THE RISE OF KENYAN SUPERMARKETS AND THE EVOLUTION OF THEIR FRESH FRUITS AND VEGETABLES PROCUREMENT SYSTEMS

Supermarkets are rapidly penetrating urban food retail in Kenya and spreading well beyond their initial tiny market niche into the food markets of lower-income groups. Having penetrated processed and staple food markets much earlier and faster than fresh foods, they have recently begun to make inroads into the fresh fruits and vegetables category. The important changes in their procurement systems bring significant opportunities and challenges for small farmers, and have implications for agricultural diversification and rural development programmes and policies.Marketing,

The supermarket revolution in developing countries: Policies for "competitiveness with inclusiveness"

"A “supermarket revolution” has been underway in developing countries since the early 1990s. Supermarkets (here referring to all modern retail, which includes chain stores of various formats such as supermarkets, hypermarkets, and convenience and neighborhood stores) have now gone well beyond the initial upper- and middle-class clientele in many countries to reach the mass market. Within the food system, the effects of this trend touch not only traditional retailers, but also the wholesale, processing, and farm sectors. The supermarket revolution is a “two-edged sword.” On the one hand, it can lower food prices for consumers and create opportunities for farmers and processors to gain access to quality-differentiated food markets and raise incomes. On the other hand, it can create challenges for small retailers, farmers, and processors who are not equipped to meet the new competition and requirements from supermarkets. Developing-country governments can put in place a number of policies to help both traditional retailers and small farmers pursue “competitiveness with inclusiveness” in the era of the supermarket revolution. Some countries are already taking such steps, and their experiences offer lessons for others." from Author's textSupermarkets, Wholesalers, Modern retail, Small farmers, Traditional retail, Supply chains, Competitiveness, Inclusiveness,

Population and Sustainability: Understanding Population, Environment, and Development Linkages

The triple challenge of rapid population growth, declining agricultural productivity, and natural resource degradation are not isolated from one another; they are intimately related. However, strategic planning and development programming tend to focus on individual sectors such as the environment, agriculture, and population; they do not explicitly take into account the compatibilities and inconsistencies among them. Farm households and their livelihood strategies are at the core of the intersectoral linkages approach advocated in this chapter. Three key aspects of the population-environment-development debate are discussed: first, the finding that inconsistencies between public and individual household behavior regarding childbearing and family planning constitute a veritable "demographic tragedy of the commons;" second, the tendency to conceptualize population variables as "unmanageable," and exogenous to environmental and economic change; third, the importance of land markets and land tenure as critical population-sustainability policy issues.Africa, agriculture, Rwanda, population, sustainability, environment, food security, Agricultural and Food Policy, Community/Rural/Urban Development, Consumer/Household Economics, Environmental Economics and Policy, Food Security and Poverty, International Development, Q56,

Market Power and Supply Shocks: Evidence from the Orange Juice Market

The orange juice market is a weather market because of its high geographical concentration and the natural characteristics of orange trees. A few hours of a freeze in Florida is enough to cause a supply shock to the orange juice market. How do oligopolistic firms react to supply shocks do they become more collusive or more competitive? This paper empirically examines the proposition and finds that the level of market power of orange juice firms decreases significantly, and the market becomes more competitive during supply shocks even though prices rise.Marketing,

The quiet revolution in agrifood value chains in Asia: The case of increasing quality in rice markets in Bangladesh

In Bangladesh—one of the poorest countries in Asia, where rice accounts for almost 70 percent of consumers' caloric intake—the share of the less expensive, low-quality coarse rice is shown to be rapidly decreasing in rice markets and the quality premium for the best-quality rice has been consistently on the rise in the last decades. It thus seems that the role of rice as only a cheap staple food is being redefined. The off-farm share in the final consumer price increases from 27 percent to 35 percent to 48 percent for low-, medium-, and high-quality rice, respectively, and the increasing demand for higher quality is thus seemingly associated with a more important off-farm food sector—in particular, milling, retailing, and branding—as well as a transformed milling industry. We further find that the labor rewards for and the technical efficiency of growing different rice qualities are not significantly different, and farmers do not benefit directly from consumers' increased willingness to pay for higher rice quality.Markets, milling, Quality, rice, value chains,

The quiet revolution in India's food supply chains:

There has been a rapid transformation of food supply chains in India over the past two decades. Modern retail sales are growing at 49 percent per year and quickly penetrating urban food markets and even rural markets. The food-processing sector is growing quickly while also concentrating and undergoing a rapid increase in the capital-output ratio, with little increase in employment. A modern segment is emerging in the wholesale sector, with the penetration of modern logistics firms and specialized modern wholesalers.wholesale markets, Supply chains, Farmers, Supermarkets, Food processing, logistics, cold chain, Food markets,

Small Farmers and Big Retail: trade-offs of supplying supermarkets in Nicaragua

In Nicaragua and elsewhere in Central America, small-scale farmers are weighing the risks of entering into contracts with supermarket chains. We use unique data on negotiated prices from Nicaraguan farm cooperatives supplying supermarkets to study the impact of supply agreements on producers’ mean output prices and price stability. We find that prices paid by the domestic retail chain approximate the traditional market in mean and variance. In contrast, we find that mean prices paid by Wal-mart are significantly lower than the traditional market but that Wal-Mart systematically reduces price volatility compared with the traditional market. We find some evidence, however, that farmers may be paying too much for this contractual insurance against price variation.Nicaragua, Supermarkets, Wal-Mart, Modern Retail, Market Risk, Contracts, Supply Chains, Agribusiness, International Development,

Social and Environmental Attributes of Food Products in an Emerging Mass Market : Challenges of Signaling and Consumer Perception, With European Illustrations

This paper focuses on the environmental and ethical attributes of food products and their production processes. These two aspects have been recently recognized and are becoming increasingly important, in terms of signaling and of consumer perception. There are two thematic domains: environmental and social. Within each domain there are two movements. Hence the paper first presents the four movements that have brought to the fore new aspects of food product quality, to wit: (1) aspects of environmental ethics (organic agriculture and integrated agriculture) and (2)social ethics (fair trade and ethical trade). Then it describes how the actors in the movements producers, retailers, NGOs, and governments) are organized and how consumers perceive each of the movements. From the perspective of the actors in the movements themselves, the movements are grouped into two 'actors' philosophies' : a “radical” philosophy (the organic production and fair trade movements that arose in radical opposition to conventional agriculture or unfair trade relations) and a “reformist” philosophy (the integrated agriculture and ethical trade movements that arose as efforts to modify but not radically change conventional agriculture). From the point of view of consumers, the classification of the movements is based on perceptions of the 'domain' of the movements. That is, consumers tend to perceive as a grouping the organic production movement and the integrated agricultural movement, as they both deal with the environment. By contrast, consumers tend to group the fair trade movement and the ethical trade movement, as they both deal essentially with social ethics. Recently, key players such as large retailers and agribusinesses have adopted as part of their overall quality assurance programs both the environmental and the ethical attributes. Their involvement in and adoption of the goals of the movements have, however, generated tensions and conflicts, in particular within the radical movements, because of concerns of cooptation. The paper identifies challenges for those promoting food products with environmental and social/ethical attributes to communicate coherent signals to consumers at this crucial moment of an emerging mass market for these products.Consumer perception, Ethical trade, Fair trade, Integrated agriculture, Organic agriculture, Organization, Quality signals

Supermarkets, New-Generation Wholesalers, Tomato Farmers, and NGOs in Nicaragua

Based on a survey of 145 tomato farmers and interviews with supermarket chains, NGOs, wholesalers, and farmer organizations in 2004, this paper examines the determinants and effects of farmers' participation in supermarket channels, with and without assistance from NGOs in "business linkage" programs. It finds that absent that assistance, the farmers that work with supermarket chains tend to be the "upper tier" of small farmers, better capitalized with various assets. The smaller and less-capitalized farmers that work with supermarkets tend to do so in association with NGO assistance. Despite higher input expenditures and entry requirements, farmers in the supermarket chain earn more. The paper discusses the issue of whether this development program approach is sustainable and can be upscaled, and wrestles with the tradeoff of helping poor farmers gain access to dynamic markets, of making it affordable at a larger scale by national governments with tight budgets, and at the same time field programs that are market-sustainable and market-responsive.Marketing,

The Rapid Rise of Supermarkets in Developing Countries: Induced Organizational, Institutional, and Technological Change in Agrifood Systems

There has been extremely rapid transformation of the food retail sector in developing regions in the past 5 to 10 years, accompanied by a further consolidation and multi-nationalization of the supermarket sector itself. This organizational change, accompanied by intense competition, has driven changes in the organization of procurement systems of supermarket chains, toward centralized and regionalized systems, use of specialized/dedicated wholesalers and preferred supplier systems, and demanding, private quality standards. These changes in the system have in turn determined the very recent rise of the use of contracts between supermarkets and agrifood producers in these regions to cover provision of services and provision for risk management, as well as requirements for demanding quality and safety attributes, which require substantial investment in technological change and upgrading at the producer level. This paper presents a brief discussion of these trends, followed by a conceptual framework to explain this phenomenon, illustrated with empirical evidence drawn mainly from Latin America.supermarket chains, procurement systems, quality standards, agrifood producers, Agribusiness,