Agricultural markets in Benin and Malawi: operation and performance of traders
2002
M. Fafchamps
Based on original trader surveys, this paper examines how agricultural traders operate in two sub-Saharan African countries, Benin and Malawi. The study finds that the largest transaction costs incurred by traders are for search and transport. Search methods rely principally on personal visits by the trader himself or herself, which raises search costs. Since enterprises are very small, transport represents a large share of marketing costs.Brand recognition, grading, and quality certification are found to be non-existent and brokers and agents are not organized in commodity exchanges. Quantities are not pooled for transport and storage so as to achieve returns to scale. Inter-seasonal and inter-regional arbitrage is outside the purview of most traders, who prefer to operate in a small territory on a day-by-day basis. The author suggests a number of interventions through which agricultural trade can be improved. These fall into four main areas: increasing traders’ asset base reducing transaction risk promoting more sophisticated business practicesreducing physical marketing costs [based on authors abstract]
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