What the world can learn from African ways of valuing Agricultural Commodities

What the world can learn from African ways of valuing Agricultural Commodities

From Makola market in Accra (Ghana) to Mbare market in Harare (Zimbabwe) and then off to Nairobi in East Africa, people’s agriculture markets (informal markets) have a unique language. Typically different from that used in the formal market, this language expresses the value attached to agricultural commodities by farmers, traders, transporters and consumers. While the formal market is fond of talking in terms of kilogrammes of tomatoes, metric tons of maize or rice, people’s markets express commodity value in terms of buckets of maize, boxes of tomatoes, baskets of bananas and bundles of vegetables, to mention just a few. The table below depicts examples of the language (units) used in Mbare wholesale agriculture market in Harare in June 2015.
18 august 1

According to farmers and traders, the people’s market is dynamic and fast – moving auction system, particularly in the morning.  That means attending to hundreds of customers will certainly become cumbersome if a farmer or trader has to weigh tomatoes or sugar beans for every customer. To cope with this challenge, actors have established standard ways of determining the value and prices of agricultural commodities. When dealing in horticulture commodities such as vegetables and tubers such as sweet potatoes, using kilogrammes to sell a commodity leads to loss of customers, the majority of whom are not patient. Kilogrammes work for commodities like beef in a butchery where a seller can just remove a small piece of meat to make sure a buyer gets exactly US$4/kg. For potatoes, cabbages, butternuts and other commodities it is difficult to accurately translate value into kilogrammes and relate this to price in ways that satisfy busy customers. Mbare farmers market operates from 5 am to 11:30 am and that means farmers have six hours to attend to thousands of buyers.  If each customer insists on having what s/he buys weighed and translated into kilogrammes, farmers and traders will save very few customers.

The majority of customers in the people’s market such as vendors and individual household consumers are not interested in kilogrammes but volume expressed in cups, bundles, pockets, buckets and baskets. The volume of commodities within a container can be seen but you can’t see kilogrammes which can be expressed through manipulated weighing scales.  In a butchery, a single scale can be used to sale five different types of meat and the seller is the only one who knows where to press if he wants to sell bones or stake.  The customer is not satisfied since s/he does not fully participate in the measuring process whereas a cup of beans can be seen.  In the people’s market, it is also easy to adjust volume than temper with kilogrammes. If there is a shortage of oranges, where a pocket of 10 oranges would go for a $1, the same pocket can contain eight oranges for the same price.  Customers are often put off by a price increase but do not mind a decrease in volume/quantity.

18 august 2

Many customers, particularly the illiterate are not conversant with kilogrammes, grams, millilitres and other formal expressions of volume and value.  A common language like a cup, bundle, bucket, basket, pocket and a 50kg sasseka of butternuts are used on a daily basis, making transactions very smooth. This language also simplifies commodity exchanges, for instance, a box of tomatoes can easily be exchanged with a sandak of bananas. Converting tomatoes and bananas into kilogrammes will not make sense given different water content. In addition, most people’s markets do not have heavy duty weighing scales because most of the commodities are not sold in bulk to individuals but each individual buys a sizeable portion.  When selling maize, the people’s market uses buckets and everyone knows that three buckets make up a 50 kg bag and roughly 60 buckets of maize make up a ton.

Water content within different commodities is also an issue against use of kilogrammes. For example, five tubers of sweet potatoes from one farmer can weigh 3kgs while three tubers from another farmer can weigh 3kgs.  What differs here is the water content.  From the marketing side this creates problems since a farmer whose commodity has more water content becomes uncompetitive. For beans, moisture content as expressed in kilogrammes can also rip off customers. The people’s market has a smart way of rationalising all these unforeseen problems by resorting to volume – e.g., a pocket full of sweet potatoes.

Towards local ways of measuring and valuing agricultural commodities

Transactions in agricultural value chains must be smooth.  Where we don’t have technology or equipment to measure moisture content and other attributes, there is no point in complicating the market by imposing a western way of expressing the value of local commodities.  Actors in the people’s market have developed a dynamic knowledge system able to identify and characterise commodities in terms of water content, ripeness, taste, sweetness, etc.  These skills are now used to differentiate prices (value, etc.,) than using kilogrammes which do not say much about the value of a commodity.  Given that most smallholder farmers do not have weighing scales, introducing weighing  scales in the people’s market contributes to unsatisfactory deals which sometimes lead to side-marketing.

The majority of farmers who bring commodities to the people’s market understand measurements and expressions of value in this market and by the time a farmer supplies groundnuts to the market, s/he will have attached a value to his/her commodity.  Major customers such as vendors do not have scales but buy for sale to households most of whom also do not have scales.  The language has to be understood right through. Most actors in the market know how many cups of beans make up a 5 litre tin, how many 5 litre tins make up a bucket and how many buckets make up a ton of beans.  A viable farmer will also tell you, when properly managed, a single tomato plant gives you at least one and half to two boxes.

In livestock sales, the majority of smallholder farmers go back home from the market dissatisfied due to the absence of a transparent language that they can interpret. We have seen some farmers go back with their cattle after suspecting some connivance between cattle buyers who measure livestock worthy through kilogrammes. Some farmers often over-feed their livestock and give them too much water on the belief that weight matters.  Often these farmers are disappointed when buyers introduce other market parameters such as choice and super grades.

The most satisfactory market transactions are conversations where both sellers and buyers negotiate while looking at the commodity.  The people’s market has a remarkable way of carrying these values along the value chain.  Knowledge on the use of buckets, baskets, boxes, bundles, crates and other measurements in the market has come a long way.  Obtaining information from the people’s market and expressing it in dollars or cents per kilogramme may not be helpful to farmers, transporters, traders and the majority of consumers who do not speak in terms of kilogrammes. Policy makers and development partners have to recognize the way commodities are measured and valued in the people’s market.

While food security in most African countries is measured  in metric tons of maize or rice in strategic grain reserves, what about tubers like potatoes and sweet potatoes whose value and quantity is expressed in a different practical language?   The value of a commodity should be determined by the market which has its own language.  The people’s market (informal market) has a rich language which can show the distinctiveness of African economies rather than continue hanging onto elite ways of valuing commodities.   The expansion of people’s markets in almost all African urban areas means more than 30% of cash circulating in indigenous commerce is exchanged through a common language not kilogrammes, millilitres and metric tons.  Understanding this language will help African countries in accurately estimating their commodity values in ways understood by the majority.  African Gross Domestic Product (GDP) measurements should incorporate ordinary people’s understanding of value.

Formal institutions like universities and research institutions, some of which have been around in Africa for more than 100 years, are still expressing knowledge in western measurements like tons and kilogrammes instead of learning and adapting from the people’s market. To show that they are true adaptive learners, actors in the people’s market have created containers and measuring systems out of existing materials rather than importing. For example, cardboard boxes and planks that other people would throw away and burn have been fashioned into boxes and crates for selling tomatoes, mangoes, bananas and other commodities. Baskets are also creatively weaved from locally abundant reeds.

Banks and other financial institutions should understand the language used in people’s markets  because these measurements are the ones translated into business growth patterns and performance.  If you are going to fund a farmer or trader, the language is in boxes not kilogrammes or hectares.  The question to a farmer should be how many boxes are you going to produce per plant not how many kilogrammes or tons per hectare.  Boxes translate to projected sales and potential to repay loans.  Since farmers, traders, transporters and the majority of consumers understand bundles, baskets, buckets, pockets and other practical ways of expressing agricultural commodity values, why should African policy makers and development partners continue foisting a foreign language in indigenous commerce?.  If the UK can still speak in terms of miles instead of kilometres and the USA still measures fuel in gallons, developing countries should also measure and expression the value of their commodities in ways that make sense to the majority.

More information:

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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