Improving Agricultural Market Performance:
Creation and Development of Market Institutions
8
Introduction
Well-functioning agribusinesses and agricultural markets that optimize the sustainable
production and distribution of food are essential for global food security. Furthermore, the
establishment of a prosperous and equitable agriculture and food sector depends on the
agricultural market environment.
A market system is made up of the functions of regulation, market, support, and the
organizations that perform them. Buying and selling, storage, transport and processing,
standardization of weights and measures, safety and inspection, financing, risk bearing, and
market intelligence are considered as the main functions of market. Besides, market systems
have fundamental sub-systems; production, distribution, consumption, and regulation.
Marketing of agricultural and food products necessitates special attention due to the unique
characteristics of the sector from both supply and demand sides. Government has a crucial role
in keeping the operation of markets orderly by using its key instruments. One of the most
common ways to ensure well-operated markets is to regulate them via public authority to
assure the fair and proper conduct of each player. Moreover, state has a responsibility to
provide safe basic agricultural and food products to its citizens at a reasonable price. Hence,
direct intervention to the market is another way to address market failures. Therefore, the
creation and development of agricultural and food market institutions such as regulatory
authorities, state-owned economic enterprises, licensed warehousing companies, industry
associations, and commodity exchange platforms are vital for smooth operation of markets in a
country.
Improving agricultural market performance is the heart of the economic growth in most of the
Organization of Islamic Corporation (OIC) Member Countries, especially the Least Developed
Countries (LDCs) member countries since agriculture plays a major role in income and job
creation. In this context, agricultural market institutions, as main contributors to economic
growth provide multiple functions to markets: they transmit information, mediate
transactions, facilitate the transfer and enforcement of property rights and contracts, and
manage the degree of competition. At this point, agricultural and food market institutions,
which are involved in all aspects of agricultural market sub-systems, have a crucial role to
eliminate distortions in domestic markets and to restore the agricultural market efficiencies.
The key objective of the present report is to show ways for increasing efficiency of the
agriculture sector and to contribute to food security in the OIC Member Countries by
improving agricultural market performance via the creation, development, enhancement, and
coordination of market institutions.
The purposes of the Study include:
 to present an overview of the current situation of the agricultural markets in the OIC
Member Countries;
 to examine each market channel in the agriculture and food sector, including
production, handling, storage, transporting, processing, packaging, and retailing;
o to identify and examine the agriculture and food market institutions which are
established by Government or with Government partnership in the OIC
Member Countries;