Triggering Value Chain Development through Supermarkets: The Key to Transforming the Agro-Food Industry in Africa Emmanuel Tambi, Odularu Gbadebo, and.

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Presentation transcript:

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

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 FARA’s interventions and conclusion

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

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

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 (Farmer’s 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

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

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 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.

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

Thank you for your attention!! www.fara-africa.org