Improving Agricultural Market Performance:
Creation and Development of Market Institutions
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operate with insufficient knowledge of how the system works and how to get things done
within the system.
Hence, human capacity development of both agricultural market institutions as well as of other
Government entities should become a policy priority. The provision of high-quality services,
proper communication with agricultural market participants, other Government officials,
potential investors, and the business community, and accurate representation of farmers and
their interests requires human capacity development of agricultural market institutions staff
in order to understand the current circumstances and challenges of the agricultural market
systems and how to anticipate and address these. Similarly, human capacity development of
other Government officials should contribute to bridging their unawareness and lack of
knowledge of agricultural market institutions, their mandates, functions, activities, and
services, eventually improving inter-Ministerial coordination and collaboration.
To overcome these difficulties in communication and coordination, countries should consider
establishing a high-level commission or authority on which all stakeholder groups from
Government and the private sector are represented. Such a commission would serve both as a
policy advisory body and a forum for public-private dialogue. For some reason, such
commissions are common for issues of investment or private sector development, but much
less so for agriculture. For such a commission to work effectively, it should ideally be
constituted under the authority of a Prime Minister or President; otherwise it may be under
the tutelage of the Ministry of Agriculture, which is likely to carry less weight than other
Ministries such as Finance or Industry. Within such a commission, various subsector- or issue-
specific working groups should be constituted, which will carry out more detailed analysis and
negotiations, and which are likely to meet more frequently than the full commission (though
the full commission should probably meet at least semiannually, if not quarterly). A Secretariat
to the commission should also be appointed, a function which could be fulfilled by a policy unit
in the Ministry of Agriculture.
In this sense, Indonesia’s country case study may provide inspiration for other OIC Member
Countries. Food Law 2012 has initiated the establishment of a National Food Authority in
response to fragmented statistics, data discrepancies, and conflicts of interest among various
Ministries. Moreover, integrating human capacity development and institutional coordination
may require an OIC-wide human and administration capacity development initiative, where
good practices and lessons can be shared and institutional coordination fostered.
6.2.3 The Role of Inputs
Develop means by which the access to quality inputs (e.g. seeds, pesticides, fertilizers, and
other key ingredients) may be assured, thereby improving the quality and market
acceptance of end products.
Many smallholders and small-scale farmers are now challenged by limited access to high-
quality, certified inputs and often only have access to low-quality or even fake inputs (e.g.
fillers or substitutes that are not the actual purported materials). Content of such inferior
inputs in agricultural products may even be banned in other countries and export markets,
hence reducing market access and export opportunities of smallholders using these inputs.