How the people’s market deals with embedded inequalities in market structures and knowledge systems

How the people’s market deals with embedded inequalities in market structures and knowledge systems

The informal market has a smart way of dealing with embedded inequalities in existing market structures and mainstream knowledge systems.  It has its own perspectives on sense-making, persuasion, influence and identity formation in ways that may not be captured by conventional ways of gathering and sharing information. Research by eMKambo shows that improving the supply of information through lowering the cost of airtime does not farmers’ information needs or lead to farmers receiving appropriate information.  Given that they are also tossed from one information source to another, farmers are saying a fragmented knowledge process cannot be relied upon to address their knowledge deficits.  Organisations which double up as associations and processors tend to have privileged access to information which they can hoard and not allow it to trickle down to farmers the way it should.  This puts farmers in a disadvantage because they will have low negotiation powers.

How the informal market addresses some of this knowledge asymmetry

Informal markets are an open knowledge sharing system where, at any given time, actors have comparative advantages in terms of knowledge.  If this knowledge is shared among smallholder farmers, medium & large scale producers, traders, transporters and consumers, knowledge gaps and loopholes are reduced.  Because producers come from different areas, they are more knowledgeable about commodities grown in their own areas.  By allowing farmers from different areas to meet and exchange value, the informal market enables dialogue which reduces knowledge asymmetry.

Some market participants are not financially literate on pricing and costing models but because in the informal market, demand and supply mechanism determines prices not individual farmers or traders, a financially illiterate farmer can earn a better price than the one who is able to calculate costs and profit margins.  For those farmers not sure about what price they can charge for their commodities, the informal market can unlock the true value of a commodity on a given day. A financially literate farmer can do all the costing but can earn less than the farmer who does not do all the calculations.  This is partly explained by the fact that in the informal market, competition between products carries the day as opposed to competition between farmers.  However, there is great scope for developing market systems, otherwise financially illiterate farmers can be exploited and face barriers to participation in the market.

Participating in the people’s market enables farmers to develop intuitive knowledge such that they can make projections and organise their supplies appropriately.  Relationships in the market also make up for lack of knowledge in costing by some smallholder farmers.  In addition, getting organised for coordinated supply is another way of dealing with embedded inequalities in information.  While some farmers may be good in production, others are good in marketing.  This addresses knowledge asymmetry and creates a balance.  Utilising ICTs for information sharing also enhances farmers’ exposure to the market.

Consumer tastes also play a powerful role in addressing embedded inequalities.  Most big producers who produce commodities in bulk are not particular about quality.  As a result, most consumers want to buy from small producers who bring small quantities because they know that these producers pay attention to detail. Where a big producer earns profit on volume and small margin, smallholder producer gets more profit on small quantities, good quality but a bigger profit margin.  Smallholder producers are also good at correcting taste because they are also consumers of their products.  They get vegetables for household consumption from their small gardens and sell surplus to earn income.    This means they are much closer in satisfying consumer tastes and expectations.  A large number of big producers do not have time to taste their own commodities.  Smallholder producers are also good at articulating the Unique Selling Proposition of their products.

While for a passer-by, roadside markets may not make sense, these markets play a very important role. Besides satisfying immediate needs, roadside markets can be a barometer of economic drivers in a particular area. These markets point to the diversity and volume of agricultural commodities in an area. Roadside traders can be some of the most reliable informants in terms of sources of produce as well as the seasonal character of most commodities.

09 november 2015

It should not just be about price

At the moment, price information is considered the most important information by farmers, as shown through enquiries received by eMKambo all the time.  However, in essence, it should not only be about price but factors that determine price, e.g., price trends, supply and demand trends, competing commodities, available markets, standards, etc.  Farmers should invest in processes that influence price, for example, market-related production.  All these factors which tell a story of why the price is what it is should be understood.  Some of this information can be accessed through tips via ICTs gadgets but it becomes more effective when other players can organize farmers for training programmes that have to be paid for.  This is where knowledge brokers, government departments and development organisations can work together to move farmers from social entrepreneurship to profit-oriented business models.  In as far as some of the information is provided by some organisations, it doesn’t show how much profit a farmer will earn.  Much of the training focuses on crop varieties, livestock breeds, yields per hectare, fertilizer application, weeding, harvesting, etc.  Such information or knowledge is not enough for a farmer to analyse profit and loss unless the farmer has information from the market end.

The importance of both weak and strong ties

The people’s market shows the significance of both strong and weak ties in the market. Where big players will engage in cut-throat competition, weak and small players help to neutralize the game by exposing vulnerabilities of each player. Weak ties in the market represent a learning curve which is a voice of caution for strong ties.  Where weak ties chicken out, big ties ensure food security and can stabilize the market.  In the case of a drought, strong ties can stabilize the market and ensure market supply.  However, strong guys are few and when they collapse there is a disaster.  For example in Zimbabwe the collapse of the Grain Marketing Board (GMB) has had devastating effects at national level. Small players like the millers association have become a fall-back position for the market, farmers and consumers.  On the other hand, because it doesn’t have a local fall-back position, the cotton value chain is negatively affected when prices collapse on the international market.  The situation would be different if there was a string of small scale cotton processors who could act as a fall-back position.  At least 40 – 50% of weak ties are resilient during drought and their role is becoming very important in a changing climate. / /

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Charles Dhewa

Charles Dhewa

Thanks for the feedback. Every day communication among farmers and other actors are often easy to miss yet they are more important than formal communication.