CHAPTER 1: INTRODUCTION

A. Who the Guide is for?
B. The Development Process
C. Key Issues
D. Summary of the Market Planning Process Described in the Guide
E. Further Reading

The critical stage of the market development process is at the beginning and this is when decision makers and market users should be fully involved. This chapter describes the process:

• it defines who the guide is meant for;
• it explains the overall development process;
• it raises the key issues that may need to be taken into account in project design;
• it suggests sources for further reading; and
• it provides a summary of the whole market planning process.

A. Who the Guide is for?

The purpose of this guide is to assist decision-makers to judge whether market infrastructure investments should be made or not and to guide them through the first steps of the design process in initiating a market infrastructure development programme. The potential users of the guide include:

• elected and appointed political and administrative representatives;
• senior government-level officials and administrators of Ministries of Agriculture, Planning, Trade, Commerce and local government;
• senior officials of provincial, district, municipal and local authorities;
• directors and facility managers of existing public corporations and private-sector marketing services, such as wholesale markets; and
• private-sector owners (existing and potential) of markets, packaging houses and transportation facilities.

The Client and User: The decision-making organizations and individuals listed above are effectively the “client” for the development. They are not generally the real “users” of the facilities. However, these users must have an equally important role in the development of an appropriate planning strategy and the consequent design brief. The participation of traders and farmers in the process is critical. This issue, and the subject of potential conflicts between decision makers in different organizations and the coordination required, are further considered in later chapters.

Scope of the Guide: Although infrastructure is generally defined as constructed buildings and civil works, the guide does not confine itself exclusively to these activities. Often, market development will include: equipping or re-equipping a market; improving transport facilities; institutional restructuring, including reducing or reallocating staff; a system for the management of market facilities and information; providing training to market staff and to farmers’ groups; introducing quality control standards; and properly enforcing market regulations.

BOX 1 Stages in the development process i) inception - the identification of problems and needs ii) surveys and development of the design brief (space and accommodation requirements) with the market users iii) outline proposals and pre-feasibility studies to evaluate options, redesign and modify the design brief iv) overall scheme design, detailed evaluation and feasibility studies, and decision to proceed with the project v) final studies and detailed infrastructure design vi) production information (bills of quantities, specifications and contract documents) vii) tendering process (selection of tenders, tender, review and appointment) viii) implementation - construction of infrastructure and procurement of equipment ix) monitoring and feedback, to provide information for future planning

B. The Development Process

Any development project goes through a number of distinct stages (see Box 1). This guide broadly covers stages i) to iii), which comprise the critical period from the initial idea of a potential market development through to the preliminary feasibility studies which will be used to determine the direction the project ought to be taking and the decision to proceed to stage iv). Decision makers are not likely to get involved in detailed calculations. They will give the approval to a proposal prepared by technicians. Therefore, decision makers need guidance on the correct preliminary steps. If this process is not followed in a rational sequence then there is a high risk that the development will not be socially or economically viable.

The critical time in the design process is that between the idea for a market development and detailed feasibility studies. This is when the decision makers need to be sufficiently well briefed to be able to:

• suggest that further information is needed on how the food marketing system works;
• stimulate a dialogue with traders, particularly when some or all are likely to be moved to new premises;
• identify the specific requirements of traders and transporters, in terms of the trading space, services, facilities and parking areas they will require;
• think about the cost implications of distributing food from the farm, through an assembly and wholesale market system to the retail level;
• define the expected environmental and social consequences of the new market (traffic, pollution, etc.);
• identify possible ways to involve private associations (existing ones or new ones) in the management and operation of markets; and
• define, in agreement with market users, the expected type of services and the level of fees and charges.

C. Key Issues

The guide defines an overall approach for analysing market development and provides simplified planning procedures to help decision makers to define what they want. It provides a basis for developing a new market to replace an existing market or for rehabilitating an existing one. The key issues that need to be considered in deciding whether to proceed with a market infrastructure investment are:

• what type and size of market facilities are needed and where should they be located?
• what technical, financial and institutional factors need to be considered and what preliminary work is needed (summarised in Appendix A - Check List of Issues) on which to make informed decisions?
• what planning (time) horizon should be used for forecasting?
• who should be involved in the design process (such as market users, farmers and traders)?
• what is needed to brief a team of technical specialists and consultants in preparing surveys and pre-feasibility and feasibility studies and detailed designs for the investment?

This guide attempts to demonstrate the clear linkages between agricultural and urban development policies, market-infrastructure planning, economic viability, market management and the role of the various involved parties. If a market development is to be both successful and profitable it is essential that there should be a clear understanding of the role of the market users (particularly traders). There may also be a need to make appropriate institutional and legal arrangements (the setting up of a market committee is likely to be a precondition). The linkages between market income, operating expenditure, profits and financial viability need to be clearly defined, as well as the relationship of the market improvements to other development programmes. Overall, there is a need to have a clear approach to defining criteria for screening, prioritising and evaluating market improvements. These basic questions are summarised in Box 2.

BOX 2 Basic questions for developing a clear justification for market infrastructure interventions Has consideration been given to whether the development is really necessary? is it clear why there is a need for a new market? have alternatives been considered, such as improving existing markets by rehabilitating/expanding? has thought been given to the consequences of a new market on the environment? have the implications for traffic and parking space been considered? is there a consensus on the financial and economic rationale for the project? Is it agreed that it should be run on a profit-making or, at least, on a cost-recovery basis, i.e. be “economically sustainable”? what are the traders’, transporters’ and consumers’ reactions to the proposals? is there a possibility or agreement for increasing market user charges? For larger markets, such as urban wholesale and retail markets, further factors may need to be considered: has thought been given to all the accompanying measures which may be required to protect the economic interest of those traders to be relocated to a new market site? why should traders want to move to a new market? will services (e.g. banks) also be willing to move to the new market? has an estimate been made of how much more traders will have to pay to distribute food from the new market back into town? has the involvement of traders and transporters in the operation of the market and its management been agreed? Finally, are the next steps on how to proceed with the market development clear?

D. Summary of the Market Planning Process Described in the Guide

The approach to planning and developing market infrastructure as described in the guide is as follows :

• understand how the marketing system presently operates, who is involved, what are the channels for produce and what are the pressures for change to the system - see Chapter 2.
• understand the policy context and how it will influence the development of market infrastructure - see Chapter 3.
• review the existing market management and operating procedures, how these activities will be incorporated in a development and what are the institutional arrangements needed to facilitate the project - see Chapter 4.
• examine the general factors in market planning and design, examine alternative solutions, estimate space requirements and prepare a design brief - see Chapter 5 and Appendix A.
• prepare an overall master plan of physical requirements- see Chapter 5.
• define on-site (and off-site) planning and infrastructure requirements - see Chapter 5.
• prepare a budget with capital cost estimates- see Chapter 6.
• make an estimate of recurrent costs - see Chapter 6.
• make an estimate of revenues, including those from daily licence fees or tolls, annual or monthly rents, and long leases on stalls or income from the sale of sites - see Chapter 6.
• based on the cost and revenue information, evaluate the development options, by using prioritising alternatives and by calculating the economic and financial benefits of the development- see Chapter 6 and Appendix B.
• undertake an environmental and social impact, including the potential impact on beneficiaries’ (producers, traders and special interest groups) income earning opportunities - see Chapter 6.
• define development risks and follow-up actions that may be required (e.g. land title availability and detailed survey requirements) - see Chapter 7.
• define the requirements for surveys - see Chapter 7 and Appendix C.
• examine methods of project implementation and financing, and any preconditions that may need to be met before the development can progress further - see Chapter 7.
• summarise the type of issues that will need to be considered for each type of market development - see Chapter 8.

E. Further Reading

The Guide should be read in conjunction with other FAO publications on wholesale and retail marketing, planning and management (see Appendix E -List of Further Reading on Marketing Infrastructure).