GUANGZHOU: The Guangdong food city commission unit of Carrefour China signed an agreement last Friday with four farmer cooperatives, two in Guangdong, one in Guizhou and one in Guangxi Zhuang autonomous region, to ensure direct supply of vegetables and fruits.

Under the agreement, Carrefour will purchase vegetables and fruits directly from the farmer cooperatives, while the latter will grow vegetables and fruits as required by the retail giant.

"The deal was signed in response to the Chinese government's call to increase farmers' income; the direct supply mode will simplify the supply chain, lower purchasing cost and benefit both the farmers and consumers," said Eric Legros, president of Carrefour China.

Carrefour will provide professional guidance and trainings on quality, technology, package and transportation to streamline the farmers' operation and will set up exclusive shelves for the promotion of the direct-supply products, he said. The deal will also help build up the brand awareness of the products and the cooperatives, he added.

According to Manual De Rosa, manager of Carrefour's food city commission unit in Guangzhou, the direct supply mode would reduce the supply time by about two days, which means customers can get access to much fresher vegetables and fruits at a more reasonable price at Carrefour.

And both farmers and customers can benefit from the profits that are otherwise taken away by wholesalers and other suppliers, which generally account for 15-20 percent of the purchasing costs, with the hypermarkets maintaining the same profit level.

He said Carrefour made an inspection over the direct-supply mode of operation to make sure that the vegetables and fruits are up to the standard.

Li Ziyuan, chairman of Changgou Vegetable Farmer Cooperative in Southwest China's Guizhou province, one of Carrefour China's first four direct-supply partners in Guangdong, hailed the business mode.

Speaking about the benefit of the partnership with Carrefour, which began in June, Li said his cooperative has supplied 200 tons of potatoes to Carrefour, accounting for 370,000 yuan in sales income for the farmers.

"Traditional purchasing price of potatoes in my hometown is only 0.8 yuan per kg as compared to Carrefour's direct-supply purchasing price of 1.84 yuan," he said. "And the sales volume in the past two months increased by 10 percent compared to a year ago."

He said his cooperative plans to grow more varieties of vegetables and supply 3,000 tons of vegetables to Carrefour within this year and over 100,000 tons by 2010.

(HK Edition 08/04/2008 page1)