Governance and Trade in Fresh Vegetables

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Governance and Trade in Fresh Vegetables:

The Impact of UK Supermarkets on the
African Horticulture Industry
C AT H E R I N E D O L A N and J O H N H U M P H R E Y
Production of fresh vegetables for export has grown rapidly in a

number of countries in sub-Saharan African over the past decade.
This trade brings producers and exporters based in Africa together
with importers and retailers in Europe. Large retailers in Europe
play a decisive role in structuring the production and processing of
fresh vegetables exported from Africa. The requirements they
specify for cost, quality, delivery, product variety, innovation, food
safety and quality systems help to determine what types of
producers and processors are able to gain access to the fresh
vegetables chain and the activities they must carry out. The control
over the fresh vegetables trade exercised by UK supermarkets has
clear consequences for inclusion and exclusion of producers and
exporters of differing types, and for the long-term prospects for the
fresh vegetables industry in the two major exporting countries
studied, Kenya and Zimbabwe.
I. INTRODUCTION
International trade in horticultural products has increased markedly in the

past two decades. Changes in dietary habits stemming from increased health
awareness, together with demand for convenience foods, have accelerated
year-round consumption of fresh fruit and vegetables and the sale of an
increasing variety of prepared foods in industrialised countries. Some
African countries have been able to benefit from this trade. Between 1989
and 1997, the value of exports of fresh vegetables from sub-Saharan Africa
to the European Union (EU) increased by 150 per cent.1
Catherine Dolan and John Humphrey are at respectively, the School of Development Studies,
University of East Anglia and Institute of Development Studies, University of Sussex. They
thank Carla Harris-Pascal for work on this project, and an anonymous referee and members of
the globalisation team at the Institute of Development Studies for helpful comments on previous
drafts. Financial assistance from the Department for International Development is gratefully
acknowledged.
The Journal of Development Studies, Vol.37, No.2, December 2000, pp.000–000
PUBLISHED BY FRANK CASS, LONDON
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148 GLOBALISATION AND TRADE
Fresh vegetables are a good example of a non-traditional agricultural

export crop, and they illustrate the potential for agricultural diversification
and production of high-value crops. Nevertheless, this trade links African
producers and exporters with very large European retailers. Food retailing
has become increasingly concentrated in Europe. In 1996, the top five
supermarket chains had a total food market share of more than 50 per cent in
all but three EU countries (Spain, Greece and Italy) [Baas et al., 1998: 25–7].
This process is particularly noticeable in the UK, where the largest six food
retailers had captured a 76 per cent share of fruit and vegetable sales by 1997
[Fearne and Hughes, 1998: 29]. These firms have also invested heavily in
the development of their supply chains, greatly increasing monitoring and
control of suppliers. The resulting power asymmetries have been a cause for
concern. Doel [1996], for example, describes the pressures suffered by
suppliers to large retail chains in the UK, while Thrupp [1995] has
documented the impact on Latin American growers of production of non-
traditional export crops for the North American market.
This study analyses the trade linkages between producers and exporters
of fresh vegetables in Kenya and Zimbabwe and UK supermarkets. It takes
up the concept of governance in global commodity chains developed by
Gereffi [1994] in order to examine how the competitive strategies of the
supermarkets have led to particular governance structures that determine
not only the types of product to be produced, but also production and quality
systems, the extent and location of post-harvest processing and the structure
of the horticulture industry in Kenya and Zimbabwe. Two basic questions
are posed. First, governance: how is the fresh vegetable chain structured,
which actors define what the chain requires, and how are these requirements
transmitted to the various actors in the chain? Section II discusses the
concept of governance and its relevance for the analysis of trade. Section III
analyses the way in which governance is exercised. Second, consequences
for African exporters and producers: how has involvement in the chain
transformed the production and processing of fresh vegetables in Kenya and
Zimbabwe? More specifically, what types of firms are included in the chain
or excluded from it? Section IV examines how meeting the requirements of
the UK retailers has influenced the nature of the horticulture business in
Africa, focusing specifically on the cases of Kenya and Zimbabwe. Section
V considers the limitations of the analysis.
II. GOVERNANCE IN COMMODITY CHAINS
The global commodity chain concept is just one of a number of approaches

to inter-firm relations that draws on the simple idea that the design,
production and marketing of products involves a chain of activities divided
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GOVERNA NCE AND TRADE I N FRESH V E G E TA B L E S 149

between different enterprises. Various authors have developed this idea in
different ways. For example, Hopkins and Wallerstein define a commodity
chain as ‘a network of labour and production processes whose end result is a
finished commodity’ [1994: 17], and apply it to the changing organisation of
the world economy. Porter uses the terms value chain and value system to
discuss company strategies in terms of the management of relationships with
other firms, arguing that: ‘Competitive advantage is increasingly a function
of how well a company can manage this entire system. Linkages not only
connect activities inside a company but also create interdependencies
between a firm and its suppliers and channels’ [Porter, 1990: 43–4].
Ruigrok and van Tulder [1995] discuss the restructuring strategies of
leading global firms by using the concept of ‘industrial complex’, in which
the core firm organises suppliers, workers and dealers, and maintains
relations with financiers and governments. Similarly, Wilkinson has
analysed the knitwear industry using the concept of ‘productive system’: ‘It
is possible to describe as a “productive system” the combination of design,
product development, marketing, production and retailing by which
products progress from their conception to the final consumer. In the
markets for knitwear different types of “productive systems” coexist and
compete’ [Wilkinson, 1995: 1]. Each of these authors takes the idea of a
chain of inter-firm linkages and applies it to particular circumstances,
focusing on specific linkages and their characteristics. Their different
perspectives and priorities generate different but overlapping concepts.
Gereffi took as his starting point the work of Wallerstein, but his concept
of global commodity chains (GCCs) contains three new elements which are
particularly useful for the analysis in this study. First, Gereffi has
emphasised the fact that chains frequently involve cross-border co-
ordination of the activities of independent firms. Secondly, Gereffi has
emphasised the issue of governance, drawing attention to the fact that large
retail and brand-name companies create inter-firm networks characterised
by a high degree of co-ordination. Campbell and Parisotto have expressed
this point in the following way:
Much international trade in goods and services cannot be thought of
as a multitude of arm’s-length transactions between countries. Instead,
trade is organised within a structure or system of international
production. In this sense, it is ‘internalised’ within the common
ownership of multinational enterprises, or ‘quasi-internalised’ within
a system of governance that links firms together in a variety of
sourcing and contracting arrangements. Much international trade can
therefore be said to be situated somewhere between ‘markets’ and
‘hierarchies’ [Campbell and Parisotto, 1995: 1].
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Thirdly, Gereffi has highlighted the increasing role played by

international buyers, retailers and brand-name companies in the trade of
labour-intensive manufactured products such as garments [Gereffi, 1994].
In recognition of this, he distinguishes between two basic types of
commodity chain. On the one hand, there are ‘producer-driven’ chains,
typical of capital- and technology-intensive industries, in which chain
governance is exercised by companies which control key technology
and production facilities. On the other hand, there are ‘buyer-driven’
chains in which retailers and brand name companies exercise
key governance functions. They focus their own activities on design,
retailing and marketing, as well as the organisation of the chain itself.
They define what is to be produced, but do not produce it themselves. The
role of this type of non-manufacturing company in defining trade
opportunities for developing countries is one of the central arguments of
Gereffi’s work.
The governance exercised by such companies has consequences not
only for the inclusion and exclusion of firms in the chain, but also for the
opportunities they have for upgrading – moving into more sophisticated
functions within the supply chain or into the production of more
sophisticated commodities. Gereffi [1999] sees upgrading as the process
by which industries in developing countries acquire both new skills
through export manufacturing and establish links with new commodity
chains that can use these skills. In the garments industry, for example,
upgrading involves not only a shift from the assembly of cut parts into
garments to provide a ‘full-package’ service that supplies a complete
garment, but also a shift in buyers, from manufacturers outsourcing part
of their production to retailers looking to buy a complete product [Gereffi
1999: 52–3].2
But why should a commodity chain have to be ‘governed’ at all? Why
do international buyers not use arms-length market relationships that do
not require costly investments in governance and provide greater
flexibility of sourcing to buyers?3 Two factors appear to be crucial. First,
the increasing use of product differentiation strategies in developed
country markets means that retailers derive competitive advantage from
selling non-standardised products that are not generally available in the
market, competing not only on price, but also on factors such as
reliability, product variety, product quality and speed of innovation. This
competitive strategy increases the need for supply chain governance. On
the one hand, the supplier requires ever more complex information about
changing market requirements, as well as assistance in meeting changing
product specifications. On the other hand, the risks to the seller from poor
quality products, deliveries, delays, etc. are considerable.
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Secondly, governance requirements increase when developing country
producers have difficulty in meeting the requirements of developed country
markets. Keesing and Lall argue that:
A major problem associated with the marketing of manufactured
exports from developing countries is that products made in a
developing country for export to a developed one are generally quite
different from the analogous products made for the domestic market
… As a result of these systematic product differences and changing
product specifications, information must be collected and supplied,
order by order on what is needed … Often instructions on these points
is part of the crucial information transmitted to suppliers. While the
latter are still inexperienced, either buyers or someone must teach the
details of procurements, quality control, inspection, packing, shipping
documents required, sizes and size assortments, and much else
different from what is done in production for the local market
[Keesing and Lall, 1992: 178].
The need for governance is reinforced in certain markets by increased
concern with labour, environmental and product safety standards, either
through legal obligations or consumer, government and NGO pressures.
These increase the responsibility of the retailer for what happens in the
supply chain.4
Product differentiation and more complex product requirements need
not, by themselves, create a need for close management of the supply chain.
In situations where manufacturers are technically competent and have good
market knowledge, governance structures may not be required. For
example, retailers might be able to purchase high-fashion Italian shoes
through arm’s-length market relations. Similarly, complex supply chains for
products such as computers can be managed through arm’s-length market
relations. But governance is required when the supplier lacks technical
competence or market knowledge.5 Market failures in the area of
information about markets and the provision of services to producers,
together with the need to co-ordinate different parts of the supply chain
require intervention by the retailers. Generally speaking, this option is only
open to larger retailers, or to specialist international traders who have the
resources and knowledge to manage international supply chains. Taking as
given that large retailers and brand-name firms have deliberately eschewed
the vertical integration route, while maintaining close control over the
supply chain, this study will consider the consequences of this control for
producers and exporters of fresh vegetables.
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III. THE GOVERNANCE OF THE FRES H V EG E TA BLES CO MM O D I TY

CHAIN
Over the past 30 years, one of the most striking features of the retailing of
fresh food in the United Kingdom has been the increasing dominance of
large supermarkets. According to Gray and Kleih, ‘Specialist greengrocers
and fruiterers had a 46% market share [of the UK market] in 1980 but this
had fallen to 26% by 1991’ [1997: 30]. This process continued in the 1990s.
By 1997, the multiple stores (supermarkets and major retail chains)
accounted for 76 per cent of UK fresh fruit and vegetable sales [Fearne and
Hughes, 1998: 29]. The horticultural value chain linking UK consumers and
supermarkets with export firms and farmers in Africa has been directly
affected by this process of retail concentration. Whereas imported
horticultural produce was previously channelled primarily through
wholesale markets, the largest UK retailers now control 70–90 per cent of
fresh produce imports from Africa.
The dominance of the supermarkets in UK food retailing reflects a
broader process of retail concentration that has been associated with radical
transformations of supply chains. Supermarkets came to exercise increasing
influence on commodity chains across a wide range of products. They
developed their own brands, in competition with industry leaders such as
Heinz, Kellogg and Schweppes. They developed sophisticated logistics
systems, as described by Womack and Jones [1996], and they played a
decisive role in developing products and supply channels.6 Generally
speaking, large retailers have avoided direct involvement in production.
They specialise in marketing and in the organisation of supply chains.
Supermarket retailing is characterised by oligopolistic competition. A
small number of retailers battle for customer loyalty and market share, using
product differentiation and heavy advertising as major weapons, even though
the predominance of competitor-oriented reactive strategies undermines these
attempts at differentiation. During the 1990s, the supermarkets were able to
expand market share at the expense of smaller competitors. A combination of
a market strategy based upon product quality and variety and heavy
investment in both retail outlets and logistic systems proved successful.7
Fresh fruit and vegetables were a key area of competition between
supermarkets, and the characteristics of competition between supermarkets
were decisive for the rapid development of the African fresh vegetables
trade. While food products as a whole are income inelastic, fresh fruit and
vegetables are purchased disproportionately by higher-income consumers
and fresh produce is crucial for attracting and retaining such customers:
Fresh produce has become what retailers describe as a ‘destination’
category – fresh fruit and vegetables is one of the few product
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categories (along with fresh meat and wine) for which shoppers will
switch stores. It is also one of the two remaining categories (along
with meat) which is virtually all own label and thus over which they
can exert considerable influence and control. As a result, over the past
fifteen years, the fresh produce department has moved from the back
of the store to the front and has doubled its shelf area in store …
[Fearne and Hughes, 1998: 5].
Estimates of the growth prospects for the fresh fruit and vegetable
market as a whole vary, but sales of speciality vegetables8 and prepared
fresh food grew considerably in the 1990s. Fearne and Hughes [1998: 5]
estimated that ‘sales of speciality vegetables have increased by 21 per cent
in volume terms during the period 1993–96’. They also drew attention to the
rapid growth in sales of ready-to-eat, pre-washed salads, whose sales
increased by 34.3 per cent in value terms between 1994 and 1996 [Fearne
and Hughes, 1998: 25].
The countries of sub-Saharan Africa have found a niche in this trade. An
indication of the extent of their involvement is given by Table 1, which
shows that a wide variety of fresh vegetables were sourced from developing
countries to UK supermarkets in spring 1999. African countries accounted
for most of the produce. The market for fresh vegetables imported from
Africa has increased in volume and product variety, moving from off-season
supply towards an increasing year-round supply. This not only expanded the
market for imported fresh vegetables, but also led to a decisive
transformation in the structure of the trade and participating firms. The
governance of the chain is a key factor in this transformation. This can be
discussed in terms of the positioning of the chain in the market, the structure
of the chain and monitoring of and the provision of assistance to firms in the
chain.9
The Positioning of the Chain

The supermarkets have emphasised fresh, healthy food, ease of preparation
and innovation in order to attract the high-spending, middle-class
consumers. Competitive strategies have emphasised:
• Quality. The supermarkets have extended the concept of self-service to
fruit and vegetables, and this reinforces the need for instant, appealing
produce. According to one senior supermarket manager, the produce left
on the shelves by customers determines the quality standard.
• Consistency. The supermarkets aim to supply the customer with a
product that is consistent in appearance and taste, not only at any one
time, but also preferably across the growing season.
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TABL E 1
S P ECI AL I T Y VE GE TABL E S I N UK S UPER MA R K ETS, A PR IL 1999 (a)
Product Asda Marks Sainsbury’s Waitrose

& Spencer
asparagus Zimbabwe Thailand Peru Thailand

Thailand Zimbabwe
asparagus, babycorn Guatemala /
and mangetout Spain /
Thailand(b)
babycorn/ dwarf corn Thailand Kenya Thailand Thailand
babycorn and Kenya South Africa Gambia
mangetout Zimbabwe
babycorn, mangetout Thailand / more than
and carrots Guatemala / one country
Holland
mangetout Egypt Kenya Guatemala Kenya
Guatemala Kenya
Kenya Zambia
dwarf beans Egypt Kenya
fine beans Kenya Kenya Gambia Gambia
Kenya
Zambia
fine beans and baby Kenya
carrots
hard-shell garden peas Kenya
round beans Gambia
stringless beans Egypt
runner beans Zimbabwe Zimbabwe Kenya Zimbabwe
runner beans & carrots Various
countries
sugar snaps Guatemala Guatemala
South Africa Kenya
brussel sprouts Kenya
broccoli Zimbabwe
courgettes South Africa
globe artichokes Egypt
Notes: (a) The country of origin in the table is that stated on the label. This is sometimes
accidentally or deliberately mis-specified.
(b) Where various countries are indicated as a source with a slash between them, this
means different parts of the product combination are sourced from different countries.
Where more than one country is indicated without a slash, products were available
from these countries at the same supermarkets. In some cases, the products were
identical, in other cases they were packed in different ways (cellophane bags versus
trays, for example).
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• Variety. Supermarkets have increased the variety of basic products such
as tomatoes by introducing cherry tomatoes, vine-ripened tomatoes, etc.,
and introduced new products, such as papaya, okra and snow peas.
• Processing. Supermarkets have offered an increasing range of prepared
foods, involving washing and chopping of food products. Pre-washed
salads and vegetables that are ready for immediate cooking have become
increasingly popular.
• Product combinations. Customers can now buy product combinations,
such as peeled and chopped papaya packaged together with wedges of
lime, and packets of vegetables combining a range of peeled, sliced and
washed food that can be put straight into stir-fry dishes.
• Packaging. For speciality vegetables, supermarkets have stopped
presenting many products in loose form and shifted towards prepacking
produce in cellophane wrappings and trays.
• Reliability of Supply. Supermarkets believe that customers will switch
to other stores if products are not available at the time they go shopping.
Therefore, continuity of supply is an important goal.
• Price. While price is not the main focus of competitive strategies, it did
become more important at the end of the 1990s as market shares reached
saturation point and reactive competitive strategies limited the success
of differentiation strategies.
The scope for differentiating and processing even simple products is
shown in Table 2. The price charged for Class 1 (the best) carrots in one
supermarket in the Brighton area was 39.4p per kilo for loose carrots.
Putting the same carrots into bags doubled the price. The price of peeled and
sliced carrots was seven times as high as the loose product, at £2.83p per
kilo, while a new product variety, the ‘mini-crunch’ carrot designed as a
snack, retailed for £6.00 per kilo. Clearly, product processing and
differentiation adds significantly to margins.
TABL E 2
A D D I N G VA L U E TO C A R R O T S
Product Weight and Price Price per kilo
Basic carrots, Class 1 loose, 18p per lb. 39.4p

Basic carrots, bagged, class 1 1 kg bag, 87p .87p
Peeled and sliced carrots, in bag 350g bag, 99p £2.83
Carrot batons (peeled, chopped, washed, 200g bag, 59p £2.95
ready-to-eat)
Peeled, ready-to-cook mini-carrots 300g bag, 85p £2.83
Mini-carrots, in tray 225g tray, 99p £4.40
Mini-crunch carrots (peeled, chopped, 100g bag, 60p £6.00
washed, ready-to-eat)
Source: Authors’ observations in one UK supermarket.
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A competitive strategy based on product variety, packaging and

processing would, in itself, place greatly increased demand on the supply
chain. The supermarkets have also had to meet regulatory requirements. In
particular, the 1990 Food Safety Act requires retailers to demonstrate that
they have shown ‘due diligence’ in the manufacture, transportation, storage
and preparation of food [Marsden and Wrigley, 1996]. In response to the
requirement to demonstrate ‘reasonable’ care to ensure food safety, UK
supermarkets developed systems that allow products to be traced from the
field to the supermarket shelf. More recently, supermarkets have come
under some pressure to ensure that their production systems are socially and
environmentally sound. The issues of labour and environmental standards
gained increased importance in the minds of consumers, and the UK
government actively promoted the involvement of retailers in the
development of standards. Retailers have become acutely aware of the
damage that can be caused to their image by exposés of poor labour
conditions (particularly child labour) and environmentally damaging
production processes. As a result, retailers developed codes of practice that
address issues of health and safety, employment conditions, and
environmental management throughout the supply chain.
The supermarkets make the key decisions about the positioning of the
chain. While they frequently argue that they merely respond to customer
demands and government obligations, the supermarkets make strategic
decisions about how to respond to these pressures. This can be seen in
differences in the range of products and the types of presentations offered to
customers,10 even through imitative behaviour tends to narrow the
differences between competitors. Supermarkets both anticipate and shape
customer needs and make decisions about how these needs should be met.
Furthermore, it was clear from interviews with importers that supermarket
buyers play the decisive role in determining which products will be stocked,
the packaging presentations to be used, etc. Importers do devise new
product and presentation ideas, but these have to be approved by the
supermarket buyer.
Achieving continuous, reliable supply of a broad and changing range of
products from different countries around the world requires a highly
sophisticated supply chain. The governance of the chain has to deliver these
performance requirements. This governance has two parts: the specification
of the structure of the chain, and the systems that ensure the chain’s actors
meet the required performance standards.
The Structure of the Chain

When the UK supermarkets first began to sell fresh fruit and vegetables,
they bought domestic and imported produce from wholesale markets. Such
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markets are suitable for standardised products whose characteristics are
clear at the point-of-sale. For horticultural products, this type of half-
channel network11 is still evident in international trade of cut flowers (via the
Amsterdam auction) and for some fresh fruit. However, as the supermarkets
began to require increasing product variety, customer-specific processing
and greater knowledge of production and processing systems (in order to
reduce the risk of exposure to failings by their suppliers), they greatly
increased the degree of control exercised in the chain by reducing the
number of suppliers and tightening linkages in the chain. The basic actors
remained the same – African growers, African-based exporters, UK
importers and the UK supermarkets – but the number of actors, the
distribution of functions between them and the relations between them
changed.
In the early 1990s, UK importers could still source produce from a range
of exporters, who would buy produce from a range of growers according to
price and availability. By the late 1990s, the linkages in the chain had
become much tighter. UK-based importers source produce from various
countries in order to ensure year-round availability, but at any one time of
year they will have one or two countries supplying produce, and in each
country the importer will usually deal with one major exporter. While
supermarkets may enter into exclusive arrangements with UK importers and
African exporters, sourcing the whole of their supplies of particular product
lines at certain times of year from just one exporter, this is the exception.
Following the disruptions to production in certain African countries caused
by El Niño, some importers had been encouraged by their supermarket
customers to diversify their sources of supply again. The director of one
leading UK importer explained that not only was he expected to diversify
his sourcing and reduce reliance on his main supplier, but also that his
largest customer had specified that a new source be developed in one
particular country, Egypt.
The tightness of linkages in the chain does not mean that there is
reciprocal dependence between supermarkets and their suppliers. While
such relationships are frequently durable, each supermarket will source
from a number of fresh vegetable importers. The distribution of orders
between suppliers varies according to the prices offered, and supermarkets
do switch between suppliers. Similarly, importers will source from various
countries, and as was seen above, they may be encouraged by supermarkets
to develop competing sources of supply. It was seen clearly in Table 1 that
similar or identical produce was available from different countries in the
same supermarket at the same time of year.
This is the ‘ideal’ situation for the supermarkets. In practice, there are
two constraints on the full development of this degree of control. First,
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supermarkets have varying volume requirements. For example, when

products are being promoted, or there is an unexpected peak in demand, it
may be necessary to find additional suppliers, and in these cases the degree
of supervision will be lower. Secondly, a high degree of control is easiest to
exercise when there is a severe power asymmetry between supermarkets
and suppliers. This does appear to be the case in sub-Saharan Africa, where
there are various countries and exporters competing for market share.
However, in the case of Spain, which is an essential source of low-cost
Summer fruit and vegetables, the need to find Spanish suppliers gives these
suppliers more latitude to resist supermarket demands. Some UK importers
acknowledged that standards imposed on African growers and exporters
cannot be applied to Spanish firms.
Meeting Performance Standards

If the chain is to meet the requirements placed upon it, its performance must
be monitored, and systems put in place to ensure that suppliers can and do
meet standards. Producers and exporters wishing to supply the UK market
need monitoring systems that ensure compliance with retail (product
quality) and legislative (due diligence) requirements. Exporters must be up-
to-date on UK legislation related to pesticides, residue levels12 and food
safety and ensure that there are sufficient hygiene facilities and protective
clothing on site. Further, they have to allocate managerial resources to
training personnel on quality, safety, hazards and other aspects of quality
assurance, as well as develop monitoring tools and evaluation criteria to
satisfy their overseas customers. All export firms now have sophisticated
quality assurance systems that document seed procurement, planting
schedules, pesticide and fertiliser use, spraying, and personal hygiene to
guarantee food safety.13 Yet increasingly retailers have expanded the
standards that exporters must meet, moving beyond procedures to ensure
regulatory compliance to addressing broader issues such as integrated crop
management (for example, Nature’s Choice at Tesco), human rights and
environmental protection. In addition, in 1997 UK retailers, in conjunction
with supermarkets in continental Europe, launched the European Retailers
Produce Working Group to develop and harmonise Integrated Crop
Management standards worldwide [Miller, 1999]. This will intensify the
burden of monitoring for African exporters.
The supermarkets use decisions about inclusion and exclusion to ensure
that these standards are met. Before a supplier is included in the chain, it is
usually subject to an audit of its facilities, and it must demonstrate that it can
meet the requirements described above. Conversely, extreme cases of poor
performance or major lapses in food hygiene and safety standards can lead
to suppliers being excluded from the chain altogether.
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Monitoring and auditing of production and processing systems is carried
out by supermarkets and importers. Supermarkets usually visit African
suppliers twice during the year to ensure that produce is grown, processed
and transported in compliance with their requirements. The seriousness with
which retailers view compliance with due diligence is reflected in Tesco’s
formation of a ‘hit squad’, which is prepared to inspect any supplier without
prior notice to ensure compliance [Fearne and Hughes, 1998]. However,
short visits by supermarket inspectors to exporters and growers in Africa
can only provide limited oversight. It is not possible to visit more than a few
growers or farms, particularly when export farms use a variety of different
production units. In fact, retailers are beginning to use third party auditors
paid for by producers to ensure compliance with standards.
While the supermarkets establish the standards and carry out some direct
monitoring, the responsibility for the day-to-day enforcement of procedures
is generally the responsibility of importers and exporters. Importers visit
their African suppliers on average three to four times of year. They usually
accompany supermarket buyers as well as visit on separate occasions. In
some cases importers have permanent staff in Africa, not only to ensure
compliance, but also to provide technical assistance to exporters. The
closeness of ties between exporters and importers is reflected in the tie-ups
seen between them. Some of the largest African exporters have set up their
own import companies in the UK and/or Europe in order to improve access
to the market, while some UK importers have taken equity stakes in
exporters in Kenya and Zimbabwe.
I V. T H E S T R U C T U R E O F T H E S E C TO R I N S U B - S A H A R A N A F R I C A
The previous section has shown the outputs required from the chain by UK
supermarkets, and it has analysed the chain’s structure and decision-
making. How does this translate into the specific characteristics of the fresh
vegetables industry in Kenya and Zimbabwe?
Export horticulture has been one of the bright spots of African
development. It has raised production standards in agriculture, created
supporting industries, and provided considerable employment in rural areas.
While three countries – South Africa, Côte d’Ivoire, and Kenya – account
for the majority of this success, in the past decade Zimbabwe and Zambia
have also experienced rapid horticultural export growth. Clearly, part of this
success is attributable to European Union trade preferences, which give
better access to European markets for products from ACP countries, and in
the next few years this advantage will be undermined by trade liberalisation.
An analysis of the likely impact of trade liberalisation on African
horticultural exports by Stevens and Kennan [2000] suggests that this
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problem should not be overestimated. Most existing non-African suppliers

in European markets enjoy trade privileges similar to those of the African
countries, and trade liberalisation is unlikely to impact African exporters in
the next few years since current trade preferences will be maintained during
a preparatory period (2000–2008) [Stevens and Kennan, 2000: 34;
Morrissey, 2000: 6]. Competitive threats certainly exist – the rapid rise of
Egyptian fresh vegetable exports is evidence of this – but this has occurred
independently of trade liberalisation.
Several recent studies14 have highlighted a number of factors behind
Africa’s horticultural boom. These include:
• Non-interference by government in the commercial dimensions of the
business.
• Preferential trade agreements such as the Lomé Convention.
• The achievement of sub-regional/cross-border economies of clustering,
which provides a critical mass of activity for technical learning, market
information flows, the development/spread of trained manpower.
• International technical and marketing strategic partnerships which
have assisted in technology transfer, logistics, market penetration, and
the creation of a market identity for African products.
• The effective coordination of internal and international logistics at the
industry level, involving intra-firm co-operation [Thoen et al.,
forthcoming].
Exports of horticultural products to the UK have grown considerably
since the 1980s. Kenya was still by far the largest exporter of the vegetables
included in categories HS 0708 and 0709 to the European Union as a whole
in 1997, and Zimbabwe was the second-largest exporter. In both countries
the price per ton of exports continued to rise in the period 1989–97,
reflecting their growing prominence in the trade of pre-packed and prepared
vegetables, salads and cut flowers to EU markets.
In Kenya, export horticulture has grown from a small trade centred on
Asian vegetables (okra, chillies) during the 1960s to an extensive trade that
delivers approximately 75 products to dozens of overseas markets [Jaffee,
1995]. While Kenya’s trade began with a small number of Asian-owned
family enterprises, by the 1980s several well-financed exporters had entered
horticulture, viewing direct sales to retailers as a way to exploit their
advantages in investment, scale and market linkages. In both Kenya and
Zimbabwe, the fresh vegetables trade is entirely under the control of a few
private individuals and companies. These exporters have changed the nature
of product sourcing. Until the 1990s, the majority of produce in Kenya came
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from smallholders, who sold produce under spot market arrangements
through intermediaries or ‘middlemen’ [Harris, 1992; Dijkstra, 1997].
These middlemen sold produce to small and medium sized firms, who
channelled it through wholesale markets to UK retailers. However, today
the majority of export horticultural produce is destined for supermarket
shelves. In Kenya and other major horticultural exporting countries in sub-
Saharan Africa the market share of smallholder production and small export
firms has declined and the industry is dominated by a few large exporters
sourcing predominantly from large-scale production units.
While some producers and exporters have clearly benefited from the
move toward direct supermarket sales due to increased access to markets
and product information, many more producers and exporters have fallen
out of the market. Little is known about the competences and strategies of
those who have been successful in securing a position in the chain and even
less is known about those who have lost market access in the face of
competitive challenges. This section examines the position of African
exporters and producers in the fresh vegetable trade, exploring the
capabilities required to meet the competitive challenges of the industry.
Concentration in the Export Sector

There is considerable scope for growth in the export horticulture sector. The
market is expanding and there are significant opportunities for African
firms to become players in overseas markets. However, inclusion in the
chain is contingent upon meeting the requirements described above. These
requirements have, first, favoured the concentration of the export trade in
the few, large firms, and, secondly, shifted production increasingly to large
farms, many of which are owned by the exporters. As a result, small and
medium-sized exporters, and small growers have been excluded from the
supermarket chain. To compete in this trade exporters need well-developed
organisational capabilities, investment in post-harvest facilities,
sophisticated logistics, large volumes and close relations with European
importers.
Organisational capabilities: The demands for consistency of quality,

reliability of supply and due diligence place considerable organisational
burdens on African exporters. First, both growing and processing systems
must be managed so as to produce reliable supply of high-quality produce.
Good management along the chain is essential to produce good quality
produce and prevent later deterioration. This requires both control of in-
house systems and management of suppliers, and exporters must prove that
they have the necessary control mechanisms in place. Second, regulatory
requirements such as due diligence require suppliers to oversee the use of
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chemicals, undertake audits, and develop monitoring procedures. The

competitiveness of African exporters is linked to the their reputation for
food safety and complying with standards involves all aspects of their
business. They have to allocate managerial resources to training personnel
on quality, safety, hazards and other aspects of quality assurance, as well as
develop monitoring tools and evaluation criteria to satisfy their overseas
customers. Large exporters can invest in the management systems to meet
these requirements, while small exporters lack both the resources to ensure
compliance and a management system through which to trace
accountability.
Post-harvest facilities: Staying in the fresh vegetables business requires

considerable investment in post-harvest facilities. This investment arises
from several factors. Firstly, the quality requirements of the UK
supermarkets necessitate close management of post-harvest activities. The
product deteriorates rapidly, and the post-harvest climate from farm to
supermarket shelf strongly governs product quality. Products must be
placed in a cool environment shortly after harvest, transported in a
refrigerated vehicle to packhouses, where product is cooled, graded and
packed under temperature and humidity controlled conditions. Cold storage
is now an integral part of the supply chain, and in both Kenya and
Zimbabwe large exporters have invested in state of the art methods
including chilled chlorinated water for washing.
Secondly, in the horticultural chain, market power has shifted from those
activities that will lower cost to those that will add value in the chain
[Boehlje et al., 1998]. There is a the growing tendency to push these value-
adding functions back along the chain to the source of supply. Today, a
substantial amount of produce sold in the multiples is packed and barcoded
to differentiate products, varieties, countries and suppliers. To the extent
that these activities are performed in the source country, they require
considerable investment in perishables handling facilities and equipment.
Pushing back these functions into Africa has a number of advantages for
the supermarkets. Adding value to vegetables is labour-intensive and
African labour is cheaper. It reduces repackaging in the UK and enables
defective products to be detected and discarded in Africa. In addition,
processed products have a higher value-to-weight ratio, which reduces
transport costs. Taken together, these three factors make it likely that
competitiveness will rest on securing the skills and investment capabilities
to add value in Africa.
Thirdly, as exporters move away from simple products towards more
complex product processing and presentations, greater investment is
required. Products packed in trays require more complicated machinery
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than products wrapped in cellophane packets. Further investment is required
if exporters wish to move into high-value-added activities such as ready-
prepared vegetables and salads. These require ‘high care’ facilities that meet
European hygiene regulations. One importer estimated that it would require
an investment of US$500,000 to set up a processing unit for such products.
These are asset-specific investments that are not easily transferable to other
sectors, which not only exclude small exporters but render the larger firms
locked into the UK retail market in order to recoup their investment.
Logistics: The retail sector demands flexibility and reliability in supply.

This combination is hard to achieve. Reliability of supply is most easily
achieved by keeping stocks in the system, but the supermarkets wish to
minimise the time from farm to supermarket shelf and pass the costs of
inventory control back to exporters [Hughes, 1999]. Rapid turnover means
greater freshness, and in Kenya and Zimbabwe large exporters have shifted
towards JIT management techniques in order to reduce the time between
harvesting, packing and delivery. They must be prepared to respond quickly
to changes in supply and demand, often within 24 hours, or bear the loss of
unharvested product. As a result, logistics is now a core competence in the
chain and exporters supplying UK multiples must be able to respond
quickly and efficiently to changing orders.
The supermarkets’ emphasis on logistics capability also places a
premium on up-to-date market information within the supply chain. The
profits of the supermarkets have been realised to a large extent by
substantial investment in IT systems that track ordering and sales, identify
their customer base, and organise storage, delivery and transport. The
ability to finance investment in IT has given large firms a competitive
advantage over those who are unable to reduce costs, trace customers, and
adopt customer-specific marketing [Poole, 1997]. In Kenya and Zimbawe,
exporters who have adopted electronic integration have experienced
significant cost savings over those who still rely on faxes or telephone
communication.
Finally, the demands for rapid and reliable delivery make securing air
cargo space a priority. Approximately 93 per cent of Kenya’s fresh
horticultural exports are shipped by air and the availability and cost of
airfreight have long been a central problem for African exporters [Barrett et
al., 1997]. In fact for many large exporters, these problems have provided
the impetus to gain control over the distribution process through joint
ventures with freight forwarders. Yet this requires having the scale of
operations to consolidate and negotiate air cargo space with commercial
airlines, which small exporters do not have. Instead smaller exporters are
forced to secure space on passenger airlines, which are reluctant to accept
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pre-booked space [Barrett et al., 1997]. When space is not available,

produce often deteriorates on the tarmac before being returned to cold
storage. Small exporters have very little power against the airlines and fear
that both the availability and price of cargo space may drive them out of the
market. As one exporter claimed, ‘If we start making claims against carriers
for spoiled produce, the rates will start climbing. We can’t afford that.’ This
makes smaller exporters far less able to guarantee either the quality or
reliability of their products in overseas markets.
Scale: The analysis so far has pointed to the number of factors, which
clearly work in favour of the large exporters in the fresh vegetables industry.
These include their management and investment capabilities, and their
access to transport. One additional factor favours concentration in the
sector: the rationalisation of the supply base. When the supermarkets
rationalised their supply base in the 1990s, the volumes required from their
‘dedicated’ exporters increased greatly. The supermarkets have reinforced
this trend because they believe that only the largest suppliers can reduce
costs.
Innovation: relationships with importers: In an industry where product

development and diversification are an important source of competitive
advantage, innovation has become a key source of power and security in the
supply chain. Suppliers who assume responsibility for product and
packaging innovation greatly increase their value to the supermarkets and
minimise their risk of substitution.
The relationship between exporters and importers is crucial for
innovation, particularly since information about consumer preferences and
product specifications is now transmitted through the closed channels of
‘dedicated’ suppliers. The development of long-term relationships with
European importers has brought several advantages to African exporters
and all of the leading exporters have been involved with the same importer
for between five and ten years. Increasingly, importers are taking the lead in
product development, and working with their best suppliers to provide
improved products, packaging and presentations. As one exporter claimed,
‘Occasionally a supermarket will come up with an idea. But this is really
part of our business. You have to do this. You have to provide the whole
package to keep your position in the market.’ The exporter cannot do this
alone. Cape Gooseberries, King Passion and Runner Beans are all examples
of products that Zimbabwean exporters developed in concert with their
respective importers. Yet the costs of innovation are borne by exporters in
Africa, who can never be certain if the product will sell once on supermarket
shelves. As a result, pushing innovation down the supply chain reinforces
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the concentration of the export trade to those who can absorb the potential
losses from unsuccessful product innovations.
In addition, exporters are expected to participate in promotional offers.
Horticulture promotions are typically given a standard on-shelf price
reduction, where the cost of the product is reduced for a limited time period,
or where extra produce is given away at no additional cost [Chetwood,
1997]. As one exporter said, ‘Sure I’m a dedicated supplier … dedicated to
paying [the supermarket] for promotions, for shelf space, for farm visits and
holidays.’ All of the exporters interviewed in Kenya and Zimbabwe bore the
costs of product promotion. As a result, only those African exporters who
have the cash flow to withstand temporary losses in anticipation of future
gains can fulfil supermarket demands for promotion.
All of these factors taken together weigh strongly against the survival of
small and medium size exporters in the fresh vegetable chain. While there
are over 200 licensed fresh produce exporters registered in Kenya, only 50
are consistently operative, and the other 150 exporters exploit favourable
short-term market conditions, entering and exiting the industry sporadically
during the October–April peak season [Jaffee, 1995]. Small and medium-
size export firms remain largely dependant on arms-length marketing
relationships, exporting bulk produce to wholesale markets, which is now
only marginally profitable for African suppliers. The quality of their
supplies has been variable and they have yet to develop the intensive supply
chain relationships needed to obtain up to date information or to secure their
position in the chain.
The consequences of these requirements on the structure of the industry
are clearly evident in both Kenya and Zimbabwe, where the top five
exporters controlled over 75 per cent of all fresh vegetable exports in the
late 1990s.
One exception to the tendency toward concentration may be organic
produce, for which there is both a price premium and a significant unmet
market demand [Fresh Produce Journal, 1999]. While the amount of
organic produce has increased in the last year, the supply base in the UK is
still very fragmented and supermarkets have little option but to source from
smaller companies, several of which are located overseas. This means that
smaller African exporters still have an opportunity to penetrate this market,
particularly since organics do not presently require the scale and investment
of exotic produce lines.
The Growers
It has been argued that there are strong tendencies towards concentration
among exporters. Are there similar tendencies towards concentration at the
production stage? There is clear evidence from Kenya and Zimbabwe that
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TABL E 3
S O U R C E O F S U P P LY B Y T Y P E O F P R O D U C T I O N U N I T ( % )
Own Farm Production Large Commercial Farms Smallholders

or Leased Land
Kenya 40 42 18
Zimbabwe 49 45 6
Source: Author interviews with leading exporters in Kenya and Zimbabwe.
two processes have transformed the production base. The first is the decline
in smallholder production. In 1992, close to 75 per cent of fruit and
vegetables in Kenya were grown by smallholders [Harris, 1992]. By 1998,
four of the largest exporters in Kenya sourced only 18 percent of produce
from smallholders, as can be seen in Table 3, and it is unclear what portion
of this output was destined for supermarket shelves. In Zimbabwe, five of
the largest exporters sourced less than six per cent of produce from
smallholders. The second is that there are tendencies towards vertical
integration within the chain. Several large exporters that had bought in most
or all of their produce in the mid-1990s have begun to acquire their own
growing capacity. This section explains the reasons for both these
tendencies.
The decline of smallholder supply: Exporters that wish to source part of

their output from smallholders face a number of well-known problems that
exist irrespective of the markets being supplied. These include the need to
provide credit at interest rates affordable to small farmers, loan defaults and
side-selling to alternative markets. Smallholders also suffer from logistical
constraints resulting from poor roads and unreliable transport in rural
areas,15 which means that they are unable to maintain the quality required
for UK supermarkets. In particular, smallholders supply must meet the
needs of:
• Consistency across production units and through the season, which
means controlling variation in agronomic practices (harvesting, crop
rotation and pesticide application) across a large number producers.
• Maintaining post harvest quality and preventing deterioration, which
means developing dispersed cold storage facilities close to farms.
• Ensuring compliance with health and safety requirements, which means
maintaining confidence in pesticide use and hygiene conditions across a
broad range of producers.
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• Ensuring compliance with ethical trade commitments, particularly with
respect to child labour and worker safety.
• Communicating changes in procedures to a large number of producers
when product or growing innovations are made.
Clearly these financial and organisational challenges have to be
achieved at an acceptable cost. However, the major challenge is to convince
the UK supermarkets that smallholder sourcing endangers neither quality
nor safety.
It is easy to make a case against smallholders. For example, it can be
argued that the transaction and supervision costs of sourcing from a large
number of dispersed producers are far greater than sourcing from a small
number of large producers. However, these arguments underestimate the
problems associated with large size and ignore the benefits of smallholder
production. First, there are some commodities for which smallholders have
a comparative advantage. French beans, Kenya’s largest fresh vegetable
export to the UK, is widely considered to be less amenable to capital
intensive, mechanised production due to the labour-intensive requirements
in both production and packing. Second, large farms require supervision of
wage labour, whereas smallholders use family labour, which is both low-
cost and self-supervising [Collins, 1995]. Third, small plots and inter-
cropping help to reduce problems associated with the spread of disease and
wind damage. Finally, smallholder sourcing is an effective response to
problems of land scarcity (particularly in Zimbabwe, where land is a
politically sensitive issue) and the need to extend the benefits of the trade to
broader segments of the rural population.
In fact, two of Africa’s largest horticultural exporters have shown that
smaller producers can meet the quality requirements of the UK market. In
both cases, the exporter has assumed responsibility for organising growers,
arranging finance, providing technical support and ensuring traceability.16
However, UK supermarkets remain wary of sourcing from small farmers.
They realise that failure to meet food safety or ethical trading standards can
result in bad publicity and undermine their position in the market place.
Because of this, they believe that concentrating their grower base will
reduce their exposure to risk by giving them greater control over the
production and distribution processes.17
Vertical integration: If smallholders are being marginalised, from what

types of production units do exporters source their crops? It can be seen in
Table 3 that among a group of ten large exporters in Kenya and Zimbabwe
produce was sourced equally from exporter-owned plantations and
independent, large commercial farms. Yet this average figure conceals some
372jds07.qxd 03/01/2001 09:33 Page 168
variation in sourcing policies. Two export farms in Zimbabwe grew 100 per
cent of their produce on land that they owned or leased.18 Three of these ten
companies relied entirely on production from independent farmers, almost
all of which came from large farms under contract.19 In the remaining five
cases, exporters sourced produce from a mixture of their own farms and
from large farmers. Different products and/or varieties are typically grown
on exporter-owned plantations and on large commercial farms. This
facilitates specialisation and enables exporters to capitalise on climatic
differences.
In much of Africa, the dominance of large exporters has given rise to
growing numbers of large, commercial farms.20 As competition has
intensified, many small and medium-sized exporters have shifted to
growing crops for the large exporters rather than shouldering the risk of
exporting. This was clearly seen in the case of Pumpkin Ltd., a Kenyan
grower, whose falling margins forced them to withdraw from direct
exporting and supply a leading Kenyan exporter instead. This is a trend also
seen in other African countries. In The Gambia, for example, close to one-
third of export farms sell the majority of their produce through Radville
Farms, which is owned by a transnational corporation with an import
subsidiary in the UK [Little and Dolan, forthcoming]. This trend is likely to
continue as more and more large commercial farms find it difficult to secure
overseas market contacts and aircargo space.
Despite the increase in large commercial farms, exporters still source at
least some of their produce from their own farms. As one Zimbabwean
exporter claimed, ‘It is absolutely imperative to control your own
production’ to attract business from the multiples. There are three main
reasons for this. First, control over one’s own production guarantees
continuity of supply and reduces the risk of losing suppliers to competitors.
Secondly, possessing at least some land for growing crops provides the
exporter with knowledge about production issues and innovation and
problem-solving capabilities. In an industry increasingly characterised by
innovation and the need for rapid problem-solving, these are important.
Thirdly, some exporters (and their associated importers) believe that vertical
integration provides greater control and greater scope for reducing costs.
According to one leading UK importer, a key factor in losing a supermarket
contract was the fact that its main African supplier had no production
facilities of its own.21 As a result, the African supplier purchased one of its
competitors (with financial assistance from its UK importer) in order to gain
access to land.
It seems likely that the concentration of production on large units will
continue. The early entrants to the industry started with small-scale
production. In contrast, new entrants into industry in sub-Saharan Africa
372jds07.qxd 03/01/2001 09:33 Page 169

entered the horticulture trade with well-established capabilities and market
linkages, as well as substantial investment in post-harvest facilities.22
Zimbabwe, for example, did not begin exporting horticultural products until
the 1980s, but came into the market with the scale and investment to attract
the multiples. Similarly, the recent boom in imports of fine beans from
Egypt has been based on pre-existing capabilities in growing the less
sophisticated bobby beans. When supermarkets and importers wish to
develop new sources of supply, they look for producers that already have the
potential to meet the exacting requirements of the fresh vegetable chain.
Upgrading and Security in the Supply Chain

The previous sections have shown how African exporters have struggled to
keep pace with market trends and best practice in the industry. Several
exporters have managed to develop intensive relationships with overseas
customers and exert greater control over the supply chain through their
integration of freight forwarding and importing activities. These larger,
more aggressive producers/exporters have diversified their marketing
outlets, providing year-round products to supermarket chains, and
increasing their sales to other regions in Europe and the Middle East. In
essence, these exporters have acquired a broad range of functions and have
secured a valuable position in the horticultural supply chain.
Upgrading opportunities have arisen partly from the re-positioning of
the fresh vegetables chain by the supermarkets. A continuing emphasis on
healthy eating, food preparation and ease of use has led to a product
diversification and more complex and extensive processing. In the 12
months following the survey of supermarket shelves whose results are
shown in Table 1, signs of product development were evident. Organic
produce sourced from Egypt could be found at one supermarket, along with
“ready-to-microwave” product combinations from Kenya. At the same
time, some upgrading has taken place as a result of a transfer of functions
within the chain from the UK to Africa, as in the case of the transfer of
packaging and labelling to Africa exporters.
This type of upgrading differs in one important respect from the
upgrading in manufacturing described by Gereffi [1999]. Gereffi associates
upgrading with a shift of customers and marketing outlets. Higher-value
products are sold to different types of retailers. In the fresh vegetable chain,
the same retailers are redefining their product ranges and creating upgrading
opportunities.
Yet upgrading is a complex process. As Gereffi [1995] notes, as
industries become globalised, exporters face shorter time periods in which
to exploit their competitive advantage. The rewards for the early innovators
of new varieties, presentations and packaging are extremely short-lived and
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virtually every developing country in the world with a suitable climate is

now trying its hand in the export horticultural trade [Hirst, 1994]. The
dominant position held by Kenya just a few years ago has been challenged
by the entry of new African producers such as, Zimbabwe, Zambia and
Tanzania, and by the growing importance of producers closer to the
European market (and hence with significantly reduced freight costs) such
as Egypt. It is a characteristic of buyer-driven commodity chains that buyers
will seek new sources of supply, and interviews with UK importers
indicated clearly that their supermarket customers expected them to find
new sources, particularly in order to remain competitive on price. Quite
justifiably, exporters in Kenya and Zimbabwe fear being pushed out of the
market by new entrants or at the very least forced to accept lower margins.
As new market entrants challenge Africa’s position as an early
innovator, it becomes imperative that export firms be proactive in market
and product diversification. According to Boehjle et al. [1998] power in the
supply chain lies in possessing resources and capabilities that are not easily
substitutable. In the short term, established exporters have some protection
from the competence and relationships that they have built up over time,
including knowledge of production and post-harvest processes; investments
in specialised facilities; and relationships based on trust and reciprocity with
overseas customers. These capabilities decrease their vulnerability to
substitution within the supply chain, either from within Europe or from
another external supply source. In the long term, however, expanding
product range and the services offered appears to be the most secure path to
long-term viability and the maintenance of sufficient margins. Product
differentiation may involve greater skill in production, post-harvest care,
and logistics, greater capital investment, and/or greater innovation
capabilities. This requires strategic thinking, networking, and changing the
orientation of export activities to new markets with different demands. Put
simply, the African exporter cannot afford to stand still. Their
competitiveness, and the ultimate developmental potential of the sector,
depends upon it.
V. C O N C L U S I O N S
This study has analysed the fresh vegetables trade between the United
Kingdom and Kenya and Zimbabwe from the global commodity chains
perspective. Global commodity chains do not consist merely of flows of
materials across national boundaries. They consist of networks whose key
decision-makers influence the outputs of the chain and its composition. The
paper has paid particular attention to the governance of the chain,
identifying the key decision-makers and how their requirements for the
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performance of the chain were translated into structure and practice. In
particular, it has highlighted the role played by large retailers in defining the
outputs and structure of the chain and the impact of supermarket
requirements on exporters and producers in Kenya and Zimbabwe.
As well as demonstrating the relevance of the commodity chain concept,
developed originally for the analysis of manufacturing, for understanding
international trade in fresh vegetables, the paper has refined the concept of
governance, distinguishing between different areas in which the buyer
exercises control and the different forms through which this control is
exerted. It has also highlighted the fact that durable relationships between
companies involving intense information flows and co-ordination of
activities can still be characterised by insecurity. While chains that are
tightly governed are frequently described by terms such as ‘commitment’,
‘long-term relationships’ and ‘co-operation’ [Loader, 1997: 24], suppliers
still experience competitive pressures and the threat of substitution.
The commodity chain approach provides insights that are important for
the development of non-traditional agricultural exports in sub-Saharan
Africa. The paper demonstrates that success in the fresh vegetables chain
depends on meeting (and exceeding) the exacting requirements of major
customers in export markets, and that there is little scope for exporters who
lack the investment capabilities to ensure a consistent, quality product that
complies with regulatory requirements to participate in the market. At the
same time, even the largest African exporters must maintain close links to
UK importers. Policies aimed at promoting non-traditional agricultural
production must focus not only on the growers, but also on the exporters
and on marketing channels.
The commodity chain approach was adopted for the analysis of the fresh
vegetables sector precisely because of its focus on linkages across national
boundaries and the role of large retailers in international trade. However,
this approach leaves certain questions unanswered. First, the focus on the
dominant marketing channels for fresh vegetables from Kenya and
Zimbabwe means that no attempt has been made to see if alternative actual
or potential markets and marketing channels might exist for smaller and
medium sized exporters. Secondly, while the findings reinforce work on
export linkages in labour-intensive manufacturing sectors, such as garments
and shoes, three questions remain about their applicability to agriculture:
(1) They certainly appear relevant to situations where safety, product
differentiation, value-added and innovation are important. For
example, work on fruit exports from Brazil highlight similar pressures
facing exporters [Damiani, 1999; Gomes, 1999]. However, it is
important to recognise that many agricultural exports do not have these
372jds07.qxd 03/01/2001 09:33 Page 172
characteristics. Raikes and Gibbon [2000], for example, show that the
global supply of Africa’s primary commodities (cotton, cocoa, cotton,
and tea) is generally a lower grade crop with a low value-to-weight
ratio. These commodities tend to be exported in unprocessed form, and
where processing is done locally it is limited to rudimentary activities
such as drying, milling or hulling. Rather than adding value, these
processes merely prepare commodities for international transport.
Non-production value added activities remain located outside Africa,
denying producers access to activities with higher margins and the
opportunity to acquire new competences. The potential for upgrading
in this situation is extremely limited.
(2) The extent of product differentiation and post-harvest processing is not
determined solely by the nature of the crop, however. The rapid
transformation of the fresh vegetables market in the UK makes this
clear. The process was driven by oligopolistic competition in the UK
supermarket sector in the 1990s, which favoured product
differentiation strategies. With market penetration in the fresh
vegetables sector reaching its limit, and with price-cutting price
strategies becoming more evident in the supermarket business, the
dynamics of the fresh vegetable chain might change. On the one hand,
a renewed emphasis on low-cost sources of supply might marginalise
countries with relatively expensive airfreight costs. On the other hand,
a more radical shift of processing towards the producer countries might
reinforce current tendencies.
(3) Different food products are marketed through different marketing
channels. For example, coffee tends to be controlled by roasters
whereas bananas, tea and sugar tend to be controlled by vertically
integrated multinationals, which are both producers and branders
[Raikes and Gibbon, 2000]. In some cases, supply chains are tightly
controlled, and in others they are not. Some of the factors lying behind
this differentiation in the horticultural sector were discussed in section
II. Among Africa’s primary commodities, buyer/supplier relationships
are less institutionalised than in the horticultural sector. In fact, it
appears to be the case that transactional dependence is relatively low,
with investment in and commitment to, suppliers extremely rare
[Gibbon, 2000]. For these commodities, it is more common for
international trading houses rather than retailers to be the key agents in
chain co-ordination.23 In such cases, the buyer-driven GCC model may
well not apply [Raikes and Gibbon, 2000]. Further work is required in
order to understand how governance relationships change over time
and their implications for agrarian development in Africa.
372jds07.qxd 03/01/2001 09:33 Page 173

NOTES
1. This data is taken from Eurostat [1998] and refer to HS 0708, ‘leguminous vegetables,
shelled or unshelled, fresh or chilled’ and HS 0709, ‘other vegetables, fresh or chilled’,
which includes artichokes, asparagus, mushrooms, sweet peppers, capsicums, etc.
2. Gereffi [1999: 52] defines four types of upgrading, but the two of most interest to this paper
are the shift to the production of more sophisticated products and the acquisition of new
functions, such as packaging, quality control, logistics, design, etc.
3. These ideas about governance have been developed jointly with Hubert Schmitz and are
discussed more extensively in Humphrey and Schmitz [1999].
4. One clear example of this is the UK government’s policy of ‘naming and shaming’ retailers
that sell fresh food with excessive pesticide residues. It is the retailer’s reputation which is
on the line should pesticide be applied incorrectly when the product is grown.
5. The interesting question is not why markets fail in these situations, but why buyers do not
respond to these challenges through vertical integration.
6. Doel [1996] describes how Marks & Spencer created the chilled, ready meals sector in the
UK, developing products and creating a whole new supply industry.
7. The limits to this strategy will be discussed in section V below.
8. Examples of speciality vegetables are shown in Table 1 below.
9. A very similar discussion of governance in commodity chains and its elements can be found
in Kaplinsky [2000].
10. For example, Marks & Spencer emphasises quality, and offered all of the products listed in
Table 1 in trays. Supermarkets emphasising quality and value-for-money would use more
cellophane packets.
11. For the distinction between half-channel and entire-channel networks in agricultural trade,
see van der Laan [1993: 181–2].
12. A recent NRI report [2000] has shown that communication of the EU legislative position
regarding Maximum Residue Limits (MRLs) has been poor and even the largest exporters
are finding it difficult to obtain accurate information to respond to legislative requirements.
13. This is similar to the Assured Produce Scheme in the UK, which mandates that all UK
suppliers adopt the uniform protocols regarding food safety, employee health and safety, and
environmental protection.
14. See Barrett et al. [1997], Jaffee [1995], Malter et al. [1999], Thoen et al. [forthcoming], and
Dixie [1999].
15. Dijkstra’s [1997] work on horticultural marketing channels in Kenya identifies weak
infrastructure as a primary constraint on the performance of domestic horticulture.
16. These cases were described by the firms concerned at workshop in London organised in
February 1999 by Institute of Development Studies and the Natural Resources Institute under
the sponsorship of DFID. This explored the scope for smallholder supply to UK
supermarkets and presented two examples of exporters in Kenya and Zimbabwe who were
sourcing part of their produce from smallholders while meeting supermarket quality and
safety requirements.
17. For example, the UK government is committed to ‘naming and shaming’ retailers whose
fresh food products display excessive pesticide residues. One consequence of this may be to
reduce the availability of ‘exotic’ fruits whose volumes do not justify complex monitoring
arrangements.
18. The acreage of horticultural export farms in Zimbabwe ranges from between 3,000–8,000
acres, although substantial portions are allocated to tobacco or left fallow.
19. Contracts with large growers specify the quantity, quality and price of produce.
20. While the shift to large-scale commercial farming in horticulture has generated significant
employment for African countries, the potential for poverty reduction is less clear. In both
Kenya and Zimbabwe, the industry is heavily reliant on temporary, casual, and seasonal
workers, who are mainly female and not afforded protection under national legal
frameworks. In addition, unlike the cut flower industry, the fresh vegetable industry has not
372jds07.qxd 03/01/2001 09:33 Page 174
stimulated businesses and services in the areas near farms. This is largely due to the
geographic dispersion of plantations and packhouses, coupled with the smaller size of the
industry.
21. It should be noted, however, that this type of argument was used for many years to justify
vertical integration in manufacturing industry, but the present trend is to increased
outsourcing.
22. See Raikes and Gibbon [2000] for a discussion of Zimbabwe’s large-scale, commercial
farming (LSCF) sector and the transition from high-input, mechanised traditional crops to
export horticulture.
23. In the global coffee chain, for example, retailers have lost power due to their declining role
in final consumption [Raikes and Gibbon, 2000].
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Governance and Trade in Fresh Vegetables:

Production of fresh vegetables for export has grown rapidly in a

International trade in horticultural products has increased markedly in the

148 GLOBALISATION AND TRADE

Fresh vegetables are a good example of a non-traditional agricultural

II. GOVERNANCE IN COMMODITY CHAINS

The global commodity chain concept is just one of a number of approaches

GOVERNA NCE AND TRADE I N FRESH V E G E TA B L E S 149

150 GLOBALISATION AND TRADE

Thirdly, Gereffi has highlighted the increasing role played by

GOVERNA NCE AND TRADE I N FRESH V E G E TA B L E S 151

152 GLOBALISATION AND TRADE

III. THE GOVERNANCE OF THE FRES H V EG E TA BLES CO MM O D I TY

GOVERNA NCE AND TRADE I N FRESH V E G E TA B L E S 153

The Positioning of the Chain

154 GLOBALISATION AND TRADE

Product Asda Marks Sainsbury’s Waitrose

asparagus Zimbabwe Thailand Peru Thailand

GOVERNA NCE AND TRADE I N FRESH V E G E TA B L E S 155

Basic carrots, Class 1 loose, 18p per lb. 39.4p

156 GLOBALISATION AND TRADE

A competitive strategy based on product variety, packaging and

The Structure of the Chain

GOVERNA NCE AND TRADE I N FRESH V E G E TA B L E S 157

158 GLOBALISATION AND TRADE

supermarkets have varying volume requirements. For example, when

Meeting Performance Standards

GOVERNA NCE AND TRADE I N FRESH V E G E TA B L E S 159

160 GLOBALISATION AND TRADE

problem should not be overestimated. Most existing non-African suppliers

GOVERNA NCE AND TRADE I N FRESH V E G E TA B L E S 161

Concentration in the Export Sector

Organisational capabilities: The demands for consistency of quality,

162 GLOBALISATION AND TRADE

chemicals, undertake audits, and develop monitoring procedures. The

Post-harvest facilities: Staying in the fresh vegetables business requires

GOVERNA NCE AND TRADE I N FRESH V E G E TA B L E S 163

Logistics: The retail sector demands flexibility and reliability in supply.

164 GLOBALISATION AND TRADE

pre-booked space [Barrett et al., 1997]. When space is not available,

Innovation: relationships with importers: In an industry where product

GOVERNA NCE AND TRADE I N FRESH V E G E TA B L E S 165

166 GLOBALISATION AND TRADE

Own Farm Production Large Commercial Farms Smallholders

Source: Author interviews with leading exporters in Kenya and Zimbabwe.

The decline of smallholder supply: Exporters that wish to source part of

GOVERNA NCE AND TRADE I N FRESH V E G E TA B L E S 167

Vertical integration: If smallholders are being marginalised, from what

168 GLOBALISATION AND TRADE

GOVERNA NCE AND TRADE I N FRESH V E G E TA B L E S 169

Upgrading and Security in the Supply Chain

170 GLOBALISATION AND TRADE

virtually every developing country in the world with a suitable climate is

GOVERNA NCE AND TRADE I N FRESH V E G E TA B L E S 171

172 GLOBALISATION AND TRADE

GOVERNA NCE AND TRADE I N FRESH V E G E TA B L E S 173