©Freepik
December/2020
Series The agrifood system and the challenges of COVID-19
5
The role of wholesale markets in the pandemic:
challenges and opportunities
Introduction
Access to a healthy diet is another component
of this equation. Social isolation and a reduction
in the pace of economic activity have led to a
Due to transport difficulties,
order cancellations and import
restrictions, the crisis also
manifests itself on the supply side
in the reduced availability of fresh
food for domestic consumption.
considerable increase in unemployment and
the worrying closure of businesses, especially
micro, small and medium-sized enterprises
(MSMEs). The International Monetary Fund
(IMF) forecasts are not encouraging in general,
and particularly bad for Latin America and
the Caribbean: while the world’s economy is
expected to shrink by 4.9 percent, twice as
much is expected in the region – a 9.4 percent
fall. (IMF, 2020).
On the other hand, the International Labour
Organization (ILO) reckons that during the
second quarter of this year the number of
hours worked – in relation to the last quarter
of 2019 – will fall by 14 percent worldwide,
19.2 percent in the Caribbean and 20.6 percent
in South America, making these sub-regions
©FAO/Max Valencia
When the pandemic started to spread in Latin
America and the Caribbean a few months ago,
it was already anticipated that governments
and civil society would have to take on more
responsibility to ensure food security and
nutrition effectively. According to estimates by
the Economic Commission for Latin America
and the Caribbean (ECLAC, 2020), nearly
46 million Latin Americans and Caribbeans
will return to poverty in 2020, bringing the
region’s total in this situation to 231 million, all
of which as a result of the economic recession
associated with COVID-19.
Due to transport difficulties, order
cancellations and import restrictions, the
crisis also manifests itself on the supply side
in the reduced availability of fresh food for
domestic consumption. However, for the
regional agricultural sector as a whole, the
crisis has shown a positive side. Driven by the
devaluation of the exchange rate and the gaps
in trade disputes between the United States
of America and China, agricultural exports are
expected to grow slightly in 2020 (ECLAC,
2020; FAO and ECLAC, 2020). On the other
hand, higher external demand and the devalued
exchange rate have caused instability in the
prices of agricultural products in the domestic
market, thus creating a new challenge for
production and distribution systems.
the most affected on the planet (ILO, 2020).
It is also estimated that fewer hours worked
will result in a 5.4 percent increase in the
unemployment rate in Latin America and the
Caribbean (CCSA, 2020). Besides, ECLAC
estimates that the regional population living in
extreme poverty will grow by almost
30 million people, reaching 96 million,
equivalent to 15.5 percent of the total
population. In such a situation, and taking into
account the reduction in demand for food and
the interruption of public programmes such
as school feeding, this population finds itself
under pressure from falling incomes, resorting
mainly to cheaper, ultra-processed and lower
quality food (IICA, 2020).
The importance of wholesale food markets
consumption circulates in the main national
reference markets in the region. According
to Intini, Jacq and Torres (2019), wholesale
markets still play a very important role in the
supply of traditional retail in several Latin
American countries: they distribute more
than 70 percent of agricultural production
in Mexico, 80 percent of fresh vegetables in
Argentina and 90 percent of fruit consumed
in Chile. These important hubs stand out in
food consumption because they establish
marketing standards, determine prices, type
of packaging and labels used, and other
product characteristics. For this reason,
supply centres tend to be considered “food
authorities” in their countries.
The Food and Agriculture Organization of
the United Nations (FAO) highlights the
fundamental role that wholesale food markets
play in ensuring access to low-income
populations and the possibility of promoting
healthy eating (FAO et al., 2019). In fact, since
a large part of the region’s population resides
in urban areas – mainly in “megalopolises”
– a significant proportion of agricultural
production is marketed in wholesale centres,
and then goes to supermarkets, medium and
small markets, restaurants, cafeterias and
hotels.
In order to know about the number,
distribution, operating structure and
dynamics of wholesale markets, FAO
carried out a study (not published) in 2017,
which identified 294 wholesale markets
in the region, distributed in 22 countries.
Subsequently, at the end of 2019, a survey
was conducted with the participation of 40
markets, that is, 44 percent of eligible food
wholesale markets in Latin America and the
Caribbean, considering all operational sizes.1
Although there are no exact data on the
quantity of products traded in these markets,
it is possible to indicate that a significant
part of agricultural production for domestic
Concerning their administration, most of these
markets are characterised by public (42.5
percent) or mixed (17.5 percent) management,
which further reinforces their role as agents
of each country’s food security and nutrition
policy. It is not easy to imagine a food supply
policy without the assistance of an operational
arm such as wholesale markets.
Furthermore, most of these markets can be
considered as reference markets. There are
two other types: regional wholesale markets,
1
Ninety eligible markets were surveyed, considering only those recognised by the regional representatives of the Latin American
Federation of Supply Markets (FLAMA, by its acronym in Spanish), the Brazilian Association of Supply Centres (ABRACEN, by its
initials in Portuguese), the National Confederation of Supply Centre Merchants’ Groups of Mexico (CONNACA, by its acronym in
Spanish) and others. Besides, only the main management organisation was considered, since it controls other wholesale markets.
2
which bring together wholesale markets of
various sizes that supply regions far from the
countries’ metropolitan reference centres; and
local wholesale markets, which complement
the previous types of market and offer food
products for metropolitan regions. In this
category, we can also find small markets,
support centres or farmer’s markets that
perform retail functions.
the 1960s. As a matter of fact, about twothirds of the region’s wholesale markets were
founded 50 years ago or more, and their
modernisation has been only marginal in
recent decades. With the advance of urban
development and the incorporation of facilities
into the set of equipment and services offered
in their environment (banks, health stations,
police stations, nurseries, transport, trade in
complementary items, others), wholesale food
markets became part of the landscape of
modern Latin American and Caribbean cities.
Historically, large national reference markets
began to be created in the second half of
Impacts and response of wholesale food markets to COVID-19
Wholesale food markets are the main marketing
channel for hundreds of thousands of farmers,
especially family farmers. They are responsible
for supplying food to a vast and diverse network
of small and medium enterprises. Wholesale
markets also operate as retailers, receiving direct
consumers and buying groups in their spaces.
Therefore, from the beginning of the pandemic,
FAO and other regional organisations – jointly
with governments and wholesale market
management – developed strategies to ensure
that the health crisis does not turn into a supply
crisis, to avoid the closure of wholesale supply
centres or markets, facilities and farmers’ fairs in
the region.
the public, among others. Measures were also
taken to prevent workers in these markets
from contracting the disease.
In the framework of the agreement between
FAO and the Latin American Federation of
Supply Markets (FLAMA, by its acronym in
Spanish), four surveys were carried out to
understand the measures and difficulties, the
price, supply and demand situation in the
region’s wholesale markets (see Table 1).
Initially, with the interruption of transport, the
operators quarantined, and the border closure
with sanitary barriers, the markets had difficulty
in selling perishable products from the field.
Shortly afterwards, some demanding sectors
such as hotels, restaurants and cafes stopped
their purchases. This mismatch between supply
and demand led to occasional price increases
and shortages of some items, although markets
continued to function normally, ensuring
food supplies.
©CONACCA
Wholesale markets have not been disrupted
during the pandemic, which at the height of
the pandemic created great concern among
health authorities, given the massive flow of
people walking through the market spaces.
In this regard, the aforementioned survey
carried out by FAO reported that a significant
number of markets have implemented
preventive measures such as: the mandatory
use of masks, information campaigns, control
of pedestrians and vehicles with the closure
of certain routes, reduction of opening hours
and installation of sinks and washrooms for
3
Table 1. Summary of FAO-FLAMA COVID-19 surveys.
Period
Topic
Operational results
Conjuncture results
May 2020
Measures to
reduce the
effects of
COVID-19.
The markets acted quickly and
implemented protocols to prevent
contamination of traders, workers and
buyers. Digital platforms and direct
sales were implemented.
Markets with stable prices. Slight
reduction in demand.
June 2020
Platforms for
buying and
selling, and to
reduce food
loss and waste.
Broadened use of digital platforms to
carry out transactions. Most markets
made direct donations and donations
to food banks.
Increased prices of some items
due to seasonality, and import
difficulties.
Reduction in demand.
July 2020
Investments
to control the
effects of the
pandemic.
Own capital for investments. Digital
economy is in the spotlight.
Prices are moderately up: mainly
imported grains and fruit. Strong
reduction in demand and supply
of imported fruit and grains.
September
2020
Obstacles to the Informality and lack of knowledge
modernisation
about the use of digital platforms for
of markets.
buying and selling.
Markets provide health conformity
certificates that allow virtual
transactions.
Stable prices or moderate
increase, except for imported
fruit. Stabilisation of supply and
demand, except for fruit and meat.
Source: The authors.
The first survey aimed at obtaining information on the general operating picture of the
wholesale markets impacted by the pandemic in the first months of 2020. Among the findings,
it is worth mentioning that:
• Most markets
acted quickly and
implemented protocols
to prevent traders,
employees and buyers
from being infected.
• In terms of marketing, the data indicated
that 67 percent of the markets were
already using buying and selling platforms,
and 33 percent were making direct sales
to final consumers, indicating greater
openness to retail trade.
• Finally, some
bottlenecks were
also identified, the
main one being
the reduction in
demand.
The second survey, conducted in June with the participation of 64 markets, focused on the
management of food loss and waste. Among its main findings were:
• The growth in the use
of digital platforms for
transactions, reaching 73
percent of the markets
surveyed.
• Direct delivery of food
in baskets or packages
was already practised in
50 percent of the markets
surveyed.
• More than two out of
three markets (72 percent)
pointed to rising prices as
a problem.
• Finally, concerning food loss and waste, the survey yielded
a surprising finding: 69 percent of markets made direct
donations and 56 percent made donations to food banks.
4
• As for bottlenecks, the
demand situation had
worsened, reaching 92
percent in relation to the
previous month.
The third survey was carried out in July 2020, involving 71 markets, intending to deepen the
data on the impact of COVID-19 on marketing. It was observed that:
• Fifty-four percent
of respondents
reported falls of up
to 50 percent in
trading volume.
• Considering that the wholesale markets invested heavily to
control and minimise the effects of the pandemic, the origin of
these resources was sought, finding that 55 percent of the markets
use their own capital alone or in combination with the resources of
the traders (38 percent).
• Few markets were supported by municipal (17 percent), provincial (7 percent) or national
(5 percent) governments, and they had to use most of their own funds (see Figure 1).
Figure 1. Investment resources to combat COVID-19.
Market administration’s
own resources
Trader support
Municipal Government Resources
Forms of financing
Others
Provincial/Departmental
government resources
National Government Resources
No investment
Bank loans
International cooperation
programmes
Answers
Source: FAO and FLAMA (2020).
Finally, the research sought to deepen the issue of post-pandemic investments and the
results indicate that there is investment readiness. These investments should be directed
precisely to the area of information technologies and systems, as well as to better control
of access. In fact, adding up all the actions planned for the digitalisation of operations,
these surpass other initiatives in the field of cleaning or infrastructure services. In this
regard, see the table below, which presents the data collected in a July 2020 survey.
Figure 2. Investment priorities to improve market functioning (%).
Others
4%
Information and
connectivity
Logistics and access
24%
35%
18%
Environmental and
health services
19%
Public services:
water and energy
Source: FAO and FLAMA (2020).
5
The fourth survey was conducted in September and involved 51 markets. This research
identified the main barriers to the adoption of virtual platforms for food sale.
• On the other hand, the informality of the
agents working in the markets (producers and
traders) and the lack of specialised personnel
have been the main factors that have pushed the
implementation of digital systems of purchase and
sale (55 percent and 35 percent, respectively).
6
©CONNACA
• For 41 percent of the respondents,
the certification system is essential for
traceability and for the operation of a
digital platform; the same percentage
was indicated for a reliable electronic
payment system.
Towards the modernisation of wholesale markets
7. Adapt the facilities of the supply centre
to function as a logistics platform, controlling
the flow and schedule of trucks, computerised
ordinance and registration of all transactions
made in the physical or virtual space of the
wholesale market.
The restriction to the functioning of open markets
present in most countries at the beginning
of the pandemic, along with the difficulties
encountered by small food businesses indicate
a growth in self-service structures (convenience
shops, supermarkets, hypermarkets, etc.), with
concentration in food retail.
8. Install or modernise cold rooms for the short
stay of products on sale.
While it is true that the supply centres and/or
retailers have taken some measures, we present
below an agenda of short and medium-term
actions, focused on quality, aimed at modernising
these commercial spaces. This agenda seeks to
transform the physical structure, which in some
cases leads to the need to relocate facilities (as is
being done in the Mercado Modelo in Montevideo
and the CEAGESP in São Paulo), and to introduce
or improve digital trading platforms.2 These
actions cannot happen at once; they must follow
a sequence that contributes to their success and
can be coordinated by the wholesale markets. The
adoption of these sequences makes it possible to
reduce production and transaction costs.
9. Train staff to develop new administrative
and operational functions (forklift operators,
refrigeration technicians, laboratory analysts, etc.).
10. Adopt a policy of total transparency in
the transactions carried out, in addition to
direct communication with producers – via rural
technical assistance, and with traders – with
teams of nutritionists and sales technicians.
Clearly, the process of implementing the
ten steps presented is medium- to longterm, which may be incompatible with the
emergency arising from the new environment
for food trade. However, this is an opportunity
and nothing prevents this process from being
implemented in parts, by type of product or
market. As always, it is essential to note that
there are no immediate solutions and no direct
purchase and sale application will modernise
the operating system without the foundations
for it being in place.
1. Standardise fresh products marketed in supply
centres by type, size, colour and ripening.
2. Incorporate information on the origin of the
product, date of harvest or production, and date
of packaging to ensure traceability.
3. Incorporate basic information on the food
safety attributes of the product: organic or
conventional, presence of genetically modified
organisms, compliance with current amounts of
pesticides, etc.
The responsibility of wholesale food markets,
as food authorities, to maintain city supplies
grew in the wake of the pandemic. Their major
challenge is to modernise in an inclusive and
transparent manner.
4. Use standard product-specific packaging,
preferably disposable and electronic labels with
national – and, if possible, international – validity
with all product information.
5. Accredit companies, cooperatives or
producer groups for the certification process of
marketed products.
6. Create or improve a digital platform with
“real-time” information on product prices,
according to their classification, quantities traded,
and price practised in other markets.
2
As is happening in Argentina with Tienda Cooperativa; in Chile with the government platform Mercado Campesino Online; and
in Costa Rica with the application La Finca Agropecuaria..
7
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Some rights reserved. This work is available under a
CC BY-NC-SA 3.0 IGO license
Intini, J, Belik, W. Cunha, A. y Torres, J. Series The agrifood system and the
challenges of COVID-19 The role of wholesale markets in the pandemic:
challenges and opportunities. No. 5. Santiago, FAO.
https://doi.org/10.4060/cb1592en
© FAO, 2020
CB1592EN
Autors
Joao Intini, Policy and Food Systems Officer. Food and Agriculture Organization of the United Nations.
Walter Belik, Wholesale Markets Consultant, FAO Regional Office for Latin America and the Caribbean.
Altivo Cuhna, Wholesale Markets Consultant, FAO Regional Office for Latin America and the Caribbean.
José David Torres, Food Systems Consultant, FAO Regional Office for Latin America and the Caribbean.