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NOVEMBER 2010 FEBRUARY 2011 PARTNERS
BY DR GIO BRAIDOTTI
Two years ago, Ida Rosida of West
Java dreamed of augmenting her
rural household income. Today,
she is a full-time potato-processing
entrepreneur whose snackfood
products are sold in major city supermarkets.
Marketing her products under the Cumelly
brand, Ida specialises in potato chips with the
tuber skin intact. The novel product is now
available in six flavours and she continues to
develop new variants based on suggestions
from customers and retailers.
Ida is a key partner in a value-chain that links
potato farmers and the urban-based retailers.
She was among a group of smallholder farmers
and processors who participated in an ACIAR
project on market innovations in 2008--09 with
the International Potato Center (CIP).
By using the project's participatory market
chain approach, Ida began experimenting with
new ways to improve traditional Indonesian
snackfood products while establishing
relationships with potential value-chain partners.
Research shows that what happens in the
retail supply chain after produce leaves the
farm is just as important to food security
in developing countries as its production.
The finding, by US researchers, is helping to
focus attention on the retail sector and the
extraordinary transformation brought about by
modernisation in supply chains.
With the emergence in the past 10--20 years of
specialised wholesalers, centralised logistics, high-
capacity processors and modern retail practices
has come new efficiencies that are reshaping
the relationship between farmer, retailer and
consumer in developing countries. Understanding
the impacts on the world's smallholder food
producers is a major concern of David Shearer,
ACIAR's agribusiness program leader.
The program is addressing the results of a
study by Dr Tom Reardon, from Michigan State
University, which show that post-farmgate retail
accounts for 50--70% of the price consumers
pay for food. To Dr Reardon, this means that
efficiencies brought by modernisation of the
supply chain are just as important to food
security as raising on-farm yields.
"The food security debate has focused on
farm production and productivity, and while
this is necessary, it is not sufficient," Dr Reardon
said when addressing the 2010 ASEAN Food
Security Conference. "There are efficiencies
to be had in wholesale, logistics, processing
and retail that can have as much---or more---
impact on food security."
Mr Shearer says modernised supply
chains across Asia are letting modern retail
outlets provide commodity food cheaper
to consumers. For example, supermarkets in
Delhi charge 15--20% less for basic staples
such as rice and wheat and 10% less for basic
vegetables compared with traditional retailers.
"In terms of a food security strategy, we need
to start understanding the post-farmgate price-
forming processes and the beneficial effects
of modernisation," Mr Shearer says. "That is
something ACIAR's agribusiness program wants
to pursue so that we can help smallholders
capture benefits from changes in retail, including
moving into new markets that meet changing
consumers expectations about food safety,
quality and where or how food is produced."
The challenges confronting farmers from the
influences of supply-chain change on demand,
supply and a farmer's location in relation to
markets are substantial. Smallholder farmers
in particular will need help in meeting these
challenges before they can be transformed into
SUPPLY AND DEMAND
Unlike traditional supply chains, the modern retail
processing and wholesale sector can monitor,
contract, trace and store food efficiently. Along
with this extra capacity comes a substantial
incentive to avoid liability while capturing profits
from goods with superior quality and variety. Mr
Shearer says these factors are combining with
changing consumer expectations to produce two
trends of interest to ACIAR:
1 Modernised supply chains can drive down
consumer food price, reduce risk and
variability in food supplies and drive waste
and inefficiency out of the system.
2 Modernisation potentially improves food
quality and safety, reducing exposure to
contaminants on fruit and in milk-herd
feed, disease in poultry, and tainted fish
from poor supply-chain practices.
"The modern sector is the only segment that
has the incentive and capacity to accomplish
these improvements," Mr Shearer says. "But with
changing circumstances come both challenges
and opportunities for smallholders."
To market, a new challenge
Modern supply-chain systems are changing the way food is retailed
globally, with important knock-on effects for smallholders, and they are
also shaping the support provided by ACIAR
Ida Rosida developed Cumelly jacket potato chips as
a way to augment her rural household income.
Harvest farmers group at Padawaas in
the Garut District of West Java.
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