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Mr Two Percent, what hope do you have?

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Title Mr Two Percent, what hope do you have?
 
Creator Technical Centre for Agricultural and Rural Cooperation
 
Description The smart market information service (MIS) combines market prices with the farmer s savvy. We look at some success stories which have made some farmers very happy indeed, but how long can it all last?

We all have at least one, locked up in the cupboard of our memories. The Marketing Board. Remember it? It s not that long ago that they were being wound up, as part of the text-book practices and prescriptions of those fresh-faced visitors from somewhere out in outer space known as Structural Adjustment. How many shed a tear when their board folded? Did you?

Not that the Marketing Boards were really theirs, for they did not belong in reality to the individual farmer or trader. No, it was more the other way around, or at least seemed to be, if the truth be told. Normally the boards for all sorts of commodities - were statal bodies, some with private participation at the beginning, and many of them being gradually, or abruptly, privatised as their numbers were being written ever more clearly on the wall.

'At least you knew where you were with the board, though' is a common refrain to be heard in any discussion of a group of farmers when the talk turns to nostalgia. In an way of life that must seem alien to people below the age of twenty, they were part of the cradle to grave philosophy of an overbearing top-down economic approach. The board provided the farmer with seeds and tools, set production quotas, fixed prices, made loans, paid out fixed earnings, provided training and extension services and settled scores. Not only did the farmer know where he stood (the board tended to deal more with men than women farmers), but so did traders, processors and the Minister of Finance, who were assured in advance of prices and revenues. At times, it seemed that the only uncertainty was the weather, since even the most powerful board could not regulate that, though some may have wanted to do so.



Bye bye board, hallo market



And then, one day, the marketing boards were gone, and the market place stood unfamiliarly empty. Producers literally scurried for cover, like beetles from an overturned stone, uncertain of where, and on what terms, to buy their inputs and sell their outputs. Traders, more flush with cash and confidence than most farmers, were able to dictate prices for a while.

Gradually, market services were developed and put in place, often by enterprising former officers of the defunct boards or civil servants. In so doing they demonstrated yet again that wherever there is some sure supply and some tangible demand there is a market. And a market for market information services there surely was. It is a new way of organising what has to be one of the oldest professions in the world the middleman (or woman), the broker. Whether we are looking at the trade routes along the coast of West Africa, dominated for thousands of years by brokers from Benin and Phoenicia (Lebanon in today s terms), or the inroads made in the Horn of Africa all the way to the Great Lakes by traders from Oman and Gujarat, long before the first fresh-faced wave of European colonialism, or at the cattle and meat commodities markets in Brazil and the mid-West of America, you ll always find one on the first boat or bus in.

For many producers, processors and purchasers on the ACP food chain, the last two decades have seen more changes to their use of markets and market information than just the loss of stable prices and certain supplies. The dropping of tariff barriers and duties, and the overall liberalisation of trade has led to increased competition from producers elsewhere in the world. In essence, to be able to compete fairly is a fairer system, but such was the effect of the ingrained protection of marketing boards that their removal has led to squeals of unfair and unjust . In a very real sense, the emergence of MIS has helped to lessen the pain.

The rude awakening has led to the need for greater market alertness, and dealing with the associated practices of just-in-time delivery, and out-sourcing of products and services. With global, literally planet-wide, ordering networks and delivery chains now in place, it is possible for even a small and previously isolated ACP producer, or group of producers, to hook into distant markets. But you have to know how.

To maximise these opportunities, a smart producer will also want to follow trends in hitherto unknown markets. It is no longer enough to know the dead certainties : for a Kenyan fruit grower to know that the British have a massive surge in strawberry consumption during the June weeks of tennis at Wimbledon, or the Zimbabwean horticulturist to know that the annual peak of all flower purchases in Austria is in the week in September that secondary school examination results are announced. These dates are known years in advance.

More than that, a smart mango producer in, say, Mali, may want to know not only what fruits are in fashion in Europe this year, but what produce is being prepared for promotion next year? What are the Brazilians up to? A women s jam making cooperative in Grenada may want to know what the projected volumes of tourist arrivals are for the coming season not only in their own country but in neighbouring countries too. Is UNIDO helping a British supermarket owner set up a large jam factory that could spell doom for them?



Any level, any produce, but not any price



The task of an MIS is, therefore, much more than simply to provide price information to producers, and offers of supply to purchasers. As MISs establish themselves in most ACP countries, the first challenge is to define the scope of its coverage, in manageable amounts and periods. Scoring on the market place means exploiting your comparative advantage as a supplier, or being better informed than any other potential purchaser. An MIS can operate at any level, handle any type of produce or inputs, deal with any volumes; the more complex the demands of the trading parties, the greater the complexity of the system. The tendency is therefore to computerise, and to link up a local MIS with similar MISs in other localities, and with national and international networks. This can place an MIS under technical stress.

The converse can be true too, with highly capitalised MISs following the sadly repeated path of many development projects of being excessively ambitious, over-manned, over-financed and under-used. Several services in the Caribbean and West Africa run the risk of being coffee-table exercises, of no use to farmers or to traders in the market place. Yet again, with a more measured and modulated approach to project design, some basic market research and an understanding of local conditions, many efforts could be much better focussed.



Who pays in the end?



The prime challenge to establishing and keeping an effective and sustainable MIS is not in getting the technical mix right: it is in achieving financial viability. This is going to have to rely largely on generating income from its users, along the age-old lines of the market place. In some MISs, such as that operated by KACE in Kenya, the standard fee for brokering a transaction is 2% of the agreed sale price. With that sort of fee, there is obviously going to be a temptation for MIS operators to live from being a trading enterprise itself, or from sub-letting its facilities for other uses, or offering technical services. Fair enough, if it can be managed, but the clear risk is that the attention paid to necessary information will wane, and the quality of service to the stakeholder farmer will worsen.

Income from users, as with any network at a given stage of its development, depends on their satisfaction and continued loyalty . In that sense, the idea of providing value-adding services to price information is a sensible way to build up user loyalty, and thus turnover. The problem arises when users are savvy enough to do their own deals directly, without any broker service. When the MIS has no more tricks or special information up its sleeve, it will wither and die. That was not the point of all the investment made in these services. The next step, then, is to help MIS operators to adapt themselves to the changing market place and to stay one step ahead of the competition. Which is where they came in.



[caption to illustration]

Street markets work for mamas and middlemen, but there may be better deals on the trading floor



[caption to illustration]

I fixed my price through the MIS
The smart market information service (MIS) combines market prices with the farmer s savvy. We look at some success stories which have made some farmers very happy indeed, but how long can it all last?We all have at least one, locked up in the...
 
Date 2014-10-16T09:06:05Z
2014-10-16T09:06:05Z
2001
 
Type News Item
 
Identifier CTA. 2001. Mr Two Percent, what hope do you have?. Spore 96. CTA, Wageningen, The Netherlands.
1011-0054
https://hdl.handle.net/10568/46347
 
Language en
 
Relation Spore;96
 
Publisher CTA
 
Source Spore