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The Food Retail Revolution in Poor Countries: Is It Coming or Is It Over?

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  • Bart Minten

Abstract

Global retail chains are becoming increasingly dominant in the global food trade, and their rise leads to dramatic impacts on agricultural supply chains and on small producers. However, the prospects and impacts of a food retail revolution in poor countries are not yet well understood. Here, I examine this question in Madagascar, a poor but stable country in which global retailers have been present for over a decade. The survey and analysis find that while global retail chains sell better-quality food, their prices are 40%–90% higher, ceteris paribus, than those seen in traditional retail markets. In poor settings, characterized by high food price elasticities, a lack of willingness to pay for quality, and small retail margins, supermarkets appear to set prices with an eye toward maximizing profits on the basis of price-inelastic demands for quality products from a small middle class interested in one-stop shopping. It seems unlikely that global retail chains will further increase their food retail share in such poor settings.

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Bibliographic Info

Article provided by University of Chicago Press in its journal Economic Development and Cultural Change.

Volume (Year): 56 (2008)
Issue (Month): ()
Pages: 767-789

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Handle: RePEc:ucp:ecdecc:v:56:y:2008:p:767-789

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Web page: http://www.journals.uchicago.edu/EDCC/

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Cited by:
  1. Minten, Bart & Reardon, Thomas & Sutradhar, Rajib, 2010. "Food Prices and Modern Retail: The Case of Delhi," World Development, Elsevier, vol. 38(12), pages 1775-1787, December.
  2. Minten, Bart & Reardon, Thomas & Vandeplas, Anneleen, 2009. "Linking urban consumers and rural farmers in India: A comparison of traditional and modern food supply chains," IFPRI discussion papers 883, International Food Policy Research Institute (IFPRI).
  3. Johan F.M. Swinnen & Anneleen Vandeplas, 2010. "Market power and rents in global supply chains," Agricultural Economics, International Association of Agricultural Economists, vol. 41(s1), pages 109-120, November.
  4. Suryadarma, Daniel & Poesoro, Adri & Akhmadi & Budiyati, Sri & Rosfadhila, Meuthia & Suryahadi, Asep, 2010. "Traditional food traders in developing countries and competition from supermarkets: Evidence from Indonesia," Food Policy, Elsevier, vol. 35(1), pages 79-86, February.
  5. Tschirley, David L. & Ayieko, Miltone W., 2008. "Assessment of Kenya's Domestic Horticultural Production and Marketing Systems and Lessons for the Future," Food Security Collaborative Working Papers 55431, Michigan State University, Department of Agricultural, Food, and Resource Economics.
  6. Tschirley, David L. & Ayieko, Miltone W. & Hichaambwa, Munguzwe & Goeb, Joey & Loescher, Wayne, 2010. "Modernizing Africa’s Fresh Produce Supply Chains without Rapid Supermarket Takeover: Towards a Definition of Research and Investment Priorities," Food Security International Development Working Papers 93030, Michigan State University, Department of Agricultural, Food, and Resource Economics.
  7. Buergelt, Doreen & von Oppen, Matthias & Yadavendra, Jagdish Prasad, 2009. "Hedonic price analysis to guide breeding for upgrading an orphan crop in India and Nepal," 2009 Conference, August 16-22, 2009, Beijing, China 51758, International Association of Agricultural Economists.
  8. Gómez, Miguel I. & Ricketts, Katie D., 2013. "Food value chain transformations in developing countries: Selected hypotheses on nutritional implications," Food Policy, Elsevier, vol. 42(C), pages 139-150.
  9. Tschirley, David L. & Hichaambwa, Munguzwe, 2010. "The Structure and Behavior of Vegetable Markets Serving Lusaka: Main Report," Food Security Collaborative Working Papers 93006, Michigan State University, Department of Agricultural, Food, and Resource Economics.
  10. Gorton, Matthew & Sauer, Johannes & Supatpongkul, Pajaree, 2011. "Wet Markets, Supermarkets and the "Big Middle" for Food Retailing in Developing Countries: Evidence from Thailand," World Development, Elsevier, vol. 39(9), pages 1624-1637, September.

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