[URBANTH-L]NEWS: Mexico: No Place for Small Farmers at the
jancius at ohio.edu
Thu May 8 13:00:07 EDT 2008
MEXICO: No Place for Small Farmers at the Supermarkets
By Diego Cevallos*
IPS - InterPress Service
May 2, 2008
Some supermarkets don't make space on their shelves for small farmers'
MEXICO CITY, May 2 (Tierramérica) - A Mexican coffee grower receives about
three dollars per kilogram of unprocessed coffee beans, and the consumer
here pays 11 dollars. That price difference, in large part, is the result of
the growing power of a handful of supermarkets.
The "autoservicio" (self-service) stores, as supermarkets are known in
Mexico, are responsible for sales of 52 percent of food and perishable items
in the country. In Mexico City the proportion rises to 70 percent.
These large stores have pushed out the old markets and the neighbourhood
shops, according to the federal government's consumer protection agency.
Those stores could disappear within the decade.
The small farmer faces the "voracious and nearly absolute power" of the
supermarkets and intermediaries, says Pedro Cervantes, coordinator for
Agromercados, a marketing firm whose members include coffee growers with
"It isn't easy to meet the supply requirements imposed by the large
supermarkets, and they have a policy of paying the supplier up to three
months after product delivery -- most small farmers can't wait," Cervantes
As a result, many coffee growers hand over their product to intermediaries
for a lower but immediate pay, he said.
"Sometimes coffee or other farm products pass through the hands of seven or
eight before reaching the supermarket in the form and frequency demanded,"
The U.S.-based mega-store Wal-Mart and Mexico's Soriana and Comercial
Mexicana chains together have 1,800 supermarkets across the country, of
which 1,033 belong to Wal-Mart.
The combined Mexico sales of the three in 2007 surpassed 27.7 billion
dollars. Their original suppliers are in the countryside, where 5.6 million
farmers live and work, and where 75 percent of the country's poverty is
The growing power of the supermarket chains is not just a Mexican
phenomenon. Gathering force since the 1990s, it is happening in all of Latin
America and the Caribbean, says the International Assessment of Agricultural
Science and Technology for Development (IAASTD), published Apr. 15.
The supermarket chains concentrate 50 to 60 percent of all food sales in the
region. It is "an extraordinary increase", considering that just 10 years
ago they controlled 10 to 20 percent, according to the study, carried out by
some 400 scientists from around the world.
The penetration of the supermarkets is growing by giant steps in the cities,
and even in some rural areas, states the report.
The IAASTD says the consolidation of the supermarkets' presence has widened
the gap between the prices paid to the food producer and what consumers pay
at the cash register.
This has an impact across society, generating displacement of small farmers,
loss of employment and even changes to the cultural patterns of rural
dwellers and consumers, says the report, which was sponsored by the World
Bank and five United Nations agencies.
The Rural Confederation of Mexico in 2005 and 2006 signed agreements with
the supermarkets so that its three million members could sell their products
directly to the companies, avoiding intermediaries and losses.
But those agreements failed, announced Confederation spokespersons in
January, because the farmers could not comply with the volume and regular
delivery schedules imposed by the supermarket chains. Furthermore, payment
was much delayed, arriving up to eight months after delivery.
Most of the farmers prefer to deal with the intermediaries, which gather
large volumes of products at the central supply site located just outside
Latin America's largest wholesale market -- 304 hectares with 1,489 sales
posts and 1,881 warehouses -- is where the supermarket trucks arrive daily
to get their products.
A small farmer alone cannot abide by the conditions imposed by a
supermarket, like delivering large volumes, providing packaging and waiting
for deferred payment, says Rita Schwentesius, an expert in global
agroindustry at the Autonomous University of Chapingo.
The supermarket chains prefer to buy from the supply centres in the capital
and in other cities, although they also receive products in their own
warehouses, as long as the deliveries comply with their conditions,
Schwentesius said in a Tierramérica interview.
To avoid intermediaries, the government and some local authorities are
encouraging and financing the integration of farmers into networks.
But such initiatives have functioned for only a few, agree Schwentesius and
"Most can't meet the requirements of the supermarkets," said Agromercados
coordinator Cervantes, who was able to establish a group among the members
to provide supermarkets with packaged coffee, both whole bean and instant
In the case of processed products, most supermarkets require the supplier to
stock the shelves themselves.
If in three months the sales are slow, according to parameters set by the
supermarket, the product is returned and it is very unlikely that they will
be able to return to the shelves in the future, chain executives told
The requirement that suppliers put their own products on the shelves, as
well as employing children or the elderly to pack up the clients' purchases
in exchange for tips, are practices aimed at cutting costs.
The IAASTD notes that one of the arguments justifying the existence of
supermarkets is that the consumer would benefit from the larger scale, with
better products and prices.
But the study says that the dominant position of the supermarkets reduces
competition -- and thus reduces those presumed benefits
In Mexico, the situation could be different. By the late 1980s, when this
country began implementing aggressive policies of open trade, the rise of
the supermarkets was dominated by a few national chains in partnership,
without open competition among them, according to several studies.
Wal-Mart stepped on to the Mexican market in 1991, inviting consumers to
compare its prices and services with the other supermarkets.
That strategy was a blow to national competition and led to clashes with
Wal-Mart, which in 2002 resulted in its expulsion from Mexico's National
Association of Supermarkets and Department Stores.
Some observers say the presence of Wal-Mart, which now dominates the Mexican
market, forced its competitors to lower prices and improves services.
The IAASTD suggests confronting the broad power of the supermarkets,
monitoring and analyzing their strategies of self-regulation, and urging
consumers to pursue a more fair commerce.
(*Originally published by Latin American newspapers that are part of the
Tierramérica network. Tierramérica is a specialised news service produced by
IPS with the backing of the United Nations Development Programme and the
United Nations Environment Programme.) (END/2008)
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