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A novel agribusiness model for backward linkages with farmers: a case of food retail chain

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  • Mangala, K.P.
  • Chengappa, P.G.
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    Abstract

    One of the leading food retail chains, ‘Spencers’ have established backward linkages with farmers for procuring fresh fruits and vegetables. The main strategy of this system ensures a steady and continuous supply of fresh vegetables to the food retail chain and flow of income to farmers. This linkage has been able to change the method of farming and the marketing arrangement followed by the food retail chains. The marketing arrangement by Spencers food retail chain has reduced the market risks and transaction cost of farmers and has helped them in breaking away from the clutches of traditional brokers/wholesalers/commission agents. Direct supply by farmers has allowed the retail chain to simultaneously increase control over quality, supply reliability and price stability. An added advantage of this model is that it provides flexibility to the farmers to exit from this system, if they are not satisfied with its functioning, since there are no written contracts. This model of linkage is specially suited to small and marginal farmers and improves their economic conditions by providing an opportunity to grow and supply high-value vegetables round the year at a fairly decent price. The study has analyzed the impact of food retail chain linkage on farmers.

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    Bibliographic Info

    Article provided by Agricultural Economics Research Association (India) in its journal Agricultural Economics Research Review.

    Volume (Year): 21 (2008)
    Issue (Month): 2008 ()
    Pages:

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    Handle: RePEc:ags:aerrae:47886

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    Keywords: Agribusiness;

    References

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    1. Dave D. Weatherspoon & Thomas Reardon, 2003. "The Rise of Supermarkets in Africa: Implications for Agrifood Systems and the Rural Poor," Development Policy Review, Overseas Development Institute, vol. 21, pages 333-355, 05.
    2. David Neven & Thomas Reardon, 2004. "The Rise of Kenyan Supermarkets and the Evolution of their Horticulture Product Procurement Systems," Development Policy Review, Overseas Development Institute, vol. 22(6), pages 669-699, November.
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    Cited by:
    1. Schipmann, Christin & Qaim, Matin, 2011. "Supply chain differentiation, contract agriculture, and farmers’ marketing preferences: the case of sweet pepper in Thailand," Discussion Papers 108349, Georg-August-Universitaet Goettingen, GlobalFood, Department of Agricultural Economics and Rural Development.
    2. Aparna, B. & Hanumanthaiah, C.V., 2012. "Are Supermarket Supply Channels More Efficient than Traditional Market Channels?," Agricultural Economics Research Review, Agricultural Economics Research Association (India), vol. 25(2).
    3. Vamsidhar Reddy, T.S. & Hall, Andy & Sulaiman V., Rasheed, 2010. "New Organisational and Institutional Vehicles for Managing Innovation in South Asia: Opportunities for Using Research for Technical Change and Social Gain," MERIT Working Papers 054, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    4. Singla, Naresh & Singh, Sukhpal & Dhindsa, P.K., 2011. "Linking Small Farmers to Emerging Agricultural Marketing Systems in India—The Case Study of a Fresh Food Retail Chain in Punjab," Agricultural Economics Research Review, Agricultural Economics Research Association (India), vol. 24(1).

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