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Colin, Congratulations on the write-up. I didn't find too much to disagree with. You will see from my paper on marketing finance in Asia that I tend to regard trader-farmer credit linkages as often having beneficial effects so I am a bit unsure about your tied credit reference. The paper is at: http://www.fao.org/ag/ags/subjects/en/agmarket/markfinance.html <http://www.fao.org/ag/ags/subjects/en/agmarket/markfinance.html> A final version will be on the web in a few days. We've been trying to work out here how we should be responding to market developments. A few of the issues are set out below. You will find that our approach is not dissimilar to yours. You are welcome to use these in preparing your summaries, but please do not quote me at this stage. Thanks All the best, Andrew Andrew Shepherd Agricultural Marketing Group http://www.fao.org/ag/ags/subjects/en/agmarket/agmarket.html <http://www.fao.org/ag/ags/subjects/en/agmarket/agmarket.html> The marketing scenario confronting farmers continues to change. Access to liberalised domestic markets poses problems for many farmers, particularly those in remote areas. The decline of marketing boards and an end to most crop subsidies has encouraged diversification into new crops more suited to farmers' agro-economic environments and locations but the marketing of these crops brings new challenges. Increasingly integrated food distribution systems employed by supermarkets and others create significant problems for small farmers in terms of meeting traceability requirements and organizing to supply the buyers. The Marketing Group will thus continue to work on promoting farmer access to markets while, at the same time, slightly re-orienting its focus to address the development of farmer-market linkages required under the new environment described above. Implementation of marketing liberalization and structural adjustment measures remains imperfect and can be seen as one reason why the private sector has not always responded to the opportunities presented. Examples of inconsistent policy include the introduction of import or export bans by governments that have a stated commitment to free trade; government involvement in input supply, often at subsidised prices, despite a policy of liberalizing input markets; and the failure of governments to sell marketing assets such as storage facilities, even though policy reform means these are no longer required by the (former) marketing board. In some areas food aid distribution also fails to take into account the impact on the private sector, and donors fail to explore the possibilities of involving the private sector in overcoming food deficits. Improving the ability of farmers to market diversified production to better meet the needs of existing and new markets will, as noted, take on increasing importance in the coming years. Continued support to farmers to improve their marketing skills will be necessary. In many countries NGOs are playing an active role in promoting improved market linkages. At the same time, there is evidence that these organizations suffer many of the same weaknesses as traditional extension services, in terms of knowledge about markets and marketing practices. The growing concentration in the food distribution industry (supermarkets) and increasing concerns on food quality and safety and on product classification (grades, standards, labelling and packaging) will seriously impact on small-scale farmers' access to markets, initially to export markets but in time to domestic markets. The cost of meeting "traceability" requirements is already having a major impact on small-scale farmer vegetable exports from Africa to Europe, for example. Equipping farmers to supply products to increasingly demanding markets should be an area of continuing attention. In a similar vein, both procurement and input supply linkages between farmers and agribusiness concerns, such as food processors and export commodity processors (cotton, sugar, coffee), need to be improved. Often, these best practices will involve farmers organizing into formal or informal groups or cooperatives. While significant changes are occurring in agricultural marketing arrangements throughout the world, the more traditional marketing systems will continue to play the dominant role for many decades to come. Concern to promote new types of marketing linkage should not lead to the neglect of well-established systems and of activities designed to overcome the constraints they experience. Social capital and trust between those involved plays an important role in marketing systems and in the financing of those systems. It is important that misguided policy interventions based on a, usually unjustified, suspicion of the motives of the private sector do not jeopardise such trust-based systems. It is therefore desirable to continue to carry out studies of the way in which private-sector marketing systems function as the basis for informed policy making. Efficiency and profitability in the marketing and postharvest chain depends on minimising costs consistent with providing the services necessary to meet the needs of consumers. Analysis of such costs, the so-called value chain analysis, is an important tool in promoting marketing efficiency. The value-chain techniques employed by large concerns in developed countries to identify areas of inefficiency are just as valid, in a simplified form, for smaller companies in transitional economies. Studies have already been carried out by FAO on market access issues confronting farmers in Africa in the light of the various WTO negotiations and issues relating to enhancing competitiveness will need to be addressed in the future. Even where countries encounter few tariff or non-tariff barriers in the major developed markets, agricultural exports are still often constrained by problems within the exporting country. These include a lack of suitable quality control arrangements, poor road, storage and port infrastructure, inadequate legislation, poor banking procedures and poor communications which mean that the uses to which modern communication technology is already put in developed countries for agricultural marketing cannot be exploited. The impact of these constraints on export development needs to be addressed.
Please visit dfid-agriculture-consultation.nri.org.