Improving Agricultural Market Performance:
Creation and Development of Market Institutions
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Governments and between state and private entities. Alireza Bozorgi, a member of the Iranian
Expediency Council’s committee on agriculture, water and natural resources, has said that the
country “lacks a strategic vision that involves all key institutions…the Ministry of Agricultural
Jihad should coordinate its efforts with the Ministries of industry and trade, energy, economy
and finance as well as with the Central Bank of Iran, seeing that only a coordinated strategy
could pave the way for a healthy growth in the sector.”121
The Iranian position statement represents progress of a sort, but it addresses the public sector
exclusively and ignores the critical role of non-Government organizations like NOGAMU in
Uganda, and PISAgro in Indonesia. These are the kinds of structures that can increase the
market power of smallholder farmers and link them to the value chains of international
agribusiness companies. Their success depends to a large degree on appropriate Government
policy and institutional reforms.
As many countries’ experience of reforms illustrates, abrupt abolition of subsidies on fuel,
agricultural inputs like fertilizer, and food can lead to civil unrest as well as disruption of
agricultural markets and supply chains. These reforms, though essential, need to be phased in
deliberately and managed carefully. The alternative, as Iran’s experience illustrates, can result
in the huge savings on subsidy expenditures being siphoned off into political activities or
corrupt officials’ pockets rather than used to reinforce market institutions and social welfare
programs. Nigeria’s GES, described above is almost certainly a better model.
The difficulty of coordinating institutions and policies on a regional level is in many ways even
greater than that of achieving coordination within a single country. The potential rewards,
however, may be even greater. Africa is the least-integrated region of the world. Even within
the major trade blocs, intraregional trade accounts for a mere 10% of the total external trade
of ECOWAS and COMESA Member Countries and 15% of that of SADC countries. In North
Africa, the level of integration is even lower: only 2.7% of North African countries’ external
trade is with other North African countries, while in Central Africa, trade among ECCAS and
CEMAC countries is only 1% of Member Countries’ external trade. This compares to 72% for
the EU and 52% in Asia.122
Trade between countries belonging to different regional groups is minimal, especially since
neighboring countries that are not part of the same trade bloc may impose very high tariffs on
one another. Nigeria and Cameroon share a 2,000-kilometers border, but trade between the
two countries is minimal. Exports from Nigeria, a member of ECOWAS, to Cameroon, a member
of ECCAS and CEMAC, in 2016 amounted to US$233.1 million, or 0.7% of Nigeria’s total exports
of US$35.5 billion. Cameroon’s exports to Nigeria were US$40.8 million, or 1.9% of its total
exports of US$2.1 billion. This is largely explained by high tariffs: to pick one example,
Cameroon’s exports of meat products face a 34.96% tariff in Nigeria and other ECOWAS states,
as against 0% in other ECCAS and CEMAC countries.123
121 The Iran Project (2013), Iran’s need for agricultural reform, available at
Accessed May 2017].
122 NEPAD (2013), Agriculture in Africa: Transformation and Outlook, p. 43, Johannesburg: NEPAD.
123 ITC Trade Map (2017), ITC Trade Map, available a and Market Access Map
[Accessed May 2017].