Template:Chapters 8.17 8.18

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8.17/8.18 - Use of a friend in the city to obtain selling price, sell directly


Anthony Turjuman, University of Guelph, Canada

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Suggested citation for this chapter.

Turjuman,A. (2022) Use of a friend in the city to obtain selling price, sell directly. In Farmpedia, The Encyclopedia for Small Scale Farmers. Editor, M.N. Raizada, University of Guelph, Canada. http://www.farmpedia.org

Introduction

The challenge that I will be analyzing is that small scale farmers are unaware of the correct market prices of their harvested products and hence are exploited. Furthermore, often they have to pay large sums of money in order to have a middleman take their products to the market to be sold. This ultimately decreases their profit margins and takes money away from the farmer and their family. To that point, a study was conducted which confirmed that those who used a middleman to sell their goods made 10% less profit (Abebe et al., 2016, p210). Additionally, these farmers are sometimes scared to refuse to pay these middlemen their desired commission (Permadi and Winarti, 2018, p7). This is due to the fact that they would threaten to stop working with them and simply find another farmer who would be willing to pay him more (Permadi and Winarti, 2018, p7). One solution to eliminate this issue is for the farmer, a friend or member of their family to enter urban markets, find out the correct, fair-market prices for their products directly from vendors, and then go into town and sell the products themselves. That way they would not have to deal with middle men or be exploited.

Benefits Of Selling Farm Products Without A Third Party

The best way to find out fair market pricing would be to ask a trusted friend or family member who lives in the city to communicate the daily market pricing, perhaps via an SMS text message or a phone call. The mobile phone penetration rate is very high in South Asia and Africa (Ouma et al., 2017, p30). If this is not possible, then a family member (e.g. teenager) could consult the internet at internet cafes which are becoming more common (Ouma et al., 2018, p7). The next step would be for a farmer to use this information to decide product pricing, perhaps with help from local farmer organizations (Bizikova et al., 2020). The next step is to secure the transportation necessary to bring products to the market, which is challenging: 68% of the farmers who were surveyed in Central Kalimantan, Indonesia, did not have access to transportation (Permadi and Winarti, 2018, p7). However, a solution to this issue would be an agreement between neighboring farmers to hire a truck and truck driver together and split the cost of it. As this may be time consuming, a secondary solution could be that the farmers hire someone in the city who will help them deliver their products, as already mentioned. There are most likely many people in the city who are well versed in the market practices and would be willing to earn extra income.

Critical Analysis

Although this method has the potential to be successful and save farmers a large amount of money, there are also some associated problems. An obvious issue as already noted is that there will be more work required of the farmers if they are selling their crops themselves. There is much more preparation involved as well as the time it would take to physically transport all the crops to the market and then spend a large portion of the day selling the products, rather than maintaining the crops that are still growing. The earlier study noted in Central Kalimantan (Permadi and Winarti, 2018, p7) validates this statement, as when farmers were asked why they chose to use a middleman, 79% stated that it was because selling the crops themselves was too much work. Another limitation, dependent on the quantity of product that farmers have available to sell, is access to wholesale markets. Some small scale farmers earn more income from their crops by using a middleman than on their own (Abebe et al., 2016, p211). This is because they would not be able to directly sell to the wholesalers with their small amount of crop (Abebe et al., 2016, p211). Since the middleman is providing these wholesalers with crops from a few small farms, they have the quantity necessary to sell in bulk and by extension, sell for a higher price (Abebe et al., 2016, p211). However, this issue would not apply to farmers with larger farms, or farmers who can form cooperatives and sell in a larger volume, as already noted. Another challenge with a farmer selling crops on their own is the lack of relationships with buyers (Abebe et al., 2016, p211. To elaborate, when receiving large amounts of crops from new farmers, the vendor will want to do a quality check upon receiving them to ensure that they are not receiving sub-standard food products (Abebe et al., 2016, p211. Furthermore, when the wholesalers do this, they often do not inspect each bag of products thoroughly and instead assume that there are some less than average products included and pay the farmers the average price (Abebe et al., 2016, p211. This could be problematic, as some farmers would receive less money than their product is actually worth. Some farmers prefer working through middlemen because it is often easier for them to resolve these issues and negotiate a better price with wholesalers that is fairer for all parties included. Therefore, in some situations, it is due to a middleman’s relationships in the market that they may be able to secure farmers with better deals and negotiate on their behalf (Abebe et al., 2016, p211). Therefore, the success of friend or family members in the city depends on their ability to establish trusted relationships with vendors.

Links to Useful Resources

http://www.amis-outlook.org/amis-about/en/ The AMIS website has a large amount of information regarding the market prices and current global and political issues that pertain to agriculture (AMIS, 2022). This website is also useful for looking at prices for certain crops and keeping updated on global news that could affect prices and trends in the future (AMIS, 2022).

Additionally the FAO (Food and Agriculture Organization) has a website with large amounts of information on agriculture and farming and current national news and government policies (Data Collection, Food and Agriculture Organization of the United Nations, 2022): https://www.fao.org/statistics/data-collection/en/

This video describes an idea from Kenya where farmers’ markets are organized to help farmers sell directly to consumers. This video discusses the benefits of selling without a middleman. https://www.youtube.com/watch?v=pusPUO3LJLg&ab_channel=FarmKenya

Short video about the problems of using a middleman and why farmers should remove them from the equation. https://www.youtube.com/watch?v=MNJMi9EenG4&ab_channel=PostHarvestTechnologies

Video about the positives and negatives of using a middle man. https://www.youtube.com/watch?v=73fPJ_vm4FI&ab_channel=ChannelsTelevision

References

1.Abebe, G. K., Bijman, J. and Royer, A. (2016). Are middlemen facilitators or barriers to improve smallholders' welfare in rural economies? Empirical evidence from Ethiopia. Journal of Rural Studies 43, 203-213. https://pdf.sciencedirectassets.com/271785/1-s2.0-S0743016715X00076/1-s2.0-S0743016715300553/main.pdf?X-Amz-Security-Token=IQoJb3JpZ2luX2VjEN3%2F%2F%2F%2F%2F%2F%2F%2F%2F%2FwEaCXVzLWVhc3QtMSJIMEYCIQDQs5GniyQXvWBVeXvhXq6NeKDZbecOl9LzIUDQ0WWxXgIhALz2qkhNViOGE

2.AMIS (2022). Agricultural Market Information System. Retrieved September 28, 2022, from http://www.amis-outlook.org/amis-about/en/ Data collection | Food and Agriculture Organization of the United Nations. (n.d.). FAO. Retrieved September 28, 2022, from https://www.fao.org/statistics/data-collection/en/

3.Bizikova, L. et al. (2020). A scoping review of the contributions of farmers’ organization to smallholder agriculture. Nature Food. 1, 620-630 Retrieved September 28, 2022, from https://www.nature.com/articles/s43016-020-00164-x

4.Malla, S. (2021) Situation of vegetable production and it’s marketing in the context of rural farmers: a case study. Food and Agri Economics Review, 3, 124-126 http://doi.org/10.26480?faer.02.2021.124.126

5.Ouma, S. A., Odongo, T.M. and Were, M. (2017). Mobile financial services and financial inclusion: Is it a boon for savings mobilization? Review of Development Finance 7(1), 29-35. https://doi.org/10.1016/j.rdf.2017.01.001

6.Permadi, R.and Winarti, L. (2018). The Analysis of Factors Affecting Farmers' Accessibility Towards Markets and Its Relation to Farmers' Bargaining Position. Journal Manajemen dan Agribisnis, 15(1), 10. https://www.mendeley.com/search/?page=1&query=The%20Analysis%20of%20Factors %20Affecting%20Farmers%27%20Accessibility%20Towards%20Markets%20and%20It s%20Relation%20to%20Farmers%27%20Bargaining%20Position&sortBy=relevance

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