Back

2.10 Marketing and policies

Marketing practices vary among the developing countries. Within 3 to 4 weeks after harvestime farmers take about 70 to 80 percent of their produce personally to the market to fulfil their cash requirements. The marketable surplus of the small and marginal farmers is so small that they do not find it economically feasible to take it to wholesale markets, even though these distant markets often offer better prices. Rural markets often lack facilities and are generally strips of land serving as a meeting place between buyers and sellers. Market yards are owned either privately or by local governing body called panchayat. In India, marketing period for the rainy season crop commences in October and remains till February, with a peak between November and December. Within this period about 45 percent of the marketable surplus of groundnut arrives in the markets. The disposal of the produce, either at the market or in the village is closely connected with the producers holding capacity. The sales in the village level markets are invariably in the form of pods, while in the assembling markets transactions take place both in the form of pods and kernels. Regulated markets have been organized in some of the main groundnut producing areas, which provide certain amenities to the sellers and forbid exorbitant market charges and malpractice of the traders. The number of regulated markets and the volume of produce passing through them are still inadequate. Please see Figure 32.

 Figure 32:Groundnut is directly being transported from the field to the market yard, Junagadh, India in the month of October.

India has historically persuaded a policy of self-sufficiency in vegetable oils and related products by banning imports and imposing other quantitative restrictions on trade. These policies kept domestic groundnut prices higher than international prices and consequently depressed the consumption. The government provides support prices for many oilseeds, including groundnut, but these have normally been below market prices and have, therefore, not been effective in procuring supplies. A survey conducted in Gujarat showed that, most of the markets are efficient in pricing for groundnut. As the farmer's share of the consumer's rupee is the highest (73 to 79 percent), followed by the miller's (5 to 8 percent), wholesale-trader's (1 to 4 percent) and retailer's (1 to 4 percent). The government procurement has added a new dimension to agricultural marketing and the Primary Cooperative Marketing Societies help farmers to fetch a better price for their produce (Raju and Bhatt, 1985).

In Gambia threshing of the crop is carried out in two separate operations; a portion of the crop is reserved for seed is threshed first, bagged and transported to the National Seed Stores, treated with insecticides and stocked. The second threshing operation takes place between December and February. The farm families utilize this portion of the crop in local consumption and surplus is marketed. In Niger the harvest is usually divided into three parts; the largest part is sold, the second is kept as seed for the next cropping season and the family uses the third.

In Senegal the government parastatal SONACOS, which is responsible for crushing and marketing refined groundnut oil, still operates a form of price fixing body through arrangement with licensed private traders. Similarly the Gambian Cooperative Union, a Government parastatal, continues to operate alongside an emerging private sector and dominates groundnut marketing. In Zambia, the National Agricultural Marketing Board continues to enjoy a statutory monopoly, but in practice private traders by informal sector conduct the bulk of groundnut trade. Consequently, market liberalization has little effect on prices. In Malawi the government parastatal ADMARC exerted strong monopoly power during 1980s through an intensive network of rural buying points at which producers were paid guaranteed prices. The sluggish response of the private sectors in groundnut marketing following liberalization in most African countries is due, in part, to high transaction costs. Sudan has implemented very different pricing and marketing policies. The private sector play a dominant role in groundnut marketing policies-producer price support, exchange rate subsidies and preferential export taxes have been used to maintain producer incentives, thus favouring groundnut producers (Freeman, et al. 1999).

The Gambia Produce and Marketing Board (GPMB) have a monopoly over the purchase and export of groundnut. Both the public and private sector carries out the domestic marketing of groundnut. All traders are required to pay farmers the officially announced produce price (Drammeh, 1990). The Ghana Food Distribution Corporation (GFDC), a government marketing and distribution organization buys groundnut from the rural areas and stores for reselling it to the public. GFDC handles only a small portion of groundnut produced and therefore, most farmers depend on middlemen for the ready market. Domestic sector and macroeconomic policies in AGC countries have played critical role in the decline of production and exports by AGC countries. Their combined effect on national groundnut sectors has resulted in average annual changes in AGC-wide groundnut production of 4 percent to 15 percent from the late 1960s to the end of the 1980s. The regional markets have hardly played any role in AGC exports (Atuahene-Amankwa, et al., 1990).

In Zimbabwe farmers in the large scale commercial farming areas were required by law to sell their produce to the parastatal Grain Marketing Board (GMB) at state-controlled prices. These prices did not keep pace with real market prices and their levels relative to other crops, often resulted in swings from one crop to another depending on profitability. This situation led to steady decline in groundnut production in the country. In March 1992 the government-decontrolled groundnut marketing producers and permitted to dispose of regulated crops to best advantage. The GMB offers a guaranteed floor price and retains control of imports and exports. Exports are normally permitted only after local requirements are satisfied.

A common feature in all major groundnut-producing countries is government intervention through price and marketing policies that directly influence prices and costs. The pattern of intervention, however, is different in developing and developed countries. In the past, in developing countries, the government price and marketing policies discriminated against the groundnut sector by directly suppressing producer prices. In international groundnut oil markets large swings in prices are observed. Such swings become more pronounced in South Asian countries, where domestic production has to be augmented by imports, which fluctuate due to the poor balance of payments position (Rai, et al. 1993).

The role of market places varies not only between developed and developing countries, but also within the developing countries. It depends to a greater extent upon the general socio-economic and political pattern of the respective region. In developing countries the markets are very important elemental components in the spatial articulation of economic and social activities, their changing role for wholesale and retail trade, in rural and urban environments and for different strata of the population need to be evaluated in the context of the general stage of development in any particular country or region.