Transcript M3S1 Markets and Enterprises Domestication Process

Markets and
enterprises in the
domestication process
Diane Russell, Steve Franzel &
Anand Aithal with friends
Trees & Markets
Overview of the session
Why do we need to know about markets?
 What do we need to know about markets?
 Market systems
 Market analysis
 Strengthening market linkages
 Talking to traders
 Enterprise and business development

Why do we need to know?
Domestication, improvement and diversification
involve choices, risks, resources and
investments
 Investments should pay off provide better
returns to labor and build rural economy
 One way for investments to pay off is for trees
and tree products to be sold and/or be sold at a
better price (improved quality, consistency)
 Choice of species has to consider market
potential (current and future)

What do we need to know?
How are people using tree and tree products?
 What outlets exist for sales of these products at
what levels?
 [How] can these products be transformed to add
value? By whom?
 How are producers organized and [how] could they
be better organized?
 What traders, merchants are involved?
 How is the market system organized?
 What are the future prospects?

Elements of market systems

What kind of product?
Subsector groups different commodities/products
 Commodity (raw graded)
 Quality issues & certification
 Product (what level of processing or finishing?)
 Service (environmental, tourism)
 Restricted broad consumer base
 Multiple products and consumers

Elements of market systems

What is the marketshed?
Local (stakes, firewood, pulpwood)
 Sub-regional/national (charcoal, timber)
 International (hearts of palm, marula liqueur)

Dispersed production/sales (NTFPs)
 Concentrated (coffee)

Elements of system

People








Producers and producer groups
Transformers, processors (e.g., craftspeople)
Traders, middlemen, merchants, shopkeepers
Bulkers, wholesalers, distributors
Manufacturers
Retailers, vendors
Salespeople
Consumers
Services and inputs
C O N S U M E R
Fresh local market
and vending :
Domestic and
catering market
55%
Fresh fruit
salad and
juice market;
Vending
carts
5%
Local Processed
product outlets;
supermarkets, shops,
kiosks caterers
30%
Processed
export
products
market
5%
Wholesalers/
distributors
Exporting
firms
MSE processors Medium
(Incl. sun-drying) scale
processors
Large scale
processors
Middlemen
Small and medium scale farmers
Losses (losses/ unmarketed produce - 15%)
PRODUCER
Mango Marketing Chain
Courtesy of TechnoServe, Kenya
Export services,
advertising and
promotion.
Transport,
warehousing
services.
Technology,
packaging,
ingredients, utilities,
labour management,
finance, certification
Transport, labour,
finance.
Agricultural research
(KARI), Extension
and training
(MOALDM and
HCDA), farm inputs,
transport, packaging
Elements of system

Institutions and policies






International trade bodies
National rules and regulations on markets
(e.g., licenses, restrictions)
On specific markets and commodities (e.g.,
charcoal, timber)
Regulating boards
Trade associations and guilds (e.g., timber
manufacturers’ association)
Regulations governing associations and
enterprises (e.g., farmer groups
registration)
Elements of system

Infrastructure







Common areas and their management
Market spaces
Road and other transport systems
Irrigation, water delivery
Processing equipment
Marketing and business
development services
Extension services
How systems work

Market “imperfections” are the rule not the
exception
A perfect market matches supply and demand with
price equilibrium
 “Imperfections” come from imperfect information,
inequities in power among actors,
monopolies/monopsonies/cartels, rules and
practices that encourage rent-seeking behavior
 But it is not true that middlemen and traders always
exploit farmers they play an essential role

How systems work

Market development starts from demand and
not production
Producing more of a commodity or product can
be a disincentive if there is no market outlet
 If the aim of domestication is largely for market
sales, strategies need to be developed with
actors in the trade
 Consumers have to be well understood

How systems work

Market systems change rapidly
Diversified options are necessary but this
strategy faces commodity chains that demand
large numbers of products of specified qualities
 What is the role for market analysis and
information market intelligence?
 What information can be obtained readily?

Value addition

Ways to add value







Selection, grading
Preservation (e.g., boiling
rattan in oil)
Transformation
Creation of product (e.g,
basket)
Assembling (parts of a
product)
Increasing market
intelligence
Negotiating and facilitating
market linkages
Market analysis

Analysis

Information systems

Market intelligence (active, futureoriented)
Market analysis

Is only useful if it is used! What is the purpose?
Prioritization
 Scoping (for partnerships)
 Seeking key intervention points (Policy?
Information? Quality improvement?)
 Comparing across regions or sub-sectors
creation of methods and tools

Market analysis

Varieties of analyses
Academic-quality studies emphasizing economic
analysis (e.g., studies of NTFPs in Cameroon)
 Rapid market appraisals of one product/species
(e.g., tamarind study)
 Studies of markets (“arrays” of goods found at
different market sites and levels)
 Studies of market systems analyzing roles of
different actors (e.g., smallholder timber in Meru)

Market information

Many market information systems on the web
e.g.,http://www.foodnet.cgiar.org/market/
Tropical Commodities and their Markets
A Guide and Directory
by Peter Robbins
Published by TWIN 1995
ISBN 0 7494 1672 0
PART ONE
1.1 Markets for Tropical Products
1.2 Exporting tropical products
1.3 Trading Commodities on Future Markets
1.4 Volatile Oils
1.5 Natural Fibres
1.6 Fruit and Vegetables
1.7 Spices
PART TWO
DIRECTORY OF COMMODITIES
PART THREE
USEFUL ADDRESSES
Market information

A big challenge is to get information to end-users
Radio
 Newsletters and bulletins
 Networks and associations
 Extension???
 Workshops and trade fairs
 Mobile phone options

Market intelligence

Analysis and information (collected over time) used to
create strategies for existing products



Add element of marketing
Add element of partnerships
Scenario development




What are the future demands and needs?
What areas, producers are well positioned to meet needs?
What policy changes might affect products (e.g., chemical
use, GMOs)
Additional problems facing tree products