1. 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. 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

3. 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

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 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. 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

6. 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. 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.

8. 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. Thank you for your attention!!