Transcript Slide 1
Keys to inclusion of small producers in dynamic markets Regoverning Markets A global programme of collaborative research and policy support to: • To understand the keys to inclusion into restructured market in order to address implications and opportunities for small scale producers and enterprises • To understand what is best practice in connecting small scale producers to dynamic markets • To bring these findings into the wider policy arena with facts and recommendations, practical action for public sector policy and private sector strategies. Program Components 1. Empirical research to inform policy 2. Building on Innovation and Guiding Practice Keys to inclusion Points of innovation 3. Learning Platforms and Policy Dialogue New alliances Component 1: Studies of market restructuring 1. Horticulture Markets in China 2. Dairy Markets in India 3. Horticulture Markets in Indonesia 4. Strawberry Markets in Mexico 5. Dairy Markets in Poland 6. Horticulture Markets in South Africa 7. Tomato Markets in Turkey 8. Beef and Chicken Markets in Zambia Component 2: Best Practice Case Studies • Round 1: 15 cases selected from 39 proposals from 23 countries – 6 business models (eg Carrefour, China FFV, Haleeb Food, Pakistan, Dairy) and 7 collective action (Morakert, Hungary, FFV; NorminVeggies Phil, Vegetables) • Round 2 (on going): 15 case studies selected from 81 proposals Component 3: Policy Dialogues and Learning Platforms • 8 Reference Group (RG)- 1 for each country with component 1 research • RG is a multi-stakeholder group who provides advice, feedback and helps champion policy and c3 initiatives • 4 Policy and Institutional Mapping workshops (Turkey, Indonesia, South Africa and Morocco) • Policy and Institutional Mapping Toolkit/Manual/Learning Workshop Modern Markets Traditional Low operating costs Low margins Proximity to customers Long opening hours Home delivery Credit provision to consumers Sale in small units Provision to transport, packaging, inputs market information Building of trust with both supply and demand side – social networks Haven for manipulation and exploitation Modern Product differentiation Quality and food safety as key driver of vertical integration Private standards Reliability of supply Wholesale /cash and carry consolidation Contracts Group marketing Brand name and value Centralised procurement Specialised wholesalers and logistics companies Dedicated wholesalers Preferred suppliers Dragon heads – supply and trade functions Produce concession in store Physical infrastructure – cold chain etc Service provision to preferred suppliers – TA, credit, transport, training, IT services and advice, loan guarantor Interest in CSR and Fairtade Re-governance and market inclusion: Conceptual framework Factors driving dynamic market change Creates changes in supply chains…. Consumer ‘pull’ Technology Policy ‘push’ Management Leading to small-scale producer and SME.. INCLUSION Urbanisation Organization Commercial opportunity Industry structure, concentration Skills and assets of producers and SMEs Food standards Procurement Foreign Investment EXCLUSION Standards Local investment ..in dynamic markets Finance Entry Points Policies Institutions Business Models Collective Action Support Systems Research and Development The rapid rise of both supermarkets and wholesale markets in China (sales, $ bn) Sales (Billion US$) Wholesale Supermarkets 45 60 40 50 35 30 40 25 30 20 15 20 10 10 5 0 1990 1992 1994 Source: CCAP 1996 1998 2000 2002 0 1986 1988 1990 1992 1994 1996 1998 2000 Retail strategy as practice.. Cash and Carry investor in Pakistan • Cash and Carry investor - 2 stores in 2006, 5 more in 2007 which each store costing $30-40m • Suppliers must have tax number, fax machine etc.. • Success of C&C depends on inefficiency of wholesale. Eg tomatoes. Rp 20 at farm, and Rp 140 in city 5 days later, with up to 5 people involved along chain. Broker (arthi) provide very little service other than prefinancing. 40-45% losses -- packing, logistics, grading. • C&C can buy for Rp40, sell for Rp60 and still get enough margin. Types of strawberry producers in Michoacán, Mexico 1996 2006 1. Traditional system 1. Traditional system 2. Traditional system with higher input use – Cost = $7,500/ha – 80% of farmers / 25% production 2. Medium tech system – Cost = $20,000/ha – 15% of farmers / 40% of production 3. High tech system – Cost = $45,000/ha – 5% of farmers / 35% of production The Market Divide Fastfood chains Processors Hotels & Restaurants Supermarkets Consolidators Traditional Market - Traders Modern, dynamic market chains Fragmenting farms (Roy 2006) Average Farm size: expanding block (source: Roy, 2006) Regulating buyer power? • Regulation of below-cost selling? – Eg Germany: Restraints on Competition Act (1999) • Regulation of supplier relations? – Eg Germany: Reform of competition legislation, July 2005. Large companies now prohibited from using market power to demand “unjustified and repeated” special terms and conditions from suppliers • Codes of Conduct on supplier relations? – Voluntary?. Eg UK, March 2002 – Mandatory? Eg Argentina, Australia – Europe-wide? Any impact? Transferable from NS? (service) •Independent growers (Marketing) CLUSTERS Sweet pea Lettuce Tomato Carrots Squash Cabbage Bell pepper •NGOs & POs(Small farmers) • Corporate farms • Input/service providers •Honorary members Regoverning Markets programme in short.. • Can the new agrifood business drivers be partners in development? • Can smaller scale producers and their organisations be partners in new business? • Can anticipatory public policy make any difference? Strong link between research and policy and learning platforms 1. Empirical research to inform policy 2. Building on Innovation and Guiding Practice Ke ys to inclusion Points of innovation 3. Learning Platforms and Policy Dialogue New alliances