The New Supply Chain: Implications to the Fresh Fruits and Vegetables Sector in Malaysia

Abstract

This paper traces the growth of the new retail formats such as hypermarkets, departmental stores and supermarkets and its implications to the fruits and vegetables sector in Malaysia in particular to the small producers. The structural differences between the new supply chain and
conventional marketing are compared. Some measures of concentration are provided to indicate the degree of competition in the retail sector. Within less than a decade, the new super retailers were able to capture a significant market share of the local fruits and vegetables at the expense of the small time local retailers. Their procurement system which emphasizes on consistent supply and rigid quality standards indirectly cuts off the small farmers from the supply chain. New type of intermediaries, packing houses emerge replacing the traditional middlemen role usually performed by small time wholesalers or traders at the farm level. To integrate the small farmers into the new supply entails a reformation programme that enhances productivity, product quality and institutional restructuring towards cooperative movement.