Supermarket Buying Power

This report examines how the consolidation and increased market power of global supermarket chains affect global supply chains, specifically focusing on the challenges and opportunities for smallholder farmers in the developing world, with a particular emphasis on the fresh fruit and vegetable (FFV) sector in sub-Saharan Africa.

• The global supermarket sector has undergone significant consolidation, concentrating market power among a few major retailers who now exert substantial control over their suppliers. In the U.K., four supermarket chains account for over two-thirds of retail food sales, while the top five chains in the U.S. control over 60 per cent of food sales.
• World trade in fresh fruit and vegetables (FFV) grew by more than 30 per cent between 1990 and 2001, reaching a value of US$71.1 billion. While this creates opportunities for developing countries, the gains are disproportionately captured by retailers; for example, a 1999 study found supermarkets took more than 45 per cent of the shelf price for fresh vegetable exports from Kenya and Zimbabwe, while producers earned only 11 to 14 per cent.
• Smallholder farmers are increasingly marginalized in the FFV supply chain as supermarkets prefer 'dedicated' large-scale suppliers who can guarantee quality and volume. In Kenya, the proportion of export FFVs produced by smallholders fell from nearly 75 per cent in 1992 to just 18 per cent for the four largest exporters by 1998.
• Supermarkets implement private standards (such as EUREP-GAP) that go beyond legal requirements, creating significant barriers for smallholders who lack the credit to invest in necessary infrastructure. These standards often shift costs to the supplier; for instance, an annual farm audit costing approximately £300 could absorb 70 per cent of a typical Ghanaian grower's profit.
• Aggressive business practices by supermarkets further squeeze small producers. These include high cosmetic standards leading to high rejection rates, delayed payments of up to 60 days, and 'cartel pricing' where dominant chains obtain discounts below industry averages.
• Despite these challenges, smallholders possess comparative advantages in the FFV sector, such as lower production costs due to family labour and a better ability to adapt to organic production methods. A study in Ghana found smallholder pineapple production costs per hectare were 22 per cent lower than those of large plantations.
• Various policy and organizational models can help smallholders access supermarket chains. These include cooperatives (e.g., Farmapine Ghana Ltd), outgrower schemes (e.g., Hortico in Zimbabwe), public-private initiatives (e.g., the Food Industry Development Project in South Africa), and regional initiatives to create shared standards, such as the UNEP/UNCTAD project for organic farming in East Africa.

APA

Brown, O., & Sander, C. (2007). Supermarket Buying Power. International Institute for Sustainable Development. https://www.iisd.org/system/files/publications/tkn_supermarket.pdf

Chicago

Brown, Oli, and Christina Sander. Supermarket Buying Power. International Institute for Sustainable Development, 2007. https://www.iisd.org/system/files/publications/tkn_supermarket.pdf.

Wikipedia

{{cite report |last1=Brown |first1=Oli |last2=Sander |first2=Christina |title=Supermarket Buying Power |publisher=International Institute for Sustainable Development |date=March 2007 |url=https://www.iisd.org/system/files/publications/tkn_supermarket.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{brown2007supermarket, author = {Brown, Oli and Sander, Christina}, title = {{Supermarket Buying Power}}, institution = {International Institute for Sustainable Development}, year = {2007}, month = mar, url = {https://www.iisd.org/system/files/publications/tkn_supermarket.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }