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72 | Sub-Saharan Africa (SSA) Report

tea and cotton through small-scale production systems are unable to create new jobs or reinvest in alternative market sectors. Thus countries and individual farmers who rely on cash crop production for revenue are obliged to continue to grow and sell these commodities, no matter how low prices fall (Robbins and Ferris, 2003).

While the neo-liberal principles of structural adjustment programs led to trade liberalization in many countries with exchange rate adjustments, a decrease in trade tariffs and abolishment of parastatal marketing boards left African producers facing inequities in international trade with mainly the EU, the United States and Japan, which continued to protect their markets against imports from developing countries. The support and trade protection measures of industrialized countries reduced net agricultural exports of developing countries by nearly US$40 billion, resulting in an annual loss to agriculture and agroindustries in developing countries overall of US$24 billion (Orden et al., 2004). If industrialized country support policies and trade barriers were removed the value of SSA net agricultural exports might increase by one-third, increasing the value of agricultural GDP by about US$2 million (Orden, 2004).

Trade has significant potential to benefit the poor but only if enabling policies and institutional infrastructures are in place. Advocates of market liberalization, however, concede that the notable exceptions to this rule are African countries where growth is not evident. Globalization has further exposed and intensified existing structural and institutional weaknesses in some SSA countries. The expanding global market requires consistent economic policy formulation and implementation and transparency in governance.

3.5.3.2 Market infrastructure, links and barriers
Robust market infrastructure is important, and will underpin Africa’s ability to benefit from new trade opportunities. New export opportunities are emerging for nontraditional export crops, livestock production and processed foods, but mostly for producers who are well connected to markets and who can meet quality standards. To capitalize on this potential requires regional, national and local markets to be linked more explicitly than they are currently (Diao et al., 2005).

The following elements comprise a strategy to stimulate broad-based growth in agribusiness by developing microand small-enterprise agricultural production and marketing (Steen et al., 2005):

  • A policy and regulatory environment that provides incentives for small-scale producers and micro- and smallenterprise participation in markets.
  • Vertical links—and systems of vertical coordination that take a long-term, inclusive approach to working with small-scale producers and small and medium enterprises.
  • Horizontal links and cooperation among like firms to reduce transaction costs and achieve external economies.
  • Upgrading of both the chain and firms in the chain by promoting product and process innovations, improving the flow of information and learning, and addressing systemic constraints.
  • Support of markets to ensure sustainable access to finance, business services and inputs.
  
  • Competitive strategies that bring these elements together into commercial solutions that offer developmental benefits, i.e., national branding, penetration of niche markets and social marketing strategies.

Globalization and the increased competition that accompanies it requires African agricultural producers to build their capacity to comply with exacting standards of food quality and safety, as well as production (e.g., in markets for organic produce) and differentiate their products from those of their competitors to compete favorably in industrialized country markets.

This requires an AKST system and a market infrastructure that meets producers’ needs for information about these standards and information about market demand and quality. Stronger institutions are needed for technical assistance—producer organizations and regulatory bodies, and also private sector entities such as exporters that provide technical assistance commercially or as an embedded service. These organizations can speed market development by helping develop processing systems that enable producers to conform to established standards and quality control and that facilitate quality certification. Legal and regulatory environments are needed that ensure contracts are enforced and that there are efficient channels for market information and product promotion. Also needed are ancillary business services such as credit and other financial services, risk mitigation in the form of crop or rain insurance, transportation and storage services, accounting and business training services, and price information services, as well as policymaker commitment to market reform and effective marketing institutions. Key to the AKST system is an information infrastructure that can convey information related to both production and marketing of agricultural products, in all appropriate languages and media.

On the production side, information needs include everything from meteorological information specific to distinct agroecological zones, knowledge about crop varieties and management, soil and water conservation, animal husbandry, and agricultural technologies and inputs, to information about credit availability (including supplier credit for fertilizer or feed, etc.), postharvest techniques, processing and value-adding techniques, and other extension assistance.

On the marketing side, information needs range from trade literacy and knowledge of market demand for current commodities and potential opportunities for prospective commodities to processing standards and means of compliance, price information, and so on. The infrastructure for marketing agricultural products includes institutions through which information can flow and which facilitate trade in agricultural commodities. These institutions include ministries of agriculture, producer organizations and cooperatives, bureaus of standards, and private sector providers of business services offering technical assistance in quality control and standards as well as market links. In Africa, these institutions are often weak and underfunded.

 Strong market infrastructures include formal and contractual as well as informal links among participants all along the various value chains through which agricultural
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