Improving Agricultural Market Performance:
Creation and Development of Market Institutions
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the season when costs are at their lowest the overall cost of SNS purchases would have
been 11% lower – i.e., a saving of about US$400,000 per annum.
 SIE operations are concentrated in Bamako, the capital, which accounts for between
65% and 70% of total volume of rice put into or taken out of stocks. Purchasing
decisions for rice also appear not to take account of seasonal price fluctuations: most
purchases take place between January and July, but prices are at their lowest between
December and March. Though there is some overlap in purchasing schedules, FAO
calculates that if SIE had concentrated its purchases when prices were at their lowest
it would amount to annual savings of more than US$600,000. Put another way,
concentrating purchases in the seasons of lowest grain prices would bring in far more
grain to feed hungry people.
 SIE and SNS have had a minimal effect on price volatility for rice, millet and sorghum:
just 0.3% to 0.4%.
4.6 Reflection
OIC Member Countries and other countries have experimented with a wide range of tools and
mechanisms to stimulate agricultural productivity and production and to ensure food security
and price stability. Several main conclusions emerge from the foregoing discussion and
examples:
1. It is far more effective to treat agricultural market systems and financing mechanisms
in tandem, since reinforcing market systems increases the financial strength of
farmers, producers, processors, and traders, while improvements in agricultural
financing has a beneficial effect on the viability of the market systems. Furthermore,
the importance of interventions to mitigate risks throughout the value chain rather
than focusing on a single stage, such as primary producers, should not be
underestimated. Nigeria’s NIRSAL demonstrates both these observations.
2. Indeed, an integrated approach, involving multiple private and public sector entities
and treating the agro-food sector as a single, if complex system rather than as a
collection of unrelated sets of activities and institutions, is far more likely to deliver
positive impacts and operate with accountability and transparency. Brazil’s EMBRAPA,
Ethiopia’s ATA, Indonesia’s PIRSA, and Nigeria’s GES (all discussed in Chapter 2)
reinforce the lesson from the NIRSAL experience.
3. The necessary conditions for a successful warehouse receipt system include enabling
legislation and regulations, a regulatory agency, quality certification agencies and/or
standards, and participation of both private and public bodies. Tanzania’s and
Kazakhstan’s experiences with warehouse receipts show how such systems can work
successfully.
4. Commodity exchanges, similarly to stock exchanges, rarely work in countries with
small economies and low tradeable volumes of commodities (or financial
instruments). Commodity exchanges also require appropriate legislation, regulation,
accountability, and oversight, as well as infrastructure that can effectively deliver
commodities to markets.