Linking farmers to markets

 By Jesse Anjen & Raghunath Ghodake

The emergence of globalization, competitive marketing, biotechnology and new information and communication technologies has presented exciting opportunities and new challenges in addressing the problems of farming communities and agro-industries. 

This is especially important in the areas of linking farmers to markets. Such linkages are necessary not only to create marketing efficiencies and getting benefits to producers and consumers but also to help provide the right signals for efficient use of resources.

The term “market” referred to here is not limited to physical facilities and market-place linkages. It goes beyond these to look into policies, technical support, value chain analysis, regional and international integration, agri-food systems, rural development and overall inclusiveness of smallholder semi-subsistence farming communities in developing countries. 

Farmers in Papua New Guinea are mainly semi-subsistence smallholders, cultivating small land areas for their own consumption needs as well as for cash incomes from market places. The existing marketing system is characterized by a large number of small producers or sellers and also a large number of buyers in local markets, with weak links to bigger markets and wholesalers. 

There is also a weak integration (both horizontal and vertical) between various types of markets. This has been imparting a high level of inefficiency and ineffectiveness in marketing processes, resulting in huge differences in prices paid by consumers and those received by producers. Secondly, as demand and supply are not effectively linked, farmers and consumers do not receive market responses which can be utilised for their production and consumption decisions.  

The problem of poor market linkages is further confounded by factors such as poor transport infrastructure, poor communications, poor produce quality, perishability, bulkiness and scale diseconomies, all resulting in poor and unremunerative prices received by the producers. Therefore a paradigm shift through to an innovative production and marketing system is essential. 

Linking farmers to markets becomes an integral part of such an innovative marketing system and will need to address the following areas:

1. Improvements in marketing infrastructure, support facilities, and various marketing mechanisms so as to reduce marketing costs, reduce market margins and improve market efficiency at all levels.
2. Attention is required to increasing production efficiency at the farm level through improved agricultural technologies, practices and systems so that cost of production is reduced and quality (including nutritive values) and output productivity are improved.
3. Concerted efforts are needed to understand and link all areas of marketing and transactions right through from production to consumption, covering both backward and forward linkages. This is to help provide better integration both horizontally and vertically so as to improve overall marketing efficiency. 
4. Research studies on demand and supply responses, as reflected in prices offered and quantities exchanged, are necessary in understanding and improving effectiveness and efficiencies of markets and marketing
5. Downstream (post-harvest) processing and value adding will not only help improve marketing efficiency but also help increase income levels of primary producers in rural areas.
6. Also important will be the areas of food quality, food safety, bio-safety and bio-security that will require special consideration by producers, processors, traders and consumers. Quarantine issues will have to be appropriately addressed and capture lucrative and niche markets.
7. In order to bring in scale-economies, there is a need to encourage farmers to form associations and co-operatives to deal more competitively and have better bargaining power in marketing. 
8. Trade reforms will have to be undertaken in light of the liberalisation of trade and the emerging trends to supermarkets chains. These are eminent challenges that PNG famers will have to face in the dynamic, competitive global market environment. 
9. Appropriate policies necessary to guide and encourage positive developments in the above areas will be paramount importance and need to be addressed at all levels of governance.

To conclude, success in linking farmers to narkets would depend on enhanced capacity at the national level for technological advances; new cost effective and resource saving processes that add value to products; farmers; capability enhancement including value chain analysis and improved market access; and entrepreneurial development of farmers. 

Engagement and partnership with the private sector is going to be the key for creating strong linkages and building the necessary trust and relationships along the supply chain.   

• Note: The authors are former employees of NARI.