The relationship between vegetable growers and the supermarkets : a study of South Eastern Scotland in comparison to the situation in Skåne, Sweden

University essay from SLU/Dept. of Crop Science

Abstract: The supermarkets in Europe have over the last decades gained increased control within the food supply chain. Globalisation has made it easier to trade and this comes with good and bad effects for the food system. In both Scotland and Sweden we find suppliers and producers within horticulture. These are getting increasingly affected by the supermarkets authority because they rely on supermarkets actions within the supply chain. There is an increasing demand on producers to be competitive and innovative to be able to survive in the tougher market climate. There are different methods for developing a competitive strategy, such as better organisation of the producers or labelling of the produce. Another opportunity could be to increase the profit margin by adding value to the crops. The producers can also try to find other routes or methods to sell their produce through. The aim of this study is to briefly describe the structure of the vegetable industry in Scotland as well as Skåne, Sweden. The industry will be analysed from an economic perspective with focus on the theory of Porter's common competition strategy and the model of five rivalry forces. I shall also describe the alternative market channels to supermarkets for sale of vegetables. Since supermarkets are the dominating market channel for vegetable producers the relationship between supermarkets and the growers will be an important part of the study. Also the marketing situation for fresh produce shall be investigated along with examination of the hierarchies in the supply chain. The results from the different countries are compared to each other and similarities and differences will be evaluated. The studies of literature and articles have been an important part of the investigation along with the case study. Several personal interviews have been carried out in Scotland as well as Sweden. The method which has been used for the case study is a qualitative examination with opened question during the interviews. This has made it possible for the respondents to easier express their opinions concerning the issue. The results show that depending on the size and structure of the company the grower can achieve a more or less successful business relation to their buyers. Therefore it is important to choose a suitable market channel along with developing a good strategy to reach a competitive position on the horticultural market. The conclusion of this study is that the relation between growers and the supermarkets are considered to be satisfying from some growers' perspective whilst other producers are negative to the supermarkets way of doing business. Some tendencies shown from the interviews are that larger companies, selling to supermarkets have a propensity to be more positive to the supermarkets than smaller growers. The larger companies also consider themselves unable to sell the produce through other channels. The growers dealing directly with their buyers and avoiding a middle hand are generally more positive to the situation and relationship to the supermarkets.

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