Small producers, supermarkets, and the role of intermediaries in Turkey's fresh fruit and vegetable market

Article published by Céline Bignebat, Ahmet Ali Koç, Sylvaine Lemeilleur

Agricultural Economics Volume 40 Issue s1 , Pages 715 - 825 (November 2009)

Abstract : A wide range of empirical studies show the extent to which the rise of supermarkets in developing countries transforms domestic marketing channels. In many countries, the exclusion of small producers from so-called dynamic marketing channels (that is, remunerative ones) has become a concern. Based on data collected in Turkey in 2007 at the producer and the wholesale market levels, we show that intermediaries are important to understanding the impact of downstream restructuring (supermarkets) on upstream decisions (producers). Results show first that producers are not aware of the final buyer of their produce, because intermediaries hinder the visibility of the marketing channel, thereby restricting a producer's choice to that of the first intermediary. Econometric results show that producers who are indirectly linked to the supermarkets are more sensitive to their requirements in terms of quality and packaging than to the price premia compensating the effort made to meet standards. Therefore, the results lead us to question the role of the wholesale market agents who act as a buffer in the chain and protect small producers from negative shocks, but who stop positive shocks as well, and thereby reduce incentives.

The original version of this article was prepared for the 111 EAAE-IAAE Seminar "Small Farms: Decline or Persistence" held at the University of Kent, Canterbury, U.K., 26-27 June 2009.

Availabe at http://www3.interscience.wiley.com/journal/123189755/issue?