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

Author

Listed:
  • Shyamal K. Chowdhury

    () (International Food Policy Research Institute, USA)

  • Ashok Gulati

    () (International Food Policy Research Institute, USA)

  • E. Gumbira-Sa'id

    () (Bogor Agricultural University, Bogor, Indonesia)

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

  • Shyamal K. Chowdhury & Ashok Gulati & E. Gumbira-Sa'id, 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(1&2), pages 39-48, December.
  • Handle: RePEc:sag:seajad:v:2:y:2005:i:1&2:p:39-48
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    Cited by:

    1. 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.
    2. 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, Open Access Journal, vol. 7(2), pages 1-16, February.

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    Keywords

    Indonesia;

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