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A. Policy Framework
B. Reviewing the Existing Marketing System
C. The Basic Purpose of the Market Development
D. The Main Elements or Functions to be Included
E. Available Financial Resources and Expertise?

Marketing infrastructure developments must be seen within their policy context in order that their basic purpose and function can be examined rationally. This chapter outlines the initial actions that need to be taken to formulate a workable marketing development project, as follows:

A. Policy Framework

The main justification for infrastructure development is to provide a suitable environment for more effective marketing. To understand this process, the marketing development needs to be placed within an overall policy framework. Typical marketing policies, and means to achieve them, that could have an impact on a development project include:

Organizations that should be involved with marketing policy development

  • Ministry of Agriculture (including research & post-harvest bodies)
  • Ministry of Trade and Supply and Customs Department *
  • Standards Organization
  • Environmental Protection and Public Health Bodies *
  • Ministry of Urban Planning
  • Main Municipalities and District/Provincial Authorities
  • Export Councils and Trade Organizations
  • Chambers of Commerce *
  • Farmers’ associations
  • Representatives of private-sector trading interests and consumer groups

(those with * are optional depending on circumstances)

A Marketing Forum

Marketing is an interactive process and many of the activities are cross-sectoral. Marketing issues need the coordinated efforts of a wide range of stakeholders, in both the public and private sectors. Attempts to develop specific policies often fail because of a lack of coordination and dialogue. The issue of quality control and standards, for example, is one which may not progress because the interested parties have not been brought together. Therefore, it may be necessary to set-up some form of collaborative body such as a “marketing forum” or working group which can meet on a frequent basis to review ongoing interventions in marketing and to help form and direct government policy. The marketing forum should have as wide a membership as possible and include all the major stakeholders in the sector. Organizations that should be involved are shown in Box 3.

Policy issues that a Marketing Forum could consider might include developing:

Developing an Overall Strategy

A possible approach to developing an action plan for marketing development would be to arrange a series of workshops involving the marketing forum proposed above. As a follow-up to the workshop a series of actions would need to be recommended to develop the project (and any related marketing activities) on an effective and sustainable long-term basis, within the context of national agricultural and urban development strategies. The types of actions are shown in Box 4 and are explained in further detail in Appendix D.

B. Reviewing the Existing Marketing System

Marketing interventions need to be approached in a comprehensive manner. Potential benefits, such as reduced losses and more cost-efficient marketing, will not be achieved through single, uncoordinated actions. As the first step in preparing marketing development proposals, the gaps in the present marketing and distribution systems need to be identified and a study made of the potential instruments for improving marketing efficiency. The functions of the private sector need to be thoroughly reviewed, as well as the roles various types of markets play in the agricultural marketing system.

Actions required to develop marketing policy

  • undertake studies on marketing channels, costs and margins;
  • define post-harvest problems and appropriate research activities;
  • develop a legal framework for marketing activities;
  • develop marketing operational regulations;
  • identify need for strengthening institutions;
  • establish a sustainable market information service; and
  • develop local guidelines for planning urban food supply and infrastructure.

Assessment of Supply, Demand and Consumption

A fundamental step in understanding a marketing system is to know what produce is being traded, where it is coming from and when are the peak times that it will reach the market. For smaller rural and urban retail markets this information may be possible to obtain by undertaking a simple interview survey in the existing markets. However, for larger rural assembly markets and urban wholesale markets a more comprehensive approach will be needed. To do this it is necessary to define the cropping patterns and cropping calendar for the main production areas serving the markets. In reviewing the marketing system it is also necessary to estimate the supply, demand and consumption of produce. The basic principles for making an overall assessment at national, regional or city level are summarised in Box 5. *

* Detailed techniques are given in FAO Agricultural Services Bulletins 90 and 121.
Defects in the Market System:

The defects of existing markets should next be defined as clearly as possible. They may include:

Physical problems:

Estimating overall supply, demand and consumption

Estimating the supply, demand and consumption of produce is the key step in reviewing the adequacy of the existing facilities and projecting the demand for new facilities. The following steps need to be followed:

1. Define the population served by the market system, including the immediate population (urban or rural) and that of adjacent areas forming part of the catchment zone of the market.

2. Define the annual average population growth of the catchment zone.

3. Estimate the overall supply of produce (usually defined in tons) using a “Food Balance” approach:

  • Total annual production, obtained from agricultural statistics and crop cutting trials;
  • Plus imports and existing stock/storage (where these are relevant, such as with a wholesale market);
  • Less waste and use for other purposes (e.g. seed) and future stock;
  • Less annual exports;
  • Balance available for consumption and processing;
  • Less processing;
  • Balance available for consumption;
  • Estimate for specified years the average per caput consumption of fresh fruit and vegetables (balance available for consumption divided by population - see 1 and 2 above); and
  • Estimate variations in consumption levels in different towns and regions (there is usually variation between urban and rural areas).

Social and managerial problems:

C. The Basic Purpose of the Market Development

It would seem self evident that the basic purpose of a project should be clearly defined. This is frequently not the case and the approach adopted is either over-ambitious in what it wants the marketing infrastructure to achieve or has identified the problem properly but not the correct solution. For example, surplus agricultural production is often seen as a marketing “problem” (or even worse as a processing problem) which could be solved by market construction. The solution is likely to be found in making production more responsive to market demand rather than in constructing markets.

The first step in reviewing a project, therefore, is to go back to the policy context in which it will operate. Inevitably, there will be two aspects to this:

With the latter, it will be necessary to ask whether the development’s policies will fit in with those of other bodies, including the private sector. Their priorities, policies and programmes need to be quite clearly understood in order to avoid any conflicts. The “marketing forum” discussed above could play a critical role in resolving these issues.

In both cases it will be necessary to determine what would be the development’s relationship to and impact on related projects and development programmes such as:

D. The Main Elements or Functions to be Included

The main elements or functions to be included in a market project should be self-evident. However, it is very easy to include too much in a programme without realising the consequences of this. It is necessary, therefore, to:

E. Available Financial Resources and Expertise?

Cost will normally be a major determinant of whether a project is viable, as the improvements will need to be economically sustainable (and profitable). This will necessitate a pre-feasibility study (see Chapter 7). Factors influencing the viability of a market development might include whether there are any:

Another point to consider at this stage is whether appropriate technical resources are already available to undertake such studies. If they are not, the appointment of suitable consultants needs to be considered.


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