Supermarket Buying Power, Global Commodity Chains and Smallholder Farmers in the Developing World

by Oli Brown, UNDP Human Development Report Office, OCCASIONAL PAPER 2005.

A very useful paper, covering both exports and domestic markets. Recommends:

1. Development agencies and governments must recognise that small farmers and entrepreneurs have to gear up quickly to compete in the new markets that are spreading over most of the food economy.

2. Need to promote good business practices that optimise retailer-supplier relations. This can be brought about by establishing/ improving contract regulations and business rules of practice.

3. More generally, it is important to foster competition in the supermarket sector and in the retail sector in general.

4. Where projects are in place to ‘upgrade' small farmers to meet the needs of the supermarket, the chains do appear eager to participate in these schemes.

Meanwhile supermarkets can help in a number of ways; modify codes, be flexible, agree reasonable time frames, provide technical and financial support, negotiate an incentive/ bonus scheme, review buying practices, support harmonisation of European codes, treat third world producers and exporters as equal partners.

Full paper available at http://hdr.undp.org/docs/publications/background_papers/2005/HDR2005_Brown_Oli_4.pdf