Magazines Archives - 2007 September

Growing Indon supermarket sector holds bright prospects for local farmers
Story 9

MODERN retail and supermarkets now make up 30% of Indonesia’s food-retail business, reported the World Bank in Jakarta, last month. The report, titled Horticultural Producers and Supermarket Development in Indonesia, also highlighted that local farmers of fresh fruits and vegetables have yet to take full advantage of the opportunities offered by the supermarket sector’s continuing growth in the Indonesian economy.

Fresh fruits and vegetables make up 8% of sales in the country’s supermarkets but only 15% of local farmers distribute their produce to supermarket chains. The rest of the produce retailed is imported from China and Thailand, which are known for produce of better quality and lower prices than in Indonesia.

Shobha Shetty, lead author of the report, also attributed the lack of local farmer participation in the modern retail environment to the country’s poor supply chain.

“Indonesian farmers face formidable odds” as they are up against poorquality roads, and “a lack of cold chains and logistic services while dealing with entrenched bad business practices”, Shetty lamented.

As such, most local farmers sell their produce to traditional markets, which are controlled by district governments rather than supermarket chains. The upside for these farmers is that government control maintains a buffer and keeps a check on the growth of modern chains in the country. Despite the difficulties, supermarkets are continuing to grow, with great opportunities in the horticultural sector for retailers once the quality produce and supply-chain issues are resolved, Shetty added.