Private food safety and quality standards for fresh produce exporters: The case of Hortico Agrisystems, Zimbabwe

Food Policy 30 (2005) 371–384 www.elsevier.com/locate/foodpol

Private food safety and quality standards for fresh produce exporters: The case of Hortico Agrisystems, Zimbabwe Spencer Henson

a,¤

, Oliver Masakure a, David Boselie

b

a

Department of Agricultural Economics and Business, University of Guelph, Guelph, Ont., Canada N1G 2W1 b AgroFair Assistance & Development Foundation, Linnaeustr 35F, 1093 EE Amsterdam, The Netherlands

Abstract There is evidence that the challenges of complying with stricter food safety and quality standards are acting to exclude small-scale producers from export supply chains for high-value agricultural products. The case of Hortico Agrisystems illustrates the considerable challenges and costs faced by supermarket suppliers in sourcing from a broad base of small-scale producers in the context of evolving food safety and quality standards. While small-scale producers are able to achieve levels of compliance at least equal to those of large-scale producers, multitiered and dynamic systems of control are required to maintain control. These need to include measures that facilitate compliance, incentives to reward good performance and penalties to punish non-compliance. In establishing a sustainable supply system in this context, both exporters and small-scale producers face a steep learning curve in adjusting to new requirements, further emphasising the need for supply chains to be responsive to change.  2005 Elsevier Ltd. All rights reserved. Keywords: Food safety; Quality; Standards; Outgrowers; Horticulture; Zimbabwe

*

Corresponding author. Tel.: +1 519 824 4120x53134; fax: +1 519 767 1510. E-mail address: [email protected] (S. Henson).

0306-9192/$ - see front matter  2005 Elsevier Ltd. All rights reserved. doi:10.1016/j.foodpol.2005.06.002

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Introduction In recent years, growing attention has been paid to the impact of supermarkets on the livelihoods of small-scale producers in developing countries (Boselie et al., 2003). The predominant focus of this debate has been the nature of the linkages between small-holders and supermarket chains in industrialised countries, most notably the United Kingdom (see for example, Dolan et al., 1999; Dolan and Humphrey, 2000; JaVee, 2004). There is considerable evidence that, while there are concerns about power relations through the supply chain, supermarket demand for high-value fresh produce can provide opportunities for the enhancement of small-scale producer livelihoods, especially among women (see for example, von Braun et al., 1989; Carletton et al., 1999; JaVee, 2004; McCulloch and Ota, 2002; Dolan and Sorby, 2003). At the same time, attention has focused on the processes through which small-scale producers are integrated into, or excluded from, supermarket supply chains and the associated impact of stricter food safety and quality standards and logistics requirements (JaVee, 2004). More recently, attention has focused on the evolution of supermarkets in developing countries and the ways in which similar processes are beginning to pervade supply chain structures and relations in domestic markets (see for example, Reardon and Berdegue, 2002; Weatherspoon and Reardon, 2003; Codron et al., 2004). The current paper focuses on the conditions required for the continued participation of small-scale producers in developing countries within export supply chains for high-value agricultural products, in the context of evolving private food safety and quality standards. SpeciWcally, it considers a Wrm-level case study of non-traditional horticultural product exports from Zimbabwe, where signiWcant numbers of smallscale producers have been integrated successfully into a supply chain to UK supermarkets. This case study illustrates how, under certain conditions, compliance with strict food safety and quality standards can be achieved within supply chains involving small-scale producers, in a manner that is commercially sustainable to both exporters and producers. However, it also highlights the considerable learning processes involved in the role of multi-tiered mechanisms of supply chain control and the associated investments on the part of the exporter.

Private food safety and quality standards and the small-scale producer There is mounting evidence that the enhancement of food safety and quality requirements within industrialised country markets raises formidable challenges for small-scale producers attempting to participate in high-value markets for agricultural products. These requirements reXect both the technical regulations laid down by governments and the private standards of major supermarket chains, the latter of which are employed both to manage regulatory and liability risks and as the basis of product diVerentiation (Martinez and Poole, 2004). Studies in a number of countries illustrate the considerable operational changes and costs required to comply with food safety and quality requirements that are not only stricter, but also subject to on-going change, and the associated risks for small-scale producers (see for example

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von Braun et al., 1989; Immink and Alarcon, 1993; Barham et al., 1996; Carter and Barham, 1996; Carter et al., 1996; Dolan et al., 1999; Dolan and Humphrey, 2000). While there is evidence of longer-term beneWts small-scale producers from compliance with such standards (see for example, JaVee, 2004), in many cases the required ‘up front’ investment is prohibitive, especially where they are unable to access formal credit institutions. At the same time, the entire cost structure of production can be changed, for example requiring high-value inputs such as agro-chemicals and fertilisers (see for example, Thrupp et al., 1995). There is evidence that the challenges of complying with stricter food safety and quality standards are acting to exclude small-scale producers from export supply chains for high-value agricultural products. For example, while an estimated 7000 small-scale producers were involved in the Kenyan export supply chain for fresh vegetables in the mid-1980s, accounting for 45% of exports (JaVee, 1990), by 1998 the contribution of small-scale producers had declined to an estimated 18% (Dolan et al., 1999). Conversely, small-scale producers can have a comparative advantage in the supply of high-value agricultural products, for example where the production practices required to meet the required quality standards are labour-intensive. Thus, there are instances where supply chains have evolved to facilitate compliance by smallscale producers. Most notably, various forms of production and marketing contracts have been employed by exporters (see for example, Glover, 1984; Little and Watts, 1994; Schejtman, 1996; Gow and Swinnen, 2001), while technical and/or Wnancial assistance is often provided. Indeed, there may be strong economic incentives for exporters to contract out production rather than produce themselves, related to the level and nature of transaction costs and market imperfections (see for example, Key and Runsten, 1999). There is a large literature on the potential role of collective action and other institutional arrangements (for example networks, new generation cooperatives and other forms of strategic alliance) between producers as a means to adjust to the challenges posed by evolving supply chain structures and requirements (Brester and Penn, 1999; Cook and Iliopoulos, 2000; Fulton, 2001; Holmlund and Fulton, 1999; Levins, 2002). Indeed some authors have argued that collective action has become a necessity in order to rebalance power relations in contemporary agro-industrial supply systems (see for example, Cook et al., 2001; Reardon and Barrett, 2000). However, while there are documented examples of innovative forms of cooperation between farmers in a developing country context more generally (see for example, Holloway et al., 2000) it is not evident that such institutional arrangements have evolved spontaneously in response to private food safety and quality standards (Boselie et al., 2003). Indeed, the scale of the challenge faced by small-scale producers in complying with stricter food safety and quality requirements invariably requires some form of external support to not only provide the required expertise and resources, but also to bring about the necessary changes to supply chain organisation and operation. In many cases, this is provided by the exporters, as described above, while in others non-governmental organisations (NGOs) may play a leading role. In either case, donors frequently provide Wnancial backing in order to oVset the up-front costs of compliance and/or to allay the commercial risks for the exporter (Boselie et al., 2003).

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Although the challenges for small-scale producers highlighted above are associated with the evolution of food safety and quality requirements in export supply chains more generally, it is evident that private standards in general, and those of the major supermarket chains in particular, are now the prominent driver of such requirements (see for example, Reardon et al., 2001; Henson and Hooker, 2001; Reardon and Farina, 2002). At the same time, private standards have distinct characteristics that set them part from technical regulations. Firstly, private standards are arguably more Xexible in that they can be negotiated between buyers and sellers according to prevailing competencies and may evolve over time as trust is established between trading parties (Henson and Hooker, 2001; JaVee, 2004). Such relations can, however, be destroyed instantly by opportunistic behaviour and/or the failure to meet customer requirements. Secondly, private standards are typically more dynamic than technical regulations; they can be changed almost instantly on the basis of evolving demands on the part of supermarket and other buyers. This contrasts with the typically more protracted nature of public decision-making that results in regulatory inertia (Henson and Hooker, 2001). Thirdly, private standards are predominantly process-based, requiring the implementation of speciWc systems of food safety and/or quality control such as Hazard Analysis and Critical Control Point (HACCP), Good Manufacturing Practice (GMP) and/or ISO 9000, providing scope for the associated costs of compliance to be oVset by institutional and/or managerial innovations (Mazzocco, 1996). This highlights the evolutionary nature of supply chains from small-scale producers to supermarket buyers in the context of private food safety and quality standards, as trade-oVs are made between the management of compliance processes and the associated costs. While the existing literature gives credence to the central role of exporters in facilitating compliance by small-scale producers with private food safety and quality standards, it provides relatively few insights into the speciWc processes through which commercially sustainable supply chain relations are established and maintained. On the one hand, the economic returns to smallholders must at least defray the costs of compliance and the additional risks associated with production of high-value agricultural products for export, as private standards continue to evolve. On the other, the exporter must maintain control measures that provide the required level of assurance as to compliance with prevailing standards within its supply base of small-scale producers, while keeping control costs at a level that enables it to compete in export markets.1 The dynamic nature of contractual relations between small-scale producers and buyers is well-recognised in the literature (see for example Glover, 1990; Baumann, 2000; White, 1997; Singh, 2002b; Little and Watts, 1994), although the focus is largely on the tendency for the terms provided to small-scale producers to diminish over time through a process of ‘agribusiness normalisation’. This ignores the legitimate need for supply chain relations to adjust as learning processes proceed as part of eVorts to manage transaction costs in the face of evolving food safety and quality

1 Although these costs may be oVset, at least in part, by the enhanced product quality and/or riskspreading provided by small-scale producers (Dorward et al., 1998; Poulton et al., 1998).

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standards (see for example, Dorward et al., 1998; Poulton et al., 1998; Govereh and Jayne, 2003; Key and McBride, 2003). The evolution of relations between small-scale producers and exporters and the role of innovation in management systems as food safety and quality standards evolve is the focus of the Hortico Agrisystems case study reported below. SpeciWcally, it illustrates the very considerable learning processes involved in adjusting to new food safety and quality standards and the role of multi-tiered control mechanisms as a means to achieve acceptable level of compliance across a large supply base of small-scale producers at acceptable cost. More generally, the case demonstrates the considerable inter-dependencies that develop between the exporter and its small-scale producers in the context of strict food safety and quality requirements alongside the need to supply product as and when required by customers.

Hortico Agrisystems Hortico Fresh Produce Ltd. is one of the largest fresh produce exporters in Zimbabwe, with a main focus on high-value fresh vegetables that are supplied to supermarkets in the UK, Netherlands and South Africa. The company has three subsidiaries, namely Hortico Produce, Hortico Shipping and Hortico Agrisystems. Hortico Produce is the export arm of the business and undertakes processing and packaging operations. Hortico Produce is partially vertically integrated, in that it grows products for export on its own farms, although historically also procured from large-scale commercial farmers under contract. Hortico Shipping is responsible for the physical export of products. Hortico Agrisystems, the subject of this case, operates a small-scale producer out-grower scheme through which farmers in the region of Mashonaland East are contracted to grow baby corn, mangetout, butternut squash, Wne beans, sweet corn, broad beans and chillies. During the period 1996–1997, Hortico Produce encountered diYculties sourcing produce from large-scale commercial farmers. Broadly, it could not compete with the prevailing price of tobacco and began to explore the possibility of contracting small-scale producers. In January 1997, it initiated a three-year program with support from an existing USAID revolving fund that was managed by the Horticultural Promotion Council (HPC), which aimed to establish linkages between small producers and exporters. Three other exporters received similar support. Since its inception, Hortico Agrisystems’ small-scale procurement system has grown rapidly and by 2002 included around 3800 producers (Fig. 1). In view of this, Hortico Agrisystems was established as a wholly owned subsidiary to manage the small-scale grower supply base. Small-scale producers have since become of great strategic importance within Hortico’s supply base, in particular for Wne beans and baby corn (Fig. 2). For some other products, in particular mangetout, large-scale commercial farmers remained the predominant source of supply until 2002, after which the process of land reform in Zimbabwe resulted in the contraction of the largescale commercial farm sector.

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S. Henson et al. / Food Policy 30 (2005) 371–384 4000 3500 3000 2500 2000 1500 1000 500 0 1997

1998

1999

2000

2001

2002

Fig. 1. Number of small-scale producers supplying Hortico Agrisystems in Zimbabwe, 1997–2002. 100% 80% 60% 40% 20% 0% Mangetout Mangetout Fine beans Fine beans Baby corn Baby corn (2000) (2001) (2001) (2002) (2001) (2002)

Fig. 2. Proportion of selected produce from small and large-scale producers by volume, 2000–2002.

Management of the small-scale producer supply base Hortico Agrisystems has established standards and procedures for its contract growers that aim to meet the food safety and quality standards of its supermarket customers. The challenge has been to establish a system of supervision and control that provides the necessary levels of enforcement and traceability and which manages the associated risks, while limiting the associated costs. Given the strategic importance of small-scale producers, it also has to ensure that the returns and risks they face are sustainable. Producers are grouped into centres that are themselves allocated to three administrative districts. Each collection centre is managed by a Weld supervisor and staVed by a clerk, Weld sprayer and grader. The centre is responsible for all activities associated with the producers under their jurisdiction. The contract between Agrisystems and its small-scale producers is both verbal and subject to on-going renegotiation, and broadly works on the basis of trust. The agreement speciWes a commitment by farmers to grow particular crops on standard plot sizes and subject to speciWc procedures. Agrisystems guarantees to purchase the entire crop of any farmer, subject to minimum quality standards, regardless of the

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demand from its customers. Prices are also guaranteed pan-territorially prior to planting, but vary seasonally. At the time of planting, farmers are provided with the required inputs under credit, in measured amounts appropriate for the standard plot size. All pesticide application is undertaken by Agrisystems’ staV (see below). They are also given a crop budget explaining variable input costs and approximate revenue, given pre-planting prices. Farmers are paid in cash Wve to six weeks after crop delivery, less the value of the inputs advanced by Agrisystems. Contracted producers deliver the harvested crop to their local centre, where it is graded according to crop-speciWc quality criteria in their presence. They are then issued with a receipt for the quantity of produce accepted. Rejected produce is returned to the farmer. At this point ownership of the accepted product transfers to Agrisystems and the producer has no further involvement or liability. Producers can complain if they feel their produce has been unfairly downgraded. This happens most frequently with new contractees that are unfamiliar with the quality speciWcations and where the producer has not established a relationship of trust with centre staV. In a number of cases, experienced producers assist centre staV in grading their product to limit the scope for opportunistic behaviour on the part of Agrisystems. Under this system, Agrisystems bears much of the risk along the supply chain to its supermarket customers, including Xuctuations in input costs, output prices and air transport rates, changes in customer demand and rates of crop rejected against quality criteria following purchase from the producer, which often exceed 60%. The major risks for small-scale producers are associated with Xuctuations in crop yield and quality which, in the worse-case scenario, can leave them with a debt equal to the cost of the inputs provided under credit. This latter scenario poses, in turn, a risk to Hortico Produce that it is unable to fulWl the orders of its supermarket customers. The level of risk has increased for both parties over time in line with the imposition of stricter food safety and quality standards, necessitating the adjustment of supply chain controls. The distribution of risk along the supply chain broadly reXects the relative capacity of Agrisystems and its contracted small-scale producers to bear risk. At the same time, the commercial sustainability of the supply chain relies upon Agrisystems’ ability to keep its own risks within manageable bounds. It utilises a number of facilitating, monitoring and enforcement mechanisms to achieve this that have continued to change over time in response to evolving private food safety and quality standards. Firstly, producers wishing to grow for Agrisystems are screened to ensure that they have the required resources (mainly land, labour and water), abilities and commitment to supply under the strict production standards that are speciWed by Agrisystems. These production standards reXect Agrisystems’ translation of the food safety and quality requirements of its supermarket customers, in the context of local conditions and the capacities of its small-scale producers, into practical procedures that producers can follow. Over time, Agrisystems’ has negotiated with its customers regarding speciWc requirements in order to apply production practices that ensure compliance in the most eVective and cost-eYcient manner. Training and on-going advice is then provided to producers on production practices, control of pests etc. These include, for example, weeding, fertiliser application, trellising of crops, harvest

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and crop handling procedures etc. Agrisystems’ aim is to foster good agricultural practice (GAP) so as to minimise potential problems and, at the same time, foster conWdence among its supermarket customers in the ability of its small-scale producers to meet their strict food safety and quality standards. The performance of producers is monitored continuously on the basis of deliveries of produce that comply with the required production and end-product quality standards. Further, during the production cycle centre staV visit producers to ensure the speciWed procedures are being complied with and to provide advice on any remedial action, for example application of fertilizers, pest control etc. At the same time, contracted producers are subject to a strict system of enforcement. Anyone caught cheating or failing to comply with the required production procedures is given a maximum of two warnings, following which they are deregistered. Perhaps reXecting the eVectiveness of such sanctions, the rate of deregistration since the small-scale contract scheme came into operation has been consistently less than 1%. The organisation of producers into collection centres also allows for self-enforcement of Agrisystems’ procedures by the contracted producers themselves. At least one centre has been closed because of persistent non-compliance, highlighting the common interest of producers in their centre achieving a high level of performance. This takes the form of peer pressure and, in extreme case, the ‘disciplining’ of underperforming producers by their fellow farmers. Agrisystems also makes use of producer competitions as a mechanism to provide positive incentives for high levels of performance. Contracted producers with exceptional performance relative to their peers are rewarded, for example, with free inputs and/or caps and tee shirts. Finally, to ensure compliance with the strict limits on residues of pesticides and worker safety applied by their supermarket customers, Agrisystems has chosen to prohibit the application of pesticides by producers themselves. Instead crops are inspected by the Weld supervisor on a regular basis and pesticides applied as and when required by a trained and equipped Weld sprayer employed at each centre. The cost of the pesticide is provided on credit in a similar manner to other inputs. Smallscale producers are inspected on a regular basis to identify the pesticides they have on their property and soil sample tests are taken as part of a program of surveillance to demonstrate ‘due diligence’ to their supermarket customers. Alongside these mechanisms, Agrisystems aims to improve continuously its services to producers in order to minimise rates of attrition in its supply base; the costs of training each producer and incorporating them into the contract system are considerable and it is in Agrisystems’ interest to retain producers once they have been recruited. These mechanisms include timely payments and provision of advice and assistance when producers face problems, even with their own crops. At times of rapid expansion in its supply base and/or rapidly changing food safety and quality standards, however, Agrisystems has struggled to maintain the loyalty of its contracted producers. The need to manage costs of supply chain management while achieving compliance in the short time frames allowed by its supermarket customers has meant that attention has had to focus on ‘trusted’ and better performing producers. At such times, these producers have been given priority when issuing seeds or providing advice and, in extreme cases, other producers have been left without a crop

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to grow. This has bred resentment and caused longer-term problems for Agrisystems in managing compliance within its supply base.

Performance of small-scale producers

% export grade

For certain crops, there is a steep learning curve associated with the strict procedures that are applied in order to comply with the food safety and quality standards laid down by Hortico’s supermarket customers. This creates signiWcant challenges in managing new producers and integrating them into the supply chain. For example, the proportion of mangetout production delivered to Agrisystems in 2000 that was of export quality ranged from only 8.7% in the case of farmers in collection centres that had been established for only one year, to 19.2% for farmers in collection centres that had been in operation for four years (Fig. 3). With baby corn, however, there is less evidence of a learning curve beyond the Wrst year of supplying Agrisystems; indeed in 2000 the proportion of export-grade produce was actually lower for collection centres that had been established for three or four years than those that had been operating for only two years. In this latter case, Agrisystems has had to implement controls in order to manage the trade-oV between the learning process involved with new producers and the greater care that producers typically take when Wrst starting to grow export crops in order to establish themselves as trusted producers within Agrisystems’ supply chain. Despite the signiWcant learning curve associated with Agrisystems’ exacting requirements, small-scale producers consistently perform as well as large producers, if not better. Thus, the proportion of production that meets the export quality standard is comparable across small and large-scale producers for mangetout and Wne beans (Fig. 4). In the case of baby corn, small-scale producers signiWcantly out-perform large-scale producers in some years. Further, a supply-base of numerous smallscale producers that are geographically dispersed acts as an eVective mechanism to reduce the risk of widespread crop failures due to disease and (to a lesser extent) weather, thus safeguarding Hortico’s ability to fulWl customer orders. 40 35 30 25 20 15 10 5 0 1

2 3 Number of years centre operational Mangetout

4

Baby corn

Fig. 3. Proportion of mangetout and baby corn production meeting export quality standards by age of collection centre, 2000.

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% export grade

80 60 40 20 0 Baby corn (2002)

Baby corn (2001)

Fine Beans (2002)

Fine beans (2001)

Mangetout (2001)

Mangetout (2000)

Small-Scale

Large-Scale

Fig. 4. Proportion of production from small and large-scale producers meeting export quality standards.

Managing the costs of supply chain control in the face of evolving private standards

Number of producers per employee

Although it is evident that Hortico derives considerable beneWts from sourcing through small-scale producers, Agrisystems has struggled to manage costs while maintaining the required level of supply chain management in order to comply with the food safety and quality standards of its supermarket customers. Over the period 1998–2001, as Agrisystems’ supply base expanded and the food safety and quality standards became stricter, it was forced to increase the level of oversight by employing more staV at its collection centres. At this time, the controls put in place were mainly focused on inspection of producers and checks at collection centres, with more rigorous enforcement of penalties for non-compliance. As a result, the ratio between the number of producers and collection centre staV declined (Fig. 5) and the cost per producer of managing the supply chain increased (Fig. 6), jeopardising Hortico’s competitiveness relative to, not only other Zimbabwean exporters, but also

60 50 40 30 20 10 0 1997

1998

1999

2000

2001

2002

Fig. 5. Number of small-scale producers per Agrisystems collection centre employee, 1997–2002.

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Real cost per farmer (Z$)

400 350 300 250 200 150 100 50 0 1997

1998

1999

2000

2001

2002

Fig. 6. Real cost (1997 prices) of Agrisystems’ supply-chain operation, 1997–2002.

those in Kenya, Morocco, Senegal, Gambia and other exporting countries. These measures also caused resentment among the supply base of small-scale producers. In response to these increases in costs, Agrisystems developed a multi-tiered system of management and enforcement (such as those described above) that provided the required degree of compliance with lower levels of oversight through a blend of facilitation, incentives and penalties. Thus, the costs of operating the supply chain declined signiWcantly from 2001 to 2002, reXecting an increase in the producer to collection centre staV ratio. Further, the establishment of a signiWcant core of established producers that had adapted to the procedures required by Agrisystems and where a relationship of trust and mutual dependency had been established enabled collection centre staV to concentrate on new recruits. Simultaneously, Agrisystems negotiated with its supermarket requirements regarding speciWc elements of their food safety and quality standards in order to Wnd ways of complying at minimum cost. Examples included the speciWc seed varieties, fertilisers and/or pesticides that were speciWed and the ways in which due diligence was ensured through systems of traceability, record keeping etc. Clearly, Agrisystems itself has been engaged in a long-term process of learning and negotiation with both its supermarket customers and small-scale producers in order to achieve compliance with strict food safety and quality standards that are subject to seemingly continual change. Through the adjustment of its own production standards and the mechanism of supply chain controls that are employed, Agrisystems has been able to establish long-term and rigorous relations with its supply base of almost 4000 producers. This is indicated, for example, by the very low rate of ‘side-selling’ by contracted producers to other exporters, that rarely exceeds 0.5%. The sustainability of these relations reXects the mutual dependency that has developed between Agrisystems’ and its producers. While the contracted producers are dependent on Agrisystems to obtain a viable return from a product for which there is little or no local market, at the same time Agrisystems’ ability to fulWl customer orders at any point in time is reliant on the integrity and eYcacy of a relatively small group of producers.

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Conclusions The evolution of private food safety and quality standards poses major challenges for the continued participation of small-scale producers in high-value supply chains for agricultural products, especially to supermarkets in industrialised countries. Indeed, there is evidence that small-scale producers are being excluded as exporters seek simultaneously to achieve compliance with changing private standards and to manage the associated costs of procurement. However, while many exporters have shifted to a more consolidated supply base of medium and large-scale producers, there is evidence that mechanisms can be put in place that permit small-scale producers to make the changes and investments necessary to comply with stricter food safety and quality standards. Indeed, there may be beneWts from doing so associated with the comparative advantage of small-scale producers in the production of highvalue crops that require great attention in order to comply with strict quality standards. In many cases this requires that the exporter is proactive in facilitating compliance by small-scale producers, while organising its supply base such that compliance can be assured at reasonable costs that are commercially sustainable. The case of Hortico Agrisystems illustrates the considerable challenges and costs faced by supermarket suppliers in sourcing from a broad base of small-scale producers in the context of evolving food safety and quality standards. While small-scale producers are able to achieve levels of compliance at least equal to those of largescale producers, multi-tiered and dynamic systems of control are required to maintain control. These need to include measures that facilitate compliance (for example, training and Wnance), incentives to reward good performance and penalties to punish non-compliance. These systems are costly to operate and must adjust and adapt over time as relations between the exporter and producers evolve as a means to enhance cost eYciency and eYcacy. Crucially, a relationship between small-scale producers and the exporter needs to develop that is based on trust and mutual dependency and that secures the long-term commercial sustainability of both parties. Both exporters and small-scale producers face a steep learning curve in adjusting to new requirements, further emphasising the need for supply chains to be responsive to change. At the same time, private standards may enable such processes of adjustment given their predominant focus on process-based requirements and, at the same time, scope for exporters to negotiate with their supermarket requirements regarding speciWc elements given local prevailing conditions. This emphasises, in turn, the need for supermarket buyers to be responsive to the speciWc conditions and constraints faced by exporters that source from small-scale producers and, while not suggesting that they should accept lower standards of food safety and quality, willing to recognise and accept the equivalency of alternative systems of production and control.

References Barham, B.L., Boucher, S., Carter, M.R., 1996. Agro-export production and peasant land access: examining the dynamic between adoption and accumulation. Journal of Development Economics 46, 85–107.

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