This article examines the rapid consolidation and multinationalisation of the supermarket sector in Brazil over the past decade. The impact of this on the horticulture marketing system is shown to include a sharp reduction in the role of traditional wholesale markets, the rise of specialised wholesalers and distribution centres, and the beginnings of contracts with growers. There have been similar changes in the dairy processing sector, with huge impacts on the dairy products systems leading to substantial concentration 'upstream' in the chain. For small farms and firms in both sectors, there is a need for substantial improvements in organisation and technology to face these challenges, and the government has a role in helping them make this adjustment.This article focuses on the three interlinked forces of consolidation, multinationalisation, and competition that have profoundly changed the Brazilian agrifood system in the past decade, causing firms to make strategic changes in the organisation of the supply chain, to increase co-ordination, reduce costs, and raise quality, with important effects on the upstream segments in the chain, such as the farmers. It starts by looking at the general changes in the 'downstream' segments of the agribusiness system, in particular the rise of supermarkets and fast-food chains, the emergence of fresh-cuts companies, and the consolidation of food processing. It then focuses on two case studies, fresh fruit and vegetables (FFV) and dairy products, to examine the effects on small farms and firms. These examples are used because demand for them is growing quickly, and because many small processors and farmers are involved in these chains.We work from the general notion that agriculture is part of a broader 'agribusiness system', a concept that emphasises the co-ordination and organisation aspects of a supply chain. This system conditions firms' strategies, performance, and adoption of adequate controlling structures, such as formal and informal contracts linking the different segments (from farmer to retailer) and governing transactions in order to transmit information, provide incentives for, and monitor actions by chain participants. Strategies such as tough price competition, market segmentation, product differentiation, and innovation may cause important changes in transaction attributes and costs, thus requiring new structures throughout the system. * Elizabeth Farina (emmqfari@usp.br) is at the University of São Paulo, Brazil.
