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LINKING PRODUCERS TO MODERN FOOD RETAILERS: A Survey of Buyer Interest in the Balkans

LINKING PRODUCERS TO MODERN FOOD RETAILERS: A Survey of Buyer Interest in the Balkans. Prepared for the U.S. Agency for International Development By Chemonics International and J.E. Austin Associates MAY 2005. CONTENT OF THE PRESENTATION. Introduction Demand in the Region Positive Elements

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LINKING PRODUCERS TO MODERN FOOD RETAILERS: A Survey of Buyer Interest in the Balkans

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  1. LINKING PRODUCERS TO MODERN FOOD RETAILERS:A Survey of Buyer Interest in the Balkans Prepared for the U.S. Agency for International Development By Chemonics International and J.E. Austin Associates MAY 2005

  2. CONTENT OF THE PRESENTATION • Introduction • Demand in the Region • Positive Elements • Obstacles • Comments by Country • Recommendations • Conclusions

  3. INTRODUCTION – STUDY OBJECTIVES • Determine potential for farmers to sell to large-scale buyers • Suggest regional interventions by USAID

  4. INTRODUCTION – STUDY DESIGN • Limited Internet research • Interviews in six countries • Analysis and conclusions • Written report

  5. INTRODUCTION – DATES, CONSULTANTS, COUNTRIES Research done in April and May 2005 Douglas Griffith and Jeff MacKenzie Chemonics International, Inc. Romania and Serbia Marcos Arocha and Kenneth Weiss J.E. Austin Associates, Inc. Albania, Bosnia-Herzegovina, Bulgaria and Montenegro

  6. INTRODUCTION – PEOPLE INTERVIEWED Roughly 70 interviews in 6 countries Managers of hypermarket and supermarket chains, processing companies, hotel chains, wholesale companies

  7. INTRODUCTION- MAP OF REGION

  8. DEMAND – INFLUX OF BIG RETAILERS • Metro, Carrefour, Billa, Mercator, etc. • A worldwide phenomenon • Growth in every country visited • Dramatic expansion plans

  9. DEMAND – PRODUCTS OF INTEREST • Vegetables – salad and other • Fruits – melons, apples, etc. • Meat (packaged cuts) - beef, turkey, etc. • Dairy – fresh milk, white cheese, etc.

  10. DEMAND – PROCUREMENT METHODS • Interest in local products (esp. fresh) • Local decision-making / buying • Emphasis on quality and quantity • Preference for long-term relationships • Discounts and slotting fees • Private labeling, electronic systems • Increasing use of central warehousing • Long payment terms

  11. ON THE POSITIVE SIDE • Big stores becoming more important • Open to potential new suppliers • Superb preparation for exporting • Several success stores

  12. CONSTRAINTS I • Critical mass and continuity • Quality and condition • Packaging • Cold storage • Business informality • Supplier agreements unreliable

  13. CONSTRAINTS II • Definition of quality • Difficulty finding investors • Difficulty obtaining loans • Competition from imports • Strict buyer conditions • Inadequate extension services

  14. RECOMMENDATIONS – QUALITY • Definitions of quality • Health and safety standards • Post-harvest handling • Packaging information and materials

  15. RECOMMENDATIONS – RELIABILITY • Sustainable business models • Extended growing seasons • Producer cooperation • Long-term relationships

  16. RECOMMENDATIONS – ACCESS TO CREDIT • New financial mechanisms • Electronic information systems • “Bankable” supply relationships • International partnerships

  17. RECOMMENDATIONS – OTHER • Agricultural extension • Turn farms into businesses • Conferences, exhibits, etc.

  18. BULGARIA Metro, Billa, ENA, Ramstore, HITT Kaufland and others Produce from local sources Government regulations Protection of “infant industries” ROMANIA Ten years with big stores; trend continues Metro, Carrefour, Mega Image, Billa, etc. Most produce imported Role of wholesalers Consumer behavior changing COUNTRY SUMMARIES I

  19. BOSNIA-HERZEGOVNIA Small market Mercator, Velpro, Interex, VF Commerce The role of wholesalers The baking industry SERBIA Mercator, C-Market, Super Vero, Metro, and others Growing numbers of food retailers COUNTRY SUMMARIES II

  20. ALBANIA First Hypermarket to open in Sept. Small supermarket chains Hotels on the coast Greenhouse industry MONTENEGRO Confusion from political situation Surprising number of stores ERA, Voli Trade, and Mex Centar The Grey Market COUNTRY SUMMARIES III

  21. POSSIBLE REGIONAL ACTIVITIES I • Cooperation by producers • Cooperation by wholesalers • Private brands and co-branding • Supplying food chains for export • Buyer-seller events

  22. POSSIBLE REGIONAL ACTIVITIES II • Training on grades and standards • Guide to selling to supermarkets • Guidelines on packaging • Business plan for cold storage • IT solutions for tracing products

  23. CONCLUSIONS • Market changes are working against small farmers, processors, wholesalers and retailers. • Selected interventions will help small business to cope and survive. • Some interventions may be appropriate for USAID at the regional level.

  24. — END —THANK YOU

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