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How to modernize wholesale markets in Brazil?

In Brazil, wholesale markets receive, classify, select, store and trade fresh food, guaranteeing the production flow and the supply to the population with quality and in a fair trade environment. The Ministry of Agriculture, Livestock and Supply (Mapa) details the affirmation in a study released in 2012 called “Plan for the Modernization of Wholesale Markets”. But are Ceasas in Brazil accomplishing this mission?


The answer is no, according to a research performed by Hortifruti Brazil magazine (Cepea) in August 2018. Still, players in the sectors of fruits and vegetables reaffirm the importance of wholesale markets in distributing these products in Brazil.


The ability of the wholesale markets to face challenges for a national modernization of the sectors of fruits and vegetables is limited. Among the problems, the out-of-date infrastructure and inefficient regulation/control to improve trades of fruits and vegetables, keeping quality standards are highlighted. Many of these problems are a result of the lack of investments and of a national policy coordinated among wholesale markets. Moreover, the model of terminal markets is still related to that settled on the 1960’s, which has been little updated to meet current trends. Besides, until the 1970’s, there had been a coordinated action of supply centers, through Cobal, which is currently known as Conab; however, this model did not survive to the 1980’s, and the regulation of the national supply had weaken.


The study performed by Mapa in 2012 indicates that: “supply centers established an obsolete model that suppresses the adoption of innovating logistic practices, limiting its efficiency and quality of the products traded. This fact results in growing operational costs, affecting the efficiency of the supply system and the competitiveness of the production chain of the different products”.


However, wholesales represent an important chain between the production and the retail of fruits and vegetables. Although part of the production is not physically negotiated at supply centers, a significant share of trades is performed by agents who have the permission to use the space. In other words, in spite of all physical, regulatory and administrative restrictions, the importance of these markets remain significant in the sector of fruits and vegetables.


In general terms, there are three major challenges for the modernization of wholesale markets: outdated infrastructure, inefficient management and little interest from the government. The result is high costs for dealers and low quality of the service offered to the clients.


For many players, the solution is to address the responsibility of solving these problems to the private sector. The current management model, federal and with directors selected by political criteria (not technical, in general), and players with little freedom to manage, is a major bottleneck for the modernization of the wholesales.


One project that is starting to become more solid and can give more freedom to players is Nesp (Portuguese for New Warehouse of São Paulo). The project is considered by its founders as a modern alternative to trade fruits and vegetables in São Paulo city. The idea is to establish a partnership with the Brazilian government to change the current location of Ceagesp to Perus neighborhood. The government of São Paulo has indicated to be in favor of this project earlier this year.


Click here to know more (in Portuguese): Revista Hortifruti Brasil, August 2018.


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