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MessageOne issue that puzzles me is just why do African Governments spend 18
billion US$ each year on imported food from outside of the continent? Do they
have to or do they choose to? This is money that boosts the GDP of non-African
countries rather than their own. It is also a heavy call on invalubale forex
reserves. What is it about the supply chain in African food produce that means
there is a greater incentive to purchase food from abroad? What makes Asian
rice cheaper on the shelf than West African rice, or is it insufficient volumes
of local production, and economic barriers that are preventing local producers
from capturing a larger share of the national market?
Andy Bullock
----- Original Message -----
From: William Kedrock
To: economic-opportunity
Cc: Vinay Chand
Sent: Thursday, May 06, 2004 1:35 PM
Subject: RE: access to markets
Good Day,
A first timer here. I'm intrigued by many of the discussions but find so
little time to provide input/feedback.
Though I might not put it in terms of access to markets, I do agree that even
farmers in the most remote areas can effectively move produce. We see
commodities go from basket to sack to multiple sacks on a bicycle to a full
pick up truck to a loaded Bedford. The produce moves effectively but not
efficiently. The role of collectors is paramount in such a system. Actions to
cut them out can increase efficiency and returns to farmers, but it is not easy
nor always advisable.
This is where I think price information is important. It may not increase
access per se but it does move needed information from the buyer to the seller.
Collectors trade on information. The asymmentry of that information gives them
an advantage. They are not likely to willingly increase margins for farmers. An
informed farmer though is in a better position to ask for a better farmgate
price. Moreover, if embedded in that price information are signals that
improved quality garners a higher price, the farmer can then make an informed
choice as to whether the higher price for better quality is worth the
investment.
Collectors play an important role in effective access to markets. Price
information that targets the farmer helps level the negotiations and allows the
farmer to make informed decisions when trading with these collectors.
Cheers,
William Kedrock
Chemonics International
<address removed>
tel: 202-955-7426
fax: 202-955-7550
-----Original Message-----
From: Vinay Chand [mailto:<address removed>
Sent: Wednesday, May 05, 2004 7:53 PM
To: economic-opportunity
Subject: access to markets
Taking Colin's last point about moving the discussion on to constraints to
access to markets and assets, in my experience, farmers including small farmers
nearly always have access to markets.
It is not the access that I find to be constrained, rather the terms on
which access is granted. To see the implication for the smaller farmer it is
sufficient to look at the physical disposition of what he produces. It has to
be picked up from the field, not the nearest road. The farmer may carry it to
the road or a larger farmer may do so on its way to the farmers market in the
locality.
Unless the transaction is within the family with land that has been divided
up between members but who still co-operate, or a collective organisation
between a number of small farmers, whosoever collects the produce can end up
making the same for it as the farmer. The role of collectors is critical here.
Collectors aggregate produce from a number of small farmers and take it to a
local market where it is normally bought by a transporter/wholesaler taking it
to a larger market unless of course the collector is also a wholesaler.
The importance of looking at this key part of the value chain, which is
necessary in my opinion if there is to be an efforts to maximise farmer
incomes, is often obfuscated by confusion between farmers, collectors and
wholesalers and their roles at major markets. The buying price at wholesale
markets was being published in Sri Lanka, for example as a producer price and
there were proposals to install sophisticated information systems to transmit
prices including these producer ones.
Real time market price information does not increase access to markets for
particularly small farmers, it is of no possible use for them. Yet the idea
appeals to educated planners as part of a transparency process. Real time
prices are of interest only to traders and transporters. It can guide them to
markets where they would obtain marginally better prices.
Again, I would return to farm gate prices and the share of final retail
prices that farmers get. Increasing farmer margins will make production more
responsive to price movements and to what consumers want. If a farmer only gets
1/10 or less of the retail price, shelf price movements reflect only trader
activity. When the farmer gets 1/5 of the retail price, there is a more
efficient transmission of market signals.
The farmer does need to be told about market demand movements and that is
the role of extension as far as I am concerned and transmitting analysis rather
than real prices.
Best wishes,
Vinay Chand,
230, Finchley Road,
London NW3 6DJ, UK
Tel: 44-20-7794 5977
Fax: 44-20-7431 5715
<address removed>
Please visit dfid-agriculture-consultation.nri.org.