Universiteit Gent Faculteit Landbouwkundige en Toegepaste Biologische Wetenschappen Vakgroep plantaardige productie




НазваниеUniversiteit Gent Faculteit Landbouwkundige en Toegepaste Biologische Wetenschappen Vakgroep plantaardige productie
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Marketing


(van Englen, 2000)


General



From independence until the early 1980s (when Tanzania started applying structural adjustment and market liberalisation programmes) there was only one channel leading from farmer to market: via primary cooperative societies (dependent on the Cooperative Union) through the various marketing boards (for export crops). Agricultural marketing has traditionally been divided between agricultural inputs, food crops and cash crops. What is referred to as food crops, are those staple crops destined principally for domestic and regional consumption (including maize, rice, wheat, sorghum, millet, cassava and potatoes). Cash crops are those crops grown principally for export outside the region (including coffee, tea, cashew, cotton, tobacco, pyrethrum and sisal). There is a third output group (including horticultural and fruit crops and non-traditional products such as flowers and spices) which has received relatively little attention, apparently on the grounds that these products are of less strategic importance. Although the intentions were good, the system led to inefficiency, poor prices for farmers and often delays in payment or even no payment at all. Prices were not market-controlled and set sometimes arbitrary with heavy government involvement.


After liberalisation, farmers were suddenly faced with many markets to sell their produce to and allowed to enter into agreements with individual buyers and bargain prices due to the presence of competition. Although there are many advantages of liberalisation there are also disadvantages as pre-planting prices no longer exist, secure marketing channels disappear and farmers are not cushioned anymore against poor world market prices where in the past the government might at times have carried the burden of world market prices lower than agreed framers’ price.


Nowadays the trade in major export crops, although there are private buyers, has to a certain extent still got an element of government control through the boards and the political system. The boards are supposed to make sure that everybody operates according to the ruling acts, but some interference is still occurring.


In the case of food crops the government does not have much influence over pricing. The primary societies play no role in the marketing of food crops. All crops are sold by farmers either at farm level or on markets. For most commodities, prices are usually lowest around harvesting time and increase to a maximum just before the next season’s harvest. Besides a time gradient in prices there is also a geographical gradient: the closer to a tar or all season road and/or major centre, the higher the price.


Marketing Strategies



The most important ‘market’ for the smallholder farmer was and still is home consumption. All his activities are geared towards achieving food security for his family. In the second plan comes the acquisition of cash in order to purchase the family’s other requirements and pay the various taxes, school fees, etc.


The next level of marketing is selling within the farmer’s village, to neighbours and small traders/agents. Most farmers do not actively venture beyond this level. They wait for buyers to come to the doorstep. Where in the past the primary society in some cases might have assisted in grouping farmers’ produce and looking for markets, this function of the primary society has long gone if it ever existed. Most buyers arriving in the villages are middlemen/agents for bigger buyers or bring the crop to the next marketing level which is the district level.


On district level, produce is sold on markets, to rice mills and middlemen/agents who bulk up produce and sell it. Marketing on regional and national level is concentrated in the major regional centres. Most companies use small traders to buy the crops and transport them to their central stores. Export marketing is mainly centered in Arusha, Mbeya and Dar Es Salaam for Tanzania.


Many of the crop flows are not well documented nor are they controlled. Therefore it is extremely difficult to establish which part of farm production is used for home consumption, consumption within district/region/country, or which part goes to industry and which part is being exported. There is cross-border trade which is not always legal and due to existing export restrictions, part of the export is not recorded.


A special type of marketing is the system whereby farmers and companies enter into production contracts or agreements. This is especially valid for products that are not easily marketed elsewhere because there only exists a small or very protected market (e.g. flower seed and bean seed outgrower contracts), because of stringent quality requirements for the produce (e.g. fresh vegetables for export) or because of certification of the production methods (e.g. organic farming). In other cases the need for processing makes that the farmer is bound to a certain buyer (e.g. sugar cane for sugar milling, paprika for oleoresins, fresh fruit for canning). Some markets demand certain socio-economic conditions under which the production takes place and are prepared to establish long-term relationships with the producers and to give a fairer distribution of profit made on the transformed produce between producer and buyer (e.g. fair trade coffee). Contract farming is further analysed in Chapter 4.


A farmer will have to develop his production and commercial strategy within this whole range of crops and marketing possibilities. There are organisations that can assist farmers to make such choices and facilitate the development of production systems under contract, such as FAIDA and TechnoServe in Tanzania and CLUSA in Zambia (see also Annex IV). However, such companies/organisations are not widely (re)present(ed) in these countries.


A farmer can choose from different strategies to maximise his/her income from the farm:

  • produce more per area, increase the area under cultivation and/or reduce production costs. This strategy is the one that has received most support from government institutions and development agencies over the years. However, it depends on the market whether this extra production eventually leads to increased income for the farmer or not. A good example is the decline in maize production in the south of Tanzania during the last ten years as NMC lost its monopoly and did not buy maize anymore against fixed prices. Farmers faced problems to market their produce and thus make good returns to pay for the inputs.

  • Improve marketing in order to get higher prices. This strategy is a relatively new one as the presence of various (legal) marketing channels is only something of the last 5 to 10 years. A true primary cooperative society or farmers’ organisation could demand a better price for the produce of their members because of larger amounts of product and/or (better) grading. It often pays not to sell right after harvest but to wait for prices to go up, especially with rice, beans and maize. This strategy is only possible when farmers organise themselves in groups, start grain banks (see section 3.2.7.), get access to credit, etc.

  • Add value to product through grading or processing. Due to a long history of only selling raw material it will take a major effort to show farmers the potential of this strategy.

  • Look for alternative crops and/or markets. If farmers, because demoralised with the results of existing crops, which is the case right now for cotton, coffee and tobacco, will start looking for alternatives, their choice will depend on their technical capacity to acquire new skills, the risk they can take and the support they get in venturing into new crops or markets.


Due to lack of information and because of the often numerous steps between farmers and final buyers, farmers do not always get what they deserve on a per kg basis because middle men calculate the price for bigger traders buying from them by adding up (sometimes) 50% on the price they paid to farmers. Farmers could get more for their crops if they would be more active themselves in looking for markets, developing marketing structures and if they would have access to more information about prices and markets which is easier for groups than for individuals.


But many farmers fail to meet the first requirement of attaining food security for their families for the whole year. A number of factors/causes can be seen: (1) funds are poorly managed due to lack of financial institutions; (2) too often returns are diminished due to bad terms of exchange as farmers have to borrow maize from traders to feed their families with future crops as collateral or they have to sell cattle for food when cattle is cheap and food expensive whereas they have to buy cattle when it is expensive whereas they get little money for their crops; (3) the sudden need to pay fees or taxes at times when there is no cash thus forcing farmers to sell cattle or stored crops at unfavourable prices.


District Councils could plan tax collection to be done in the period of the year that most money from cash crops is available in the villages so that people are not forced to sell cattle or crops at unfavourable times. Another solution for to avoid selling at unfavourable prices, is the establishment of grain banks (see section 3.2.7.).


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