Improving Agricultural Market Performance:
Creation and Development of Market Institutions
27
The market institutions execute these functions across the agricultural market system’s
channels or stages, including:
 Production – Activities concerning the production of agri-food products, such as
planting, sowing, spraying, irrigating, fertilizing, cultivation, growing, tapping, tillage,
and harvesting. Key market participants include smallholders, farmers associations,
and input providers.
 Handling and storage – Post-harvest and collection activities required to prepare the
transformation of agri-food produce. Key market participants include large agro-
enterprises; smallholders; farmers’ associations; logistics, storage, and warehouse
companies; transporters; and traders.
 Processing and packaging – Includes primary and secondary value-addition
activities such as shredding, drying, washing, roasting, blending, brewing, grinding,
milling, creping, assembling, and packaging, Key market participants include
processors and machinery suppliers.
 Distribution and market – Includes distribution and transport activities to exchange
the processed agri-food products from processors to the market. Key market
participants include logistics companies, distributors, wholesale markets, and
exporters.
 Consumption and trade – Includes the final consumption of the product by rural and
urban consumers as well as exportation. Key market participants include domestic and
international consumers, retailers, logistics companies, and trading companies.
Finally, market institutions have specific roles and responsibilities with regards to the
adoption of more innovative, sustainable, productive, and efficient agri-food practices and
techniques. An organized and coordinated network of institutions and market participants is
required to facilitate their adoption, in which the role of agricultural market institutions is to
provide information, reduce information asymmetries, mitigate conflicts, and institutionalize
cooperation in the context of innovation systems.33
Institutional innovation is typically characterized by three stages:34
 Emerging institutional innovations – Piloting, testing, and pioneering with innovative
institutions. Nigeria’s Community-Based Farming Scheme (COBFAS) of the Federal
University of Agriculture, Abeokuta (FUNAAB) functions as an example of an
innovative program, which has been designed with the aim to link sustainable
agricultural practices with markets. COBFAS was established by FUNAAB, a specialized
agriculture-based universities with mandates of teaching, research and extension, in
December 2010. COBFAS revolves around a new approach of training agricultural
students by exposing them to current agricultural challenges through lectures,
practical skills acquisition sessions, practical attachments with farmers, and operation
of an organic produce kiosk where trainees’ products are sold. More than 60 modern
future farmers have been trained under the COBFAS.
33 FAO/INRA (2016), Innovative markets for sustainable agriculture - How innovations in market institutions encourage
sustainable agriculture in developing countries, pp. 57-280, Rome: Food and Agriculture Organization of the United Nations
and Institut National de la Recherche Agronomique.
34 Ibid