Reardon_et_al_Supermarkets_august_2005.doc

Of farms by type of produce in guatemala one tends to

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of farms by type of produce; in Guatemala one tends to find a relatively flat distribution of farm size (mainly small) in vegetables for the local market, and a skewed distribution for tropical fruit such as bananas. 12
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A Kenyan Illustration. Neven and Reardon (2004) show for the case of Uchumi in Kenya the use of a mix of procurement systems for produce, depending on the type of produce. For vegetables, which make up 45% of the value of produce sold at Uchumi, roughly 50% are sourced directly from growers. Medium-sized producers supply the largest share, with 25%, followed by large farms with 15%, and small farms with 10%. Brokers supply 45% of Uchumi’s vegetables, while the rest (5%) is imported. Small farmers supply mostly leafy greens (kale, spinach, traditional African vegetables) and vegetables sold in small volumes (e.g., herbs). Other vegetables are supplied by the larger farmers. The latter especially applies to fresh-cut vegetable packs because most small-scale farmers do not have a packing shed, which in this case is a key requirement. Currently 75% of fresh-cut vegetable packs are supplied by large farms and this percentage is expected to increase to 90% over the next 5 years. Brokers mainly resolve shortfalls. For fruits, which make up 55% of the value sold, Uchumi sources 35% directly from growers - 15% from large-scale farms, 10% from medium-sized farmers and 10% from small producers. Imports represent roughly 25% of procured fruit and the remaining 40% is supplied by brokers. Small farms play only a small role with regard to fruits (examples of fruits where they are involved are watermelons, passion fruit and strawberries). For fruits there is a heavy reliance on brokers (because they buy mangoes, for example, from smallholder producers in different regions of the country as the seasons change), large-scale farms/plantations (e.g., Kakuzi, a 6,400-acre agrifood business listed on the Nairobi Stock Exchange) and imports. As a group these three suppliers represent 80% of Uchumi’s fresh fruits supplies. As Uchumi’s sales of produce increase, it is moving away from traditional brokers (and their long supply chains and the mostly smallholder producers they buy from) to get supplies directly from farmers. Brokers, as a source of produce, have decreased from the main supplier category (70% in 1997) to less than 50% in 2003 (45% of vegetables and 40% of fruits). Reducing its reliance on brokers is the first priority at the moment for Uchumi‘s produce procurement, and management expects that by 2008 brokers will make up no more than 10% of supplies, i.e. they will only be used to resolve shortfalls from regular suppliers (similar to Freshmark, Shoprite’s produce procurement arm in South Africa; Weatherspoon and Reardon, 2003). Direct supplies by farmers allow supermarkets to increase simultaneously control over quality, supply reliability and price stability and thus make them more competitive with traditional retailers.
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