Business / Carrefour price gouging

Carrefour signs direct-supply memo

By Li Woke (China Daily) Updated: 2011-06-25 09:26

BEIJING - Carrefour SA China signed a strategic memorandum with the Ministry of Agriculture in Beijing on Friday, a move in line with the Chinese government's eagerness to tame rising inflation.

The memo aims at improving direct supply to supermarkets, through which retailers can purchase directly from farmers. The agreement includes opening more training sessions for farmers and developing more partnerships with retailers.

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Earlier this year, the Ministry of Commerce and the Ministry of Agriculture jointly issued the Guiding Principles for Farmers' Direct Supply to Supermarkets.

"Direct supply to supermarkets helps stabilize prices, increase farmers' income and ensure supplies and food safety," according to the guidelines.

Since 2007, the French retail giant has echoed the Chinese government's call to work with more than 300 farmers cooperatives in 25 Chinese regions and has directly purchased more than 150,000 tons of items, including apples, potatoes, carrots, pears, oranges and pineapples.

"Carrefour's direct purchase is a win-win situation. It can effectively reduce the traditional intermediate circulation and at the same time increase farmers' incomes," said Eric Legros, China president of Carrefour, the second-largest retailer in the world by revenue, after Walmart.

"Although farmer-supermarket direct purchase is developing year-on-year in China, it is still in the initial stage," said Pei Liang, secretary-general of the association. "On one hand, sales revenue from direct-purchase products is still small, usually less than 15 percent of the total sales revenue. On the other hand, direct purchasing supermarkets are located mostly in big cities, such as Beijing and Shanghai. Areas in southwest and northwest China have been ignored."

Pei also said the proportion of direct purchase cooperatives is relatively minor, as China had over 40,000 qualified and registered cooperatives by the end of last year. However only about 10,000 cooperatives, less than one third, have successfully carried out the project.

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