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Forum for Agricultural Research in Africa Triggering Value Chain Development through Supermarkets: The Key to Transforming the Agro-Food Industry in Africa.

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Presentation on theme: "Forum for Agricultural Research in Africa Triggering Value Chain Development through Supermarkets: The Key to Transforming the Agro-Food Industry in Africa."— Presentation transcript:

1 Forum for Agricultural Research in Africa Triggering Value Chain Development through Supermarkets: The Key to Transforming the Agro-Food Industry in Africa Emmanuel Tambi, Odularu Gbadebo, and Idowu Ejere, Forum for Agricultural Research in Africa (FARA) November 06 – 09, 2012 Addis Ababa, Ethiopia

2 Forum for Agricultural Research in Africa Outline Evolution of supermarket development in Africa Effects of supermarket transformation on value chain development Observed effects of supermarket development Successes and failures of supermarket-related value chain development FARAs interventions and conclusion

3 Forum for Agricultural Research in Africa SUPERMARKET DEVELOPMENT IN AFRICA Growth of supermarkets triggered by: – Demand and supply factors – Macroeconomic reforms & favorable environment for investment Advent of supermarkets in Africa is relatively recent: East and Southern Africa – pioneers Evolution and spread of supermarkets to other parts of Africa

4 Forum for Agricultural Research in Africa EFFECTS OF SUPERMARKET DEVELOPMENT ON VALUE CHAIN DEVELOPMENT Value chain development – Chain of activities performed by a firm/business in order to deliver a valuable product or service As business entities, supermarket development can have important positive effects on value chain development: – Product development/customization – Service provision – Value addition – Linkages (downstream and upstream) – Planning/logistics – Distribution – Research and development – Cost reduction and economies of scale

5 Forum for Agricultural Research in Africa SUPERMARKET DEVELOPMENT AS TRIGGERS OF VALUE CHAIN DEVELOPMENT OBSERVED EFFECTS Enhanced functioning of food value chains in Africa – Timely delivery of value added products to consumers (Shoprite and Pick n Pay fresh fruits and vegetables) – Product transformation and value addition (Farmers Choice meat & meat products and Brookside dairy products in Kenya) – Connecting key players to match supply and demand – Transparency – price transmission Strengthened linkages between farmers/agro-processors and markets (domestic/international) – Increased sales volume (S.Africa about half of national food retail market; pig, poultry & dairy farmers in Kenya & Uganda) – Gain and sustain markets

6 Forum for Agricultural Research in Africa SUPERMARKET DEVELOPMENT AS TRIGGERS OF VALUE CHAIN DEVELOPMENT OBSERVED EFFECTS Enhanced welfare of producers and consumers – Quality and safe food products for human and animal consumption (e.g imported products of plant and animal origin that comply with SPS measures) – Increased smallholder farmer incomes Scale economies – Lower cost structures – Lower consumer prices Order and sanity in retail food sector – Enhanced competitiveness with traditional retailers – corner stores, public market places

7 Forum for Agricultural Research in Africa SUCCESS AND FAILURE OF SUPERMARKET-RELATED VALUE CHAIN DEVELOPMENT Success Failure Supermarkets bridge the widening gap between farmers/agro- processors and markets along the value chain. Supermarkets do not always: Integrate local farmers and processors in their systems Support local farmers and processors to meet their standards Provision of new opportunities for an increasing number of small and medium-scale agro-processors to participate in high value markets. Lost market opportunities and revenues to smallholder farmers because of their inability to meet the specific standard requirements of supermarkets Introduction of scale-economies and lower-cost structures. Low cost structures and lower consumer prices discourage growth of traditional retail outlets along the value chain.

8 Forum for Agricultural Research in Africa CONCLUSION Africa has experienced an expansion in the number of supermarkets in the last 2 – 3 decades Supermarkets have enhanced the development of agro-food value chains in Africa but have not fully integrated a majority of smallholder farmers Contribution of supermarkets to local economies will depend on how well the integrate local producers and processors in the agro- food value chain. Policies to promote smallholder farmer access to markets should focus on supermarkets as a key component of the agro-food value chain

9 Forum for Agricultural Research in Africa Thank you for your attention!!


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