Building partnerships for adding value: the role of agribusiness in developing trade

Abstract

As a major retailer with supermarkets in many parts of the world, Royal Ahold serves millions of consumers each day. These consumers become increasingly demanding, but spend less on food than ever before. Besides safe and high-quality food, consumers increasingly want their food to be responsibly produced. Most expect the retailers to ensure this and only very few are willing to accept higher prices to do so. Retailers therefore, also in developing countries, highly depend on large volumes and low prices. Economies of scale are more important than ever, and the focus is on good and short supply chains. The focus on safe and high-quality food brings retailers to implement worldwide food safety programmes, with a network of preferred suppliers. Retailers initiate programmes where the focus is on implementing safety and good practices among their outlets (supermarkets), distribution centres and suppliers. Through independent inspections their suppliers are screened on their ability to provide safe and responsible products. Once suppliers (or organized producers) match these criteria they can benefit by becoming part of the retailer’s global and regional network. In other words, by complying with the retailer’s high standards at the local level, they are able to have access to global markets. To become part of a retailer’s regional and global network, suppliers need to understand the competitive challenges that retailers face in serving their consumers. Retailers are looking for partners that analyse this situation and suggest solutions. Suppliers with a proactive approach can receive support from retailers by being part of their networks, and from development programmes to achieve their optimization.