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Supermarkets: Kenya


The power of supermarkets

Supermarkets are immensely powerful players in the food business. We buy most of our food from them. The food people buy from Tesco, Sainsbury, Asda and Safeway makes up1/3 of all the grocery sales in the UK. We can now eat any food we want at anytime of the year because supermarkets fly in produce from all over the world. Supermarkets dictate the size, shape and varieties of fresh fruit and vegetables they sell as well as the price. The trade that supermarkets do with countries all over the world has created opportunities for farmers in poorer countries to sell their food to countries in Europe – but it has also created some problems.

Fresh produce from Kenya

In Kenya exports of fresh fruits, vegetables and cut flowers for sale in European supermarkets have soared to more than US$300 million per year. Smallholders who grow for the export market enjoy significantly higher incomes than nonparticipating households. A recent study found that if non-participating rural households were able to take up growing horticultural crops for export, their poverty rate would decrease by approximately 25%. But as the scale of Kenya's exports has grown, the share produced by smallholders (people with small farms) has dwindled. Before the horticultural export boom in the 1990s, smallholders produced 70% of vegetables and fruits shipped from Kenya. By the end of the 1990s, 40% of the produce was grown on farms owned or leased directly by importers in the developed countries and another 42% on large commercial farms. Smallholders produced just 18%.

Difficulties for small producers

Supermarkets make life difficult for smallholders because they have strict demands for the produce to standards for quality and reliability which may require substantial investments in irrigation, greenhouses, trucks, cooling sheds and packing technology. This type of technology is expensive and not many smallholders are able to afford to buy it.

Empowering small producers

Supermarket transaction costs may be significantly higher for negotiating and managing contracts with small producers. Smallholders who have succeeded as suppliers for supermarkets have generally overcome these obstacles by forging cooperatives or enrolling in "outgrower" schemes. Often they have benefited initially from information, training and start-up funds provided by public and private sector development initiatives.