Economic Spill-Over of Food Quality Schemes on Their Territory

Abstract

We study the effect of a set of food quality scheme (FQS) products within the local economy using a local multiplier approach based on LM3 methodology. To evaluate the effective contribution within the local area, we compare each FQS product with its equivalent standard/conventional counterpart. Local multiplier allows us to track the financial flows converging within thelocal area at the differentlevels of the supply chain so that we can measure the FQS product role in local economic activation. Overall, the FQS products exhibit a higher positive contribution to the local economy than the standard references. However, there is significant heterogeneity in the impact according to the product categories. In the case of vegetal products, the local economic advantage due to FQS is 7% higher than the reference products, but the statistical tests reject the null hypothesis that the medians are significantly different from zero. On the contrary, animal products exhibit a larger contribution of FQS than the standard counterparts (+24%). The PGI products (+25%) produce the major effect, while PDO products show a median difference lower (+6%). The organic and non-organic products seem to be substantially equivalent in terms of contribution to the local economy, due to the similarity in the downstream processing phase.