Matching on-farm production to market demand
By Andrew W. Shepherd
Piles of rotting produce clogging wholesale markets, mouldy fruit getting mouldier by the day in cool stores, inadequately covered maize stored outside in the rainy season, distraught farmers dumping mountains of tomatoes-such sights are all too familiar in the developing world.
The technical reasons for losses are well known, and since 197X have been the focus of FAO's program on Prevention of Food Losses (PFL): waste can be avoided by improving handling and packaging to minimize damage to produce, designing shops to lengthen shelf life and storing foodgrains to reduce pest damage.
But all this is pointless if people don't want-or more likely can't afford-to buy the food that's being so well handled, skillfully packaged and correctly stored. Governments, civil servants and even donors too often overlook the fact that food losses result not so much from poor handling or storage, as from the fact that too much is produced at one time for the actual demands of the market
Why does this happen?
The simplest answer is that surpluses occur because farmers-whether sophisticated, mechanized farmers in the wealthy countries or poor smallholders in developing nations-tend to do what other farmers are doing. This terd instinct is often a response to market price fluctuations. High prices in one year encourage farmers to plant the crop in the next. With over-abundance prices collapse and few farmers plant the crop in the following year causing prices to rise again.
The cycle begins anew. Eastern European farmers freed from the restrictions of central planning are already discovering that private enterprise farming can be frustrating. In Bulgaria, it was zucchini. High prices for the popular vegetable encouraged lots of farmers to plant it-with disastrous financial consequences.
A glut of limes
Poorly planned crop development-especially failing to relate development targets to effective market demand-can also cause surpluses. In Sri Lanka some years ago a horticulture project distributed lime tree seedlings to farmers. Unfortunately, these farmers lived in areas that already produced seasonal gluts of limes, so much of the fruit was left to rot on the tree or remained unsold in the market. Farmers in areas that produced limes outside the main, glut season were not receiving any seedlings, yet they could have harvested limes when there was a shortage. The visit of a marketing specialist talking about production planning for the market was resented. The attitude seemed to be, It's our job to grow the stuff and your job to sell it.
A market opportunity may encourage several development activities in one country or region when only one program is needed to meet demand. Where schemes are large, the potential impact of project area output on total market supply may not be considered until it's too late. That happened in the Middle East with projects to plant fruit trees in several countries. The agency involved only began to be concerned about possible market saturation more than half-way through the planting program.
A related problem is that development projects frequently target particular areas of a country to promote crop production. This is often for the best of reasons. Perhaps the farmers are poor and could benefit from income-generation activities, and the soils and environment are suitable for a particular crop. But the farmers may be poor because inadequate communications restrict their market outlets, and under these circumstances it makes little sense to promote increased production unless roads are also improved and a functioning marketing system is in place. A project in a West African country encouraged potato production in a remote inland area, but most of the potatoes were left to rot because of poor roads and no transport. Meanwhile, the Central Bank was reportedly granting foreign exchange to importers to supply the capital with potatoes.
The problem with onions
While mistakes at the project level can cause waste and dishearten farmers, mistakes in government policy, particularly pricing policy, can create significant food and financial losses. Faced with a glut of onions, the former South Yemen asked for advice on storage. An FAO consultant concluded that the problem wasnt storage but the practice of offering farmers the same price for onions throughout the year. This provided no incentive for off-season production. The pricing policy was reviewed, and farmers started to produce year-round, significantly reducing the need for storage.
Some years ago, a West African country had a disastrous experience with onions. A scheme to promote production both for the local market and for export foundered when the Marketing Board was left with large quantities on its hands. It had undertaken to buy all onions produced, with no stated quality requirements. Farmers responded enthusiastically to over-generous buying prices, but there was no outlet for the onions because they were the wrong varieties for the world market. Meanwhile importers continued to import onions because no one had told them of the plans to expand production. Cd'Ivoire take heed (see FAO in Action, p. 15).
Onions seem particularly vulnerable to overproduction. Alfred Scherer, a former chief of FAO's Marketing and Credit Service. recalls that when he was working in Uganda in the 1960s an FAO irrigation project promoted yellow and white onion varieties because they produced the best yields in field trials. Production results were just as impressive, but most of the crop was left to rot because consumers had always used red onions and were not prepared to change their taste.
Businesses can be ruined when enthusiasm for production is so great that marketing aspects are ignored. In the FAO publication Marketing Improvement in the Developing World, John Abbott, former chief of FAO's Marketing and Credit Service, writes about Uncooperative Melons. In Chad, a successful melon exporting business was ruined in the early 1970s by a politician, who set up a cooperative to take over from a private trader. The cooperative attracted foreign aid and technical assistance to promote production but paid no attention to marketing. The business collapsed, leaving farmers with tons of unsold melons.
Too many melons
A South Pacific island also had a not very positive experience with melons, this time watermelons grown for export to New Zealand. So great was the enthusiasm among farmers that production and exports increased without any regard to market demand. The produce did not go to waste because consumers in Auckland and elsewhere snapped up the melons at bargain prices, but the farmers suffered. The returns from exporting were so low growers could not cover transport costs, let alone the costs of production.
Governments often offer technical solutions to market surpluses instead of trying to relate production more closely to demand. One favorite-and usually mistaken solution is to set up a processing factory to absorb the surplus. Frequently factories are planned without fully considering demand for the processed product they will turn out. Surpluses of raw material can be vulnerable to price changes and often last for just a few weeks. These are just two reasons why there are so many white elephant factories in the developing world.
To be successful, a factory needs a market that will pay enough so it can pay farmers good prices to provide raw material on a regular basis. If these conditions are not met from the outset, the factory will almost certainly fail.
Storage is another often mistaken solution to surpluses. The idea is that in times of oversupply, produce can be held in store and marketed when prices rise. Yet only a relative few crops are suitable for long-term storage-potatoes, carrots, onions, citrus and apples. Much horticultural produce can be stored only for short periods, which are rarely long enough for prices to rise. And, when produce is brought out of store, it may have lost freshness and quality and suffer from competition with fresh produce. As a result, produce stored so that it will not be sold at a loss sometimes ends up being sold at an even greater loss.
What can be done?
But the situation is not hopeless. Much can be done to try to bring production more into line with market demand and so help reduce postharvest losses.
· Farmers extension workers, development experts and research scientists all need to know! market requirements. They need to understand not only the quantities that can be sold but also the varieties consumers prefer and the ranges of quality for which various classes of consumer can pay. Production specialists need to base their recommendations more on what is most profitable for the farmer than on what grows best in a particular area. To be profitable, farmers have to supply consumers with what they want, and consumers don't necessarily want the variety that gives the best results on a research station.
· Small investments of time and money to research market requirements and the capacity of the marketing system to handle increased quantities help to avoid expensive mistakes. That such research is rarely undertaken may be because of the production orientation of government officials and development specialists, who are responsible for promoting new crops or expanding production of existing crops. This suggests a need for a more multidisciplinary approach when planning development projects. Marketing specialists should be brought in at the beginning to advise on what crops to grow, not at the end to try to sell what has been produced.
· Governments can promote awareness of market needs. Some countries operate market information services, which report on price movements in the major markets of their country. These help farmers decide when to harvest and to which markets they should send their produce. Gluts are minimized and farmers are paid higher prices. Traders can also use the information to divert produce from markets where there is a surplus and prices are low to those where higher prices indicate a shortage.
· Long-term price information can help extension workers advise farmers which crops to plant and when. Using this information, farmers can experiment with early and late varieties to extend the harvesting and marketing seasons. More sophisticated farmers can use plastic tunnels and greenhouses to stagger planting and harvesting dates. Out-of-season production can bring in very high returns and is often more economical than long-term storage, and farmers in developing countries are becoming increasingly aware of these opportunities.
· Governments can encourage production of important crops in areas with the right microclimates. Extending the harvest period is usually more effective than constructing cool stores. In one of Asia's centrally planned economies, the government wanted to reduce storage losses of the country's staple vegetable. Each province was required to be self-sufficient in this staple and interprovincial movement of the crop was not permitted. Although the crop would only grow for a few months of the year in each province, it was growing in one part of the country at any time of year. FAO recommended lifting restrictions on produce movement and placing less emphasis on expensive Improvements to long-term storage.
· Government policy should not encourage overproduction. This applies to grains such as rice and maize in particular. Because these crops can be stored, excess production is not as important a problem as it is with horticultural crops. But long-term storage will cause physical loss as well as quality loss, especially where storage facilities are inadequate. This happened in several African countries in the 1970s and 1980s when government-controlled marketing parastatals subsidized farmers. The result was annual surpluses, which could not be marketed and for which there were no storage facilities. Many governments impose controls on grain movements within their countries. The controls are meant to safeguard regional food security but can often have the opposite effect. If traders cannot legally move produce from one area to another, grain will lose quality in storage where there is a glut, while people go hungry where there is a shortage.
Extension workers ought to be able to advise farmers not only on how to plant and harvest, but also on what and when to plant and when to harvest. To do this, they need an appreciation of the market for produce. FAO's Marketing Group promotes the concept of marketing extension, encouraging extension services to train extension workers in marketing and to appoint a core group of so-called subject-matter marketing specialists within the extension service.
Advice on how to match production to market needs will be extremely important for farmers in Eastern Europe and the former Soviet Union as their countries move from command economies to economies based on free market principles. Where huge state farms produced to pre-set targets, the transition to a market economy will be far from easy.
The challenge will he to develop a clear understanding, at the outset. among farmers and their governments of what is really meant by producing for the market.
By Todd Shields
The horrors of war and famine in Somalia have been paraded on every television screen in the world-but few reports have noted an ominous fact:
The worst of the country's clan violence was visited upon two mainly agricultural groups, the Cushitic Rahanwein and non-Cushitic Bantu, who between them provided Somalia with much of the pre-war food security it enjoyed. No matter how much food aid is delivered or how thoroughly American Marines and French Legionnaires enforce calm, the Somalis' selective decimation of these two groups may have helped doom the nation to chronic food shortages for years to come.
As far back as October, the discrimination was evident.
Inside an abandoned walled compound in the port city of Kismayu, some 200 to 300 people huddle under rude twig-and-plastic shelters.
Visitors appear. Elders display matchstick-thin children, and for lack of a common language appeal mutely for food. At pains to demonstrate their need, they gesture at a boy, perhaps eight years old, who lies weakened on the ground. An ulcerated sore mars his upper thigh; flies graze upon the wound.
There is food in the port, and the group's need is clear. But because they are Bantu, members of Somalia's most disadvantaged minority, they will remain temporarily beyond reach of help.
I can't bring them food, says a relief worker. If I do, it'll just disappear over the wall tonight as armed Somali groups loot the Bantu's food.
What is needed first, he explains, is explicit permission from the town's relief committee, which doesn't meet for several more days. Until then, the Bantu will remain foodless. Judging from their condition, it seems likely one or several children will die in the meantime.
The forlorn group's difficulties have been replicated thousands of times during Somalia's long months of hunger. An agricultural people in a nation of pastoralists, the Bantu have faced special hardship in the country's crisis. They are often the first to suffer pillage, and the last to receive relief, as other Somalis who consider themselves ethnically superior deny their compatriots.
The problem of discrimination-in a country that long considered itself ethnically homogeneous-ranges further than the problems suffered by the Bantu. In a real sense, Somalia's famine has been abetted, perhaps even caused, by the system of clan lineages. In a militarized and atomized society, the Bantu and other farming people considered lacking in prestige suffer heavily at the hands of the purer clans who traditionally dominate society.
Somali society is built on lineage, with some groups able to trace their ancestry back to a single founder. Asked their identity, Somalis recite their forbears the way Europeans recite their street addresses. The system is an adaptation to the harsh conditions of semidesert grazing lands, where the family is the social safety net of last resort. Loyalty to family is the bedrock of identity, while loyalty to larger groups, sub-clans and clans, is less ingrained.
In bad times, it's harder to trust those who are, genealogically, farther away. The circle of trust retracts; those who are not of your group become adversaries, as in the proverb: I and my clan against the world; I and my brother against the clan; I against my brother.
This tendency to schism stands against the cultural picture of a Somalia with one language, one religion and one culture. And it goes far to explain the nearly incomprehensible array of armies and militias that have fought across the land, reducing it to penury much as medieval armies once sacked towns and farming districts in their campaigns across Europe.
Especially hard-hit has been the rough triangle that holds most of Somalia's arable land. The area comprises the valleys of two rivers, the Jubba and Shebelli, and the territory between. In unhappy historical circumstance, it sits between two implacable opponents.
To its west is the traditional home of ousted President Mohamed Siad Barre's Marehan people, a sub-grouping of the large Darod clan. To the triangle's east and north are the Hawiye people, who in early 1991 ejected Barre from the capital, Mogadishu. Much of the continual fighting since then has ranged back and forth across the agricultural triangle, as Hawiye and Darod armies pursue one another over what, to them, is foreign territory.
Caught in the crossfire are the Rahanwein. Like other Somali clans, they are of Cushitic stock. But unlike the others they have adopted agriculture. In their centuries upon the land, they've developed a separate dialect, as different from mainstream Somali as Spanish is from Portuguese. Throughout Somalia's history as a modern state, the Rahanwein have held inferior status, putting forward few important politicians and enjoying little in the way of patronage and position. Their powerlessness has left them with few guns and little organization in the face of the country's disintegration.
They still lack self-confidence, says Murray Watson, an ecologist who has lived and worked in Somalia for 13 years. Other clans, he adds, hold the pastoralists' common disdain for those who till, much as cattlemen disdained sodbusters in the American Old West. If these guys are cultivators, and their fathers are cultivators, they'll look down on them.
With the collapse of the state, old prejudices took on deadly consequences. Barre retreated across Rahanwein land, with the Hawiye in pursuit. Three times in the next 15 months Barre's Darods counter-attacked, striking deep into Rahanwein territory and twice reaching Afgoi, a town just west of Mogadishu. Each time they were driven back.
With each advance or retreat, marauding armies and their thousands of armed camp followers looted and pillaged without restraint. This was partly because the armies received no rations and had to loot to survive. But, say relief workers, the scale of the disaster has a deeper explanation. The supposedly inferior Rahanwein were owed neither respect nor protection.
Destruction was systematic, with wells, ponds, grain stores, seed and livestock consumed, carried off, killed or destroyed. In an especially cruel stroke, two of Barre's offensives took place in April, the most important planting month of the year. It was almost a burnt earth policy, says Rhodri Wynn-Pope, a Mogadishu-based worker for CARE International who has travelled the region.
John Rogge, a University of Manitoba consultant who surveyed the region for the United Nations in August, found virtually no cultivation had taken place for more than a year. Seed and food stocks, as well as almost all other means of production, were systematically looted by both opposing militias as they crossed the area, he writes Livestock herds, once numerous, are now totally depleted from looting, disease and distress selling....the area has rapidly degenerated into the most acute famine belt in the country.
Most of this year's photographs of emaciated, dying children have come from this region. Its capital, Baidoa, has achieved dark notoriety, with 300 or more people dying there each day despite the presence of relief groups and emergency food. Help came too late. The international effort could reach Baidoa only after fighting had subsided.
In April 1992, the Hawiye pushed the Darod to the western side of the agricultural triangle. In the ensuing relative calm, relief groups penetrated the area and distributed seeds and emergency rations, hoping farmers could plant in October for the lesser of southern Somalia's two rainfall seasons. But a fresh Darod offensive in October raised fears that warfare would again engulf the region, making planting impossible.
The cycle-fighting causing famine, which leaves the gun as the only means of obtaining food, leading in turn to more looting-struck other areas of the country before it laid low the Rahanwein. The Bantu, whose status is even lower than the Rahanwein, were among the earliest victims. Descendants of slaves who once worked plantations along the southern Somali coast, they've suffered pervasive discrimination and marginalization-so much so that one Westerner with long experience among them was moved to say, racism is a real factor in Somali society.
The Bantu were underrepresented in government, including local government and in education. While 90 per cent of the Bantu are farmers, they've managed to place few students in Somalia's agricultural schools. A common Somali word says much of attitudes toward these people. They are called addoon, which means slave.
The Bantu were brought to Somalia from territories ranging from present-day Mozambique to Tanzania, as part of the slave trade organized by the sultans of Zanzibar. Many escaped from coastal plantations in the 19th century and established small villages along the forested riverbanks-thus another name by which they are often known: gosha, or people of the forest.
For a time, the Bantu established an independent, and in some respects flourishing, smallholder farm economy. But relations with surrounding Somalis were always fraught with danger, characterized by one scholar as an endless round of raid and reprisal, with the risk of re-enslavement always present.
Colonial rule obviated this risk. But as the modern state expanded government plantations were created. The Bantu increasingly saw their best land expropriated-either for state plantations or for land-grabbers who manipulated new land tenure laws-and saw their area invested by ethnic Somalis. Many became even further marginalized, forced into unremunerative wage labor on the new state farms and reduced to routine dependence on what were once considered famine foods.
You just had this pervasive domination of society, says a Western commentator who, in hopes of one day returning to the Jubba Valley, requested anonymity. Militarily, these people were nothing, and politically they were nothing.
As with the Rahanwein, the Bantu's powerlessness produced dire consequences once Somalia fractured into competing militias. Unable to resist outside force, they at first maintained a precarious neutrality as armies swept through their territory. Soon, they became targets.
The lower Jubba Valley, home to the so-called free Bantu who have never entered a client relationship with a Somali clan, has been closely studied. The Gosha have been hit harder by looting than any other social group in the area, writes Kenneth Menkhaus, a University of South Carolina scholar who lived in the lower Jubba in 1988 and returned to assess its misfortunes. Few villages have been spared repeated attacks by armed men....Food reserved and livestock have been taken away, as have money, appliances, pumps, cloth and anything else of value.
By the time of Menkhaus's return visit-July 1991-the war front between the Hawiye and Darod had passed through the lower Jubba four times. Since then, the region has seen continual military activity, with its principal city, Kismayu, changing hands at least twice.
Each wave of conflict further impoverished the Bantu. But even more damaging were the periods of occupation by either army, both of which view the local farmers as non-Somali. In every case (these periods) have been accompanied by widespread looting and structural damage, assault and, increasingly, massacres, writes Menkhaus.
Bantu in other areas suffered similar fates. Workers for the International Committee for the
Red Cross (ICRC) estimated that 90 per cent of the Bantu on the middle Shebelli-roughly the area upstream from Mogadishu to the border town of Beled-Weyn-have been dislocated. The Bantu of the lower Jubba began moving from their homes in large numbers in July 1992, after their reserves were finally exhausted.
Once the Bantu move, there are special problems in trying to assist them. Relief workers often face blithe denials from local Somalis that any Bantu are in their area, and say they must apply pressure to ensure that Bantu are included in food distributions.
If you are not there to make sure the food gets to them, they may receive only a small, small share, says Erwin Koenig, a technical adviser with the ICRC.
Rogge, who surveyed many stricken areas in August, found the Bantu's plight particularly bad. They were, for instance, in the worst condition of those seeking food in Beled-Weyn, a fact that indicated a more profound disaster.
Most of the Bantu villages south of Beled-Weyn are almost totally deserted and in others the remaining population is in desperately poor condition, Rogge writes. The displaced Bantu are unwelcome and receive low or no priority for food distribution....Likewise, lists of villages provided last season by local authorities to the ICRC for seed distribution contained only a few token Bantu villages.
Such discrimination, to be expected when viewed through the distorting lens of the clan system, is nonetheless profoundly counter-productive. By destroying these supposedly inferior people, Somalis are destroying their own future food supply.