A. Market Management and Operating Procedures
B. Operational and Technological Changes
C. The Activities to be Incorporated
D. Institutional Arrangements
E. The Market as a Business
Market infrastructure development cannot be isolated from its operational context, which includes:
Operational methods that will be used in the markets need to be clearly defined as they will influence both the physical design of the markets and their regulation. In developing an operational method the features that should be considered include: (i) sales methods (such as whether by auction or negotiated sales); (ii) whether only standardised or graded produce will be handled (requiring the use of special crates, packaging and handling equipment); and (iii) the types of licensing and leasing arrangements. The latter will be a major determinant of how the markets operate, as it will effect the use of space and may limit new entrants into the marketing system.
Also critical to understanding market requirements is defining the present and future role of the public and private sectors in market operations and management. Institutional reform might include the establishment of committees or autonomous boards of Directors for the markets. At the national level, coordination may need to be provided for constructing and operating new markets, in a manner that will lead to more effective participation by all the participants. Markets also need to be operated in a consistent manner which reflects government and community concerns. These may include:
These issues will need to be covered by a consistent set of Model Regulations, suitable for local conditions. They will also influence the overall design of the project. Proposals to down-size government departments and reduce government interventions will also have a strong influence. It is critical, therefore, to review the future role of existing institutions, as well as that of the private sector. This might require a radical reassessment of functions and a review of what should be left to the government and local authorities and what should be handled by the private sector.
The physical organization of new markets (and restructuring of existing markets) would need to take into consideration all the relevant technical and institutional factors, including:
Markets are not static organizations and the development of a market will be heavily influenced by the type of operational and technological changes that are occurring. These might include:
Some of the more sophisticated trends being seen in markets in developed countries will in the future also have an impact on market design. These include:
To develop the design brief it will be necessary to define the specific factors which will govern the layout, relationships and priorities of the market. These might include:
The market’s activities may need to be supported by the following marketing services and facilities:
There are many variations possible for operating wholesale markets. In some countries it is the responsibility of producers’ organizations. In the UK many markets are operated by the traders and the systems in France and Spain are based on parastatal and municipal ownership. A number of major markets in the USA are cooperatives and full private ownership also occurs, although this is comparatively rare. In Eastern Europe a common model being considered for the development of wholesale markets involves the use of joint-stock companies. There are a variety of potential investors, such as state agencies, banks, private companies, local government, and producer and processing organizations.
Within this framework, however, there are still many options available on how a market should be managed. Although the overall management could come under a market management company, the ownership of the land and facilities can be separated from the management system. For wholesale markets, for example, individual sections could be under the delegated control of producers’ organizations or private companies. Contracting out services or the use of franchise agreements may be appropriate for activities such as site facility management and cleaning.
The basic questions that will need to be asked at the project identification stage are:
The principal aim of improving both physical infrastructure and management systems at a market is to facilitate trade and, in the case of wholesale markets, to encourage the development of specialised traders to perform true wholesale functions. In the case of retail markets, traders and producers can operate side-by-side. However, in wholesale markets, traders should be either independent commission agents, handling produce exclusively on behalf of producers, or multipurpose wholesalers taking title to produce.
Alternative Management Systems: The impact of arrangements for market management on the market design will need investigation. This will be particularly relevant where there are arrangements which reflect groupings of traders who are physically adjacent to each other (i.e. a “neighbourhood” concept), or there are associations based on common interests, such as groupings of exporters, wholesalers or producers from the same area or marketing group.
Alternative Revenue Collection: Revenues to be collected from the market users should reflect the need to cover recurrent as well as past and future capital expenditure. Some of the revenue collection system will also impact on the physical design. Alternative systems to charging stall rents, such as the use of entry or parking fees, may be attractive as revenue generation methods but could led to increased congestion (or corruption). Rental collection based on the turnover of commission agent’s units may also impose high demands on staff time and cause the need for provision of additional infrastructure such as collection booths.
Financing of Market Improvements: Arrangements for financing market alterations or new developments would need to be worked out in detail. They are likely to include a combination of municipal financing, funding from groups of users (possibly reflecting autonomous entities foreseen under a revised management system), sale of shares, and individual investments by traders and others (such as constructing partitioning, extending canopies and making investments in cold storage).
To allow the private sector to initiate a process of marketing improvements, current regulations governing the management of markets may need to be amended and an alternative management structure put in place, whereby the actual users have direct control over market management. This might be achieved by privatising the market management or by delegating responsibility for market management to one or more appropriate autonomous entities. If it is intended to transfer ownership a municipality should be compensated for the investment that it made in the development of the market, and for any services it continues to provide on a long-term basis.
SUMMARY OF OPERATIONAL ISSUES
