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The participation of the poor in supermarkets and other distribution value chains : draft synthesis. Working paper

Moustier P., Dao Thê Anh, Hoang Bang An, Vu Trong Binh, Figuié M., Dao Duc Huan, Le Thanh Loan, Nguyen Thi Tan Loc, Thanh Son H., Phan Thi Giac Tam, Nguyen Duc Truyen. 2005. Hanoi : MALICA, 24 p..

The study assesses conditions for an increased involvement of the poor in the food value chains driven by supermarkets and other value-adding outlets. The trends of the different distribution chains were analysed through the gathering of secondary data. Surveys on poor consumers' access to different retailing points were made in Hanoi, Ho Chi Minh City and Moc Chau, as well as comparison of prices between the different points of sale in these cities. Four case studies investigated poor farmers' and traders' participation in distribution value chains: (i) vegetables for Hanoi from Soc Son district and Moc Chau district, (ii) vegetables for Ho Chi Minh City from the peri-urban area of Cu Chi district, HCMC and from Duc Trong and Don Duong districts in Lam Dong Province; (iii) litchi from Yen the district in Bac Giang province; (iii) flavoured rice from Hai hau district in Nam Dinh province. In-depth interviews of stakeholders along the chains, as well as census of traders, investigated the patterns of horizontal and vertical coordination that link the poor to the markets; the distribution of costs and benefits between the farmers and the traders along the chains; the respective advantages and drawbacks involved in supplying different types of outlets; the employment impact of the different chains. Markets and street vendors are still the major players in food distribution, when considering quantities sold, areas of sale, as well as employment. Yet supermarkets are growing fast all the more since the government has a positive attitude towards them, in particular for reasons of food safety and modernisation, in opposition to a negative attitude towards street vending and informal markets. Yet street vending and markets generate more employment by volume of business than supermarkets, especially for the poor. They are also the main points of sale for the poor consumers, who rarely purchase in supermarkets, because of price and distance constraints. This situation may change though if prices in supermarkets go down, as already reflected by the higher frequentation of supermarkets in Ho Chi Minh City as compared with Hanoi. Poor farmers have no direct access to supermarkets because of the requirements in terms of safety (for vegetables), quantities and conditions of delivery (for all products). Yet poor farmers can be indirect suppliers of supermarkets through the belonging to (or contracting with) farmers' associations supplying supermarkets. Ten farmers' associations, which work in the form of commercial organisations with shares, are regular suppliers of supermarkets for the selected products. Some have poor farmers as members, e.g., a vegetable cooperative in peri-urban Ho Chi Minh City and the flavoured rice association in Hai Hau. Their ability to supply supermarkets is related to the combination of functions they supply to their members: technical training (e.g. as regards safe vegetable production), input supply, collective marketing, quality control, credit supply, for which they receive public and NGO support. Supermarket supply through farmers' associations generally generates increases in farmers' incomes when compared with traditional chains, with a lot of variations: no difference for baby tomato chain, 42% increase for the litchi and rice chains, 25% for Soc Son vegetable farmers, 400% for water convolvulus in peri-urban Ho Chi Minh City. The supply of supermarkets is mostly appreciated by farmers because of a higher stability in prices and quantities purchased than in traditional chains, yet the situation is reported to change with the increase in supermarket competition. Shops represent another type of outlet for which farmers' associations benefit from the same advantages than supermarkets with less constraining requirements. Small-scale suppliers can get more added value by the promotion of farmers' associations involved in quality development and control through training and credit programmes. Propositions aime...
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