Improving Agricultural Market Performance:
Creation and Development of Market Institutions
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5. Markets tend to perform better when institutions harness market forces to serve social
goals and try to make markets work more effectively, than when they try to supplant
market forces with uneconomic and ultimately unsustainable controls.
6. Both Government and non-Government market institutions tend to be most effective
when their interventions focus on transmitting information, mediating transactions,
reducing volatility in commodity markets, facilitating the transfer and enforcement of
property rights and contracts, managing competition, increasing the market power of
producers and exporters, improving product quality, and, above all, eliminating or
mitigating market failures.
These conclusions form the basis for a number of specific recommendations that are
differentiated with respect to the following subjects:
 Farmer registration;
 Institutional coordination & human capacity;
 The role of inputs;
 The role of warehousing;
 Traceability and standards;
 Research laboratories; and
 International collaborative efforts.
6.2 Recommendations for National Efforts
There is considerable variability of sophistication, size, and capabilities among the food and
agricultural market systems of the OIC Member Countries. Even the approaches to market
institutions may vary greatly. For example, Tunisia has quite a range of market institutions
which facilitate the implementation of its agricultural price support measures and regulations
such as subsidized inputs, guaranteed minimum prices, and direct market intervention. UTAP
has the ability to directly intervene in the market in collaboration with the Inter-Professional
Agricultural Associations and private sector in order to balance supply and demand of the
market, guarantee reasonable prices for the farmers, and ensure regulatory stock (i.e. control
and location of stock per governorate). SOTUMAG manages the largest wholesale market of
Tunisia, where the country’s circuits of agri-food distribution are consolidated and unified
through monitoring and regulatory enforcement mechanisms. SOTUMAG’s mandate also
concerns diffusion of the standard for prices of products. Marketing boards have a relatively
strong market interference power, as they can negotiate this price freely, thereby guaranteeing
a certain minimum price (i.e. ONH) or buy common wheat and durum at prices set by the
Government while selling domestic and imported cereals at fixed prices to processing facilities
(i.e. OC).
In contrast, the agricultural market system of Uganda is to a great extent liberalized and
market institutions are only responsible for promotion, extension services, and (some)
regulatory and promotional functions (e.g. marketing board such as UCDA, DDA, and CDO).
Government intervention in the agricultural and food market in Uganda traditionally included
a number of participants, particularly some concerned line Ministries and their marketing
boards and state-owned economic enterprises. The Government of Uganda followed
international developments and trends with respect to market institutions and started large-
scale privatization of its agricultural market institutions (particularly marketing boards and