Better information sought on retailer plans to boost sector development
18 May 2013
The CEO of the Barbados Agricultural Society has called for new entrant restaurant franchise operators, such as Burger King and Subway, to provide more advanced notice to local poultry producers of their investment plans and product requirements.
Advanced notice would then enable local producers to invest in technological upgrades to meet the product requirements of such fast food chains, rather than dependence being built up on imported products. This would ensure that the local agricultural sector is able to benefit from the expanded demand that such retail-level investments create, rather than it giving rise to a further contraction, as products to meet the new demand are externally sourced.
Currently, many of the poultry products required by these franchise operators are not available from local producers.
Editorial comment
The underlying issue raised by the CEO of the Barbados Agricultural Society in relation to poultry sector development in Barbados is of far wider concern than simply the relations of the local poultry sectors with fast food chains. It is also applicable to plans by multiple retailers to open new chains across the ACP, particularly in Africa.
South African, European and Kenyan multiple retailers all have plans to expand their operations across various African regions. These retail chains bring with them pre-existing product standards and procurement practices that can see local food and agricultural producers locked out of a growing market component.
This raises important policy challenges for ACP governments in terms of ensuring that new investors are required, as an integral part of licensing agreements, to open up dialogues with local producers on product standards and requirements, in order to give local suppliers an opportunity to upgrade their production to meet these new market demands.
There is evidence of such dialogues taking place in Trinidad between local producers of poultry, cassava and fruit juices, which are consistently being offered in foreign fast food franchises such as Pollo Tropical.
Under some franchises in the Caribbean, the issue of the scale of local production arises, with choices needing to be made between investing in meeting the new demand and serving traditional markets.
Nevertheless, such dialogue processes could open up new opportunities for addressing financing constraints on expansion of local agricultural production, as the prospect of new contracts allows better terms and conditions for bank loans to be secured for on-farm investment.
In some ACP countries, policy initiatives in this area, coupled with broader efforts to support information services on product requirements and markets and linked to support for contract farming arrangements, could ensure that the major changes under way in the retail sector, particularly in Africa, provide a significant boost to local agro-food sector developments.
