Agriculture and greenhouses: small farmers in Sicily, Italy

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An opportunity analysis for Bayer Cropscience.

Project Goal:
Provide Bayer CropScience with opportunity spaces for the development of new products and services that aim at improving farmers’ conditions.

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Agriculture and greenhouses: small farmers in Sicily, Italy

  1. 1. Agriculture and Greenhouses An Opportunity Analysis for Bayer CropScience 177
  2. 2. “The farmer has to be an optimist or he wouldn’t still be a farmer”. Will Rogers 178 - Sicily · Agriculture and Greenhouses - D4SB 179
  3. 3. Index Why Sicily? Bayer CropScience 185 Project Brief 185 The Sicilian Context Sicily Profile 189 Sicily in Numbers 189 Ragusa 190 Greenhouse Cultivation 191 Ragusa and Greenhouse Cultivation 192 Benchmarks 193 Project Goal 194 Observation & Synthesis The Siciliy Field Research Program 198 The Interview Guides 199 Stakeholder Map 210 Time and Money Flowchart 211 Stakholders on the Agrcultural Context. Influence on System 212 Opportunity Spaces 214 Projections Projections Bibliography 180 - Sicily · Agriculture and Greenhouses - D4SB 72 75 181
  4. 4. Why Sicily? During our journey in defining the scope of design and social business, we had the opportunity to collaborate on a project with a multinational corporation that showed interest in our work and methodology. Due to the confidential information revealed throughout the research and used throughout our analysis, synthesis and ideation, we will not be able to share the detailed outcomes of our project. However, it is important to acknowledge this project as a valuable tool to understand how social and design can integrate within large corporations. 183
  5. 5. Bayer CropScience “Bayer: Science For A Better Life”. Bayer CropScience is the second largest crop protection global company, with sales in 2006 of USD$4,874 million in the crop science sector and USD$8,000+ million for the entire company. Bayer CropScience sells products in the United States, Canada, Mexico, Asia, Europe, Brazil, Australia and other countries. Its customers are commercial dealers and growers in crop production, horticulture, turf and ornamentals and professional products. Products are insecticides (#1), herbicides, fungicides, and seeds. Bayer CropScience is with annual sales of about EUR 6.8 billion one of the world’s leading innovative cropscience companies in the area of crop protection (Crop Protection), non agricultural pest-control (Environmental Science), seeds and plant biotechnology (BioScience). Customers include distributors, dealers and farmers. Project Brief Identify opportunity spaces for Bayer to develop new products and/or services within the context of greenhouse agriculture in Ragusa - Sicily. To understand the opportunities for the development of new services, to analyze the needs of farmers, retailers and other stakeholders and to give insights about the innovation process in greenhouse agriculture 185
  6. 6. The Sicilian Context 187
  7. 7. Sicily Profile Even though much of its mountainous terrain is unsuitable for farming, Italy has a large work force (1.4 million) employed in farming. Most farms are small, with the average size being only seven hectares. In this context, Sicily is known for it’s vegetables, which since the sixties have gained much larger markets in the quality of crops in greenhouses, found mainly in the South East, such as the famous Pachino tomatoes, or legumes such as lupine. Sicily in Numbers Total area of Italy 301,338 Km2 70% Italy Total area of Sicily 25,711 Km2 Area in Km2 of Sicily compared to Italy Greenhouses Capital City: Palermo Population: 5,048,806 GDP: 88,327.73 GNI (PPP) per capita: 17,533 30% Sicily Proportion of Greebouses in Sicily compared to Italy Hectars of covered ground Most of the greenhouses in Sicily are located mainly along the strip in the south coast, especially in the province of Ragusa. In particular, in the Vittoria, Comiso, Achates and Santa Croce Camerina zones. There predominate the floriculture, and the fruit and vegetable sectors, while the marine area of Scicli, Pozzallo, and Ispica presents mainly vegetable crops in open fields (Sicily Region). The entire inland of the coastline of Ragusa, from Ipsica to Vittoria (and recently some areas from Gela and Mazara) have constituted for several decades an area of excellence for protected crops. 189
  8. 8. Ragusa “...the industry’s most outstanding and innovative feature is that of the greenhouses, especially on sandy soils, which stretch from Vittoria to the coast; millions of square meters of cropland, made with great economy ​​ of material, ...that go through the entire year”. Greenhouse Cultivation The agriculture of the province has many traditional aspects: on the plateau dry crops are prevalent, especially cereals and tree crops. A mosaic of tree crops and vegetable plants characterizes the areas of Ispica and Pozzallo , the hills and the plains of Vittoria, Comiso and Achates. But the industry’s most outstanding and innovative feature is that of the greenhouses, especially on sandy soils, which stretch from Victoria to the coast; millions of square meters of cropland, made ​​ with great economy of material, in which there is a production of zucchini, eggplant, tomatoes and flowers (the latter, especially in the area of Victoria) that go through the entire year. The cultivation in greenhouses is presented - in monofunctional or multifunctional areas - in the Ispica region, including Donnalucata and Scicli, as well as along the coast and in between Punta Secca and Santa Croce Camerina and between Acate and Achates. In the early seventies the explosion of the ragusian greenhouses has been, according to Antonio Saltini , one of the most striking phenomena of vitality of the entire Italian agriculture building, on land which offered virtually no income, a flow of income and involving a large number of related areas, from trade of seeds and pesticides to that of polyethylene, from bottled gas for heating greenhouses and refrigeration facilities for road transport. Greenhouse cultivation plays an important part in flower and fruit and vegetable growing. In the Mediterranean basin, crops grown in some sort of protective structure cover an estimated surface area of over 40,000 hectares, largely with little technological input. Yet innovation continues, for the structures used and the crop techniques and technical methods. The wine-growing economy has an important place of Ragusa, there are many wines IGT and DOC products, among which stands the Cerasuolo di Vittoria, produced from the grape Nero d’Avola and Frappato . Construction Types Greenhouses are almost all built in two basic types: gable roofed with symmetrical or asymmetrical gables, and tunnels with a circular or elliptical section. They also differ in terms of the conditions inside, which rests on the type of crop: cold frame, when there is no temperature control; temperate frame when the night temperature is kept at 10-14°C; and hot houses with a temperature of 16-20°C at night. Some wooden framed greenhouses are still built, but steel is the most widely used material. The frame must be strong to support its own weight, any secondary supports such as metal anchors, the covering, and also factors such as wind and snow. The type of cover material decides the type of structure, its shape and size. Climatisation Controlled greenhouse conditions means controlling not only the temperature, but also humidity, illumination and air flows. In hot and temperate greenhouses, heating is the most important component. The ‘greenhouse effect’ is not enough to guarantee the temperature, so artificial heating is almost always indispensable. It is generally produced by hot air generators fitted with fans. The most common type is suspended in the air and blows the hot air through a suspended pipe made of plastic film with holes in it. Heating can also be applied to the substrate in which the plants grow, using PVC pipes buried or laid on the bottom of the growing bench. The whole operation of a modern greenhouse – shading tarps, mechanised opening and closing, heat regulation, etc. – can be managed fully from a computer on the basis of information from sensors and peripheral microprocessors. Problems in Greenhouse Cultivation The troubles which arise in the culture of crops in the greenhouse may be divided into several groups »» failure to supply the essential factors for optimum growth such as light, moisture, carbon dioxide and heat in amounts necessary for each individual crop »» fertilizer deficiencies »» fertilizer excesses »» toxic gases »» attacks by insects, animals, and allied pests and »» susceptibility to fungus, bacteria and virus troubles. 190 - Sicily · Agriculture and Greenhouses - D4SB 191
  9. 9. Ragusa & Greenhouse Cultivation Ragusa holds the national record of gross marketable agricultural production, with 47% of the floriculture and vegetable production in greenhouses. Benchmarks Other initiatives that have dealt with greenhouse agriculture are: The greenhouses of Ragusa are used mainly for horticulture, especially for tomatoes, eggplants, bell peppers, zucchini and melons. Tomatoes alone, account for 70% of the entire production in the zone. Technology use in the area is also very limited, especially among the small farmers, and many of them still use the same techniques of 20 years ago. Most of the greenhouses in the area are cold ones, which means that they are not heated, or use automated temperature control mechanisms since they can benefit from milder temperatures than other renowned greenhouse zones such as the Netherlands, and the relation between cost and benefit is still high. Instead, it is widely spread the use of plastic to cover the soil to keep it warmer and to avoid sudden changes of temperature. This help to considerably reduce the production costs, since the use of fuel is very limited, and many times, none. Techniques such as soil-less cultivation (fuori solo) which is one of the biggest trends of the market in the recent years – plants grown outside of the ground in suspended bags containing natural fibers and added nutrients – are still not very diffused because of the high cost of implementation. The use of soil-less cultivation considerably reduces the contamination of the plants by fungus , lowering the need of agrochemicals. In Italy, it accounts for 3% of all greenhouse production while in Holland for over 50%. The cycles of a crop can vary from farm to farm. They can decide to do one or two cycles per year. One cycle a year, reduces the overall costs, since they planting occurs only once. On the other hand, even if it is more costly doing two cycles, it allows the harvesting in times such as winter or Christmas when farmers can sell their products at higher prices. Walking Plant Systems In Holland, Walking Plant Systems, one of the major suppliers of greenhouse management systems, uses electronic tagging employed in the automatic identification of people and things (Radio Frequency Identification) to keep track of each individual vase and optimize the entire process of greenhouse cultivation. The system created by WPS integrates RFID and image technology to achieve full automation through the plant’s crop cycle, from sowing to sale to the final customer. The software also means that each plant can receive specific treatment as a function of its needs. RFID also makes retail sales management very reliable. Nutrient Film Technique (NFT) A simplified hydroponic technique known as Nutrient Film Technique or NFT was developed in England in the 1970s. using small channels at a slope of 1 - 1.5% covered with an opaque plastic roof. The plants are started in inert materials such as perlite or rock wool and then placed over a channel containing a fine, continuous flow of nutrient. In this way, the roots are always bathed in a veil of nutrient solution continually on the move so there is no need for it to be aerated artificially. Of course, the nutrient is kept moving by a pump with continuous control of pH and heat conductivity. The agrochemical market. Growing sales of generic products. With few new pesticide active ingredients coming to market, sales of older pesticides are dominating global agriculture. When patents on these older pesticides expire generic producers can start manufacturing. The original research-based companies seek to maintain control while generic producers try to capture a share of the market. Fierce competition is likely to bring about significant changes over the next five years. Agrochemicals are an aging industry. While over 800 pesticide active ingredients remain on the market, the number of new substances being developed has fallen considerably over the last ten years. In some industrialized country markets older products are losing their registrations. For example, the European Union review has removed over 360 active ingredients to date. Ragusa But these and many other chemicals are still available elsewhere. But while aging, the industry has not lost its vigour. The overall global agrochemical pesticide market was valued at US$32 billion in 2004 with generic products making up an increasing percentage of this market. Latest estimates indicate that generic products account for US$18 billion, or around 66% of overall sales1 and by volume, generic active ingredients may account for approximately 95% of all product sales worldwide. Six research-based agrochemical companies (Bayer, BASF, Dow, DuPont, Monsanto and Syngenta) control around 85% of the overall global market by value. Generic pesticides are key in their product portfolios and these companies play a dominant role in the generic market, with approximately 70% of sales by value, and possibly 65% by volume. Figure 1. Greenhouse production in Ragusa compared to the rest of Italy. 192 - Sicily · Agriculture and Greenhouses - D4SB Table 1. Description of the agrochemical market. 193
  10. 10. Project Goal: Provide Bayer CropScience with opportunity spaces for the development of new products and services that aim at improving farmers’ conditions. 195
  11. 11. Observation & Synthesis 197
  12. 12. The Sicilly Field Research Program The Sicily Trip Program (13th - 16th September) Tuesday Wednesday Thursday Friday 13 14 15 16 Arrive to Sicily Interviews with farmers, retailers and other stakeholders in the agriculture field throughout the day Morning interviews Complete information download Information sharing and downloading in the afternoon Leave Sicily to Milan Initial dialogue – Building the system map on field workforce together with Bayer representatives Table 2. The schedule of our 4 day research in Sicily. In preparation for our field research in Sicily, we developed interview guides for the different stakeholders in the agriculture system that we had identified earlier with Bayer representatives in Milan. Once in Sicily, we interviewed and conducted card games with 9 farmers, 3 retailers, 1 vivarium, 1 commissioner, 1 quality certification administrator and 1 technician. In addition, we had a group discussion with 3 of Bayer’s representatives that helped us understand the relationships within the complex agriculture system. A main tool that helped facilitate the conversations with our interviewees was the card sorting game. This visual aid helped the stakeholders express abstract and emotional sentiments through the use of words and images. These include: »» Their relationship and feelings towards all the other stakeholders involved in the process: farmers, retailers, buyers, customers, companies, cooperatives, etc. »» Trust issue and community sense. »» Economical barriers/gains and frustrations/satisfactions. »» Ideal services for them. The Interview Guides 198 - Sicily · Agriculture and Greenhouses - D4SB 199
  13. 13. The Interview Guides Interview Guides - Retailers Name Interview Guides - Farmers Name Age Occupation Activity Specifics Production Specifics Use Of Agrochemicals Important Quotes Stefano Nicita 31 years Sales Manager “Libretti Srl” - 200ha - 150 employees commercialization Tomato, eggplant, pepper, cucumber, zucchini Prevention - type and brand chosen by the technician in house “Nowadays it is very difficult to start in agriculture” Guglielmo Lami 57 years Owner Family business - 0.5ha from 1 to 2 employees Grapes, tomato, zucchini Doesn’t pay attention to the brand products chosen with son (technician) - No protections “I don’t see agriculture as a possibility” - “We’d like to be part of a coop that looks after us” Angelo Biagio 42 years Owner Family business - 5ha from 9 to 10 seasonal workers Tomato, artichoke, several try-outs No prevention; products chosen by brand - managed by specialized operators “I buy what I know” Giuseppe Melilli 44 years Administrator Family business - 8ha 15 employees Tomato, eggplant Helped by a friend technician doesn’t care about the brands he uses “I’m willing to pay more for the quality” Giovanni Lomagno 40 years Biological farm (with 3 associates) - 45ha - 120 employees commercialization Tomato, small percentage of other horticultural products No use of chemicals if not authorized - products chosen by the technician inhouse (both brands and generics) “Market requires bio and beautiful at the same time” “Plastic bio” Owner Occupation Activity Specifics Products Specifics Suppliers Relationship Important Quotes Salvatore 41 years Owner (supplies/ selling management) Big retailer 4 employees 30% plastics - fertilizers and other products Regarded as partners - Bayer is less flexible with payments but credible and powerful “We give more credit than we should” Gianluca/ Salvatore 39 & 40 years Administrator/ Technician “Farmacia Agricola Agrisol” - Big retailer Agrochemicals - zinc wire - other structural material They have a bigger margin with the generics but prefer selling the brand - Syngenta gives the best service and the fastest delivery - Bayer has a long delivery time but a great technical support system “Farmers should specialize” Fabio - Sales Manager “Tutto Per L’agricoltura” Family business (4 brothers + 1 external) Big variety of products in small storage, mostly agrochemicals He has power of negotiation because pays always on time “Clients trust us on products” Table 5. The table lists some of the data gathered from the retailer interviews. Interview Guides - Comissioner Name Salvatore Sciacca 49 years Owner Small family business - 1ha - 2 seasonal workers Tomato, pepper, cucumber Choice influenced by the technicians, the retailer, the price and the personal experience - No protections “I buy the products I find” “We usually buy the brands that everybody knows” Galanti Brothers 42 years Owners/Sales Manager Family business - 15ha - 50/60 workers commercialization Different products Products chosen by the technician inhouse “To maintain yourself in the business you need to have a name and quality” Iacono 70 years Owner Family business (3 brothers) - 4ha Grapes, tomato, pepper Depends on the help of the technical forces from the companies (Bayer) “Everybody looks for his own interest” Antonio 34 years Owner Small family business - 3ha - 1 fixed/1 seasonal worker Tomato, eggplant, zucchini, pepper Chooses based on his personal knowledge - Bayer products too expensive “Bayer products are good but expensive” - “Better to pay more for a product that works” Table 3. Age The table lists some of the data gathered from the farmer interviews. Age Occupation Relationships in the System Important Quotes Aristia - Commissioner in Vittoria market and owner of the transformation company “Agromonte” Has a place in the market where he buys products for his company and for small farmers for the Italian market taking 10% commission “The market is missing a lot of services” “There is lack of experience and knowledge Table 6. The table lists some of the data gathered from the commissioner interviews. Interview Guides - Quality Certification Agency Name Age Occupation Activity Specifics Important Quotes Gianni Polizzi - Administrator Give consulting and certification services (the global gap) “We have to attract young people to join the field” - “We have to innovate culturally and in the mentality of the farmers here” Table 7. The table lists some of the data gathered from the quality certification agency interview. Interview Guides - Vivarium Interview Guides - Bayer Name Age Occupation Activity Specifics Production Specifics Use of Agrochemicals Important Quotes Name Age Occupation Relationships in the System Important Quotes Filomena Fontana 39 years Production/sales management Family business (3 greenhouses - 1 bio) Tomato, pepper, eggplant, cucumber They have a technician in house, don’t use chemicals till the plant is in the greenhouse “The client comes knowing what he wants” - “We give credits only if there’s trust” Giovanni Inghisciano 57 years C.T.C. for Bayer - Part of crop team Direct relationships with retailers and coops. (Orders) and farmers (promotion of products & technical support) “I can’t bypass the retailer” - “Too many technicians in the chain and lack of communication between them” - “Bayer’s profit depends on the whole system, each player has an important role in it” Table 4. The table lists some of the data gathered from the vivarium interview. 200 - Sicily · Agriculture and Greenhouses - D4SB Table 8. The table lists some of the data gathered from the quality certification agency interview. 201
  14. 14. “I buy the products I find” “Usually we buy the brands that everybody knows” 202 - Sicily · Agriculture and Greenhouses - D4SB “I only buy the products I know” 203
  15. 15. “Nowadays is very difficult to start in agriculture” 204 - Sicily · Agriculture and Greenhouses - D4SB “I don’t see agriculture as a possibility” 205
  16. 16. “Market requires bio and beautiful at the same time” “Plastic Bio” 206 - Sicily · Agriculture and Greenhouses - D4SB “Bayer’s profit depends on the whole system, each player has an important role in it” 207
  17. 17. “We give more credit than we should” “I’m willing to pay for a service to be sure to have my money back” 208 - Sicily · Agriculture and Greenhouses - D4SB “Here we are in the middle age” 209
  18. 18. Technical support Retailer (plastic / material) Technician Retailer (plastic / material) Retailer BAYER Retailer FARMER (small & medium) Technician BAYER Quality Certification Agency (Global Gap) FARMER (small & medium) Technician Technician Technician Technician Technician Vivarium Quality Certification Agency (Global Gap) Vivarium production Seeds production Seeds Selling General market Comissioner 1 Comissioner 2 Selling Local market General market Exportation Comissioner 1 Comissioner 2 Technician Local market Exportation Technician Supermarket Supermarket Tranformation company Technician Technician Technician Tranformation company Technician Final user Relations Between the Different Stakeholders Within the Agricultural Context 210 - Sicily · Agriculture and Greenhouses - D4SB Final user Time and Money Flow Between the Different Stakeholders Within the Agricultural Context 211
  19. 19. Stakeholders of the Agricultural Context Influence on the System COOP BAYER RETAILER VIVARIUM FARMER Association of producers/sellers looking after their interests and needs; able to have more power in the chain Sells its products to the farmers through the retailer; has influence on farmers’ choices through the technical support forces in field Buys the products from agrochemical companies/plastics companies/other materials companies and resell them to the farmers with a margin; has the power to influence the farmers’ choices Buys the seeds to the seed company and sell baby plants to the farmers, according to the request Produces crops to be sold on the market aggregation 212 - Sicily · Agriculture and Greenhouses - D4SB Production QUALITY CERTIFICATION AGENCY Agency in charge to give the Global Gap Certification to the farmes Commissioner LOCAL MARKET SUPERMARKET GDO Taking the 10% of commission buys the crops from the farmers at the general market to resell them to other buyers (local markets, supermarkets, big platforms), pays back the producer in 1 week Buys products from commissioner or directly from the producer (can resell to restaurants/ private users etc) pays back after 30 days Buys products from commissioner, paying back every 30 days Groups of big supermarkets buying big amounts of products paying back every 30 days (usually have contracts with producers or commissioner) Market 213
  20. 20. Opportunity Spaces So how might Bayer... After collecting all the data and insights gathered from the different activities conducted with the major stakeholders in the agriculture context in Sicily, we identified patterns and clustered the information in main themes. The recurrent patterns and relevant quotes back up the themes which formed the foundation of our brainstorming sessions. These themes include: »» »» »» »» »» »» »» »» »» »» 214 - Sicily · Agriculture and Greenhouses - D4SB Retailers encourage/enable specialization of farmers? generate brand awareness by communicating its products using a more familiar approach? generate a service/solution that will help farmers with waste management? create more brand awareness through the active principle of products? play a role in helping farmers in the quality certification process? help farmers trust each other? play a role in bringing farmers together? help in attracting the young generation to the agriculture field? develop farmers’ skills and know-how? empower farmers with managerial knowledge on running farms? give more importance/empower retailers to sell its products? take advantage of good relations with the retailers to sell their products? improve its delivery system? gain influence over the retailer on the products farmers buy? bypass the retailers’ influence on clients? help farmer with payments to retailers? Innovation help small farmers access new markets/channels? ease the bureaucratic procedures that farmers have to go through? reduce the number of intermediates between the farmer and the consumer? raise awareness regarding quality to end consumers? use vivariums as a channel to increase/market product sales? In order to explore the opportunity spaces for providing solutions to the identified problems, one brainstorming tool we use is to ask ourselves ‘how might we’ questions. In this case, we asked ‘how might Bayer...’ questions in order to trigger ideas for innovative solutions that Bayer can develop, be it products, services or systems, in order to fidelize farmers to their portfolio. Farmers Market End User & Vivarium Innovation Trust issue Interdependent system Lack of unity / aggregation Market instability / prices Bayer products & pricing Technical regulation / bureaucracy Waste management Lack of professional stakeholders Young generation use their know-how and R&D department to expand the line of products/services to provide infrastructure/ technical innovation to farmers? take advantage of the pre-existing techniques to introduce innovation? 215
  21. 21. Projections 217
  22. 22. Projections Bayer CropScience is one among many other multinational companies that are showing great interest in social initiatives. These companies that are willing to exploit their resources for social benefits need to rethink how they go to market and how they are perceived by those markets. This provides an opportunity for design to play a role in guiding these companies through their discovery process and to become “leaders in leapfrogging to products that don’t repeat the environmental mistakes of developed countries over the last 50 years.” (The fortune at the end of the pyramid). 218 - Sicily · Agriculture and Greenhouses - D4SB 219
  23. 23. Bibliography »» Bayer CropScience http://www.bayercropscience.com/ »» P. Piccarolo, Greenhouse Type and Crop Techniques. (Mondo Macchina Worldn Issue #5, 2008) http://www.unacoma.it/mmacchina/32-41_mag_2008.pdf »» Sicily and Ragusa profile http://en.wikipedia.org/wiki/Sicily Bibliography 220 - Sicily · Agriculture and Greenhouses - D4SB »» Campiotti, C.A. F. Dondi & C. Viola. Sviluppo di un Modello sostenibile di sistema serra a ciclo chiuso e controllato per la riqualificazione tecnologica, Energetica e produttiva delle colture protette nella Sicilia Meridionale (MODEM). (Agenzia nazionale per le nuove tecnologie, l’energia e lo sviluppo economico sostenibile. 2008). http://www.efficienzaenergetica.enea.it/doc/pubblicazioni/Modem_UTEE_AGR.pdf »» Economia in Sicilia : agricoltura, allevamento, pesca, produzione di energia, undustria. http://www.insicilia.org/economia-sicilia/65.htm 221

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