Improving Agricultural Market Performance:
Creation and Development of Market Institutions
106
5.2.3 Effectiveness of Agricultural & Food Market Institutions
The precise impact of the selected institutions as described in section 5.2.2 on Tunisia’s
agricultural performance and productivity rates and the effectiveness of Tunisia’s agricultural
and food market is difficult to pinpoint. However, it is evident the performance of these
institutions has been considerably undermined by a withdrawal from the state and, hence,
Government control, since 2011, which has resulted in growing informal market channels at
the expense of formal wholesale markets like the municipal markets and the Bir El Kassaa
wholesale market managed by SOTUMAG. 199
High taxes and the large number of intermediaries and traders further impede the
effectiveness and control of the selected market institutions, as this has encouraged producers
to look for informal channels to market their products. Taxes may amount up to 17% for Bir El
Kassaa, while tax rates for other municipal wholesale markets are slightly lower.200
Consequently, the volume of products passing through formal market channels (e.g. wholesale
markets such as Bir El Kassaa and municipal markets) have diminished as agricultural
producers increasingly use alternative (informal) market channels to market their products
and circumvent fees and taxes.
This changing pattern has fueled a proliferation of market intermediaries,201 which, in turn,
has increased the inefficiency of market systems considerably, as commodity prices have
doubled or even tripled before reaching the final consumer.202 Suppliers and intermediaries
can increase their prices because farmers are in a lock-in situation and have no bargaining
power. This development challenges the effectiveness of the selected market institutions such
as SOTUMAG, the Inter-Professional Agricultural Associations, and the marketing boards as
they may further lose control and grip on the formal market and need to intervene at higher
costs.
Tunisia’s high level of protection for the agricultural sector has led to a strong need for
intervention in times of low agricultural production to limit the rise in prices through imports,
tax benefits, and customs concisions. Such constructions, however, have proven to be very
costly.203 There is no evidence available for the aggregated impact of the selected market
institutions. However, some data is available on the costs of market intervention via some of
the selected market institutions (e.g. Cereals Board and STS).
For instance, market intervention costs for the Cereals Board alone equaled more than US$600
million in 2014, up from just US$70 million in 2004, discouraging productivity gains,
innovation, new products, and adaption of new technologies.204 Furthermore, the STS has
recorded losses ever since 2004 and is confronted with serious issues of indebtedness
(US$11.5 million in 2010) driven by the rise of the world price of sugar with domestic selling
199 Nawaat (2015), Food Markets in Tunisia: State Institutions and Controls for Distribution Circuits of Agricultural and
Seafood Products, available a
Accessed May 2017].
200 Interview conducted with Ministry of Investment, Development, and International Cooperation in Tunis, May 15, 2017
201 Interview conducted with Institution de Recherche et de l'Enseignement Supérieur Agricoles in Tunis, May 15, 2017
202 Nawaat (2015), Food Markets in Tunisia: State Institutions and Controls for Distribution Circuits of Agricultural and
Seafood Products, available a
Accessed May 2017].
203 WTO (2016), Tunisia Trade Policy Review Report by the Secretariat, World Trade Organization: Geneva.
204 Ibid