The role of domestic fruit and vegetable po’s in integrating small producers in the context of selling to large retail chains

Seres, Antal – Felföldi, János – Szabó, Márton

Keywords: Pos, retail chains, small producers, supply, fruit and vegetables

The domestic producer organisations (POs) and their secondary associations are the organisations which could become successful suppliers to and strong negotiating partners of the large retail chains. Joining these organisations is the main way for masses of small producers to become suppliers. Producer organisations are not very widespread in the fruit and vegetables sector yet in Hungary and therefore do not play the role in supplying to the large retail chains as they do in the European Union. This is one of the fundamental cause of the supply troubles that domestic small producers of fruits and vegetables must face. The main cause of the difference between successful countries and Hungary is the significant share of the grey economy in Hungary. This does not encourage small producers to adapt, as well as diverting large amounts of produce from the legal sales channels via POs. Any appreciable reduction of the scale of the grey economy would primarily require actions by the government. The government should also establish financial vehicles to alleviate one of the main problems that POs and small producer members have, namely the lack of capital. It would be especially important for the government to provide assistance to small producers who are willing and able to increase the scale of their business. A change in the role of POs requires that producers change their attitude - that instead of pursuing their business individually, they join a nearby producer organisation. Producers should realise the benefits that membership offers: consistent stocks, quality assurance systems, continuous supply to solvent customers, development and innovation. The cooperation between POs and their small producer members as well as the services offered by POs should be made more efficient.

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