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While the COVID-19 pandemic disrupted trade and global food supply chains, it also created new options and preferences among consumers for local food products. This underscores the importance of a well-functioning food system that can supply enough good quality, affordable food for all, at all times.

To improve market access for food producers in Montenegro – a country dominated by small family farming – the European Bank of Reconstruction and Development (EBRD) and the Food and Agriculture Organization of the United Nations (FAO) produced guidelines on local sourcing.

These guidelines were developed in collaboration with the Montenegrin Ministry of Agriculture and Rural Development as part of the EBRD’s and FAO’s efforts to make the country’s agrifood value chains more sustainable.  

The project aims to improve linkages between fruit and vegetable producers in Montenegro with local buyers – from processors and retailers to wholesalers and exporters – by consolidating supply and upgrading quality standards.

“To seize these opportunities and engage with retailers, small and medium food suppliers have to overcome serious challenges,” said FAO Economist Lisa Paglietti. “The limited size of a company makes it more complicated to achieve economies of scale or invest in distribution logistics.”

She added that the EBRD and FAO are trying to facilitate commercial interactions between Montenegro’s smaller food companies and local buyers and to support more sustainable local value chains.  

Nemanja Grgic, Principal Manager of Agribusiness Advisory, EBRD, noted that “Montenegro’s agriculture sector continues to play an important role in the national economy and is part of the country’s heritage and social fabric.”

Win-win

Of Montenegro’s 43 791 agricultural holdings, nearly 100 percent are family owned. Productivity is low, packaging and product standardization are poor, and volumes placed on the market are small. Yet despite facing tough competition from often cheaper imports, local producers do have opportunities to sell to domestic aggregators.

Sustainable local sourcing can be a win-win solution for all – retailers, processors, consumers and, above all, local producers.

Shortening the supply chain and sourcing locally can often provide profitable margins for local suppliers and retailers. At the same, consumers can feel closer to local agricultural producers and rural communities and buy products of known origin at an affordable price.

These new guidelines can help Montenegrin retailers engage and invest in local sourcing as part of their corporate sustainability strategies. For them, buying from local producers can be a way to contribute to the Sustainable Development Goals and to show their commitment to global climate goals under the Paris Agreement.

The guidelines also provide an overview of consumer trends, policy measures and other influencing factors that will shape the engagement of Montenegrin retailers with local suppliers. They highlight good international practices and set priority actions for Montenegrin retailers to consider when developing their market strategies.

Although these EBRD/FAO guidelines were developed specifically for Montenegro, they can be adapted for retailers in other countries that wish to strengthen their commercial relationships with local suppliers.