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Box 5 Case E

From: Alignment between vertical and horizontal coordination for food quality and safety in Indonesian vegetable chains

Vertical coordination
Specialised wholesaler 4 has contracts with individual farmers for the supply of vegetables to modern retail markets. Wholesaler 4 has contractual arrangements with local farmers. In the contracts, wholesaler 4 establishes a strict rule that vegetables must meet intrinsic and extrinsic (organic) quality requirements. To achieve the quality required, wholesaler 4 shares information and knowledge and provides technical assistance regarding organic production to the contracted farmers. Wholesaler 4 also pays expenses associated with organic certification applications to a third party. Quality monitoring is carried out by wholesaler 4, which sorts vegetables and selects those that meet the intrinsic quality requirements before delivering them to modern retailers. For the extrinsic (organic) standard, a third party (an independent organic certification institution) inspects vegetable production to assess whether organic standards have been met by the contracted farmers. The third-party issues organic certifications for vegetables that have reached organic standards.
Horizontal coordination
No PO is involved in the chain.
Quality performance
The vegetables produced at farm level meet intrinsic quality and extrinsic (organic) safety standards.