Improving Agricultural Market Performance:
Creation and Development of Market Institutions
19
3. Quantity restrictions
Quantity restrictions can be imposed on both supply and demand side. These restrictions
typically include customs tariffs, trade restrictions, and import quotas fixed by the
Government. The Government of Sri Lanka operates a coupon distribution program in
response to the situation where domestic demands exceed domestic supply while import is
restricted through quantity restrictions.15 A number of African countries (e.g. Ethiopia, Guinea,
and Mozambique) and Transition Countries still impose quantity restrictions on domestic
production.
4. Public Sector Market Operations
Governments of many countries intervene in their agricultural markets through direct
operation of some elements of the agricultural market system. Governments, in order to
ensure food security, often develop, and operate, warehouses to store staple commodities as
well as essential inputs such as seed and fertilizer to ensure stability of supply and moderate
price fluctuations in times of shortage. Such activities may also include actual production
(typically through state-owned economic enterprises such as Government farms and
plantations), collection and consolidation of agricultural produces, transport, distribution, and
trade. Direct market activities also concerns the creation of marketing boards, which were
involved in marketing, processing, trade, transport, and logistics, and which enjoyed different
degrees of monopoly and monopsony power. Direct market operations – especially marketing
boards – are frequently implemented around the globe. For instance, countries in Sub-Sahara
Africa have a particular strong legacy when it comes to direct market interventions as many
countries were characterized by Government-controlled agricultural and food market systems.
Government intervention in marketing and production of basic staple food crops was strong in
Eastern and Southern Africa while export-orientated marketing boards ware particularly
dominant in Western Africa.16 Examples of countries where such intervention practices were
common include Benin, Cameroon, Ghana, Ethiopia, Kenya, Malawi, Mali, Uganda, Zambia, and
Zimbabwe where marketing boards ranged from relatively small and weak ones to strictly
nationalized industries, where private trade was banned altogether.17
Such direct market interventions are intended to - either directly or indirectly - fulfill policy
objectives such as food security, food self-sufficiency, moderate and stable food prices, and
support to rural incomes.
5. Public Support to Producers and Intermediaries
Governments typically provide a wide range of services to agricultural producers and other
market participants. These include market intelligence, agricultural research, quality
assurance, establishment and application of standards, quality certification. Nearly every
country provides such a form of public support to producers and intermediaries. For instance,
most Governments supported the creation of agricultural-specific research centers and
departments, typically under the supervision of the Ministry of Agriculture and part of a
15 Ibid
16 Sarris, A. & Morrison, J. (2010), Food Security in Africa: Market and Trade Policy for Staple Foods in Eastern and Southern
Africa, pp. 79-80, Cheltenham: Edward Elgar.
17 Lundberg, M. (2005), “Agricultural Market Reforms,” in World Bank Group (eds.), Analyzing the Distributional Impact of
Reforms, pp. 145-153, Wageningen: World Bank Group.