Agriculture Business

Why each agricultural food commodity needs a solid profile in the market

Agricultural commodities

By Charles Dhewa

The COVID19 pandemic has provided sufficient reasons why agro-based countries should not wait until there is a crisis to invest in data collection, analyses, and sharing. Given the extent to which agriculture is a baseline for most African economies, the value of agricultural data is increasing daily. If organizations working in the agriculture and food sector do not come together to share and manage data, they will not be able to create meaningful value individually.

The power of commodity profiles

Almost every domesticated crop and livestock has an agronomic profile in terms of how it can be produced. However, beyond crop and livestock census and production factors, the most fundamental but undervalued details are market profiles for each agricultural commodity. This is important because agricultural commodities participate in a competitive environment and, like any other product, areas of improvement should be identified towards meeting customer expectations. It is important for farmers to know market profiles and performance of commodities that they produce. Unfortunately, most farmers focus on production and productivity but lack information on market-related profiles and performance.

 

Know thy competitor

Farmers also need to know competitors of their commodities (very close substitutes that compete with what they produce) because any change in the price of their commodities in the market results in a significant change in demand of the same commodity as consumers move to or from substitutes. When farmers reduce a price for a commodity that does not have close substitutes, such an action has no influence on demand because consumers have no other option.  Conversely, in cases where a commodity has very close substitutes when farmers reduce prices, they tend to attract more customers from the close substitutes. Examples of close substitutes are leafy vegetables like Covo, Rape, and Tsunga as well as sweet potatoes and yams (madhumbe) which often compete for customers because they are very close substitutes. 

 

Know thy companion

It is also important for farmers to be aware of complementary commodities that are demanded in combination with other commodities. For example, carrots, peas, and green beans are complementary commodities that often move together. The same applies to cauliflower and broccoli.  Rather than just producing cauliflower, it becomes wise for farmers to produce broccoli together with cauliflower because these are demanded as a combination. Once you find a market for broccoli you have found a market for cauliflower.

 

Extending these issues to nutrition

Developing thorough market profiles lays the foundation for examining the extent to which agricultural food commodities that substitute or complement each other in the market have potential to do the same from a nutrition perspective. When that is known farmers will be persuaded to produce commodities that nutritionally complement or substitute each other throughout the year. After consolidating the finer details, next steps should include mapping major production zones in order to align production zones within supply chains. As supply chains are smoothened, market-related challenges are also addressed automatically in ways that take farmers to the next level like from mass to formal or export markets, acquiring new knowledge in the process.

 

The need for strong links between farmers and markets saved by middlemen cannot be over-emphasized.  Across many African countries, farmers see middlemen coming to buy goats and other livestock in bulk but they never ask where their goats are being taken to and what are they going to be used for? Several underground markets exist but there is no mechanism for farmers to access such markets. That is why indigenous small livestock animals are still being marketed through informal channels although demand is rising. 

 

Unless data on these trends is collected, consolidated, and shared, such information and knowledge will remain hidden. One of the issues is about diverse measurements used in rural areas where crops like maize are usually measured in scotch-carts which are then converted into tons by formal knowledge systems. On-farm yields are measured in a number of scotch-carts not tons. Such details can eventually be the basis for comparative advantage trading between districts or communities as fluid data shows what is abundant or lacking in different communities or districts.

About the author

Byron Adonis Mutingwende