Central American supermarkets’ private standards of quality and safety in procurement of fresh fruits and vegetables

In the context of near-absence of public food safety and quality standards, or the lack of effective implementation of them where they exist, and in order to increase product quality and consistency and differentiate their product from traditional produce retailers, leading supermarket chains in Central America are imposing private standards on their fresh produce suppliers. These are mainly for cosmetic quality, but emerging also are standards for fresh produce safety, in particular for leafy greens and some fruit. They are implementing the private standards at the same time they are cutting costs in order to compete with wetmarkets, via organizational change in the leading chains’ procurement systems (shifting away from use of spot markets and traditional wholesale systems toward centralized purchases and use of implicit contracts and specialized/dedicated wholesalers). They are coupling those changes with some actions to resolve idiosyncratic factor market failures facing farmers such as through provision of technical assistance. The implementation of these private standards of produce safety are good for consumers as they are among the few food safety practices by domestic food industry actors. But the tougher standards are a challenge for producers who need to make significant investments, implying the need for investment assistance and support services by governments. The paper presents field study findings for Costa Rica, Guatemala, El Salvador, Honduras, and Nicaragua from 2002 to 2004.