Improving Agricultural Market Performance:
Creation and Development of Market Institutions
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university or college, typically mandated to provide extension and training services to small-
scale farmers. Moreover, most Governments established dedicated food quality certification
bureaus, services, and organizations to certify domestic food producers (e.g. for Halal and
organic food), complementing international certification bureaus in order to comply with
global food safety initiative schemes.
Governments implement these five types of agricultural market interventions to achieve
agriculture and food policy objectives. To administer these interventions, Governments have
established market institutions such as state-owned economic enterprises, marketing boards,
commodity regulation authorities, extension services, animal health and plant protection
services, public warehouses, the union of Chambers of Commerce, commodity exchanges, and
state-owned agricultural finance institutions. Many Arab countries, especially those with
persistent food production deficits and high import requirements, have historically had
Ministries of Supply or similar Government bodies responsible for purchase, storage, and sale
of (mainly agricultural) commodities. Indonesia has a Ministry of State-Owned Enterprises
which, among others, is responsible for managing agricultural market institutions, while
Turkey also has specific Government agencies to administer its state-owned economic
enterprises. More recently, however, many countries have phased out these institutions in
favor of more market-based mechanisms as will become clear in Chapter 2.
1.3 Introduction to Agricultural & Food Market Institutions
The first two Sections of this Chapter framed the context of agricultural and food market
institutions in they introduced the characteristics of general markets, market systems, and
market participants (Section 1.1), after which the nature of agri-food markets, market systems,
and market participants (Section 1.2) are explained, as well as the motives and forms of
Government intervention in agri-food markets.
This Section specifically elaborates on this background as it explores what kind of agricultural
market institutions are used by Governments to implement the five forms of market
intervention as identified in Section 1.2.3 (i.e. input subsidization and taxation mechanisms,
output price control mechanisms, quantity restrictions, public sector market operations, and
public support to producers and intermediaries). It briefly describes nine key groups of
agricultural market institutions, after which six are selected given their exact purposes with
respect to market intervention.
1.3.1 Purpose and Types of Agricultural & Food Market Institutions
Agriculture and food market institutions may directly intervene in markets in several ways.
Regulatory authorities can set and enforce the rules by which markets operate while other
institutions ma act as direct input suppliers, commodity producers, exporters, importers,
wholesalers, or warehouse operators. They often provide a wide range of facilitation services
and market platforms, including agricultural research, extension services, standards bureaus,
inspection and protection services, commodity exchanges, financial institutions, and marketing
boards. And they often intervene in markets by directly producing, imposing price controls,
and providing price supports and subsidies, which often constitute the bulk, in monetary
terms, of Government intervention in agricultural markets.