Journal of Agriculture and Food Research (Sep 2023)
Financial performance of companies associated with the PDO Parma ham consortium: Analysis by quartile of firms
Abstract
Agri-food companies ensure food needs of consumers and play a role in protecting health, environment and local territories. For this reason, food and drinks protected by geographical collective marks products (PDO, PGI, TSG) are protected by the European Union. Research investigates Parma PDO Ham sector; in terms of turnover, it is the third Italian production with a protected mark and the first in meat processing. Parma PDO Ham requires aging of at least 14 months according to production specification; this requires significant investments in fixed capital and working capital. The research aims to analyze the financial performance of companies in the sector, dividing companies by size class by quartile. The sample considers all the 140 member firms of the Consortium and, of these, annual account statement data of 101 companies were analyzed, over a 10-year series, for 840 observations. Observations were divided into turnover quartiles; analysis shows that larger companies, in the fourth quartile (Q4), implement a business strategy of higher capital turnover (T), lower inventory turnover (INV_DAYS) and then they achieve better profitability performances (ROE, ROA, Π). Firms Q2 have higher duration of inventory cycle (INV_DAYS) with an increase in the cost not compensated by adequate profit margins, and thus we observe the greatest number of cases of Π < 0 (66). Performances of Q3 are better than Q2, both as regard generation of Π and for other FRs. Firms' Q1 contains debt, possibly due to financial constraints and difficult access to credit. Research can be useful for operators in the sector to highlight the advantages of large enterprises and difficulties of SMEs; policy makers can apply the research to support SMEs in accessing credit. Research can be replicated, particularly in typical product firms’ analysis and in the agri-food sectors where there are companies of different size classes.
