By Edward SeidlerThe world is increasingly becoming urbanized. Within the next five years the number of people living in urban areas will surpass that of people living in rural areas. It is projected that over the next twenty years 93 percent of urban population growth will occur in the cities in the developing world. Asian cities are currently growing at an average rate of 3 percent per year, compared to an overall population growth in Asia of 1.4 percent. However, these averages hide the fact that many cities are actually growing at over ten percent each year and that a large section of the new population, often resulting from rural migration to the cities, is living in absolute poverty and battling daily to meet basic food needs.
As urban growth intensifies, increasing quantities of food are being transported to cities from further afield. Unless timely improvements are made in food distribution infrastructure i.e. market and transport infrastructure and facilities, existing facilities will rapidly become over-stretched and inadequate to handle the increased produce flows. Congestion in and around markets leads to increased produce losses and high transport and marketing costs as well as higher food prices, which the bulk of the city population can ill afford.
The level of urban food security of a particular city is materially affected by the efficiency of the system supplying and distributing food within the urban area. The efficiency of the food supply and distribution system, in turn, depends on the efficiency of operation of those participants making up the system. The system as a whole is influenced by the availability of supporting facilities and infrastructure necessary for them to operate efficiently. Access to food, or the level of urban food security can be viewed from two perspectives. The first is physical access or the physical availability of the food needed by urban consumers. The second is economic access or the ability of the population to purchase the food they need to lead healthy lives. Economic access is in turn determined by the level of personal income and the price of food to be purchased. This paper, while raising issues related to physical access, will particularly examine issues related to economic access as they relate to the functioning and efficiency of the urban food distribution system and its effect on food prices.
For food to reach the urban consumer it must pass through many hands and often through a number of channels. Numerous participants are involved in a variety of marketing, negotiation and organizational systems. Each of these participants has its own need for infrastructure, services and legislative and regulatory support. The traditional sector comprises buyers of different types operating at different levels such as those buying at the farm gate, at local assembly and at retail markets or wholesale markets and selling to small shops, market retailers and street sellers or selling directly to consumers. The modern sector consists of large, often vertically integrated, distributors and agroindustry supply networks as well as national or international trading companies.
Those agents involved in buying, transporting, storing, marketing and distributing food to and within the cities are private businesses and individuals. The involvement of the public sector in food distribution is generally on the decline in most areas of the world following structural adjustment and market liberalization but food agencies handling and selling staple food grains do remain significant in a number of Asian countries. The activities of national food agencies often have a large impact on the development of private food marketing systems. This is particularly the case for staple cereals such as rice and wheat as the private sector is unable or unwilling to compete with state subsidised prices for grains, which are procured and distributed through prescribed channels. The involvement of the public sector (central government, municipalities and local authorities) in many countries now tends to focus on:
The capacity of municipal and local authorities to adequately plan and implement food marketing infrastructure and support services to cope with the rapidly rising food needs of their populations will materially affect the food security status of their populations.
What are the main components of the food distribution system in urban areas? First, food comes into cities utilizing a variety of transport modes: headloads, bicycles, hand and animal drawn carts, small vehicles, large trucks, trains, and river and seagoing vessels. All these modes need to be accommodated in terms of facilities and access. Second, the food is usually consigned to one or a number of wholesale markets either specialised markets for fruit and vegetables or grains or mixed wholesale markets or to specialised processing facilities such as mills, bakeries and slaughterhouses. Third, from the wholesale markets or processing plants, the food is consigned to a variety of retail outlets such as retail food markets, local food shops, modern supermarkets, informal and formal street sellers and fast food outlets, street food sellers and restaurants and various eating places. The functioning of these food distribution channels is governed to a great degree by the action or inaction of municipal authorities. The action (or inaction) of these authorities is often determined by the knowledge that these authorities have of the role and functioning of FSD channels, their importance and their requirements to function effectively and efficiently. Only then can the present and projected food needs of the urban population as a whole be met.
In most Asian cities the situation regarding the present performance and functioning of the various components of the food distribution system leaves much to be desired. Following this presentation there will be a number of workshops dealing with specific topics related to urban food distribution namely, wholesale markets, retail outlets, municipal policies for the informal food sector, fish marketing, food safety and nutrition issues related to street foods and waste utilization from markets and slaughterhouses. I will therefore not dwell on specific issues that will come up in the workshops but will confine myself to making some overall assessments.
Much of the food entering most Asian cities passes through wholesale markets of one type or another. Many wholesale markets are congested as new markets or the expansion of existing markets has lagged behind the growth in urban populations and the consequent increased product flows. Because of the time it often takes to plan and build new markets, these markets are often congested and inadequate to meet the needs of the market users within the first few months of opening e.g. Kalimati market in Kathmandu. Space and facilities available to handle the products are insufficient, wastage and spoilage levels are consequently high and conditions for produce handling are unsanitary. The increasing vehicle traffic cannot be adequately accommodated in terms of access, arrival and departure and parking with the result that severe congestion and delays occur, transport costs are high and produce wastage is increased. All this leads to higher transaction and marketing costs and ultimately higher food costs that are passed on to the consumer. The management of wholesale markets is another area of concern, causing or compounding the problems just highlighted. In many countries, wholesale market managers are inadequately trained in the efficient operation and management of their markets. Market supervisory boards and municipalities are often pre-occupied with short-term revenue generation objectives and deprive the market and its management of sufficient funds to maintain market facilities, let alone to improve or expand them. The involvement of market users is often absent in market management decisions contributing to the prevailing poor and often conflict-ridden management of markets.
It is interesting to note here the specific situation regarding wholesale market development and operation in a number of countries in the region. Hanoi has a population of some 5 million and of the five food wholesale markets in the city only Long Bien market was planned. The four others developed spontaneously. The latter markets operate along streets in the early morning with minimal market management. They are all now located in or close to the inner city, which makes it very difficult for food trucks to reach markets as traffic jams are the norm and parking space is insufficient. Market and storage facilities are inadequate and poorly maintained, although traders pay a market fee. As a result, food damage and losses are high (it is estimated that 15 to 20 percent of fruit and vegetable products are lost during transport and handling), quality of food is reduced, especially for fresh foods, and consumer prices are higher than they need be.
The city of Colombo in Sri Lanka does not have dedicated wholesale markets for foodstuffs with the existing three markets for grains, fruits and vegetables and fish conducting both wholesale and retail trading. Although originally established as wholesale markets the incorporation of retail activities due to inadequate planning of retail markets has meant that the markets are now severely congested and the whole area around and inside the markets is severely affected by traffic congestion during the morning hours. Buyers frequently spend over two hours in the market to purchase their requirements. Maintenance of heavily used facilities is difficult and the inadequate drainage has resulted in flooding and damage to road surfaces and market structures.
Following the liberalization of horticulture marketing in China in the 1980s and the commercialization of the former fruit and vegetable procurement, storage and marketing companies, a large-scale expansion of wholesale market facilities occurred. These companies had large open premises and storage facilities but, after reform, handled a much reduced throughput so many turned their yards and open storage spaces into ad hoc wholesale markets open to private sector traders. In addition many city authorities (e.g. commercial and industrial bureaux) embarked on the construction of a number of wholesale markets to cater to the increased number of private sector operators and farmers who were now directly involved in produce marketing. These new markets handled fruits or vegetables, fish and also processed products, each in specialised areas and were mostly constructed on the outskirts of the cities. As cities rapidly expanded and new ring roads were built, notably around Beijing, the formerly suburban wholesale markets found themselves within the enlarged city and subject to increasing traffic congestion and problems of access for both farmers and buyers. The problems subsequently led to the gradual decline in the number of large wholesale markets as their locations, which were their former advantage, were now being deemed inappropriate. This example raises the importance of adequately planning wholesale market development within a dynamic urban planning context, taking account of the projected growth of the city, its road infrastructure and the anticipated use of land surrounding markets. A minimum of ten years is the context in which potential market locations should be evaluated.
In most countries of the region the provision of wholesale market facilities for agricultural products is seen as the sole responsibility of city or local governments. Thailand would seem to be an exception to this with large private wholesale markets successfully operating in both Bangkok and Chiang Mai. Serious consideration must now be given to creating conditions that can promote private investments in market facilities. These investments are needed due to the increasing need for market facilities in the face of the growing quantities of products being consigned from rural areas (through assembly markets) to the cities (urban wholesale markets) combined with increasing financial constraints faced by local and municipal authorities. Local authorities need to consider making land available and granting planning permission for private sector market development with possibilities of joint ownership being considered to provide the initial impetus to private sector investment in market facilities.
In the more developed countries of the region such as Korea and Malaysia supermarket chains are rapidly developing to meet the needs of more affluent consumers. In these two countries there is a gradual shift away from procurement through wholesale markets to contract supplies from producers or producer groups to central distribution centres operated by these chains. A contributing factor to this trend in other countries is the congestion and related higher costs and difficulties of procuring supplies through the existing wholesale markets.
The retail sector in most Asian cities is very diverse, adapting to the needs of the clientèle to be served. The poor generally purchase their requirements exclusively at local shops, street markets, local fairs and from hawkers or local street sellers. The availability of local retail street markets, local shops and street vendors in the newer city areas (be they new suburbs or shanty towns) is often limited due to local restrictions on commercial activities or the failure to provide for these services during the initial planning of the new areas. How many high-density housing areas do not have any local shops or a local market because the planners did not consider that these needed to be planned for and land was therefore not set aside? In these cases the poor have to travel to the older centres to secure their basic food needs and incur higher costs in doing so.
Many retail markets in urban areas are congested, unhygienic and inadequate to cater satisfactorily to the numbers of vendors selling in them. Many have arisen spontaneously along roadsides or on small vacant pieces of land. Facilities are simple and mostly inadequate with no drainage or waste disposal, no parking spaces for delivery vehicles and no running water or hygiene facilities. Many markets have no managers and are not maintained, although local councils will often collect fees or levies. In some cases, municipalities will construct retail markets such as in Colombo, but they are often poorly designed and badly located. In order to save land, markets have sometimes been built as two and three storey buildings making access to selling areas difficult for both vendors and sellers and leading to dead areas in many markets. In consequence, pavement traders and weekly fairs are crowded while local markets built by the municipality remain under utilized or even partially abandoned. This situation is in evidence in a number of markets in Colombo and its surrounding areas.
Middle and higher income consumers in many Asian cities such as Bangkok, Beijing and Mumbai increasingly shop at conveniently located modern supermarkets and can easily access their supplies. Because of bulk buying and promotions, prices are often lower than in the traditional shops and markets. These people have transportation, can afford to buy the set quantities required, such as ten kg of rice or a kilo of tomatoes, and are looking for a wider range of commodities and higher quality products.
With the expansion of cities more and more consumers, especially lower income ones, have to commute large distances to work from their homes. The need to commute has given rise to a strong demand for both raw and prepared street food that can form a significant part of urban food consumption, sometimes representing over 30 percent of household food expenditure. The availability and cost of street food can have a significant impact on nutritional status both in terms of those who consume it and on the incomes accruing to those, mostly women, who sell it. Facilities, such as the running water, electricity and garbage disposal necessary for the safe vending of street foods, are often non-existent or inadequate. The lack of safe water supplies for food washing and preparation and for washing hands and dishes is often a source of food borne infections and illnesses. In some cities the importance of street foods as a low cost source of nutritious food and as a source of employment is receiving increased recognition and specific areas or facilities are being provided for street food sellers, such as in Thailand.
Most of what has been said above relates to problems confronting the existing food distribution system, which, in many cases, is unable to cope with the rapidly increasing urban population. If little or nothing is done to improve the functioning of the urban food distribution system the result, in the not too distant future, will be that urban families will face higher food costs arising from increased marketing costs as a result of greater congestion and higher food losses. More alarmingly, one will see increased malnutrition and higher degrees of urban poverty together with the related social and criminal consequences associated with food crises.
The situation elaborated above raises serious concerns over the existing and future urban food situation confronting cities in Asia. Now one must ask, What can city and local authorities do to meet the challenges confronting their cities and populations in terms of improving urban food distribution and thereby the urban food security of their cities?
Municipal and city authorities are required to:
Edward Seidler is the Senior Officer, Marketing and Farm Supply, in FAOs Marketing and Rural Finance Service, Agricultural Support Systems Division. He is an agricultural marketing specialist with a B.Sc. (Economics) and M.Sc. (Agricultural Economics) from the University of London. He started work as an agricultural marketing adviser in Africa in 1970 and joined FAO in 1974. Following thirteen years in the field, Mr Seidler moved to FAO Headquarters in Rome. In 1988, he assumed the post of Senior Officer (marketing) in charge of FAOs marketing programme in headquarters and the field. Mr Seidler has direct experience of marketing in Asia, Africa and the Caribbean having been involved in numerous marketing projects and studies and is a specialist on marketing development and on horticulture marketing.
Aragrande, M. & Argenti, O. 1999. Studying food supply and distribution systems to cities in developing countries. Methodological and operational guide. Food into Cities Collection, DT/36-99E. Rome, FAO.
Argenti, O. 1999. Urban food security and food marketing. A challenge to cities and local authorities. Food into Cities Collection, DT/40-99E. Rome, FAO.
Argenti, O. 2000 Food for cities. Food supply and distribution policies to reduce urban food insecurity. A briefing guide for mayors, city executives and planners in developing countries and countries in transition; Food into Cities Collection, DT/43-00E. Rome, FAO.
Balbo, M., Visser, C. & Argenti, O. 2000. Food supply and distribution to cities in developing countries. A guide for urban planners and managers. Food into Cities Collection, DT/44-00E. Rome, FAO.
Cullinan, C. 2000. Law and markets. Improving the legal environment for agricultural marketing. FAO Agricultural Services Bulletin No. 139. Rome, FAO.
Hugon, P. & Kervarec, F. Municipal policies for the informal food sector. Food into Cities Collection, Rome, FAO. (forthcoming).
Tracey-White, J. 1991. Wholesale markets - Planning and design manual. FAO Agricultural Services Bulletin, No. 90. Rome, FAO.
Tracey-White, J. 1995. Retail markets planning guide. FAO Agricultural Services Bulletin, No. 121. Rome, FAO.
Tracey-White, J. 2000. Market infrastructure planning. A guide for decision makers. FAO Agricultural Services Bulletin, No. 141. Rome, FAO.