IDEAS home Printed from https://ideas.repec.org/a/ags/phajad/165779.html
   My bibliography  Save this article

The Rise of Supermarkets and Vertical Relationships in the Indonesian Food Value Chain: Causes and Consequences

Author

Listed:
  • Chowdhury, Shyamal K.
  • Gulati, Ashok
  • Gumbira-Sa’id, E.

Abstract

This paper reviews the causes of the emergence of modern retailing and the vertical relationships in the Indonesian food value chain, and the consequences of these changes on market organization and value distribution. The findings of this paper suggest that there are both demand- and supply-side factors that contribute to the emergence of modern retailing. The evolution of vertical relationships between farmers and modern retailers observed in Indonesia is a direct response to risks and quality uncertainty. In the vertical relation, large-scale retailers may earn a monopsonistic rent, and there are risks of exclusion of small-scale farmers from the emerging food value chain. However, there are alternative channels through which farmers may sell their products, albeit at a lower price compared to the modern channels, and measures can be instituted to protect them against monopsonistic rents. The findings have important policy implications for developing countries.

Suggested Citation

  • Chowdhury, Shyamal K. & Gulati, Ashok & Gumbira-Sa’id, E., 2005. "The Rise of Supermarkets and Vertical Relationships in the Indonesian Food Value Chain: Causes and Consequences," Asian Journal of Agriculture and Development, Southeast Asian Regional Center for Graduate Study and Research in Agriculture (SEARCA), vol. 2(01-2), pages 1-10, December.
    • Handle: RePEc:ags:phajad:165779
    DOI: 10.22004/ag.econ.165779
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/165779/files/AJAD_2005_2_1_2_4Chowdhury.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.165779?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Digal, Larry N. & Ahmadi-Esfahani, Fredoun Z., 2002. "Market power analysis in the retail food industry: a survey of methods," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 46(4), pages 1-26.
    2. Fernando Balsevich & Julio A. Berdegué & Luis Flores & Denise Mainville & Thomas Reardon, 2003. "Supermarkets and Produce Quality and Safety Standards in Latin America," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(5), pages 1147-1154.
    3. Minot, Nicholas, 1986. "Contract Farming and Its Effect on Small Farmers in Less Developed Countries," Food Security International Development Working Papers 54740, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    4. Thomas Reardon & C. Peter Timmer & Christopher B. Barrett & Julio Berdegué, 2003. "The Rise of Supermarkets in Africa, Asia, and Latin America," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(5), pages 1140-1146.
    5. World Bank, 2003. "World Development Indicators 2003," World Bank Publications - Books, The World Bank Group, number 13920, April.
    6. C. Dolan & J. Humphrey, 2000. "Governance and Trade in Fresh Vegetables: The Impact of UK Supermarkets on the African Horticulture Industry," Journal of Development Studies, Taylor & Francis Journals, vol. 37(2), pages 147-176.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sowjanya R. Peddi, 2014. "Multinational Corporations in Indian Food Retail: Why and How Size Matters," Millennial Asia, , vol. 5(1), pages 89-117, April.
    2. Sukhpal Singh & Naresh Singla, 2011. "Fresh Food Supermarkets in India: An Analysis of their Inclusiveness and Impact on Primary Producers," Millennial Asia, , vol. 2(1), pages 65-91, January.
    3. Sukhpal Singh, 2012. "Role of FDI in Multi-brand Retail Trade in India and its Implications," Review of Market Integration, India Development Foundation, vol. 4(3), pages 283-308, December.
    4. Maspaitella, Marcus & Garnevska, Elena & Siddique, Muhammad I. & Shadbolt, Nicola, 2018. "Towards high value markets: a case study of smallholder vegetable farmers in Indonesia," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 21(01).
    5. Gáfaro, Margarita & Pellegrina, Heitor S., 2022. "Trade, farmers’ heterogeneity, and agricultural productivity: Evidence from Colombia," Journal of International Economics, Elsevier, vol. 137(C).
    6. Neeliah, Shalini A. & Neeliah, Harris & Goburdhun, Daya, 2013. "Assessing the relevance of EU SPS measures to the food export sector: Evidence from a developing agro-food exporting country," Food Policy, Elsevier, vol. 41(C), pages 53-62.
    7. Alim Setiawan Slamet & Akira Nakayasu & Masahiro Ichikawa, 2017. "Small-Scale Vegetable Farmers’ Participation in Modern Retail Market Channels in Indonesia: The Determinants of and Effects on Their Income," Agriculture, MDPI, vol. 7(2), pages 1-16, February.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Philippe Marcoul & Luc Veyssiere, 2010. "A Financial Contracting Approach to the Role of Supermarkets in Farmers' Credit Access," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 92(4), pages 1051-1064.
    2. Luc, Veyssiere, 2007. "The rise of supermarkets in developing countries: Implications for credit markets," 106th Seminar, October 25-27, 2007, Montpellier, France 7936, European Association of Agricultural Economists.
    3. Asfaw, Abay, 2007. "Supermarket purchases and the dietary patterns of households in Guatemala," IFPRI discussion papers 696, International Food Policy Research Institute (IFPRI).
    4. Souza, Roberta de Castro & Neto, João Amato, 2010. "The Entry of Brazilian Fresh Fruit Small and Medium Producers Into the Global Market," Brazilian Journal of Rural Economy and Sociology (Revista de Economia e Sociologia Rural-RESR), Sociedade Brasileira de Economia e Sociologia Rural, vol. 48(3), pages 1-18.
    5. John Pickles & Stephanie Barrientos & Peter Knorringa, 2016. "New end markets, supermarket expansion and shifting social standards," Environment and Planning A, , vol. 48(7), pages 1284-1301, July.
    6. Elizaphan J. O. Rao & Bernhard Brümmer & Matin Qaim, 2012. "Farmer Participation in Supermarket Channels, Production Technology, and Efficiency: The Case of Vegetables in Kenya," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 94(4), pages 891-912.
    7. Reardon, Thomas & Odera, Michael M. & Neven, David, 2006. "Horticulture Farmers and Domestic Supermarkets in Kenya," Staff Paper Series 11534, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    8. Mukherjee, Anit & Zhang, Xiaobo, 2005. "Rural non-farm development in China and India: the role of policies and institutions," DSGD discussion papers 24, International Food Policy Research Institute (IFPRI).
    9. Handschuch, Christina & Wollni, Meike & Villalobos, Pablo, 2013. "Adoption of food safety and quality standards among Chilean raspberry producers – Do smallholders benefit?," Food Policy, Elsevier, vol. 40(C), pages 64-73.
    10. 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.
    11. Lemeilleur, Sylvaine, 2013. "Smallholder Compliance with Private Standard Certification: The Case of GlobalGAP Adoption by Mango Producers in Peru," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 16(4), pages 1-22, November.
    12. repec:lic:licosd:36315 is not listed on IDEAS
    13. John C. Beghin & Miet Maertens & Johan Swinnen, 2017. "Nontariff Measures and Standards in Trade and Global Value Chains," World Scientific Book Chapters, in: John Christopher Beghin (ed.), Nontariff Measures and International Trade, chapter 2, pages 13-38, World Scientific Publishing Co. Pte. Ltd..
    14. Fontaine, Damien & Gaspart, Frederic & Frahan, Bruno Henry de, 2008. "Modelling the impact of private quality standards on the fresh fruit and vegetable supply chains in developing countries," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 44378, European Association of Agricultural Economists.
    15. Muriithi, Beatrice W. & Matz, Julia Anna, 2015. "Welfare effects of vegetable commercialization: Evidence from smallholder producers in Kenya," Food Policy, Elsevier, vol. 50(C), pages 80-91.
    16. Miyata, Sachiko & Minot, Nicholas & Hu, Dinghuan, 2009. "Impact of Contract Farming on Income: Linking Small Farmers, Packers, and Supermarkets in China," World Development, Elsevier, vol. 37(11), pages 1781-1790, November.
    17. Barrett, Christopher B., 2008. "Smallholder market participation: Concepts and evidence from eastern and southern Africa," Food Policy, Elsevier, vol. 33(4), pages 299-317, August.
    18. 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.
    19. Jiping Ding & Paule Moustier & Xingdong Ma & Xuexi Huo & Xiangping Jia, 2019. "Doing but not knowing: how apple farmers comply with standards in China," Agriculture and Human Values, Springer;The Agriculture, Food, & Human Values Society (AFHVS), vol. 36(1), pages 61-75, March.
    20. Bellemare, Marc F., 2012. "As You Sow, So Shall You Reap: The Welfare Impacts of Contract Farming," World Development, Elsevier, vol. 40(7), pages 1418-1434.
    21. Narayanan, Sudha & Gulati, Ashok, 2002. "Globalization and the smallholders: a review of issues, approaches, and implications," MSSD discussion papers 50, International Food Policy Research Institute (IFPRI).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:phajad:165779. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/searcph.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.