2. LINKING PRODUCERS TO MODERN FOOD RETAILERS: A Survey of Buyer Interest in the Balkans Prepared for the U.S. Agency for International Development By Chemonics International and J.E. Austin Associates MAY 2005

3. CONTENT OF THE PRESENTATION Introduction Demand in the Region Positive Elements Obstacles Comments by Country Recommendations Conclusions

4. INTRODUCTION – STUDY OBJECTIVES 1.Determine potential for farmers to sell to large-scale buyers 2.Suggest regional interventions by USAID

5. INTRODUCTION – STUDY DESIGN Limited Internet research Interviews in six countries Analysis and conclusions Written report

6. INTRODUCTION – DATES, CONSULTANTS, COUNTRIES Research done in April and May 2005 Douglas Griffith and Jeff MacKenzie Chemonics International, Inc. Romania and Serbia Marcos Arocha and Kenneth Weiss J.E. Austin Associates, Inc. Albania, Bosnia-Herzegovina, Bulgaria and Montenegro

7. INTRODUCTION – PEOPLE INTERVIEWED Roughly 70 interviews in 6 countries Managers of hypermarket and supermarket chains, processing companies, hotel chains, wholesale companies

8. INTRODUCTION - MAP OF REGION

9. DEMAND – INFLUX OF BIG RETAILERS Metro, Carrefour, Billa, Mercator, etc. A worldwide phenomenon Growth in every country visited Dramatic expansion plans

10. DEMAND – PRODUCTS OF INTEREST Vegetables – salad and other Fruits – melons, apples, etc. Meat (packaged cuts) - beef, turkey, etc. Dairy – fresh milk, white cheese, etc.

11. DEMAND – PROCUREMENT METHODS Interest in local products (esp. fresh) Local decision-making / buying Emphasis on quality and quantity Preference for long- term relationships Discounts and slotting fees Private labeling, electronic systems Increasing use of central warehousing Long payment terms

13. ON THE POSITIVE SIDE Big stores becoming more important Open to potential new suppliers Superb preparation for exporting Several success stores

14. CONSTRAINTS I Critical mass and continuity Quality and condition Packaging Cold storage Business informality Supplier agreements unreliable

15. CONSTRAINTS II Definition of quality Difficulty finding investors Difficulty obtaining loans Competition from imports Strict buyer conditions Inadequate extension services

16. RECOMMENDATIONS – QUALITY Definitions of quality Health and safety standards Post-harvest handling Packaging information and materials

17. RECOMMENDATIONS – RELIABILITY Sustainable business models Extended growing seasons Producer cooperation Long-term relationships

18. RECOMMENDATIONS – ACCESS TO CREDIT New financial mechanisms Electronic information systems “Bankable” supply relationships International partnerships

19. RECOMMENDATIONS – OTHER Agricultural extension Turn farms into businesses Conferences, exhibits, etc.

20. COUNTRY SUMMARIES I BULGARIA Metro, Billa, ENA, Ramstore, HITT Kaufland and others Produce from local sources Government regulations Protection of “infant industries” ROMANIA Ten years with big stores; trend continues Metro, Carrefour, Mega Image, Billa, etc. Most produce imported Role of wholesalers Consumer behavior changing

21. COUNTRY SUMMARIES II BOSNIA- HERZEGOVNIA Small market Mercator, Velpro, Interex, VF Commerce The role of wholesalers The baking industry SERBIA Mercator, C-Market, Super Vero, Metro, and others Growing numbers of food retailers

22. COUNTRY SUMMARIES III ALBANIA First Hypermarket to open in Sept. Small supermarket chains Hotels on the coast Greenhouse industry MONTENEGRO Confusion from political situation Surprising number of stores ERA, Voli Trade, and Mex Centar The Grey Market

23. POSSIBLE REGIONAL ACTIVITIES I Cooperation by producers Cooperation by wholesalers Private brands and co-branding Supplying food chains for export Buyer-seller events

24. POSSIBLE REGIONAL ACTIVITIES II Training on grades and standards Guide to selling to supermarkets Guidelines on packaging Business plan for cold storage IT solutions for tracing products

25. CONCLUSIONS 1.Market changes are working against small farmers, processors, wholesalers and retailers. 2.Selected interventions will help small business to cope and survive. 3.Some interventions may be appropriate for USAID at the regional level.

26. — END — THANK YOU