Consumers in the UK now expect high quality food from around the world, produced according to high ethical, environmental and safety standards, at an affordable price and in all seasons. This opens up new market opportunities for agricultural producers in developing countries. But there are fears that the way these supply chains are managed - through rationalisation and through standards and certification processes - are also a potential barrier for smaller scale producers, who form the backbone of the African rural economy. Given the importance of these producers for achievement of the Millennium Development Goals this is of major concern.
"Export markets offer very lucrative opportunities but can be very hard to exploit. Large retailers such as supermarkets in Europe play a decisive role in structuring the production and processing of fresh vegetables exported from Africa. The top 30 supermarket chains worldwide control almost a third of grocery sales. Their informal or private standards can be even more exacting than official ones - such as sanitary and phyto-sanitary (SPS) ... leading to the exclusion of small farmers and concentrating business in the hands of large firms... Supermarkets should assess the development impact of their procurement and standard setting practices on smallholders and help them integrate into the supply chain."
Source: Our Common Interest. Report of the Commission for Africa: More Trade and Fairer Trade.
Linkage with the UK is not a simple in-or-out question. There is increasing evidence from IIED projects that smallholders excluded from large retailer supply chains continue to sell their produce to consumers in the UK through other supply chains, including wholesale and cash-and-carry. While those smallholders included in large retailer supply chains face persistent pressure to adhere to higher standards.
The impact of large retailers is not confined to those industry participants included in their supply chains. The indirect impact on inclusion of smallholders is usually more widespread. For instance, the technology and skill-set that foreign large retailers import to developing countries, particularly new procurement practices through distribution hubs and standards, is often adopted by the entire agri-food industry in developing countries. This results in dynamic changes and higher standards throughout agri-food supply chains.
The UK Department for International Development (DFID) is supporting a project at the International Institute for Environment and Development (IIED) to explore these issues. Forming close partnerships with food retailers, manufacturers, standard-setting bodies, traders and producers, this project aims to create opportunities and identify favourable outcomes for small-scale producers in developing countries to participate in international horticultural supply chains, given the rise of private standards. Supplementary funding has also been provided by the Swiss Agency for Development and Cooperation (SDC).
The project recognises the commercial realities of the highly competitive food retail market and the need for rigorous supply chain management, and customer assurance, but also recognises the private sector as a partner in development and poverty reduction. The project will focus in particular on the full range of export horticulture in Africa, in the context of the focus on Africa within the 2005 UK G8 Presidency.
The project is built around three key themes:
Dialogue, among supermarkets, other retailers, standard-setting bodies, industry associations, public policy-makers, NGOs, donors, Secretary of State, etc, in the UK and Africa on the future direction for private sector standards
Information on standards setting and compliance issues for rural development, including the costs and benefits of compliance with specific standards such as EurepGAP, to assist smallholders in accessing the most beneficial standards scheme for them.
‘Best practice' with regard to standard-setting and implementation, with the inclusion of smallholder-friendly elements into existing standards, through piloting different solutions.