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IntroductionThe agrofood industry in Spain has undergone a deep transformation during the last two decades and the acceleration of technological innovation and economic globalization processes are impelling a complex process of productive restructuration within all industrial activities – which has provoked a noticeable increase in the requirements of flexibility and competitiveness for food and drink manufacturers Trends towards a gradual fragmentation of the market, due to the progressive personalization of demand, combined with concentration in the corporate sector and a higher level of internationalization, has been accompanied by a change in the traditional location patterns of agrofood firms, which implies their gradual movement towards urban areas in order to secure better access to customers (Rastoin, 1993; Sanz, 1993; Viladomiu, 1995). However, the persistence of industrial activity in rural areas and towns is especially evident in the “agrofood local productive systems” (ALPS). It is in these zones where the concept of local food acquires a socioeconomic dimension as a result of a particular and intimate connection between a strong economic presence of agrofood enterprises and elements such as tradition, culture and food quality that characterize the identity of the local community. Taking the Spanish region Castilla y León as a case in point, with particular reference to the wine industry, the dynamism of the agrofood industry based on local economic development is described with reflection on the use of quality denominations as a mechanism for local and/or rural development.Within Spain, there exists a relative regional polarization. Cataluña is the region that shows the highest agrofood industry potential, followed by Andalucía and Castilla y León. In 2004, these three regions accounted for 43% of employment in the sector, 47% of total net added value, 49% of sales, 50% of consumption of raw materials, and 44% of investment in equipment. The industry is structured according to two spatial localization patterns. First, the sparse pattern, connected to agricultural productive areas, and second, the concentrated pattern, oriented to urban consumption areas and transport nodes. Thus, the Spanish agrofood industry is one of the industrial activities more sparsely located both at provincial and local level, as demonstrated by the frequent presence of agrofood firms in almost every small village (Juste, 2001). This outcome is closely related to the existence of obstacles to de-localization which impede a higher level of spatial concentration in the sector. Amongst them we can mention some features which stimulate the settlement in rural areas: the dense presence of SMEs1, especially within the context of local economic development initiatives, the explicit compromise of local authorities in territorial development, the preservation of gastronomic habits and the role of Origin and Quality Denominations (OQD). Although OQD do not represent a high percentage of total national food consumption in Spain, they include a large number of products and are widespread throughout the country. In any case, this instrument is recently showing the vitality of the industrial tradition of many rural areas and the strong affinity between the agrofood industry and areas of local productive systems (LPS), a connection that is particularly evident in the Castilla y León region.This connection, linked to the concept of “typicality” (Caldentey, 1996), becomes the main argument of some heterodox researches about local economic development, in particular, those referring to agroindustrial districts (Iacoponi, 1990; Cecchi et al, 1992; Fanfani, 1994), widely influenced by the study of the intimate relationship between small sized enterprises and territory within the Italian industrial context (Becattini and Sforzi, 2002). In the Spanish case, the consideration of some researches oriented to the determination of industrial LPS at national level point out that a high proportion of the identified areas base their specialization on agroindustrial activities, especially on agrofood activities (ITUR, 1987; CEP, 1993; Boix and Galletto, 2006).Local development and agrofood industry in Castilla y LeonThe profile of the regional agrofood industry exhibits the previously noted low productivity and entrepreneurial atomization; sectoral concentration (around five branches: meat products, breads and pastries, dairy products, sugar, cocoa and chocolate, and animal feed); high investment of foreign capital; progressive performance of exports; and spatial polarisation (with Burgos and Valladolid provinces at the top). This high degree of spatial dispersion is particularly evident at local level, with a large number of very small firms unable to achieve critical mass due to the low consumer population in surrounding villages. The presence of the agrofood industry in the greater municipalities is also remarkable, but in fact, there aren’t many municipalities with more than 2,000 inhabitants to support specialization in agrofood industry sufficient to impregnate the local economic structure as a whole. In this sense, the outstanding position of the main localities of several endogenous local productive systems (LPS) in Castilla y León are proof of the correlation between the processes of emergence and consolidation of local development experiences in non-urban areas and the strength of the agrofood industry (either alone or combined with other agro-industrial activities).Several arguments demonstrate the strategic importance of the agrofood industry in spatial development within the context of agrarian regions like Castilla y León, through acting as: a direct and natural supplier of agriculture production;   the first step to diversify local economic activities in rural areas, becoming a powerful factor of productive integration in the economy in a given territory (Pardo, 1998; Gil y Pérez, 1996, 1998) and contributing to fixing the population to these rural areas; and  new consumption patterns based on better information about food and health. These factors have intensified the search for differentiation and quality and this presents an opportunity to the small and medium sized agrofood firms in rural locations, particularly those which have introduced a trade mark based in the quality of products from a particular territory, such as the Origin Quality Denomination (OQD). In this context, as at national level, is perceptible the increasing role of Public Administration in promoting such processes, particularly through rural development programmes such as LEADER, PRODER, as well as through a variety of financial aid to promote OQD agrofood products.Taking into account the meaning of the expression local food, it is interesting to determine the main features of LPS2 with a high degree of specialization in agrofood in the region. Such a consideration reflects the reciprocal influence between territory and local agrofood industry performance in the Spanish context. Thus, taking as a starting point the endogenous local development experiences which are present in the region (Juste, 2001)3 examination of these four ALPS at the beginning of the 21st century reveals the following important facts:1) ALPS have benefited from the positive evolution experienced by Castilla y León’s agrofood industry over the last years comprising a significant proportion of new agrofood firms, new employment and new investment generated in the region. Amongst them is the singular case of Guijuelo, which shows the high rate of emergence of new firms within the agrofood sector at regional level.2) The genesis of these four experiences is related to a group of very similar factors, which were clearly perceptible since the end of the 19th century: a relatively advantageous geographic situation (i.e. territorial accessibility), the availability of local raw materials and human resources, and the presence of entrepreneurial ‘esprit’.3) Although dependence of the local agrofood industry on the proximity of raw materials is increasingly reduced due to improvements in transport and communication logistics and conservation techniques, the traditional productive specialization of Guijuelo and Cantimpalos can only be explained by their location at the foot of mountainous zones, which offers access to processing for curing hams and making sausages. The firm’s activity in Aguilar is still connected to their supply of Castilian flour and cereals, which present a high quality and a considerable adaptability to productive processes favoured by a fresh climate. In the most diversified LSP of Aranda such a link to local inputs is not so marked, even though it is important for some products (e.g. blood pudding of Burgos, suckling lamb and, especially, wine of Ribera del Duero, whose recent vigour is much praised).4) The prevalence of the familiar firm, which shows a scarce or null productive implantation outside the local area, and a very modest size: 75% of farms registered an annual sales volume under 3 million Euros and 84% employed fewer that 20 workers (Table 1). However, there exist also two large biscuit manufacturing companies, located in Aguilar, Fontaneda and Gullón, and an important economic role is also played by Leche Pascual and other medium sized firms in Aranda.Table 1: Size of ALPS firms in Castilla y León by employment level/Dimension des entreprises des SPLA de Castilla y León (par niveau d’emploi) (%)Total  ArandaAguilarGuijueloCantimpalos1-5 workers4244,050,034,533,36-10 workers 3224,030,031,027,811-20 workers1916,017,227,821-50 workers10  4,012,111,151-100 workers 2  3,4101-250 workers 3  4,010,0  1,7More than  250 workers 3  8,010,0Total 111 100,0 100,0  100,0     100,0Source: Author’s own elaboration/Élaboration propre5) Amongst the main features of the labour force in the ALPS’s agrofood firms we can highlight the following: its stability (75% of labour contracts are permanent, while the temporary ones reach the highest levels in the two meat ALPS, due to their noticeable seasonal component); its “masculinity” (the feminine employment is only significant in the Aguilar’s biscuits and cakes production; its relative youth (the stratum from 25 to 35 years predominates in 48% of firms); its local origin (especially in the case of employers, since the employees also usually come from neighbouring municipalities); its modest level of academic instruction (53% of personnel of the whole sample - managers included - have only have elementary schooling, and only 6% have a university degree), although this deficiency is in part compensated for by skills acquired on the job and to a certain extent through training both inside and outside the firm.6) Suppliers of raw materials, packages and machinery for productive processes are mainly of national origin. However, for part-finished products, which are frequent in the meat industry, dealings among local firms are only significant in Guijuelo.7) Prevalence of product and process innovation (Table 2). Product innovations are in general incremental, consisting in slight modifications, and are not particularly important in Guijuelo due to the traditional nature of products protected by the Origin Denomination. As for process innovations, there exists an intermediate level of automation (as revealed by 55% of the total sample) and innovations (carried out by almost 70% of firms) usually refer to the introduction of machinery in the warehouse, although there is also flexible automation in Guijuelo and Cantimpalos.Table 2: Product and process innovation in ALPS firms of Castilla y León/Innovation de processus et de produit dans les entreprises des SPLA (%)Product InnovationTotalAranda Aguilar GuijueloCantimpalosInnovation over the last 3 years56,760,040,050,083,3No present innovation but expected5,48,010,05,20,0No present or expected innovation36,932,040,044,816,7Do not know/no answer0,90,010,00,00,0Process InnovationInnovation over the last 3 years68,568,050,070,772,2No present innovation but expected5,44,010,03,411,1No present or expected innovation22,528,020,022,416,7Do not know/no answer3,60,020,03,40,0Source: Author’s own elaboration/Élaboration propreAs for commercialization, the evolution of demand is also positive (38% of firms enjoy increasing demand). Although local and regional markets are significant for many small and medium size enterprises in Aranda and Aguilar, demand is essentially nationwide. The degree of dependence on the main customers is high due to a certain extent to the force of the distributive sector. Internationalization through the trade side is however insufficient (Table 3), since only 26% of companies admit to export - in general, those of greater size - and often only a small percentage of production in spite of efforts undertaken in recent years, especially in Guijuelo.Table 3: Number of firms by ratio exports to sales/Nombre d’entreprises selon leur niveau d’exportations sur ventes (%)% of total sales volumeTotal  ArandaAguilarGuijueloCantimpalosDo not export8280,080,067,283,20%&#60; Exports  5%16  4,010,022,4  5,65% &#60; Exports  10% 8  4,010,0  8,6  5,610% &#60; Exports  20% 2  4,0  5,6Exports  25% of sales 3  8,0  1,7Total111 100,0 100,0  100,0     100,0Source: Author’s own elaboration/Élaboration propre8) The key to entrepreneurial competitiveness seems to lie in the quality of products and processes, which is evident in the firms accredited to Origin Denominations Guijuelo and Ribera del Duero. However, the possibilities inherent in the possession of OQD (an asset that 86% of the sample have) are undervalued. Although OQD value positively elements of the local environment: the relative proximity of suppliers and clients; the infrastructure network; and the availability of qualified labour force, nevertheless competitive advantage is limited by factors such as delay in the payments (so dangerous for a sector that needs circulating capital); insufficient market knowledge; lack of contacts; and/or absence of sales networks.9) Relationships of entrepreneurial cooperation are only present in 41% of firms, basically consisting in temporary agreements established among small and medium sized enterprises frequently located in the zone. These relationships – the establishment of which have only enjoyed public support occasionally – are especially significant in Guijuelo and related to the ODQ system.Origin Denomination and territory in the wine industry: reflections on the case of Castilla y LeonThe application of OQD in Spain is a very useful instrument for the enrichment of the consumer diet, the revalorization of a more diversified food production base, inter-professional articulation within the agrofood sector, stimulation of manufacturing and commercial distribution processes at local level and, definitively, for the management of the territory and rural zones4. The amount of products (and therefore, of locations) protected by OQD tends to increase every year because of the interest of many regions - especially Cataluña, Andalucía, Aragón, Comunidad Valenciana and also Castilla y León – in extending such a positive instrument to an ever growing number of goods and territories. OQD are found in a high variety of agrofood branches: meat, milk products, fruits and vegetables, and of course wine5. Despite the diminution of the wine growing surface area, a considerable improvement in productive potential has taken place, by means of restructuration of plantations and changes in production methods, oriented to quality wines (now 58% of total cultivation area). This process of restructuration is the result of a series of interrelated events (Langreo, 2002; Bardají, 2005). Thus, first we must consider the evolution of Spanish wine consumption, which shows diminishing global trend especially in table wines, although this is partially compensated for by the increasing consumption of quality wines for special occasions and outside the home.In this context, the dynamism of exports is acquiring increasing importance as an issue for domestic production. However, this increase - more significant in terms of volume than in terms of value (given the importance of bulk table wines and of the segment of low prices in quality wines in the composition of exports) - may be more coincidental and less the result of a strategy of penetration and consolidation in foreign markets. The evolution of demand, the influx of multinational drinks companies into the wine sector, and increasing competition from new world producing countries (United States, Australia, Argentina, Chile, but also South Africa) with a less atomized entrepreneurial structure, constitutes a challenge for Spanish firms (whose average size is 5,7 workers per firm in 2004 - along with a noticeable presence of cooperatives). The biggest firms have undertaken new strategies essentially consisting in their progressive implantation in the Origin Denomination areas, the establishment of agreements, alliances or acquisitions at international level, and special attention to international trade through a greater presence in economic quality wines. An increase in the quota in external markets has been favoured by institutional support (vital for small and medium sized enterprises) through the provision of technical assistance, collective promotion of, and support to achieve, OQD certification, and connection with distribution networks. In the commercial sphere there has been a progressive concentration in the sector, due to a change in strategy of the large distribution chains that are increasingly interested in wine; in fact they are diversifying supply with productions of different prices and from different zones, trying to save costs of promotion by replacing their marks of distributor (which are dominant in table wines) by marks of their suppliers.The low concentration of the wine sector at national level, as for the agrofood industry as a whole, has to do with two interrelated elements: entrepreneurial atomization, and the enormous territorial dispersion of firms, in which OQD play an unquestionable role. Dispersion is especially intense in the Castilla y Leon region as a result of the wide geographical area that it covers. In 2004, there were 320 wine warehouses producing OQD wines in Castilla and Leon6, which represent 7% of national total (Table 4) compared to just over 3% in 1996. These firms are, not forgetting the endorsement of both regional government and farmers, the true protagonist of the quality and renown acquired by regional wines. All these firms have made important investments in order to obtain productive and organizational improvements; a process in which the presence of wine warehouses from other regions is increasing. A result of this activity is the existence within the sector of a wide set of technicians and qualified service companies that provide services to several regions. Although there are large warehouses, sometimes related to large wine groups, the majority and are small and there exists also an important cooperative sector that finishes products. Table 4: Basic data of Origin Denomination’s wine in Spain and Castilla y León/Vins avec Denomination d’Origine en Espagne: données basiquesOrigin Denom.LocaleAreaHaGrowers No.Firms No.Total Trade(Hecto l)BierzoCacabelos, Le4,1005,0634545,482Cast. y LeónCast. y León6976CavaPenedés32,0176,9602721,682,485CigalesCigales, Va2,7846403630,337JumillaJumilla29,8813,05238189,193La ManchaCiudad Real191,69921,604493905,849PenedésVilafranca27,7295,763279351,352Ribera del DueroRoa de Duero 18,5658,113203360,643RiojaRioja60,36119,5191,4232,402,724RuedaRueda, Va7,5981,30538199,847ToroToro, Za5,6351,1933461,518Utiel-RequenaUtiel-Requena41,9047,145113300,268ValdepeñasValdepeñas29,6203,99451506,984Spain652,359166,1294,65111,591,679Source: MERCASA (2006)However, in spite of the increasing number of firms producing wine, the region is far from experiencing the problem of surplus that affects a great part of the Spanish wine sector. In fact, till now OQD wines have been sold satisfactorily at a high premium, e.g. wines of Ribera del Duero (Figure 1), but surplus production could be a problem in future (Langreo, 2004). Curiously, it is this last OD which has experienced the more important increase of new establishments (178% from 1996) along with OD Toro (where in 1996 there were only seven producing firms) – a veritable explosion that is contributing to the configuration of local productive systems of small and medium sized enterprises. This fact, also perceptible to a certain extent for other agrofood activities, demonstrates the interest inherent to certain places such as Roa de Duero, Toro and Rueda, where the structure of production looks like true local endogenous industrialization.Figure 1: Average Euros per bottle of Origin Denomination wines in Spain/Prix moyen par bouteille dans quelques Denominations d’Origine en EspagneSource: Ruiz (2004)ConclusionsAlthough this case study of wine demonstrates that the connection between the agrofood industry and territorial development reflects a greater presence at local level, a more harmonious inter-sectoral structure and more intense orientation to quality, so relevant for competitiveness and survival of rural milieu within a global scenario, success is not easy to emulate. On the contrary, these challenges require a considerable and continuous collective effort on the part of all local and regional socioeconomic agents, including growers, enterprises and institutions, in order to overcome the many weaknesses of the sector (through training, innovation, quality assurance and cooperation), and to enrich the complexity of territory as a source of competitive advantage.