Economic Opportunity Mailing List Archive

["Dick Tinsley" <<address removed>>]

I was rather happy this morning to finally see some good discussion the private 
traders, etc.  As I have mentioned previously I consider them the most cost 
effective means of supporting smallholders.

Allow me to enhance the comments a little.

1.    Unfortunately the cost of remoteness has to be borne by the farmers in 
terms of decreased farm gate price. That is simply once to the main road they 
have to compete with the produce from less remote areas where the transport 
cost is less.

2.    There can be some major snowballing on this as poorer the road the 
smaller the volume that can be marketed which increases the marking cost per kg 
of product.  The example would with progressive remoteness going from lorries 
to pickups, to bus tops, to motorcycles, to push bikes, to bullock carts, to 
donkey side bags, to back packs.  There is typically a day's time and effort 
associated with marketing that has to be prorated over the volume you are 
marketing.  This requires compensation either in price differential or lost 
opportunity for the field work needed to improve quality.

3.     This is a good argument for improving the rood network to increase the 
access and decrease the remoteness.  I think road construction has always had a 
major economic stimulus agriculture and non agriculture alike.  The tragic 
exception being the access road to the Union Carbide plant in Bhopal, India and 
the squatters it stimulated to live beside it. 

Perhaps it is indirect but a good donor investment to stiumlate agriculture.

4.    Please don't make to much effort to replace the collector they providing 
a essential service.  Remember the farmer still has other field work to do 
which he is most likely behind on.

5.   The farmer receiving 30% of the consumer price may be fairly standard and 
represent the cost of doing business in a fragmented business environment.  My 
primary example is a MSc thesis of a student while I was at AIT.  Her analysis 
of tomato marketing in Nepal showed the 30% nominal farmer share but when you 
factored in the 20% spoilage loses that increased to nearly 40%.  However, big 
problem was that the trucks moving from the Terai to Katmandu held 228 crates 
of 28 kg each.  This represented the consolidated shipment of up to 10 pairs of 
wholesalers.  The collecting wholesaler in the Terai and the distributing 
wholesaler in Katmandu. Each wholesale unit - two families - making their 
livelihood from the mark-up from 20 crates of 20 kg of tomatoes, total 400 kg. 

How much does that mark-up have to be for these two families to make a 
reasonable living? We estimated their incomes on par with mid-level civil 
servants, with substantial extra risk.

The problem is fragmentation of the marketing channel with each enterprise 
having a relatively low market volume.  This same fragmentation makes for a 
competitive environment that assure the best possible price to both the farmer 
and consumer within this marketing environment.

Dick Tinsley