the market, especially that of milk, butter and milk powder. Currently, these countries are investing using technology in the production and marketing of specific products (probiotics, pharmaceuticals, aromatic, etc.). Imitation and puns on the name of the Greek dairy products (Fetta instead of Feta, Salakis) and the use of cheap milk for the manufacture of similar products by neighbouring countries represent other forms of competition. CHALLENGES FOR THE THESSALY DAIRY CHAIN Firstly, the Thessaly dairy chain has all the characteristics that meet the definition of a cluster: spatial concentration (agglomeration) of jobs and production activities, and dairy processing, as well as transversal activities (packaging, logistics, marketing, R&D, agri-services, etc.) and scientific and financial support structures (administrative, services, etc.). These characteristics are located and organised in a favour of proximity to cooperation and synergies with the main objective to promote innovation and development. The key success factors lie within the dairy chain and within its relations with the markets. Thessaly has a great tradition of quality and authenticity, a significant amount of raw material, a trend towards modernisation of units and a breeding ground for young trained entrepreneurs who hold family or ancestral expertise. The dairy chain is also characterised by a high level of market penetration, despite the absence of a collective strategy. The existence of a common culture and an appropriate structural environment (regulation, institutions and infrastructure) facilitate the creation of a regional cluster. Despite these favourable factors, cooperation within the dairy chain and in its immediate environment is limited. The only observable relations are strong traditional links between farmers and processors and between the local/ regional sales outlets and small companies. The national environment is another factor blocking the dairy chain. Indeed, the country implements ongoing reforms in administration and local governance, but which are only effective in the medium term. Due to budget restrictions, services are restructured, but despite decentralisation, they still depend on central administration, which is the Ministry of Rural Development and 54

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Food. Other inhibiting factors include the quasi-dissolution of the cooperative dairy chain, weakening of the Chambers of Commerce and Industry, lack of collaboration between research centres and companies, and the absence of a culture of partnership amongst the agri-processing companies in general, and particularly in the dairy chain. Meanwhile, the instinctive marketing and euphoria caused by the demand for Feta PDO is no longer sufficient to cope with rapidly changing markets and consumer expectations, and domination by retail supermarkets. It is therefore crucial to build in the shortest possible time, competitiveness based on the territorial specificity of dairy products. Thessaly dairy products, like the vast majority of Greek products, are characterised by a strong, Greek and Mediterranean image, which assimilates food and health. This image is strong because it responds simultaneously to two food market trends: authentic traditional and functional health; however, this picture is not mobilised for the creation of a territorial brand promoting Thessaly. Maintaining the quality and authenticity deeply rooted in the territory will be an asset to the Thessaly dairy chain if it manages to offset the cost involved and promote this specificity amongst consumers. Feta is a PDO product at national level and is not exclusively representative of Thessaly. To build its own identity and better present it to consumers, the dairy chain needs information about its environment, innovation and research of which it must share the cost. Thus, the role of research, new technologies, innovation and training is crucial. The success of the dairy chain can only be guaranteed only through networking of the multiple research centres available to the Thessaly and cooperation between the different actors. Finally, the need to sustainably meet the specifications of PDO products, to increase the quantity and quality supply of raw milk, to highlight more effectively the identity of Thessaly dairy products and to promote them on the world markets world requires both horizontal and vertical coordination for two reasons: the dairy product is closely linked to public goods and thus territorial, and the industry needs new technologies and innovative ideas. The same needs are felt at the diversification of products, including functional food that incorporates the results of research and new technologies. These weaknesses, resulting from the structure of the relational system of the industry (Porter diamond), weigh heavily on the future, including that of SMEs. However, the creation of a dairy cluster would allow the latter to benefit from agglomeration economies and other advantages, such as access to information and capital, knowledge transfer, job-sharing of qualified professionals, etc. These benefits could help reduce their costs, increase productivity, better organise their marketing channels and improve their national and international competitiveness. OPPORTUNITIES IN MARKET DIVERSITY The opportunities to create a dairy cluster are primarily related to the growing demand, which extends to related areas and can form the basis for new economic activities, such as the manufacture of functional food. Demand is driven by new foreign markets, such as China, as well as niche markets geared to specific products. Indeed, the consumption of specific quality products is rapidly changing, and the Thessaly dairy chain consolidates its position by satisfying the search for authenticity and food-health consumers. In addition to the growth in global demand for dairy products, Greece enjoys the strong recognition of Feta abroad, as well as the boom of "Greek" yoghurt on the U.S. and British markets. These present visible and promising opportunities. However, the Thessaly dairy chain should not focus on foreign markets at the expense of the national market because the Greeks are the biggest consumers of cheese in the world and pay particular attention to the specific characteristics of dairy products. Moreover, globalisation increases competition within the Greek market, which attracts more and more foreign companies. With an average consumption of dairy products of 12 kg/ person/ year, which is three times more than the global average, the Greek market could indeed be valued at 30 million consumers. Thus, the industry must be able to manage two distinct markets: the Greek market, which remains attached to traditional characteristics of dairy products including Feta, and international markets on which a continuous monitoring is needed to understand the new trends. Compared to other dairy chains, the dairy market is less complex because it focuses mainly on cheeses. However, the growing demand for yoghurt and alicaments expands and complicates the domestic market. Finally, in terms of distribution, Thessaly has a clear advantage because it supplies all categories of retail, local dairies and supermarket chains, without applying any well-defined marketing strategy. Nevertheless, growth in demand for dairy products and the development of presence on international markets create competition requiring innovation and marketing capacities and adequate distribution structures. 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Thessaly has significant assets to support initiatives around the cluster concept. Highlighting these assets must be a priority in the cluster, as well as the removal of obstacles that represent the structural weaknesses 30 of the dairy chain. Finally, the initiative to create a Thessaly dairy cluster would benefit from the centrality of the groups, networking and forming partnerships within the objectives and funding of the CAP and EU support programmes.

2.3.2. Priority objectives Despite the differences of views and reserves about the potential success of a Thessalian dairy cluster, the persons surveyed agree on: 

A general objective: the pulse of a new dynamic and strategic direction for the dairy chain;



A vision of sustainable development and prosperity of the Thessaly dairy chain by combining innovative developments maintaining its territorial character;



A main mission: to create structures that meet the needs in capacity, skill and innovation of all links in the chain and promote the emergence of greater cooperation.

In the definition of the priority objectives of the cluster, its dual function has been highlighted: 

Support companies and their collaborations by accompanying their projects;



Ensure the organisation and development of the cluster itself.

Diagnostic results and priorities proposed by the actors allow a better identification of the cluster’s priorities. CREATION OF A FAVOURABLE ENVIRONMENT FOR DAIRY INNOVATION 

Creation of a centre of innovation;



Attraction of researchers and high-level experts;



Mobilisation of external funding, increasingly difficult to find and justify;



Adoption of a joint action plan for research and technological development in the areas of traceability (DNA barcoding), DNA fingerprinting in food (database), packaging, etc.;



Development of relations with related industries;



Creation of new production yields by integrating new technologies related to the environment, alternative energy, etc.

SUPPORT OF THE DEVELOPMENT OF THE CHAIN 

Creation of a centre of expertise;



Strengthening links between the various links in the chain;



Establishment of innovation projects coordinated by centres of expertise and innovation to benefit processors, funded by national research and European programmes;



Promotion of innovative projects in upstream and downstream activities, product development, qualification of dairy chain professionals and transfer of appropriate technologies to reconcile the improvement of the competitiveness of the dairy chain and the promotion of specific resources of the territory;



Development of new products through cooperation between dairies and related industries.

DEVELOPMENT OF THE MARKET 

Identification of new opportunities: create a centre for collecting information on international markets and identifying opportunities for diversification and value addition;



Coordination of research on innovation, primarily on the marketing methods;



Development of outreach activities and promotion;



Promotion of business abroad: create a brand focusing on the production of local PDO and PGI food to promote Thessaly.

30

Reminder: weak export activities, poor performance of distribution networks and low coherence methods of marketing on the product/ target markets, the mode of distribution and promotion methods.

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DEVELOPMENT OF PARTNERSHIPS IN THE DAIRY CHAIN AND WITH RELATED INDUSTRIES 

Creation of meeting and exchange spaces to facilitate cooperation between processing units;



Establishment of training programmes, technical assistance, joint learning, awareness on "good practices" and the creation of forums for discussion;



Networking of international promotion and distribution structures;



Promotion of the cooperation between dairy companies and related industries.

SUMMARY OF THE CLUSTER PRIORITIES Taking into account the structural weaknesses of the dairy chain, support institutions and priorities proposed by the actors, goals to achieve and actions to be performed by the cluster can be grouped into seven major themes: 

Internal dairy chain collaboration: information, primary dairy chain, transport, common strategies;



Employment and skills: attraction and training, industrial culture, differentiation related to skills;



Market development: monitoring tools, international exploration, joint product development, marketing, marketing structures;



Business performance: optimisation of the value chain, business services, relationships with the upstream part of the chain;



Innovation: product innovation, service innovation, cooperation with research centres, new production yields;



Structures and mechanisms of support: networking support structures for creating a centre of expertise;



Territory: development of the territory features, resources and assets, integration of dairy products in the “basket of goods” in the territory cooperation amongst all actors on the basis of a joint action plan.

These themes could be the subjects of working groups that the cluster will organise under its governance structure and leadership.

2.3.3. Search for a relevant "clustering" process The success of a cluster depends on several factors: the degree of awareness of its usefulness by companies, the adequacy of the reasons given by the actors of the dairy chain and the specific objectives of the cluster priorities, the means available and the type of governance adopted. This is why it is often difficult to immediately achieve a critical mass, especially when the relationship between companies is not homogeneous. Therefore, the implementation of a phased process is as important as the choice of cluster type and mode of governance. Indeed, a certain maturity in the relationship between companies and other support structures is necessary for the implementation of actions of common interest. Several reasons explain the difficulty of achieving from the start a critical mass and a sufficient and representative consensus of the different perspectives of actors in the dairy chain: 

Coexistence of informal structures from a great tradition in dairy farming and artisanal dairies, and formal structures, resulting from adaptation efforts more or less successful in the majority of companies;



Emerging opposition between large companies who are trying to increase their influence in the milk production pools, and small companies that still control the supply of raw milk through their relational networks;



Euphoria for the recognition and the demand for Feta on international markets, which does not yet take into account the need to respect the standards related to the PDO status (EU regulations);



Lack of links and trust between entrepreneurs, particularly between small and large companies.

These must be supplemented by the results of a preliminary evaluation of the feasibility of creating a cluster in the short term, which has brought to light the following obstacles: 

Lack of specialised organisation maintaining strong relationships with companies in the dairy chain;



Lack of a collective vision;



Lack of a business leader capable of leading a development initiative integrating small dairies; 57

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

Lack of consulting, training and research network structures;



Lack of professional organisations and support;



Good level of skills of the labour concentrated on production tasks;



Reluctance of companies, which hinders the achievement of a critical size by the cluster.

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The situation and the conditions seem unfavourable for the immediate establishment of a dairy cluster in Thessaly. The success of a cluster is not evaluated by the initial number of participants, nor its capacity for development and attraction of new members; the conclusions of the consultation meetings tend towards the establishment of a gradual process. Moreover, the regional dimension is not a prerequisite for the formation of a cluster. It is mostly a consequence of its emergence. Given the above weaknesses and unreceptiveness of the regional entrepreneurial culture to the idea of cooperation at the heart of the cluster concept, a two-phase scenario seems prudent: 

Phase 1: initiation and maturation of the idea of the dairy cluster, with the driving force and core of the most "territorialised" companies;



Phase 2: creation of the cluster around a core of dairies.

2.3.4. Two-phase action plan This scenario is based on the results of the diagnosis, which have identified a shared vision, presented above. Well-orientated towards the future, it is in reality an initiation and maturation action due to the low maturity of the conditions likely to "support" a partnership plan and the low number of actors that have expressed their willingness to participate in the cluster. This plan can be adapted and refined following the progress of the dairy cluster project. The full participation of a large number of actors in the dairy chain and the formal creation of the cluster would therefore be covered in a second phase, depending on the success of the first phase. However, it seems unrealistic to expect the second phase to be completed within the LACTIMED project. Therefore, and although it seems difficult to expedite the formation of a cluster comprising a large number of actors and institutions, a series of actions can be taken to: 

Create conditions conducive to the formation of a dairy cluster in Thessaly;



Meet the major internal and external challenges of the dairy chain.

These actions should have an immediate effect and a definite period of return on investment. INITIATION AND MATURATION Given the lack of experience in formal cooperation, significant differences in size between the companies and the devaluation of the cluster concept by the failure of past initiatives, it appears more appropriate in this first phase to limit and focus on: 

Actions addressing both the intrinsic problems of the links and their impact on the industry (lack of support structures, critical mass, etc.);



Progressive building of trust relationships, which should result in an increase over time of the number of participants and the efficiency.

However, it is important to ensure from the outset the good representation of the cluster, its legitimation by national, regional and local public support, the active participation of research centres and the progressive increase in the number of dairies. The method adopted is to act according to the links and priorities identified above. As part of the diagnosis, partners and potential leaders were identified, including government departments, research centres, chambers of commerce and industry, chambers of tourism, etc. In this first phase of the action plan, a minimum of organisations and institutions is needed to clarify the roles and obligations of each party. The action plan should include concrete actions with a delay of specific implementation and visible short-term results (if possible), around which all territorial actors need to be mobilised.

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These actions may include: 

Organisation of cooperation and networks to meet the priorities identified;



Establishment of structures and actions involving technical support and research whose legitimacy is recognised by entrepreneurs (centre of expertise, innovation and extension structure);



Invitation to processors to participate in the steering committee (without any initial commitment) to facilitate discussions on the strengths and weaknesses of the Thessaly dairy chain and its positioning in relation to opportunities and threats from the external environment;



Information and awareness work on issues and specific goals to promote contacts and facilitate cooperation.

During this first phase, further cooperation actions could be initiated on the basis of priorities identified by actors and by the diagnosis: 

Establishment of a cooperation structure responsible for encouraging increased productivity while ensuring compliance with requirements imposed by the PDO regulations;



Cooperation between an industrial group and some related processing companies to develop new products (functional products);



Gathering of a large number of processors around common concerns, such as transport, packaging or participation in a project on the promotion of a Thessaly breakfast in hotels (launched by the Thessaly chamber of hoteliers).

CREATION OF A CLUSTER AROUND A CORE OF DAIRIES The second phase corresponds to the choice of the final shape of the cluster, the adoption of the governance mode and the establishment of a leadership structure. It will include central actions to create the cluster: 

Definition of common objectives and strengthening of relations and trade;



Development of strategic relationships (partnership phase);



Development of a vision and strategy (planning phase);



Cluster implementation (mature phase).

During this phase, a structure must be created to formalise the cooperation initiated in the first phase and ensure the continuous and independent funding of the cluster. A leader/ facilitator should also be selected to manage the cluster and its sustainability after the LACTIMED project.

2.3.5. Resource mobilisation Mobilisation of the available resources must follow the guidance of a strategy and an action plan within the objectives of the cluster, providing concrete and additional steps that must include a plan for resource mobilisation. RESOURCES NEEDED FOR PROPER FUNCTIONING OF THE CLUSTER 

Human resources:

-

-

Beneficiaries (all actors in the dairy chain, especially Thessaly farmers and processors) and voluntary members (qualified professionals and leader entrepreneurs); Chain partners (individuals and/ or institutions providing services to the industry) and consumer organisations; Scientific and technical staff of the regional public services; Opinion leaders and political lobbies in the region; Unemployed youths and/ or graduates (veterinarians, animal scientists, agronomists, etc.) with an interest in breeding; High-level experts specialised in training and research facilities; Professionals of training centres and consulting companies; Representatives of consular chambers.



Logistics resources:

-

Own business means; Services provided by specialised companies (equipment, organisational technology, etc.).

-

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

Technical resources:

-

Local development agencies; Consulting companies; Training centres and academic department programmes; Organisations providing assistance to study the orientation and implementation of projects.



Financial resources:

-

Financial resources offered by banks, including Thessaly cooperative banks; Community programmes; Membership fees, grants and miscellaneous contributions.

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MECHANISMS TO FACILITATE THE DIRECT RESOURCE MOBILISATION 

Training offered by public and private organisations, training workshops and public presentation of the "best practices";



Public research centres for innovation and transfer of appropriate new technologies;



Services offered by banks (Agricultural Bank, Cooperative Banks of Thessaly, etc.);



Communication, awareness and dissemination of research results:

-

Project proposals; Creation of a list of members and participants; Organisation of meetings, creation of forums, results of research projects, etc.



Strategic initiatives made by the Ministry of Rural Development and Food under the CAP or the CRSN (innovation, entrepreneurship and development) and implemented by its decentralised services;



Thessaly territorial community programmes (region and demes).

The above resources can be activated as part of: 

Public policies and programmes, such as the CAP and the CRSN regional programme (training, business support, etc.);



Funding offered banks such as the Agricultural Bank of Greece and the Piraeus Bank (solicitation of the strategic development plan of contract farming for the establishment of a funding system for livestock breeders and fodder producers by cooperatives and companies in the dairy chain).

Given the current crisis in the Greece, the cluster will rely on greatly reduced domestic financial resources. However, the ETHIAGE, University of Thessaly and TUI research centres have proven success in mobilising EU funding for innovation and R&D. The Ministry of Rural Development and Food seems to have realised the potential value of creating the dairy chain and its impact on the national and regional GDP, employment and agriculture restructuring. Thus, the dairy chain has been elevated to the rank of investment priorities by the state.

2.3.6. Potential partners FORMATION OF THE THESSALY DAIRY CLUSTER 

The core

-

Thessaly SME dairies interested in participating in discussions on the formation of the cluster; Thessaly Breeders Cooperative: THES-GAL (dairy cows), THESGI (fodder producers), Karditsa and Elassona sheep farmers cooperatives, etc.



Support structures

-

Thessaly Competent public services; Consular Chambers and Industrial Union of Thessaly; Relevant departments of the University of Thessaly (Agronomy, Regional Development, School of Veterinary Medicine, Biotechnology) and the TUI (Animal Production); Local authorities of Thessaly (Demes and region); National public authorities (Ministry of Rural Development and Food); Thessaly higher education establishments active in the transmission of research results and knowledge; Local development agencies established in Thessaly.

-

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CREATION OF PARTNERSHIPS AND STRATEGIC ALLIANCES One of the priorities proposed by the actors is the creation of partnerships and strategic alliances: 

With the Thessalian agri-food dairy chain;



With the dairy chain and related industries of the neighbouring regions integrated in the Thessaly dairy pool;



In Greece, the Mediterranean and the world.

2.3.7. Terms of governance and leadership DEFINITION OF THE GOVERNANCE MODE The choice of governance must take into account three objectives for the development of the cluster: 

Improvement of the effectiveness of relationships and exchanges between partners;



Development of a range of services to meet the objectives of partners and companies' expectations;



Ensure the sustainability of the cluster.

These three combined objectives require governance to coordinate the provision of services and implement collective territorial development projects, even after the LACTIMED project. The creation of a Thessaly dairy cluster requires organised mobilisation of the actors involved so that they are able to come together and produce the information needed to develop collaborations and projects. Therefore, the structure for these tasks and the services it will offer must be clearly defined. It may be established on the basis of a short-and medium-term project for the priority issues of the dairy chain while preparing for the future extension of the cluster. That is why, under the LACTIMED project, regular meetings will be held with all industry representatives to discuss governance and the possibilities of information, use and exploitation of new technologies and markets. Governance should therefore be realised at the end of a process that begins with the mobilisation of the Thessaly dairy chain actors and ends with a gathering of actors representing various links and that have consciously chosen to participate in the cluster formation. Thus, the first action will be to form a territorial steering committee including all actors in the dairy chain and in the territory involved. The steering committee will be mainly to coordinate joint efforts and ensure their continuity in the medium/ long term, with the following objectives: 

Support cooperation, collaboration and networking actions by supporting projects;



Support the cluster organisation (consultation on the legal form, the leadership structure, etc.).

In addition, specific governance arrangements are planned and tailored for each phase: 

Phase 1: establishment of a steering committee for each separate action of the LACTIMED project;



Phase 2: formation of a structure by those directly involved in the dairy cluster.

In Phase 1, management of the cluster will be carried out by representatives of the participating organisations and will aim to promote a broader action plan. For each action, a separate working group will be created and will have the responsibility for implementing the action in question. Management of Phase 2 of the cluster will be by professionals of the companies constituting the cluster "core", as well as by the structure that will be encouraged and facilitated its development. This management system will result from consultation process and cannot be imposed. The choice and the role of the facilitator is a key factor for the success of the cluster, especially in Phase 1. Indeed, the facilitator is responsible for the implementation of actions and ensures that they meet the common interests of members. In the event that this role could be assigned to any future members of the cluster, it could be done in a professional network. This will be discussed in the meetings and consultations within the LACTIMED project. Concerning the shape of the cluster the most adapted to Thessaly, experience has shown that voluntary partnerships are more effective than rigid forms with too many contractual commitments. Respondents within the field survey did not give a clear answer on this. They indicated, however, that the development and signing of a "Thessaly territory dairy charter" could be a first positive and constructive step. This charter will include the commitments and objectives of the signatories. 61

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EVALUATION OF SCENARIOS FOR STEERING THE CLUSTER Defining the terms best suited to governance of the Thessaly dairy chain means developing a "hybrid form of market and non-market relations to adapt, coordinate and monitor exchanges between heterogeneous entities. These objectives can be achieved by both economic and social, and transactional and relational complex, regulatory mechanisms" (Poivret, 2010). 

Hierarchical governance

The first scenario would be to entrust the cluster steering to one or more leading companies in the Thessaly dairy chain. However, the diagnosis revealed the danger of adopting a governance system led by a large, regional dairy company, which would lead to regulatory mechanisms close to the Williamson hierarchy. Indeed, the Thessaly dairy chain faces company individualism, strategy heterogeneity, market diversity and low horizontal exchanges. This results from the lack of economic links between companies, relations between customers and suppliers and the fact that few companies sell to the same customers. The dairy chain has, however, a strong local presence, based on traditional, interpersonal relations between farmers and processors, on the control of raw materials especially for small processors and the high fidelity of local and regional consumers. These factors favour the choice of a flexible and innovative network based on mutual adjustment mechanisms (Mintzberg, 1982). Entrusting the control of the cluster to one or leading companies might strengthen the latent opposition between small and large processors. In addition, the Thessaly dairy chain is characterised by the absence of outsourcing activities, which does not facilitate cooperation around a leading company. 

Associative governance

The second scenario is associative governance (Ehlinger et al., 2007), where coordination between the actors is by mutual adjustment. Despite apparent cultural and institutional proximity at the regional level, the diagnostic results showed the commitment of the majority of processors their territory, in which they activate their interpersonal relations with farmers to control their milk supply. This results in a lack of confidence, reinforced by the absence of horizontal cooperation. In the case of self-organising networks (Assens, 2001), members usually rely on organisations whose technical support is short-term (Barrabel et al., 2007). This often leads to lack of skill, difficulties in raising awareness of the network and making them think about development opportunities and environmental changes. The associative governance scenario, which seems feasible, could rely on small entrepreneurs who are also most favourable to cooperation. However, such cooperation might fail due to lack of a specialised organisation and support structures, as well as enhanced competition between small and large companies. 

Territorial governance

The third scenario, and one that seems best suited to the situation and the current and future needs of the Thessaly dairy chain, is that of territorial governance. It differs from the associative governance that any action is discussed and decided together. According to Ehlinger (2007), a range of actors of the territory (institutional, politicians, industrialists, scientists and training centres) set up via an association, a voluntary territorial development action (Poivret, 2010). This choice is supported by the strong local roots of processors and their products, territorial integration of livestock, including Thessaly sheep and goat, new skills of the Region and the Demes in the form of local authorities, the presence of numerous research centres and the lack of organisation bringing together the industry manufacturers. The choice of territorial governance should not lead to losing sight of the main driving force of the cluster, which is the group of dairy companies. They are the ones who will eventually decide the formation of a contractual or institutional structure oriented towards international markets and the innovation cluster, taking advantage of the structures and the cooperation established in Phase 1. Once the model is chosen, the functions of the governance system are: 

Monitor the implementation of strategic objectives and manage the future direction of the cluster;



Manage the resources, funding and personnel required;



Enhance the organisational capacity and expertise gained in Phase 1;



Promote contacts, collaboration and partnerships.

After selecting the organisation form, the partners will have to agree on the system of governance, on the funding, the operation and the promotion of the cluster. Funding can be supported by its members and/ or dedicated policies.

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FORMATION OF THE LEADERSHIP STRUCTURE Such a structure must form its own team whose main function is to mobilise members around actions and collective projects included in the process of training and development of the cluster group projects and communication of the cluster’s activities. In the preferred progressive approach, it is necessary, once "full participation" has been obtained, to proceed to the creation of a leadership structure and team organisation. This should aim to harmonise the collaboration between public and private actors in Thessaly. It should nevertheless be noted that, given the crisis and the liquidity problem that affects Greece, funding a leadership structure with trained staff and appropriate tools may be difficult. Most of the actors prefer this team to be informal, consisting of company professionals in the cluster, and that the University and the expertise and innovation clusters play a greater role. They hope that such a team is formed in parallel with the progress of the LACTIMED project, the cluster development process and the implementation of planned actions. Actors accept all the intermediate roles of such a large group, at least initially. Finally, they consider that internal regulations should define the management and operation of the leadership team, as well as the services proposed to companies in the dairy chain. The main functions of the leadership structure can be: 

Leadership and management of the cluster;



Definition of competence of the leadership team



and training of operational staff;



Management of the relationship with members and contacts;



Definition of a strategy and implementation through collaborations between actors;



Proposal of actions implemented for companies;



Knowledge of the needs of members;



Administrative support.

Finally, dairy chain actors consider as crucial factors to the cohesion of the cluster and effective cooperation, the synergy between the central enterprises and support structures, and the creation of action groups (task force) to meet the needs of the cluster. A member of the leadership team must participate in each of these action groups. In conclusion, it is important to mention that the vast majority of respondents agree that such a structure should be animated in the medium term with more or less restricted human and financial resources. They also believe that only a leadership structure based on expertise and strong regional innovation structures could become autonomous faced with the major actors in the dairy chain and ensure effective and balanced governance.

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References BIBLIOGRAPHY 

Greek sources

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Anifantakis Em. (1993), Manufacturing cheese, Stamouli Editions, Athens (in Greek) Hellenic National Committee of Milk (2005), Guide to good practice in the dairy chain, Athens (in Greek) Greek Consulate General in Dusseldorf, Bureau of Economic and Business Affairs (2012), The yoghurt market in Germany - "Greek style" Yoghurt - Trade Evolutions (in Greek) http://dsCAPe.aua.gr/xmlui/bitstream/handle/10329/4956/Georgakopoulos_D.pdf?sequence=1 (in Greek) Economou E. (2011), The dominant trends in the packed and private brand Feta PDO cheese market, 3rd Festival of Greek Milk and Cheese, p. 42 (in Greek) EFET (2012), Guidance on the application system based on the principles of HACCP in small dairies, Athens (in Greek) Gaki D. (2013), Territorial Approach of organisation, management and development of local production systems in mountainous areas, Ph.D. Thesis, Department of Planning, Urban Planning and Regional Development, University of Thessaly, p. 427 (in Greek) Georgakopoulos D. (2012), The dairy market in Greece and the links with the international market: a macroeconomic and microeconomic approach, Master Thesis in Rural Economy and Development, Agricultural University of Athens (in Greek) ICAP (2009), Sectoral study on dairy products (in Greek) ICAP (2011), 2011 annual report on the situation and prospects of SMEs in Greece: Sectoral analysis of cheese – dairy products, 2nd edition (in Greek) Kondyli, E., Katsiari, M.C., Voutsinas, L.P. (2008) Chemical and sensory characteristics of Galotyri-type cheese made using different procedures, In Food Control, 19:3:301-307 Koukouzelis G. (1965), Artificial prairies - pastures: - installation - management, Athens (in Greek) Kroustalaki-Beveratou, S. (1990), Studies in the rural economy, agricultural cooperatives: institution of social and economic development, Athens, Agricultural Bank of Greece Ed. (in Greek) Rural Space Laboratory, University of Thessaly and the Development Agency of Karditsa SA (ΑΝΚΑ) (2011), NOVAGRIMED: Agricultural Innovations in Mediterranean regions, MED Programme Rural Space Laboratory, University of Thessaly (1999), Survey of the distinguishing characteristics of processed agricultural farm products: consumer and market attitudes, FAIR programme (1996-1999) Litopoulou-Tzanetaki E., Tzanetakis N. (2011), Microbiological characteristics of Greek traditional cheeses, In Small Ruminant Research, 101:1-32:17-32 Milona E. (2006), Marketing of pasteurised milk in Greece, Master’s Degree, University of Harokopio, Department of Domestic Economics and Ecology, Athens, p. 287 (in Greek) Pappa E. (2009), Business Innovation and Regional Development (in Greek) Pheka V. (2009), Strategic groups of the Greek dairy industry, Ph.D. Thesis, Department of Economics and Social, University of Macedonia, p. 296 (in Greek) Samouris G. (2008), Hygiene instruction on a small dairy, National Institute of Rural Research - Veterinary Research Institute of Thessaloniki (in Greek) ΣΒΒΕ (2003), Study on sheep and goat farming, and organic production of biological products based on sheep and goat’s milk - Abstract, Excellence in Central Macedonia - Dairy products network, p. 23 (in Greek) Skordili S. (2008), Aspects of food globalization: geographical processing of the food products supply networks, Journal of Social Research, 125 (2008), pp. 131-161 (in Greek) Skoupra M. (2009), Management of dairy products after production focusing on returns, Master’s degree, University of Harokopio, Department of Domestic Economics and Ecology, Athens, p. 132 (in Greek) Simeonidou Alexia B. (2010), Analysis of competition in the dairy sector and financial analysis of the Drama dairy industry "NEOGAL SA", Agriculture University of Athens (in Greek) Taki Chr. (2010), Willingness to pay for standard and packed Feta, Master’s degree, Department of Economics and Rural Development, Agriculture University of Athens, Athens (in Greek)

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AB Vassilopoulos distributor brochure, Greek tradition: small producers, 20 unique cheeses (in Greek) AB Vassilopoulos distributor brochure, Nutria Life, vol. 9 - cheese, p. 37 (in Greek) AB Vassilopoulos distributor brochure, At AB, we trust the Greek producers and the quality of Greek products, vol. 2, p. 16 (in Greek)

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www.ecoressources.com/en/Projets/agro_projets_NBDairy.htm ÉcoRessources Consultants (2007c), The New Brunswick Dairy Industry: Economic and Strategic Cluster Study, Progress Report 3: Analysis of the development of the New Brunswick Dairy chain, report submitted to the New Brunswick Dairy Industry Council, October www.ecoressources.com/en/Projets/agro_projets_NBDairy.htm ÉcoRessources Consultants (2007d), The New Brunswick Dairy Industry: Economic and Strategic Cluster Study, Progress Report 4 in Preparation for the January 14th-15th Strategic Engagement Planning Session: SWOT Analysis and Recommendations, report submitted to the New Brunswick Dairy Industry Council, October www.ecoressources.com/en/Projets/agro_projets_NBDairy.htm EUROPEAN COMMISSION (2011), Proposal for a Regulation of the European Parliament and of the Council on support for rural development by the European Agricultural Fund for Rural Development (EAFRD), Cancels and replaces document COM (2011) 627 final of October 12, 2011 Applies to FR/ EN/ DE versions (table of contents) Fousekis P., Spathis P., Tsiboukas K., Assessing the efficiency of sheep farming in mountainous areas of Greece. A non-parametric approach, Agricultural Economics Review, Vol. 2, No. 2, August 2001, p. 5-15 (in Greek) Goussios D. (1997), Success of a community of breeders of the Pindos massif. In "Mediterranean lessfavoured areas". (Editors: Roux B and D. Guerraoui) Harmattant Ed. - Toubkal Ed., Paris, 1997 Guegen G. (1997), Turmoil - does the company need to be reactive? AIMS Communication Symposium Grenier C. (1997), Stress or obstacle or means to strategic action organisations? AIMS Communication Symposium Hadjigeorgiou I., Vallerand F., Tsiboukas K., Zervas, G. (1999), The socio-economics of sheep and goat farming, in Greece, and the implications for future rural development, In “Livestock Production in the European Less Favoured Areas”, FAIR Concerted Action LSIRD Network – Laker & Milne Ed. – Macaulay Ed. Land Use Res. Inst., Scotland, pp.17-23 Hofer C.W., Schendel, D., (1978), Strategy Formulation: Analytical Concepts, West Publishing, St Paul, MN Lancaster G., Massingham L. (1993), Marketing Warfare in the 1980’s, The Journal of Business Strategy, winter, p. 34, UK. Lazani A. (2009), The DODONI SA cooperative dairy and contribution to the development of the region, Master’s Thesis, University of Harokopio, Athens Linck T. (2009), Heritage and classification of "traditional" cheese: a comparative approach of qualification procedures, Ruralia [Online], 16/ 17 | 2005 posted July 1, 2009, consulted March 11, 2013. URL: http://ruralia.revues.org/1086 Louis-Samuel Jacques, Morton G, Belzile B, Forest J-F. (2008), The dairy sector in New Brunswick: a strategic and economic study of the industrial cluster, final report: a new generation of innovation and expertise in the dairy sector Muchnik J., Canada J., Salcido G.T. (2008), Localised food systems: state of research and perspectives, Cahiers Agricultures, 17(6): 513-519 Mintzberg H. (1982), Structure and dynamics of organisations, Paris: Organisation editions, 434 p. Nelson R.R., Winter, S.G. (1982), An evolutionary theory of economic change, Belknap Press of Harvard University Press, Cambridge Pecqueur B. (2006), What is the "territorial turn" of the globalised world economy, Institute of Alpine Geography, Joseph Fourier, Grenoble University, France Poivret C. (2010), Governance of a network of organisations territorialised by an animation structure: the case of a cluster. 20th AIMS Conference (International Association of Strategic Management), Luxembourg Knowledge Project (Euromed Heritage II), Typical product sheet, Cheese sector, Cheese name: Mytilene Ladotiri, Partner 13 - University of Athens Paniuton, Scientific Coordinator: Anthopoulou T., Scientific Consultant: Vallerand F. Papadopoulos Spiros, General Secretary Of Industry Ministry Of Development, Entrepreneurial & Investment Opportunities in the Region Of Thessaly Peano Cristiana, Francesco Sottile, Slow Food Presidia in Europe: A Model of Sustainability-An assessment of the sociocultural, agri-environmental and economic results 2000-2012, Slow Food Foundation for Biodiversity Pfeffer J., Salancik G.R. (1987), The external control of organizations, Harper & Row, New York 67

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Porter M.E. (1998), Clusters and the New Economics of Competition, Reprint number 98609, Harvard Business Review, November-December, pp. 77-90 Porter M. (2000), The 5 P Model-Porter Analysis, Harvard Journal of Management, Harvard, USA Rastoin J.L., Bourgeois L., Cheriet F., Movahedi N. (2009), For agricultural policy and Euro-Mediterranean food. Build the Mediterranean, IPEMED Requier-Desjardins D. (2007), Territorial dynamics. Debates and issues between different disciplinary approaches. The evolution of the debate on the SYAL: Through the eyes of an economist, XLIII Symposium ASRDLF Grenoble-Chambery, July 11, 12, 13, 2007 Robic P. (1998), Institutional rupture and skills development: a path of expansion for SME development, 4th International Conference on SME Frontiers October 22, 23, 24, 1998 Rumelt R.P. (1974), Strategy, structure and economic performance, Harvard University Press, Cambridge Siomkos G. (2004), Strategic Marketing, Stamoulis Ed., Athens (in Greek) Smith K.G, Grimm C.M. (1987), Environmental variation, strategic change and firm performance: study of railroad deregulation, Strategic Management Journal, Vol. 8, pp. 363 -376 SYAL (2010), A new tool for the development of marginal areas. The lessons of the alliance of rural agriindustries of the Lacandon Jungle, Chiapas. In Innovation and Sustainable Development in Agriculture and Agri-Food, ISDA 2010, Montpellier, June 28-30, 2010 Teece D.J., Pisano G., Shuen, A. (1997), Dynamic capabilities and strategic management, Strategic Management Journal, Vol.18, no. 7, pp. 509-533 Vakoufaris H. (2010), The impact of Mytilinis Ladotyri PDO cheese on the rural development of Lesvos island, Greece, Local Environment, 15(1): 27-41 Vallerand F., Tsiboukas K., Kazakopoulos L. (2000), Models and advisory facilities: are they adapted to farming in less sought areas? Illustration from the needs analysis and the search for alternatives in the Greek dairy sector, In "Livestock farming systems; Integrating animal science advances into the search for sustainability", EAAP Publ. 97, 2000, pp. 327-331 Vallerand F., Tsiboukas K., Kazakopoulos L. (2001), A Greek paradox: ubiquitous sheep and goat breeding but largely neglected by development structures, and how to fix it, In "Production systems and quality in sheep and goats," Mediterranean options, Series A, No. 46, 2001, pp. 189-194 Vallerand F., Tsiboukas K. (2004), Forms of the small ruminant milk and cheese sectors in Greece and their development prospects, In "The evolution of goat and sheep production systems: Future of extensive systems in response in a changing society", Mediterranean Options, Series A, No. 61, 2004, p. 307-315 Vallerand F., Tsiboukas K (2005), Local cheeses: are they still a pillar in developing the Greek small ruminant dairy chain? Forthcoming (revised) in "Role of small and medium-sized dairies in local development", CIRAD - INRA programme in the drafting stage of the abstract (forthcoming 2005) Vallerand F., Dubeuf J.-P., Tsiboukas K. (2007), Sheep and goat’s milk in the Mediterranean and the Balkans: diversity of local situations and sectoral prospects , Cahiers Agricultures, vol. 16, no. 4, JulyAugust 2007, p. 258-264 Vandecandelaere E., Arfini F., Beletti G., Marescotti A. (ed.) (2009), Linking People, Places and Products: A Guide for Promoting Quality Linked to Geographical Origin and Sustainable Geographical Indications, Rome: FAO-SINER-GI (www.foodquality-origin.org)

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http://www.thessalikigi.gr/enot-news/1916 http://www.farmahellas.gr/%CE%BC%CE%B9%CE%BA%CF%81%CE%AC%CF%84%CF%85%CF%81%CE%BF%CE%BA%CE%BF%CE%BC%CE%B5%CE%AF%CE%B1 http://www.egaio.gr/files/ekdilwseis-imerides/imerida_Naxos_11_08/Odhgos_Tyrokomeiou.pdf http://www.belgomilk.gr/el/mikro-turokomeio-gr http://kthnotrofia.pblogs.gr/2012/06/oikogeneiaka-tyrokomeia-apo-kthnotrofoys.html http://www.agrospecom.gr/sited1b7.html?&file=pages.xml&catid=64&lang=el http://www.agronews.gr/business/ependutika-projects/arthro/84112/ta-vimata-gia-ti-dimiourgia-mias-mikrismonadas-turokomisis-/ http://www.emprosnet.gr/palies-katigories-emprosnet/agrotika?page=54 http://www.ethnos.gr/entheta.asp?catid=23353&subid=2&pubid=63674970 http://www.savoirs.polimi.it 68

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Appendices Appendix 1: Specifications of Thessaly’s typical dairy products General characteristics of Thessaly dairy products Greece offers a wide range of dairy products, especially cheese. Of the 84 PDO-registered Greek products, 21 are cheeses. "In cheese making, the animal breeds, the mode of management and breeding, the soil type in the region, as well as methods of preparation and ripening cheeses are factors that distinguish a cheese and constitute part of the regional tradition. The protection of designations of origin and geographical indications can be a lever for development for remote and disadvantaged areas by increasing the competitiveness of products, and therefore the producers’ income. At the same time, protected designations guarantee to consumers the origin of the products they buy" (Ministry of Rural Development and food, 2006). The dairy products traditionally produced in Thessaly are: 

Made from fresh goat and cow's milk and produced on farms or organic farms;



Various PDO or traditionally produced hard, semi-hard or soft cheeses;



Yoghurt based on sheep, goat or cow's milk, using traditional or European methods (with reduced fat, fruits, cereals, honey and other);



Butter, cream, rice pudding, etc.

This Appendix presents the 13 most important dairy products produced throughout Greece, especially in Thessaly. Indeed, only one PDO cheese is made exclusively in Thessaly: Graviera Agrafon. All other PDO cheeses produced in Thessaly generally have a national character. Amongst numerous units of older and contemporary farms, some dairies produce some local sub-products, such as Tsalafouti. Greek cheeses can be divided into five categories: 

Cheeses in brine, such as classic Feta, Telemes, Touloumisio, Sféla and Mpatsos;



Soft cheeses, such as Galotyri and Kopanisti;



Semi-hard cheeses, such as Kaséri and Krasotiri;



Hard cheeses, such as Kefalotiri, Graviera, Kefalograviera, Ladotiri, Formaella, Korfou, Metsobone and San Michalis;



Low-fat whey cheeses, such as Anthotyro, Mizithra and Xinomizithra; Manouri contains the most fat.

All PDO products must comply with the following rules: 

Milking must be done at least 10 days after calving;



Milk must be of good quality, and be fresh or pasteurised;



Coagulation must be made within 48 hours of milking and until coagulation, milk must be stored under controlled temperature conditions;



Making cheese from milk of another species is prohibited.

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Specification 1 – GRAVIERA AGRAFON (ΓΡΑΒΙΕΡΑ ΑΓΡΑΦΩΝ) PDO This document defines the requirements for processing sheep and/ or goat’s milk (no more than 30%) into Graviera Agrafon, its conservation conditions and its development on the market. PRODUCT 

Presentation: 2-3 kg and 8-10 kg rounds;

 Description: hard, pale yellow cheese dotted with small holes;  Name: Graviera Agrafon (No. 313031/ Official Journal 16/14-01-1994);  Type of milk: sheep and/ or goat (no more than 30%); 

Composition: 40% fat.

This is one of the best Greek "gruyere" cheeses. Made exclusively in the cold climate of the mountainous region of Agrafa, it holds all the aromas and flavours of mountain herbs. Animal breeds that provide the milk are adapted to the region and their diet is based on the local flora. It can be eaten alone, with bread and fruit, or as a meal accompaniment. PROCESSING METHOD 

Pasteurisation: milk is heated to 34-36°C, it coagulates and the curd is divided after 25-35 minutes;



Moulding: the curd is then heated to 48-52°C with constant stirring, and then placed into moulds and subjected to pressure;



Drying: after 24 hours, the cheese is removed from the mould and placed on wooden shelves for two days;



Brining: the cheese is then placed in a brine bath for four days;



Drying and salting: the cheese is dried in a dry room at a temperature between 12 and 15°C, with a humidity rate of 85%; at this stage, the cheese is dry salted on the surface for three weeks to obtain a salt content equivalent to 2% of its weight;



Refining (three months): the cheese is transported to a room with a temperature between 16 and 18°C where it remains for a month, and then to a cooler room with a moisture content of 90-95%; microflora gradually forms on the surface, giving it the cheese characteristic.

Specification 2 – FETA (ΦΕΤΑ) PDO This document defines the requirements for processing sheep and/ or goat’s milk (no more than 30%) into Feta, its conservation conditions and its development on the market. PRODUCT  Presentation: in 20 to 50 kg wooden barrels or tin cans (Ténékédès) in the form of 1 to 2 kg pieces; 

Description: soft cheese practically perforation-free;



Name: Feta (No. 313025/ Official Journal 8/11-01-1994);



Type of milk: sheep and/ or goat (no more than 30%);

 Composition: 52% moisture, 25-26% fat, 17% protein, 1.8 to 2.75% salt.

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The leading Greek cheese, Feta is made from sheep and/ or goat’s milk in brine produced exclusively in regions of Macedonia, Thrace, Epirus, Thessaly, Central Greece, Peloponnese and the island of Lesbos. Animal breeds that provide the milk are adapted to the region and their diet is based on the local flora. Feta is consumed after refining for at least two months. It has a pleasant, slightly sour taste, and a rich fragrance. It is consumed alone or with a meal or fruit. It is also used as an ingredient in the preparation of pastries or traditional dishes. Organic Feta can be produced from using organic milk. PROCESSING METHOD 

Pasteurisation: milk is pasteurised and then it coagulates;



Moulding: the curd is placed in special containers (wooden or metal moulds) for natural drainage without pressure;



Natural drainage: during draining, the surface is salted with coarse salt (edible sodium chloride);



Brining: after draining, brine is added (sodium chloride content: 7% of weight);



Refining (two months): firstly, the containers are placed for 15 days in refining chamber at a controlled temperature of 18°C and at a humidity of at least 85%; secondly, the containers are placed for 45 days in cold storage (refrigeration systems) at a constant temperature of 2-4°C and 85% humidity.

Specification 3 – TELEMES (ΤΕΛΕΜΕΣ) PDO This document defines the requirements for processing sheep, goat and/ or cow’s milk into Télèmes, its conservation conditions and its development on the market. PRODUCT  Presentation: in brine in 0.4, 0.8 and 1 kg plastic containers, or 15 kg tin cans; can be cut into slices;  Description: white to pale yellow, soft to semi-hard cheese, with or without holes and some mechanical perforations; 

Name: Télèmes (No. 313059/ Official Journal 25/18-01-1994)



Type of milk: sheep, goat and/ or cow;

 Composition: 56% maximum moisture, minimum 43% fat in the dry matter. This is a white cheese in brine made in numerous regions in Greece (Macedonia, Thrace, Epirus, Thessaly, central Greece and the Peloponnese) from sheep, goat and/ or cow’s milk. Animal breeds that provide the milk are adapted to the region and their diet is based on the local flora. Telemes differs from Feta by its division into squares and storage in metal cans. It has a mild and pleasant, slightly sour taste, and a rich aroma. PROCESSING METHOD 

Pasteurisation: milk is pasteurised; it coagulates at 33-35°C after 45-60 minutes;



Moulding: the curd is placed in special containers (wooden or metal moulds) for natural drainage;



Natural drainage: it is pressed with a weight of about twice that of the cheese volume;



Refining (three months): firstly, the cheese is cut and placed in brine 13-15 Be for 4-6 hours; secondly, it is placed in layers in wooden barrels or metal containers, and is covered with brine 7-8 Be and stored at a temperature of 12°C for one month; thirdly, it is kept in cold storage at a temperature below 6°C for two months.

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Specification 4 – ANTHOTYROS (ΑΝΘΟΤΥΡΟ) PDO This document defines the requirements for the processing of sheep and/ or goat’s whey into Anthotyros, its conservation conditions and its development on the market. PRODUCT  Presentation: usually in the form of spherical balls or cones of different sizes, fresh or dry cheese;  Description: soft/ semi-hard, dry and white, no crust for fresh Anthotyros, hard, dry, whitish for the refined variant;  Name: Anthotyros (No. 313030/ Official Journal 8/11-011994); 

Type of milk: sheep and/ or goat;

 Composition: 70% maximum moisture, minimum 65% fat in the dry matter. This cheese is made with fresh sheep and/ or goat’s milk from breeds raised in Macedonia, Thrace, Thessaly, Central Greece, Peloponnese, Epirus, Crete, the Aegean islands and the Ionian Sea. These breeds are adapted to the region of production and their diet is based on the local flora. The fresh variant of Anthotyros cheese is soft and creamy, and slightly salty. It is eaten for breakfast with honey and fruit, in savoury dishes with oil, tomato and brine herbs. The refined variant is more salty. It is also well used in cooked dishes. PROCESSING METHOD 

Filtering: the whey is filtered or centrifuged to remove granules;



Heating: the whey is heated with continuous stirring to 88-90°C for 40-45 min until a temperature of 68-70°C has been reached when the cream or whole milk (sheep and/ or goat) is added in a ratio of 5 to 15%; when 80°C is reached, flakes appear and the heat is increased to 88-90°C while the stirring speed slows to a stop; the temperature is maintained for 15-30 minutes;



For refined Anthotyros, temperatures are higher and the heating time is longer;



Natural drainage: the mixture is poured gently and gradually in tulle or conical strainers perforated for drainage; it is placed in a cold room and can be consumed after 24 hours;



Drying and salting: for refined Anthotyros, the cheese is salted with fine salt after draining and stored in a cool, well-ventilated place until it achieves less than 40% moisture;



Refining: for refined Anthotyros, the rounds are then cleaned and refined.

Specification 5 – GALOTYRI (ΓΑΛΟΤΥΡI) PDO This document defines the requirements for processing sheep and/ or goat’s milk into Galotyri, its conservation conditions and its development on the market. PRODUCT 

Presentation: 1, 5 and 10 kg plastic containers;

 Description: white, soft cheese and soft texture (spreadable) without a crust; 

Name: Galotyri (No. 313031/ Official Journal 8/11-01-1994);



Type of milk: sheep and/ or goat;



Composition: 75% maximum humidity.

Galotyri is one of the oldest and most traditional Thessaly cheeses. It is made with fresh sheep and/ or goat’s milk from animals bred in Thessaly and Epirus. Their diet is based on the local flora.

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It is characterised by a pleasant and fragrant, tart, refreshing taste. Due to its high moisture content (75%), the lifespan of Galotyri stored at 4°C is limited to 30 days. PROCESSING METHOD 

Heating: raw milk is cooked, and then placed in a container, preferably in clay, where it is left for about 24 h at room temperature;



Coagulation: it is then salted, kneaded and left to stand for two days, stirring occasionally, until the acidity develops; rennet or a lactic ferment can also be added before salting to facilitate milk acidification and coagulation;



Natural drainage: the curd is then wrapped in a cloth, or put in leather bags or in wooden casks for drainage; the process is repeated with the following milked milk until the bags or barrels are filled;



Refining (two months): once filled, the containers are sealed and transferred to the cold room (-8°C) for refining.

Specification 6 – MANOURI (ΜΑΝΟΥΡI) PDO This document defines the requirements for processing sheep and/ or goat’s milk into Manouri, its conservation conditions and its development on the market. PRODUCT 

Presentation: different sizes, generally cylindrical;



Description: soft and skinless;



Name: Manouri (No. 313028/ Official Journal 8/11-01-1994);



Type of milk: sheep and/ or goat.

Manouri is made with whole, fresh sheep and/ or goat’s milk from breeds raised in Macedonia (Western and Central) and Thessaly. Their diet is based on the local flora. It has a mild and pleasant taste with characteristic aromas. Butter and milk protein flavours are complementary. Eaten fresh as a table cheese, it may be accompanied by honey and dried fruits. Slightly salty, it hardens during ripening and becomes ideal for use in pasta. Considered one of the best Greek cheeses, it deserves an international career due to its flavour that pleases the taste of European consumers. PROCESSING METHOD 

Filtration/ centrifugation: milk is centrifuged and enriched with sheep or goat’s milk cream;



Heating: the mixture is then heated to 88-90°C and stirred constantly for 40-45 minutes; when it reaches 7075°C, 1% salt is added, and as well as goat or sheep's milk to obtain a proportion of 25%;



Natural drainage: at 88-90°C, the cheese is put into cloth bags for drainage for four to five hours;



Conservation: it is then stored in a cold room at 4-5°C until it is eaten.

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Specification 7 – MIZITHRA (ΜΥΖΗΘΡA) PDO This document defines the requirements for the processing of sheep, goat and/ or cow’s whey into Mizithra, its conservation conditions and its development on the market. PRODUCT 

Presentation: 1 to 4 kg spherical cone;

 Description: soft and skinless, low fat for fresh Mizithra, hard cheese and skinless for refined Mizithra; 

Name: Mizithra (No. 313029/ Official Journal 8/11-01-1994);



Type of milk: sheep, goat and/ or cow;

 Composition: 40% moisture and 50% fat in the dry matter for fresh Mizithra/ 70% moisture and 50% fat in the dry matter for dry Mizithra. Mizithra is made throughout Greece from whey coming from the manufacture of another cheese. The fresh variant has a sweet taste and a neutral flavour. It is often used in baking and accompanies fresh and dried fruits. The refined variant tastes salty. It hardens and can be used in pasta. PROCESSING METHOD 

Filtration/ centrifugation: the whey is centrifuged and transferred into pots, then enriched with goat or sheep's milk cream;



Heating: heated, a little fresh sheep, goat and/ or cow’s milk is added at 65-70°C; the mixture is then heated to 80°C and stirred constantly for 15-30 minutes; the stirring speed is then gradually reduced until completely stopped;



For dry Mizithra, temperatures are higher and heating times are longer;



Drainage: the cheese is placed in cloth bags or perforated moulds for draining for four to five hours;



Conservation: it is then stored in a cold room at 4-5°C until consumption.



Drying and salting: for refined Mizithra, the cheese is salted with fine salt after draining and stored in a cool, well-ventilated place until it reaches less than 40% moisture;



Refining: for dry Mizithra, the cheese is then cleaned, packaged and refined.

Specification 8 – XINOTYRI (ΞΙΝΟΤΥΡI) This document defines the requirements for processing sheep and/ or goat’s milk into Xinotyri, its conservation conditions and its development on the market. PRODUCT 

Description: cream cheese, without any form or crust;



Name: Xinotyri;



Type of milk: sheep and/ or goat.

Xinotyri has a pleasant taste and is slightly sour. Its texture resembles a viscous, grainy or smooth yoghurt. Its lifespan is short due to its little or no salt content, with the exception of products packaged under vacuum, which have a shelf life of one year. PROCESSING METHOD This cheese is made from sheep or goat's milk by directly boiling the milk with or without the addition of salt. "On the island of Naxos, this cheese is made from raw goat’s milk of breeds indigenous to the island. Rennet is added to the milk and it is curded for about 24 h at room temperature. Sometimes a small amount of whey from the previous day is used as a starter. The curd is transferred to a drainage fabric for three hours and then salted at 1.5%. The curd is kneaded to disperse the salt uniformly, transferred into conical plastic moulds for three to four days and turned daily. The moulds are removed and the cheeses are matured on wooden shelves for 30-45 75

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days." (Source: Litopoulou-Tzanetaki E., Tzanetakis N. (2011) "Microbiological characteristics of traditional Greek cheeses" in Small Ruminant Research, 101:1-32:17-32).

Specification 9 – KEFALOTYRI (ΚΕΦΑΛΟΤΥΡI) PDO This document defines the requirements for processing sheep and/ or goat’s milk into Kefalotyri, its conservation conditions and its development on the market. PRODUCT 

Presentation: cylindrical rounds of different sizes;

 Description: hard cheese, constant volume and perforated, whitish to pale yellow; 

Name: Kefalotyri (No. 313026/ Official Journal 8/11-01-1994);



Type of milk: sheep and/ or goat.



Composition: 38% maximum humidity and 40% fat in the dry matter

This cheese is made in numerous regions of Greece (Central Greece, Peloponnese, Thessaly, Crete, Epirus, Macedonia, Ionian Islands and the department of Cyclades) from sheep and/ or goat’s milk of breeds adapted to the region of production and whose diet is based on the local flora. Relatively fatty, Kefalotyri has a slightly salty and spicy taste, and a rich aroma. It complements pasta dishes. PROCESSING METHOD 

Coagulation: the milk is heated to 34-36°C before being allowed to stand for 35 minutes, during which a curd is formed;



Curd slicing: the curd is cut;



Heating: it is heated to about 45°C under continuous stirring;



Moulding: it is then placed in moulds under pressure for 24 hours and stored in a room at 14°C and 85% humidity;



Brining: the forms are then placed in a brine bath of 18-20 Βe for about two days;



Refining (minimum of three months): the surface of the cheese is dry salted by simultaneous inversion, after which it is kept at a temperature below 6°C, before being placed for at least three months in a refining room at 12-14°C and 85-90% humidity.

Specification 10 – MPANTZIOS (ΜΠΑΤΖΟΣ) PDO This document defines the requirements for processing sheep and/ or goat’s milk into Mpantzios, its conservation conditions and its development on the market. PRODUCT 

Presentation: 0.4, 0.8 and 1 kg plastic containers or 15 kg tin cans;



Description: semi-hard or hard, white;



Name: Mpantzios (No. 313057/ Official Journal 25/18-01-1994)



Type of milk: sheep and/ or goat;

 Composition: 42% moisture, 19-20% fat, 23% protein and 5-6% salt. Mpantzios is made in brine from sheep and/ or goat’s milk of breeds raised in West and Central Macedonia. Their diet is based on the local flora. It is low in fat and cut into square 1 kg pieces. The best way to enjoy it is fried. Cooking enhances its flavour and aroma.

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PROCESSING METHOD 

Coagulation: the milk is heated to 28-32°C, rennet is added to coagulate the milk in about 50 minutes;



Curd slicing: the curd is then divided into very small particles, and then allowed to stand for about 30 minutes;



Heating: the mass is then heated to 45°C with continuous stirring;



Natural draining: it is placed in a drainage fabric;



Slicing: the next day, the curd is cut into slices and the surface salted with coarse salt;



Refining (minimum three months): after about five days, the cheese is placed in metal containers with brine (between 10 and 12% salt) and remains there until maturity, at least three months.

Specification 11 – TSALAFOUTI (ΤΣΑΛΑΦΟΥΤI) This document defines the requirements for processing sheep and/ or goat’s milk into Tsalafouti, its conservation conditions and its development on the market. PRODUCT 

Presentation: 1 kg plastic containers;



Description: smooth and creamy texture;



Name: Tsalafouti;



Type of milk: sheep and/ or goat;



Composition: 10% fat.

Tsalafouti is produced from fresh sheep and/ or goat’s milk from endemic breeds raised in Agrafa Karditsa (Thessaly region). Their diet is based on the local flora. It is made in the last months of summer, when the milk is very rich in fat. This traditional Greek cheese has a little acidity and a pleasantly salty taste. It is eaten as a starter or a side dish. PROCESSING METHOD 

Pasteurisation: the milk is boiled and a little salt is added;



Moulding: the milk is allowed to cool and then gradually poured into wooden containers;



Coagulation: the following days, the milk is mixed two or three times a day until the milk coagulates and has the consistency of yoghurt;



Cooling: when it is ready, it is placed in cold storage.

Specification 12 – NIVATO (NIβATO) This document defines the requirements for processing goat’s milk into Nivato, its conservation conditions and its development on the market. PRODUCT 

Presentation: cheese spread;



Description: white cheese with a slightly grainy texture;



Name: Nivato;



Type of milk: goat;



Composition: 18% fat.

Nivato is a very old traditional cheese of the Elassona mountains and is made with 100% goat’s milk. The manufacturing process provides a light cheese, with a slightly sour taste, typically Greek. It has a balanced salinity and deep flavour.

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It is eaten with crispbread or wholemeal bread. Spread on toasted buns ("Ntakos"), it accompanies well the traditional "Tsipouro" (type of brandy/eau de vie alcohol served as an appetizer). It is also used in salads instead of Feta. It can also be cooked with "Trahana", a slightly sticky soup made from dried sour milk. Beaten with a little milk and pepper, or with hot peppers, it makes an excellent pasta sauce.

Specification 13 – YOGHURT (ΓΙΑΟΥΡΤI) This document defines the requirements for the processing sheep, goat and/ or cow’s milk into yoghurt, its conservation conditions and its development on the market. PRODUCT 

Presentation: plastic or ceramic pots;



Description: smooth and creamy texture;



Name: Yoghurt;



Type of milk: sheep, goat and/ or cow.

PROCESSING METHOD 

Pasteurisation: the milk is heated to 90°C;



Cooling: left to cool to 45°C;



Fermentation: a tablespoon of yoghurt is diluted in a little milk and mixed with the rest of the milk;



Heating: heated for four hours at 40-45°C in an oven or in a pan with a lid to keep it warm; the mixture should not move or be moved during processing;



Cooling: the yoghurt is stored at room temperature, then in a cold room, without moving it during the first 24 hours; it is consumed within 15 days. For manufacturing firm yoghurt, yoghurt during manufacture is poured into of thick cloth or white muslin bag (e.g. a pillowcase) and suspended a few hours to drip. It is then kept refrigerated for 20 days.

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Appendix 2: List of actors and institutions surveyed INTERVIEWS BY ACTOR CATEGORY Actor category

Persons interviewed

Livestock breeders Producer group THESgala Rigas Ferraios Group Palama and East Karditsa Group Pilis-Mouzaki Group Processors – dairy companies Sales outlets (supermarkets, dairies) Consulting companies

Mr Gkougkoulias Mr Sdroulias – Mr Kitsios Mr Karakostas Mr Vaiopoulos – Mr Manouras

Mr Goussios Mr Ifantis (Vasilopoulos supermarket) Mr Georgiadis (KRINOS SA)

Wholesalers - distributors Suppliers (animal feed)

Number of interviews 57 2 3 2 1 20 17 1 2 12

DAVANTOB Mr Leventakis Mr Leventis Ms Papaioannou Mr Charakopoulos

Related industries Tour operators Ministry of Rural Development and Food

2 2 1

REGIONAL AUTHORITIES Structure

Mr Agorastos Mr Kouretas Mr Kaliakoudas Mr Paidis Mr Spanos

Number of interviews 2 4 2 1 2

Mr Kalfountzos

1

Mr Halatsis Mr Tsiabalis

1 1 1 1 1

Persons interviewed

Secretary General of the Thessaly Region Regional Council members Directorate of Rural Development Directorate of Agricultural and Veterinary Economics of Larissa Directorate of Agricultural and Veterinary Economics of Magnesia Veterinary Directorate Industries Directorate Trade Directorate TYROGALA Management Committee

Mr Kouretas

LOCAL AUTHORITIES Structure Sofades deme

Mouzaki deme

Tempi deme Riga Ferraiou deme

Persons interviewed Mr Papadopoulos (mayor) Mr Kehagias (deputy mayor) Mr Kaminiotis (agronomist) Mr Kotsos (mayor) Mr Fragopoulos, Ms Kalliarra (agronomist) Mr Kroupis Mayor Mr Asimakopoulos, Mr Mpethaves, Mr Ziogkos (agronomists) Ms Laitsou (mayor) Ms Mpompoti (agronomist)

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Number of interviews 3

2

2/3 2

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SUPPORT STRUCTURES Actors/ structures category

Persons interviewed

Control The Animal Genetic Improvement Centre of Karditsa Laboratory of animal feed transport control of Larissa Veterinary laboratory of Larissa Hellenic milk and meat organisation (ELOGAK) Unified actor of food control (EFET) Seminars, awareness, training, networking DIMITRA training centre

Mr Hondos Mr Dimitriadis Mr Sagris Ms Theodoridou Ms Papadima Mr Korobilias Ms Kamateri, Mr Dontas (Chairman) Mr Giannakopoulos (Chairman) Mr Pappas (Chairman)

Union of industry and companies of Thessaly Chamber of Commerce and Craft Trades of Larissa Chamber of Commerce and Craft Trades of Karditsa Institute of Consumers Union of Consumers Karditsa Development Agency Tourism Magnesia hotel chambers Larissa hotel associations

Number of interviews 2 1 1 1 1 1 2 1 1 1 1

Mr Baltas, Mr Haliamalias (agronomists)

1

Mr Leventis Ms Papaioannou

2 2

RESEARCH CENTRES Structure

Persons interviewed

Laboratory of animal feed hygiene Department of livestock production Laboratory of the physiology of cultured organisms Laboratory of agriculture and plant physiology Institute of fodder and pastures

Mr Gkovaris Mr Goulas Mr Kouretas Mr Danalatos Mr Vlahostergios

Number of interviews 1 1 1 1 1

PARTICIPANTS AT THE RESEARCH CENTRES’ MEETING Structure Faculty of veterinary medicine/ laboratory animal feed hygiene School of biochemistry, biotechnology/ laboratory of livestock breeding physiology School of Agriculture-UTH/ Laboratory agriculture and plant physiology INRA/ Institute of fodder and pastures Technological Institute of Larissa/ Department of livestock production Technological Institute of Larissa/ Department management and administration of projects Technological Institute of Larissa/ Department of business administration Technological Institute of Larissa/ Department of plant production Hellenic Farm organisation ΔΗΜΗΤΡΑ - ΔΗΜΗΤΡΑ Centre

Participants Mr Gkovaris Mr Kouretas Mr Danalatos Mr Vlahostergios Mr Goulas Mr Sirakoulis Ms Exarchou Mr Theodosiou Ms Bogiatzi Μr Korobilias

In addition, face-to-face meetings were conducted with: 

5 farmers’ groups (all Thessaly livestock breeder groups):



22 dairies (from the existing 75);



10 mayors and deputy mayors (12);



8 laboratories;



5 Chambers of Commerce, Industry and Craft Trades of Thessaly.



2 regional directorates.

These meetings allowed an understanding of the activities of the different actors and to exchange views on their respective contribution to the functioning of the dairy chain.

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Developing the typical dairy products of Thessaly Diagnosis and local strategy January 2014

LACTIMED aims to foster the production and distribution of typical and innovative dairy products in the Mediterranean by organising local value chains, supporting producers in their development projects and creating new markets for their products. The project is implemented under the ENPI CBC MED Programme, and is financed, for an amount of EUR 4.35 million, by the European Union through the European Neighbourhood and Partnership Instrument. From November 2012 to May 2015, ANIMA and its 11 partners will organise a hundred operations targeting the various stakeholders of the dairy value chains of Alexandria and Beheira (Egypt), the Bekaa and Baalbeck-Hermel (Lebanon), Bizerte and Beja (Tunisia), Sicily (Italy) and Thessaly (Greece). So as to encourage integrated development of the dairy chain in Thessaly, the project will base on a diagnosis of this value chain and study opportunities in the national and international markets, thus helping local authorities and support structures to adopt a strategy for promoting local typical dairy products. The diagnosis conducted from January to September 2013 involved the following steps: 

Inventory of the dairy chain: literature review, identification of local stakeholders, interviews and working groups with experts and key stakeholders,



Field survey with livestock farmers (57 questionnaires, 10 interviews), groups of farmers (3 questionnaires, 5 interviews), food-producing livestock (12 questionnaires, 2 interviews), dairies (19 questionnaires, 5 interviews), related industries (2 interviews), consumers unions (2 questionnaires), distributors (2 interviews), points of sale and consumption (17 questionnaires, 3 interviews), touroperators (2 interviews), institutional bodies, local, regional and national (2 questionnaires, 17 interviews), R&D and training centers (8 questionnaires, 4 interviews), chambers and development agencies (4 questionnaires, 3 interviews),



Identification and drafting of production specifications of 13 local typical dairy products,



Summary, definition of strategic priorities to ensure the development of the dairy chain and proposals for the creation of a dairy cluster.

The results of the diagnosis were presented on 9 October 2013 at a regional restitution workshop in Bizerte (Tunisia) and discussed with all the project partners and associates as well as with a panel of Tunisian and international experts. The conclusions of these discussions have been incorporated into the present report. More information at: www.lactimed.eu

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