Improving Agricultural Market Performance:
Creation and Development of Market Institutions
24
agriculture and climate change research institutions on overall research programs and
specific research projects.
There is, finally another category of institutions that are not specifically focused on agriculture
or food but which strongly influence the operation of agro-food markets. These include
Ministries of Finance and associated tax and customs administrations, which set and
implement fiscal policies, and apply tariffs and quotas on imported agricultural and food
commodities. They include Ministries of Trade and Industry and/or Ministries of Investment,
which negotiate and implement multilateral and bilateral trade and investment agreements,
and which govern industrial and agricultural investment and are usually responsible for
company registration. They include Ministries that govern land use planning, rural
development, water, and local Government. They also include Central Banks, which set and
execute monetary policies that may cause a currency to appreciate or depreciate, either of
which may affect the price of imported agro-food commodities and agricultural inputs and the
competitiveness of agro-food exports. They may also include Ministries of Transport or
transport regulatory authorities, which may influence the cost-competitiveness of domestic
and international road, sea, rail, and air transport of commodities.
This study, however, will only focus on a specific classification of six agricultural market
institutions that are the direct institutions used to implement agricultural and food policies
and also the main focus of this Study:
1. Commodity market regulation authorities
2. Cooperatives,
3. State-owned economic enterprises
4. Marketing boards
5. Licensed public warehousing companies
6. Commodity exchange platforms
These six types of agricultural market institutions are actively engaged in agricultural markets
to concentrate the bargaining power of agricultural and food producers, produce and
disseminate market intelligence, develop and administer infrastructure and facilities, support
technological improvement, encourage and support agricultural investment and trade,
increase the competitiveness of domestic and international agri-food market systems, mitigate
price and financial risk to producers, stabilize commodity prices and ensure adequate food
supplies.
As mentioned in Section 1.2, agri-food market institutions are instruments to implement,
apply, and administer Government interventions in the agricultural market, which, in turn, are
needed to address market failures and imperfections. The six selected agricultural and food
market institutions have been typically established with the purpose to respond to address
specific market risks, failures, and vulnerabilities: 29
 Price volatility – Government agricultural market institutions seek to minimize the
effects of volatile commodity prices on farmers’ income and productivity.
29 Lundberg, M. (2005), “Agricultural Market Reforms,” in World Bank Group (eds.), Analyzing the Distributional Impact of
Reforms, pp. 145-153, Wageningen: World Bank Group.