Urban shopping patterns and implications for high-value agriculture Nicholas Minot , Randy Stringer, Wendy Umberger, and Wahida 28 March 2013 ARD / East Asia & the Pacific region The World Bank, Washington, DC INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
Overview of project Project title: Markets for high-value commodities in Indonesia: Promoting competitiveness and inclusiveness Funding: ACIAR Institutions IFPRI, University of Adelaide, ICASEPS, Michigan State University, and CAPAS Objectives 1. What are the patterns of urban consumer demand for modern retail outlets and implications for food retail transformation and effect on farmers? 2. What are the determinants and outcomes of participation of farmers in modern market channels for high-value commodities compared to traditional market channels? 3. What are the policies and programs that would promote the competitiveness and inclusiveness of the transformation of high-value supply chains? 4. A fourth objective is to build research capacity in Indonesian institutions 2
Project activities Urban consumer survey covering 1180 households in three cities What are the patterns of demand for modern retail outlets? What are the implications for food retail transformation and effect on farmers? Attitudes toward organic food and certification? Surveys of growers of chilies, shallots, shrimp, mango, and mangosteen What are the determinants and outcomes of participation of farmers in modern market channels for high-value commodities compared to traditional market channels? What are the policies and programs that would facilitate diversification into high-value agriculture? Value chain assessments and trader surveys What are the trends in transformation of supply chains? What policies and programs would make supply chains more competitive and more inclusive? Capacity building Five Indonesian graduate students using survey data Training in survey methods, sampling, CSPro, etc 3
Objectives of urban consumer survey Describe shopping patterns in urban Indonesia • Focus on importance of modern retail outlets • Evidence that supermarkets source produce differently • Risk that small farmers will be squeezed out by quality and quantity requirements of supermarkets as they expand Use current shopping patterns to project into future • As incomes rise, use of supermarkets rise • We measure this relationship statistically with survey data • Then simulate effect of income growth on supermarket use Implications for high-value agriculture • Impact on high-value agriculture depends on rate of growth of supermarket demand for high-value commodities 4
Design of urban consumer survey Sample • 1180 urban households in three cities • Stratified three-stage random sample • Over-sampling of higher-income households • Over-sampling of RTs near supermarkets Surabaya 600 households Bogor 280 households Surakarta 300 households 5
Design of urban consumer survey Questionnaire • 16-page questionnaire Household member characteristics Assets and housing Shopping attitudes and behavior Food & non-food expenditure Perceptions Attitude toward certification Nutrition status Data collection • 33 enumerators in three teams • Nov 2010 to Feb 2011 6
Types of food outlets Type Definition Very large, modern stores with 10 or more cash Hypermarket registers. Examples: Carrefour, Giant, Macro, and Hypermart. Medium or large modern stores with 3-9 cash Supermarket registers. Examples: Hero, Matahari, Asia, and Yogya. Small, modern stores with 1-2 cash registers. Minimarket Examples: Alfa and Indomart. 7
Types of food outlets Type Definition Vendor who sells from a table, Semi- stand, cart, or stall that can be permanent moved, but generally stays in one stand place during the day. Does not include vendors in a wet market . Small store selling food products in Small shop a building or part of a house, often (warung) located in a residential area. 8
Types of food outlets Type Definition Collection of numerous food Traditional vendors under one roof or in one (wet) location, usually renting space in market the building Small-scale vendors operating on foot, on bicycle, with a cart, or from Peddler a car/truck, who moving around during the day. 9
Food shopping patterns Main reason for using this type of food outlet (percent of urban households that use this type) Semi- Tradi- Hyper- Super- Mini- perm. Small tional market market market stand shop market Peddler Total Low price / value 19 29 21 26 11 45 10 23 Variety of foods 29 23 12 10 1 22 2 13 Easy to get to 11 16 47 49 77 19 70 45 Other 41 33 19 16 10 14 18 0 Total 100 100 100 100 100 100 100 100 “Other” reasons for going to hypermarket or supermarket include close to entertainment, provides discounts, high quality food, and cleanliness 10
Food expenditure data Food expenditure module • 67 food categories 7 rice and other grain products 3 beans, soy, and tofu 12 animal products 23 fruits and vegetables 22 other (spices, beverages, etc) Questions on • Change in consumption over past five years • Frequency of purchase • Normal amount of purchase • Main type of store where bought 11
Food shopping patterns Share of food spending by type of food outlet (percent of urban food expenditure) Modern outlets account for 19% of food spending 12
Food shopping patterns Share of food spending by type of food outlet and food group (percent of urban food expenditure) 13
Food shopping patterns Food products for which more than 50% Food products for which less than 4% of spending at modern retail outlets of spending at modern retail outlets % from % from modern modern Food product outlets Food product outlets Infant formula & nutr 92 Other seafood 5 Spreads 91 Onion 5 Other dairy products 84 Meals eaten outside home 4 Other cooking oils 68 Poultry 4 Other fresh and froze 68 Maize products 4 Apple 67 Other meats 4 Other milk 67 Fish 4 Fats, butter, and mar 65 Pineapple 4 Chocolate, meisus, an 63 Rice 3 Alcoholic beverages 59 Potato 3 Other spices and seas 3 Chili sauce and other 57 Breakfast cereals 57 Processed fish & seaf 2 Processed meat 51 Ready-to-eat meals 2 Other processed food 51 Tofu and tempe 2 Green bean (buncis) 1 Other food products of interest Tomato 1 Carrots 1 % from Garlic 1 modern Tubers 1 Food product outlets Chilies 1 Mango 7 Leafy green vegetable 1 Mangosteen 10 Long bean 0 Shrimp 11 Shallots 0 14 Cucumber 0
Food shopping patterns Share of food spending by type of food outlet and income (percent of urban food expenditure) 15
Food shopping patterns Share of food spending by type of food outlet and education (percent of urban food expenditure) 16
Determinants of share of food spending at modern retail outlets sector Determinants of whether or not a household uses modern food outlets Determinants of the share of food spending at modern outlets, given that a household shops there 17
Determinants of share of food spending at modern retail outlets sector Determinant Effect on whether Effect on share of households uses food spending at modern outlet modern outlet Per capita expenditure (log) +++ +++ +++ +++ Household size 0 0 Female-headed household +++ +++ Education of head of household 0 0 Working wife +++ +++ Own refrigerator ++ 0 Own motorbike 0 0 Own car 0 0 Time to get to supermarket (min) 0 0 Interaction of motorbike and time + ++ Surabaya 0 ++ Bogor 18
Projecting evolution of food retail sector Increased Income Increased Population number of growth ownership of growth modern motorbikes & outlets cars Urbanization Increased demand for food quality, safety, Increased access to etc. of modern outlets modern outlets Rising spending at Rising Rising share of modern outlets urban households using among customers population modern outlets Rising total spending at modern food outlets 19
Projecting evolution of food retail sector Key assumptions in making projections • Urban population growth: 2.5% World Bank & UN, http://data.worldbank.org/indicator/SP.URB.GROW • Per capita income growth: 5.5% Projection 2010-14, http://devdata.worldbank.org/AAG/idn_aag.pdf • As incomes rise, households will follow patterns of higher income households today Modern outlet share Modern outlet share 2011 2020 Per capita income Per capita income 20
Projecting evolution of food retail sector What is the effect of income growth on other determinants of modern retail spending? 21
Projecting evolution of food retail sector What is the projected share of food expenditure allocated to modern outlets? • Taking into account income growth, increased ownership of motorbikes and refrigerators, and rising education on use of modern food outlets? Share of food expenditure at modern outlets rises from 19% to 25% over 10 years 22
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