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Promoting efficient markets

2009 Available in English, French, Portuguese and Spanish

Photo: Gyanu Kumar Shakya/Share and Care Nepal

From: Food security – Footsteps 77

Tools and ideas for improving food security

Agriculture has been neglected by many governments and organisations over the last two decades. Most development policies have promoted broad economic growth in the hope that it will bring widespread benefits. However, according to the 2008 World Development Report, this approach has failed in many countries – inequalities have grown and many of the poorest people, who live mostly in rural areas, are no better off than they were 20 years ago.

Organisations are now renewing their interest in rural development and the rural economy. These efforts have been boosted by concerns about the dramatic increases in food prices which caused riots in many countries during 2008 and by the threat of climate change to food security.

Agricultural marketing is a key issue that needs to be addressed if rural economies are to be revived.

Changing attitudes to traders

When food supply problems arise, people often complain about traders and middlemen, accusing them of making money at the expense of the hungry. Although exploitation and cheating does happen, not all traders are dishonest. In judging so quickly, people often fail to understand the traders’ situation:

  • Many small-scale traders are also poor.
  • Traders are responsible for transporting food to market which can be risky. Prices can fall after the trader has bought the produce from the farmer, and poor quality roads mean that food can be damaged during transportation. It takes time and effort to transport goods, and women traders face the additional problem of harassment.
  • It must also be said that farmers sometimes cheat as well!

Traders are vital in the chain that links farmers with consumers and their importance needs to be better understood by farmers, consumers and policy makers. For example, they can provide information, credit and inputs to places that government extension workers do not reach. Also, without traders, markets work less efficiently and everyone suffers – farmers get lower prices, customers pay higher prices, less food is available and the quality of food can be low. Where there is mistrust between buyers and sellers, food security is threatened.

Building co-operation between farmers and traders

Where government development policies have failed to reach rural areas, traders have the potential to help local development using the market system. Expanding agricultural markets can help to provide local finance, food processing and employment. As local agricultural markets expand, the trader associations that start to develop can take on responsibility for regulating markets and controlling exploitative practices.

The Royal Tropical Institute and International Institute of Rural Reconstruction have recently published a book entitled Trading Up which tells stories of African farmers and traders and how co-operation has helped them all to benefit. It shows how to create mutual understanding between farmers and traders by finding joint solutions to their business problems.

Key principles

From the case studies in the book, some key principles have emerged:

  • ORGANISATION Farmers and traders need to organise themselves if they want to improve their business. The decisions of most individual farmers and traders are too small to make a difference. But if they team up with friends and neighbours, they can support one another to strengthen skills, share technologies, combine products and services, learn about market demands, gain access to finance and negotiate with clients.
  • UNDERSTANDING Markets only function well if everyone involved in the chain respects the roles and needs of others. Farmers should understand that traders are vital for getting products to consumers and supplying inputs such as seeds, fertilisers and veterinary medicines. Traders should understand that farmers need good marketing conditions to supply the food that is needed and that they should be paid fair prices too.
  • SPECIALISATION Farmers do not often make good traders; traders are not usually successful farmers. Once traders and farmers recognise the importance of each other’s roles, they can save time by concentrating on what they do well and improving the quality of their products and services.
  • CO-ORDINATION As farmers and traders specialise, their activities need to be linked together. Information is important so that farmers produce what consumers want, and traders deliver the inputs and credit that farmers need. It is very important that these activities happen at the right time. For example, if fertiliser arrives too late the crop will be affected. To link these activities, communication and close working relationships are essential.
  • PARTNERSHIP The final stage in working together is to develop a shared vision and a joint action plan to identify new market opportunities and overcome problems together. Farmers and traders could lobby the local government for better roads and market stalls and for the provision of electricity for developing processing businesses. It may be possible to introduce or change local laws about how markets should operate, and how contracts are made between buyers and sellers.

Dr Nigel Poole is the Academic Programme Director of Agribusiness for Development at:

SOAS Centre for Development, Environment and Policy and London International Development Centre, University of London High Street, Wye Ashford, Kent TN25 5AH, UK

Email: [email protected]

This article is based on the book Trading Up: Building cooperation between farmers and traders in Africa, published by Royal Tropical Institute (KIT), Amsterdam and International Institute of Rural Reconstruction (IIRR), Nairobi. See Resources, page 15, for more information. 

Case study from Ghana

Ghanaian traders had been buying tomatoes from Burkina Faso and delivering them to the capital city, Accra, for many years. Unlike the Ghanaian farmers, the farmers in Burkina Faso allowed the traders to grade and select the tomatoes they wanted to buy. This enabled the traders to choose tomatoes that could survive the journey to the capital city.

Ghanaian farmers had been promised that a local processing plant would buy their tomatoes. Unfortunately the processing plant was not yet working. As the traders preferred to buy their tomatoes from Burkina Faso, the farmers were unable to sell their tomatoes, so they were rotting in the fields. The farmers started to protest violently against the traders.

To resolve the dispute a meeting between the traders and the farmers was organised by the local Security Council, the Ghana National Tomato Traders Association and the winner of the 2006 National Best Farmer award. The farmers apologised for their behaviour and a deal was agreed between the two sides. The traders agreed to buy a large quantity of tomatoes from the north of Ghana if the farmers allowed them to grade the tomatoes beforehand and only buy the highest quality tomatoes. A committee of traders and farmers was set up to negotiate prices each week. Another committee was set up to resolve any disagreements between the farmers and traders.

Since the meeting, tomato trading activities are better organised, traders do not have to travel as far and the relationships between farmers and traders have improved.

Role of the local church

The local church can make a huge contribution to overcoming poverty. One of its strengths is its commitment to improving relationships. In your community consider what the local church can do to:

  • bring together farmers and traders to talk with each other and to discuss how they can co-operate better
  • work with farmers and traders as they lobby local authorities to support local markets
  • share learning with other communities, using its networks.

by Nigel Poole

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