Challenging e-commerce monopolisation in food distribution

E-commerce continues to expand rapidly into food distribution and retail across Asia, speeding up corporate control. These digital platforms increase the pricing power corporations have over farmers and enable them to bring workers in the food system under the control of invisible command centers.

E-commerce in the food sector is being supported by the World Bank and other financial institutions, as well as Big Tech companies like Microsoft or Amazons. For instance, the World Bank and Microsoft partnered with TaniHub, an Indonesian online fresh food sales platform, to accelerate a ‘sustainable supply chain’ that TaniHub says will disrupt the conventional agricultural supply chain. But this "disruption" could eliminate the source of livelihood for 12.5 million fresh market traders registered in the country and many other informal workers who depend on these markets.

The intertwining of grocery and online companies is also a testbed to try out new technologies, such as blockchain, unmanned stores, or shaping consumer behaviour through the use of consumer data and analytics.

Many e-commerce platforms store data on consumers to analyse their preferences and consumption patterns, and seek to influence their choices by feeding them targeted advertisements from food companies and “suggesting” individual shopping preferences across e-commerce applications. Meanwhile, experiences from farmers in China show how private e-commerce companies charge quite high fees for farmers who want to use the platform service for selling their products, eventhough their products tend not to be easily found on these platforms.

During a farmers’ dialogue on agricultural digitalisation in Asia organised by GRAIN and ETC, Lakshmi Udaiyat of the Thalawady farmers’ network in Tamil Nadu, India shared about how the farmers’ market initiative that was launched in Tamil Nadue in the early 1990s is in serious decline, with only 80 active farmers markets remaining from the previous 182 farmers market that were established. Many farmers now have little option but to use virtual mobile applications to connect directly to consumers. This has led the Thalawady farmers’ network to try to create their own online application to fit with the farmers' needs. As Lakshmi explains, engaging with an e-commerce system that is based on the end-user or consumer needs could backfire for small farmers who might not always have the products that consumers are looking for.

Small farmers, traders and consumers could benefit from technology. But to do so, we all need to work together to break away from the power of Big Tech and its billionaires, and to fight for a different vision.

A young agroecology farmer introducing his pomelo via TikTok video for his online sales (Photo: Beijing Farmers Market).

A few years ago, the emerging e-commerce trend gave thousands of small agroecological farmers in China the hope of reaching out to more consumers. Farmers saw in it the possibility of casting aside the constraints of middlemen or the high travel costs of bringing their products to ecological farmers’ markets in big citiesg.

Initially most e-commerce companies did not require any fee for marketing agricultural products. Small farmers could register their online vegetable stores at Taobao, one of China's popular online markets, at almost no additional cost. The e-commerce companies even branded their platforms as a farmer-to-consumer model. They presented a very attractive sales channel for young farmers, who are familiar with using smartphones.

Unexpectedly, the outbreak of COVID-19 changed the rules of the game.

China’s zero-Covid policy transformed the consumption habits of many urban residents, with a new preference to buy fresh food online. Since then, almost all major e-commerce companies set up their direct online fresh food business, leading to unfair competition with the individual farmers’ stores.

To amplify sales, e-commerce companies recruit community agents to promote and coordinate collective buying in many neighbourhoods. Some community agents work under an agreement with e-commerce companies. Others are self-initiated residents, who transform their home space for collection points with commissions offered by the companies.

Numerous pick-up stations are now set up in residential or business areas, supplying huge amounts of fresh food, including meat, seafood, vegetables and fruits. Many communal spaces are now turned into mini-logistic centres for Alibaba, JD.com, Pinduoduo and Meituan. Recently, more ready-to-cook food has also been included targeting office workers.

As a consequence, small farmers have to adopt different tactics to face the competition, but most of them are costly or involve additional fees to the e-commerce companies. For instance, one common practice is to pay the companies a standing fee to optimise the online search. Alternatively, some of them will join price-cut promotional activities initiated by the companies or enlist the services of an online influencer, at huge costs. Such kinds of live-streaming sales are becoming very popular, and merchants now spend an average of 20 percent of their total operating costs on influencer sponsorships.

To make matters worse, the consumer data will mostly be held by e-commerce companies. In reality, the e-commerce model does not imply direct relationship building but substitutes one set of business intermediaries for another. The expanding online consumers are largely guided by cheap prices rather than concerns about quality and health, not to mention the livelihood of small farmers. Meanwhile, the e-commerce companies are only interested in sourcing fruits, vegetables and other agricultural products at cheap prices. The direct sourcing mechanism that e-commerce companies are doing has no guarantee of pesticide or other agrochemical monitoring even if it’s marketed as ecological products.

To date, the expansion of agriculture e-commerce is not only happening in the city. Ah Cai, a young agroecological farmer from Anhui Province, said that right now many farmers in his community also buy vegetables through online stores. He is worried that this new marketing channel will introduce pesticide-contaminated and non-seasonal vegetables to the community, which could potentially risk people’s health, especially children.

Despite the boom of agricultural e-commerce, the Beijing Farmers Market says that sales from its agroecological farmers remain very stable due to the trust and strong bond between the consumers and farmers. For them, the farmers’ market is not just a space for trading but a community hub for learning and caring.

In early October, GRAIN had the opportunity to visit the agroecology school of FENSUAGRO, IALA Maria Cano in Viotâ., Colombia. The agroecology school was established in April 2016 after a long process. It stands on 16 hectares of land and serves as a space for education and other practices with a common goal to implement different aspects of agroecology in the communities.

One important aspect of agroecology is to strengthen peasant economies. This is a conclusion that came very strongly from the meeting of ten agroecology schools across Latin America. FENSUAGRO itself set up what it calls a ‘merca tienda campesina’ or farmers market shop in 2013. With this shop, farmers learn and work to process their production such as cheese, yoghurt, marmalade, cake and panela (a form of brown sugar) to sell to surrounding areas, including to the city of Bogota.

The farmers of FENSUAGRO realise the importance of having a farmers’ market that helps them to link to customers as well as to cut out intermediaries. But they face a lot of restrictions from food safety laws on how and where they can sell their products, such as the requirement for certifications that are not suitable to their systems of production even though the farmers know that their food is being produced in a safe and healthy way.

The FENSUAGRO farmers are not deterred and are continuing to develop their farmers’ market project. They are now organising a space at a school where they can have farmers from other areas coming with their products, and thereby enabling the exchange of products among the farmers from highland and lowland areas of Colombia. Another new initiative is for a farmers’ market in the city of Bogota where they can sell their products to city dwellers. For this FENSUAGRO is pressuring local officials to allow them to have a space for farmers’ market where farmers from different area can bring and sell their products in the city once a week.

As a result of this pressure from peasants, for example, the program "Mercados campesinos agroecológicos. Bogotá es mi huerta” (Agroecology farmers market. Bogota is my garden) has been implemented in the city of Bogota with the aim of promoting the peasant economy and guaranteeing access and availability of food at a fair price. However, there are still only limited spaces where peasants can sell their products, which is why FENSUAGRO continues working to promote public policies in favor of the peasants. FENSUAGRO also actively participates in the National Agrarian Reform System, where the organisation promotes the development of public policies to strengthen the peasant economy, as well as the national “Red de Agricultura Urbana” or urban agriculture network that brings together about 20,000 urban farmers and thousands of urban consumers who participate in the different farmers' markets.

Another important aspect of this work is FEENSUAGRO's effort to set up a national participatory guarantees system for products sold through their farmers' markets. The system would guarantee that products are from farms that are either 1) in a transition towards agroecology, 2) implementing a number of agroecological practices, or 3) fully agroecological. This is to guarantee that the farmers’ products that are sold through merca tienda campesina is done in an agroecological way and processed safely, and that the markets support a transition to agroecology.

It is important to note tha the majority of the farmers who are involved in these farmers’ markets are women and that landless women farmers across Colombia play an important role in maintaining family economies, while at the same time providing food for the family.

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