Transformation of the Agrifood Industry in Developing Countries - The Oxford Topic of Food, Politics, and Society - page 810

On the other hand, the penetration of rural towns and poor areas in cities is facilitated
bythesmallformats,cheappricing,andlexibleinventories.helatterbecomesmost
innovative when modern retail sets up “one-stop shopping” for rural consumers. For
example,“ruralbusinesshubs”inIndiaarecombinationsofsmallsupermarketsand
farm input stores with joint venture banks and even health units in rural areas, such as
ChoupalSaagarorHariyaliKisaanBazaar(Gulati,Minten,andReardon2008,Bellet al.
2007).InChina,thegovernmenthasstartedchainsofruralsupermarkets.heseforays
appear to be driven by increasing rural incomes, the dearth of services available locally,
and the recognition that modern retail brings cheaper staple foodstuffs and nonfood
goods(Chakravartyet al.2007).
Impacts on SMEs and Farmers
Indevelopingcountries,millionsofthepoorareemployedinsmallandmediumenter-
prises(SME)inallthreeagrifoodindustrysegments,andonfarms.hetransformation
oftheagrifoodindustryhasmyriadefects,realizedandpotential,onSMEsandsmall
farms. The research on these is only emerging, but already suggests some broad lines.
Modern agrifood companies have a direct impact only on SMEs in wholesale/logis-
tics,processing,andretailing—fromwhichtheymaydirectlysourceorwithwhichthey
directlycompete—andfreshproducegrowers,fromwhichthecompaniesmaysource.
Thus, we treat those two groups below. Here we do not consider indirect effects, such as
how the relation between a supermarket and large processor in turn affects the farmers
supplying the latter.
Impacts on Traditional-sector SMEs in Processing,
Wholesaling, and Retail
First,modernizedagrifoodindustrysegments(wholesale/logistics,processors,retail-
ers) are broadly competitive with—and apparently, over the longer term, broadly
destructive of—their counterparts in the traditional sector. he modern company
brings economies of scale and supply-chain sourcing efficiencies to bear on the produc-
tion/service-rendering and input sourcing side. On the marketing side, the company
armsitselfwithadaptivelexibilityofformtomimicsmalloutletsandunits,varietyof
output to adapt to differing tastes over classes and localities, branding to win consumers,
credit programs for suppliers and consumers, and advertising.
Nevertheless, the traditional enterprise has some advantages it uses to resist or avoid
competition from the modern segments. As it is in the informal sector, it saves the
costsoftaxesandregistrations(althoughitmaypaybribestopolice)andlargelyavoids
costsofmeetingregulationsonfoodstandards.Itusesitsownfamilylaborlexibly,and