The objective of the Mini Roundtable Meeting was to establish priorities for FAO’s programme of work in agricultural marketing for the next few years in Asia and the Pacific. The recommendations that emerged from the meeting are based on several considerations. First, up until now government intervention in regional agricultural markets has been pervasive. As most of the countries in the region are increasingly liberalizing their international trade regimes, it will be important to simultaneously reduce government intervention in domestic markets. Second, although commitments made by these countries under the Agreement on Agriculture under WTO require the reduction of the supports being provided to their agricultural sectors, there is considerable resistance in these countries to dismantling the supportive policies that have been in place for so long. Sharing of experiences about the impact of various policy instruments may help some of the countries to properly sequence their agriculture sector reforms. Third, the problems of poverty and food insecurity continue to characterize these countries. This requires the appropriate meshing of liberalization policies and poverty reduction strategies. Fourth, the marketing infrastructure in several countries continues to be far from adequate. However, the creation of physical infrastructure is capital intensive and most of the governments are unable to invest at the required scale. They are, therefore, required to create an enabling environment for attracting private investment in this sector. And fifth, because the training, research and extension education infrastructure for agricultural marketing is generally inadequate in most of the countries of the region, insufficient attention is being given to human resource development in agricultural marketing. The priority areas suggested in the theme paper, and those that emerged from the two-day Roundtable Meeting, have taken into consideration the region specific context. Support from FAO can be in the form of capacity building, establishment of information networks, sponsoring comparative studies, direct support in planning, and providing a forum for sharing information and experiences.
The main conclusions and recommendations of the Roundtable Meeting are as follows:
1. Almost all countries in the region are using buffer stocking of food grains as an important instrument of agricultural price policy. It was felt that there is a need for a fresh look at the entire system of food - and especially buffer stocking - policies being pursued in Asian countries with a view to reducing the cost of stock holding, and at the same time keeping the food security concerns of individual countries in view. The initiatives pertaining to possible regional or subregional emergency food security reserves taken by the Association of Southeast Asian Nations (ASEAN) and the South Asian Association for Regional Cooperation (SAARC) countries should be given careful consideration. It is, therefore, recommended that a study on the food stocking policies and practices of different countries be launched to bring out their cost effectiveness, keeping in view the distinction between the dual objectives of national buffer stocks, namely domestic price stabilization and securing emergency food reserves.
2. Support and capacity building for training in agribusiness management is another area where FAO can play a significant role. The existing curricula in the agricultural universities and training institutes of the region continue to be loaded in favour of production technologies. In the emerging economic environment there is a need to increase the agricultural marketing and agribusiness management components so that graduates from these universities and institutes are equipped to take up agribusiness activities, especially as the demand for skills in these areas is expected to rise at a very rapid rate. FAO should help the countries to assess the emerging demand for human resources in agricultural marketing and agribusiness management and to review the curricula at the graduate and postgraduate levels to see if marketing and agribusiness training is adequately provided for. Training support by FAO would also be quite important in the area of food safety, both from the point of view of internal marketing and external trade, especially as sanitary and phytosanitary measures may increasingly be used by some countries to block the imports of goods from developing countries. It is recommended that FAO should undertake a review of the course curricula of agricultural universities and other training institutes, provide advice and help to assess the demand for human resources, and assist in improving the capacity and capability of teaching and training institutes in agricultural marketing and agribusiness management.
3. Another important area where FAO can play a significant role is capacity building and training in policy analysis. Several countries are moving towards decentralized governance. The functions of planning and implementation are increasingly being delegated to lower levels of governance at district and subdistrict levels. This is a welcome move to empower the people, but the capacity of personnel responsible for policy analysis, planning and project/programme formulation at these levels is quite inadequate at present. Given the far reaching implications of marketing policies for both accelerating economic growth and reducing poverty and food insecurity, it is imperative that marketing policy analysis capabilities are created and analytical capabilities are built at provincial levels. It is, therefore, recommended that FAO should initiate measures to help the member countries create cells of marketing policy analysis and build capacity for policy analysis by training government functionaries dealing with policy formulation and analysis.
4. Marketing extension services in most developing countries of this region are either absent or very weak. Farmers now increasingly need information on food varieties that can fetch higher prices, and where and in what form to sell. In this context there is a need to reorient agricultural extension systems by increasing the agricultural marketing extension component. FAO can play an important role in this regard. It is recommended that FAO should persuade and sensitize the countries of the region to increase the marketing component in agricultural extension systems and improve the capabilities of extension workers in marketing at different levels.
5. The participants also suggested several areas for additional marketing studies to be undertaken by FAO. The results of such studies will provide several lessons and serve as guidelines for others. Some of the areas suggested are: (a) marketing costs and margins for important agricultural commodities at suitable time intervals in different countries; (b) marketing and agricultural pricing policies and systems in selected countries such as China; (c) a cross country examination of rules and regulations relating to agricultural marketing; (d) the status and functioning of land and labour markets in different countries and the impact of their liberalization on food security; (e) total supply chain and its management in different countries; (f) the role of women in agricultural marketing; (g) identification of constraints and possibilities of further value addition and processing; (h) asymmetry of information available to different countries in the area of international trade agreements and their implications; (i) integration of domestic markets within individual countries; (j) barter and income terms of trade for the agricultural sector in different countries; (k) role and experiences of futures markets in reducing farmers’ price risks and fluctuations in prices; and (l) degree of self-sufficiency being pursued by different countries and implications and lessons for household food security. Considering the importance of experience sharing in the improvement of agricultural marketing systems, it is recommended that a comprehensive study of the marketing and agricultural pricing policies and systems of China and some other countries be undertaken and the lessons learned disseminated.
6. There is considerable scope for strengthening and improving the market information system in several countries. The present system of market information in many countries is geared to meeting the requirements of the government. The main problem related to the market information system in this region is that the information made available to the farmers is not relevant. For example, although farmers need information on the prices in the nearby or accessible markets, it is available only for distant or international markets. There is a need to gear the entire market information and outlook system to cater to the needs of farmers, as well as agribusiness organizations, traders and agroprocessors. FAO can play an important role. It is recommended that FAO should step up efforts to advise member countries on strengthening and improving their market information systems.
7. There is a need for a fresh look at the role of the public sector, the private sector and cooperatives in agricultural marketing. It is being felt increasingly that the government’s role should shift from direct intervention in the markets to providing public goods to facilitate the operation of the markets. There are examples in almost all countries in the region that show that the private sector and farmers’ cooperatives can play an important role in improving the efficiency of the agricultural marketing systems However, this would require a dispassionate review of the plethora of rules and regulations put in place by governments that hinder the functioning of the private sector or the operation of the farmers’ cooperatives on commercial lines. Several of these rules and regulations have outlived their usefulness as they were promulgated in situations where the demand exceeded the supplies and they now hinder the efficient functioning of the marketing system and add to marketing costs. Several countries have initiated steps to regulate their agricultural marketing systems, but the speed and sequencing of deregulation varies from country to country. In this context, there is considerable scope for learning from the experiences of each other. FAO has already brought out guidelines on this topic (AGS Bulletin on Law and markets). The Bulletin needs to be widely disseminated and policy makers sensitized to this important area that provides considerable scope for improving the efficiency of agricultural marketing systems in this region. It is recommended that efforts be stepped up to sensitize and persuade the countries of the region to review their regulatory frameworks for agricultural marketing with a view to simplifying and rationalizing them, and to document and disseminate the experiences of different countries after making these changes.
8. The importance of grading and packaging in reducing marketing costs and thereby improving marketing efficiency can hardly be overemphasized. FAO has, in the past, demonstrated the benefits of grading and packaging to both farmers and other market functionaries. Some more demonstration projects for promoting grading and packaging of agricultural commodities would be timely and rewarding. It is recommended that FAO should document and carry out some case studies to highlight the advantages of promoting grading and packaging of agricultural commodities at the farm level in the countries of this region.
9. One of the major problems faced by farmers in Asia, particularly those with low-marketed surpluses, is the uncertainty of yield and prices. Crop insurance schemes introduced in some countries have had partial success only. Minimum price guarantee programmes are being operated by several governments to cover the price risk. However, several questions relating to the effective implementation and sustainability of these programmes are being raised. Further, as the countries are progressively liberalizing their external trade regimes and reducing government intervention in domestic markets, the price risks for farmers are likely to increase further. It is politically difficult to sustain liberalization policies when they expose the farmers to the full brunt of international market fluctuations without providing some mechanisms to allow them to manage their risks. It is in this context that mechanisms to effectively manage the price risks for farmers need to be devised and put in place. A long-term solution to reduce price risks of farmers would be to develop and implement market-based approaches, including commodity price risk insurance mechanisms and futures and options trading in agricultural commodities. The World Bank, reportedly, has initiated some steps to evolve an institutional mechanism to address these issues. It is recommended that FAO associate with the World Bank and help selected countries of this region to evolve some institutional mechanisms and frameworks for price risk insurance and to assess the potential of futures and options trading for reduction of price risks at the farmers’ level.
10. FAO should play an advisory role in assisting governments to formulate and implement plans for the development of agricultural produce markets. Market development plans should take a long-term perspective and should include village markets, primary wholesale markets, secondary wholesale markets, city markets and mega markets. While formulating and implementing such plans, the need to link primary rural markets with secondary wholesale markets and terminal markets should be kept in view. Further, an enabling environment needs to be created to attract private sector investment in the development of a hierarchy of markets. Countries with very low levels of infrastructure need special attention in this area. It is recommended that FAO should support and build capacity to assess the facilities and gaps in the markets, the investment requirements, and the ways for motivating the private sector to invest and mobilize resources for investment.
11. A considerable quantity of agricultural products is lost in the marketing chain because of a lack of infrastructure such as transport facilities, roads, storage structures, markets, cold stores and grading and packaging facilities. Mobilization of resources for such infrastructure from financial institutions requires the formulation of feasible projects. FAO has formulated guidelines for market infrastructure planning that can be used to develop national and provincial level market infrastructure projects for mobilizing resources and implementation. It is recommended that some countries be provided with technical assistance to assess investment requirements and prepare feasible marketing infrastructure projects for mobilizing resources from international financial institutions.
12. The marketing policy environment is changing rapidly. Most of the countries in the region are trying to reduce the restrictions and redefine and change the marketing policy parameters. In this process they look at the experiences of other countries regarding the effectiveness of alternative policy instruments, particularly their impact on the poor and food insecure. In this rapidly changing marketing policy environment, FAO could take up the important role of working as a repository of cross country information on key instruments of marketing and agricultural pricing policies and marketing systems in various countries. It is recommended that FAO should develop and maintain a cross country information network on key parameters of agricultural marketing and pricing policies and systems in the countries of Asia and the Pacific.
13. FAO can also play an important role in providing a forum for member countries where they can share experiences and interact on market related activities, policies and programmes. The need to involve the private sector in such interactions and experience sharing is becoming increasingly important. In this context, the role of the Association of Food and Agricultural Marketing Agencies in Asia and the Pacific (AFMA) would be quite useful. The AFMA should, therefore, receive continued support from FAO, and its membership should be increased by involving all the countries in the forum. As and when all important food and marketing organizations enrol as members of AFMA, it will be convenient to maintain a cross country information network of marketing and agricultural policy related parameters. It is recommended that AFMA should continue to receive support from FAO and FAO should encourage and help to increase the membership of AFMA.
