Product Certification
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subsequent steps. What is commonly practiced today in industrialized countries is to have the farming practice audited and certified by a third party. In fact the third party certification
goes for all stages of operations, in general. Similarly, unlike manufacturing products and services, for agricultural products much
of the specification on quality is determined by retailers who base their quality requirements on consumer requirements and some compliance with government regulations. We observe
for instance the requirements set by EUREGAP in order to accommodate both requirements. In the future, the trends seem to go toward imposing individual requirements
by retailers, which is at the same time being used as a competitive weapon against competitors.
A close observation then on the sourcing activity in agro-food industry boils down to product certification, i.e., a mechanism of ensuring that what the consumers want is what
they get. What the consumers want may be the same as what the producers claim. In such case, a mechanism still needs to make sure that the produce is exactly as it is claimed. In
this assurance process what is essentially involved is some kind of trust. If consumers trust no one, the consumer will do all the checking on the product to ensure that it complies with
the requirements set maybe mentally by the consumer, or to check that it is as claimed by the producer, or have a third party to do the job.
In manufacturing operations, it is common to have a ’single supplier‘ philosophy instead of the traditional low cost approach through a bidding mechanism by many
suppliers. It is not uncommon for a vendor to take years until they are qualified to be a vendor for a company. In fact once they are accepted as a supplier, they become an
extended ’family‘ of the company. There are some advantages to this method, that is not only in ensuring delivery of high quality products but also suppliers can contribute to
efficient, timely, and effective product development and process selection. Edward Deming quality guru once said in his 14 points for quality improvements management to avoid
procurement based on price alone but rather consider total cost and eliminate suppliers whose quality is not acceptable Martinich, 1997, i.e., a single supplier philosophy.
2.4 How the rural poor can benefit
The above discussion tells us that the new wave in agro-food industry, i.e., international sourcing of agro-food produce by multi-national supermarkets and supply chain
management in produce procurements are a result of increased and stringent competitiveness in the market both global and local that lead to an effort by any player to
Chapter 2
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improve efficiency and responsiveness in all aspects of operations. Any possible improvement in any aspect at any level should not be left unnoticed and should be taken
advantage of if the business is to survive and grow in the highly competitive market we are facing today. This implies that any entities participating in the supply chain are required to
do the same in trying to fulfil the demand of the market. This also implies that rural farmers, poor or well off, have to align themselves in this
effort of improving efficiency and responsiveness in all aspects of business. The reward is substantial but the effort is not easy. Beside the usual economies of scale and substantial
amount of investment requirements, this also requires behavioural change, that is, all parties should strive toward an aligned virtual corporate culture.
The question is how rural poor farmers could be involved in and benefit from this wave? Certainly they are not an exception. They, too, have to align themselves or they will
be left out. Such alignment often times is beyond the reach of poor farmers, which explains why in many developing countries they rarely take part in the process of globalization and
the growing trend of supermarkets. Product certification step by step in the sense of total quality management and single supplier philosophy could be part of the solution. Rural poor
farmers should be part of the whole system, that is become an ’extended business unit‘ of the retailer by providing them the technology, the culture and the economic ability to support
themselves. Technology can be derived from certification standards. Simple tools for grading, sorting and packaging could help improve their chance of inclusion in the emerging
market of high quality produce. Experiences from Thailand and India Buurma et al., Van de Kop et al., 2006
indicate that this is not impossible. What I would suggest is to first try to capture domestic high quality demand by supermarkets. In the case of Indonesia there are some farmers’
associations organized by traders who are able to supply local supermarkets, hotels and restaurants with high quality vegetables. For exports markets, a farmer’s association is
connected by government as third party to an importer and distributor of high quality vegetables in Singapore where technology, financing and the market are provided by the
importer.
2.5 Concluding remarks
