Presentation on theme: "Triggering Value Chain Development through Supermarkets: The Key to Transforming the Agro-Food Industry in Africa Emmanuel Tambi, Odularu Gbadebo, and."— Presentation transcript:
1 Triggering Value Chain Development through Supermarkets: The Key to Transforming the Agro-Food Industry in AfricaEmmanuel Tambi, Odularu Gbadebo, and Idowu Ejere,Forum for Agricultural Research in Africa (FARA)November 06 – 09, 2012Addis Ababa, Ethiopia
2 OutlineEvolution of supermarket development in AfricaEffects of supermarket transformation on value chain developmentObserved effects of supermarket developmentSuccesses and failures of supermarket-related value chain developmentFARA’s interventions and conclusion
3 SUPERMARKET DEVELOPMENT IN AFRICA Advent of supermarkets in Africa is relatively recent: East and Southern Africa – pioneersEvolution and spread of supermarkets to other parts of AfricaGrowth of supermarkets triggered by:Demand and supply factorsMacroeconomic reforms & favorable environment for investment
4 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 serviceAs business entities, supermarket development can have important positive effects on value chain development:Product development/customizationService provisionValue additionLinkages (downstream and upstream)Planning/logisticsDistributionResearch and developmentCost reduction and economies of scale
5 SUPERMARKET DEVELOPMENT AS TRIGGERS OF VALUE CHAIN DEVELOPMENT OBSERVED EFFECTSEnhanced functioning of food value chains in AfricaTimely delivery of value added products to consumers (Shoprite and Pick n Pay fresh fruits and vegetables)Product transformation and value addition (Farmer’s Choice meat & meat products and Brookside dairy products in Kenya)Connecting key players to match supply and demandTransparency – price transmissionStrengthened 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 SUPERMARKET DEVELOPMENT AS TRIGGERS OF VALUE CHAIN DEVELOPMENT OBSERVED EFFECTSEnhanced welfare of producers and consumersQuality 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 incomesScale economiesLower cost structuresLower consumer pricesOrder and sanity in retail food sectorEnhanced competitiveness with traditional retailers – corner stores, public market places
7 SUCCESS AND FAILURE OF SUPERMARKET-RELATED VALUE CHAIN DEVELOPMENT 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 systemsSupport local farmers and processors to meet their standardsProvision 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 supermarketsIntroduction 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 CONCLUSIONAfrica has experienced an expansion in the number of supermarkets in the last 2 – 3 decadesSupermarkets have enhanced the development of agro-food value chains in Africa but have not fully integrated a majority of smallholder farmersContribution 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
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