Cultivating the power of real-time awareness

As agricultural value chains in developing countries become over-crowded and hyper-competitive, real-time awareness has never been so important. While digital technology is being presented as a solution,  more efforts have to go into ensuring information satisfies the needs of farmers, traders and other value chain actors who want to engage in evidence-informed decision making. Many organizations that currently produce manuals for farmers do not realize that some farmers have no time to read such manuals from cover to cover but can only consult the publication when a need arises.

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There is a difference between availing information to agricultural value chain actors and making it user-friendly in ways that increase real-time awareness. Most digital initiatives that focus on disseminating information to farmers do not spend enough time figuring out if such information is user-friendly or contributes to real-time awareness. As a result, there is information over-load, especially for particular commodities. For instance, while commodities like maize, cocoa, cotton, tomatoes and banana can be characterized by information over-load, information scarcity is a permanent feature of orphaned crops and livestock. There is more information about cattle production than rabbit farming, for example.  In the absence of smart content developers, digital technology might increase the gap between famous commodities and orphaned ones.

Building new ways of handling evidence

Value chain actors have to be capacitated in analyzing existing data in new ways. As they set and tackle priorities in competitive ecosystems, it is critical to start from existing data or evidence. Every community has its own community software in the form of reliable practices and what has stopped working.  While such knowledge may not have been codified, community members might want to consider what they already know about particular markets and different consumers. Formalizing these ideas and turning them into opportunities can be a good entry point.

Many African farming communities already have a wealthy of information that just needs creative application. They may even advice formal institutions like government departments to search for new insights from unexpected places unlike over-depending on traditional surveys like annual crop and livestock assessments. Formal institutions may also be pointed to new sources of evidence like different types of markets such as spot markets, road side markets, formal markets, institutional buyers and others. This will increase appreciation of the full range of factors affecting consumers’ experiences.

Exposing farmers to new sources of evidence

In most cases, traders interact more directly with consumers while many farmers do not have that chance but rely on secondary sources of feedback. There are also many cases where farmers are fed commercial data sets like advertisements from seed companies or input distributors whose information may be biased towards selling inputs irrespective of effectiveness. The real value for farmers may not be in messages from companies that are selling inputs but combining such messages with local knowledge and advice from independent knowledge brokers like government extension.  Where farmers do not have access to feedback from satisfied or unsatisfied customers, they will continue doing things the wrong way and fail to retain customers. Like all other value chain actors, when farmers tap into effective customer feedback, they will be able to improve relationships with diverse consumers and expand their market share.

Identifying the right value chains

Real-time awareness makes it possible for new farmers and investors to accurately identify value chains in which they can invest profitably. For some commodities, price elasticity can be so high that a fall in price suddenly leads to huge losses. Evidence can show how some value chains can be disqualified by both internal and external factors. On the other hand, commodities like tomatoes may continue to be produced in one area because a lot of knowledge has been generated and applied in the same community for generations such that almost everyone now knows how to produce tomatoes without need for extension support. Some commodities like potatoes and banana can continue to be produced in a particular community because tastes and preferences have been honed and extended over time.

It is through real-time awareness that choices like producing a commodity where it does well in order to generate better returns on investment can be anchored. With the right support, one production corridor can become a market for other production corridors. For instance, the potato corridor can become a robust market for the livestock production corridor. Where some value chains for fruits like oranges and apples have already been developed, support might only be in the form of creating an enabling marketing environment. Through real-time awareness and evidence, agricultural decision makers can see how much is flowing to the market from a particular farming community, how much is left for local consumption and how much is lost through poor post-harvest handling practices. Since what normally comes to the market is the best, if poor quality commodities come to the market it might mean nothing is being left at local levels – signaling malnutrition in production areas.

charles@knowledgetransafrica.com  / charles@emkambo.co.zw / info@knowledgetransafrica.com

Website: www.emkambo.co.zw / www.knowledgetransafrica.com

eMkambo Call Centre: 0771 859000-5/ 0716 331140-5 / 0739 866 343-6

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Empowering communities to evaluate their knowledge

eMKambo is increasingly meeting rural communities that have been schooled into valuing tangible assets like dams and tractors at the expense of intangible assets like knowledge on how to earn more value from those assets. In agricultural communities where assets like irrigation schemes and roads have been built or rehabilitated, people are still unsure how they can unlock value from those assets in the absence of a market for commodities to be produced and transported to consumption zones.

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This is where the ability to evaluate existing knowledge or intangible assets becomes important. Every community has intangible assets in the form of expertise, experiences, ambitions, visions and appetite for risk. However, such intangible assets remain difficult to evaluate and cost. On the other hand, interventions from development actors continue to provide support in the form of tangible hardware as opposed to software issues like knowledge which can turn assets into better lives. Consequences of ignoring intangible assets are often visible in the form of under-utilized assets like dams, irrigation equipment, expensive processing equipment and roads.  If communities are empowered with formulae for assessing the value of their knowledge on using pastures and roads, they can be able to see how such  assets are saving a purpose. For instance, the value of a road can be assessed through high quality commodities that are transported to the market from the community.  Gathering such details means investing in data collection.

Informing commercial transformation

It is through consistent data collection and analysis that communities can inform their broader commercial transformation on the basis of available resources such as water, pastures, tourism potential and others. Through collecting data on what gets out and comes into the community, it is possible to see the value of a good road network or a water source. While some people may think this is a difficult process, many value chain actors in any community already have data and tools that can easily be integrated to provide a complete picture for the entire community.  However, unless there is consensus on what needs to be measured and understood, the purpose of collecting the data is lost. Community members have to agree and focus their data collection vision of what they want to achieve. This will be the foundation on which community data-driven muscles can be built. Eventually data will begin to influence community business and social outcomes in ways that align all actors doing the same thing. What is the point of investing in a well-furnished house when the household continues to suffer acute malnutrition?

It is time development agencies move away from providing hardware like infrastructure to supporting the germination and application of software like knowledge and the right attitudes. Government departments and local authorities have lots of data but such data is either outdated or inconsistent such that it is difficult to use. While some knowledge is in people’s heads, mechanisms of collecting it can be set up so that collection becomes a fluid process.  Providing a structured data collection method can ensure cleanliness of the data in ways that simplify usage.  Communities can identify people responsible for cleaning and ensuring consistency in the quality and availability of data. In addition to ensuring data is available when required, it is also important to determine different audiences for different sets of data. Decision makers may need different data from new comers into a community. Local business people like agro-dealers may be more interested in business metrics than general insights.

The power of forecasting and early warning

Capturing data at every information and decision-making node enables communities to see opportunities ahead of everyone else. There have been cases where outsiders see opportunities which local people do not see due to lack of a culture of collecting and analyzing data at local level. A transparent data collection system is a foundation for more reliable decision making and accurate forecasting. This will also assist farmers in gathering valuable insights on the behavior of different commodity buyers, instead of relying on intermediaries who often tilt business outcomes in their favor. Transparent pricing of diverse commodities can also be enabled through consistent flow of data about commodity volumes and prices in diverse markets.

 Getting the right data in the right place is the first step in building robust commercial capabilities for farmers and agribusiness that are struggling to break through. Better and more informed decisions can be arrived at when high quality and trackable data is available throughout the agricultural ecosystem. It is through reliable and consistent access to customer data that value chain actors can be able to see growth opportunities and accurately meet customer needs.

charles@knowledgetransafrica.com  / charles@emkambo.co.zw / info@knowledgetransafrica.com

Website: www.emkambo.co.zw / www.knowledgetransafrica.com

eMkambo Call Centre: 0771 859000-5/ 0716 331140-5 / 0739 866 343-6

How ecosystems are replacing value chains in African food systems

Instead on choosing a few value chains in which to specialize, some agribusinesses in developing countries are being compelled to embrace an ecosystems approach to agriculture.  This is because each commodity has its limits. Many contract farming models are collapsing as value chains evolve into ecosystems where different agricultural commodities either complement or substitute each other, thanks to ICTs and the knowledge economy. The definition of staple food is also becoming increasingly subjective, especially given that some households have more food choices and might consume less of what is traditionally considered their staple food.

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The influence of SMEs

In countries where the Small and Medium Enterprise (SME) sector is expanding at the expense of big corporates, value chains are rapidly giving way to ecosystems. For instance, rather than supplying food to one big company, food traders are forced to follow scattered SMEs whose demand volumes vary a lot. This phenomena is re-defining food supply models and ecosystems. Where a food trader used to supply tons of potatoes or sugar beans to one company, the consignment now has to be split into the needs of more than 20 different consumption zones who also need different other foods at once.

The knowledge economy is also challenging data collection methods like random sampling. Targeted sampling is becoming more ideal because champion farmers and traders have different knowledge needs from new farmers and traders. This means the classification of farmers should not just look at land and other resources but consider knowledge, skills and experience. Tools that are used to reveal poverty and vulnerability levels are different from those that explore commercial innovation and growth.

African food markets as ecosystems, not value chains

In addition to meeting the needs of diverse consumers, one of the critical roles of African informal food markets is consolidating commodities and knowledge from different sources and distributing to different demand zones. As commodities are demanded by traders, processors, consumers and other actors, the demand pattern is more of an ecosystem. Value chains are limited to cases where farmers are contracted by a company to supply specific commodities. Still in those situations, the temptation to turn relationships into an ecosystem continues, as exemplified by side-marketing and side-demand for knowledge.

These markets also support knowledge ecosystems between consumers, farmers, traders, transporters, processors and different actors. Very few commodities can currently be distributed directly from farm to factory without passing through other actors like aggregators whose role include grading and sorting volumes before distributing to different users. On the other hand, the cultural-rootedness of food is creating new markets and ecosystems.  The best people to market culturally-rooted food are those who grew up eating such food and know different ways of preparing it. The true commercial value of yams is not in areas where it is produced abundantly but in areas where it is not found.

Food ecosystems are fragmenting value chains such that tomatoes do not just travel straight from farm to factory due to competing uses which sometimes divert supply into different routes before commodities get to the processing stage.  Informal channels and relationships play a part in this distribution process.  That is why picking a few value chains from an ecosystem comprising more than 80 different commodities may not be informative. Most of these commodities either supplement or substitute each other.  A production corridor approach is more ideal because it shows commodities coming from different areas and how they either complement or substitute each other.

Paving a commercialization pathway

It is through careful characterization of consumers that effective commercialization pathways can be cultivated.  Subsistence consumers may not assist in pointing the commercial direction. Policy makers in developing countries have a duty to explore different incentives for farmers in order to avoid despondence and loss of confidence in the market. Many smallholder farmers are not willing to wait for the slow marketing process and random walks associated with different markets. When farmers become impatient, traders end up warehousing food on the market and wait for buyers when ideally such warehouses should be on the farm, so that traders get in touch with farmers in response to demand.

As part of promoting commercialization, farmers who do well should be incentivized the same way farmers who are not doing well end up receiving free inputs. Areas and districts which supply more commodities to the market should also be incentivized in ways that recognize their contribution to the Gross Domestic Product (GDP). However, incentives are difficult to frame when there is no culture of collecting data showing volumes of commodities coming from different production zones. When such data is available, it becomes easy to ensure proceeds from horticultural exports cascade to horticulture farmers so that they see their value of their work.  Such incentives are better offered at community level.

Unfortunately, at the moment most farmers stop where serious commercialization begins. Once farmers receive their meagre once-off payment, commodities move into private hands and government benefits through Value Added Tax, whose benefits do not cascade down directly to farmers. That is why some banana farmers wonder why they are given less income when they hear that their commodities produce various products like yoghurt, fruit juices and many different products. Diverse forms of incentives can address some of these genuine concerns.

Limitations of some conventional incentives

Field days and agricultural shows should desist from incentivizing one farmer without recognizing the entire community which encourages the winning farmer to work hard and provide the necessary competitive environment that allows him/her to win. In most cases, field days are stage-managed and turned into branded commercial events where input companies compete to sell their inputs. These events should focus more on knowledge sharing as opposed to advertising, in misleading ways. When government extension officers who are supposed to be neutral knowledge brokers are branded with t-shirts and hats from a seed company, their objectivity becomes questionable.

 

charles@knowledgetransafrica.com  / charles@emkambo.co.zw / info@knowledgetransafrica.com

Website: www.emkambo.co.zw / www.knowledgetransafrica.com

eMkambo Call Centre: 0771 859000-5/ 0716 331140-5 / 0739 866 343-6

The role of data in accelerating agricultural transformation

The capacity of data to accelerate agricultural transformation in developing countries is no longer questionable. However, a remaining challenge is limited capacity to set systems for continuous data collection. Without that capacity, it is difficult for policy makers to put in place a set of coherent building blocks for delivering tangible value to farmers, consumers and use agriculture in addressing unemployment.

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Data as instruments of culture change

Traditional top down extension approaches are being challenged as mobile technology democratizes knowledge. Many farmers who used to depend entirely on extension officers are now able to gather data, seek, sense and share knowledge. While there are many cases where the value of government extension cannot be ignored, extension officers can creatively use data to expand their coverage and increase their quality of services. Instead of one extension officer engaging with more than 500 farmers on a face to face basis, data and evidence can show which farmers need attention and which ones have become champions and can actually be conduits of advisory services.  Farmers who have been producing certain commodities for generation cannot continue to be fed the same advice.

How data can reveal market behavior and guide investment decisions

It is through data collection and analysis that the entire agricultural sector can see the types, varieties and volumes of commodities flowing from one farming community to specific markets, in ways that can inform investment decisions.  If more than 60 percent of fruits come from three out of 10 provinces, a case can be built for setting up processing factories in the three provinces.  However, in the absence of data, policy makers can recommend setting up of fruit processing factories in urban centres, where, although close to bigger markets, moving raw fruits from farming areas for processing in cities can be  more costly than if processing happens close to production areas.

On the other hand, data about volumes of commodities from the three provinces may not be enough if it does not show volumes consumed locally. A province can produce high volumes of fruit but most of it can be consumed locally due to high population density.  In that case, setting up a local fruit processing factory will be a waste of resources because the factory will compete for raw materials with local consumption such that it will remain dormant for most of the time.  Competitive forces at producer level often force some farmers to sell after knowing the surplus of staple crops. That means a processing factory may not be guaranteed of surplus raw commodities.

Balance between food security and wealth creation

There should be a balance between food security for the nation versus wealth creation for the farmer and the nation.  After satisfying food security, what about wealth creation? A model is needed to strike the right balance between food security and the market. Some of the most useful information that should be collected in farming areas goes beyond farm sizes and availability of natural resources like water and favorable climate.  Such resources are not useful without detailed farmer characterization indicating knowledge, skills base, experience, sources of advice, mechanization, preferred markets and risk appetite.

Picking the impact of different interventions

The impact of commodities supported by development agencies can also be picked through data, particularly on the market. There have been many cases where, supporting the production of particular commodities by development organizations has led to serious distortions on the market both on the input and output side.  For instance, where development agencies provide free inputs, local agro-dealers who sell inputs are short-changed and where small grains production is supported without equal support to the market, gluts become the order of the day.

Important metrics that should be tracked include monthly activities in agricultural markets, monthly active versus daily active ratios, consumption patterns, consumption growth, food supply models, sources and frequency of supply from different sources. Besides informing policy and programming, such data can enable farmers and traders to connect with customers at a much deeper level. Some of the models that can be fueled through data include a market demand and supply model that accommodates warehousing, aggregation, cooling, ripening facilities and other value addition activities like processing.  All these initiatives have to be backed by credible evidence.

The impact of agriculture on dietary diversity can be seen through longitudinal data collection and analysis. Data can also show the extent to which a country’s diet is broad or narrow.  For instance, some evidence is beginning to show that Zimbabwe’s dietary diversity score is based on 12 commodities, although the country has a wide range of food systems. The country’s rural populations depend on less than six food groups yet they produce a diverse range of foods. Evidence is also beginning to reveal how rural finance does not always lead to better nutrition because people focus on acquiring assets instead of investing in better nutrition. Longitudinal data can also reveal factors that predict stunting among children. If governments and development agencies want to sustain their achievements, they have to invest in data collection and effective feedback loops. Without data, it is also difficult for academic institutions to become change agents in addressing food and nutrition insecurity.

charles@knowledgetransafrica.com  / charles@emkambo.co.zw / info@knowledgetransafrica.com

Website: www.emkambo.co.zw / www.knowledgetransafrica.com

eMkambo Call Centre: 0771 859000-5/ 0716 331140-5 / 0739 866 343-6

The curse of forgetting useful information and knowledge

eMKambo recently heard a story of how a veterinary doctor surprised livestock farmers when he told them he did not have the expertise to artificially inseminate their cattle. The farmers had travelled from distant areas to come and witness the first scientific experiment in the history of their rural farming community.

There is no shortage of similar stories in many developing countries. Agricultural experts who do not practice after training tend to lose the most important knowledge gained through years of academic training. If sophisticated people can forget knowledge they will have acquired painstakingly, what about illiterate people with little exposure. One of the dirty secrets of farmer training is that farmers forget more than 80 percent of what they are taught within 24 hours of the training experience. Unfortunately, many training organizations and initiatives spend billions of dollars every year on training knowing full well that most of that knowledge will quickly disappear.

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A case for building local memory

One way of addressing this challenge is establishing and strengthening community structures and processes that can scaffold information and knowledge so that even if people move out of communities and organizations some of the knowledge remains. In the absence of such structures through which knowledge can be socialized, communities will continue to lose a lot of knowledge while more resources will continued to be poured into training initiatives that do not make a difference.

Farmers and other value chain actors that are immersed into farming as a business and other training processes tend to be not sure about which bits of information will be useful in the long-run. Even if they can try to keep records, when faced with an immediate challenge, it is difficult to call up relevant information from their records and memory. Organizations that regularly bombard farmers with different advertising messages worsen the situation. For instance, while providing farmers with information about more than 30 different maize varieties is considered a good idea in terms of broadening choices, farmers end up confused and make subjective choices. On the other hand, while there is a tendency to think that farmers can learn through events like field days and agricultural shows, knowledge sharing is a process embedded in how farming communities work and not an event. As a result, most field days and agricultural shows are characterized by stage-managing reality.

 Return on Investment in training

Without clear formulae for determining return on investing in training, there is a danger of continuously misallocating scarce resources on training programmes that do not change lives. Instead of surfacing unarticulated needs, some of the tools traditionally used to conduct training needs assessments confirm biases of those funding the training. Focusing on long-term information and knowledge retention as well as well behavior change means there is need to pay more attention to what happens after training than during training.  Unfortunately, there are often no resources devoted to activities after a three to four year programme by development partners of government interventions.  That means information and knowledge acquired during a particular programme also disappears with the phasing out of the programme.

Is keeping records a panacea?

There is an increasing tendency to blame farmers for not keeping records, yet record keeping requires different levels of literacy beyond the capacity to read and write. In addition, forcing smallholder farmers with a few goats and cattle to keep records is expecting too much from busy people trying to eke a living using meagre resources. They might keep records for a short period but soon get absorbed into the demands of daily living. It makes sense to have individual farmer records centrally collected, consolidated and frequently updated by an institution like the local extension department which can assume the role of a knowledge centre. Scattered records among individual farmers become valuable when consolidated for a particular purpose like luring investors into the community so that they match size of investment with potential for growth.  Otherwise, keeping records without a clear purpose is a meaningless exercise.
charles@knowledgetransafrica.com  / charles@emkambo.co.zw / info@knowledgetransafrica.com

Website: www.emkambo.co.zw / www.knowledgetransafrica.com

eMkambo Call Centre: 0771 859000-5/ 0716 331140-5 / 0739 866 343-6

Market information and knowledge as therapy

When farmers who have spent years looking for satisfactory answers to their challenges finally get a solution, such a moment of truth becomes a moment of healing. A different feeling often embraces farmers when they finally discover that agriculture markets are always in a random walk such that price is just one part of a complex ecosystem influenced by several factors. They begin to realize that financial and non-financial resources as well as production volumes, surplus and frequency of participation in markets have a bearing on the behavior of agriculture markets.

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Capacity assessment as the foundation for coordination

In addition to assessing availability of natural resources such as land and water, the ability of farmers to consistently supply a particular market has to consider their different capacities. If you want to enhance farmers’ skills in using available resources, you need to know their individual and collective capacities. Few initiatives are as difficult as trying to coordinate people with different capacities. Some farmers can become faster knowledge processors when they move to a different commodity while some can behave differently.

eMKambo has repeatedly noticed that many African farmers no longer want basic advisory information but now require assistance in building networks, knowledge sharing platforms as well as conversing with the market, interpreting market trends and making sense of different market expectations. Farmers are now also keen to know about changing consumer patterns. They also now need support in processing data into budgets and other insights that can demonstrate returns on investing an agriculture. For such farmers, meaningful budgets should be accompanied by cash flows showing how much a farmer will remain with after using different inputs and selling commodities to particular markets.  This is where a market becomes critical in providing information about revenue.

Academic budgets which leave out a lot of important contextual issues are becoming useless. For instance, a cabbage budget cannot be the same for farmers in different climatic conditions and proximity to markets. Some of the critical questions farmers are now keen to answer include:

  • What should I consider when framing a budget?
  • How do I know I am making a profit from my commodities?
  • How can I charge for family labor?
  • What has changed in the way I produce and market commodities over the past few years? This speaks to farming history.

 Are farmer issues similar everywhere?

The only common thing among farmers everywhere is that they all need knowledge in order to produce better results. However, they cannot be the same everywhere due to different socio-economic drivers. For instance, farmers in border towns tend to have totally different stories about farming. Those in livestock areas also have different stories from predominantly crop farmers. Those in valleys that receive rainfall throughout the year also have different stories about agriculture.  Even within the same area, there can be different stories from three to four farmers:

  • Some have a lot of resources but do not want to farm, preferring to be a market for others.
  • Others provide labor although they have their own land and other resources.
  • Some use the land for subsistence just to keep the land working.
  • Others farm to supplement income.
  • Some do farming as a business and this group can constitute less than 10% of the people in a community. Although this group can grow cash crops, the first preference is meeting household needs. That is why some farmers end up locked in contracts.

In irrigation schemes, not everyone has capacity. Some may want to continue producing for household consumption, while other want to combine subsistence production with food reserves. Another cluster can comprise subsistence production with surplus for the market, although surplus for the market may be unplanned. The first preference is producing what they consume, for instance, leafy vegetables. On the other hand, transition to peas, sugar beans and potatoes demonstrates a change of mind set and germination of a commercial mindset.  Assessing the capacity of farmers can increase chances of noticing those who are ready for commercialization.

 

charles@knowledgetransafrica.com  / charles@emkambo.co.zw / info@knowledgetransafrica.com

Website: www.emkambo.co.zw / www.knowledgetransafrica.com

eMkambo Call Centre: 0771 859000-5/ 0716 331140-5 / 0739 866 343-6

Slow knowledge and fast knowledge in African Agriculture

While African countries neglect their informal economies in planning and policy development, the informal sector provides several avenues of looking at knowledge. One of these avenues is the relationship between slow and fast knowledge. Commodities flowing into informal markets from farming areas reveal the extent to which slow and fast knowledge have distinct characteristics.

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Slow knowledge

This knowledge is associated with commodities like beef, eggs, maize, groundnuts and small grains, among others whose characteristics do not change fast. Once you have acquired knowledge on beef or maize production, that knowledge stays with you for a long time without drastic change. These commodities also tend to have fewer, manageable varieties and breeds. Their behavior in the market does not change suddenly. For instance, consumer tastes for maize meal and beef have stayed the same for decades in many African countries where maize and beef are considered staples.

It seems there are barriers to exiting the consumption of these consumption just as barriers to entry could be prevalent. People who grew up eating Sadza/pap or Ugali do not just stop consuming it. Starting to eat small grains when they have not been your staple can also be challenge, especially to young urban consumers. As a result getting out of regular staples and moving into new food systems is a slow knowledge system. You do not just start eating finger millet but you will take some time to develop some taste. Production knowledge for these commodities also stays the same for a while. There are no 10 different ways of growing maize or keeping beef cattle.

 Fast knowledge

On the contrary, horticulture is about fast knowledge. Most horticultural commodities are characterized by frequent change of tastes among diverse consumers. There are also wide varieties of vegetables and fruits whose tastes also vary significantly. Potatoes, for instance, have several varieties -not to mention tomatoes. Consumer preferences also vary remarkably.  Some consumers prefer large potatoes for chips, some prefer potatoes from red soils while others want small sizes for different reasons. Commodities like onion, tomatoes, potatoes and cabbages all have a wide range of varieties. Variety, quality, taste and ripening stage, all influence the speed of knowledge acquisition. This forces producers to embrace fast ways of seeking and absorbing knowledge in order to satisfy market needs on time. Perishable knowledge is also a key feature of these commodities. Prices are highly perishable and what you knew yesterday may not be relevant today.

Staying up to date with fast knowledge

Fast, perishable knowledge calls for systems that can gather and track information in real time. That is why a coordinated system from planting to the market is very important. Without such a system, production knowledge will always lag behind the market.  Unfortunately, most African countries seem to have a skewed knowledge generation system, biased mainly towards production. The agricultural production side tends to have more actors than other parts of the value chain such as logistics, marketing and value addition. Since it is often not clear who is responsible for collecting and sharing information and knowledge along the entire value chain, privatization of information and knowledge is common particularly on the market side.

While traders are usually blamed and labelled middlemen, farmers who already have relationships with traders are satisfied and do not complain. As an institution, each informal market has found ways of consolidating its knowledge and relationships between producers, traders and consumers. Farmers and other actors who complain about middlemen have not invested in building relationships with the market. Fast-moving informal markets do not want to work with people who do not consistently supply commodities.  The market has its own plans. By showing up randomly, farmers bring unsolicited commodities which they try to foist onto the market. Traders end up taking what they had not planned to take because farmers will be desperately in need of money to go back home. This scenario reduces farmers’ negotiating power compared to farmers who will have cultivated a relationship with the market.

The multiplier effect of revenue circulation in informal markets

A significant feature of informal markets is that revenue has enormous multiplier effects due to the speed at which money exchanges hands. Where a supermarket would sell commodities and keep money in the safe for a week, a dollar can exchange hands among 500 people a day in informal markets, purchasing commodities $500 per day. A dollar that will have been locked in a safe will not generate such value. Since Gross Domestic Product (GDP) is based on the multiplier effect of money in circulation, the informal market can be said to be the biggest contributor to GDP than organizations that tie down money in ways that make it impossible to circulate. The economy is about money exchanging hands. If everyone constrains money from circulating there is no economy to talk about.

While formalization is being touted as a solution, it introduces bureaucratic systems that slow down the movement of money. Systems are usually associated with mistrust. The informal market has built its own trust-based system, which is why it is always moving fast.  Formal systems like banking are handicapped by excessive systems because they are run on the basis of mistrust. Where there is trust there is no need for excessive paper work.

 

charles@knowledgetransafrica.com  / charles@emkambo.co.zw / info@knowledgetransafrica.com

Website: www.emkambo.co.zw / www.knowledgetransafrica.com

eMkambo Call Centre: 0771 859000-5/ 0716 331140-5 / 0739 866 343-6