Agricultural Markets in Benin and Malawi : The Operation and Performance of Traders
Drawing on original surveys of agricultural traders, the authors examine how traders operate in two Sub-Saharan African countries, Benin and Malawi. They find the following: The largest transaction costs for traders are search and transport. Search methods rely principally on personal visits by the trader, which raises search costs. And since enterprises are very small, transport represents a large share of marketing costs. Brand recognition, grading, and quality certification are nonexistent. Brokers and agents are not organized in commodity exchanges. Quantities are not pooled for transport and storage so as to achieve returns to scale. Interseasonal and interregional arbitrage is not feasible for most traders, who prefer to operate day to day in a small territory. This information provides some important insights into how agricultural trade could be improved. It suggests possible policy interventions in four main areas: increasing traders' asset base, reducing transaction risk, promoting more sophisticated business practices, and reducing physical marketing costs.
Summary: | Drawing on original surveys of
agricultural traders, the authors examine how traders
operate in two Sub-Saharan African countries, Benin and
Malawi. They find the following: The largest transaction
costs for traders are search and transport. Search methods
rely principally on personal visits by the trader, which
raises search costs. And since enterprises are very small,
transport represents a large share of marketing costs. Brand
recognition, grading, and quality certification are
nonexistent. Brokers and agents are not organized in
commodity exchanges. Quantities are not pooled for transport
and storage so as to achieve returns to scale. Interseasonal
and interregional arbitrage is not feasible for most
traders, who prefer to operate day to day in a small
territory. This information provides some important insights
into how agricultural trade could be improved. It suggests
possible policy interventions in four main areas: increasing
traders' asset base, reducing transaction risk,
promoting more sophisticated business practices, and
reducing physical marketing costs. |
---|