14.2 Institutional factors

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If a PFL activity is successful it means that larger quantities of a commodity are available for sale. In some cases a surplus will be created for the first time, in others it will be an enlargement of the marketable amount. This could put pressure on the marketing system. Larger quantities may have to be stored, transported and sold. It is therefore important that the marketing chain operators, whether private traders, cooperatives or government organizations, be made aware of the increased supply, so that it may be absorbed. This consideration grows in importance the more remote the siting of the PFL activity is from the recipient market. Again, the cost factor in absorbing the increased produce from the prevention of losses must be taken into account in the cost-benefit assessment at the planning stage.

Introduction of the grading and, packing of fruit and vegetables for the export market leads to reduced losses during transport and marketing operations, and increased income will be earned. Consumers of fruit and vegetables in local urban markets, however, may have low income and require cheap supplies. A PFL activity to reduce physical losses in such a situation may eventually prove to be a bad idea, as the increased costs incurred in grading and packing would be reflected in the sales price and might reduce sales. If so, the increased return per unit of sales may be less than the cost of grading and better packing. Therefore, the idea may not be practical, depending largely upon the market-consumer sector concerned.

This example does not necessarily imply that grading and packing are not recommended for internal markets. A limited operation may well be justified, but any proposal should be subject to a cost-benefit assessment. Initially, a pilot-scale operation should be undertaken with certain selected farmers to test the market. Where spoiled fruits or vegetables are discarded, the value of the satisfactory produce remaining may be enhanced; and, again, packaging made of cheap local materials will certainly reduce losses during handling and transport. Packaging may also facilitate retail display, further reducing losses. It is not possible to lay down firm guidelines in these matters, since the location, nature of the market, cost and availability of packaging materials, tradition and consumer acceptance must all be taken into account. Only local trial shipments on an experimental basis can determine the feasibility of an improvement idea. If, after the trial shipments, a positive benefit can be shown from an innovation, then there is a strong case for believing that the new development will become common practice and be repeated elsewhere. In the Indonesian example given in the previous section, the appeal of the solar drier would have been much less convincing to other producers if the processing factory price had fallen later in the year, although the same differential between normal and clean prices may have been retained.

Marketing systems vary from country to country with differing degrees of governmental involvement.

The marketing system has a bearing on PFL technology and may influence the extent to which improved practices are economic. In state-planned economies this means planned production, planned supply and planned pricing, but this has often resulted in high losses in fruit and vegetables because incentives to avoid losses at the various stages of the production/marketing chain were lacking. Under a government-operated marketing system, the main concern is often with quantity (the number of tonnes of fruits and vegetables distributed), with little emphasis put on quality (the quality of the produce distributed and the cost of the task carried out). In this situation, technical knowledge of post-harvest measures alone would not contribute to the reduction of losses.

Whatever the marketing system-state-controlled, free enterprise or otherwise-it must be effective. If not, it will mean high prices for the consumer and/or lower returns to the farmer. In both cases losses will be high. Marketing agencies carry out the marketing function; these can be private individuals (such as farmers who may be wholesalers and money-lenders), or companies, cooperatives or government corporations. Whatever the method, the important factor is that it should be effective and cost-oriented throughout the marketing chain if losses are to be minimized. Inefficiencies can lead to physical as well as financial losses.


14.3 Implications for labour

All development projects involving technological change affect employment, and projects on the prevention of food losses are no exception. A study in a traditional rice-producing area in Asia has shown that even when food losses were not reduced with the introduction of the pedal thresher and the rice mill, there was considerable labour displacement. In fact, the innovations were introduced because they were labour-saving.

Conservation of labour demand is important because it is essential to show that the extra labour or labour-saving involved in proposed innovations does not occur when there is a prospective surplus of such labour elsewhere for cultivation or processing. A method commonly used to analyse the distribution of labour is a histogram of the labour requirements of an average farming family during one year.


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