EU PROGRES

A good marketing system is the one where the farmer is assured a fair price for his produce. This is only possible when: there are not many intermediaries between the farmer and the consumer, the farmer has proper storing facilities and is not compelled to indulge in distress sales; efficient transport is available; the malpractices of intermediaries are regulated; farmers are freed from the clutches of village moneylenders, and regular market information is provided to the farmer.

The present marketing system of fruits and vegetables in Serbia does not adequately address the complex problems of producers. It is characterized by a long, fragmented supply chain, high post-harvest wastages and it does not foster competitiveness. The system is also deficient in providing a fair share of consumer price to the producer and in ensuring high quality and hygiene of the produce.

In many parts of the country wide gaps exist in local distribution and processing infrastructure, making it difficult for small and mid-sized growers to gain access to markets where there is unmet demand for source-identified, locally or regionally grown products.

This calls for an alternative marketing structure that provides multiple choices to farmers for sale of produce along with a comprehensive solution to create collaborative supply chains and to market these differentiated products.

Regional and local food hubs (distribution centres) are known to be an effective way to overcome infrastructural and market barriers. For those smaller and mid-sized producers who wish to scale up their operations or diversify their market channels, food hubs fulfil various roles, including functioning as aggregators, processors, distributors, and marketers of local food. They help them gain entry into new and additional markets that would be difficult to access on their own.

Access to refrigerated storage space, which would be offered by the hub, means that a farmer can wait for a competitive price for the product, rather than having to sell immediately after harvest. Furthermore, the shortening of supply chain of perishables can enhance farmers’ efficiency and enable an increase in income. Buyers can more easily source from many small farms without the burden of additional paperwork if the farmers have a warehouse in which to aggregate and cooperatively market their products. Infrastructure can include processing operations to prepare products for grocers or other buyers and refrigerated trucks to transport local food.

Regional Food Hub would  establish  backward  linkages  with  producers  through  the  Local Food Hubs and Collection Centres and forward  linkages  through  wholesalers,  distribution  centres,  retail cash and carry stores, processing units and exporters. This would enable farmers to achieve higher revenues.

With this in view, a potential collaborative model could be the Hub-and-Spoke Format wherein the Terminal Market (the Regional Food Hub) for example the “Green Zone” Leskovac, would be linked to several Local Food Hubs (for example Blace and Vranje), which would be on their part linked to a number of Collection Centres  (the spokes).

The spokes (Collection Centres) would be conveniently located at the key production centres to allow easy farmer access and would be based on meeting the convenient needs of farmers, operational efficiency and effective capital utilization of the investment. Finally, the Collection Centre should have the capability to handle more than one commodity.

Food hubs are committed to small and mid-size farmers, utilizing different product differentiation strategies, and have a positive local economic, social, and environmental impact. Although food hubs may be a viable strategy for wealth creation in rural Serbia, it is critical to remember that a food hub’s success depends in part on its connection and active participation in the larger community-based network that includes business, education, technical, financial, and government partners.

Goran Radovanović
EU PROGRES National Expert for Business Planning