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The Supermarket Revolution in the Asia/Pacific
The Supermarket Revolution in the Asia/Pacific
The Supermarket Revolution in the Asia/Pacific
The Supermarket Revolution in the Asia/Pacific
The Supermarket Revolution in the Asia/Pacific
The Supermarket Revolution in the Asia/Pacific
The Supermarket Revolution in the Asia/Pacific
The Supermarket Revolution in the Asia/Pacific
The Supermarket Revolution in the Asia/Pacific
The Supermarket Revolution in the Asia/Pacific
The Supermarket Revolution in the Asia/Pacific
The Supermarket Revolution in the Asia/Pacific
The Supermarket Revolution in the Asia/Pacific
The Supermarket Revolution in the Asia/Pacific
The Supermarket Revolution in the Asia/Pacific
The Supermarket Revolution in the Asia/Pacific
The Supermarket Revolution in the Asia/Pacific
The Supermarket Revolution in the Asia/Pacific
The Supermarket Revolution in the Asia/Pacific
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The Supermarket Revolution in the Asia/Pacific

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Prof Tom Reardon's talk from the Australian Agricultural & Resource Economics Society's event "Reframing the Food Agenda: Setting the Scene for Australia" held August 19, 2011

Prof Tom Reardon's talk from the Australian Agricultural & Resource Economics Society's event "Reframing the Food Agenda: Setting the Scene for Australia" held August 19, 2011

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  • 1. The Supermarket Revolution in the Asia/Pacific
    Implications for Food Security and Australian Aid and Export Strategies
  • 2. Thomas Reardon, Michigan State University & IFPRI/MSU Joint Program “Markets in Asia”
  • 3. 1. Asia/Pacific Food Economy Context
    While trade is important and growing: 95% of Asian Food Economy is domestic market
    … 5% are imports or exports
    b) While grain is important to food security: grain is about 25% of Asia’s food; the majority (75%) is milk, meat/fish, oil, pulses, produce
  • 4. d) While the rural areas are important: 50-75% of Asia’s food market is urban
    e) While the productivity of the farm sector (“upstream” in supply chain) is crucial for food security: but 50-70% of the food price is formed after the farmgate in the supply chain
    … “downstream” (retail)
    … “midstream” (wholesale/logistics and processing)
     These off-farm segments have been relatively neglected in the food security debate
  • 5. e) A common view of the food markets and supply chains of developing countries of Asia/Pacific is that they are traditional, stagnant, sleepy…
    …. But we find the downstream and midstream segments are transforming in a DOUBLE REVOLUTION:
    • A Modern Food Market Revolution: A “Supermarket Revolution” (fastest in the world in history)
    … + rapid rise of modern large processors
    … + rapid rise of modern wholesale/logistics firms
     Accompanied by Quiet revolution in traditional supply chains
    … not just in “high value agriculture” (non-staples)
    … but also in rice & other staple foods
  • 6. 1. Asian Supermarket Revolution: 3-5x faster than GDP Growth
  • 7. b) Supermarket section in Asia concentrating + multinationalizing
    …global multinational firms (like Metro, Carrefour, Tesco, Walmart)
    … plus rapid emergence of regional multinationals like Dairy Farm International (HK based)
     FDI will probably accelerate (retailFDI was last week liberalized in India…)
  • 8. c) Spreading in waves from the rich .. to the middle class… into the food markets of the poor
    d) Spreading in waves from big cities .. to secondary cities … to rural towns/villages
    … there are even now rural supermarket chains emerging in China and India
  • 9. f) Spreading in waves over product categories:
    … processed foods and rice,
    … to semi-processed foods: meat, dairy.
    … to (already, recently) fresh fruits and vegetables
    … but faster/earlier than in Latin America, Europe, and the US
    … in the US it took 40 years before supermarkets sold any fresh fruits and vegetables…
  • 10. 2. “Midstream” in the supply chain: Processing & Wholesale/Logistics
     Processing + wholesale/logistics “co-evolving” in symbiosis with supermarkets: mutual re-enforcement
    2.1. Modernizing Processing Sector:
    a) Rapid growth,
    b) concentration
    c) multinationalization (global multinationals but also by Asian multinationals like the giant CP (Thailand)
    d) technology change (capital/labor ratio increase)
    e) Branding & packaging
  • 11. 2.2. Rapid modernization of wholesale & logistics in Asia:
    rapid overall expansion of wholesale markets: example from China & India
    … and modernization of Wholesale markets: Inner Mongolia Wholesale Market
    b) Technology change in wholesale/logistics: huge investment in truck fleets, warehouses, cold storages
  • 12. c) rise of specialized modern wholesalers (such as Bimandiri on Java) that act as dedicated procurement agents for supermarket chains
    d) Rapid disappearance of traditional marketing system: reducing role of traditional village brokers
  • 13. e) Multinationalization/regional integration of wholesale/logistics
    … “follow sourcing”
    … regional multinational wholesalers
    … regional and global sourcing hubs of retail chains (with inter-Asian trade within procurement networks)
    Prediction: Intra-Asia-Pacific Trade will grow to far dominate Asia-Europe & Asia-US food trade in next 20 years
  • 14. 3. Procurement System Modernization
    re-organizing: distribution centers + national/regional sourcing networks
    standardizing: private standards
    dis-intermediating and re-intermediating:
    … direct procurement/contracts
    … use modern wholesalers
  • 15. 4. Impacts on Supply Chain in Asia/Pacific
    Most of the impact is of supermarkets
    … on food processors and wholesalers
    … and via the latter on farmers
    b) Included: Small farmers with needed assets (irrigation, roads, credit, education) & medium farmers
    c) Included: dynamic/commercializing zones
    d) Excluded: resource-poor small farmers
  • 16. 5. Impacts of Supermarket Revolution on consumers’ food security
    Emerging evidence: Reduced Cost of Food
    Emerging Evidence: Increased Food Safety
    c) Hypothesis: Reduced Volatility of Food Prices
    d) Hypothesis: Increased availability of food
  • 17. 6. Australian aid implications
    Invest midstream: Public-Private Partnerships
    Invest upstream in farm and agricultural support services
    Differentiate aid strategy for two zones/groups
    … there are poor farmers in both zones
    Use jujitsu/jieli-dali on the food market transformation!
    … examples of Corfo/Chile, China’s 2x100 Program, and ACIAR innovations in supply chains
  • 18. 7. Australian export implications
    Asian food market is a huge opportunity: growing 5-7 x faster than that of Europe or US
    Supermarket Revolution + food processing and wholesale modernization: together have vastly increased the accessibility of the Asia/Pacific market
  • 19. c) Australia is well-positioned for fresh meat & produce exports, and grains
    d) Challenges: growing competition, need for:
    … scale
    … branding
    … de-seasonalization
    … one-stop shop variety of supply
     Key role of north-south (in Asia) joint ventures

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