Increased Supermarkets Purchases Provide Opportunity to Smallholder Vegetable Farmers

Market trends show that more and more people will opt to buy from supermarkets than in wet markets in the future. This will have great impact on farmers, especially small-scale farmers who would need to comply with several requirements to be able to directly access this market.

This change in the institutional market segmentation should be no threat, but could be an opportunity to smallholder farmers, said Dr. Sylvia B. Concepcion, Dean of the University of the Philippines Mindanao School of Management. In her study, focused on vegetables from Southern Philippines, she identified the current institutional market segments by following the farm–market–consumer routes of vegetable produce in major urban centers in the whole country. She presented the results during her Professorial Chair Lecture at SEARCA’s Agriculture and Development Seminar Series (ADSS) on 1 March 2011.

In the traditional vegetable supply chain, the farmer sells the produce to wholesalers and traders, who in turn sell to the wet market retailers and to the consumers. This is the way it has been done in the Philippines for generations. However, Dr. Concepcion’s study showed that there has been a shift in the supply chain, as farmers are now selling directly to  consolidators, who in turn sell to supermarkets, hotels, and restaurants. Dr. Concepcion called this the modern supply chain, as they have more stringent requirements from suppliers in terms of quality.

To further analyze impact of the new market chain to smallholder farmers, Dr. Concepcion divided the vegetable market into distinct groups of buyers with different needs, characteristics and behaviors. Dr. Concepcion said the modern supply chain caters to what she called the “plush” and the “business and budget” market segments. These included upscale hotels, resorts, restaurant and supermarkets (plush) and business hotels, mid-priced resorts and restaurants, and supermarket chains (business and budget).

Other markets segments are the “traditional middle”, or the wholesalers and consolidators, and the “wet market retailers” that cater to middle and lower income consumers. These market segments constitutes the traditional vegetable supply chain and usually source products from small-scale vegetable producers.

To be able to penetrate into the “plush” and the “business and budget” segments, small producers need to be facilitated and assisted. Collaborative marketing groups are also imperative, especially if large quantities are required. Dr. Concepcion said,  “Many small farmers working together can make an impact”.

The study also showed that challenges for small producers entering the upscale markets included the need for legal identities and documents like official receipts. Short-term credit facilities should be set up for farmers. They should also be provided with technical information in growing specialty vegetables. Finally, Dr. Concepcion stressed that farmers need to be able to commit to the market and establish long-term relationships. (Regine Joy P. Evangelista)


The point of view taken by this article is entirely that of the presenter's and does not reflect in any way, SEARCA’s position.


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