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close this bookExporting High-Value Food Commodities: Success Stories from Developing Countries (WB, 1993, 119 p.)
close this folderII. Economic and institutional issues in the marketing of high-value foods
close this folderTechnologies, institutions. and other solutions to generic food marketing problems
View the document(introduction...)
View the documentTechnological measures
View the documentLaws, rules, and standards
View the documentSpot marketing trading
View the documentReputations, brand names and advertising
View the documentPersonalized trading networks
View the documentBrokerage
View the documentContract coordination
View the documentCooperatives/associations/voluntary chains
View the documentVertical integration
View the documentGovernment intervention

Brokerage

2.57 Brokers are intermediaries who do not take title over the commodities traded, but who link suppliers and customers. They are commonly found in agricultural markets and in all forms of international trade. For several reasons, brokered trade can be less costly for suppliers and customers. First, as regular players in the market, brokers are likely to be better informed about market conditions than the buyers, sellers or both. Brokers can assist buyers and sellers in sifting through and selecting the data relevant for them to make proper decisions. Second, a broker may have the social standing, experience, and bargaining skills to effectively bring together buyers and sellers from different locations, clans, or social settings. The broker, who cultivates the trust of both buyer and seller, can bring an element of personalization to trades between parties which do not know or directly communicate with one another. Third, brokers can achieve economies of scale in deal-making by accumulating small supplies/offers from many parties and selling to many other parties. Use of a broker may enable a supplier (or buyer) to stabilize his sales (or purchases) given the plethora of market outlets (and supply sources) which the broker can offer.