Improving Agricultural Market Performance:
Developing Agricultural Market Information Systems
16
Onumah 2002; and COMCEC, 2017). The overall impact of the reforms on producers was rather
mixed and include the following negative effects (summarised by Onumah et al., 2007):• Producer margins were squeezed because of supply chains became elongated as a result
of entry by large numbers of small-scale traders as assemblers. The cost of assembling
produce in rural areas was also transferred from the parastatal marketing boards to
producers.
• Produce quality became rather uncertain and variable due, in part, to weak enforcement
of commodity standards by assemblers, who tended to trade in volumes rather than
quality. The consequent loss of quality premiums often implied lower household income
for producers.
• Access to markets became increasingly uncertain, especially because most of the small-
scale assemblers lacked trade finance and were unable to absorb large volumes at the
peak of the harvest. Farmers were therefore exposed to high levels of price variation,
both within seasons and from year-to-year, when guaranteed minimum prices were
abolished by governments.
This outcome is attributable in part to the fact that the neo-classical market model, which
underpinned reforms, had a major theoretical lacuna. The model presumed that market actors
generally trade on a voluntary and equal basis and are as well fully informed (Harris-White 1995).
Poulton et al. (1997) clarify this further by stating that it is presumed that all economic actors (in
this model) have complete information about all aspects of a transaction (or business), including all
costs facing their competitors. North (1995) adds that it is possible to market actors to know in full
the intentions of fellow actors and to anticipate the future with complete certainty.It is, however, evident that this idealised market model does not exist in any developing country
nor even in the most advanced free market economies. Indeed, transactors in most agricultural
markets face uncertainties in commodity trading due to lack of reliable information about the
volumes and/or quality of available commodities as well as the intentions of parties with whom
they have to transact (Hubbard 2003). North (1995) and others, therefore, argue that fluid market
transactions occur only when there are effective market-supporting institutions to reduce
uncertainty as well as transaction costs. Similar conclusions are reached in the recent study on the
role of institutions in improving market performance by COMCEC (2017). It is within this context
that the role of MIS in fostering efficient agricultural marketing is perceived in this study. MIS is
seen as a crucial institutional solution in addressing information asymmetry and other related
problems which create uncertainty and raise the cost of transacting in agricultural value chains.