Supermarket buying power : Global supply chains and smallholder farmers

This paper is about the impact of the supermarkets’ increased market power on global supply chains and what this means for smallholder farmers in the developing world trying to sell their produce to the potentially lucrative markets of the developed world. [...] It can be good business for farmers selling top-quality and out-of season horticultural produce—but the big imbalance between buyers and sellers means that most of the gains are being captured at the top of the supply chain.13 For example, a 1999 study estimated that producers in Zimbabwe and Kenya earned between 11 and 14 per cent of the final price of their fresh vegetable exports while the supe [...] Two and a half billion farmers across the globe rely on the production of primary agricultural products like rice, coffee, sugar, wheat and cotton for their livelihoods… And it is here, in the cost containment part of the equation, that poor farmers are feeling the squeeze. [...] In the same year, in Zimbabwe the five largest exports sourced less than six per cent of produce from smallholders.26 In essence, small and medium-sized producers and exporters in the FFV chain are being marginalized by supermarkets in the developed world in favour of “dedicated” suppliers who can provide assurances of due diligence and quality control. [...] Supermarket Buying Power: Global supply chains and smallholder farmers 6 trade knowledge network Meanwhile, the widespread abolition of marketing boards and the end of many commodity agreements since the end of the 1980s have further undermined the bargaining power of smallholder farmers.