Box 4 Case D

Vertical coordination

Specialised wholesaler 3 has a contract with PO2 to supply organic vegetables to modern retailers. Wholesaler 3 establishes the intrinsic and extrinsic (organic) requirements that PO2 must comply with. Wholesaler 3 monitors the intrinsic quality of vegetables, via sorting, and examines the produce in terms of size, appearance, colour and shape. The intrinsic quality standards stem from the requirements of modern retailers. Regarding the extrinsic (organic) standards, a third party (an organic certification institution) assesses the standard of farmers’ production processes.

Horizontal coordination

PO2 coordinates with its farmer members to comply with the quality requirements set out by wholesaler 3 regarding intrinsic and extrinsic quality. PO2 provides services to its members to comply with quality requirements by providing organic farming inputs (organic fertiliser and phyto-pesticide), technical assistance and organic farming knowledge. In addition, PO2 holds regular meetings to share information with its members, including information on buyers’ quality requirements. To achieve extrinsic quality (an organic standard), a third-party monitor and assesses vegetable production for PO2 members. The members cover the costs of PO2, including paying for the expenses associated with the organic certification process.

Quality performance

Vegetables produced at the farm level meet intrinsic and extrinsic (organic) safety standards.