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Streamlining commodity markets and its benefits

WE are in the last month of the Gregorian calendar – a festive December – this means a lot than a mere numbering, it entails a very befitting message that a year like a race needs to be reviewed and necessary lessons drawn from it.

We tried to talk a little bit on the ravages that coronavirus brought in agriculture last week and we may shed more light on it anytime in the future, but for the sake of brevity we will bring up a yet another issue on market, as one of the greatest predicaments that derailed agribusiness performance this year.

This subject has occurred severally on this page this year, if it was anywhere too much then it should be due to its significance in pulling the agriculture value chain. The reason why this is resurfacing at this time is because of the unnecessary costs it made businesses incur.

While road infrastructures remains a major issue – plus the distance that the producing areas are between themselves –absence of user friendly markets makes hard infrastructures nothing but a peanut. Conservatively speaking, it takes between 4 to 7 days for a produce to get out of farmers’ hands to major markets in Tanzania.

For a new entrant in commodities business, it becomes even harder as he has to craft the affable relationships with local dealers who are well versed with the geography and socio – economic patterns of that particular locality.

This situation discourages so many able traders from getting into the game. In return, agribusiness tends to be controlled by few people for a long time. And as a matter of fact, it reduces competition which deals a dig blow to small farmers as he or she gets relatively lower price than what a perfect market could offer.

In other words, producers are prevented from getting a premium price that which could be provided by a more dedicated trader with huge capital and better business plan. What few people know is that this situation has existed for `a very long time now and there is no indicators that it will naturally disappear.

So this calls for more malicious interventions that will try to address this menace and improve an entire activity as well. To say that there are no steps taken to change this status quo will be to deviate from the truth.

Even after liberalising our economy four decades ago, a number of actions were taken to open up an economy into a full employment while making sure that every player gets the a fair pie. Notwithstanding, to conclude that those actions have already given the desired fruits will be to narrate the ‘‘blinds and the elephant’’ fairy tale.

It is simply not true. What lacks in this whole process is the proper information between major players; farmers, aggregators and traders. All these people have to be aware of price, place, crop availability, and distance. These are important factors to determine an entire costing and at the same time help reach the market at the shortest time possible.

That is to say, all interventions have to see if all those components have been addressed or else they may be redundant. While intrinsic intention of this essay is not trying to pre-empt some more innovations on this matter, it is proper that we have a look on establishing sub – sectorial spot markets in particular regions and/or districts, especially on pulses.

As I have been explaining this whole year, spot markets tend to offer equal platform to all players what other forms like auction buying system, do. It gives a farmer full ownership of its crops to the last point of trade dealing with a final buyer – not a middle man.

Since, this juncture brings all the farmers under one roof at a particular point in time, it helps giving them one powerful voice on price negotiations over the buyers. That means they can all stand for a reasonable price that traders can never overturn.

On the other hand, traders are assured of crops availability, quality and distance from the word go. And for any serious business person those are major issues that are primary in determining the profitability of business venture. They can inspect the consignment and quickly acquire it without delay. Government authorities are able to collect their revenue without further ado.

We have some few examples of these markets in Tanzania. The likes of Nyandira (Morogoro), Kibaigwa (Dodoma) and Kinyasini (Zanzibar).

Unfortunately compared to the level of demand these are but a drop in a sea. If there are resolutions to be made for the year 2021, this subject should appear at the top of the list.

I have been recently retrenched by my employer. ...

Author: Zirack Andrew

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