Sweet potato supply chain and cost involved

 By Eleo Dowa

 Last week we highlighted that there are severe impacts faced by farmers along the supply chain and that is from the farm to the market. 

The two issues that were discussed were improper post-harvest handling techniques of sweet potatoes and the absence or lack of storage facilities to contain them.

Today we discuss cost another factor that contributes to the value of sweet potato.  

In the Australian Centre for International Agricultural Research funded (ACIAR) sweet potato mapping study carried out by the National Agricultural Research Institute (NARI) and Fresh Produce development Agency (FPDA), we noted that cost of marketing contributed to the reduced value of sweet potato at distant coastal markets.

There was a trade-off for quantity over quality during delivery. 

Although most farmers understood the damage caused to sweet potato during transportation, they continued to pack an average of 90kg bags in order to maximise their returns. 

Over-packing increased the likelihood of losing the entire bags and even shipments from the post-harvest damage.

The costs of handling and transport increased when sweet potato was hauled over poor roads and using inefficient transport services. 

Farmers were dependent on haulers arriving by chance without prior arrangement made. 

Waiting time at roadside locations without proper cover from the weather allowed further da­­mage to the sweet potatoes. 

Bags of fresh produce sitting on the side of the Highlands Highway are a common sight that has to be addressed 

When transport arrived the farmers paid for space on the empty containers hauled by semi-trailers or by open-back trucks so that they could deliver their bags of sweet potatoes to Lae market or elsewhere. 

The study found that farmers from Western Highlands paid K10-K18 per bag, while Eastern Highlands farmers paid K7-K15 per bag. 

At the shipping yard farmers were charged K27.50 per bag. 

This was the highest of all costs along the supply chain. 

At the transit points, farmers continued to pay for manual loading and unloading by carriers at K2 per bag. 

There was a further waiting time at Lae’s main wharf that the farmers had no control over because of the shipping schedules.

Finally, when the sweet potatoes arrived at destined markets, they paid up to K5 for storage space, K3 to access market premises and paid for their own living expenses for a week or two weeks to sell their bags of sweet potatoes.  

It was estimated that a weekly delivery of sweet potato to Lae Main Market and Gordon’s Market in Port Moresby was between 800 to 2400 bags, at an average weight of 80 to 100kg per bag. 

This volume of sweet potato delivered to market was inclusive of losses along the supply chain. 

The prices at which farmers recoup all their costs were estimated to be K133 and K57 for sweet potato sold in Port Moresby and Lae respectively. 

The regularly observed prices per bags were K100 (over-supply) or K150 (under-supply) for Port Moresby, varied widely from K45 to K80 for Lae. 

The retail price of sweet potato varied greatly between locations depending on proximity to production areas, better road networks and transport systems. 

The price of sweet potato in Port Moresby is typically two to three times that of other main towns in the coastal areas (Lae, Madang, and Rabaul). 

The price difference is usually reflected in the number of sweet potatoes sold in a heap because sellers do not sell on a weight basis.

Due to this factor, the sum of all these costs for marketing sweet potato at distant markets is considerable and passed on to the consumer.

To improve the value of sweet potato for long distance markets it is appropriate for farmers:

• to monitor the market closely until the market price is higher than the breakeven price; 
• farmers try to reduce the costs by hiring an agent in Lae or Port Moresby rather than going to the markets themselves; 
• farmers consolidate their bags with other farmers to take advantage of economies of scale in marketing; 
• farmers sell in bulk to re-sellers to avoid spending more time away from home than is necessary, and, 
• Farmers sell to local buyers and avoid all the costs associated with going to the market themselves.