The challenges of concentration in the agricultural product supply chain: a study of Producer Organizations in Portugal

One of the greatest challenges facing rural producers stems from the difficulties in accessing markets majority controlled by the major distribution chains. The small quantities under production and the low level of investment capacity ensure that smallholders in particular encounter an asymmetric relationship with the retail sector. The European Union (EU), through means of the Common Agricultural Policy (CAP),has adopted strategies to overcome these obstacles through stimulating farmers to concentrate their own supply through Producer Organisations (POs).These POs, in addition to concentrating supply, also act to improve productivity and guarantee reasonable prices to consumers. The objectives of this article include analysing challenges faced by the concentration of the agricultural product supply chain through a study of POs in Portugal. The research findings arise from analysis of both primary and secondary sources of information. The research techniques applied were documental analysis and holding interviews with six key players. The research results demonstrate how the average level of PO participation in the EU stands at 46% but falls back to 25% in Portugal. The results are also below those presented at the EU level despite accelerated growth taking place in the horticultural sector, which more than doubled its level of participation over the last decade (10% in 2005 rising to 26% in 2014). We conclude that, on the one hand, POs respond positively to the challenges of supply chain concentration; on the other hand, this has lacked the impact necessary to reversing the ongoing rural desertification in Portugal.