Securing small farmer participation in supermarket supply chains in South Africa

Abstract

Urbanisation and a growing middle class with changing consumption patterns provide an ideal setting for supermarkets to prosper. With South Africa's urban population approaching 60 per cent, supermarket retail chains are now important players in the agro-food sector. Over the last two decades they have begun to purchase produce from in-house sourcing companies who buy mainly from large-scale farmers. Together with the strict requirements of the retail groups, this makes it difficult for small-scale farmers to supply these retailers. This paper highlights the market changes that could continue to exclude small producers from mass consumer markets. It uses a case study to show how small farmers can be integrated into the urban retail market and, using evidence from this study, proposes a number of strategies to help them participate in the mainstream agro-food supply chains and an innovative model for including them while maintaining profitable business operations.

¹Respectively, Professor, Research Fellow, Professor, and Postgraduate Student, Department of Agricultural Economics, Extension and Rural Development, University of Pretoria.

Notes

¹Respectively, Professor, Research Fellow, Professor, and Postgraduate Student, Department of Agricultural Economics, Extension and Rural Development, University of Pretoria.

¹In 2003, South Africa's financial sector released a groundbreaking and visionary Black Economic Empowerment charter, providing for increased access to financial services for poor households and communities, and aiming to direct billions of rands of investment into transformational infrastructure, agricultural development, low-income housing and small and medium black businesses (Du Toit, 2006).