Presentation 17.09


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  • (In selecting respondents who supplied to the supermarket procurement centre in Nuwara-Eliya due to the impossibility of obtaining a sampling frame)
  • 1. despite the availability of a range of selling options 2. Farmers receiving advance payments and loans for purchasing of inputs in exchange of farm produce of buyers’ choice 3. Which bought vegetables from their own set of farmers (with the priority given to the members of the Grameen Scheme under the company), sorted and sold to various industrial customers such as hotels, supermarkets and garment factories and occasionally to export markets 4. Such part time farmers are mostly professionals and government or estate workers who are carrying out commercial agricultural operations in the location + collector farmers whose main activity’s collecting
  • Presentation 17.09

    2. 2. <ul><li>INTRODUCTION </li></ul><ul><li>Majority of the farmers are smallholders Located in relatively isolated areas </li></ul><ul><li>Access to competitive markets difficult and costly </li></ul><ul><li>Traditional Vegetable Supply Chains (TVSC) </li></ul><ul><ul><li>Characterized by various sources of inefficiencies </li></ul></ul><ul><ul><li>Large number of intermediaries- Lack of accountability among each other </li></ul></ul><ul><ul><li>30 to 40% of post harvest losses- low farm gate prices and higher retail prices </li></ul></ul><ul><ul><li>Existence of credit bound relationships-lack of bargaining power to the farmers </li></ul></ul>
    3. 3. <ul><li>To investigate into </li></ul><ul><li>Whether the emergence of supermarkets has created vegetable supply chains that are different from existing traditional supply chains (TVSC) </li></ul><ul><li>and if so </li></ul><ul><li>(b) The nature of such emerging supply chains </li></ul><ul><li>and </li></ul><ul><li>(c) The impacts on the primary producers vis-à-vis traditional supply chains </li></ul>OBJECTIVES
    4. 4. METHODOLOGY Case Study Strategy was Adopted: Study consisted two stages Stage one : To investigate the existence and the nature of Emerging Supermarket related Supply Chains (SVSC) Stage two: To investigate the Impacts of newly emerged supply chains on farmers vis-à-vis TVSC
    5. 5. Stage 1 Stage 2 Sampling <ul><li>Supermarkets : purposively </li></ul><ul><li>to capture the variability: </li></ul><ul><li>- number of outlets </li></ul><ul><li>- geographical spread </li></ul><ul><li>- ownership structure </li></ul><ul><li>number of years in the business </li></ul><ul><li>Actors involved : snowball sampling </li></ul>Study Sites : The two locations with Supermarket Vegetable Procurement Centres (SVPC )in Upcountry of SL Hanguranketha : Simple random sampling Nuwara-Eliya: Exit-poll Snowball sampling (30 farmer suppliers to SVPC & 30 non suppliers to SVPC from each location) Method of Data Collection <ul><ul><li>TVSC: Secondary data </li></ul></ul><ul><ul><li>SVSC : semi-structured interviews, direct observations </li></ul></ul>semi-structured interviews direct observations
    6. 6. FINDINGS Stage 1: The Nature of Emerging Supermarket Related Vegetable Supply Chains (SVSC) Nature of SVSC associated with supermarkets varied with the size of the supermarket chain (no. of branches per chain) Three main categories identified: Small: supermarkets with one or two outlet Medium: supermarket chains with a branch network of about 7-8 outlets Large:
    7. 7. <ul><li>SVSC of Small and Medium Scale Supermarket Chains: </li></ul><ul><li>Mere extensions of the existing TVSC </li></ul><ul><li>They procure vegetables: </li></ul><ul><ul><li>either from the TVSC through intermediaries (i.e. vegetable supplier) </li></ul></ul><ul><ul><li>or from </li></ul></ul><ul><ul><li>Collectors who buy vegetables from farmers (at the prevailing farm gate prices) and sort and supply high quality produce directly to supermarkets </li></ul></ul>
    8. 8. <ul><li>The Supermarket Chain with the largest branch network: </li></ul><ul><li>Created an alternative supply chain through regional procurement centres (SVPC) </li></ul><ul><li>Positive Aspects </li></ul><ul><li>Post-harvest losses comparatively low: </li></ul><ul><ul><li>Transfer of ownership </li></ul></ul><ul><ul><li>Method of transportation-Usually in freezer trucks, using plastic crates (as opposed to usage of gunny or polypropylene bags in traditional supply chains that are transported through lorries) </li></ul></ul>
    9. 9. <ul><li>Positive Aspects Cond. </li></ul><ul><li>Higher degree of transparency and accountability among the actors involved throughout the chain </li></ul><ul><li>Less number of intermediaries </li></ul><ul><li>Presence of quality consciousness along the supply chain </li></ul><ul><li>Quality related price signals passing down to farm level </li></ul>
    10. 10. <ul><li>Negative Aspects </li></ul><ul><li>Price advantages -only by the (privileged set of) farmers who supply directly to the supermarket </li></ul>
    11. 11. <ul><li>Stage 2: The Impacts of Emerging SVSC on Farmers Vis-à-vis TVSC </li></ul><ul><li>Operations and Impacts: </li></ul><ul><li>SVSC -relatively more efficient and effective compared to traditional supply chains </li></ul><ul><li>Context specific variations in the two study sites </li></ul><ul><li>Most of the farmers are exclusive suppliers to a supply chain of their own choice despite the availability of a range of selling options </li></ul><ul><li>(except in the case of farmers who supplied directly to super market who also supplied to one other supply chain) </li></ul>
    12. 12. Hanguranketha Nuwara-Eliya SVSC+ A limited # of variants of TVSC (connected with the country’s main whole sale markers viz., Colombo, Dambulla Dedicated Economic Centre (DDEC) and Katugasthota-Kandy) More variants of TVSC + SVSC + other alternative supply chains (TVSC connected via wholesale mkts in Meegoda and Thambuthhegama + supply chain operated by a group of companies 3 with higher price benefits to farmers) Suppliers to SVSC also supplied to one other TVSC Other farmers: exclusive suppliers 1 to a TVSC of their own choice (long standing mutually beneficial 2 and/or credit bound relationships) A higher range of actors compared to Hanguranketha- more competitive market environment No exclusive affiliation of farmers Choice in the order of priority DDEC, Colombo, Katugasthota-Kandy No such priority 94 % of farmers of vegetable suppliers of SVPC were full time farmers Suppliers to the SVPC - Mostly part time farmers 4 (of which majority are collectors)-less benefits to farmers
    13. 13. <ul><li>IMPACT of the SVSC </li></ul><ul><li>Supermarket collecting centres - offers relatively higher prices (for higher quality produce)in both localities </li></ul><ul><li>Extension activities- By the managers/agents of SVSC (solutions and advice to problems related to crop husbandry practices in both locations) </li></ul><ul><li>Has created opportunities for farmers to venture into alternative agriculture . </li></ul><ul><li>For example, a demand for alternative vegetables such as Coriander leaves and Thibbatu has been created in Hanguranketha </li></ul>
    14. 14. Figure 4: Income comparison between farmers by their selling options in Hanguranketha Note: The graph compares the income per harvest of tomato from 0.25Ac of land by farmer types based on place of selling Incremental average income per harvest per 0.25 acres of tomato is only about two hundred rupees
    15. 15. <ul><li>LATERAL SPREAD of BENEFITS </li></ul><ul><li>Hanguranketha: </li></ul><ul><li>Creation of a Spatial Price Variation within a Radius of 12 km in Hanguranketha </li></ul><ul><li>Farmers operating in close proximity to the SVSC receive higher farm gate prices from the vegetable collectors attached to TVS </li></ul>
    16. 16. <ul><li>In Nuwara Eliya: </li></ul><ul><li>SVPC </li></ul><ul><li>Has contributed to the increased competition among buyers in the location, </li></ul><ul><li>Has not contributed towards increasing the farm gate prices offered by the traditional supply chains in Nuwara Eliya (owing to the insignificant proportion of vegetables channelled) </li></ul><ul><li>Has created opportunities for farmers to venture into alternative agriculture. </li></ul><ul><li>For example, a market for high-value vegetables such as Cauliflower, Broccoli, Zucchini, Red cabbage </li></ul>
    17. 17. <ul><li>Limitations of the Supermarket Supply Chain </li></ul><ul><li>Only a limited number of suppliers who have direct access to such centres are able to reap its benefits. </li></ul><ul><li>Quantities purchased were not large enough to make a significant impact in terms of price advantages created at the grass-roots level </li></ul><ul><li>(According to 80 % of the farmers who supplied to SVSC the proportion of the total harvest purchased is not sufficient to generate a reasonable household income) </li></ul><ul><li>In Hanguranketha, only around 1 % of the total farming population has the access to SVSC and only around 29% (on average) of the total harvest of those farmers was purchased by the centre </li></ul>. [1] With seasonal variations
    18. 18. <ul><li>In Nuwara-Eliya: </li></ul><ul><li>the benefits of the higher price paid by the supermarket is captured only by the intermediaries (as the majority of supplier were collector farmers) </li></ul><ul><li>In both localities: </li></ul><ul><li>the SVSC has not induced the farmers to change their resource use patterns in their production practices </li></ul><ul><li>Prevailing uncertainty on the quantities that can be sold to SVSC and the price they would receive </li></ul><ul><li>During Market Gluts- SVSC procure vegetables from the TVSC (have further aggravated the problem) and tighten quality criteria for farmers--  hampers the ability to plan ahead and reduces motivation to change the production practices in order to improve the quality to suit the standards required by the supermarket </li></ul>.
    19. 19. <ul><li>CONCLUSIONS </li></ul><ul><li>Supply chains related to small and medium scale supermarket chains mere extensions of the existing TVSCs </li></ul><ul><li>The island’s largest supermarket chain has created an alternative supply chain which is comparatively more efficient and effective due to its transparency, accountability and low post harvest losses </li></ul><ul><li>Although the emergence of the SVSCs have brought about certain benefits, the conveyance of these favourable impacts to the farm level is dependent to a great extent on the specific context in which it operates </li></ul><ul><li>Beneficial impacts of SVSC at the grass roots level found to be context specific and varied with the geographic location </li></ul>
    20. 20. <ul><li>The vegetable supply chains as a whole have become more competitive and hence the traditional supply chains also are compelled to offer higher prices in certain locations </li></ul><ul><li>Has induced farmers to diversify into alternative agriculture </li></ul><ul><li>Only the farmers who were directly interacting with SVPC were able to capitalise on the higher farm gate prices offered </li></ul><ul><li>Only a modest portion of the total harvest of a limited number of farmers is purchased by the procurement centre </li></ul><ul><li>farmers are not motivated to change their production related resource use pattern </li></ul>.
    21. 21. some TVSC offer mutual benefits to farmers in terms of advance payments and granting loans to purchase inputs. TVSC found to be the most assured selling option for farmers despite its weaknesses.
    22. 22. Thank You
    23. 23. Figure 2: Various other Selling Options Adopted by Farmers in Hanguranketha who Supplied to Supermarket To Collectors attached to Dambualla TVSC To Colombo via Transport Agents To Kandy via Transport Agents F
    24. 24. Figure 3: Selling Options Adopted by Farmers in Hanguranketha who did not Supply to Supermarket To Collectors attached to Dambualla TVSC To Colombo via Transport Agents To Kandy via Transport Agents
    25. 25. Figure 4: Composition of the Suppliers of Vegetables to the Supermarket Procurement Centre in Nuwara Eliya Full time small scale farmers Full time large scale farmers Part time farmers Collector farmers Full time collectors
    26. 26. Table 1: Spatial Price Variation Created by the Presence of Supermarket Procurement Centre in Hanguranketha Note: The data indicates the average price (Rs/kg) paid by vegetable collectors for Tomato Date of Data Collection Distance to the Supermarket Procurement Centre Decreases  Padiyapalalla Dehipe Denike Rikillagaskada Day 1 26 25 28 30 Day 2 28 32 32 34 Day 3 26 26 30 32 Day 4 30 32 32 34 Day 5 30 32 32 34
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