Improving Agricultural Market Performance:

Developing Agricultural Market Information Systems

in commodity trade. In addition, the participating farmers’ organisations were supported to

invest in aggregation centres, which facilitate direct trade with large-scale buyers whilst

reducing the involvement of multiple layers of middlemen. Collective marketing was also

encouraged as a means of enabling SHFs to meet the minimum volume requirements of large-

scale buyers. Farmers also had their capacity enhanced in order to enable them to comply with

trade-friendly commodity standards which prevail in the formal marketing system.

Box 3: Lessons from 2GMIS in Tanzania and Zambia

Under a project titled Farm Risk Management for Africa (FARMAF), which was funded by the

European Union, support was provided to enhance MIS accessible smallholder farmers (SHFs). The

support provided included investment in computing technology, training of requisite staff, and

fostering collaboration to allow for effective crop forecasting. In addition, specific efforts were made

to link the MIS to commodity trading systems, especially with the aim of promoting access to

remunerative markets for SHFs. A review of the systems which was undertaken towards the end of

the project showed that farmers can gain from accessing reliable market information – the gains

could exceed 25% of household income obtained from alternative crop marketing systems at the

farmgate. However, it emerged from the review that the gains did not emerge from just reporting

ex-

post

price data, but also including reliable forecasts of supply and demand, which in Zambia, for

example, made it possible for farmers to enter into credible forward contracts for the sale of their

crops. The forecasts provided also proved highly beneficial to policymakers, especially in formulating

and implementing food security interventions.

The review also highlighted major challenges in running an effective and accessible MIS, including

the following: standardisation of weights and quality helps to set the reported prices in context,

allowing farmers to determine not only what to grow but also the type of quality products they intend

to market and the buyers to target. Also noteworthy from the review is evidence indicating that MIS

is not only important for bargaining by farmers and traders but also crucial in developing efficient

structured trading systems and in fostering innovations in agricultural finance. Furthermore, it

emerged that developing MIS as bespoke actions is likely to produce suboptimal outcomes unless

linked with the development of other markets (e.g. reliable inputs distribution networks, transparent

output markets as well as accessible credit markets). Sustainability remains a major challenge,

especially where quality and reliability of the content, as well as the timeliness of dissemination,

hinder the build-up of commercial demand for information.

Source: NRI (2017) “FARMAF Final Narrative Report”, October 2017.

In the specific case of MVIWATA in Tanzania, the MIS was directly linked to the promotion of

structured marketing involving investment in physical infrastructure for drying, cleaning,

weighing and grading which contributes to transparent trading in grains. The grain price

information notice board (Figure 11) is sited at a rural grain assembly market which is also

equipped with drying, cleaning, weighing and grading facilities and attracts traders from major

urban markets in Tanzania as well as others from neighbouring Kenya.

In terms of content, the MIS run by the ZNFU includes crop forecasts generated through a pilot

scheme involving the application of remote-sensing technology to monitor crop performance

situ

and without the traditional

crop cut

survey. Forecasting through this process was more

timely and allowed farmers and major buyers to negotiate credible forward sales contracts. The

MIS run by ZNFU is also linked to a financing programme for farmers with a package including

crop insurance; direct access to farm inputs fundedwith commercial credit at highly competitive

interest rates; and assured crop marketing arrangements including forward contracting.