Improving Agricultural Market Performance

Creation and Development of Market Institutions

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history and culture. Livestock is a central element in the cultures of the Arabian Peninsula and

the Sahel. The social and cultural significance of agriculture in so many societies often gives

rural populations greater political weight than their contributions to national economies might

otherwise indicate.

Given the special place of agriculture in so many societies, it would be surprising, if

Governments were to prize market efficiency and liberalization above all other considerations,

and unreasonable to expect them to do so. And although some countries profiled in this

analysis – South Africa in particular – have pursued aggressive forms of liberalization with

considerable success, this does not mean that such policies are always and everywhere

appropriate.

Setting and implementing policies for the agro-food sector, even more than in many other

sectors, requires balancing of competing and often contradictory interests and objectives:

efficiency and social protection, rural and urban, tradition and innovation, high producer

prices and low consumer prices, openness to trade and protection of domestic producers,

among others. What this study has illuminated is the ways in which countries have sought to

address these challenges in an equitable manner, and the ways in which both public and

private sector agricultural market institutions have evolved in response to these often-

competing objectives. This study also illustrates the degree to which agricultural market

institutions everywhere are parts of a system in which these questions are resolved, both

through collaboration and cooperation and through competition and advocacy.

The direct observations of agricultural market institutions, obtained through the case studies

and surveys carried out as part of this study, together with the observations and analyses

obtained from extensive desk research and literature reviews, have led to several conclusions:

The Governments examined for this study all intervene in agricultural markets. The

question is therefore not whether intervention is warranted, but rather what kind of

intervention can produce the desired outcomes, and how Government and non-

Government institutions can interact most effectively to achieve those outcomes.

For the countries examined, the performance of agricultural markets is subject to the

influence of a great many institutions and policies, many of them only tangentially

connected to the agriculture sector. These include Ministries of Finance, Ministries of

Trade and Industry, and Central Banks, among others. These institutions in many cases

exercise a more substantial influence on market performance than institutions with a

specific agriculture-related mandate.

Given the many complex interactions among market institutions, their effectiveness

can be assessed only by looking at the entire system of institutions, and the position of

those institutions within a wider policy context.

Independent, private sector institutions are critical to the effective functioning of

market systems. Though Governments set and implement policy, the voice of non-

Government institutions is essential to help ensure that the right policies are adopted.

Robust non-Government market institutions such as sector associations cooperatives,

and exporters’ federations, are also essential if markets are to work effectively.