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Behaviour of Premium Paid by Supermarket and Trade-off Facing Farmers

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  • Suganthi, D.

Abstract

The argument that supermarkets might pay higher prices to farmers because of their economies of scale remains a contentious issue in India. Using procurement price data of one of the leading supermarket chains, Aditya Birla More (ABM), the impact of supply relationship on the premium paid to the farmers was analysed. The findings suggest that conditional premium associated with ABM chain is positively significant, which shows that farmers gains because of disintermediation. However, it is crop specific. At the same time, evidence shows that it poses challenges in the form of high price volatility, compared to traditional market, irrespective of the season. Further, season-wise mean analysis proves that ABM manages to procure good quality produce in the lean season by paying lower premium than the peak season.

Suggested Citation

  • Suganthi, D., 2013. "Behaviour of Premium Paid by Supermarket and Trade-off Facing Farmers," Indian Journal of Agricultural Economics, Indian Society of Agricultural Economics, vol. 68(3), pages 1-9.
    • Handle: RePEc:ags:inijae:206345
    DOI: 10.22004/ag.econ.206345
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    File URL: https://ageconsearch.umn.edu/record/206345/files/Suganthi68_3.pdf
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    References listed on IDEAS

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    1. Berdegue, Julio A. & Balsevich, Fernando & Flores, Luis & Reardon, Thomas, 2005. "Central American supermarkets' private standards of quality and safety in procurement of fresh fruits and vegetables," Food Policy, Elsevier, vol. 30(3), pages 254-269, June.
    2. Michelson, Hope & Reardon, Thomas & Perez, Francisco, 2012. "Small Farmers and Big Retail: Trade-offs of Supplying Supermarkets in Nicaragua," World Development, Elsevier, vol. 40(2), pages 342-354.
    3. Narrod, Clare & Roy, Devesh & Okello, Julius & Avendaño, Belem & Rich, Karl & Thorat, Amit, 2009. "Public-private partnerships and collective action in high value fruit and vegetable supply chains," Food Policy, Elsevier, vol. 34(1), pages 8-15, February.
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    Cited by:

    1. Nuthalapati, Chandra S.R. & Sutradhar, Rajib & Reardon, Thomas & Qaim, Matin, 2020. "Supermarket procurement and farmgate prices in India," World Development, Elsevier, vol. 134(C).

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    Keywords

    Farm Management; Marketing;

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