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A novel agribusiness model for backward linkages with farmers: a case of food retail chain

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  • Mangala, K.P.
  • Chengappa, P.G.

Abstract

One of the leading food retail chains, ‘Spencers’ have established backward linkages with farmers for procuring fresh fruits and vegetables. The main strategy of this system ensures a steady and continuous supply of fresh vegetables to the food retail chain and flow of income to farmers. This linkage has been able to change the method of farming and the marketing arrangement followed by the food retail chains. The marketing arrangement by Spencers food retail chain has reduced the market risks and transaction cost of farmers and has helped them in breaking away from the clutches of traditional brokers/wholesalers/commission agents. Direct supply by farmers has allowed the retail chain to simultaneously increase control over quality, supply reliability and price stability. An added advantage of this model is that it provides flexibility to the farmers to exit from this system, if they are not satisfied with its functioning, since there are no written contracts. This model of linkage is specially suited to small and marginal farmers and improves their economic conditions by providing an opportunity to grow and supply high-value vegetables round the year at a fairly decent price. The study has analyzed the impact of food retail chain linkage on farmers.

Suggested Citation

  • Mangala, K.P. & Chengappa, P.G., 2008. "A novel agribusiness model for backward linkages with farmers: a case of food retail chain," Agricultural Economics Research Review, Agricultural Economics Research Association (India), vol. 21(Conferenc).
    • Handle: RePEc:ags:aerrae:47886
    DOI: 10.22004/ag.econ.47886
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    1. Nedumaran, Swamikannu & Selvaraj, Aravazhi & Nandi, Ravi & Suchiradipta, Bhattacharjee & Jyosthnaa, Padmanabhan & Bose, Disha, 2020. "Digital integration to enhance market efficiency and inclusion of smallholder farmers: a proposed model for fresh fruit and vegetable supply chain," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 23(3), September.
    2. Vamsidhar Reddy, T.S. & Hall, Andy & Sulaiman V., Rasheed, 2010. "New Organisational and Institutional Vehicles for Managing Innovation in South Asia: Opportunities for Using Research for Technical Change and Social Gain," MERIT Working Papers 2010-054, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    3. Schipmann, Christin & Qaim, Matin, 2011. "Supply chain differentiation, contract agriculture, and farmers’ marketing preferences: the case of sweet pepper in Thailand," GlobalFood Discussion Papers 108349, Georg-August-Universitaet Goettingen, GlobalFood, Department of Agricultural Economics and Rural Development.
    4. Sandhyarani Patlolla & Rachael E. Goodhue & Richard J. Sexton, 2015. "Managing Quantity, Quality, and Timing in Indian Cane Sugar Production: Ex Post Marketing Permits or Ex Ante Production Contracts?," The World Bank Economic Review, World Bank, vol. 29(3), pages 606-630.
    5. Ma, Wanglin & Abdulai, Awudu, 2015. "Linking apple farmers to markets: Determinants and impacts of marketing contracts in China," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 202719, Agricultural and Applied Economics Association.
    6. Singla, Naresh & Singh, Sukhpal & Dhindsa, P.K., 2011. "Linking Small Farmers to Emerging Agricultural Marketing Systems in India—The Case Study of a Fresh Food Retail Chain in Punjab," Agricultural Economics Research Review, Agricultural Economics Research Association (India), vol. 24(1), June.
    7. Singh, Rakesh & Gangwar, Arpita & Saxena, Raka & Singh, S.K. & Singh, O.P., 2016. "Impact of Market Reforms on Agricultural Growth: A Case of Uttar Pradesh," Conference Papers 261301, Indian Society of Agricultural Economics.
    8. Viet Hoang, 2021. "Impact of Contract Farming on Farmers’ Income in the Food Value Chain: A Theoretical Analysis and Empirical Study in Vietnam," Agriculture, MDPI, vol. 11(8), pages 1-16, August.
    9. Vishnu, Kedar & Rai, Ruchika, 2022. "Measuring The Impact of Transaction Costs on Profitability of Farmers: Empirical Evidence from India," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322593, Agricultural and Applied Economics Association.
    10. 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.
    11. Nuthalapati, Chandra S.R. & Sutradhar, Rajib & Reardon, Thomas & Qaim, Matin, 2020. "Supermarket procurement and farmgate prices in India," World Development, Elsevier, vol. 134(C).
    12. Kedar Vishnu & Parmod Kumar, 2019. "Structure and strategy of supermarkets of fruits and vegetables retailing in Karnataka: Gains for whom?," Working Papers 438, Institute for Social and Economic Change, Bangalore.
    13. Schipmann, Christin & Qaim, Matin, 2011. "Supply chain differentiation, contract agriculture, and farmers’ marketing preferences: The case of sweet pepper in Thailand," Food Policy, Elsevier, vol. 36(5), pages 667-677.
    14. Kedar, Vishnu Shankarrao & Kumar, Parmod & Neharkar, Pratibha, 2021. "Transaction Costs, Institutions and Smallholder Market Integration: Chili Producers in India," 2021 Annual Meeting, August 1-3, Austin, Texas 313970, Agricultural and Applied Economics Association.
    15. Rao, N. Chandrasekhara & Sutradhar, Rajib & Reardon, Thomas, 2018. "Inclusiveness, Technology and Profitability in Supermarkets: SUR Model Results from Semi-Arid Region," Indian Journal of Agricultural Economics, Indian Society of Agricultural Economics, vol. 73(03), July.
    16. Aparna, B. & Hanumanthaiah, C.V., 2012. "Are Supermarket Supply Channels More Efficient than Traditional Market Channels?," Agricultural Economics Research Review, Agricultural Economics Research Association (India), vol. 25(2).
    17. Singh, Sukhpal, 2009. "Rapporteur’s Report on Implications of Corporate Entry into Agricultural Input and Output Markets and Its Impact on Small Producers and Consumers," Indian Journal of Agricultural Economics, Indian Society of Agricultural Economics, vol. 64(3), pages 1-9.

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