An effective marketing system can contribute to national policy objectives. This section relates the features of marketing to the five main broad groups of policy objectives as identified in module 2.
The independence objective aims at obtaining and preserving a satisfactory degree of political and economic autonomy. Although in general increased trade could be seen as acting contrary to this objective, an effective domestic marketing system reinforces independence by enabling a nation to supply its own needs more easily. For example, improvements in the West African livestock marketing system could enable regional supply of high-quality beef which in some cases is now imported. Regional marketing systems which replace supplies from world market sources work towards regional independence.
The self-sufficiency ratio, discussed in module 2, reflects the performance of the production and marketing systems combined. If the marketing system is defined broadly to include the external trade factors, then changes in the NPC (module 4) are a measure of changes in the incentives given by the marketing system to domestic producers in comparison with imports. But when NPC is calculated, the least reliable data are typically the costs of internal marketing for both domestic products and imports. They are the key issues in any discussion of the performance of a marketing system in respect to independence objectives.
The economic efficiency objective focuses on increasing the level of real national income and its growth rate over time (maximising real income). The attainment of this objective is the most important contribution of an effective marketing system. In a country where livestock production is important, improvements in livestock marketing can make a significant contribution to national economic efficiency and thus growth. The contribution of marketing to this objective is a result of the optimal allocation of resources which can occur with the meaningful price signals that a well-working market can deliver. Producers and traders will move in response to price and other market signals to activities which return the greatest value to the economy. Over time and on a large scale, the increased wealth made possible from an effective marketing system can add significantly to national income growth. Livestock, because of its positive income elasticity of demand, offers opportunities for creating wealth not only for rural smallholders but for the economy as a whole, due to the development of many new marketing services.
The resource conservation objective concentrates on preserving the natural resource base to ensure the above two objectives. An improved marketing system may or may not contribute to this objective. Indeed, market activity in general is often criticised for working against the goal of resource conservation. It is sometimes argued that, especially in dry areas in Africa, resource degradation has increased due to integration of these areas into world commodity markets. In South America, forests have been cut in order to raise livestock for export. If some economic actors are given the opportunity to exploit natural resources without being responsible for the long-term damages and costs, resource degradation could indeed occur. Large firms exploiting natural resources for the market must be monitored by appropriate government agencies.
On the smallholder level in Africa, there have been some cases where increased market integration has caused environmental degradation. One such example is making charcoal from trees in rural areas to supply urban demand in Addis Ababa, an activity which accelerated with the change of government in 1991. But here the factor which led to the problem was uncertainty of land ownership and use rights. The effect of market integration on natural resources is closely tied to property rights and land tenure issues (module 7).
There is no conclusive evidence either way concerning the impact of African livestock markets on the environment. Traditional land tenure systems may moderate the effects. Improved marketing which causes producers to offer more cattle for sale, rather than hold them for wealth, may increase offtake rates and eventually reduce the stock using natural grazing resources.
The stability objective attempts to avoid abrupt and large changes in income, in the price and availability of domestically-produced basic commodities and inputs. One of the main forms of instability in the livestock sectors of countries with unreliable rainfall is a huge increase in the flow of livestock into markets when drought strikes, as farmers sell their stock when they are threatened by starvation. The huge increase in livestock flows, at a time when many potential consumers are also suffering from drought-induced declines in income, quickly leads to a total collapse in livestock prices. An improved livestock marketing system is unlikely to avoid this problem. Better marketing of inputs such as feed and operating capital may allow some farmers to withstand a drought situation until prices return to normal. In general, effective marketing systems create stability in supply and prices by allowing surplus regions to supply areas with net demand, smoothing price and availability differences. Whether this will be effective at the national or even regional level is uncertain, as the 1992 Southern African drought has shown.
The equity objective promotes the fair distribution of income and wealth within society, among different types of farms, among regions and between producers. Again, the impact of greater market integration on this objective is not necessarily positive or negative. If some economic agents are able to control large market shares, they may increase wealth at the expense of others. This is unlikely to occur in African livestock markets which are typified by a large number of small producers and traders. Indeed, a shift from monopoly marketing boards to free market trade carried out by numerous private enterprises is almost certain to improve the distribution of income and thus aid the equity objective.
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Important points (5.6-5.8) · Marketing interventions should be preceded by an evaluation of existing marketing systems. · Some commonly used methods of market evaluation are: - assessing the degree of market efficiency in terms of marketing margins · Marketing margin is the difference between the farm-gate price and the retail sale price received. However, there arc, several basic types of marketing margins, based on market levels or stages being considered. · A value is added to the cost of a product at each successive stage of the marketing system. · Marketing margins of more that 15% indicate unacceptable market performance. However, great care. must be used in making conclusions based on marketing margin values alone as many other factors influence the performance of a marketing system. · Price analysis, as a method of marketing evaluation, examines the price correlation between markets separated by space and through time · Marketing services, as an indicator of the effectiveness of marketing systems, are difficult to evaluate. However, the cost of a commodity and marketing structure give an idea of the effectiveness of marketing -services. · Structure, conduct and performance analysis is used with margin analysis to evaluate marketing systems. This approach holds that the structure of a market controls the conduct of the participants and consequently the performance of the marketing system. Accordingly, continuous monitoring of structural issues should form the basis of market evaluation. · Market information is crucial for producers, wholesalers and consumers taking decisions on what to buy and sell. Information on prices, traded or available quantities, forecasts of future supplies and demand and general market conditions are needed for such decisions. · Government policies and resulting interventions should play a facilitating rather than a direct role in markets. · Three appropriate types of government intervention in marketing systems are: - improving market infrastructure · An effective marketing system contributes to national objectives by: - Enabling a nation to supply its own needs of goods and services. |
