1.1. Categorization by type of food sold
1.2. Categorization by function
1.3. Food marketing problems in African cities
1.4. Impact of inefficient urban FSDSs
Food marketing systems in African cities can be categorized by the type of food distributed and by the type of functions performed. The types of food categories are markets for local staples and others for imported food products. The categories classified by function are wholesale, retail and modern distribution outlets, such as supermarkets, self-service groceries and shops.
1.1.1. Markets for local staples
1.1.2. Distribution network for imported foods
Small-scale family farms provide the bulk of food to African cities. Although a few large-scale farmers produce specifically for the market, most small-scale farmers produce staples (cassava, maize, rice, millet, bananas, meat, milk, fruits and vegetables) primarily for subsistence and only the surplus is sold.
The marketing chain begins with trader-collector drivers who buy produce from rural markets or directly from individual farmers. The trader-collector drivers constitute the main link between geographically scattered small farms in rural areas and the distribution network of wholesale and retail markets in cities. They also sell directly to consumers. Produce is usually transported loose or in sacks by trucks that provide little protection against the tropical heat. It is common to find haulage trucks being used for sorting, packing and storage of produce in places where no wholesale markets exist. Standard weights, measures and grading systems are non-existent in the rural-urban trade of local produce, and as a result trading by sampling is predominant. Inefficient handling and high levels of deterioration and wastage, especially in the case of perishables, increase the cost and undermine the spatial marketing function in African FSDSs.
Wholesale houses play a leading role in the distribution of imported foodstuffs, which reach consumers through sub-wholesalers and retailers and sometimes directly. Government intervention has been much more pronounced in the case of imported foods, particularly through state control over import licensing and allocation of foreign exchange.
1.2.1. Wholesale markets
1.2.2. Supermarkets, self-service groceries and shops
1.2.3. Retail markets
Wholesale distribution can be defined as the activity that bridges collection from producers and retailers to end users or consumers. Although the wholesale sector is critical to efficiency in food marketing, most African cities do not have wholesale markets. It is often difficult to distinguish between wholesale and retail operations. Some activities that are considered retail are in fact sub-wholesale, for example, when large-scale wholesalers supply relatively small-scale wholesalers who are unable to purchase bulk quantities or to directly import. Small quantities are often sold to micro-retailers who resell to consumers.
Food wholesalers usually trade in a wide range of items, only rarely specializing, and often combine wholesale and retail functions. Their facilities tend to be widely spread throughout the cities. Trader-collector drivers are the main suppliers of local produce, either as independent operators or quite commonly as direct fixed commission agents. Apart from coffee (in Kenya and Burundi) and tobacco (in Zimbabwe) agricultural produce in Africa is seldom sold by auction.
It is apparent that restrictive market regulations constitute a major obstacle to the improvement of the wholesale food marketing system in Africa for both imports and locally produced processed items.
Most cities have a fairly large number of supermarkets and self-service groceries that stock mainly imported foods and locally produced or imported fresh fruit and vegetables. These “modern” outlets play a relatively minor role in the distribution of local staples (flour, cassava leaf, maize flour, millet, sorghum and rice) and are patronized mainly by relatively high income-earners (both expatriates and nationals). Small shops play a relatively more important role in the distribution of local and imported non-perishable foodstuffs as well as manufactured consumer goods to low-income households.
Food retailing takes place mainly in large central markets located in well-constructed structures and is controlled by the municipal authorities. Other retail markets are located in open spaces and lack basic infrastructure (concrete floors, drainage and facilities for sorting, storing, weighing and handling of produce). The municipal authorities depend on levies and tolls from these markets as a major source of revenue.
Box
1
Case study: Fruit and vegetable wholesale markets in Morocco
| The Rabat-Salé Company has two wholesale markets in Rabat and Salé. The Rabat market has a monopoly over supplies to the city, sanctioned by the 1962 law which specified that all goods retailed in the city must pass through the wholesale market (basically for tax reasons). The local administration levies an ad valorem tax of 7% on all wholesale transactions. The wholesale market was built in 1974 on a five-hectare plot in the outskirts of Rabat. It consists of three large structures, each with an open-air extension. As a result of over-subscription, which led to congestion, additional structures are to be developed. The market has no cold-storage facilities and handling is entirely manual. According to the market administration, the Rabat wholesale market handled 104 000 tonnes in 1994, although the total consumption of the city was estimated at 200 000 tonnes. This suggests either underestimation of the tonnage handled or significant evasion of the market monopoly. The latter would in fact seem to be the case, especially for vegetables. The quality and condition of produce vary considerably. The market is managed by a director and six representatives (one for each square), who act mainly as cashiers/tax collectors. Between 300 and 400 wholesaler-sellers renew their stocks on average every three days and sell an average of 1.5 tonnes per day. There are also broker-sellers, who work particularly for large-scale fruit-growers. There are between 1 000 and 15 000 professional buyers but it is difficult to estimate the number of direct consumers who buy from the market. Nearly all the professional buyers are retailers from Rabat or Salé, who purchase an average quantity of 350 kg of supplies three or four times a week. After a price is agreed upon, the seller issues a weighing ticket to the buyer who then pays the receipt officer employed by the representative in charge of a particular square. The representative issues a receipted invoice, which is checked at the market exit, and pays the amount received to the seller, less any tax due. Apart from the representatives, the market employs 60 agents. The wholesale market administration records the quantities and prices on the basis of receipted invoices issued. These figures, which are sent to the Interior and Agriculture Ministries, are never made public, therefore, producers and traders do not have access to them. The Casablanca wholesale market is the only market of national importance. Average marketing costs at the wholesale stage (from the producer to the Rabat wholesale market) vary between 27% and 64% of the gross margin, depending on the item and the season (being relatively low during the harvest season). Net margins tend to be high during the lean season. Analysis of the supply system reveals that wholesale markets operate under an outmoded regulatory system, which hampers their development and undermines their performance in the FSDS. Their role in the collection of taxes has been emphasized at the expense of basic wholesale functions. Facilities are clearly inadequate and there is no uniformity or consistency in produce quality. Consequently, prices lose any significance in terms of quality. This undermines transparent dealings in the market. Free circulation of market information is also hampered resulting in producers being poorly informed about market trends. This contributes to sharp inter- and intra-seasonal price fluctuations. The following actions are needed to overcome these constraints in order to enhance the role of wholesale markets in the efficient distribution of food, especially of fruits and vegetables:
Source: Gergely, 1996 |
1.3.1. Marketing infrastructure
1.3.2. Flow of market information
Retail markets in fast-growing African towns and cities are generally congested and inefficient, which leads to an increase in the cost of food distribution. These markets usually lack loading bays, sorting areas, cleaning and storage facilities as well as parking space. In many instances such markets do not have concrete floors or roofs and the standard of hygiene is rather dismal. These conditions encourage the mushrooming of unplanned kiosks and a growing number of itinerant hawkers in many cities. Hence, retailing in cities is characterized by an inordinately large number of micro-retailers competing for sales to low-income consumers.
The wholesale sector is underdeveloped and poorly coordinated. This is particularly the case in the distribution of local produce (especially perishables). Re-stocking by retailers is therefore time consuming since it involves buying from different, spatially dispersed sources. Consequently, FSDSs in most African cities are usually unable to cope with the demands of urban growth, particularly as transport costs increase. As a result, food procurement by urban households is time consuming and the quality of produce supplied is rather poor.
The flow of market information, including prices, between urban FSDSs and producers lags significantly behind changes in consumer demand in terms of quantity and quality. The uncertainty producers face as a result of this weakens their bargaining position in dealing with collectors, whose trading margins remain stable despite fluctuating farm-gate prices.
In an attempt to reduce these problems, the state intervened in FSDSs in many African countries by establishing marketing boards that engaged in the collection and distribution of farm produce and by imposing a number of marketing regulations including price and quality control. The interventions focused little or no attention on promoting modern, competitive and efficient private-sector food marketing systems. State interventions generally failed to enhance effective coordination of markets and hampered efficiency in FSDSs, resulting in erratic supplies and lack of competition in importation, bulk handling and distribution of staples such as rice and maize.
Information asymmetry characterizes the relationship between trader-driver collectors and producers, giving the former relative bargaining power. This is further strengthened by the fact that, in most food-growing regions, there are comparatively few collectors in relation to the large number of small growers selling small quantities of produce after meeting household subsistence needs. Lack of competition depresses farm-gate prices, distorting producer incentives and undermining growth and productivity in agriculture. The only way farmers can counter this situation is by forming associations or cooperatives that market produce on their behalf, which is taking place in some parts of Africa.
The lack of dynamic and well-organized FSDSs not only hampers growth and productivity in agriculture but also adds to distribution costs, thus raising household spending on food. Budgetary constraints faced by urban households as a result of this situation are particularly acute for low-income families. The inability of FSDSs to ensure the stable supply of good quality produce at affordable prices also has health and nutrition-related implications for urban households.
Box 2
Case study:
Fruit and vegetable wholesale markets in Kenya
| There has been far less state intervention and control of markets for fresh fruits and vegetables than for cereals and other non-perishable produce. There are several public fruit and vegetable wholesale markets in Nairobi, the oldest and best known being the Wakulima market located east of the city’s business district. Built by the Nairobi City Council in the 1960s, it was too small to keep pace with rapid population growth, leading to the development of other wholesale markets close to the more densely populated parts of the city. The largest of the newly established wholesale markets are Kawangware and Ngong supplying the western part of the city and Korogocho and Githurai, supplying the east. The most recent is the City Park market, which serves the newly developed suburbs, Parklands and Westlands, and neighbouring districts. In most of these wholesale markets, which are located next to retail markets, it is difficult to distinguish between wholesale and retail functions. There are only a few official regulations governing fruit and vegetable wholesale markets. Traders are usually charged fees to cover cleaning, water, electricity and road maintenance but the standard of these facilities and services is highly unsatisfactory. Source: Ngagi, 1995 |
