A Guide to Rapid Market Appraisal

(RMA) for Agricultural Products

Tiago Sequeira Wandschneider, Ngo Thi Kim Yen, Shaun Ferris, and Tran Van On A Guide to Rapid Market Appraisal (RMA)

for Agricultural Products

i

Notes on Partner Organizations

The International Centre for Tropical Agriculture (CIAT)

is a not-for-profit organization that conducts socially

and environmentally progressive research aimed at

reducing hunger and poverty and preserving natural

resources in developing countries. CIAT is one of 15

centers funded mainly by the 58 countries, private

foundations and international organizations that make

up the Consultative Group on International Agricultural

Research, (CGIAR).

Since 1943, Catholic Relief Services (CRS) has held

the privilege of serving the poor and disadvantaged

overseas. Without regard to race, creed or nationality,

CRS provides emergency relief in the wake of natural

and man-made disasters. Through development

projects in fields such as education, peace and justice,

agriculture, microfinance, health, HIV and AIDS, CRS

works to uphold human dignity and promote better

standards of living.

ETSP (Extension and Training Support for Forestry

and Agriculture in the Uplands) is a continuation of

a forestry development project which aims to provide

cost-effective, demand driven systems of extension and

training to upland farmers and service providers for

enhanced sustainable natural resource management

and improved household livelihoods.

Notes on Authors

Tiago Wandschneider is an international development consultant specializing in economic analysis and business development. He has worked for the Natural Resources Institute (NRI) in the UK and the International Centre for Tropical Agriculture, (CIAT) based in Hanoi. He is a Portuguese national based in Lisbon.

Shaun Ferris is a Senior Technical Advisor for Agriculture and the Environment at the Catholic Relief Services (CRS). He is a corresponding author of this publication. An Australian national, Dr. Ferris is based in CRS’ Program Quality Support Department (PQSD) in Baltimore USA. His email is shaun.ferris@crs.org.

Ngo Thi Kim Yen is a team facilitator within the ETSP project. He is a Vietnamese national based in the Helvetas office in Ha Noi, Vietnam.

Tran Van On is a freelance training facilitator with links to the Small-Scale Agro-Enterprise Development project in the Upland of Vietnam (SADU) in the ETSP projects. A Vietnamese national, he is based in Ha Noi, Vietnam.

ii

Preface

This Guide to Rapid Market Analysis Methods Note to users is a product of the experiences and lessons

This guide is part of a series on participatory

learnt while implementing agro-enterprise

marketing methods, which have been developed

projects in Latin America, Africa and S.E Asia.

to provide assistance to service providers,

This manual is one of a series of agro-enterprise

seeking to improve market access for lower

publications developed through a collaborative

income, smallholder producers. When using the

learning alliance between the Catholic Relief

information in this guide, we suggest that the

Services and the International Centre for Tropical

reader absorbs all the ideas and concepts prior

Agriculture, focused on rural agro-enterprise

to going to the field. Our experience has shown

development.

that best results from this approach are attained

when the market linkage processes outlined in

The aim of this set of methods and tools is

this guide are interpreted and adapted to the

to enable service providers to empower rural

local marketing context, available resources,

communities to engage more effectively in the

social dynamics and anticipated scale of

marketplace so as to increase their income, their

implementation.

capacity to innovate and ultimately improve their

livelihood options. To date, the titles in the agro-

We believe that integrating marketing and

enterprise “good practice guide” series include:

business concepts into rural development projects

is a vital element in achieving sustainable food

• A Strategy for Rural Agro-enterprise

and financial security. We hope that the methods

Development

outlined in this guide are useful and equip service

• A Guide to Developing Partnerships, Area-based

providers and local community actors with the

Resource Assessment and Planning Together

skills needed to meet the challenges of today’s

dynamic rural world.

• A Guide to Identifying Market Opportunities for

Smallholder Producers

• Strategies to Improve the Competitiveness of

Market Chains for Smallholder Producers

• Evaluating and Strengthening Rural Business

Development Services

• A Market Facilitators Guide to Rural Agro-

enterprise Development

• Collective Marketing for Smallholder producers

• A Guide to Rapid Market Appraisal (RMA) for

Agricultural Products

• Marketing basics for field agents

• Seven steps of marketing for field agents

iii

Contents

Page

Preface iii

PART 1. Concepts and theory

1

Chapter 1. Introduction

1

Chapter 2. Basic Marketing Concepts

3

Chapter 3. Key Features of Agricultural Markets

29

Chapter 4. Steps in Implementing a Rapid Market Appraisal 34

PART 2. Practical RMA Work

38

Step 1. Survey Area Selection

39

Step 2. Product Selection

41

Exercise 2.1 Product Selection

42

Step 3. Design of a Rapid Market Survey

43

Exercise 3.1 Team Composition

58

Exercise 3.2 Information Needs

59

Exercise 3.3 Selection of Key Informants and Preparation of Checklists 60

Step 4. Implementing a Market Survey

61

Exercise 4.1 Preparation for a Market visit and survey checklist 64

Exercise 4.2 Visit to a market and Interview of Key Informants 65

Exercise 4.3 Reflections on a Market Visit

66

Step 5. Methods and Tools for Analyzing Market Data

67

Step 6. Analysis of Data and Information

74

Step 7. Writing a RMA report

80

Step 8. From Analysis to Action

83

Step 9. Sharing results with farmers and stakeholders

91

Bibliography

97

Annexes

98

Annex 1. Criteria for Product Selection

98

Annex 2. List of Possible Issues for Investigation in an RMA 100

Annex 3. Advantages and Disadvantages of Different Key Informants 102

Annex 4. Examples of Question Checklists for Different Actors and Service Providers 104

Annex 5. Key Points to be Evaluated in a Market Chain Study 110

Annex 6. Example of RMA Report Structure

112

Annex 7. Basic Business Plan

113

Tables

Table 1. The marketing mix – product, price, place, promotion.

7

Table 2. Fish demand in Phu To Province, Vietnam

10

Table 3. Categories and Types of RBDS

13

Table 4. Importance of crops for income within the group

50

Table 5. Historical calendar for Village Mbuule

51

Table 6. Institutional inventory of services received by Ttaago village.

53

Table 7. Methods and Tools for Rapid Data Collection

57

Table 8. SWOT Matrix general headings

71

Table 9. SWOT Matrix Issues to be addressed

71

Table 10. Methods for Analyzing Market Data

73

iv

Page

Table 11. An example of the feasibility matrix

79

Table 12. Issues that need to be addressed in activity building to meet vision 84

Table 13. Activity options to shift from today’s situation to a desired state 84

Table 14. Financial requirements and sequencing

87

Table 15. Planning matrix to identify key opportunities and challenges 88

Table 16. Planning matrix to identify key opportunities and challenges 88

Table 17. Actions to be taken at specific points in the market chain.

89

Table 18. Methods for Moving from Analysis to Action

90

Figures

Figure 1. Core marketing Concepts.

4

Figure 2. Levels within a Value Chain

8

Figure 3. Market segments

10

Figure 4. Marketing Functions and Services

11

Figure 5. Strong government or public sector dominating service provision 15

Figure 6. Public sector facilitating private sector service provision 16

Figure 7. Market chain for local bean production to sales in Uganda 20

Figure 8. Market chain for meat in northern Vietnam

20

Figure 9. Prices along the value chain

21

Figure 10. Using the Ansoff matrix for risk assessment

27

Figure 11. Price seasonality

30

Figure 12. Farm-gate paddy prices in Red River Delta (1994-1999) VND / kg (15,000 VND = 1USD) 30

Figure 13. Steps in the Rapid Market Appraisal Method

37

Figure 14. Examples of simple drawings

50

Figure 15. Market mapping method to assist in expressing market chains 52

Figure 16. Make interviews enjoyable and avoid interrogation 54

Figure 17. Gross margin analysis for bean production

69

Figure 18. Problem tree

71

Figure 19. Solution tree

72

Figure 20. Presentation of RMA findings to farmers

92

Figure 21. Presentation of the RMA findings to investors, policy makers and project managers 94

v

Value Chain Actors

PART 1.

CONCePTS ANd TheORY

Value Chain Actors

Chapter 1. IntroduCtIon

Value Chain Actors

Business Development Services

This manual was prepared by technical and

of poor rural producers. The approach also

training staff working with CIAT’s Rural Agro-

offers the opportunity to find ways of stimulating

enterprise Project and the Catholic Relief

demand for technical and social innovations and

Services. It focuses on participatory marketing

enabling rural communities to integrate products

and methods used to analyze market chains and

from research, finance and local policy to help

move from analysis to action. The methodology

grow their businesses.

information is complemented with a series of

exercises and case studies.

Purpose of this manual

Traditionally agricultural support has focused on

Whilst there are many guide books on

increasing production. This approach works well

“marketing”, and “how to analyze markets”, this

if the primary concern is only food security and

book attempts to contextualize the methods

if there is an internal or ready buyer to absorb

within the types of situations and settings

the increased supply. Unfortunately, it is often

encountered by development agents when

the case that increasing supply, only works for a

working with rural communities, in remote and

limited time. Increasing production in the absence

poorly serviced areas. The participatory marketing

of market knowledge can lead to local markets

methods aim to help research and development

being oversupplied causing prices to fall, which

teams to tackle the dual challenges of food and

can reduce income for poor farmers.

financial insecurity that is experienced by millions

1

PART 1. Concepts and theory

In other words, instead of producing what the

supporting farmer organizations. The focus of the

market wants, farmers and their facilitators

manual is how to evaluate market chains. The

often expend time and energy in trying to find

service provider involved in developing marketing

markets for what they have already produced.

skills could be from a Government department

Lack of attention to markets all too often results

of agriculture, veterinary, animal husbandry,

in farmers being “stuck” with unwanted produce

fisheries, an extension officer, community

that they are forced to sell at very low prices

development officer, staff of an NGO and any

because it is not what the market needs.

other private establishment including farmer

groups, co-operatives, and business staff.

This manual seeks to provide a basic

understanding of marketing concepts and how

how to use the manual

this knowledge can be used to assist farmer

The manual is designed to be used to support a 5

groups to produce goods and how to identify

to 10-day training course, after which graduates

opportunities to introduce or strengthen local

will have the basic skills to participate in a Rapid

business development services, all based on

Market Assessment (RMA) of products identified

market demand.

through a participatory process involving local

Objectives of the Manual

decision-makers, development agencies, private

sector representatives, and farmers. Market

The objective of this guide is to build the capacity

appraisal exercises are expected to generate pilot

of local service providers from Government

interventions that will be tested and assessed for

Agencies (GA’s) and Non Governmental

subsequent adaptation, replication, and scaling-

Organizations (NGOs) in participatory techniques

up.

to undertake a rapid market analysis. The results

of the market analysis lead to the identification

The manual is divided into two sections.

of market opportunities and agro-enterprises

that improve the incomes of rural producers,

1. Section One, deals with theory and the processors and traders.

basic marketing concepts and functions of

agricultural markets.

Specifically, the manual aims to:

2. Section Two, focuses on methods for

market analysis and is the most important

• Provide service providers with skills that will

part of the manual. In this section, trainees

enable them to assist farmers to engage with

will be guided through the design and

markets using participatory methods.

implementation of a rapid market appraisal

• Guide the process of market identification and

(RMA), the analysis of secondary and primary

selection of attractive enterprise options, based

data and information, and report writing.

on information gathered from the market chain

and analysis of local assets, skills and market

Both sections include practical exercises – ways

access options.

to test the tools developed. Additional support

• Build agro-enterprise skills within the

materials are included in the Annexes.

community so that groups can continue the

process of engaging effectively within a dynamic

marketplace in the future.

Who will use this manual?

The manual is intended for use by an institution,

such as Government Agencies for Extension and

Research, Non-Governmental Organizations,

Community-Based Organizations, second order

Farmer associations interested in building staff

capacity in market facilitation and consultants

2

A Guide to Rapid Market Appraisal (RMA) for Agricultural Products Chapter 2. BasIC MarketIng ConCepts

Learning objectives

agricultural marketing, these activities include

After reading this chapter, the learner should be

post-harvest operations such as cleaning, drying

able to understand and explain basic marketing

and grading of produce, and also transport,

concepts. A good understanding of basic concepts

storage, processing, packaging, advertising and

will facilitate learning during the following training sale.

sessions, and improve the ability of the learner to

contribute to the collection and analysis of market

The second definition stresses finding out

data and information.

customer needs and satisfying these needs at a

profit. This definition focuses on two important 2.1 What is Marketing?

points:

There are many definitions of marketing! Most

i) the marketing process has to be customer-

definitions focus on the functions and purposes of

oriented; and

marketing. In this manual, we use two definitions.

ii) marketing activities should provide farmers,

The first refers to all activities and services

transporters, traders and processors with a

involved in moving a product from the point of

profit.

production to the point of consumption. This broad definition emphasizes that marketing involves

a series of sequential activities. In the case of

3

PART 1. Concepts and theory

As such, the market process ensures that

products are available for consumption:

• in the right place

• in the form wanted

• in the quantities and quality required, and

• at the time needed

• at a price that consumers are willing to pay

To be successful in the marketplace farmers need

to have a better understanding of markets. We

believe they need to focus on getting organized

and producing what they can sell and not trying to

sell what they have produced. To assist farmers

in this task, development agents need to be able

to analyze markets to find out what different

types of products consumers want to buy, what

prices they can afford and then work with farmers

to help them grow products to meet market

demands and consumer needs.

Figure 1. Core marketing Concepts.

Source Kotler et al, 2002.

Produce what you can sell

and don’t try to sell what The process of marketing is therefore more complicated than simply producing essential

you have produced

products which are sold to willing consumers. It

is about

There are two distinct categories of “needs” that

(i) understanding what people need and want,

marketing aims to meet. The first area includes

(ii) producing products to satisfy these wants and

basic or essential physical requirements such as

needs,

food, clothing, shelter, safety, community and

(iii) offering products at a place where people can

knowledge. The second area covers “wants” or

buy them,

“desires” – products that may not be essential

(iv) at a price and quality that they find attractive,

to living but make lives more comfortable and

and most importantly,

rewarding.

(v) selling the product range at a profit.

Consumers make purchases based on their

This cycle of activities is shown in Figure 1.

needs, wants and ability to pay for any products

and services. They place specific values on

One of the most fundamental relationships that

different types of products and services and when

affect marketing and the ability of people to buy

they go to market, consumers rely on producers,

products and services is defined by demand and

traders and processors to offer products which

supply. Understanding the relationship between

meet their needs in terms of price, quality and

supply and demand is critical to basic market

quality.

analysis.

4

A Guide to Rapid Market Appraisal (RMA) for Agricultural Products 2.2 demand and Supply

Supply can be defined as the amount which

In simple terms, demand is the volume of a

producers and traders are willing and able to

product or service that buyers are willing and

provide at specific prices. While supply is strongly

able to purchase at different prices. Buyers must

influenced by production, the two are not the

not only want to buy a product or service, they

same. For example, perishable produce may never

must also have the means or resources to pay

be channeled to the market due to spoilage. And

for it. Demand is not static and there are many

some agricultural products may be stored and

factors and trends that affect the short, medium

released into the market at a much later date. The

and long-term demand for a given product in the

supply of agricultural products tends to be more

marketplace. Major factors that affect demand in

volatile than the demand for these same products

agriculture include:-

because of the strong influence that natural

conditions have on production levels. Some of the

main factors influencing the supply of agricultural

products are:

• Climate. Favorable weather conditions will

translate into a good harvest and therefore have

a positive impact on supply, while drought or

floods will have the opposite effect. Pests and

diseases can have a similar negative impact on

production and supply.

• Production costs. An increase in the

production cost of a certain commodity may lead

farmers to shift to other commodities with better

returns. A decline in production costs might

have the opposite effect.

• Prices. If prices rise, demand tends to fall. If prices fall, demand tends to increase.

• Prices. There is a clear tendency for farmers to expand supply when prices rise, and to reduce

• Income. When the real income of consumers

it when prices fall. In the case of storable crops

increases, so does their purchasing power and

such as grains, farmers may be able to increase

demand. When incomes contract, the opposite

supply immediately by reducing consumption

happens.

and releasing stocks. Investment in production

is another common response, but it may take

• Consumer preferences. Demand is a function

some time for this investment to generate

of consumer preferences, and these overtime,

increased supply.

preferences are particularly affected by changes

in consumer income and education levels and

• Transport infrastructure. An improvement

exposure to modern lifestyles and advertising.

in transport infrastructure may reduce the

remoteness of certain areas and enable the

• Competing or substitute products. Demand

production of new agricultural products for sale

for a particular product will fall when alternative

in urban markets.

products become more available and/or cheaper.

It will increase when such products become

scarcer and/or more expensive.

• Quality. Buyers are often sensitive to the quality of agricultural products. Improvements in quality

can lead to an increase in demand, whereas a

decline in quality can have the opposite effect.

5

PART 1. Concepts and theory

Product

Price

Place Promotion 2.3 The 4 Ps of Marketing

In order to supply what customers want for

a profit, market participants must develop

production and marketing strategies that enable

them to operate within the laws of demand and

supply. The four key variables that sellers use in

developing their market strategies are commonly

known as the four Ps of marketing or the

marketing mix (see Table 1).

• Product (what to produce)

• Price (at what price to sell)

• Place (where to sell)

• Promotion (how to promote the product)

As product markets are highly varied and

dynamic, certain marketing strategies may be

appropriate in one context, but not in others.

2.4 Core Marketing Activities, Services

Strategies also lose relevance over time due to

and Institutions

changing circumstances. Moreover, marketing

The information in Figure 2 provides a schematic

choices will always depend on the resources

view of how markets, services and institutions

available to market participants, as well as their

interact to support market coordination and

skills and knowledge.

performance. The market typically operates on

three levels:

Developing marketing strategies is therefore an

essential part of market development and there

Level 1. Core marketing activities that are required are many books devoted to this subject entirely

to produce and deliver a product through a series

(see Kotler, 2005).

of market intermediaries1 to the final consumer;

Core market actors are the people and businesses

that produce, buy and sell the target product

within a market chain.

1 “Market intermediary” is a term used to describe the people involved in specific roles along a market chain, such as a farmer, a trader, a processor, a wholesaler, a retailer and a consumer.

6

A Guide to Rapid Market Appraisal (RMA) for Agricultural Products Level 2. Services and infrastructure that help

Level 3. Formal and informal policies, based on

to improve the efficiency and performance of

Government or private standards and regulations

core market activities; This group of people

that provide the enabling environment or “rules of

and business functions are often referred to as

the game” for businesses to operate in a fair and

Business development services (BDS), the functions

transparent manner within the marketplace.

in this level support the core business but are not

involved in buying or selling the target product

It is the interaction of these three levels that

within a market chain. This level includes financial

provide the necessary locations, players and

and non financial services.

working environment for effective marketing

transactions to take place.

Table 1. The marketing mix – product, price, place, promotion.

Marketing

Definition

Aspects of this variable include Actions to be considered Variables

Product (what Everything

Variety, quality, design,

The product supplied must satisfy a need. The product

to produce)

that we sell.

characteristics, brand,

should ideally be in high demand and include features that That which can

packaging, sizes, services,

are appreciated in the market (e.g. quality, appearance,

satisfy a need or guarantees.

size, and packaging). In the case of farmers, it is important a want. Includes

that they grow crops and varieties for which there is strong material objects,

demand and to dry, clean, sort, and grade the produce

services,

according to buyer requirements.

persons, places,

organizations

and ideas.

Price, (at what The monetary

Price lists, discounts, price

The product must be sold for the right price -- a price that price to sell)

value that a

margins, credit conditions

is competitive, but also generates a profit to the supplier.

seller seeks

Farmers can influence prices through the choice of crop and from a buyer

quality management practices. Farmers can also influence

for a product or

the price of their products through the choice of market

service.

place and buyer, and through co-operation with other

producers in the marketing and processing spheres.

Place

Distribution

Market sales points, spatial

A product should be sold at the best possible place or

(distribution

and marketing

coverage of market sales

market. This will depend on the benefits (e.g. price), costs channels and

channels.

points, locations within

(e.g. transport and time), and risks (e.g. price volatility) where to sell)

A series of

markets, inventories of

associated with different market options. It must also be independent

products, transportation

noted that buyers in different market places may have

organizations

channels.

different product requirements. For example, local collectors involved in

normally buy very small volumes of un-sorted produce

the process

directly from individual farmers, whereas supermarkets or of allowing

importers in foreign markets require a much larger volume the consumer

of standardized products.

or industrial

user to use or

consume the

product or

service.

Promotion

Convincing or

Promotion includes

Producers or suppliers should promote their product

(how to

persuading

advertising, personal

to maximize sales and prices. They should engage in

promote the

the audience

sales, trade and consumer

regular discussions and exchange of information with

product)

of the quality

promotions and public

buyers. Farmers can use these discussions to inform

or features of

relations.

potential buyers of the products they have for sale, their the products

characteristics, and the volumes available. Farmers are

or services

particularly well positioned to engage and coordinate

offered by the

transactions with buyers when selling as a group.

organization.

7

PART 1. Concepts and theory

Figure 2. Levels within a Value Chain

Source adapted from Ferrant et al, 2004

The next section provides greater detail for each

2.5 Market Types

of these levels with information on types of

A market can be defined as a place where buyers

market locations, functions and services. Any

and sellers come together to buy and sell goods

service provider who seeks to provide marketing

and services. In a narrow sense, a market refers

or business advice to others, must have a good

to a physical place where goods and services are

understanding of the basic marketing terms and

exchanged. Such places can be found in villages,

concepts, if they are to help identify and support

by the roadside, in small and medium towns,

the marketing needs of others. We begin with a

and in cities. A market can also be defined as the

description of the physical locations where the

demand for a product or a service. According to

functions of market exchanges take place -- the

this definition, a market is a group of people who

marketplace.

have needs and who are willing to spend money in

order to satisfy those needs.

8

A Guide to Rapid Market Appraisal (RMA) for Agricultural Products Assembly markets: These are markets where

areas of high population or on a few days of the

produce is sold by farmers and small local traders

week in less populated areas. The main function is

before being taken to wholesale markets. The main

to supply consumers and small businesses such

function of assembly markets is to bring together

as restaurants, hotels and street-food vendors.

supplies from a large number of dispersed farmers

While retail markets are a very important source

within an area, thereby enabling buyers to access

of supply, it is also common for consumers to buy

significant product volumes from a single location

from shops, roadside vendors and street hawkers.

at reduced costs. Assembly markets can take

many different forms. In some cases, they may be

Supermarkets: As urbanization has created

small areas where farmers and traders gather for

ever larger market centers with higher levels of

a couple of hours on a regular or irregular basis.

market demand, supermarkets have emerged as

In other cases, they may be weekly or bi-weekly

a convenient, safe, well-managed marketplace for

markets. Assembly markets are normally located

the mid- to high-income urban consumer. Many

in rural areas, but permanent ones can often be

supermarkets are managed by large international

found in small towns close to farming areas.

companies, which enable them to offer goods

from across the world. Whilst supermarkets first

Auctions: These are markets, where products are

emerged and dramatically changed food retailing

offered to buyers through a process of taking bids.

in industrial countries, they are becoming a

Products or lots of produce are offered to buyers,

feature of large towns in virtually all urbanizing

which are then sold to the highest bidder. Unlike

countries. Farmers can sell to supermarkets but

produce markets, the auction process is used only

the buying conditions for these formal markets are

for specific goods, and the process is designed

more stringent than the informal “wet markets” in

to aggregate and sell produce within a short

terms of food quality, but also in terms of supply

timeframe, often only a few hours. Auctions are

frequency, financial regulations, food quality

therefore mainly used for perishable, higher value

standards and production systems.

products such as flowers, fish and livestock.

2.6 Market Participants and

Wholesale markets: These markets tend to be

Intermediaries

located in towns and cities. The main function

Consumers and market segments: Consumers

of the wholesale market is to gather supplies

are critical drivers of market performance, they

from different production areas for subsequent

are the decision makers and they in the end

distribution to urban retail markets or in some

decide what they want to buy, where they want

cases to aggregate goods for export. Wholesale

to buy and the form in which they want to buy.

markets play at least three important functions.

Consumers however, are not all the same and

First, farmers and traders can deliver their

therefore market demand for a particular product

produce to one location rather than having to visit

is not homogeneous. Different people do not have

many retailers. Second, retailers can buy a wide

the same needs and preferences and a vital part of

range of produce from one single place. Finally,

the human condition is to demand different things.

the trading of large quantities of produce in one

place enables price formation in line with supply

One way that market analysts make sense of

and demand conditions. In many countries, urban

demand and trends in demand is by dividing

wholesale markets for fruit, vegetables and flowers

consumers into different categories or groups of

tend to operate at night or in the early hours of the

buyers, each with similar needs and preferences.

day, so that retailers have fresh produce to sell to

Each separate group forms a market segment (see

customers during normal working hours.

Figure 3). Market segments include consumers

with common features, such as age, sex, religion,

Retail markets: Retail markets can be found

personality, geography and income. Different

everywhere -- in villages, small towns and large

market segments have different needs toward a

cities. These markets sell small amounts of goods

product.

to consumers who use the produce on a weekly

or daily basis. Depending on the numbers of

customers, retail markets take place every day in

9

PART 1. Concepts and theory

Figure 3. Market segments

For example, in many developing countries, young

Most products have diverse market options due

people prefer soft drinks whereas older people tend to

to the different needs and interests of market

prefer coffee and tea. Wealthy and health-conscious

segments. Producers cannot satisfy all needs of all

consumers in large cities are starting to demand safe

market segments. Therefore, defining the potential

vegetables, whereas people living in villages are less

market segment/customer group will help the

concerned about the food safety issue.

producers to satisfy their customers’ needs and

select the most suitable marketing strategy to

An example of how market segmentation affects

maximize their resource and labor inputs and

prices and products is shown in Table 2, which

thereby increase their returns.

provides an example of market segmentation for

fish in a northern province of Vietnam, according to

Farmers: At the opposite end of the market

income. One market segment is composed of high-

chain are the farmers or producers. Farmers

income households while the other comprises low-

occasionally sell directly to the consumer, but this

income households. High-income consumers tend to

is not the norm and most often farm products

buy large fish and are willing to pay 15,000-20,000

move through the hands of several market

VND per kilogram (at the time of this survey 1 $USD

intermediaries before reaching consumers.

= 15,000 VND). Carp and grass carp are particularly

appreciated. Low-income consumers normally buy

Market intermediaries provide an essential link

smaller, soft bone fish, such as tench and mud carp,

between farmers and consumers:

and can only afford to pay 8,000-12,000 VND per

kilogram. Demand by this group is concentrated in

• Most consumers live far away from production

July-August and December-January.

areas and products must therefore be

transported, sometimes over very long distances.

Table 2. Fish demand in Phu To Province, Vietnam

• Agricultural production is generally seasonal

high-income

Low-income

consumers

consumers

while consumption is regular and continuous

Product features

throughout the year. As a result, many

larger and fresh,

smaller fish, soft

good taste

bone

agricultural products are stored for variable

Preferred breeds

carp, grass carp

tench, mud carp

periods of time.

Prices

15,000 – 20,000

8,000 – 12,000

VND/kg

VND/kg

• Most farm products are not in a form that

Consumption

15 kg/head/year

9 kg/head/year

is acceptable to consumers. They must be

Timing

all year round

July-August;

sorted, cleaned, processed in various ways

December-January

and presented to the consumer in convenient

quantities.

10

A Guide to Rapid Market Appraisal (RMA) for Agricultural Products There are different types of market intermediaries,

capital, trade small volumes and use simple

each performing different functions in the

means of transport, such as bicycles, donkeys

marketing system. Below we introduce four types

and motorbikes. Larger collectors may own or rent

of market intermediaries that can be commonly

pickups or small trucks.

found working in markets throughout the

developing world. :

Travelling traders: These are typically traders who own a truck and spend their time travelling into

Collectors: These are small local traders who

remote rural areas to buy farm produce, which

buy directly from dispersed farmers. Their

they sell to wholesale traders in urban markets. In

main function is to assemble local products for

some cases travelling traders have regular contacts

subsequent sale to larger traders and processors

with farmers who sell to them each season, but

operating within the region. Collectors have limited

often travelling traders are opportunistic buyers,

Figure 4. Marketing Functions and Services

11

PART 1. Concepts and theory

who drive to production areas in the hope of

local traders is to aggregate produce from several

finding produce for sale. These traders are

farmers. This enables the farmers to sell larger

particularly important for smallholder producers,

amounts of product at one time which enables the

as they get to remote areas making solid offers to

group to negotiate for more favorable prices with

farmers, and they pay for produce as they take it

traders.

from the farmers.

Cleaning: Harvested produce needs to be cleaned

Wholesalers: Wholesalers deal with much larger

before processing and/or consumption. Through

volumes than collectors and rent or own medium

this activity, foreign matter such as sand, straw

to large vehicles. They also tend to rent or own

and stones is removed.

storage premises. Wholesalers procure most of

their supplies from smaller traders or processors,

drying: Moisture content influences the

but some also buy directly from farmers. The main

perishability of a product and the efficiency of

function of wholesalers is to bulk produce and

processing. Therefore, many products are dried

then supply retailers in towns and cities. Many

at some stages of the marketing chain in order to

also supply processors and other large traders,

avoid microbial contamination and lengthen the

including exporters.

longevity of the products (or shelf-life).

Processors: Agro-processors are those individuals

Sorting: Harvested produce usually requires some

and firms involved in the transformation of

form of sorting to meet the needs of processors,

agricultural commodities (e.g. rice millers, cassava

exporters, and consumers. Sorting differentiates

starch factories and animal feed manufacturers).

produce according to certain attributes or

Processors can be very small household

characteristics, including variety, size, shape,

enterprises or fairly large firms, employ traditional

degree of impurity, and ripeness.

or modern technologies, and are located in rural

or urban areas. Large processors tend to have

Standard units: Standard weights and measures

significant stocks of raw material to ensure

include the use of national, or international

continuous processing and enable them to use

units, all of which can be understood and verified

their equipment during the off-season.

throughout the region of trade. Specific products

normally have widely and easily recognized

Retailers: The main function of retailers is to

standard units of sale. Farmers that meet these

distribute supplies to consumers. Retailers are

standards help to enable rapid transfer of goods

very diverse in size and operation. For example,

and ease of sales agreements. Traders are often

supermarket chains are fairly large companies that

prepared to pay a premium for produce that

deal with significant volumes of a wide range of

meets specific standards.

agricultural products. In contrast, small shops and

market vendors sell much smaller volumes and

Processing: Processing or transformation is a

fewer goods, and do not keep sizeable stocks.

critical marketing function / service, which adds

value to the primary good. Processing is done to

2.7 Marketing Functions

meet consumers’ needs and tastes and is often

Marketing functions are the roles performed by

undertaken to reduce drudgery for the end user.

market participants as the produce moves from the

For example, maize is milled into flour for ease of

farm to the consumer. Each function is associated

cooking and consumption, more exotic products

with the provision of one or more services. Figure 4

such as mushrooms can be processed into

shows some key marketing functions and services

different dishes and packed before being sold to

at the assembly, wholesaling, and retailing stages.

market. Various processing methods add value

and or lengthen the shelf life of product (e.g. by

2.7.1 Marketing Functions

canning or freezing). Some commodities cannot be

consumed at all without processing. This is the

Bulking: One of the most basic marketing

case, for example, of rice and livestock.

functions that can be performed by farmers or

12

A Guide to Rapid Market Appraisal (RMA) for Agricultural Products Storage: Storage facilities are needed at

In many countries, business development

various stages of the marketing chain. For

services are concentrated in urban areas, where

some products, storage can only be for short

they provide profitable services to many clients.

periods due to product perishability (fruits and

BDS is less accessible in rural areas mainly

vegetables), while durable commodities may be

because farmers do not have the resources to pay

kept for very long periods (cereals and pulses).

for services at commercially viable rates and the

Sometimes storage is required for just a few

costs of delivering services to a remote, dispersed

days while the product is awaiting transport

population are high. Therefore, the growth of

or the seller is searching for buyers. In other

rural business services is mainly focused on

cases, crops may need to be stored for much

higher value marketing opportunities, such as

longer periods. Farmers may want to maintain

fruit, vegetables and livestock.

some stocks for future consumption or sale.

Table 3. Categories and Types of RBDS

Processors may accumulate stocks in order

to extend their activity to periods when there

Market Access: • agricultural fairs • market linkages

is little produce (raw material) in the market.

• samples for

• marketing trips and

buyers

meetings

Traders may also want to store produce for sale

• market

• learning journeys

during the off-season period, when prices are

information

down the chain

higher. Finally, many governments feel the need

• contract farming

• market research

• standards and food

to undertake storage to stabilize supply and

quality assessment

prices.

Input Supply:

• seeds, (informal,

• irrigation,

commercial)

• pesticides

Packaging: Many products need to be packaged

• fertilizer, micro

and macro sales

in some way if they are to be marketed widely

Infrastructure: • feeder roads

• telecommunications

and efficiently. Packaging may help reduce

• storage and

• Informal money

physical deterioration, theft and adulteration of

warehousing

transfer

• transport and

• information

products. It may also ensure product cleanliness

delivery

through print,

and facilitate measurement, labeling, and

radio, TV

attachment of sales instructions and product

Collective

• farmer marketing • vertical integration

descriptions. Finally, packaging may be used for

action

groups

to achieve greater

• co-operatives

promotion and advertising purposes, making the

product more attractive to the consumer.

Training and

• exchange visits

• accountancy and

Technical

and business

bookkeeping

2.8 Business development Services

assistance

tours

• production gross

• technical training

margin analysis

(BdS)

Technology

• farmer to farmer

• linking SEs

The functions described in the previous section

Transfer

exchanges

and technology

• research to

suppliers

can be done by farmers or these functions can

farmer tech

be provided by business development services

transfer

(BDS). BDS services are critical for the effective

Financing

• rotating funds

• facilitating supplier

and efficient marketing of farm products,

“merry go

credit

rounds”

• warehouse receipts

particularly as societies urbanize and market

• internal savings

/ credits

chains become longer, in terms of distance and

and loans

• futures trading

the number of people involved in the chain. In

• direct bank

through exchanges

credit for crop

• third party loan

other words, participants in agricultural market

financing

guarantee schemes

chains require a number of support services

• loan to buy

in order to improve and sustain their business

schemes for

equipment

operations. Business development services

include a broad range of activities as outlined in

Table 3.

Source: adapted from Miehlbradt, A et al. 2005

13

PART 1. Concepts and theory

The list of rural BDS presented in Table 3 is not

Transport: A major cause of marketing problems

exhaustive but shows there are many potential

often lies in the limited availability and high cost

services, and it is often the case that poor

of transport services, especially in areas that

smallholder farmers in remote areas can access

are difficult to reach. Transport of produce from

only a fraction of these services, if any. Declining

remote, difficult to access areas is only justified

government support in agriculture also means

when the selling price in destination markets is

that that richer farmers can pay for commercial

well above the purchasing price in those areas.

agricultural services in order to remain competitive,

whereas poor farmers are marginalized due to

Communications: Post, phone, e-mail, Internet

lack of access to technologies, information on

services and word of mouth are critical for smooth

new farming methods and information on market

information flow along the market chain. The

opportunities, all of which increase barriers to

increasing availability of mobile phone networks

market entry. The types of services that most

and e-mail has had a major impact on the

farmers can access include the following:

efficiency of marketing systems and for many

market actors, the mobile phone is the most

Supply of inputs: Access to good quality and

effective means of communicating with buyers.

affordable inputs, in the right form and volume,

In areas where mobile phones have become

is critical to the activity of different actors in the

ubiquitous, many buyers will only now operate

market chain. Key inputs for farming include

with suppliers that have a phone, to ease and

seed, fertilizer, agro-chemicals, irrigation water,

reduce the costs of transactions.

agricultural implements, and post-harvest

equipment. Processing often requires access to

Market information: Information on prices of

water and electric power, equipment, and spare

products in different markets is essential for

parts for machinery and small equipment.

informed decision making, reducing transaction

Research: Research is essential for the

costs and risks, enabling efficient storage and

development of appropriate production, post-

facilitating the flow of goods from production

harvest, storage, and processing technologies. For

to consumption areas. Access to information

example, the release of improved varieties can lower

reduces business risk and allows market

production costs, increase produce supply and

participants to explore profitable opportunities

quality, reduce product perishability, and enable

and meet consumer needs. The scope for cheating

off-season production. The development of agro-

and unfair pricing practices is significantly

processing technology can reduce waste and costs,

reduced when information is available to all

increase production capacity, and improve product

market participants.

quality.

Finance: Finance is necessary for goods to move

Advisory services and market information

along the marketing system. Farmers need to

provision: Market participants require specialized purchase inputs and hire labor, and may want

information and advice. This may cover a wide

to hold on to their crops after harvest to benefit

range of areas, including production, post-

from higher prices. Traders and processors need

harvest, processing, marketing, management,

to finance investments as well as marketing and

and business strategy. Agricultural and industrial

processing activities. Although it is difficult to

extension officers, other government agencies

access formal bank loans in most developing

and information services, and consultancy firms

countries, farmers and rural traders can achieve

are common sources of specialized advice and

impressive results through savings and informal

information. Market participants themselves

loan sources. Access to mobile money, mobile

are an important source of information. Market

loans and associated insurance are new financial

information and advisory service can be provided

products which offer new possibilities for remote

directly or through communication means such as

farmers.

mobile phone, email and internet.

14

A Guide to Rapid Market Appraisal (RMA) for Agricultural Products Figure 5. Strong government or public sector dominating service provision 2.8.1 Forms of service provision

Whilst this approach can provide rapid results,

There are four main ways of supporting rural

the private sector is generally crowded out of the

business development services and an important

market place as they are unable to compete with

sustainability question for rural BDS is, “Who

these alternative, subsidized suppliers that often

pays?”

do not charge for the services they provide.

Free services: Some services such as roads,

Project sustainability: The provision of free

power grids, extension advice, research and

services by NGO staff, rather than working

market information are provided by governments

through local private sector service provides

as a public good. Whilst the approach tends to

is probably the main reason for poor levels

be successful for infrastructure, the provision of

of sustainability when a project closes. Even

regular business services is often less successful.

when free services are of low quality or limited

The quality of public goods services is often low

accessibility, their presence often undermines

and in many cases, poor people would prefer to

private sector confidence to invest in such areas

pay for services that were more reliable and of a

and therefore services do not emerge. When an

higher standard.

NGO completes a project and withdraws their

support, if the farmers have no continuing access

In some cases, the lack of provision of public

to essential services, the agro-enterprise becomes

goods services from Government has been

unprofitable, or untenable. With no access to

replaced by donor and NGO support programs.

services project gains are lost and farmers return

to their previous options and low levels of service

15

PART 1. Concepts and theory

Figure 6. Public sector facilitating private sector service provision use and productivity. The sustainability issue is

cost of services can also be based on a percentage

a major problem with many rural projects and we

of the final harvest income.

would recommend that to avoid this problem that

field agents are not required to give away assets.

Facilitated services: To promote the shift from

free public services to private services, many

Subsidized Services: To make services accessible

projects are using public/private partnerships.

to a specific set of clients or farmers, development

These partnerships seek to strengthen existing

agents can assist beneficiaries by reducing

private service provision or establish new private-

service costs. Governments and donors can offer

based services in new areas that may not yet be

users services at a reduced fee or may provide

commercially viable. This process of facilitating

start-up funds to initiate new services. In this

services can also be used to tailor specific services

case, there may be a timeframe within which the

for poor farmers through activities such as micro-

service will need to transfer from receiving partial

packaging of inputs, supporting savings groups

public funds to being a free standing program.

so that farmers can save for down payments

This process of subsidizing services can be done

on goods, the establishment of micro loans to

using vouchers that have a sliding value over the

purchase schemes for technologies such as

duration of the project. Another alternative is for

irrigation pumps, and/or training local part-time

communities to share a part of the cost of such

business advisors to act as market linkage agents

services, either through direct cash payments or,

based on local commissions of sale, as illustrated

more likely, through food-for-work programs. The

in Figure 6.

16

A Guide to Rapid Market Appraisal (RMA) for Agricultural Products Fee paying services: As markets become more

cost of these services will be factored into the

competitive, farmers will see the value in paying

price the trader pays the farmer for the produce.

for services to maintain their competitive edge

in the marketplace. This is particularly relevant

This practice, if done well, is extremely beneficial

to farmers who are aiming to sell their goods to

for farmers, but if a trader is less scrupulous,

formal buyers, or farmers engaged with higher

farmers can become so indebted to the traders

value products, those selling to more distant

that they are almost labor for the traders with no

markets and especially those farmers who are

room to negotiate reasonable sales prices for their

selling into export markets. In all of these cases,

goods.

farmers increasingly need to factor in the costs

of innovation and the costs of upgrading their

More formal types of embedded services are found

production and market performance. These costs

in the financial sector. In India, for example, a

may be required to sign up to a certification

new type of credit card has been developed by

process, a traceability process, or to pay for

the National Agricultural and Rural Development

expert knowledge, training and advice to fully

Bank for use by farmers in making small

understand market requirements and how to

transactions. The credit includes a charge for life

become compliant with the market needs and

insurance as a means of protecting the lender in

regulations. Whilst such costs are factored into

the incident that the creditor dies without paying

final product prices, it is often only the richer

the debt. Although highly effective, the ability

farmers, those with more land, water resources,

to embed services is often limited and therefore

or those linked to higher value markets that can

this approach can only be applied where it is

afford to invest in such services. However, as

practical to do so and when there are incentives

agricultural markets consolidate, more farmers

to maintain the embedded nature of a service.

will need to gain access to specific services if they

are to remain competitive within a market.

2.9 Infrastructure and Policies

One of the main impacts of government

embedded services: The concept of embedding

intervention in agricultural marketing systems is

services takes into account the challenge that

through the provision of support infrastructure

whilst services are important, consumers or users

and the policy and regulatory frameworks.

find it difficult to pay for such services and thus

Well-developed and maintained economic

services are avoided. To overcome this problem,

infrastructure, alongside supportive policies and

service providers try to “piggy back” some

regulations, create an enabling environment for

underinvested services into packages that include

cost reductions and private sector investment

goods or other services that people are prepared

in the provision of marketing and other support

to pay for. In some cases, this is done explicitly

services. Such public goods therefore have

and is advertised as a bonus. In other cases,

a major impact on the competitiveness of

services are provided and recipients are unaware

agricultural production as well as employment

they are being charged.

and income levels along market chains.

In rural areas, one of the most reliable service

2.9.1 Infrastructure

providers may be a travelling trader. These

There are a number of basic infrastructures that

traders often have strong relationships with other

enable farmers to link to markets, ranging from

service suppliers and will provide these services

water, roads, communication and security.

to farmers as part of their buying relationship.

Many traders will offer farmers credit, free seeds

Land: A critical asset for farmers in terms of

of a crop they wish to buy, and sometimes this

linking to markets is having the necessary land

relationship can include fertilizer and tools.

assets to produce sufficient surplus produce

Therefore, in addition to buying and transporting

to be able to sell into markets. One of the

the farmers’ goods, traders also provide a number

largest constraints for smallholder farmers is

of other embedded services. The farmer is not having very limited land area. It is somewhat

charged immediately for these services, but the

17

PART 1. Concepts and theory

counterintuitive that even through maize is the

grid generally have to sell their goods soon after

major agricultural product for farmers in East

harvest, with little upgrading of the basic product.

and Southern Africa, that more than 50 % of the

farmers are net buyers, as they have insufficient

Communications: The latest form of

land to produce maize surpluses using low input

infrastructure that is rapidly transforming

farming methods2 . The location of the land is

rural areas is access to wireless communication

also important, with productivity being highly

systems. The massive proliferation of mobile

dependent upon agro-ecozone.

phones, and the integration of these phones with

internet browsing facilities, is allowing farmers

Roads: For many communities, access to market

to link with services, buyers and set up trading

is determined by access to serviceable roads.

relationships. Mobile phones are now an essential

Farmers will only offer surplus for sale if they

information and trading resource, and farmers

have access to paths and roads from their

without access to a mobile phone network are at a

farms to market. Due to their high cost, most

real marketing disadvantage.

communities rely upon Governments to provide

basic roads. However, several studies have shown

2.9.2. Agricultural Policy and regulation

that market access is significantly improved with

Trade Agreements: A key role of the Government

the construction of even basic unpaved roads

is to support a competitive regulatory trading

that allow farmers to use donkey carts, or small

environment for agriculture. At the global level,

tractors to bring produce to larger roads for

the World Trade Organization (WTO), offers

sale to traders with pickups or trucks. Enabling

signing countries, a framework to facilitate trade

year round market access via more robust road

between countries. However, within this trading

networks is critical to regular market access.

arrangement, uncompetitive farmers will lose

market share to more efficient farmers from other

Water management systems: Poorer smallholder

countries. Similarly, at the regional and sub-

farmers tend to work in rain-fed agricultural

regional levels, trade agreements offer favorable

systems where success is dependent upon

trading rules within a specific area. Trade

favorable weather. Due to the risks of poor

agreements aim to promote trade between buyers

weather, most banking, micro-finance and

and sellers by supporting the use of common

insurance agencies are reluctant to provide

standards and grades with associated weights

financial services to farmers who do not have

and measures. This enables remote buyers and

some form of water management program.

sellers to trade produce without the need for

In several countries, Governments recognize

physical inspection with greater confidence. Trade

the vulnerability of rain-farming communities

regulations also include rules on legal arbitration to

and both Government and Non Government

settle disputes when the occur, taxation, tariff and

Organizations are investing in water management

subsidy measures, so that produce is traded on a

systems, which include the construction of micro-

level playing field, to avoid unfair advantages within

dams, bore holes, water catchment systems,

a trade agreement zone.

upgrading traditional and new irrigation systems,

to enable farmers to achieve more consistent

Food safety: Following a series of food poisonings production.

incidents in mainstream food chains, caused

by food contaminated with pathogens such as

Power: Rural power is a critical support service

aflotoxin, listeria and vomitoxin and fumonisin,

that enables farmers to make significant shifts

Governments and commercial companies are

from basic production to value added products.

establishing more rigorous Food safety regulations

Farmers in areas with access to national electric

to protect consumers. These regulations restrict

grid power, can condition, store, dry, chill and

the sale of food items unless they meet specific

add value to their produce using a range of

food quality specifications and some goods require

technologies. Farmers without access to low cost

inspection for toxin levels as part of the sales

2 T.S. Jayne et al, 2010. Patterns and Trends in Food Staples Markets condition. In many formal food chains, companies

in Eastern and Southern Africa.

now require produce traceability from farm to point

18

A Guide to Rapid Market Appraisal (RMA) for Agricultural Products of sale, so that any problems detected within a

2.10 Market structure and performance

batch of food can be identified and supply stopped

As producers and consumers become more

at source.

distant from each other through trends such

Public and Private standards:

as urbanization, and products become more

Associated with

processed, there is an increasingly complex

mass urbanization over the past 20-30 years there

network of people and activities that link

has also been a rapid consolidation of buyers,

producers with consumers. This sequential

within the formal food system. In the food chains

process that includes market actors, their

that supply industrialized countries, the number

functions and business relations is described

of traders, processors and retailers has decreased

using a number of terms including a sub-sector,

dramatically, with countries such as the United

supply chain, market chain and value chain,

Kingdom selling 80% of its retail food through 5-6

(see Figure 7). All of these terms refer to the

supermarket brands. One of the outcomes of this

distribution or channels that support the flow

consolidation of buyers, has been that the retailers

of goods, information and finances between

and major trading houses often play a more

producers, intermediaries and consumers.

prominent role in setting food quality and safety

These terms are used synonymously in various

standards than Government. This has come about

texts and we have attempted to indicate some

because the leading supermarket chains want

differences in these terms:

their loyal customers to be confident in their foods

systems. This quality assurance process between

Subsector: If an economy is divided into a

sellers and buyers has significantly improved food

number of sectors, such as health, education,

quality standards in the formal market food chains.

transport, banking and agriculture, then a

The effect of this market power from supermarkets

subsector focuses on the set of products and

has also led to major reforms at the farm level

activities for specific products within a given

in how food is produced and levels of hygiene is

sector. In the agricultural sector, a sub-sector

enforced at the point of production. The most

study would therefore focus on the market

recent food safety requirements being laid down by

structure, regulations and performance of a

the retailers, are that every produce in the modern

defined product, such as maize, within a defined

food chain must have total traceability from farm to

geographic zone.

store shelf.

Supply chain: refers to the sequence of

Traceability requirements: Modern

(upstream) sourcing and (downstream) market

communication and computer management

functions of individual enterprises. In some cases

systems now allow for individually packed produce

the term supply chain is more specifically linked

to be traced from their point of production, through

to a lead company with activities and services

the various elements of a market chain to a retail

focused on optimizing the flow of goods to the

store shelf. This means that if there any quality

lead company. Supply chain management was

problems with a particular batch of produce, that

a term first used in the manufacturing industry

it can be isolated and withdrawn from the market

to describe the ecology of partners involved in

quickly and remedial action taken at the point of

providing parts and services that contribute to a

problem. Full traceability systems for eggs can

final product. This term has subsequently been

be used to trace, for example a batch of eggs with

used in all marketing sectors.

salmonella, and action taken to remove all produce

from that farm at the store level, then to address

Market chains: a general term used to

the hygiene problems at the farm, or at the point

encompass the series of market players and

of contamination. It is likely that all produce in the

transactions involved in the production, trading,

future will receive an identification code of some

processing and marketing of any good that is

form, such as a bar code, to trace all goods. This

driven by market demand.

will help to reduce food safety challenges and help

to optimize food market chains.

19

PART 1. Concepts and theory

Figure 7. Market mapping method to assist in expressing market chains Market channel: refers to the production and

marketing of a specific good with a specific set of

actors.

Value chains: refers to the series of marketing

functions for a product from production to sales,

but places emphasizes on the value that is created

along the chain, also highlights the importance

of increasing the value of the whole chain and

ensuring a fair distribution of benefits amongst

chain participants.

Market webs: term used to explain the complicated

and interrelated nature of the production, trading

and marketing process, which integrates multiple

actors and channels within a market area. This view

considers that farmers, traders and other market

chain actors, are involved in multiple chains at any

one time, hence marketing agents operate within a

web of market links rather than single chains.

Figure 8. Market chain for meat in northern Vietnam

20

A Guide to Rapid Market Appraisal (RMA) for Agricultural Products Marketing maps: To begin to understand how a

incurred and the profits earned by market

product moves from the farm to a consumer, it

intermediaries, account for the difference between

is a useful exercise to create maps showing the

prices at different stages of the market chain. This

flow of products from major areas of production to

is illustrated in Figure 9.

final consumers. Marketing maps can be drawn in

participatory meetings by the chain actors as shown

in Figure 7.

For many field agents and farmers, drawing out a

marketing map, helps to get a basic understanding

of the key players within a market chain. Marketing

maps can be used to add detail over time, for

example, the market map can be used to add in

locations of service providers, costs along the chain

and to help with a process of identify bottlenecks

and opportunities.

Alternatively, marketing maps can be much more

Figure 9. Prices along the value chain

stylized, as shown in Figure 8, which shows a

marketing chain in Vietnam for beef meat being

In many cases, farmers also perform marketing

sold into a number of different markets. This figure

functions and therefore incur marketing costs. The

depicts all market channels for contract growers

most important ones are listed below:

-- from production up to export and domestic retail

sale.

• Market research and promotion. Farmers often

spend time and money collecting market

New Business models: A business model describes

information and promoting their products. They

the rationale of how an organization creates,

may need to contact buyers, visit other farmers

delivers, and captures value (economic, social, or

and markets, call an extension officer, and

other forms of value). The process of business model

participate in a trade fair, and so on.

construction is part of business strategy. This term

can focus on the business operations of a specific

• Product preparation. This includes cleaning,

firm, but increasingly this term is being used

sorting and grading produce. Household and

to describe the interlinked activities of business

exchange labor are typically involved in these

partners within a value chain.

tasks, but local labor may also be hired to perform

2.11 Marketing Costs

these tasks.

In addition to the main production costs that are

• Packaging. Packaging costs are also common in calculated using a Gross Margin analysis, which

the early marketing stages. Simple and cheap

focuses on fixed and variable costs, the process

types of packaging, such as jute or nylon bags, are

of marketing also includes a range of specific

commonly used by farmers.

costs. Often these costs are under estimated

in profitability analysis; this section describes

• Handling. When farmers rent transport they have marketing costs. All marketing activities generate

to load and unload produce. Labor is hired or

costs, with associated costs of transport, labor, and

exchanged to carry out this activity.

processing.

• Transport. Transport costs will vary according to These costs vary across agricultural products,

the distance between the farm and the market or

depending on the commodity, the degree of

buyer, the quality of the roads, and the availability

processing, distances from the farm to consumption

of transport.

centers, transport conditions, costs of utilities, cost

of labor, marketing risks, and so on. The costs

21

PART 1. Concepts and theory

• Product losses. Losses can affect both the quantity additional marketing costs.

and the quality of a product. For example, many

crops lose weight during drying and storage, and

Gross marketing margin is the sum of all marketing while in transit. Pests such as rodents and insects

costs (grey in Figure 9) plus profits (black in Figure

can cause much damage to grains. Perishable

9).

products, such as fresh cassava and many fruits

and vegetables, deteriorate rapidly after harvest.

Net marketing margin excludes normal marketing

costs, and only focuses on the profit realized.

• Storage. Storage costs typically include the cost of building and operating a store.

There are at least three reasons why the calculation

of gross and net margins is an important element in

• Processing. Certain products (e.g. cassava, sugar market research and analysis:

cane, mushrooms, bamboo) are sometimes

processed at farm level before being offered to

Margin analysis indicates where in the marketing

consumers.

chain value is being added to the product and

profits are being made.

• Fees and unofficial payments. Farmers must

often pay a fee when selling at a market. In

Margin analysis can assist development agents to

some countries, it is common for farmers to pay

understand the efficiency of marketing systems and

unofficial fees to the police during transport from

the bargaining position of different participants. In

the farm to the marketplace.

a competitive and efficient system, marketing costs

and profits are relatively low. The difference between

It is important to note that some of these marketing

retail and farm-gate prices is therefore moderate,

activities may be funded through credit. The cost of

and farmers receive a reasonable share of the price

loans – i.e. interest payments – should be regarded

paid by consumers.

as a marketing cost.

Margin analysis can enable development agents

2.12 Marketing Margins down the

to identify sources of inefficiency in a marketing

value chain

system, such as poor farmer negotiation for

Many development agents are biased against

prices, too many traders in a chain, or excessive

traders as they assume that all travelling traders,

costs within a chain or excessive profit taking. In

wholesalers and retains gain higher profits than

these cases a development agent can work with

farmers and are therefore exploitative. This

the producers and traders to find more equitable

assumption is often based on the direct comparison

solutions.

of buying and selling prices down the chain. For

example farmers receive, $20 / 50 kg bag in their

• Cutting out the middle man: This is an idea

village market but the product sells for $2 / kilo

that many NGO’s have, to reduce costs in the

in the urban markets, which equates to $100 /

market chain. In many cases it is not easy to do

50 kg bag. Making direct comparisons between

this. Traders are in place because they have a

these prices can be misleading as these numbers

role to play and are offering a needed service. One

do not reflect the marketing and transaction costs

way around this is for farmers who were selling as

associated with each of the buying stages in the

individuals to a local collector, to sell collectively to chain and the risk that the individuals in the chain

a travelling trader. In this case, the activity of one

take on, along the chain.

trader in the chain is being replaced by a more

organized farmers group. The fee that was paid to

To gain a more objective measure of income and

the collector is now absorbed by the farmers, who

profit share for different actors within a market

must do that work and will benefit from the share

chain, the development agent will need to collect

of that task. So, cutting out the middle man can

information on the marketing margins along the

work, if farmers take on the tasks previously done

chain, as shown in Figure 9, which includes not

by someone else. Cutting out a middle man does

only the purchase and sales prices, but also any

not mean avoiding some additional costs in time,

money and energy.

22

A Guide to Rapid Market Appraisal (RMA) for Agricultural Products

• Becoming more competitive: In some cases it

Relative number of trading and processing

is found that a trader is collecting a higher share

enterprises. A large number of trading and

of the final price than the farmers. As mentioned

processing firms indicates a high level of

previously, this could be because of the extra risks

competition within the marketing system. This is

or transaction cost at that point in the chain. It

essential for avoiding a situation whereby certain

may also be that the producers are supplying

firms are making excessive profits at the expense of

such low volumes that the buyer actually has

suppliers and consumers.

high costs of doing business. An example here is

a women’s group in India, who found out that the

Barriers to market entry. The higher the barriers price of chickens they were being offered by their

to entry into the market, the lower the levels of

trader was only 20% of the price that the trader

competition. Entry barriers can be related to the

was selling the same chickens to his buyer in

capital and skills required to develop a certain

the local town. When the women confronted the

marketing function. For example dairy farming

trader about this, he explained that their volumes

generally requires considerable expense in buying

of birds were so low that he could only pay a low

cows, feed, shelter, milking equipment and coolers,

amount. In this case, rather than simply asking

compared with maize farming which may only

for a higher price, the trader suggested that if the

require buying seed. Access to marketing networks

women increased their production from 15 birds

can be another important entry barrier. Complex

per week to 50 birds per week, that he could pay

and lengthy enterprise registration and licensing

them a significantly higher price, as it made his

procedures can also result in high entry barriers.

business more efficient.

Availability of market information. Good access

2.13 Efficiency of Agricultural Market-

to market information by all market participants

ing Systems

facilitates the flow of produce from surplus to

An efficient or well-performing marketing system

deficit areas, contributes to spreading consumption

serves the interest of all participants, including

throughout the year through storage and imports,

farmers. But what exactly is an efficient marketing

and reduces the scope for excessive profits along

system? To farmers, the sale of their products for

the market chain.

a high price would be efficient marketing. However,

too high a price for farmers would discourage

Transport infrastructure and services. Good

purchases by consumers. Too low a price would

transport infrastructure and affordable transport

discourage production of future supplies.

services are essential for the low-cost movement of

products along the marketing chain.

The interests of farmers and consumers are

reconciled when: the movement of goods from the

Storage. Storage services contribute to stabilizing farm to the point of consumption is done at the lowest prices and consumption over time.

possible cost consistent with the provision of services Processing. Well-developed processing activities

that the consumers desire and are able to pay for.

reduce the cost associated with the transformation

The implications of this definition are twofold.

of agricultural commodities.

Firstly, efficient marketing implies minimal waste

and unnecessary charges by market intermediaries.

Access to credit. Market participants require

Marketing costs should be as low as possible and

finance in order to move goods along the marketing

market intermediaries should earn normal profits,

system. They must either use their own capital or

consistent with the function performed.

borrow money to fund the purchasing of goods and

the services required to get them to the next stage

Secondly, efficient marketing entails the supply of

of the marketing chain. Because their own capital

goods that meet existing demand, for example with

is often limited, good access to credit by all market

respect to volume and quality.

participants is an important condition for the

Below is a discussion of key determinants of the

efficient operation of marketing systems.

efficiency of agricultural marketing systems.

23

PART 1. Concepts and theory

degree of organization of producers.

2.14 Intervention in Agricultural Mar-

Participation of farmer organizations in marketing

keting Systems

the produce of their members enables producers to

Should governments and development agencies

enjoy economies of scale, improved access to market

intervene in agricultural marketing systems?

information, and a stronger bargaining position

Sometimes it is possible to improve the efficiency

vis-à-vis selected buyers. At the same time, when

of such systems and increase the benefits accruing

dealing with farmers’ associations or clubs, instead

to some or all market participants, including

of small and dispersed individual producers, traders

producers and consumers, through carefully

face lower transaction costs. They can communicate

planned interventions. However, before deciding to

simultaneously with several producers and buy

intervene, governments and development agencies

larger volumes of standardized product at a specific

should be reasonably confident that:

time and place, which reduces their operational

costs and the risks incurred.

• The intervention will be effective in addressing one or several sources of inefficiency in the marketing

Regulations. An efficient marketing system

system;

requires regulations that reduce risk and costs,

• The benefits from the intervention will exceed its while enabling transactions to be carried out

costs; and

without every party needing to be in the presence of

• The impact of the intervention will be sustained

each other. Below are some examples:

over time.

• Legal enforcement of contracts and protection

Interventions should lead to reductions in

against fraudulent practices.

marketing costs and risks, improvements in access

• Standard weights and measures and quality

to markets, and higher returns along market

specifications to minimize disagreements between

chains. The type of intervention required and the

suppliers and buyers, and reduce the need for

agency involved will depend on the marketing

visual inspection of every product lot.

constraints and opportunities. Examples of

• Minimum health and sanitation standards

interventions include changes in policies and

to protect consumers and minimize unfair

regulations, investment in marketing infrastructure,

competition by less scrupulous operators.

provision of market information, development of

• Simple and low-cost enterprise registration and

appropriate farmer advisory services, facilitation of

licensing procedures to reduce barriers of entry

improved business links between different market

into trading and processing.

participants, development of product grades and

standards, productivity and so on.

2.15 Market Research

The collection, processing and analysis of data and

information about marketing systems are known

as market research. Markets are dynamic, they are

constantly evolving and changing, and therefore

market research is not a onetime activity, effective

market research needs to be conducted on a regular

basis. This manual focuses on the rapid appraisal of

agricultural commodity markets, which is one of the

most widely used and effective market research tools.

By now, it should be clear to readers that market

research can serve two main purposes. The first

is to enable market participants (farmers, trading

enterprises and processors) to understand the

market situation and adapt their production and

24

A Guide to Rapid Market Appraisal (RMA) for Agricultural Products marketing strategies to improve their position in the

agriculturally based goods. For many developing

market place. Knowledge about customer needs and

countries, the populations are likely to double

competitors is essential to improve existing market

over the next 15-20 years, suggesting a significant

strategies and develop new enterprise options. This

increase in demand for basic goods.

type of market research is generally conducted by

market participants themselves or by specialized

Urbanization: In the last century, the world has

consultancy firms hired for that purpose. Extension

urbanized faster than ever before, approximately

officers and development agencies working with

50% of the global population now live in towns

resource-poor farmers may also undertake such

and cities. The rapid movement of people to urban

research to help producers gain improved market

centers means that more consumers need to buy

access.

food and other agricultural produce.

Secondly, market research can be conducted to

Rising incomes, particularly urban: In most

guide interventions aimed at improving the efficiency

countries, incomes are rising. As incomes grow,

of marketing systems and generating benefits

people spend a lower percentage of their income on

to different participants. Such research can be

basic foodstuff. This means that people can select

conducted by a wide range of agencies, including

higher quality or more processed foods. The fastest

donors, government ministries and departments,

rate of income growth is found in urban centers

non-government organizations, and development

and the richer middle urban class consumers want

projects. The focus of market research activities

more sophisticated produce and can afford to pay

will depend on the objectives and mandate of the

higher prices. This trend is related to the rise of

implementing agency. However, there will invariably

the supermarkets, which is happening faster in

be an emphasis on understanding constraints and

some regions than others, African has relatively few

bottlenecks, as well as opportunities for intervention.

supermarkets at this time.

As part of this process, analysts should be aware of

key market drivers and also take into account the

Globalization: This is the term used to describe

level of risk that any new market opportunity may

the recent impact of innovations in communications

involve. An important outcome of market research is

and transport systems on trade and the increasing

being able to match new opportunities for enterprise

integration of world markets. This process has

development with the assets and skills of the

encouraged nations to liberalize their economies

client(s) who will invest their time and energy into a

and increase their volume of trade, including

recommended enterprise option.

agricultural products. Globalization is considered

by many to be the most influential trend on

2.16 What drives market trends?

market forces at this time, having both positive

There are a number of factors that drive changes in

and negative effects on the smallholder producer

the market place, in terms of the quantity, quality,

community.

volumes and types of products that are in demand.

The following list provides an overview of the major

Market liberalization: This term refers to the

factors that influence why markets are dynamic

process by which control of the marketplace is

and the factors that create market trends over the

released or liberated from the control of the State.

long run. It is useful to know how these affect the

Governments still provide a regulatory framework

markets in the short, medium and longer term.

but the mechanics of the market is organized and

Chapter 3 provides more information on short-term

implemented by a host of private sector actors and

factors that have a particular affect on prices in the

companies.

agricultural market. The list below describes basic

Commodity price trends: One of the most

factors that shape markets over a longer time-span.

devastating effects of globalization in the 1980’s

Population growth: The rate of population growth

and 1990’s was the steady fall in global prices of

in most developing countries ranges from 2-3%.

major agricultural commodities traded on the world

This means that every year there are significantly

market. From the 1980’s, when global commodity

higher numbers of people to supply with

agreements were dismantled up until the early

25

PART 1. Concepts and theory

2000’s, the value of the top 20 traded agricultural

been most rapid in the medium income countries,

commodities, fell steadily to its lowest level in more

such as in Latin America, and parts of South

than 40 years. From 2007, commodity prices

East Asia. In Africa, there are still relatively few

started to increase rapidly as investors sought

supermarkets, who mainly sell their goods to the

safer havens from the global financial crisis. Food

richest consumer groups in the main towns and

prices peaked in 2008 before falling rapidly again,

cities.

as the financial crisis morphed into a major global

recession. After the dip in prices markets and

Niche markets and Fair Trade: As consumers

commodity prices have been highly volatile, a result

become more sophisticated they can afford to

of the underlying fragility in the global market

pay a premium for exotic, novel, or specialty

system.

products. These new types of “lifestyle” products,

i.e., products that fulfill the needs of a very select

Price trends in the period from 2010 to 2012, have

consumer interest group, have created a new

shown a steady rise, but the underlying trend is

market segment related to “niche” products.

for greater price volatility with price peaks and

Specialty coffee produced from a limited number

troughs being exacerbated by the combination of

of farms is an example of a product that is in such

integration of financial systems around the world

scarce supply, that it can command a price many

and the uncertainty in Governments being able to

times higher than mainstream coffee products.

resolve fundamental issues. The most important

Similarly, some consumers will only buy goods

issues related to the imbalances of trade around

that are “fairly traded”. The charity organization

the world, with many established countries having

“fair trade” promotes products that work with

unsustainable levels of debt, and other emerging

certified farmers and pays them a guaranteed

countries having huge cash surpluses driven by

minimum price, and generally includes a premium

export trade.

payment. Certification schemes and the associated

produce are a growing market segment for

Market concentration: In the past 20 years, there

smallholders, with brands such as organic fair

has been a radical shift in the number of buyers

trade, RainForest Alliance, Utz etc, providing

trading on the international market, from very many

strong marketing linkages for farmers to access

local business traders to a few large international

higher value markets.

trading houses. For major commodities such as

wheat, maize, soybean, coffee, oil etc., the number

Consumer concern for food safety: Increasingly

of producers relative to international traders has

complex and scaled food systems, which include

fallen dramatically down to 5-10 major international

more stored and processed foods has led to several

traders. This loss in competition at the trader level

major food safety incidents. Food scares caused

in the market chain has meant a significant shift in

by eggs affected by salmonella, beef affected by

market power away from producers to the buyers.

“Mad Cow disease,” peanuts contaminated with

The danger of this situation is that a few buyers

aflatoxin, have either caused mass illnesses or

could use their market power to maintain low prices

deaths. These incidents have led to major new

and establish cartels.

campaigns and stringent food safety regulations

to make food safe for the public. Farmers who are

Retail formalization: In addition to the fall in

involved in quality based supply chains can access

international buyers, there has been a similar effect

premium markets, where people are seeking safe

in the retailer sector. In developed nations, in the

food products.

past 20 years, 100’s of village shops have been

superseded by a few national or trans-national

The growing importance of environmental and

supermarkets. For many sectors, supermarkets

sustainability issues: Technologies that increase

are the dominant buyer and farmers are required

productivity can have a severe negative effect on

to formalize their business methods to meet the

natural resources. In the agricultural context, this

stringent quality controls and price structures of

can lead to the overuse of inorganic chemicals and

the supermarket procurement standards. The level

pesticides, and rapid soil degradation. Consumers

of supermarketization in developing countries has

have reacted against this with a shift towards

26

A Guide to Rapid Market Appraisal (RMA) for Agricultural Products demanding products that are produced organically

(highest risk). Market analysis based on demand

or at least using “clean” and renewable production

and profitability often gravitates towards higher

systems. Consumers will pay a premium for

risk options and enterprise groups need to be

products that can show they are produced using

aware of the risks and benefits from high-profit

environmentally friendly methods. In the future,

options.

the use of sustainable and environmentally friendly

production systems is likely to become a more

existing products New products

important issue. Already the “organic” market is

existing markets

1. Market

3. Product

penetration

development

growing by 20% per annum.

(lowest risk)

New markets

2. Market

4. Diversification

Information & communication technology: The

development

(highest risk)

rapid spread of mobile phones in rural areas of the

world transforming how agricultural businesses

are being run. Phones allow cheap communication

Figure 10. Using the Ansoff matrix for risk assessment

within producer groups and with buyers and in

many countries, buyers insist on their suppliers

The market researcher can use the Ansoff

being contactable. For sales of higher value goods,

matrix to guide clients towards a sensible level

access to phone technology is fast becoming an

of risk based on their experience, assets, skills

essential element of the marketing toolkit and

and financial options. For example, market

the ability to bundle access to services such as

researchers may advise newly formed farmer

financial services, input supply and transport

groups to select options that are based on market

services through a phone makes this technology an

penetration with the view that less experienced

essential part of the marketing tool kit.

farmers should test markets in a stepwise

manner starting with test plots and market

Innovation: Experimentation that leads to

trials before engaging in larger scale supply.

new technologies, products, services and

For groups with more experience in marketing,

organizational structures is another essential

higher risk, higher return strategies are likely to

process that provides farmers with an advantage

be more attractive. To facilitate the identification

in the marketplace market chains. Examples of

of market opportunities and evaluate prospects

innovation in the agricultural sector include areas

for diversification, CIAT developed a guide

such as, mobile phone technology to support trade,

titled Identifying and assessing market

linking savings and loans activities with agro-

opportunities for smallholder producers

enterprise, input procurement and more formalized

(Ostertag et al, 2007).

innovation areas such:- as biotechnology and the

recent development of bio-fuels in agricultural

systems.

2.17 Preparing for risk

One of the more difficult tasks when developing

marketing strategies is to assess the level of risk

associated with a new marketing strategy. When

working with poor smallholder farmers or small-

scale processors it is important to find a simple

means of assessing an appropriate level of risk that

such clients should take on when developing a new

enterprise.

Tools such as the Ansoff matrix, illustrated in

Figure 10, are used to categorize risk options by

comparing types of products and markets. In

this matrix, risk increases from 1 (low risk) to 4

27

PART 1. Concepts and theory

exercise 2.1

Assumption

Basic concepts in marketing were provided to

participants

Objective

Improve understanding of basic marketing

concepts

Task

Draw the market chain for a specific product,

indicating i) the different market participants, ii) the functions performed at each stage, and ii) spatial

flows.

Suggested procedure

Form three groups (one for forestry products, one

for livestock, and one for agricultural crops). In

each group:

- Identify one specific product.

- Draw a map/diagram of the market chain for

the product.

- Indicate the type of market participant

(producer, collector, assembly trader, processor,

wholesaler, retailer, etc) involved at each stage of

the chain.

- Indicate the type of markets (assembly,

wholesale, retail) found along the chain.

- Indicate the marketing functions (drying,

cleaning, assembly, storage, sorting, packaging,

processing, etc) performed at each stage of the

chain.

- Indicate the main factors driving this market,

or those factors most likely to increase price

volatility.

- At each stage of the market chain, indicate the

place where marketing activities take place

(village, town, city).

- List barriers to entering this market.

- Identify which type of producer could benefit

most easily in this market and/or the skills

required by a service provider to enable

smallholder producers to enter this market.

expected outputs

A diagram of the marketing chain.

Presentation

On flipchart

due

Each group has forty-five minutes for preparation

and five minutes for presentation.

28

A Guide to Rapid Market Appraisal (RMA) for Agricultural Products Chapter 3. key Features oF agrICultural Markets

Learning objectives

have a particularly strong impact on the price of

After reading this chapter, the learner should be

perishables, such as fresh fruit and vegetables,

able to understand and explain key features of

cassava roots, and fresh fish. Perishable

agricultural markets. This will facilitate learning

commodities cannot be stored for long and

during the following training sessions and improve

therefore have to be sold quickly. Consequently,

the ability of the learner to collect and analyze

prices tend to fall considerably during the late

market data and information.

hours of trading or when a sudden arrival of large

amounts of produce leads to excessive supplies

3.1 Introduction

(gluts) in the market.

Agricultural markets in developing countries are

Short-term price instability often makes it difficult

different from markets for industrial products

for farmers to anticipate the price they will receive

and services. This is due to the special nature

for their products. Will this be the same as last

of agricultural production and the specific

week or last month, or will it be higher? Have

characteristics of agricultural products. Those

prices at the market fallen suddenly, in which

involved in a rapid appraisal of agricultural

case it would be better to sell at a later date? Are

marketing systems need to have a good

prices so low that it is better not to harvest as this

understanding of these specificities. As such,

would mean selling at a loss. Regular consultation

this manual includes a discussion of some key

with traders and processors can provide some

features of agricultural markets.

answers to these questions and help farmers

3.2 Short-Term Price Volatility

decide when to sell.

The price of agricultural commodities can change

3.3 Seasonality

suddenly and significantly within the same

The price of most agricultural produce follows

week or even day. Short-term price volatility

a clear seasonal pattern similar to that shown

is often caused by poor coordination between

in Figure 11. Agricultural supply being supply and demand. Coordination failures can

29

PART 1. Concepts and theory

concentrated in the harvesting season and one

3.4 high Inter-Annual Price Variations

or two months afterwards. This leads to very low

Another common feature of agricultural markets

prices during this period and a marked rise in

is that prices can change considerably from one

prices as supplies become scarcer. The degree

year to the next, as shown in Figure 12. These

of seasonality in supply varies significantly

price fluctuations often reflect changes in supply

according to the type of agricultural product.

and demand caused by natural conditions such

as weather, pests and diseases. For example, a

Many factors can contribute to stabilizing

severe drought can significantly reduce yields,

supplies and therefore reducing seasonality

particularly for non-irrigated crops; sudden

within the year, such as:

outbreaks of pest or disease infestations can also

• multiple and long harvesting seasons

cause losses in agricultural production leading

• diversity in the harvest time within the country

to significant price rises. In contrast, favorable

• availability of off-season imports from other

weather conditions can have a strong positive

countries

impact on production, causing over-supply in the

• storage of produce to prolong the supply onto

markets and falling prices.

the market

Figure 12. Farm-gate paddy prices in Red River Delta (1994-Figure 11. Price seasonality

1999) VND / kg (15,000 VND = 1USD)

Farmers’ reaction to these shocks may exacerbate

Maize price seasonality in northwest Vietnam

price volatility. Farmers may over-react to a rise

A recent study of hybrid maize markets in northwest

in the price of a specific commodity by expanding

Vietnam showed relatively small price variations

cultivated areas and intensifying production

across seasons. This was primarily due to the fact

that very large volumes of hybrid maize were being

during the following planting season. This may

stored for use during the winter months, a period

then lead to over-supply and low prices at the

when maize supplies from other regions (e.g. Nghe

next harvest time. The inverse can happen

An and Daklak provinces) and China were also

available.

when farmers reduce planting in response to

a severe decline in prices. Therefore one year’s

high prices can be followed by one year of low

Demand can also play a role in explaining price prices. Inter-annual price fluctuations can be a

seasonality. There are specific times in the year

significant source of risk. Market research can

when prices increase due to changes in demand.

provide insights into annual market trends by

The most obvious examples are the increases in

analyzing long-term data on supply and demand

prices of all food items during major religious and

trends, which can signal an impending increase

festive events. Farmers can plan their harvests to

or decline in prices.

coincide with these periods of peak demand so as

to capture higher sales prices.

30

A Guide to Rapid Market Appraisal (RMA) for Agricultural Products 3.5 high Risk

When information is gathered on prices along a

Agricultural markets are characterized by high

market chain, marketing costs often emerge as

risk, and inter-annual price fluctuations can be

a more valid explanation for the spread between

a major source of risk. Producers may find that

producer and retail prices. For example:

the market price at the time of harvest does not

• Assembling agricultural produce from small-

cover production costs or is much lower than

scale, dispersed, and remote farmers is costly.

anticipated. Traders may be unable to sell their

• Agricultural products often have to be

stocks for a profit.

transported over long distances and difficult

Product deterioration and spoilage is another

roads before reaching the consumer.

risk factor. Agricultural produce may suffer

• Along the way, produce needs to be cleaned,

from insect infestation, bruising, and physical

dried, sorted, packed, and advertised in order to

deterioration during transport, handling and

be acceptable to consumers.

storage, causing significant financial losses to

• More complex forms of processing are

farmers and traders.

sometimes required, generating additional and

sometimes significant costs.

Another common risk incurred by traders,

• Product deterioration and spoilage are also

especially in developing countries, is the

common.

possibility that the purchased product may

• Storage may be another source of costs to

contain undetected foreign matter such as

traders and processors.

water, sand and stones. The practice of selling

agricultural products mixed with sand, stones

All of these activities incur costs for the traders,

and other foreign matter is common as farmers

processors and retailers and all the traders

attempt to increase their income.

and intermediaries that buy and sell produce

between the farmer and the final consumer need

Farmers often fail to realize that buyers who have

to remunerate their labor and make a profit from

had bad experiences because of poor quality or

their activity.

cheating will either stop purchasing from that

area, or will continue buying but at lower prices

Many agricultural projects seek to assist farmers

than they would normally be willing to pay, to

to remove the so called “middle men” from the

offset such risks.

market chain in an attempt to reduce these

marketing costs. But before taking action, farmers

At the same time, development agents should

need to know the benefits and costs associated

be aware that some unscrupulous traders also

with each of the functions performed. It is often

cheat farmers with rigged balances, providing

the case that traders are far more efficient than

mis-information about market prices, and telling

farmers at bulking, grading and presenting

farmers that quality requirements mean that can

goods to distance buyers than farmers. Therefore

only offer a low price, even if there are no market

farmers need to be able to compare the prices

grades to adhere to.

and costs associated with taking on new tasks in

the marketing of their goods before they take on

3.6 high Transaction and Marketing

additional responsibilities.

Costs

Prices paid by end users and consumers

are normally well above those received by

primary producers. This often leads to the

conclusion that traders are exploiting producers.

However, marketing costs and risks are often

a more accurate explanation for the significant

differences between producer and consumer

prices.

31

PART 1. Concepts and theory

3.7 Incomplete Information

Rapid growth and increasing household incomes,

Poor access to market information is an important

particularly in urban areas, means that many

source of inefficiency within agricultural markets.

consumers have become more discerning in their

3

Farmers generally have limited knowledge

purchases, demanding better quality produce,

and understanding of how markets work and

a greater range of goods, and also want an all

insufficient information about supply, demand

year round supply of certain food products.

and price variations. This limits their ability to

Supermarkets are fuelling this increase in

target remunerative opportunities, meet buyer

produce differentiation and market segmentation,

requirements, and negotiate favorable prices.

with their international procurement capacity.

To engage with these new and often lucrative

Although better informed, traders and

markets, farmers need regular information about

processors may also lack access to critical

market trends. They must also be able to innovate

market information, and may not be able to fully

and organize themselves to meet the increasingly

adjust to a changing market environment. More

stringent quality requirements in domestic and

generally, poor access to market information

export markets, if they are to continue to earn a

leads to high marketing costs, higher risks and

living wage from their farms.

results in poor coordination between supply and

demand. This information failure has a negative

To compete in the marketplace farmers must

impact on demand for farmers in terms of the

be able to produce what the markets want at

types of products they produce and the prices

relatively low costs. They should focus on what

they receive.

they can produce well and supply good quality

products that are prepared, packaged and

3.8 Intense Competition

delivered in accordance with buyer requirements.

Otherwise buyers will prefer to buy their goods

Domestic and export markets for agricultural

from other farmers who provide better value

products are characterized by intense

goods.

competition and understanding more about

competition provides insight into the problems

and opportunities faced by farmers and market

Being competitive in dynamic markets

intermediaries.

In order to compete successfully in the marketplace,

farmers must produce what buyers want in terms

In much of the developing world improvements in

of volume and, quality at prices that make them

production technologies, roads, communication

more attractive than alternative suppliers. Farmers

need to be able to innovate in order to retain their

systems and marketing policies have significantly

competitiveness and be able to respond to changes

increased competition in agricultural markets

in the marketplace.

over the past decade. New international marketing

agreements, such as those developed through

the WTO, have also opened up domestic markets

to competition from neighboring countries and

more distant countries, where some farmers may

produce their goods with the added advantage of

receiving production and export subsidies. This

type of competition is likely to increase with time,

as marketing agreements open markets to new

producers and communication across the world

enables producers to market their goods in ever

more distant locations.

3 The efficiency of agricultural markets is discussed in Chapter 2.13

of this section.

32

A Guide to Rapid Market Appraisal (RMA) for Agricultural Products 3.9 Price responses to changes in

supply

Generally speaking, the supply of agricultural

products is not very responsive to prices, at least

in the short-term. In other words, it takes time

for farmers to adjust production in response to

changing prices.

The responsiveness of prices to changes in either

supply or demand is termed “elasticity”; many

agricultural products have low price elasticity.

The reasons for the slow price responsiveness

is that, for example, if a decline in the price of

carrots occurs after planting, farmers will not

be able to reduce cultivated areas. The options

available to them are limited; they might reduce

their use of inputs or wait until the next planting

season, when they may plant fewer carrots. On

the other hand, if prices start to rise, farmers

cannot sell their produce, they must wait until

the crop is ready for harvest.

Producers may have limited arable land and labor

to expand cultivation, and lack access to the

technologies that would enable them to scale-up

production, such as improved varieties, irrigation,

and agro-chemicals.

3.10 Price response to changes in

demand:

Unlike supply, demand for most agricultural

products is very sensitive to changes in prices.

Often final users or consumers can substitute

between products, and are therefore able to

shift consumption to alternative products. For

example, if carrots become expense consumers

may choose to buy more cabbage. Farmers must

be able to keep their costs low in order to cope

with competition from alternative products.

This situation is referred to by economists as

having a high elasticity to demand, so that for

example, when the price of cotton goes up, a

garment factory can increase production of

clothes made of synthetic materials and reduce its

output of cotton clothing. When the price of coffee

increases, consumers can shift to alternatives

such as tea or other drinks, but farmers are

clearly unable to rapidly shift out of producing

coffee.

33

PART 1. Concepts and theory

Chapter 4. steps In IMpleMentIng a rapId Market appraIsal Learning objectives

markets visited, the number and type of key

After reading this chapter, the learner should be

informants selected, and the time required to

able to specify situations where an RMA should be

collect and analyze information, will vary according

conducted, explain how key underlying principles

to the purpose of the RMA, the client type, the

affect the implementation of the appraisal, and

level of participation require, the timeline and the

describe the different steps in the process.

resources available.

4.1 What is an RMA?

The RMA approach is investigative. There are

no absolutes in the data collected or in the results

RMA’s provide a quick, flexible, and effective way of

derived from the analysis. The market analyst

collecting, processing, and analyzing information

needs to take on an investigative approach, linking

and data about markets and marketing systems.

information, with personalities and opportunities

Based on the results of an RMA the analyst can

in order to reach the objective of providing

develop appropriate programs and policies for

business opportunities for subsequent investment.

promoting production and marketing interventions

A good analyst therefore needs to be able to

and assist clients in developing their market

combine analytical skills with creative thinking

strategies and business plans. RMA’s comprise

in order to understand current constraints and

a wide range of simple methods and tools for

opportunities, potential options and risks and best

collecting quantitative as well as qualitative

alternatives for a given situation in time.

information in order to minimize the costs and

delays in providing timely and sufficiently detailed

Being dynamic in nature, the results from the

business information.

study have a shelf life and therefore any analysis

must include a certain degree of opportunism,

Flexibility is one of the main attributes of a

so as to capture the potential offered by market

rapid market assessment. There are no fixed

opportunities that are open at that time and the

rules regarding the size and composition of the

prospects of formulating partnerships to pursue

team involved. Likewise, the number and type of

business ventures that hold promise.

34

A Guide to Rapid Market Appraisal (RMA) for Agricultural Products 4.2 Purpose of an RMA

the collection and analysis of relevant data and

Although RMAs serve a variety of purposes,

information on input and output markets that

this type of analysis should always be regarded

can be disseminated to enable improved decision-

as an intermediate step towards developing

making by and better coordination between

interventions in the marketing system aimed at

different actors in the market chain.

increasing the benefits for market participants.

4.3 Principles of an RMA

Some of the purposes that an RMA can serve

include the following:

The principles outlined below influence the way

an RMA is designed and implemented.

Understanding existing market status: An RMA

can provide an up-to-the-moment snapshot

demand focus: Demand is the result of

of the market status for a given product or

preferences and actions by all buyers in the

service within the study area; the size of the

product chain. Demand is one of the main factors,

area depending on the scope of the study, i.e. at

if not the principal factor, driving production.

the local, national or regional level. Analysis of

It influences what is produced and how it is

historic and current information can be used to

produced, processed, marketed, packaged, and

explain how the market has evolved over a set

sold.

period of time, who are the main players, what

is the basic structure in terms of channels and

As a result, emphasis is given during the RMA to

distribution coverage; who is benefiting from

understanding quantitative and qualitative trends

being in the market and provide the analyst with

in demand, the market structure, and the product

a reasonable perspective of past performance.

requirements of different buyers.

Understanding market potential: An RMA

Vertical (market chain) perspective: Agricultural

can provide information on the size and growth

commodities go through different stages before

potential of local, regional, national, and export

reaching the consumer. An RMA should therefore

markets. This information is critical to guide

focus on the different participants in the supply

strategies and interventions by government

chain, the way they interact with each other, and

and non-governmental agencies. Products with

their access to relevant support services.

good market prospects, i.e. growth markets, are

likely to generate greater impact on the rural

Understanding competition: Understanding

and national economies, and should therefore

competition can shed considerable light on the

be identified and prioritized in development

problems and opportunities faced by all market

interventions.

participants. Competition exists across all levels

of the marketing system: Farmers compete with

Guide in the design of interventions in the

each other as well as with medium and large

marketing system: An RMA can provide a

agribusiness firms that produce their own crops

good understanding of the marketing system

and livestock. Competition comes from domestic

for a specific commodity, the constraints, and

sources as well as from other countries.

opportunities faced at various levels, and the

reasons why the marketing system is under-

Insiders as experts: An RMA relies to a large

performing. This information can be used to

extent on data and information provided by

develop appropriate policy, investment and other

farmers and market intermediaries. Farmers,

interventions that will have greatest benefits

traders, processors and other market chain

either to large numbers of producers in low value

participants should therefore be seen as the

products or a lesser number of market actors in

experts. Each has “insider” information about

higher value products.

particular issues.

Collecting marketing information for

Optimal ignorance/cost-effectiveness: Time

subsequent dissemination: An RMA entails

and resources (both human and financial) for

undertaking an RMA are always limited. There is

35

PART 1. Concepts and theory

therefore a need to make the best possible use of

• Opportunities for market interventions,

available resources and avoid unnecessary data

agro-enterprise opportunities, that will be

collection. When designing and implementing an

differentiated by scale, investment needs and

RMA, consideration should be made to answer

type of farmer.

what kind of information is really required for

• Critical constraints to market access, “barriers

achieving the RMA purposes. Only essential

to entry”.

information should be collected, processed, and

• Technology options to achieve productivity

analyzed.

gains.

• Organizational changes to increase performance

Participation: In an RMA, participation is

such as economies of scale.

essential for ensuring that the market assessment

• Policy options to support systemic marketing

is relevant and translates into appropriate

gains.

interventions. Relevant stakeholders should

• Scalability perspectives to indicate potential

be invited to get involved in an RMA exercise.

impact.

For example, farmers, policy makers or local

authorities, etc. need to participate in selecting

Each of these areas can be defined in terms

commodities. And other actors in the marketing

of recommendations for specific market chain

chain need to provide information on the surveyed

actors, service providers and institutions, these

commodities. Such stakeholders should also be

being the principle agents and agencies that are

involved in the sharing and discussion of RMA

able to invest in activities to improve and optimize

findings.

a chain. When developing these points a good

RMA report focuses these recommendations to

4.4 Steps in the RMA

a specific client, so that they can use the ideas.

RMAs normally comprise seven steps or stages,

Developing a useful client focused report must

as shown in Figure 13. While steps 1-3 are

be able to answer a simple first question “who is

sequential, steps 4-6 are not. The collection and

the client?” Studies that are not clear about the

analysis of data (steps 4 and 5) are conducted in

client, often make general recommendations that

parallel and parts of the market appraisal report

cannot be applied, this is a common failing of this

(step 6) can be written while data and information

type of study.

are still being collected and analyzed. It is often

the case that additional data and information is

collected well into the report-writing stage, if gaps

appear in the analysis. The different RMA steps

are discussed in the next chapters of this section.

Normally, RMA includes report writing. However

programming staff or related stakeholders often

find it difficult to transfer RMA results into

actions. Therefore, besides these 6 steps of an

RMA, the guidelines explain how to convert

recommendations to actions.

4.5 Outputs from an RMA

Although the RMA tools and approaches are

similar, each RMA will vary considerably at the

implementation stage, due to the wide-ranging

contexts in which the method can be applied.

Whilst the context will vary, the types of outputs

should be fairly similar. An RMA should provide

recommendations in the following areas:

36

A Guide to Rapid Market Appraisal (RMA) for Agricultural Products Figure 13. Steps in the Rapid Market Appraisal Method

exercise 4.1 Purposes of RMA

Assumption

Basic concepts and RMA definition were provided

to participants.

Objective

Create awareness about the usefulness of RMA.

Task

Identify what information needs to be collected

when conducting an RMA for a specific product,

and what purposes will the information serve.

Suggested procedure

Work in groups. Formed groups will be

maintained throughout the training.

Identify one specific product/service.

Identify what information needs to be collected

and for what purposes.

Prepare the results on flipchart.

expected outputs

A table or matrix with the list of purposes and

information.

Presentation

On flipchart.

due

Each group will have 20 minutes for preparation

and 5 minutes for presentation.

37

PART 2.

PRACTICAL RMA WORK

A Guide to Rapid Market Appraisal (RMA) for Agricultural Products step 1. survey area seleCtIon

Learning objectives

• scope and scale of the impact zone and within

After reading and conducting the exercise at the

this area:-

end of this chapter, the learner should be able

• Client types

to, (i) Explain how the geographical focus affects

• Partners.

the design of the RMA, (ii)

Identify and use appropriate

When the emphasis of the project is for the

product selection criteria and

development of small areas, for example a cluster

(iii) select products to implement

of villages or a commune, the RMA background

the assessment based on the

information should ONLY focus on understanding

identified criteria

the local marketing system within that area. The

RMA analysis will also seek to identify problems

1.1 Area Selection

and bottlenecks that can be addressed through

agro-enterprise interventions within the local

When deciding to undertake an

economy. Many projects provide large amounts

RMA, agencies must be clear

of analysis that may not be relevant to a specific

about the geographical area(s)

area, so the RMA needs to clearly define the size

where they want to show market

of the study relative to the need.

impact. Initial reconnaissance

work should quickly identify the

39

PART 2. Practical RMA Work

When an agricultural project aims to engage a

larger geographical area(s), such as a province

or country, then, the study parameters, staff

and resources need to be scaled to that level.

Working at the national level is clearly much more

intensive, costly requiring many more staff than

doing a market study within a 20 kilometer radius

area.

It is very important however, to note that an RMA

study, will follow a specific market chain and this

often includes an analysis of markets located

outside the impact area, region, or country.

Market chains do not respect administrative or

agro-ecological boundaries and an understanding

of the competitive position of the target area

within broader marketing systems is imperative.

40

A Guide to Rapid Market Appraisal (RMA) for Agricultural Products step 2. produCt seleCtIon

In many cases, projects will

be consulted when deciding on the product

have decided upon a product

focus. A specific guide in this marketing series

for market analysis prior to

deals with the issue of product selection, for

commissioning the RMA. If this

more information on this issue see A Guide

is not the case, primary and

to Identifying Market Opportunities for

secondary information needs to

Smallholder Producers. Special attention be gathered from the impact or

should be given to the needs and priorities of

target area to identify a shortlist

different groups, including men and women,

of priority products. These

poorer and less poor farming households, and

products should be of high

those living in accessible as well as remote

economic potential in the target

communities.

area and be associated with

growth markets. PRA tools such

The views of the private sector and relevant

as semi-structured interviewing,

government agencies should also be considered.

focus group discussion with

Participation during this phase is important

market actors (especially

not only for proper product selection, but

producers) are useful methods

also to create favorable conditions for

used to identify possible

stakeholder involvement during the design and

products for RMA analysis.

implementation of interventions.

Identification of priority products: To help make decisions on which product to study, it

is useful to first identify criteria for product

prioritization. Several criteria can be used to

rank and select products, as shown in Annex 1.

The weight of each criterion should relate to the

key objectives of the project. For example, if the

objective of the project is to create opportunities

for women, then criteria such as

• Requires limited access to land

• Does not compete with Men’s crops

• Can be produced near to the homestead

would be given more weight. Similarly, if the focus

of the project is to assist marginalized farmers

working on degraded land, then soil fertility

issues should be given higher priority in the

selection process.

In all cases, the selected product should be suited

to the local agro-climatic conditions, should enjoy

favorable market conditions and show strong

potential to improve income generation for poor,

smallholder farmers.

Stakeholder consultation is very important during

the product selection stage. Farmers should

41

PART 2. Practical RMA Work

exercise 2.1 Product Selection

Assumption

Participants were introduced to the RMA purposes

and product. selection criteria

Objective

To help participants identify and be familiar with

product selection criteria.

To create opportunity for participants to practice

product ranking based on appropriate criteria.

Task

Identify products and undertake a ranking of these

products based on chosen criteria.

Select the product with higher ranking for RMA.

Suggested procedure

Work in group. In each group:

- Refer back to the purposes of RMA.

- Select one/two purposes for RMA.

- Brainstorm to identify three products /services.

- Select the most appropriate criteria from

introduced list (or add more if necessary).

- Rank the three products based on selected

criteria.

- Choose the product with higher ranking for RMA

expected outputs

A matrix with three products and results of

ranking.

Presentation

On flipchart.

due

Each group has 30 minutes for preparation and

10 minutes for presentation.

42

A Guide to Rapid Market Appraisal (RMA) for Agricultural Products step 3. desIgn oF a rapId Market survey

Learning objectives

3.1 Team Selection

After reading this chapter and conducting the

A key step in the design of an RMA is the

exercises at the end, the learner should be able

formation of the team that will plan and carry out

to: (i) Select appropriate RMA team members,

the market survey. This team will be responsible

(ii) Select key issues for analysis based on RMA

for collecting data and information, conducting

purposes, (iii) Explain the relevance of secondary

the analysis, and writing the final report.

data and information and identify sources to

collect them, (iv) Select markets

The composition of the RMA team can vary,

and key informants (v) Develop

depending on the resources available and the

appropriate checklists for key

objective of the market assessment. However,

informant interviews and (vi)

the RMA team should not exceed five or six

Plan the appropriate timing and

members and interview teams should consist

duration of the RMA.

of no more than 2-3 people, to enable open and

more personal discussion of potentially sensitive

This chapter provides some

commercial information. Often teams of 1-2

guidelines for the design of

people are most efficient in this type of data

rapid market surveys. This

collection.

is a critical stage in the RMA

as careful planning and

preparation will generate

useful information, sound

analysis of relevant issues, and

appropriate recommendations

for intervention.

43

PART 2. Practical RMA Work

The entire team should be involved in the design

3.2 Identification of Key Issues for

and implementation of rapid market. Where

Analysis

possible, team members should have different

Market chains are complex systems involving

and complementary skills and expertise.

a range of activities, actors, relationships and

regulations. To be efficient in the information

Ideally, at least one person in the team should

gathering stage, the survey must focus on the

have a strong background in market research

key purpose of the RMA, and design the interview

and the analysis of agricultural commodities.

process to address the most relevant issues.

One team member should have strong technical

Particular attention should be given to any

knowledge about the commodity under study,

specific requests for information by the client,

including production, post-harvest, and

from a commissioning agency and possibly from

processing issues. One or more team members

future beneficiary groups.

may already have some contacts in the trading

community (i.e., traders, transporters and

For example, a farmer group that normally sells

processors who are working with the target

fresh cassava roots may want to know more

commodity). Team members should be motivated

about processing methods, processors and the

and have good facilitation and interviewing skills.

prospects for dried cassava and technologies

associated with storage of dried cassava products.

Where possible, the participation of relevant

In this case, the survey group should ensure that

national, provincial, and/or district government

questions address both fresh and processed good

staff should be considered. This can contribute

and that survey team members are well briefed

to mainstreaming RMA as a decision-making tool

in these areas before they go to the field. This

within government and enhance the influence of

will help the team members discuss relevant

the market survey on future policy and market

issues with market chain actors from an informed

development interventions. Extension workers

position. To help make decisions on the focus

can also take part in the market appraisal or

of the analysis, the survey team should build a

conduct a market survey as their routine work.

survey checklist similar to that provided in Annex

The team must have a leader; this person is often

2. A well prepared survey team is essential in

the person with most experience in marketing

discussing marketing options.

and economic analysis. The leader will be

3.3 Literature Review

responsible for major decision making, and be

responsible for the final report, in particular

One or several team members should undertake

the recommendations to the survey clients. The

this task. Alternatively, a consultant can be hired

team leader, must have a clear understanding

for this purpose. This has to be decided based on

of the purpose of the study and play a lead role

the resources and time available, as well as the

in training staff and making sure that they fully

analytical skills of team members.

understand the types of information that is

required from the survey and help the survey

Secondary data and information is cheaper and

team with a sound understanding of the sector or

quicker to collect than primary data, and is often

market chain that will be studied before they go to

more accurate. For example, quantitative data is

the field.

frequently available from government statistics

and previous studies, enabling the team to gain

Some or all the participants joining an RMA

a good understanding of local production levels,

team must be trained on the market assessment

seasonality and historical trends in demand,

method and have attended refresher sessions

supply, and prices for a specific product. In

to enhance and or update their communication,

addition, detailed information on export markets

facilitation, interviewing, documentation and

can sometimes be obtained from existing sources

analytical skills prior to the survey.

without having to visit those markets.

44

A Guide to Rapid Market Appraisal (RMA) for Agricultural Products The literature review should precede the collection

commodity but can offer a broad, and sometimes

of primary data and information. This will enable

detailed, perspective on the sub-sector. These

the team to gain an initial understanding of the

individuals might be an academic or researcher, a

production and marketing system for the focus

retired food industry manager, a trade association

commodity, and to identify issues that have not

official, or staff from relevant government

yet been sufficiently researched. This will then

departments, donor agencies, and NGOs.

lead to better planning of the fieldwork.

When selecting key informants, the RMA team

Possible sources of secondary data and

must answer these three questions:

information include studies, official statistics,

government and NGO reports, documentation

Sample unit: who should be interviewed? A

from projects, and specialized magazines,

localized RMA will focus on village, commune,

bulletins, and newsletters. These can be obtained

and perhaps district and provincial markets.

from statistical departments; ministries of

Local input retailers, farmers, collectors, traders,

agriculture, trade or finance; donor agencies;

and processors will have to be interviewed, along

NGOs; and/or rural development projects. They

with visiting traders from other areas. Extension

may also be available on the internet. Newspaper

officers and staff from local government agencies

articles and TV and radio programs may provide

and development projects can also be interviewed

useful information as well.

as knowledgeable observers.

At times, there will be plenty of secondary data

In contrast, a broader and better-resourced RMA

and information about the target product. At

will cover all the critical nodes in the market

other times, existing data and information will be

chain, from producer to retailer and exporter.

scarce. Hence, the literature review may take two

All major types of markets (village, district,

to three days or several weeks.

and national) should be visited. In addition, a

sample of all main actors in the market chain

3.4 Selection of Markets and Key

should be interviewed. Other key informants will

Informants

include policy-makers, researchers, technical and

The RMA team has to decide from an early stage

administrative staff from government and non-

in the design, the type and number of markets

government agencies, and representatives from

that will be visited, and the type and number of

donor agencies. Annex 3 at the end of this guide

key informants who will be interviewed. Choices

presents a table with different key informants,

will depend on the time and resources available,

their advantages and disadvantages.

the purpose of the RMA, and the type and amount

of information required.

Sample size. how many people should be

interviewed in each key informant category?

Two types of key informants should be

As a general rule, a minimum of three to five

interviewed:

interviews should be conducted for each stage of

the marketing chain. A rule of thumb indication

Market participants: These are the actors

of the right sample size at each stage, is when

involved in the production, marketing, and

the RMA team starts to gather a consistent set of

processing of the agricultural commodity under

responses.

analysis. Examples of market participants include

input suppliers, farmers, traders, transporters,

The geographical scope of the survey will

storage service providers, processing firms,

influence sample size. Hence, national surveys

importers, and exporters.

will require a larger number of interviews than

regional or local surveys.

Knowledgeable observers/ key informants: In

most RMA studies, there are a small number

The heterogeneity or diversity of market

of insightful, knowledgeable people who do not

participants at each stage of the market chain

participate in the production or marketing of the

will also influence the number of interviews. The

45

PART 2. Practical RMA Work

more diverse they are with respect to location,

retailers and large supermarket chains, and

size, organization, product mix and technology,

so on, so that a broad response to the sector is

the greater the need to increase the size of the

gained.

sample.

The initial choice of markets and key informants

Sampling procedure. how will key informants

is not treated as definite, but subject to change

be selected for interview? The team can opt

during the fieldwork. As the fieldwork progresses,

for a purely random sampling, i.e., interviewing

the RMA team may feel the need to interview

people that are available, or the team may start

additional key informants in order to improve the

by interviewing larger or well known / respected

quality of the data and information gathered and

traders and processors within a specific market

gain improved understanding of key issues. The

chain as they are likely to have an excellent

team may also become aware of new markets and

insight into the market dynamics. In many cases,

key informants as the fieldwork progresses.

it is worth asking the interviewees to recommend

other key market players to interview as the larger

3.5 Preparation of Checklists

players in a market will be well networked and

Checklists are essentially abbreviated

will know who else plays a significant role in the

questionnaires which are used by the interview

market chain being studied.

team as a guide to major issues that need to be

discussed. The issues and questions included in

Whichever method is selected it is most important

the checklists will focus on the major purposes

to ensure that the sample includes different types

and issues of the RMA that were identified in the

of market participants in each category, i.e. poor

section “identification of the survey contents”.

and rich, male and female farmers, informal and

formal traders, small and large processors, small

Using a checklist is different from a formal

46

A Guide to Rapid Market Appraisal (RMA) for Agricultural Products questionnaire. While a structured questionnaire

assessment. The peak marketing season is

consists of a series of carefully prepared

usually the best time to find traders, observe

questions, asked in a logical order and often

transactions, and collect price data. On the

have a list of fixed responses. Checklists serve

other hand, producers may be in their farms

as a prompt for a semi-structured interview

harvesting the crop, and therefore absent from

with an individual or focus group discussions.

the community. Traders may also be very busy

A team often works with one person leading the

conducting their business.

conversation and another person writing down

the response. The skill in doing semi-structured

Consequently, when interviewing market

interviews is the ability to seemingly have a

participants, the team must carefully choose

normal conversation with the interviewee, while

the periods of the day when they are available.

you are collecting detailed information and

For example, most trade in perishable products

probing the person for really valuable information.

takes place during the night and very early hours

of the morning. These periods may be the best

Normally it is necessary to prepare different

times for interviews, if the objective is to observe

checklists for different types of key informant.

transactions, but far from ideal for interviewing

This is because each type of key informant is

busy people.

particularly knowledgeable about specific issues,

according to their position and function within

The duration of the exercise can vary significantly.

the marketing system (see Annex 3). For example,

Two to four days may be sufficient when the

farmers may be able to provide useful information

objective is to collect information about a specific

about local input supply and market channels,

product within one or two local markets. A

but lack a clear understanding of processing,

more complex market survey, for example at

the export trade, and key policy and regulatory

the national level, would involve several groups

issues. Transporters may be knowledgeable about

of people and could take between four and ten

product flows, the state of road infrastructure,

weeks to finalize. One team or several teams can

and the availability and cost of transport services,

undertake this type of assessment as part of their

but unaware of prices, storage practices, and

work routine.

marketing arrangements between different

market chain actors. Annex 4 provides examples

The design of the RMA terminates with drawing

of checklists: (i) for input suppliers, (ii) for

up a schedule for all the subsequent steps:

producers, (iii) for wholesalers, and (iiii) for

processors.

• Implementation of market survey

• Analysis of data and information

It is recommended to test the checklist with

• Report writing

several people before using it for field work to

• From analysis to action

see whether the questions are understood, the

time allocated is appropriate, the order of the

content is logical, and then make revisions where

necessary.

3.6 Planning. Timing and duration of

the Market Survey

The timing and duration of the RMA depends on

the target product, the number of market places

visited, the number of key informants selected,

and the type of information required.

The RMA team needs to consider the most

appropriate period for conducting the market

47

PART 2. Practical RMA Work

3.7 Methods and tools For rapId data ColleCtIon

Learning objectives

• Focus groups

After studying this chapter and conducting the

• Product ranking and prioritization

recommended exercises, the reader should have (i)

• Historical calendars

a good understanding of the main participatory tools

• Market mapping

required, (ii) have trained interested partners in the

• Evaluation of service provision

use of these tools and (iii) pilot tested unfamiliar tools.

• Market visits

• Learning journeys

This chapter provides a review of some methods

• Semi-structured interviews

and tools that can be used by the survey team for

• Structured interviews

collecting data from a range of actors in the market

• Direct Observation

chain, including farmers, traders, processors and

retailers. These people operate in different worlds

These tools can be used either alone or in

and thus require different ways of interaction.

combination, and the survey team should decide

The following section provides some basic tools to

which tools are best suited for the scale and scope

assist the market analyst to match approaches with

of the marketing survey to be undertaken. No

specific situations. The basic tools include:

survey would use all of these tools. Instead the

survey team should select those tools that are most

appropriate to meet the needs of the purpose or

“Terms of Reference” of the survey.

48

A Guide to Rapid Market Appraisal (RMA) for Agricultural Products 3.8 Focus Group discussions with

3.8.1 Tools to be used within focus groups

Producers

Having established the focus group, there are a

Focus group discussions are probably the most

number of tools that can be used in this situation to

appropriate method for interviewing small-scale

assist the survey team to gather data efficiently but

producers. This enables the RMA team to involve a

in ways that facilitates information exchange and

greater number of producers in the discussion and

reduces extractive and intrusive questioning.

to gather a variety of views in a short period of time.

Product ranking and prioritization: This method

Focus group discussions are similar to individual

can be used with farmer groups to determine the

semi-structured interviews in that both are based

range and priority of products in the survey area.

on checklists and centered on specific issues. The

Products can be categorized according to types:

main difference is that several people participate

for example, food security, income, high value,

simultaneously in the focus group discussion.

nutrition, women’s income and medicinal uses. To

find the rank order of the products within each of

Group discussions with producers and other

these categories, farmers can be asked to vote or

members of the community will need to be

put a stone next to the most important product, for

organized in advance. This should be done through

example in terms of income.

a local government or non-government agency

already working in the sample villages. The village

You may be working with people who only have a

leaders will need to be informed about the visit and

low level of education, so where ever possible use

its purposes. They can play an important role in

pictures and symbols so that farmers who cannot

mobilizing farmers to attend the discussion.

read well can participate.

Discussions should be as informal as possible.

Facilitation skills are essential to ensure that

participants feel comfortable and express their views

openly. It is important to prevent some individuals

from dominating the discussion. Wide participation

is critical if differences across household categories

and gender groups are to be well understood. This

typically means that one person in the interview

team leads the discussion, one person writes down

the results and another person ensures that the

main issues in the checklist are covered or that

specific issues based on comments raised which

are of particular interest to the discussion are fully

understood.

Sometimes it is better to have separate men and

women farmers focus groups so as to be able to get

a better understanding of the different roles that

women and men play in production and marketing

activities.

49

PART 2. Practical RMA Work

Farmer

Maize cob

Sack of grain

Figure 14. Examples of simple drawings

Here are some tips on how to help people and

not have to be professional – you can use stick

these may help with educated people too!

drawings like the ones in Figure 14.

• Say things clearly, and repeat if necessary. Do When using numbers you can substitute numbers

not use technical jargon.

for lines.

• Ask people questions to find out if they are

following the conversation.

When prioritizing products it must be clear to the

• Make the learning fun! Try to keep the group

participants that the product with the most votes

members interested and engaged. Keep them

will be considered as the most important. Results

happy.

should be discussed with farmers to confirm them

• Use lines or dots rather than numbers if people and be sure that all agree with the results. This

are having difficulties following figures. For

means of ranking can also be used to identify

example, instead of 3 + 5 = 8 you can write

priority constraints in production and marketing

||| +||||| = ||||||||

activities.

• Use objects (such as sticks and stones) as

counters, rather than numbers.

Another method to determine priorities is to

• Use leaves or seeds to represent different crops rank pairs of products, as illustrated in Table

and trees.

4. With this method, farmers can examine pairs

• Use pictures as well as words. For example,

of crops or different constraints and indicate

instead of just “maize” (corn), draw a picture

which is more important than the other. Here the

of a maize plant or corncob. Your pictures do

meaning of “importance” needs to be clarified so

50

A Guide to Rapid Market Appraisal (RMA) for Agricultural Products that people know what they are voting for. Other

Table 5. Historical calendar for Village Mbuule

essential information to be gathered includes:

Time event

Impact

• The number of people in the group who produce

1990 Road built by

Enabled us to get to nearby

Chinese in 1982

towns and sell our beans to

the products being discussed

more traders

• Market locations for this product

1995 Major famine in

Lost all livestock and received

• Market demand (give season supply units)

1987, due to el

food aid

• Traders involved

Nino

2000 New school opened All children went to school Table 4. Importance of crops for income within the group

in the village

Labor prices increased

2002 Government

Many farmers planted all their

Maize

Beans

Rice

Chilies

informed us about farms with coffee

coffee

Maize

2005 Coffee prices fell to Farmers pulled out coffee Beans

low levels

NGO’s introduced fruit trees

Rice

2007 First time we saw , started merry-go-round

Chillies

color TV Started

savings scheme to help with

our farmer self-

funeral rites. Many people lost

help group

relatives to HIV/AIDs

historical Calendars with a Focus on Marketing:

2008 Catholic Relief

Seed fairs enabled partners to

Services started

gain a range of new varieties

Historical calendars can be useful in providing a

new projects on

background to the changes that have occurred in

health and gender.

an area and how this has affected the marketing

2009 Microfinance

We lost money in loan system

practices of farmers and local entrepreneurs over

opened office in

because some members

nearby town

defaulted. Lost livestock.

the past 5–10 years. The key questions to ask

2010 Market linkage

Village group started

are: Did the community benefit from the new

project arrived

experimentation with grains

infrastructure or an innovation? How has the

and conducted a

and vegetables

market changed over the past 4-5 years? How

village mapping

exercise

have the farmers responded to dynamic market

2012 More people

Started to listen to market

conditions? Learning how the community has

worked with

information services to learn

adapted to change will provide the survey team

vegetables as

more about markets

with a better understanding of the community’s

prices were good

and started to

strengths, opportunities, and attitudes toward

work with “Golden

risk, and provide insight into how changes are

Egg Traders” to

linked with market options and innovation. It also

sell produce

helps the community to recognize what they have

learned and gained from the changes that have

Source authors

occurred over time.

Market Mapping: A simple method to assist

As agriculture is based on natural resources, the

farmers in expressing their understanding and

facilitator should also try to record any changes

constraints within the market chain is to ask

that have taken place in the resource base,

them to draw a map on a large piece of paper,

particularly in terms of quality. One question to

(or a flip chart), that will allow them to express

ask, for example: “Have yields dropped because

their understanding of people involved in the

of soil degradation and/or new policies on land

market chain, their roles, functions, and price

size holdings? Table 5 shows a historical calendar changes along the chain. This information can be

made for Mbuule Village in Tanzania.

supplemented with the farmers’ understanding of

services being provided at different stages and the

quality of these services, See Figure 15.

51

PART 2. Practical RMA Work

Figure 15. Market mapping method to assist in expressing market chains evaluation chart for Service Provision: This

payment? Which services are missing? Who are

tool is used to create an inventory of service

the best service providers to link up with in any

providers and where possible to evaluate the

agro-enterprise project? It is important to try and

availability and quality of services provided in the

capture not only the formal service providers but

project area. Unlike secondary data that provides

also those people that provide informal services.

averaged information, this tool aims to find out

For example, traders that lend money or provide

from farmers if public services and other private

information on prices in different markets. Table

business support services are available, if they

6 shows an inventory of services received by

use them and what is their opinion as to their

Ttaago Village in Tanzania.

quality.

Market Visits: All market surveys will include

This tool provides a picture of services that the

visits to markets. However, this approach is

community can access. The inventory can be

mentioned as it can be used to introduce specific

done from an historical calendar perspective and

partners or clients into the analytical process. In

the facilitator should gather information on the

part this is done as a capacity-building process

value and quality of services being offered. This

so that for example farmers, who visit markets

discussion should be used to study trends in

regularly but have not approached the market in

service provision, how these have changed, and

a systematic manner, can learn how to discuss

how farmers perceive or approve of the changes

market prices with traders and learn more about

being made. Are the services free or require

what traders need in terms of price, quality,

52

A Guide to Rapid Market Appraisal (RMA) for Agricultural Products quantity and regularity of buying. These types of

commonly used by larger buyers, such as large

visit are simple to arrange and provide farmers

industrial processors, supermarket buyers

with new insights in how they can improve their

who may have strong relations with their direct

market prospects. The benefits of this process

supplier but a weak understanding about the

are quickly realized and farmers can use this in

operations of the market channel beyond this

their subsequent market development with other

point.

products. Market visits can be arranged to expose

farmers to local markets, but also to expose rural

The learning journey is a method used to bring

traders and farmers to more distant markets.

together, for example, the corporate procurement

The market visit approach generally requires

manager of a supermarket chain, their aggregator,

more organization as the distance and number

a more local trader and in some cases a

of participants increase, therefore the method

representative of the farmers. The group then

should be used practically and farmers should be

selects a product of interest and literally travels

informed about how to engage traders and how to

in a vehicle from the supermarket floor along

record basic information for assessment later.

their market chain back to meet with farmers

from a major production zones to observe who

Learning Journeys: This method builds on the

is involved in the chain, their activities, costs

idea of a market visit but expands the exposure to

and challenges. This method is proving to be

arrange visits with target chain actors along the

particularly successful as a first step in linking

chain, hence visits with farmers, local collectors,

smallholder farmers to high-value retail markets,

traveling traders, processors, wholesalers,

as it provides actors in the market chain with a

aggregators and retailers. The approach is

view to the requirements that poor small-holder

Table 6. Institutional inventory of services received by Ttaago village.

53

PART 2. Practical RMA Work

farmers must meet in order to supply high-value

Number of interviews. The sample size will depend

markets.

on the purposes of the survey, its geographical

scope, the structure of the commodity sub-sector,

The learning journey approach provides the

and the time and resources available.

opportunity for corporate buyers to gather

information and reflect on how their current

While knowledgeable observers are a very

business models affect the ability of small-holder

useful source of data and information, market

farmers to remain in this type of business.

participants will constitute the majority of

Gathering this information enables all the parties

key informants. Service providers, such as

in the experience to reflect on barriers and entry

transporters and storage facility owners, should

points to improving value chain communications,

also be interviewed.

business relationships and market access. The

learning journey is often a first step for value

There are no fixed rules regarding the number

chain actors to evaluate opportunities for change

of interviews with market participants. As

together. This learning and review opportunity,

mentioned in the previous chapter, a minimum

within the learning journey framework, allows

of three to five should be interviewed at each

people within a chain to assess if, for example, it

stage of the marketing chain. But when market

makes business sense for the corporate agency to

participants are very heterogeneous or diverse,

consider how to redesign their business models

there is a need to increase the sample size. A good

to include business practices that support the

indication of the right sample size for each stage

specific needs of business with smallholder

of the marketing chain is when the RMA team

producers. In other cases, it may stimulate

starts to gather a consistent set of responses.

buyers to think about new business practices that

are more equitable, more pro-poor, but also make

sound business sense.

The experience also provides insights to other

market chain actors, such as farmers and local

collectors, about how they can best position

themselves to be more attractive business

partners to larger buyers. From the discussions

and thinking around these points, the individual

chain actors start to understand their roles within

the chain and how they relate to other actors,

the resulting conversations can then focus on

how they might work with a chain-wide view to

improve their business together, rather than as a

point business within a chain.

Figure 16. Make interviews enjoyable and avoid interrogation 3.9 Semi-Structured Interviews with

Key Informants

Skills required for key informant interviews.

Individual, semi-structured interviews with key

The difficulties in conducting a good semi-

informants (i.e. knowledgeable observers, market

structured interview, and the concentration and

participants and service providers) constitute the

energy required, are often overlooked, Figure

main primary data and information-collection

16. Key informant interviews require strong

method. These interviews are based on carefully

interpersonal and interviewing skills, as well as

prepared checklists. These provide guidelines for

an inquisitive mind.

discussion, helping the interviewer remember

the key issues and direct the interview. Some

Interviewers must be confident, knowledgeable

examples of checklists are presented in Annex 4.

about the topics under discussion, have good

improvisation skills, and pay attention to detail.

54

A Guide to Rapid Market Appraisal (RMA) for Agricultural Products They must be able to earn the interviewee’s trust,

Great care is needed to avoid influencing the

create a friendly and relaxed atmosphere, and

answer or suggesting the reply. However,

maintain a lively and engaging discussion. While

interviewers should not take the answers provided

not everybody has all these skills, they can be to

at face value. As the fieldwork progresses, team

a large extent acquired through experience and

members will become more aware of the key

practice.

issues, and should therefore be in a position to

bring their own analysis into the discussion and

Some tips. Semi-structured interviews should

question some answers that are perceived as

not be organized mechanically, but conducted

inaccurate. The interviewer can in this way gain

as discussions around particular topics. They

some authority and earn greater respect from the

are flexible in that they allow key informants

key informant.

to discuss the issues in their own words. The

questions asked will then depend on the answers

It is very important to emphasize that key

obtained.

informants are usually very busy. A semi-

structured interview rarely lasts for less than 30

Semi-structured interviews of knowledgeable

minutes and can go on for one hour. If the key

observers differ slightly from those with market

informant cannot devote such time or is becoming

participants. Indeed, while the discussions with

too tired, to the point where the quality of the

knowledgeable observers should be fairly open,

discussion is being compromised, it is better to

similar to brainstorming, interviews with market

terminate the interview. Sometimes it is possible

participants and service providers should be more

to schedule a second interview for another day.

structured, with greater use of checklists. These

Other times, the RMA team will need to rely on

checklists should not be treated as definite. If

other key informants to go through the issues

need be, they can be adapted after testing them

that have not been properly discussed during

during one or two interviews.

some of the interviews.

During the interviews, the questions asked should

While personal contact is by far the best method

be simple, clear, carefully phrased, and follow a

of interviewing, sometimes this is not possible

logical and appropriate sequence. For example,

because of distance and time and resource

sensitive questions should not be asked during

constraints. In other words, it may be difficult to

the initial stages of the interview, but left for later.

access some key informants. In such cases, team

Market participants may regard some issues as

members may opt to conduct the interview over

sensitive and may be reluctant to discuss them

the phone. Sometimes there may also be a need to

until they are confident that the interviewer is

contact by phone some key informants who were

well intentioned and will not use the information

previously interviewed to obtain some missing

inappropriately. Examples of sensitive areas of

information or discuss a particular issue that was

enquiry include taxation, labor, costs, and sales

overlooked during the previous interview.

pricing.

3.10 Structured Interviews

Interviewers must also know when to probe

A structured survey as the name suggests,

deeper into specific issues or move to another

is a fixed set of questions that are posed to

topic. When the answer is unclear or perceived

interviewees in a sequential manner, each

as incomplete or too general, there is a need

interview covering all the same questions. An

for further questioning. Some key informants

example of a simple structured questionnaire

are more knowledgeable than others, and can

is given in Annex 5. Due to the rapid nature of

provide much more detailed answers about

RMA, the use of standard structured interviews,

specific issues. The interviewer must therefore

with their associated large sample sizes is not

be able to judge the amount of information that

common. However, there may be situations

the key informant is capable of providing. Exact

where a more systematic approach, as offered

quantification is often difficult, but it is normally

by structured surveys, is useful to investigate a

possible to obtain approximate figures or values.

specific issue of interest.

55

PART 2. Practical RMA Work

For example, if more information is required on

a specific type of business transaction or more

information is needed to determine the demand

for a new type of service, then there are clear

advantages in gaining a series of responses on

the same subject from diverse actors. The use of

new online survey tools such as “Survey Monkey”

(www.surveymonkey.com/) or IFormBuilder,

www.iformbuilder.com/ provide examples of

where online structured surveys can be built, for

gathering information on people’s perceptions or

preferences. In product development and product

marketing studies, simple structured surveys

are particularly important and we will revisit this

issue in Step 7, From Analysis to Action.

3.11 direct Observation.

This method consists of checking the views of

market participants and the information provided

against their actual behavior. Direct observation

methods should be employed during visits to

villages, market centers, processing facilities,

warehouses, and so on. Through these visits,

the team can observe production activities, post-

harvest handling, sorting and grading practices,

storage technologies, transport of produce,

and transactions. This will enable the team to

compare what key informants are saying, for

example regarding their scale of operation or the

quality of produce handled, with how they are

organized and behave.

It is important to note that direct observation is not

only a validation method, but can also be used to

collect additional data and information. Much can

be learned from simple observation. For example,

the variety and quality of produce can be inspected

and the storage and processing technologies

identified. Moreover, direct observation may enable

the team to estimate the number of suppliers and

buyers in particular markets, the volumes traded

or processed, existing storage and processing

capacities, and so on.

A summary list of participatory methods and tools

for rapid data collection is shown in Table 7.

56

A Guide to Rapid Market Appraisal (RMA) for Agricultural Products Table 7. Methods and Tools for Rapid Data Collection

PRA Tools

Why used

When to use

Time

Focus groups

To gain information on a specific issue

At any stage in the analysis that

2-3 hours,

or product from a “representative” group

provides an opportunity to gather

of people that can provide information

information from representative groups

on behalf of a community. Can also be

in the market chain, such as farmers,

used with consumers if information on

traders, consumers etc….

their perception about certain products is

required.

Ranking, and weighting To find out what farmers are growing and At the participatory diagnosis phase to

2-3 hours

the priority of these products in relation

select and prioritize products for further

to income and market linkages. Also used

market investigation

to rank constraints in production and

marketing.

Historical calendars

To find out when major events happened in At the participatory diagnosis phase 2-3 hours

the community over the past 10-15 years,

to find out what has worked, list local

who has supported the community, what

service providers and evaluate their

went well / what did not work.

value to the community.

Market mapping

Enables farmers, traders and service

Having selected a product, this method

2 hours

providers with a simple means to express

is used to map out the production and

their current understanding of their market marketing links and relationships links and relationships for specific products.

Evaluation of BDS

To gain an inventory and quality

At the outset of study to discover

2 hours

assessment of service providers that

existing services and how these support

work(ed) in the project area & identify

market access

successful innovations

Market visits

All market surveys will collect information

In situations where market surveys

1-3 hours

from a range of marketplaces. This method

include a high degree of participation

depending on

however, enables the team to incorporate

of for example farmers and for capacity

survey scope

chain actors such as farmers or extension

building processes

officers into the process to expose them to

basic market analysis

Learning journeys

Method that enables actors from along the

Commonly used by larger corporate

1 week

chain to come together and follow products

buyers who are unfamiliar with their

down the market chain, to experience and

market chain beyond their direct

appreciate the constraints and opportunities suppliers.

of each actor

Semi-structured

Rapid, flexible investigative method used

Throughout an RMA to gather

1 hour per

interview

to gather data from diverse actors and

information from all actors within the

interviewee

determine critical issues particularly

market chain, about access to services.

in regard to opportunities, constraints

efficiencies and incentives

Structured interviews

Focused study approach to gather

Before or after a semi-structured study

1 hour

information in a standardized manner and

to gain insights on more specific issues

compare responses to common questions

across defined response groups, i.e., rich/

poor, farmers/trader etc..

Direct observation

Method used to compare interviewee’s

To clarify information that is unclear, to 15 mins

information against their behavior or

confirm scale and scope of an activity

marketing activities.

57

PART 2. Practical RMA Work

exercise 3.1 Team Composition

Assumption

Purposes of RMA have been identified and one

product has been selected.

Objective

To help participants to set up the most suitable

team for conducting an RMA.

Task

Set up a team to conduct the RMA for your selected

product.

Suggested procedure

Work in groups. In each group:

- Identify who should be involved in your RMA

team;

- Specify their roles.

expected outputs

A table with team composition.

Presentation

On flipchart.

due

Each group has 10 minutes for preparation. The

plenary group then walks around each of the

smaller presentation groups, a process called a

“Gallery Walk”, where the teams are asked to read

out the activities and ideas, for general review.

58

A Guide to Rapid Market Appraisal (RMA) for Agricultural Products exercise 3.2 Information Needs

Assumption

Purposes of the RMA have been identified.

Products have been ranked and selected.

RMA team has been formed.

Objective

To help participants identify the information

required to achieve the RMA.

Task

Identify the type of information that needs to be

collected when conducting the RMA for the chosen

product.

Suggested procedure

Work in groups. In each group:

- Refer back to the purposes of the RMA and the

selected product.

- Identify the types of information that need to be

collected, using Annex A as reference.

expected outputs

A list of information needs for the RMA of the

selected product.

Presentation

On flipchart.

due

Each group has 25 minutes for preparation and 5

minutes for presentation.

59

PART 2. Practical RMA Work

exercise 3.3 Selection of Key Informants and Preparation of Checklists Assumption

Basic concepts have been provided.

Product for rapid market appraisal has been

selected.

Information needs have been identified.

Objective

To help participants identify key informants and

the type of information that will be collected from

each of them.

Task

Develop checklists for semi-structured interviews

with different market participants/key informants.

Suggested procedure

Maintain three groups to work on the products

you have selected.

Identify the market participants/key informants

you will interview when conducting the RMA for

the selected product. Use Annex B as reference.

Develop a matrix of three columns, including

names/types of market participants, where these

can be found, and the type of information that can

be obtained from them.

expected outputs

A matrix with possible market participants/key

informants and respective information that will

be collected from each type of market participant/

key informant.

Presentation

On flipchart.

due

Each group has 45 minutes for preparation

and 5 minutes for presentation. There will be

15 minutes for discussion and fine-tuning of

checklists.

60

A Guide to Rapid Market Appraisal (RMA) for Agricultural Products step 4. IMpleMentIng a Market survey

Learning objectives

carefully, but this will not ensure proper data and

After studying this chapter and conducting the

information collection. The quality of the data and

exercises recommended, the learner should be able

information gathered will depend on the ability of

to: (i) identify the survey procedures, (ii) identify team members to interact with key informants,

the appropriate number of interviews, (iii) apply

facilitate and direct the discussions, and employ

appropriate approaches to contact key informants

observation and interviewing skills. Below we

and (iv) apply methods of cross-checking the

provide some guidelines and tips to help those

collected information and data

involved in an RMA to apply data and information

collection methods effectively.

This chapter provides guidelines

for the application of market

Market analysis is a dynamic investigative process

survey methods with (i) focus

not a passive recording of multiple responses

groups with producers, (ii)

to similar questions. Market researchers need to

analyze data as they record and collate responses.

semi-structured interviews

with individuals and (iii) direct

observation.

Market research is about

finding new opportunities.

Therefore the process of data

collection and analysis go

hand in hand – a blend of art,

investigation and science. The

RMA team may have planned

61

PART 2. Practical RMA Work

markets, and then interview actors at lower levels

of the market chain, down to the producer. This

will enable the team to gain a wide perspective of

the marketing system before engaging with local

market participants.

A second option is to start with focus group

discussions at community level, and then move

up the market chain. The team first interviews

local traders and processors, then market

participants at regional level, and finally actors at

the top end of the market chain, including traders

and processors in destination markets as well as

exporters and importers.

4.1 Investigative market research

4.4 Cross-checking data and informa-

tion

Collecting market information is not a passive

process of obtaining responses to the same

The importance of checking the validity of the

questions and then reviewing statistical

information and views provided by key informants

divergence. It is a process of investigation to draw

cannot be overemphasized. Market participants

out information that will lead to new business

may have their own agendas and interests,

options, or finding ways to overcome critical

and this may influence the accuracy of the

constraints in a market chain. It is also about

information provided and affect their views on

finding future business partners.

particular issues. Three methods are commonly

used to check the quality and validity of the data

4.2 Contacting key informants

and information collected during fieldwork.

The method of contact will vary across key

Mirror imaging. This type of interviewing consists informants. It can be done informally by

of asking the same set of questions to informants

telephone or email, or formally by writing.

at adjacent stages in the marketing chain, and

Formal letters with the logo of the implementing

then checking the consistency of their answers.

organization or local authorities can be very

Strong divergence in responses may require

effective in reassuring the key informants that

further probing.

you are a bonafide researcher, which may help to

gain their trust and cooperation.

Triangulation. This process involves interviewing informants with different perspectives to

In other cases, you will be required to cold call,

arrive at a better understanding of particular

i.e. to arrive at a specific location and ask people

issues. Triangulation enables the RMA team to

if they can be interviewed. When contacting

understand certain aspects of the marketing

key informants, it is very important to explain

system through a process of approximation.

the likely duration of the interview, as well as

its purposes. In addition, the confidentiality of

Observation. This consists of checking the views

the information provided must be emphasized.

of market participants and the information

Transparency is critical to avoid a situation where

provided against their actual behavior. Direct

key informants are reluctant to participate in the

observation methods should be employed during

interview and disclose information for fear that

visits to villages, market centers, processing

this will be used inappropriately.

facilities, warehouses, and so on. Through these

4.3 Survey sequence

visits, the team can observe production activities,

post-harvest handling, sorting and grading

The first option is to start by interviewing

practices, storage technologies, transport of

exporters or traders in wholesale and terminal

produce, and transactions. This will enable the

62

A Guide to Rapid Market Appraisal (RMA) for Agricultural Products team to compare what key informants are saying,

for example regarding their scale of operation or

the quality of produce handled, with how they are

organized and how they behave.

It is important to note that direct observation

is not only a validation method, but can also be

used to collect additional data and information.

For example, much can be learned by watching

to see how a market operates, or observing the

number of trucks that come into a factory at a

specific time.

Supervision of interviewers. Supervision of

interviewers is recommended, particularly

in terms of the types of information they are

collecting. Where ever possible data should be

evaluated while the team is still in the field, as

it is expensive to go back to the field, when a

problem in the data is only observed when all the

interviews have been done.

Following up with field staff can be done by

visiting team members and some key informants

to confirm that they were indeed interviewed and

that key issues were discussed, confirmation of

interviews can also be done by phone.

63

PART 2. Practical RMA Work

exercise 4.1 Preparation for a Market visit and survey checklist Assumption

Basic concepts in marketing have been provided.

Product for RMA has been selected.

Information needs have been identified.

Market participants/key informants have been

selected and respective checklists developed.

Objective

To provide an understanding of how to conduct

market visits and semi-structured interviews.

Task

Prepare for market visit and semi-structured

interviews.

Suggested procedure

Maintain three groups to work on the products

you have selected.

Decide on the type and number of market

participants that will be interviewed (maximum of

five per group).

Form sub-group for conducting survey (if

necessary) and assign specific tasks (asking

questions, taking notes, etc) to each member.

Make appointment with the key informant in

advance, if necessary.

expected outputs

A concrete action plan for conducting the survey

in the real market.

Presentation

None.

due

Each group has 20 minutes for preparation. There

will be 15 minutes for discussion and fine-tuning

of action plans.

64

A Guide to Rapid Market Appraisal (RMA) for Agricultural Products exercise 4.2 Visit to a market and Interview of Key Informants Assumption

Market visit has been planned and interview

checklists have been developed.

Objective

Provide an opportunity for participants to practice

RMA activities.

Task

Collect relevant information during the market visit

Suggested procedure

Maintain working in three groups.

Go to the nearest market to observe, interview,

and take note of relevant information.

expected outputs

Information relating to the selected product is

collected and recorded in participants’ note books.

Presentation

None.

due

Half a day (3-3.5 hours).

65

PART 2. Practical RMA Work

Exercise 4.3 Reflections on a Market Visit

Assumption

Market visit and semi-structured interviews of key

informants have been conducted.

Objective

Provide an opportunity for participants to reflect

on their performance when using RMA tools.

Task

Identify the difficulties faced when applying

RMA tools in the real world and develop

recommendations to address such problems in the

future.

Suggested procedure

Maintain working in three groups.

List the tools/skills you have applied in you

market visit.

Identify the difficulties you faced when applying

each tool/skill.

Prepare a list of recommendations to address

such problems in the future.

expected outputs

A matrix with difficulties faced and

recommendations.

Presentation

On flipchart.

due

30 minutes for preparation, 5 minutes for

presentation per group, and 15 minutes for open

discussion.t

66

A Guide to Rapid Market Appraisal (RMA) for Agricultural Products step 5. Methods and tools For analyzIng Market data

Learning objectives

5.1 Trend Analysis

After studying this chapter and conducting the

Based on a combination of secondary and

exercises recommended, the reader should (i) have

primary information, the market survey team

a good understanding of the main participatory

can gather information on trends in prices and

tools required for analyzing market information,

market growth for a selected product. Market

and (ii) be in a position to provide basic training

information services are a good source of this

and coordination of analytical process with

type of information as they collect price data

interested partners.

over long periods of time. Time series data can

be used in a simple linear regression analysis,

This chapter provides a review of some methods

available in Micro-soft excel, to show whether

and tools that can be used by a market survey

prices for the selected product are increasing,

team for collecting data from a range of actors

staying the same or decreasing. Care should be

in the market chain, including farmer, traders,

taken when undertaking price trend analyses,

processors and retailers. These people operate in

as the value of money changes over time, this

different worlds and thus require different ways of

is caused by inflation. If the analysis needs to

interaction. The following section provides some

remove the effects of inflation, and compare “real

basic tools to assist the market analyst to match

price” trends, raw price data needs to be deflated

approaches with specific situations. The basic

using a CPI index4. Once all of the data has been

tools include:

deflated, conclusions on regression analysis are

considered to be more reliable. This is especially

• Trend analysis (price, production and

the case in countries that are experiencing

perceptions of sales growth)

high levels of inflation. For example in 2010, in

• Projections for growth

Ethiopia, the rate of inflation was 20-25% for food

• Market volume analysis

products, to compare data from year to year, a

• Profitability analysis

deflation process, helps the marketing team to

• Margin analysis

compare like with like across years.

• SWOT

• Problem tree

Trends in production can be analyzed based

• Solution tree

on time series data from local and national

• Scenario building

agricultural statistics. If this is not available, then

one approach to gaining an estimate of trends in

production and prices is to review the information

4 CPI Consumer Price Index – The CPI is a value given to a basket of commodities. Over time, the value of money tends to depreciate against the amount of produce that can be purchased. Therefore an index is given to the value of money over time, which can be used to compare real or deflated price trends.

67

PART 2. Practical RMA Work

given by farmer groups on their historical

of markets. To do this type of analysis, the

calendars. Traders can also provide useful

researcher needs to make certain assumptions

information on their perceptions of whether

and obtain multipliers for specific market

they are selling more or less of a commodity,

drivers that will affect the future demand. The

and if more or fewer traders are dealing with

simplest form of this type of analysis is to project

a particular product over time. For example in

future demand based on changing population.

Ethiopia, over the past 10 years there has been

This analysis is based on current levels of

a dramatic increase in the amount of maize that

consumption multiplied by national growth rates

is grown and consumed in the country, as people

over time.

have switched their food habits away from the

traditional staple food, called Tef, which is low in

For example, rice production in Vietnam was

terms of yield and hence expensive to buy in the

approximately 39.1 million metric tons (mt) in

markets, to higher yielding and lower cost maize.

2009/10 (26.1 million mt, milled basis). Vietnam

used to be a major exporter of rice, but with

Careful questioning of traders can provide a

increasing population these exports are declining.

reasonable picture of basic growth trends in the

Depending on the amount exported in a given

market. This is an important issue to define as

year, we will estimate a 5% export level, the total

agricultural interventions should target growth

consumption level would be 2,479,000 mt. Given

market.

a growth rate of 2.4%, the demand for rice on

a population growth rate alone will increase by

Tips: Why are growth markets important?

approximately 59,508 mt / year. In other cases,

demand for certain products, may be in decline

A common problem that occurs in agricultural

due to other drivers such as increasing income,

projects is the focus on increasing competitiveness

which enables consumers to buy preferred

within a market rather than on reducing poverty.

Let us consider a situation where Climbing beans

substitute products, causing a decline in the

are traditionally produced by farmers in the Village

demand for the inferior good. This type of analysis

of Rhum. An agricultural project is started nearby

is useful to gain an understanding of future

and focuses their attention on the Village of Wahum,

providing the farmers with technologies that

demands and therefore whether investment in

increase their competitiveness. Over time the famers

that sector is justified.

in Wahum, are able to sell more Climbing beans

than the farmers in Rhum. If the market is size

stays the same or even decreases in size, producers

5.3 Market Volume Analysis

in both Rhum and Wahum are likely to get poorer as

Using a combination of secondary and primary

a result of increasing production to supply a limited

market.

data, the marketing team should develop an

estimate of the size of the market being analyzed.

If the market size does not change during the

This usually requires a combination of information

intervention period, Wahum will take market share

from Rhum and although Wahum farmers will gain,

based on (i) production data and (ii) sales or export

overall poverty levels in the area do not change, the

data for the selected product. Sources of secondary

incomes simply shifts from Rhum to the village of

data may include household survey information

Wahum, or worse, incomes for both villages start to

decline. It is only in the case where the market size

of the target project area, sub-national data from

is growing that both Villages will gain when more

district of provincial government sources and

supply enters the market. Many projects do not

national data sets. For major food and export

take this into account and therefore can give a false

impression of poverty reduction within an area as

products, this data is often included in annual

they may only report on their village of interest and

Government summary statistics, developed for

be unaware of the problems caused in neighboring

the budget or are held with organizations such as

villages.

the World Bank and FAO. Care should be taken

with these global information sources because

5.2 Projections

the accuracy of the data does not always take

Following trend analysis of existing market prices

into account seasonal variations. It is therefore

or volumes, market researchers can also use

recommended to compare global figures with local

regression techniques to indicate future directions

information given by larger traders. It should also

68

A Guide to Rapid Market Appraisal (RMA) for Agricultural Products be noted that if production data is used in the

To give an example within one market, an analyst

analysis of market volume, the analyst should

can first of all find out how many traders sell a

take into account the ratio of product used by

specific product, such as cabbages. If the market

the household and that sold into the market.

team finds out there are 20 traders of cabbages

This information can be obtained from household

in the market, the team can then interview 5 or

data and to a degree through focus groups with

6 traders to find out who is the largest trader,

farmers.

and the amounts they sell, by week, by month

and eventually gain an idea of annual buying and

Depending on the scope of the market survey,

selling of cabbages within the market.

the primary data collection should aim to gather

information on the amounts or volumes of the

For larger market surveys, the marketing team

selected product that are traded in the survey area.

can identify the largest markets within the survey

Market volume information usually cannot be

area and survey the largest traders within each of

found from one source; the market team or analyst

the markets to determine flow of produce through

will be required to ask several traders about the

the markets. By repeating questions to several

amounts of product that are traded through the

traders, the marketing team can work towards an

main markets and by the main traders themselves

estimate of market volume. Mirroring, i.e. repeated

in the target area, or at the target markets.

questioning with traders at a similar level and

Through a process of asking several buyers and

triangulation, with generally works by comparing

sellers, the marketing team can gain an idea of the

responses across and between different types of

actual amount traded.

traders should start to reveal an estimate of the

market volume.

Figure 17. Gross margin analysis for bean production

69

PART 2. Practical RMA Work

5.4 Profitability Analysis

The market researcher can undertake this simple

Probably the most critical aspect of marketing

but revealing analysis through a systematic

is to provide customer satisfaction at a profit.

collection of buying prices, marketing/transaction

However, many farmers do not keep good

costs and selling prices for each participant in the

records about their costs and sales and often

market chain from the farmer to the consumer.

are not sure about their actual profit margins.

Comparing these costs and determining the

It is very important therefore to have a clear

percentage of the final market price that each

idea about current levels of profitability and,

market actor obtains will provide a basic measure

based on this information, the likely gains in

of the efficiency of the marketing system. In

profitability that will occur with investment in

competitive market chains, marketing costs and

new market interventions. The simplest form

profits are relatively low. The difference between

of financial analysis is a gross margin analysis,

retail and farm-gate prices is therefore moderate,

as shown in Figure 17. This provides the

and farmers receive a reasonable share of the

information for a business/enterprise venture,

price paid by consumers. If this is not the case,

typically over a one-year period. This approach

then additional research may be required to

can also be used also as a means of verification of

define precisely why certain market chain actors

profit at the end of the season, to confirm whether

are extracting an exceptional level of profit. Note

the plan accurately met the forecasted figures.

that market research often requires a process of

iterative analysis in certain areas to make sense

Financial data can also be projected over time,

of the information. An example of market margins

so that the business investor can see how costs

is given in section 2.11.

and profits change over time. In many cases, the

initial period of investment means that profits are

5.6 SWOT Analysis

low in the first one to three years, due to the costs

When a market survey is being used to identify

of start up. However, profits generally increase as

a market opportunity for a specific group of

loans and capital outlays are paid off.

producers, SWOT can be used to evaluate the

Strengths, Weaknesses, Opportunities, and

To review profitability over time a slightly more

Threats, for a target agro-enterprise. For best

complicated financial analysis can be performed

results, SWOT analysis needs to have a clear

using methods such as the (i) Internal Rate

objective, which fits well with visioning tools that

of Return and (ii) Net Present Value. These

are often used when working with farmers who

methods give the investor an idea of how profit

want to make a shift, for example, from producing

will change over a fixed time frame, such as the

low levels of poor quality produce that has little

next 1-5 years. These types of analysis, can be

demand in the market, into a higher volume of

done using Microsoft Excel, which has specially

better quality produce for an alternative market.

formulated macros and tutorials to explain how to

undertaken these types of analysis.

For example chickpea growers, living near

Mwanza in northern Tanzania, want to increase

5.5 Margin Analysis

their supply of Red beans to the town. The

It is often assumed that farmers are exploited

switch in product and production sales is

by traders and receive a disproportionately low

therefore a primary point for using this type of

amount of the final market price compared

analysis. SWOT can be used to evaluate whether

with other chain participants such as traders,

the farmers will be competitive against existing

processors and retailers. This point can only be

suppliers? The basic elements of a SWOT are

verified through an analysis of the marketing

shown in Table 8 and the key issues related to the

margins along the chain. Once gathered, this

SWOT categories are shown in Table 9.

information will highlight where in the marketing

chain value is being added to the product and

where profits are being made.

70

A Guide to Rapid Market Appraisal (RMA) for Agricultural Products Table 8. SWOT Matrix general headings

5.7 Problem tree analysis

SWOT Matrix

Helpful

Harmful

Problem and Solution trees are participatory tools

(to achieving the

(to achieving the

that can help an RMA team to think through

objective)

objective)

a specific challenge and identify the range of

Internal

Strengths

Weaknesses

problems that prevent or impede a goal being

(attributes of the

organization)

achieved. In the marketing context, the problem

External

tree can be used to identify problems that reduce

Opportunities

Threats

(attributes of

market performance for a specific product in a

the external

environment)

selected market chain. The problem tree exercise

begins with a brainstorming session in which

participants list all problems that affect market

Table 9. SWOT Matrix Issues to be addressed

performance for a selected product and work out

the relationships between problems. In a group

Issues to review as part of the product / agro-enterprise situation, it is useful for group members to write

analysis

one problem on a card, so that cards can be

Strengths and weaknesses

Financial and intellectual

moved according to their importance.

resources, location,

customer service, efficiency,

infrastructure, quality,

staff, management,

price, delivery time, cost,

capacity, relationships with

customers, brand strength,

local language knowledge,

ethics, principles

Opportunities and threats

Political/legal, market

trends, economic conditions,

expectations of stakeholders,

technology, public

expectations, competitors

and competitive actions, bad

PR, criticism, global markets,

security, climate change

SWOT analysis can be used by the marketing

team to create profiles of competitors, which

are compared with the target agro-enterprise

group, using SWOT analysis to focus on their

relative competitive strengths and weaknesses.

Depending on the detail of the exercise, the

marketing team can use this method to examine

competitors’ costs, sources of profits, resources

and competencies, competitive positioning,

product differentiation, business linkages and

other factors. If the marketing team can define the

current market situation and the existing agro-

Figure 18. Problem tree

enterprises, this can assist the marketing team,

to identify a niche for the client in the market

and or strategies that would best suit the client

group to be competitive within the market given

the profiles of competitor groups, companies and

other regions.

71

PART 2. Practical RMA Work

Once all the problems have been shared and

5.8 Solution tree

discussed, the second task is to arrange the cards

In this exercise, the group takes the problem

into a logical hierarchy and draw links between

tree and inverts all the problems into positive

them. The group should work towards a priority

objective statements. Through this process the

problem that is identified as the “core problem”,

central problem becomes the main objective. This

i.e., it is linked to most other problems. In the

process of converting problems into solutions,

example below, the core problem was defined as

builds a hierarchy of development objectives

limited competitiveness of chickens and this was

and interventions. The problem and solution

related to lack of on-farm inputs for chicken feed.

tree provides a simplified view of cause and

effect relationships. In this way, the RMA team

The next stage is for related problems and issues

can identify ways in which the farmer group

to be divided into cause and effects based on the

can prepare their target market options and

core problem. To link this to the tree analogy,

implementation plans to tackle key issues.

problems are considered as roots and effects as

Essentially the solution tree is used as the basis

branches. The discussion should try to find all

for the design of an intervention program, by

cause and effect relations and move the cards

inverting the problem tree the main problem is

accordingly. There can be more causes to one

transformed into the general objective. The direct

effect or more effects to one cause. Links should

causes of the problem become specific objectives

be clearly shown on the diagram to show cause-

and causes can be translated into targets. The

effect relationships and horizontal links to show

lower level causes of problems are then turned

joint causes and combined effects, Figure 18.

into solutions and these become activities for

specific interventions. The information in Figure

19 illustrates a solution tree for improving market competitiveness of chickens.

Adapted from Lundy et al, 2007

Figure 19. Solution tree

72

A Guide to Rapid Market Appraisal (RMA) for Agricultural Products 5.9 Scenario building

Table 10. Methods for Analyzing Market Data

Scenario building is a technique used to lay out

Analytical Methods

Why is this method used?

potential plans for specific types of client. This

Trend Analysis

To gain a better understanding of

method requires the RMA team to identify the

the changes in the market over

most promising agro-enterprise opportunities

time.

for target client types. For example, selecting

Market Volume

To gain an understanding of the

analysis

size of the market that is being

opportunities for a cluster of farmer groups

evaluated.

requires the RMA team to match local assets,

Profitability Analysis

Tools such as gross margin

skills and leadership qualities with investment

analysis, internal rate of return

and market access options. The scenario also

and net present value used

determine the profitability of an

needs to provide a simple plan outlining the

existing enterprise or proposed

scale or volume of the target market, buyers,

business.

quality issues, supply issues and investment

Margin Analysis

To provide a measure of the

requirements. The plan should also identify

efficiency of a market systems.

potential partners involved, their responsibilities,

Projections

Method to predict changes in

demand for a selected product

and the likely gains and risks.

based on specific market drivers,

such as population growth,

As an example, the RMA team who worked

changing incomes, urbanization

and consumer habits.

with potato farmers in south western Uganda,

SWOT

This is a strategic planning tool

considered three to four market options for the

used to evaluate the Strengths,

farmers. These included

Weaknesses, Opportunities, and

Threats in a project, business

venture, or any other situation

• Sales of potatoes into the local market

of an organization or individual

• Sales of potato into the nearest large city, 80 km

requiring a decision in pursuit of

from the farms

an objective

• Sales of potato into a fast food restaurant in the

Problem Tree

To identify and prioritize problems

and to map out problem causality.

capital city 400 km away

Solution Tree

To find solutions to the problems

• Sales of potato into the wholesale market in the

identified and through this process

capital city

to develop a series of interventions

to overcome the problems in a

systematic manner.

Scenarios can be developed to highlight market

opportunities for a range of clients including BDS

Scenario Building

Technique used to lay out

potential plans for specific types

options, niche market options, export market

of client. This method requires the

options and market linkage options to supply

analyst to identify most promising

agro-enterprise opportunities

industrial and or high-value markets.

and then provide information on

target market, investment needs,

The potential market scenarios presented must

potential partners, likely gains and

all be based on findings and results from the

risks.

RMA. The scenarios created in this section are not

intended to be detailed plans and their purpose at

this stage is to highlight options for presentation

to the farmers.

A summary of tools used for data analysis is given

in Table 10.

73

PART 2. Practical RMA Work

step 6. analysIs oF data and InForMatIon

emerging findings. These discussions are usually

informal discussions but can be more formal

presentations, which may include the use of

charts and diagrams, for example at end of week

round up sessions.

Regular meetings to discuss findings allow the

RMA team to quickly identify inconsistencies

and inaccuracies in the data and information

collected, as well as information gaps. Field

activities can then be promptly revised to address

Learning objectives

these problems. Such meetings also provide an

After reading this chapter, the learner should be

opportunity for involving all team members in the

able to: (i) Adopt a step-by-step approach to the

analysis of different issues.

analysis of the data and information collected

during fieldwork, (ii) Analyze the topics studied, (iii) Tips for the marketing team

highlight key questions that need to be answered

during the analysis and (iv) develop appropriate

To help keep the marketing team focused, team

recommendations based on the analysis.

meetings should be short and organized before the

members go for dinner.

One or more members of the team should be

The following sections provide a

responsible for recording the data and information

guide to the types of questions

collected, and putting it on paper on a daily basis

in a structured and clear way. This will ensure

that the research team should

that data and information are properly recorded,

attempt to address during the

while facilitating their subsequent processing and

analysis.

analytical stage. The analysis

should be practical and based

on the scope and type of survey

and the analytical team should

focus their attention on the most

important issues as outlined in

their terms of reference.

6.1 discussion of

Findings

The data and information

collected during the RMA

market survey should be

analyzed continuously, as more

information is collected. The

fieldwork and the analysis of

data and information should

be conducted in parallel. At the

end of each day in the field, or

alternatively, after every two or

three days of fieldwork, the team

should get together to share

and discuss the data and the

74

A Guide to Rapid Market Appraisal (RMA) for Agricultural Products 6.2 Initial Understanding of the Mar-6.4 Topical analysis

keting System

Topics or variable groups for analyzing depend on

During the early stages of data and information

the RMA purposes. However for a comprehensive

analysis, it is critical to gain some understanding

RMA, the topics or variable groups should

of the marketing system for the product being

consider the issues outlined below.

studied. Both secondary and primary data and

information should be used to describe the

Supply and Demand trends

marketing system.

Key questions:

The following questions should be answered

• What are the trends in supply and demand, both

during this initial phase:

in terms of quantity and quality?

• Which domestic and export market segments are

• What are the basic structure of the marketing

growing faster? Which ones are in decline?

chain?

• Which market channels have more promising

• Whar are the different channels and key stages

growth prospects?

in the chain?

• What are the driving forces behind these trends?

• Where are the main production areas for the

product?

Price trends and behavior

• Where are the main wholesale, processing and

consumption centers?

Key questions:

• What are the scales of operation at each stage of

• How do prices vary within the year? Are there

the marketing chain?

clear seasonal patterns? What are the factors

6.3 Preliminary diagram of the

explaining these patterns?

Marketing Chain

• What are the recent trends in real prices, for

example over the past five years? Are real prices

It is useful at this point to sketch a diagram of the

rising or declining, and why?

marketing chain. A simple example was shown

• Are these trends likely to change in the future? If

in Figure 7. You could rework this diagram to

so, why?

include the different channels observed in the

• Which market segments enjoy most favorable

survey work and add in new participants at each

price prospects, and why?

stage, with their functions. Another map could

be drawn showing the main roads in the survey

Using a price chart will help to visualize the price

area, to show the main flows for the studied

trend. Those charts can also be included in the

commodity, from production sites to the markets

report to support the analysis.

and areas of consumption. This map could show

roads, lakes, rivers and location of the main

markets, so that group members can see where

key activities are taking place.

Drawing such diagrams during the initial stages

of the analysis helps the RMA team to process,

analyze, and visualize the data and information

collected. It also makes it easier to identify

areas where further information is required. The

marketing chain diagram can then be refined

while fieldwork progresses and the analysis

further developed.

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PART 2. Practical RMA Work

Market requirements

Tips on price analysis

Key questions:

Great care is needed when drawing conclusions from

• What are the product requirements of different

margin analysis. Policy and other interventions are

markets and participants?

often based on oversimplified assumptions about the

costs incurred and the profits made by marketing

• What are their needs with regards to volume,

enterprises. When the price paid by consumers is

regularity of supply, time and location of

well above the price received by farmers, it is often

assumed that market intermediaries are making

deliveries, quality specifications, and so on?

excessive profits at the expense of producers. This

may not be the case. The reasons why margins are

Market participants and their behavior

high may lie in the considerable marketing costs

and risks incurred by traders and processors. These

Key questions:

agents may actually make periodic losses due to

adverse price fluctuations and product deterioration,

and the overall profit generated from their activity

• Who are the market participants?

may actually be a fair remuneration for their

• What role do they play in the marketing system

entrepreneurial role.

and which functions do they perform?

• How well do they perform these functions?

Efficiency of the marketing system

• And how do they relate to each other?

• How do they coordinate horizontally, for example

Finally, it is very important at this stage to

through farmer organizations and private sector

develop a sound analysis of the efficiency of

associations?

the marketing system. Key questions to answer

• What are the different marketing and contractual

include:

arrangements between market participants at

different stages of the market chain?

• How is marketing system performing?

• What is the extent and forms of informal credit

• Are producers and market participants

flows between market participants?

supplying what consumers want?

• Is there vertical integration in the marketing

• Is the system responding to the changing needs

system, whereby firms operate at different

of market participants and consumers?

levels of the market chain, such as agricultural

• Is produce flowing regularly and at a relatively

production and processing?

low cost from surplus (production) areas to

deficit (consumption) areas?

• Is produce being stored appropriately or

imported for consumption during the off-season

periods when there is little domestic production?

• Are processors employing efficient technologies

that minimize costs while assuring good product

quality?

• Are there significant post-harvest product losses

at different stages of the marketing chain?

• Is there strong competition at different stages of

the marketing chain?

• An analysis of marketing costs and margins

is also essential to determine sources of

inefficiency (see Box 1). Which marketing and

processing costs are too high?

• Is there scope for lowering these costs?

• Are producers and other market participants

receiving a fair share of the benefits generated

by the production and marketing of these

commodities?

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A Guide to Rapid Market Appraisal (RMA) for Agricultural Products

• In other words, are some market participants

6.5 Constraints and Opportunities

realizing excessive profits at the expense of

While doing analysis on above topics, attention

others? Are producers receiving a reasonable

should be paid to constraints and opportunities

share of the export or retail price?

that each market participant has. Below are

Policy and Institutional Environment

some examples of typical constraints that market

participants may face:

In some RMA studies, the policy environment may

be relevant, if this is the case, here are some

• Location of farmers is not well suited to supply a

target market against existing competition.

Key questions:

• Poor economic infrastructure (roads,

railway, ports, power and water supply,

• Are relevant policies, laws and regulations

communications, warehouse and cold chain

suitable? How they are being implemented?

facilities, and so on)

• How does local policy affect the structure and

• Limited land area of target farmers, not

performance of the marketing system?

enough farmers can produce this product at

• How do local policies contribute to, or hinder,

the volumes required to supply target market

the development of the marketing system?

opportunities.

• Weak horizontal cooperation amongst farmers

and agribusiness firms

• Poor access to appropriate production and post-

harvest technologies, such as seeds, fertilizer,

irrigation, storage facilities.

• Lack of access to formal and informal credit

• Limited access to good quality and affordable

support services in areas such as market

information, input supply, repair services,

transport, storage and processing, and so on.

• Inadequate policies and regulations

When analyzing the causes of the problem, it

is important to define the real cause. This will

lead to suitable and effective interventions.

For example, one constraint is lacking access

to governmental credit. The real cause of this

constraint may not come from the lack of credit

program but from inadequate information

provision. Tools such as the problem tree can

assist in making logical decisions and developing

more effective interventions.

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PART 2. Practical RMA Work

6.6 Recommendations for

6.7 Filling in the gaps

Interventions

As was mentioned in the section on data

One of the ways to develop interventions is

collection, analysis often reveals gaps in the data,

to apply the “Objective tree” methodology as

false trails, or exciting opportunities. This will

outlined in the previous chapter. The next step

require the RMA team to implement short follow

is to analyze the feasibility of recommended

up research with selected stakeholders in order to

interventions. This can be done either before or

improve recommendations for interventions.

after writing the report but a critical analysis of

objectives must be done in prior to discussing

the RMA results. The priority of the interventions

should also be clarified with related stakeholders.

Key questions:

• Has this intervention/solution been applied

before?

• What is the timeframe for the intervention?

• What level of resources are required?

• If it has been applied, what are the reasons for

its successes or failures?

• If it failed, what must be done to ensure

success?

For new interventions, the RMA group should

review their feasibility by using the Feasibility

Matrix shown in Table 11. This matrix will assist in answering the following questions:

• What can each stakeholder contribute

(human or financial resources, etc.) to the

implementation of the intervention/solution?

• What is the potential benefit (short and long

term) of the intervention/solution for each

stakeholder?

• What does each stakeholder need to do to

ensure the long-term and sustainable benefit?

• What are the risks or difficulties of each

stakeholder when implementing the

intervention/solution?

Depending on the depth of the analysis, more

questions could be made. For example, there

might be additional questions related to costs for

each stakeholder.

78

A Guide to Rapid Market Appraisal (RMA) for Agricultural Products Table 11. An example of the feasibility matrix

Problem: Limited market opportunities for seed potatoes

Recommended solution/intervention: Production and marketing of both seed and ware potatoes to growth high value markets, using new varieties, irrigation and storage facilities.

Related potential

Contribution

Potential benefit

What should be

Possible risks or

stakeholders

(short and long term)

done to ensure the

difficulties

participating in the

sustainability of the

implementation of the

intervention?

intervention

Farmer group

Land, labor,

Increase in productivity,

Drought,

management

quality and income

mismanagement

Lack of discipline

Extension / NGO

Provision of training in

Increased skills and

Work with more than

Short term support

use of new technologies. ability to adapt to

one extension agency

Cost share in testing

existing and new

new methods

challenges

Research

Pilot testing of new

Improved yields, better

Introduction of new

Lack of funds to

technologies

disease resistance and

varieties, methods and

support process

ability for year round

irrigation

production

Input supply merchant

Improve access to

Long term supply of

Clear business planning Inability to supply

fertilizer, and agro-

essential inputs to

that includes input

at competitive or

chemicals

boost yields

supply

affordable price

Micro-finance agency

Provision of loan

Access to reliable and

Building relationship

Low repayment rates,

options to meet long

lower cost finance than with MFI to develop

better option for loans

production cycle

moneylenders

and promote new loan

options for farmers

Buyer

Provision of agreement

Steady income

Constant focus on

Quality criteria too

for year round

improving production

high, volumes not met,

procurement

and sales performance

alternative buyer

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PART 2. Practical RMA Work

step 7. WrItIng a rMa report

Learning objectives

The structure, writing style and content of

After reading this chapter, the learner should be

the report will depend on its purpose and its

able to develop an RMA report with appropriate

audience. A report aimed at providing the basic

structure and clear content that present correctly

findings of the survey for farmers to upgrade their

the findings of the survey.

production, handling and marketing activities

is clearly different from a report targeting a

7.1 Timing

processing company, a retail organization or a

donor.

Writing the RMA report

should begin towards the

The report should be understandable to the

final stages of data analysis.

target audience. For farmers or field-based staff,

At this stage, the RMA team

the report should focus on a few of the most

should have developed a sound

important issues, i.e., product, price, profit, target

understanding of the key issues.

market and buyer. The presentation should be

7.2 Responsibilities

clear with limited marketing jargon. The report

must emphasis the key points that the farmers

The Team Leader should be

need to address with comparisons of products,

the main report author. S/

so that they can see why one product or market

he should be responsible for

is recommended compared with another. In most

coordinating report writing

cases this will compare the existing situation with

and editing the draft and final

the proposed situation.

versions. The allocation of tasks

among different team members

When preparing a market report for a broader

will depend on their specific skills and experience

stakeholder’s group, or a potential lender, or

and their availability. All team members should

investor, then more details should be added. For

provide comments to draft versions before these

this second type of audience, a short written

are sent to other reviewers. In addition, some

report could be circulated before the meeting and

members can be responsible for writing specific

this report should have all the financial analysis.

sections or preparing some annexes of the report.

7.3 Purpose and audience

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A Guide to Rapid Market Appraisal (RMA) for Agricultural Products 7.4 Structure

The flip chart materials should have clear pictures

Market reports generally have a structure as

which help to explain the main points so that

shown below:-

illiterate farmers also get a better understanding

of the results.

• executive summary,

• introduction

7.6 Report for a wider audience

• target clients for the study

When presenting RMA findings to a wider

• methodology

audience such as a project management team,

• key findings

other NGO’s, or potential investors, the report

• specific recommendations to the target clients

should provide detailed information about the

• conclusions

survey methodology and give clear evidence of

demand evaluations and financial details. The

The report should clearly identify how the results

report should also highlight any innovations that

can be used by target clients in their planned

the target user groups could take advantage of, to

agro-enterprise projects. In more formal written

make them more competitive in the marketplace.

documents, the report should also contain

sections with references and annexes. An example

7.7 Content and Style of a written

of a possible report structure is shown in Annex

report

6. The outline in Annex 6 is a reference, and

The report should be written in a concise form

decisions about the most appropriate report

and focus on the critical issues only. Data and

structure should be left to the study authors.

information that does not contribute to an

understanding of the key issues should be left

7.5 Report for farmers

out. Repetition should be kept to a minimum.

When working with farmer groups, the report

should be written so that it can be presented

Quantitative data can be very useful in supporting

orally, with clear pictures and basic data. The

and illustrating the analysis, but it should be

written report should be 2-3 pages long. The RMA

presented in a condensed and digestible form

team also should prepare presentation materials

through the use of tables, graphs, and charts.

on flip charts that highlight the main findings.

Diagrams showing spatial product flows or

The report should focus on market opportunities

representing the marketing chain, among others,

and major risks. The report needs to be simple

also help readers to digest a significant amount

enough that farmers understand the main issues,

of information. Some readers may want to access

See section 8.2, but not so simple that you miss

more detailed data and background information,

the essential pieces of business information.

and therefore these can be included in the

annexes.

Flip chart presentation information should focus

on highlights as indicated below:-

The use of photos is not essential, but can

improve presentation. Photos help readers

• Products, with details such specific variety,

visualize markets, transactions, post-harvest

• Market, with details such market types and

practices, processing technologies, means of

distance from production site

transport, product appearance, equipment and so

• Prices being offered at target market(s)

on. They can be especially useful when the target

• Costs of production

audience is not very familiar with the studied

• Profit, what is the expected change in profit

commodity and marketing system. Photos also

• Production cycle, length of season

make reading more pleasant and entertaining,

• Key risks

which can be important in cases where the target

audience is not used to reading analytical reports.

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PART 2. Practical RMA Work

Finally, in order to facilitate reading, it is

important that the authors of the report follow

a standardized style. For example, the same

font type and size, page margins, and table and

graph formats and numbering should be followed

throughout the different sections of the report. All

reports should have an contents page and where

required references.

7.8 Responses and editing

It is important that a first draft of the report

be shared with a number of people who are

experienced in similar type of studies or

knowledgeable about the commodity and

marketing system. These first reviewers can

provide useful feedback and comments on the

quality of the analysis and presentation. Sharing

a draft of the report can sometimes lead to

significant improvements in the quality of the

presentation, especially the parts that are not

clear.

82

A Guide to Rapid Market Appraisal (RMA) for Agricultural Products step 8. FroM analysIs to aCtIon

Learning objectives

• Visioning

After studying this chapter and conducting the

• Exchange visits

exercises recommended, the reader should (i) have

• Market visits for deal making

a good understanding of the tools required, (ii) have

• Identifying chain champions

trained interested partners in the use of these tools.

• Market agent “go between”

• Learning journeys revisited

This chapter provides a review

• Developing a business plan and associated

of methods and tools that can

intervention plan

be used by marketing and

• Piloting

intervention teams to apply the

information gained through

8.1 Visioning

an RMA to move from analysis

Visioning is a method that can be used with

to action. The type of methods

partners, local entrepreneurs and farmer groups

used in this step will depend on

to assist them in working with the market data.

the actors of change that are

The visioning process helps to lay the framework

being targeted and the scale of

for a plan of action that takes into account the

planned intervention. The actors

clients assets, skills and aspirations for change.

of change may be a number of

Visioning typically starts with a facilitator and a

farmer groups, a combination

target farmer group or investor group, who hold

of marketing actors in a

a brainstorming session about the status of their

market chain, (farmer, traders,

current situation for a selected product and how

processors and retailers) or

they will change to achieve a better outcome. This

the manager of a processing

process of outlining the current situation and

company. The basic tools

the goal situation, applies to all activities related

include:-

to pre-production, production, postharvest and

marketing. See Table 12.

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PART 2. Practical RMA Work

Table 12. Issues that need to be addressed in activity building to meet vision Inputs supply Production

Postharvest

Marketing

BdS

• Seed inputs

• Area of land to be planted

• How to harvest, when

• How the group will

• Which services are the

• Irrigation

• Tools to be used hoes,

and by whom?

market its produce

most important

• Fertilizer

animals or tractors

• Storage options and

• Transport, and delivery

• Which services need to

• Pesticides

• Agronomic practices (seed

facilities

schedules

be strengthened

• Other inputs

type, variety, planting

• Sorting, grading,

• Payment terms

• Should services be paid

density, weeding methods)

packing, and labeling

• How the money shall be

and, if so, how

• Monitoring of fields,

shared in the group

particularly for higher

• Investment plans for

value enterprises

the group and savings

mechanisms

The group will first of all describe the current

experience can be used as the basic elements of a

situation. When there is consensus in the group,

business and intervention plan.

about where they are today, the next stage is to

develop an idea or a “vision” of how the group

The results developed from a visioning process

would like to see their future business outlook

generally include a list of activities that are

for the selected product. This activity allows the

required for the group to meet their vision. These

group to “see” what they would like to achieve

activities should be systematically divided into

over a specific time frame. Typically the facilitator

short, medium, and long-term issues. Planning

of this type of exercise will tell the group to

processes based on visioning then start by listing

select a time horizon of between 3 and 5 years,

the set of activities that need to be changed to

depending on the type of product being evaluated,

achieve success. For a farmer group, the changes

and provide a vision of how their business will

required tend to fall into the following categories:

appear after that amount of time.

input supply, production, post-harvest handling,

marketing, and business development services.

It is often the case that the aims of the group are

These issues should focus on the identified

fairly ambitious over the longest time frame. The

market opportunity and the level of detail,

role of the facilitator is then to take the group

depending on purchasing conditions, that are

through a process of reducing the time horizon.

given by the buyer.

As the timeframe is reduced, the group needs

to prioritize issues and activities that need to

Note that the same can be done for livestock

be achieved within this period. The group also

enterprises.

needs to identify who will be responsible for these

activities. Each reduction in time brings in a

The facilitator can then lead the group through

greater degree of reality to the vision, until you get

a final process of making decisions on what can

down to a 6-12 month plan. The ideas from this

be achieved, using available assets, local skills

and resources and also what can be achieved

Table 13. Activity options to shift from today’s situation to a desired state Today, where we

Short term

Medium term

Long term activities Where we want

are

activities

activities

to be

What can be

2 metric tons of

• Organize producer • Start savings

• Link to lending

10 metric tons of

achieved with

bean production

groups

group

agency

bean production

existing resources?

and sales

• Access seed of

• Buy a mobile

• Build a seed store and sales

new varieties

phone

• Hire transport for

• Prepare

• Build trust with distant markets

implementation

target buyers

plan

What activities

Limited business

• Training in

• Training in

• Build grain store

Capacity to do a

or interventions

skills

market analysis

savings and loans

• Build drying area

market survey and

require external

• Write business

options

prepare a business

resources?

plan

• Test irrigation

plan

method

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A Guide to Rapid Market Appraisal (RMA) for Agricultural Products only with external support. This information can

can return to traders who indicated they would be

be further refined by providing information on

interested to access produce from local farmers.

service providers who have the skills to assist

with any given problem. See Table 13.

8.4 Learning Journeys revisited

8.2 exchange visits

In the previous survey the idea of a learning

journey was discussed as a means of collecting

In some cases, rather than focusing efforts on

information along a market chain and also

re-creating a new situation, a more efficient

offering diverse market actors with a space

and perhaps enjoyable approach is to take

in which they could discuss their ideas and

a group that is seeking ways to upgrade its

ambitions. This same technique can be adapted

activities to another that has already made

to intervention planning and cross-fertilization of

investments and has improved their productivity

ideas, but rather than focusing on one point in

and competitiveness. For farmers, this is often

the market chain, as is done with an exchange

the quickest way of transferring ideas, because

visit, the learning journey approach can be used

they can relate more easily to people from a

for a target group to observe how interlinked

similar background, there are no language or

changes can be applied throughout a market

power relation issues, and they can ask detailed

chain in order to make it more efficient, secure

questions about how changes in production and

and more profitable. This systemic marketing

marketing systems were made, what were the

approach is particularly important for groups

pitfalls and what should the new group focus on

intending to invest in high-value market products,

to achieve success.

and for situations where an investor is seeking to

develop new opportunities for business services to

The process of “exchange visit” is, not limited only

various market chain actors.

to farmer-to-farmer exchanges, similar events can

be applied to local technology usage. Exchange

8.5 Identifying Chain Champions

visits can also be organized to expose local

As part of the investigative nature of the RMA

business entrepreneurs about new processing

process, team members should actively try

or storage equipment. Similarly, quality issues

to identify people who are enthusiastic about

may be the focus of an exchange visit in order

upgrading their market chain. Ideally these

to show farmers and local traders, the quality

people should be influential or having investment

requirements of higher value, formal markets,

capacity within the market chain, such as a large

compared with the quality of existing products

trader, or a processor, who can devote some time

in local informal markets. The key point with

to working on critical constraint in the chain.

exchange visits is that “seeing is believing,” and

Often these people are already working on their

this can be a powerful way to transfer ideas

own to support improvements in the chain and

quickly about how to upgrade activities within a

they may see the RMA team and subsequent

business and within a market chain.

project investments as a vehicle to aid them in

8.3 Market visits for deal making

their quest for improved market performance.

Given this situation, the team may then be able

In the previous chapter, we considered market

to develop a marketing scenario which provides a

visits as a tool for gathering information. In this

win-win situation that holds prospects for public

context, the market visit can be adapted to seek

and private sector investment in makes market

and establish trading relations between farmers

chains work better for both producers, processors

and traders. This type of visit should focus on

and sellers.

meetings with traders interested in establishing

business deals and in this case, the producer

8.6 Market linkage agent

groups should clarify the conditions of the deal

“go-betweens”

in terms of quality, quantity, regularity of supply,

An effective method that many market linkage

terms of payment being offered and details on

projects have adopted is to train a local

packaging, etc., as required. Often the farmers

community agent in collecting information about

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PART 2. Practical RMA Work

markets and specific market chains. This person

a bank to provide a loan or an NGO to provide

may work for a local input supply merchant, be

credit or inputs.

a local collector, or be a person in the community

who is seeking part time work in supporting new

For the group members, i.e., the farmers to

initiatives.

fully understand the process, we recommend

that a business plan is complemented with an

To be an effective “go between”, or liaison between

implementation plan. The implementation plan will

buyers and sellers, this person will need to

provide information about specific activities putting

regularly visit buyers to ensure that they are

detail about the goals of the business plan will be

happy with the goods they are receiving. If any

operationalized and realized.

changes are required, this information needs to be

relayed back to the producers and suppliers, for

8.7.1 Writing a business plan

example so that changes can be made to improve

Most business plans follows a general outline as

quality and increase sales. Very many business

shown below. The written document needs to tell

deals fall apart because suppliers do not follow

a story as well as presenting the cold facts.

up with their customers and may not be aware

of poor quality issues with their products, or new

i. Title, contents, contacts and any definitions

innovations from competitors.

ii. Executive summary

iii. Introduction

In addition to maintaining existing clients, the

iv. Business Organization

market go-between should also be on the lookout for

v. Product

new business deals, links to other service providers

vi. Marketing strategy

such as input dealers, market information, finance

• Product

options and any new opportunities to help upgrade

• Price

the production of a quality product. The go between

• Place

also needs to watch out for changes in the market,

• Promotion

such as price changes, competitor tactics and shifts

vii. Market risks

in consumer demands.

viii. Business Operation Plan

ix. Production Costs

As with all activities in the market chain, the role of

x. Income Streams

a marketing go-between can only operate over the

xi. Profit and Loss Analysis

medium to long term if there are some incentives

xii. Financial requirements

to perform this task and therefore it is important

xiii. Conclusion

that the marketing go-between or market liaison

person be paid a basic fee for their services and a

The business plan does not need to be too long,

“top up” commission based on sales, particularly for

it can be 2-3 pages or 30 pages. As you can see

finding new market opportunities. As this may be a

from the business plan outline, the types of

part time off-farm activity, the commission should

information required, are very similar to that

be commensurate with trade, for example 5% of

gathered by an RMA. Therefore is should not take

sales prices. Trust is critical for this type of role and long to adapt the results from an RMA report, to

farmer groups should always be in a position to

prepare a large part of the business plan.

monitor the activities of this person.

The business plan should essentially contain

8.7 developing a business plan and an

sufficient detail for a reader, who may be

intervention plan

unfamiliar with your area, to understand the

This requires that information from analytical

basic idea and be able to evaluate the viability of

reports be transformed into a series of basic steps

the business venture. Be sure to clearly state the

that will realize a profitable business venture. The

project activities and expected outcomes of the

plan must be clear, logical and well targeted to

enterprise; provide an easily understood outline of

convince an investor to support a project, whether

the financial requirements, including your costs

and expected returns on the investment over at

86

A Guide to Rapid Market Appraisal (RMA) for Agricultural Products least a 1 year period. The business plan should be

analysis should also provide clear information about

clear and transparent – do not attempt to impress

expected returns and also options for re-investment

or confuse the reader, as this will be considered

into the business. The plans should highlight what

as a tactic to gloss over areas of concern.

can be achieved with the existing funds from the

market actors which will include their savings; and

The time required to write a business plan

what can only be achieved with external funds.

depends upon the scale of the planned agro-

enterprise. For basic sales of an existing primary

The outline costs of the new enterprise should be

crop into a nearby market, the RMA will provide

complemented with a cash flow analysis. There

almost all of the information required for this

are many methods for doing this type of analysis.

exercise. The timeframe to write a business plan

The costs to develop an enterprise can be written

may be 2-3 days, but that is only when you have

up as a basic input and output sheet for one

already undertaken an RMA, which may take two

season or as a financial plan over a number of

to three weeks, to collect the information required.

years.

Business plans may be shared as soon as available

but, in any case, will be presented and discussed at

Depending on the sophistication of the project,

the final session with all market chain actors. For a

this financial analysis can be done by a team

more detailed example of the format for a business

consisting of the market research group

plan, see Annex 7.

and the investors or with the help of a local

accountant. Some financial tools are now

8.7.2 Financial analysis

available on Microsoft Excel, which has specially

One of the more challenging aspects of the RMA

formulated macros and tutorials to explain how

is the financial analysis for the enterprise and the

to undertaken this type of analysis. For more

investments required to enable target communities

details about how to write out the financial

to enter into a new enterprise venture. The matrix

analysis, see Seven Steps of marketing, http://

in Table 14 provides a starting point for planning www.crsprogramquality.org/publications/tag/

financial requirements. The financial plan should

agriculture-manualsuser-guides

work out the costs for an individual farmer to

upgrade their activities to meet the requirements

8.7.3 Implementation plan

of the new business venture. These costs can then

In addition to preparing a business plan,

be transferred to the group of people involved at the

the team should work with the farmer group

production end of the process. There will be other

members to develop an implementation plan.

costs associated with training, links to traders,

The implementation plan details all of the

processing upgrades, meetings etc…

activities that need to undertaken by the farmers,

throughout the planning, production and sales

The financial analysis should include costs for

cycle. Developing the implementation plan,

each activity. The team should use basic financial

should involve all the farmer group members, and

analysis such as the gross margin mentioned in

may require additional meetings with traders.

section 5.4, to assess farm costs. The financial

Attention to detail is important and the results

Table 14. Financial requirements and sequencing

Intervention financing

Time frame

Short-term activities

Medium-term activities

Long-term activities

Local resources

• Sufficient funds to buy local

• Buy improved seed

• Upgrading traditional

seed farmers can afford $20

• Buy fertilizer

irrigation channels

investments per acre

Local savings

• None

• Set up savings and loan

clubs

Partner resources

• Access training in good

agricultural practices

external resources

• Require loans to buy fertilizer

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PART 2. Practical RMA Work

of this meeting may have important implications for the operational and financial plans. Each activity should be linked to a cost and date when the activity should be completed.

Table 15. Planning matrix to identify key opportunities and challenges Pre-production

All activities and finances required to obtain inputs such as market information, seeds, equipment purchase, irrigation, chemical purchase, fertilizer, land and soil preparation, bags, packaging, storage, factory site, utilities supply, etc., that are required prior to setting up the intervention and production of an identified product.

Production

All activities and finances required to transform inputs into the primary marketing product that will be sold to the client.

Post harvest

All activities and finances required to supply product to the client (customer) after harvesting or manufacture has taken place. This includes, handling, packaging, storage, finances related to storage, distribution, sales points

Marketing

All activities and finances required to ensure that product reaches identified clients, at the right time, place, price and quality. Also, to ensure that promotional activities are undertaken and that marketing strategy is followed within budget

Intervention organization

All management activities required to meet targets at each stage of the intervention plan, from pre-production, production, post-harvest and marketing. This element includes financial targets and making sure that goods, services, information and income proceed as planned and that intervention relationships at all stages are being managed effectively. This aspect also relates to monitoring intervention efficiency and identifying new intervention opportunities as they arise.

The specific activities can be broken down into matrices to indicate roles and responsibilities in the major intervention areas as shown in Tables 16 and 17.

Table 16. Planning matrix to identify key opportunities and challenges Farmer group

Trader/ entrepreneur Government

Retailer/ Processing

extension/NGO

factory

Pre-production

Old varieties lost

Mrs. Rose is interested

Farmers need access to

market share.

in buying new

new varieties.

New variety needed

persimmon in bulk.

arrangement of savings Supply of inputs.

scheme.

Production

New varieties needed.

Postharvest

Storage facilities

Bulk sales of 5 metric

Linking farmer groups

tons.

with contract buyer.

Need access to milling

machine.

Marketing

Target local market.

Sell to Mr. Rampresh in Experiment for next

Contract with farmer

Collective action.

first season.

season.

group for 50 tons of

produce to sell to Mr.

Kaijuka.

Business organization

How will farmers be

Prices agreed, payment What are the cost

Contracts in place.

paid?

structures.

benefits? Is this work

Bank accounts in place.

focused on direct

needs?

This process can also be applied to research opportunities if there are no readily available innovations to meet the critical points. At all times, the service providers should consider BDS, contractual arrangements and organizational needs within the selected market chains.

88

A Guide to Rapid Market Appraisal (RMA) for Agricultural Products Table 17. Actions to be taken at specific points in the market chain.

What

Who

When

Completed

Pre-production

Ensure seed potatoes are

NFG management

Jan

available for planting

Assign record keepers for costs NFG management

Jan

Ensure seed supplies are

FG management NARO

2 May

ready in the field for farmers

Prepare fields for planting

FG management, NGO

5 May and ongoing

Production

Stagger planting schedule

NFG members, NGO

10 Jul

within farmer group

Adjust planting spacing

NFG members, Africare, NARO 10 Jul

practices to produce larger

potatoes

Train group members on

NFG members, Africare, NARO 15 Sep–Nov

ware potato management

techniques

Link to research on seed of

NFG management, NARO

12 Sep and ongoing

identified varieties for Nando’s

Multiply desired varieties

NFG members

10 Oct

Identify and implement micro-

NFG management, Africare

2 Dec and ongoing

irrigation on uplands

Post-harvest

Purchase weighing scale

NFG management

3 Jul

Rent warehouse for storage

NFG management

25 Jul

Train group members on

NFG members, Africare

20 Jul and ongoing

sorting, grading, and packing

Marketing

Arrange transport and delivery John

first consignment to buyer

Review quality feedback from

FG John, NGO Paul

buyers

Supply off-size products and

John and Sydney

rejects to secondary markets

For the intervention planning process, the

are dynamic, and the pilot process provides an

team preparing the report should consider the

opportunity to test ideas on a small-scale.

following steps as an outline in the preparation of

information, Table 15.

Changing conditions or technology performance

may require that the business plan needs to

If the process aims to link farmers to markets, the

be adapted during the intervention phase. It is

planning process will include the following major

particularly important that the people involved in

areas of intervention:

the enterprise and the facilitators follow the market

closely so that producers maximize their gains.

8.8 Piloting and follow up

Progress should be closely monitored by both the

Having developed an intervention plan and obtained

investors and the intervention teams so that both

financial resources for implementation, the next

parties can evaluate whether the new approach in

stage is often to move to a pilot test. During the

fact yields the desired increase in market access

pilot stage, it is common to find that some of

and income.

the assumptions made in the plan have slightly

different outcomes than expected. This is because

A summary list of methods and tools used for

conditions change in the real world, markets

analysis to action is provided in Table 18.

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PART 2. Practical RMA Work

Table 18. Methods for Moving from Analysis to Action

Analytical Methods

Why used

Visioning

Process of community recognizing where they are now and

where they would like to be in 5 years, 3 years and 1 year.

Use this process to build a common plan of action, based on aspirations

Exchange visits

This method is used for one group of market chain actors to observe how others have upgraded elements of their business.

Market visits for deal making

This method provides an opportunity for farmers to visit

new markets and negotiate with traders for new business

opportunities

Learning Journeys revisited

This method enables several market chain actors to work

together on upgrading their activities within a chain but observing how more efficient chain actors have developed their business relations and integrated new innovations in a more systemic chain approach.

Identifying Chain champions

Basic tool that all RMA researchers should use in their work to identify people who are both influential and interested in upgrading chain activities.

Market linkage agents

Chain actors, often farmers or agents living in rural areas that take on a new task of strengthening longer term linkages between producers and buyers. Nascent BDS working on a

sales commission basis.

Developing an intervention plan

Planning process that enables market researchers to work with chain participants to integrate RMA findings into an investment

/ intervention plan

Piloting

Option for small-scale testing of a new business opportunity, prior to scaling up, provides a chance to test ideas in the real world with limited investment and enable investors to fine tune ideas before going commercial.

90

A Guide to Rapid Market Appraisal (RMA) for Agricultural Products step 9. sharIng results WIth FarMers and stakeholders

Learning objectives

plan. This presentation will lead to discussions

After this chapter, the participants are able to:

and initial reactions. The aim of this process

(i) organize and facilitate a workshop to discuss

is to socialize ideas and work towards greater

possible interventions, (ii) facilitate related

consensus about the recommendations. The

stakeholders to develop the action plan for

findings of the survey need to provide results that

the implementation of the interventions in the

can be easily understood by the main clients, and

participatory manner, (iii) use a series of methods

the presentation allows the team to assess if the

to move from analysis to action.

information meets their needs.

The process of moving from analysis to action

If you are presenting the findings to an NGO

involves two main steps,

supervisor committee, a local council committee

or another type financial investor, it is often best

(i) sharing information with the clients including

to share the report as a draft before the meeting.

farmer group members, and with interested

This will allow people to digest the information

stakeholders and

before the meeting. If there is a formal

(ii) using the results from the RMA with specific

presentation meeting, the results can be shared

groups as a means to progress the findings

at a stakeholders’ workshop so that a broader

into investments and on the ground activities.

view and reaction can be gained about the results

found and the recommended actions.

The first step is to socialize the information

gained through the RMA. This enables the RMA

9.1 Presentation of results to farmers

team to present the survey results to the clients.

Having completed the report, the RMA team

In many cases this will be a target set of farmer

should organize a meeting of the farmers, and

group(s), and other stakeholders in the marketing

present the main findings. This presentation

should highlight the most critical points about

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PART 2. Practical RMA Work

market opportunities and any major risks. The

9.2 Facilitating a general stakeholders’

presenter should make sure farmers understand

meeting

the main points and spend time on questions and

In some cases, the findings of the more detailed

answers.

market survey report may be presented to a

broader audience, such as a cooperative, or at a

The presentation of results should be supported

general stakeholders’ workshop. These meetings

by basic information written up with pictures on

may also include representatives from NGOs,

a flip chart paper, as shown in Figure 20. The

agricultural project staff, donors, government

type of information that farmers will want to know

agencies from research and trade, and private

include things like,

sector representatives from farmer associations,

• Products, with details such specific variety,

traders, retailers and processors. Essentially all

• Market, with details such market types and

the market chain actors and service providers

distance from production site

who have shown interest in being involved.

• Prices being offered at target market(s)

The purpose of this meeting is to:

• Costs of production

• Profit, what is the level of profit

• Share more detailed information – to encourage

• Production cycle, length of season

broad usage of the results and involve more

• Key risks

people in potential intervention planning

• Build support from outside – people who were

The written information should be complemented

not involved in the RMA get to know, and

with pictures so that illiterate farmers get a better

discuss openly about the findings as well as

understanding of the results.

recommended solutions

• Gain consensus – use the meeting to gain

wider agreement on key recommendations and

prioritized interventions

Figure 20. Presentation of RMA findings to farmers

92

A Guide to Rapid Market Appraisal (RMA) for Agricultural Products

• Guide priority interventions – work with

Participants who have shown an interest in being

members of this group to guide next steps in

involved in more detailed intervention planning

initiating new partnerships and developing

should be provided with details for subsequent

action plans

intervention meetings.

Preparation

Posting: Where possible, the report should also

The following things should be done:

be made available on a website so that others can

use the results in their market planning.

Timing and objectives: The best time to organize

the general stakeholders meeting is 1-2 weeks

9.3 Facilitating investor meetings

after completing the RMA survey, i.e., when the

In addition to sharing information with farmers

results are still fresh in the minds of people. It

and project participants, another set of meetings

is important to select an appropriate day and

can be organized that focus on attracting

time during the week so that most of people

additional investments. These presentations will

can participate. The invitation should be sent

not only present the basic market information,

several days or one week before the workshop.

but spend more time to outline possible financial

If the bias of the meeting is towards the private

scenarios and investment recommendations

sector, early meetings are often preferred, e.g.

from the RMA. If the team has developed more

invite participants for a breakfast meeting or

than one business option or scenario, separate

lunch meeting. If the focus of the meeting is

meetings may be required to discuss these

more towards public sector, then a mid-morning

options with relevant target groups.

meeting may be better attended.

As with the stakeholders’ meeting, the workshop

The duration of the workshop should not be more

should begin with the RMA team making a

than 1-2 hours. Aim for a 20 min presentation

presentation of the RMA results. However, in

followed by 20-30 minutes of questions and

this case, only the most relevant details from the

answers. In some cases, you may want detailed

survey should be presented to this more select

feedback from the group in which case allow

group of market chain actors that have shown

sufficient time for a presentation followed by a

interest in being involved in developing specific

short break, an hour for group work and then a

intervention plans.

final hour for presenting results and ideas back

to the plenary session. In some cases, group work

The objectives of the intervention workshop are:

may not be desirable and then the meeting will be

confined to a presentation followed by a question

• To share information – focusing on the

and answer session.

information most relevant to the proposed area

of intervention.

Content preparation: Select and present key

• To discuss and prioritize interventions and to

results by an appropriate means (flipchart or

develop an intervention plan of action.

PowerPoint). Use appropriate illustrations when

presenting the results. Emphasis should be given

Time and solution: The intervention meetings

to the key constraints and possible interventions

should be held after the general stakeholders

from the survey.

meeting, taking into consideration the same

issues as with the general stakeholders meeting

Follow up: Suggestions from this meeting

(appropriate day and time, advance notice, etc.)

should be captured by the RMA team and used

in revising the draft report. Once completed,

The duration of the workshop should be based

the report should then be circulated to key

on the product and scale of intervention. In

stakeholders, making sure to include all those

some cases the timeframe required will depend

who attended the presentation workshop.

upon the number of planned interventions that

need to be discussed. It is recommended that

the meeting should not be shorter than half a

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PART 2. Practical RMA Work

Figure 21. Presentation of the RMA findings to investors, policy makers and project managers day and no longer than two days. In some cases,

Organizing the workshop and prioritizing

the workshop can be divided into two sections

interventions

and organized over a two-week period with the

first workshop focusing on sharing information,

Example for meeting program

and the second on decision making. In this

(1) Introduction: The chairman should provide

way, participants have more time to “digest”

the opening talk, explaining the workshop

information and to consult with their colleagues

objectives and program.

or leaders regarding possible commitments.

(2) Participants’ introduction: Each member

Content preparation: Select and present key

should introduce him/herself and explain his/

results by an appropriate means (flipchart or

her expectation from the workshop.

PowerPoint). Use simple but clear illustrations

when presenting specific results. Emphasis

(3) Presentation: The RMA team should

should be given to the key constraints and

present the key findings and problems or

possible interventions from the survey.

constraints in the marketing system, with

clear illustrations of findings with results from

Chairing and facilitating the workshop: The

the survey. This presentation can be enhanced

chairmanship of the workshop should be given

by using simple visual tools such graphs, and

to a representative of the communities or local

tables. If a PowerPoint projector is available,

authorities to explain the objectives and program.

the team should make full use of pictures to

The RMA team should present the findings,

convey findings from the survey, indicating

with support from partner field agents or project

good and bad practices.

facilitators.

94

A Guide to Rapid Market Appraisal (RMA) for Agricultural Products It is important to give time for the participants

• What needs to be achieved?

to contribute information and comments to

• What needs to be done in order to achieve it?

support and enrich the findings by the RMA

• How long will it take?

team. This type of interaction helps to gain

• When will it finish?

buy-in from the meeting participants and

• What resources are required in terms of

involves them in the learning process. In many

finance, human resources, and materials?

cases, the experience of this group can provide

• Where will these resources come from?

new insight and information that may have

• Who will take the main responsibility?

been missed in the rapid survey.

• Who will implement each specific activity?

• Where will the activity be implemented?

(4) Prioritizing recommended interventions:

• Who will monitor progress?

The RMA team should present clear

recommendations for interventions and a

During this stage, it is important to identify

basic feasibility analysis for solutions to

and gain agreement on which institutions or

the participants to get their comments and

individuals should take the main responsibility

contributions.

for leadership and management in the

intervention stage. This will help to avoid any

Use methods such as the scoring matrix

potential conflicts that may emerge in the

shown in Table 4 to identify and prioritize

implementation phase.

interventions and actions.

It is advisable to establish or formalize

(5) Group discussion: Time should be allocated

new or existing community groups and/or

for group work so that participants can

organizations to implement any plans that are

discuss ideas and integrate their views into an

agreed. These organizations play important

action plan.

role in implementation of solutions and

actions later on.

The RMA team can also use methods such as

the “problem tree” to define key constraints

(7) Monitoring. A checklist is required to monitor and then use the “solution tree” to provide

progress and quality of outputs. This should

intervention steps to address identified

be a process that includes monitoring by

constraints or take advantage of a new market

both investors and an oversight team. The

opportunity. Time should be given to enable

monitoring should however, be commercially

ideas to be discussed fully by participants.

orientated, with emphasis place on sales,

income and innovation.

During each phase of the planning process,

care should be taken to record all the answers

To support the planning process, the facilitator

and key points made by the workshop

should use the tools and methods outlined in

participants.

the previous chapter.

When all participants have agreed upon

a course of action, it may be useful to

draft a memorandum of collaboration that

summarizes the key points discussed.

(6) decision making: The next step in the

planning workshop is to make decisions about

specific activities and responsibilities, i.e.,

who does what, where, when and by whom?

The following questions need to be addressed

(See also previous chapter for more detailed

planning matrix.)

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PART 2. Practical RMA Work

(8) Meeting outputs: The planning and

investment meetings should end with a draft

of commitments and conclusions. Members

from the group should present the basic

outline of the plan to the full group. The aim of

these presentations is to help all participants

to understand the main conclusions,

relationships and activities that will take place.

(9) Closing the workshop: The meeting should

ideally end with brief final comments and an

agreement to take the plan forward.

(10) Follow up: The project teams will

require additional meetings to finalize

implementation plans and to make any

financial agreements. Once this is done, the

groups should invest and put into practice

the ideas developed from the RMA.

96

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Assessment and Planning Together. 2007.

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97

annex 1

Criteria for

Product Selection

Criteria

Rationale

examples

1. Agro-climatic conditions

A region or country can only develop low-cost

River deltas areas have suitable conditions for rice

and good quality production of an agricultural

and fish production.

commodity, and therefore compete in the

Many upland areas are appropriate for the

market place, if natural conditions (rainfall

production of tree crops and non-timber forest

patterns, underground water, soil quality,

products. In many of these areas, the availability

temperature levels and distribution throughout of grass may enable the development of livestock.

the year) are suited to the production of that

commodity.

2. Market Size

Large markets have greater capacity to absorb

Local markets in rural areas are generally small.

additional supplies than small markets. It

Urban markets and export markets have much

is critical to avoid a situation where farmers

greater absorption capacity.

are supported to produce and sell a certain

commodity, but end up facing low and

The market for most traditional export

declining prices because the market is too

commodities is saturated. For example, there is

small and therefore unable to absorb new

excessive supply and very intense competition in

supplies.

the world market for coffee, tea, and cotton.

However, market size alone is not sufficient to

ensure absorption capacity. Some markets may

be large in size but already oversupplied.

3. Market growth

Growing markets have much greater potential

Global demand for staples (e.g. rice) and

for absorbing additional supplies and

traditional export commodities (e.g. cotton, coffee

generating remunerative opportunities than

and tea) is relatively stagnant.

stagnant markets. Products sold in medium

to high growth markets therefore merit special Export markets for organic and “ethical” products, consideration.

fresh vegetables and fruits, flowers, cashew,

spices, essential oils, and aromatic and medicinal

A product for which demand is expanding at an plants are expanding rapidly.

annual rate of 5 percent or more can be listed

in the high-growth category. Products enjoying Domestic markets for milk, fish, meat, fruit and a growth rate of 3 to 5 percent per annum

vegetables also enjoy high growth rates.

belong to an intermediate category, while those

for which demand is growing by less than 3

percent belong to the low-growth category.

4. Potential for targeting

Products sold in high-value markets should be Examples of high-value markets include organic high-value market

considered for possible selection. Even when

and ethical trade products, medicinal herbs,

opportunities

the overall demand for the product is stagnant, spices, and exotic fruits and vegetables.

there may be remunerative and growing

opportunities in certain market segments, such

as the organic and ethical trade niches.

However, some high-value markets may be

small and have very high entry barriers,

including the need to grow the right varieties,

meet stringent quality specifications and

standards, certify the product, and trace its

origin and source down the market chain.

5. Potential for import-

Some products may enjoy good market

Off-season opportunities are more obvious in the

substitution or off-season

prospects, even when overall demand

case of seasonal and perishable produce, provided

marketing

is stagnant. For example, there may be

the required production technologies (e.g. seed)

opportunities for substituting imports with

are available.

locally grown produce. Likewise, there may

be remunerative opportunities for off-season

production and marketing.

98

Criteria

Rationale

examples

6. Current importance to

Products that play an important role in the

Fish and seafood products play a critical role in

rural livelihoods

livelihoods of the rural population merit special the livelihoods of coastal areas.

consideration. Improvements in the production

and marketing of these commodities can

Rice is of critical importance to the population of

generate significant employment and income

Vietnam as a whole, including both producers and

benefits.

consumers.

Perishable products enjoying strong demand in

urban areas (such as meat, milk, and vegetables)

are often very important to the economy of peri-

urban areas.

NTFPs, cattle, poultry, tree crops, cassava, and

maize (amongst many other products) can be very

important to the livelihoods of farming households

in upland areas.

7. Potential for involving

Generally, the stronger the participation of

Examples of agricultural commodities where there

the poor

the poor in the production and marketing of a

is wide participation of the poor include rice,

commodity, the greater its poverty reduction

cassava, maize, groundnuts, poultry, handicrafts,

potential.

and NTFPs.

The poor are more likely to be involved in

the production and marketing of agricultural

commodities that have relatively limited

investment and input needs, require traditional

skills, can be produced on marginal land, are

important for household consumption, and/or

have low production and marketing risks.

It is important to note, however, that some

agricultural commodities that are not grown by

poor farming households can still contribute

significantly to poverty reduction through wage

employment generation.

8. Potential for involving

The potential for involving women in

Women are often more involved in the production

women

production and marketing can be an important and marketing of food crops than cash crops.

criterion for product selection, especially when Their role in cash cropping will depend very much the agencies involved in the RMA have clear

on the local cultural and socio-economic context.

gender equity concerns.

The current and potential future importance

of certain products to the livelihoods of women

will depend on the traditional division of labor

within the household and local economy.

9. Potential for

Agro-climatic conditions, availability of labor

diversification

and skills, access to inputs, and links to

potential markets could enable adoption

of new products with potential to generate

employment and income and contribute to

poverty reduction.

However, diversification into new commodities

is generally riskier and more challenging

than the development of existing production,

especially as far as the poor are concerned.

10. Potential for value

In some cases, an agricultural commodity

Milk production, cassava starch or coffee

addition

is produced locally but processed in other

processing, and the development of local honey

regions. There could be potential for income

brands are all examples of activities that add

generation and poverty reduction through the

value to local production.

development of local processing.

11. Potential contribution

Sustainability and environmental conservation Live barriers of forage grasses may be to the conservation of

issues should also be taken into consideration. economically feasible due to strong demand for natural resources

Products directly or indirectly related to

livestock and animal products.

conservation may have good market potential

and economic feasibility.

99

annex 2

List of Possible Issues for

Investigation in an RMA

Areas for

Issues

Reasons for investigating

investigation

1.Commodity

a. Grades and end uses

i. Commodity characteristics influence the performance

characteristics

b. Degree of bulkiness, perishability

of the whole marketing system, including the type

c. Handling and storage requirements

of marketing functions performed, how they are

d. Degree/type of processing

performed, and the relative cost at which they are

e. Type and magnitude of post-harvest losses

performed.

f. Packaging methods and materials

ii. The nature of the production process influences the

timing and magnitude of producer sales and marketed

flows.

iii. Post-harvest losses are high in many countries.

Identification of the causes and means of reducing

these losses can expand food availability and improve

the incomes of all participants in the marketing

chain.

2. Consumption a. Seasonal and long-term trends in domestic and i. Demand drives (or pulls) production, processing and

patterns

export markets.

marketing.

b. Consumption patterns for different socio-economic ii. The strength and seasonality of demand affect and ethnic groups.

production and storage incentives, as well as the

c. Future market prospects.

direction and size of product flows.

iii. Long-term consumption trends and opportunities

affect investment decisions by all participants in the

marketing system.

3. Supply

a. Production by year and by region for recent years,

i. Production levels and variability affect prices and risk situation

noting trends and variability.

levels.

b. Flows from major supply areas to major markets,

ii. Shifts in supply over time may indicate response

including exports and imports.

to policies, technological change, the institutional

environment, and so on.

4. Prices

a. Long-term trends in real prices at the farm-gate,

i. Prices provide a measure of incentives (profitability) wholesale and retail levels.

facing participants in the marketing system.

b. Long-term trends in real export prices.

ii. Changing input and output prices may indicate shifts c. Seasonal and cyclical trends in prices.

in production and marketing incentives.

d. Changes over time in input and output prices.

iii. The domestic pricing structure relative to

international prices provides insight into regional and

national comparative advantage.

5. Organization a. Marketing channels and stages.

i. The structure of the marketing system influences

of marketing

b. Important assembly, wholesale and retail markets.

the conduct of participants, which in turn affects

systems

c. Types, numbers, and geographical distribution of

performance.

firms at key stages in the marketing system.

ii. Analysts need to examine the benefits and costs of

d. Existence and importance of alternative

alternative institutional arrangements.

institutional arrangements, such as contracts,

vertical integration, direct marketing, cooperatives

or associations, and open market sales.

6. Operation

a. Practices and strategies of market participants

i. The behavior of market participants affects the

of marketing

regarding input purchases, and product sales,

performance of the marketing system.

systems

processing and storage.

ii. Access to information affects the ability of differet b. Vertical coordination mechanisms: sale

market participants to respond to changing market

arrangements, risk sharing, information

conditions.

dissemination.

iii. Better vertical coordination can improve the matching c. Sources, uses and distribution of production and

of supply and demand and reduce risk.

marketing information.

d. Responsiveness of market participants to shifting

supply and demand and policy changes.

e. Evidence of monopolistic or oligopolistic situations.

100

Areas for

Issues

Reasons for investigating

investigation

7. Marketing

a. Transport infrastructure (roads, ports, airports,

i. In many countries, infrastructural constraints

infrastructure

waterways, railway).

constitute severe bottlenecks to marketing.

b. Market places.

ii. Excess, underutilized capacity suggests uneconomic

c. Storage and processing facilities.

investments and deficient allocation of resources.

d. Communications.

e. Electricity.

f. Water supply.

g. Infrastructure adequacy and bottlenecks (evidence

of excess or unutilized capacity).

8. Government, a. Regulations: rules, input and product regulations, i. The regulatory environment affects the incentives marketing

laws affecting marketing and trading, property

facing market participants and their behavior.

institutions and

rights.

ii. Public marketing institutions influence the

policies

b. Public marketing institutions.

organization, operation and performance of marketing

c. Macroeconomic policies: price policies, exchange

systems.

rate policies, labor policies, fiscal and monetary

iii. Macroeconomic policies condition and shape the

policies.

envirnment in which market participants make

d. Banking and credit policies.

production and marketing decisions.

iv. Banking and credit policies determine who has access to formal credit.

9. International a. Commodity exports and world market situation.

i. International trade affects production and marketing

trade and

b. Imports of the commodity or substitutes, and their

incentives and opportunities, consumption patterns

commodity

impact on production, markets and prices.

and preferences, and the behavior of market

competitiveness c. Trends in exports and imports.

participants.

d. Likely changes in exports and imports, and

ii. International market conditions influence a country’s emerging market opportunities or dependencies.

comparative advantage in production and export of

e. Competitiveness of exports in particular foreign

agricultural commodities.

markets.

101

annex 3

Advantages and disadvantages of

different Key Informants

Key informant

Advantages

disadvantages

1. Farmers

a. Knowledge of input sources, production practices, i. Subsistence-oriented farmers may have limited production technologies, prices and marketed

knowledge of marketing opportunities.

surplus in their own area.

b. Knowledge of production and marketing

constraints faced by producers in a given area.

2. Collectors

a. Detailed knowledge of exchange arrangements with i. Knowledge rarely extends beyond relatively small producers and wholesalers.

geographical areas.

b. Knowledge of marketing opportunities, production,

stocks, and prices in particular areas.

3. Wholesalers

a. Broad perspective of marketing systems.

i. Extremely busy and often difficult to interview for more b. Knowledge of production, stocks, product flows,

than a short period.

prices, and demand in different rural and urban

ii. May be uncooperative informants for fear that the

areas.

information provided may be disclosed to government

c. Good understanding of marketing constraints.

officials or competitors.

4. Institutional

a. Often major buyers of high-value commodities,

i. As buyers of final products, they may have limited

buyers

such as fruit, vegetables, and livestock products.

knowledge of the upstream marketing system.

(supermarket

b. May have negotiated contractual arrangements

ii. Often constitute a small proportion of final demand

chains, schools,

with large wholesalers, processors or importers.

for staple commodities.

hospitals,

military)

5. Retailers

a. Have better knowledge of consumer wants and

i. In many countries small retailers are relatively

needs than most other market participants

homogeneous, conservative and lack a perspective of

b. Knowledge of wholesaler-retailer exchange

the whole marketing system.

arrangements.

6. Importers/

a. Knowledge of magnitude, timing and prices of

i. May know little about how commodities are

exporters

imports and exports.

assembled for export, or how they are distributed after

b. Detailed understanding of import and export

importation.

practices, procedures and regulations.

ii. May be unwilling to report export/import volumes and c. Some knowledge of wholesale and retail

prices if involved in smuggling and under- or over-

distribution systems.

invoicing.

d. Good understanding of the potential and

iii. May be unwilling to share business practices if

constraints for success in export markets.

informal payments were made to obtain export or

import rights.

7. Managers

a. Have a broad perspective of marketing systems.

i. May be uncooperative respondents due to fear that the of processing

b. Knowledge of production and prices in selected

information provided might be disclosed to government

firms

rural areas, and demand for processed products in

officials or competitors.

urban markets.

ii. Will often under-report production in order to evade c. Detailed knowledge of marketing arrangements

taxation.

and risk-sharing mechanisms with producers,

producer groups, and buyers of processed

commodities.

8. Transporters

a. Knowledge of direction and magnitude of product

i. Do not actually participate in trade, so may lack

flows.

knowledge of trading practices and commodity prices.

b. Familiar with the structure of commodity trade.

Can often identify large-volume traders and

processors.

c. Can provide transport cost data, which are often a

significant proportion of total marketing costs.

102

Key informant

Advantages

disadvantages

9. Input

a. Knowledge of input demand in different regions.

i. Suppliers who adulterate inputs (e.g. fertilizer) may be producers and

b. Knowledge of input supply, flows and prices at the

uncooperative informants.

suppliers

wholesale and retail level.

ii. Lack knowledge about marketing systems for

agricultural commodities.

10. Extension

a. Are familiar with farmers’ production and

i. Limited knowledge of marketing systems beyond the

officers

marketing practices and strategies.

local area.

ii. May be a biased source of information regarding

b. May have good information about marketing

production practices and technology utilization.

arrangements between producers and input

iii. May have limited knowledge due to poor pay

suppliers, and between producers and buyers.

conditions and low mobility within their area of

c. Detailed knowledge of local farms, including size,

operation.

distribution, production technologies adopted,

food security situation, and range of marketed

products.

d. May have good understanding of the production

and marketing constraints affecting farmers in the

local area.

11. Government a. Good knowledge of the policy and regulatory i. Often lack detailed knowledge of agricultural

officers

framework.

commodity sub-sectors.

b. Can provide an understanding of government

ii. May hold pre-conceived ideas of the constraints

strategies and priorities for the development of

affecting the sub-sector and the solutions required to

specific commodity sub-sectors.

address them.

c. May have an historical perspective of the

commodity sub-sector.

12. Bank

Have detailed knowledge of the factors constraining

i. May not have much contact with, and understanding

officers

access to formal credit by different market

of, most participants in the market chain.

participants.

13. Academics

a. Knowledge of literature and secondary data

May have a narrow perspective and biased perceptions

and Researchers

sources, and their reliability.

linked to their discipline.

b. May have a good understanding of marketing

systems and conceptual issues.

May lack detailed knowledge of the business objectives,

practices, and problems of participants at different

stages of the marketing system.

103

annex 4

examples of Question Checklists for

different Actors and Service Providers

Input Traders

1. Background

a. Location

information

b. Years in operation

c. Type of inputs and other products traded

2. Procurement

a. Volumes traded per type of input (month, year)

and sale of inputs b. Seasonality in input sales

c. Suppliers of inputs and their location

d. Buyers of inputs and their location

e. Current wholesale and retail prices for different inputs 3. Trends

a. Trends in input sales (say over the past 3 years) and reasons behind these trends b. Perception of future input demand trends (say over the next 3 years) and key driving factors c. Trends in input prices (say over the past 3 years) and reasons behind these trends d. Perception of future price trends (say over the next 3 years) and key factors that are likely to drive these trends

4. Transactions

a. Buying arrangements/conditions: e.g. sales on credit, prompt cash payment, etc b. Selling arrangements/conditions: e.g. sales on credit, prompt cash payment, payment in kind, etc 5. Policies and

a. Key policies and regulations, and their influence on the development of input trading regulations

6. Constraints

a. Key constraints to the development of the input trading business and opportunities b. Solutions to these problems

c. Key opportunities to develop the wholesale business

d. Factors that could enable this development

e. Recommendations for improving access to inputs by farmers 104

Farmers

1. Production

a. Total cultivated areas across different farming household types b. Cultivated areas for the commodity studied per type of farming household c. Production technologies and practices (e.g. input use) across different types of farming household d. Typical production volumes across different types of farming household e. Seasonality in production

f. Gender division of labor in production

2. Post-harvest

a. Post-harvest practices and technologies at farm level (drying, cleaning, sorting, storage, etc) and marketing

b. Share of production typically sold in the market across different types of farming household c. Seasonality in marketing and underlying reasons

d. Buyers (neighbors, collectors, assembly traders, wholesalers, processors, retailers, etc) and their relative importance

e. Places of sale (farm-gate, village market, commune market, district market) and their relative importance f. Advantages and disadvantages of different markets and buyers g. Gender division of labor in post-harvest and marketing activities 3. Production and a. Production trends (say over the past 3 years) and key factors behind these trends.

demand trends

b. Demand trends (say over the past 3 years) and key factors behind these trends.

c. Major changes in demand (e.g. with regards to variety, quality, etc) d. Expectations regarding future production and demand trends (say over the next 3 years 4. Prices

a. Current selling prices at different locations (farm-gate, village markets, etc) b. Influence of produce quality (variety, moisture content, cleanliness, grades, etc) on prices c. Degree of price volatility within seasons

d. Degree of price variations across seasons

e. Price trends (say over the past 3 years) and key factors behind price trends f. Perception of future price trends (say over the next 3 years) and key driving factors 5. Transactions

a. Selling arrangements (cash or barter basis, prompt or delayed payment, etc) b. Bargaining position vis-à-vis buyers

c. Horizontal coordination/cooperation between producers (individual versus group sales) d. Buyer requirements (product quality, regularity of supply, volumes, place of delivery, etc) e. Embedded service provision by buyers (market information, credit, inputs, technical assistance, contracts, etc)

6. Access to

a. Input supply (sources, quality and affordability of inputs, problems, etc) services

b. Market information (sources, reliability, problems, etc) c. Technical advice on production, post-harvest and marketing (sources, reliability, problems, etc) d. Processing (availability, problems, etc)

e. Storage (availability, cost, problems, etc)

f. Transport (availability, cost, problems, etc)

g. Finance (sources, cost, problems, etc)

h. Other services

7. Policies and

a. Perception of key policies and regulations, and their impact on production and marketing of the commodity regulations

under study.

8. Constraints

a. Key constraints to production of the commodity under study.

and opportunities b. Key constraints to marketing of the commodity under study.

c. Key opportunities in the production and marketing of the commodity under study.

d. Proposed solutions to address constraints and enable access to opportunities.

105

Wholesalers

1. Background

a. Location

information

b. Years in operation

c. Number and type of commodities traded

d. Number of employees

2. Sources of

a. Geographical origin of produce purchased.

produce

b. Relative importance (in terms of volumes) of different supplying areas by season.

c. Differences between supplying regions with regards to quality of produce.

d. Major suppliers (individual producers, farmer groups or cooperatives, collectors, assembly traders, other wholesalers, etc).

e. Relative importance of different suppliers according to volumes and regularity of supply.

f. Differences between suppliers with regards to quality.

g. Advantages and disadvantages of different supplying areas and suppliers.

3. Destination of

a. Destination markets for the produce.

produce

b. Relative importance (in terms of volume) of different destination markets.

c. Major buyers (other wholesalers, retailers, processors, supermarkets, exporters, etc).

d. Relative importance of major buyers according to volumes purchased and regularity of purchase.

e. Product requirements according to type of buyer.

f. Advantages and disadvantages of different markets and buyers.

4. Demand and

a. Production and supply trends (say over the past 3 years) and key factors behind these trends.

supply trends

b. Differences between different areas with regards to production trends.

c. Demand trends (say over the past 3 years) and key factors behind these trends.

d. Differences between different markets (urban/rural, regional/national/export) with regards to demand trends.

e. Expectations regarding future supply and demand trends (say over the next 3 years).

5. Prices

a. Current wholesale purchasing prices.

b. Current wholesale selling prices.

c. Degree of price volatility within the season.

d. Influence of produce quality (variety, moisture content, cleanliness, grades, etc) on prices.

e. Seasonal pricing patterns and factors behind seasonality.

f. Price trends (say over the past 3 years) and key factors behind price trends.

g. Perception of future price trends (say over the next 3 years) and key driving factors.

6. Transactions

a. Volumes purchased (per week, month, season, and year).

b. Value added to produce (cleaning, drying, sorting, grading, packaging, etc).

c. Places of purchase (farm, assembly market, warehouse, etc).

d. Places of sale (warehouse, wholesale markets, ex-factory, etc).

e. Use of buying agents (other traders, such as collectors and assembly traders).

f. Payment procedures, both when purchasing and selling (cash or barter basis, prompt or delayed payment, etc).

g. Other terms and condition for purchases and sales.

7. Storage

a. Type of storage facilities.

b. Storage capacity.

c. Storage management practices.

d. Normal storage period.

e. Reasons for storing produce.

f. Profitability of storage activities.

g. Ownership of storage facilities (owned or rented).

106

Wholesalers

8. Support

a. Transport (means of transport used and capacity; ownership of transport vehicles; availability and cost of services

rented transport; etc).

b. Market information (sources; reliability; problems; etc) c. Credit (sources and their relative importance; frequency; cost; problems; etc) d. Other support services.

9. Support

a. Quality of road infrastructure.

infrastructure

b. Quality of market infrastructure.

c. Quality and cost of power supply and other utilities.

d. Assessment of other key support infrastructure.

10. Policies and

a. Key policies and regulations (foreign exchange, labor, land, credit, taxation, registration, fees on produce regulations

flow, imports and exports, etc).

b. Impact of policies and regulations on the marketing system.

c. Necessary policy and regulatory changes.

11. Marketing

a. Main marketing costs (labor, transport, credit, communications, product losses, etc).

costs and risks

b. Marketing costs per unit of produce (say 100 kilograms): collection, handling, transport, storage, credit, packaging, taxes, etc.

c. Main marketing risks (product losses, availability and quality of produce, contract default, price fluctuations, etc).

12. Key

a. Key constraints to the development of the wholesale business.

constraints and

b. Solutions to these problems.

opportunities

c. Key opportunities to develop the wholesale business.

d. Factors that could enable access to opportunities.

107

Agro-Processors

1. Background

a. Location.

information

b. Years in operation.

2. Scale of

a. Type of processing technology.

operation

b. Processing capacity (per shift, numbers of shifts).

c. Volumes processed (per month, season, annum).

d. Number of workers (permanent, seasonal, casual, and part-time).

3. Sources of

a. Geographical origin of produce purchased.

produce

b. Relative importance (in terms of volumes) of different supplying areas by season.

c. Differences between supplying regions with regards to quality of produce.

d. Major suppliers (individual producers, farmer groups or cooperatives, collectors, assembly traders, other wholesalers, etc).

e. Relative importance of different suppliers according to volumes and regularity of supply.

f. Differences between suppliers with regards to quality.

g. Advantages and disadvantages of different supplying areas and suppliers.

4. Destination

a. Destination markets.

of processed

b. Relative importance (in terms of volume) of different destination markets.

produce

c. Major buyers (wholesalers, small retailers, supermarkets, exporters, etc).

d. Relative importance of major buyers according to volumes purchased and regularity of purchase.

e. Product requirements according to type of buyer.

f. Advantages and disadvantages of different markets and buyers.

5. Demand and a. Trends in raw material supply (say over the past 3 years) and key factors behind these trends.

supply trends

b. Differences between supplying areas with regards to production trends.

c.Demand trends for the processed product (say over the past 3 years) and key factors behind these trends.

d. Differences between different markets (urban/rural, regional/national/export) with regards to demand trends.

e. Expectations regarding future supply and demand trends (say over the next 3 years).

6. Prices

a. Current prices for purchased (unprocessed) produce.

b. Current prices for processed product.

c. Degree of price volatility for unprocessed and processed produce within the season.

d. Influence of quality (variety, moisture content, cleanliness, grades, etc) on the price of purchased (unprocessed) produce.

e. Influence of quality on the price of processed produce f. Seasonal pricing patterns and factors behind seasonality for unprocessed and processed produce.

g. Past price trends (say over the past 3 or 5 years) for unprocessed and processed produce, and key factors behind these trends.

h. Perception of future price trends (say over the next 3 to 5 years) for unprocessed and processed produce, and key driving factors.

7. Transactions

a. Volumes of produce purchased (per week, month, season, and year).

b. Volumes of processed product sold (per month, season, and year).

c. Places of purchase (farm, assembly market, wholesale market, factory, etc).

d. Places of sale.

e. Use of buying agents.

f. Use of selling agents.

g. Payment procedures, both when purchasing and selling (prompt or delayed payment, etc).

h. Other terms and condition for purchases and sales.

8. Storage

a. Type of storage facilities.

b. Storage capacity.

c. Storage management practices.

d. Volumes stored.

e. Normal storage period.

9. Support

a. Transport (means of transport used and capacity; ownership of vehicles; availability and cost of rented services

transport; etc).

b. Technology (access to and cost of equipment, spare parts, maintenance and repair services, etc).

c. Utilities (quality and cost of power and water supply).

d. Consultancy services (access and quality).

e. Market information (sources; reliability; problems; etc) f. Credit (sources and their relative importance; frequency; cost; other conditions; problems; etc) g. Other support services.

108

Agro-Processors

10. Policies and a. Key policies and regulations (foreign exchange, labor, land, credit, taxation, registration, fees on produce flow, regulations

imports and exports, etc).

b. Impact of policies and regulations on the whole marketing system.

c. Necessary policy and regulatory changes.

11. Processing

a. Main processing costs (produce, labor, transport, credit, energy, water, repairs, communications, product costs

losses, taxes, etc).

b. Processing costs per unit of output.

12. Constraints a. Key constraints to the development of the processing activity.

and

b. Solutions to these problems.

opportunities

c. Key business opportunities.

d. Factors that could enable access to these opportunities.

109

annex 5

Key Points to be evaluated

in a Market Chain Study

Dimensions

• Map of area, market chain, channel, product flows in selected study of the market

• Rapid Overview of the Economic Status of the Countries

study

• Macro-Economic Developments

• Trade and Competitiveness: Recent Reforms, Performance and Market Access Product Case

• Production zones

Studies and

• Importance of the product to earnings, rural livelihoods, poverty alleviation and economic growth Analyses:

• Principle production and marketing constraints limiting the product export expansion

• Medium and long term market outlooks across the product, for national, regional and export trade Clients for

• Exporter, commercial buyers, processors, farmer association, service provide study

Demand

• Growth categories (exponential growth, steadily increasing demand, stagnant) analysis

• Market size (estimate volume of the market, key segments products, segments buyers)

• Market opportunities identified by market type, (local, district, national, regional, export)

• Price trends over past 5-10 years

• Volume trends over similar period

• Principal buyers of this product, competitors and the advantages they enjoy

• Market barriers

• Market requirements in this product area what customers / importers will pay for

• Quality and health standards that have to be met

• Processing and packaging requirements

• Volume and delivery time requirements

• Product differentiation needed to succeed.

Supply analysis • Analyze the market chain including:-

• Production costs, and margins down the market chain and assess possible changes that would overcome any bottlenecks within the system

• Principle constraints to production of this commodity

• Costs of production

• Finance / credit

• Quality control measures

Major

• Organization

challenges to

• Technology

market entry

• Services

within markets • Policy

identified

Institutional

• Marketing barriers (local, national and regional)

and market

• Finance

barriers

• Price information

• Grades and standards, health certifications

• Market linkages

Institutional

• Private sector organization / institutional set-up along the production / marketing chain and policy

• Government barriers

constraints

• Trade barriers

Regional

• Highlight most competitive areas and products

comparison of

• Provide an analysis of areas with comparative advantage, that is being exploited and other areas that may have comparative

comparative advantage but is not able to realize this potential

/ competitive

• Given that future R&D investment is limited, provide suggestions of where specific types of investment would advantages

provide most economic gain.

The way

• Development strategies for the sub-sector on national and regional advantage basis:-

forward:

• Growth markets and product areas

Production and • Priority requirements (changes in production, processing and quality control and enhancement, product market growth

differentiation, technology and investment.

strategies for

• Respective roles and actions of private and public sectors the product

• Short term and longer term actions needed (balancing poverty reduction and growth objectives) market chain

110

Priority

• Areas where government / donors will have greatest impact growth from this market chain Government

• Infrastructure development

intervention

• Improved planting material / product improvement

to support the

• Processing and processing efficiency

production

• Market information

and export

• Attracting foreign investment and technology

development

• Policy, legislative and institutional support

strategy

• Indicative costing / timing / phasing/ prioritization of these proposals

• Areas where donor assistance might be best applied.

Conclusions

• Major finding, recommendations and steps in interventions for future R&D / commercial applications 111

annex 6

example of

RMA Report Structure

Acknowledgments

In the acknowledgements, the authors of the report credit the contribution that different people have made to the study, for example by funding it or by providing documentation, information, and comments.

Special thanks are due to people who have made a particularly significant contribution to the success of the appraisal.

Table of Contents

The Table of Contents lists the different sections and chapters of the report in sequential form, including the annexes, and the starting page for each section/chapter.

List of Tables

List of the different tables presented in the report and the respective pages.

List of Figures

List of the different figures presented in the report and the respective pages.

List of diagrams

List of the different diagrams presented in the report and the respective pages.

Acronyms

Abbreviations or acronyms are should be listed for easy reference.

Glossary

Several technical terms are used in RMA reports. It is useful to include a glossary with a brief explanation of key terms and expressions to enhance understanding of the text.

executive Summary The summary of findings is one of the most important sections of a report. Many readers face significant time constraints and therefore will only read the Executive Summary. This section should provide a clear summary of the report. While a brief description of the RMA purposes and the methods used should be provided, the emphasis should lie in the key findings, conclusions and recommendations.

Introduction

The introduction provides background information regarding the RMA. It describes the context of the study, including funding and implementing agencies, the team involved, and the duration of the exercise.

In addition, the introductory section should include a problem statement and outline the purpose and objectives of the RMA. The structure of the report is also summarized in the introduction.

Methodology

This chapter explains the RMA methodology, with a particular emphasis on the methods or tools used for data collection and analysis. The chapter should describe the sources of secondary and primary data and information; the methods and procedures for selecting markets and key informants (sampling); the number and type of markets and facilities visited; and the number and type of interviews conducted.

Middle sections

Analysis and findings

Conclusions

The key findings of the RMA and their implications are summarized in this chapter. It is important that these conclusions are based on hard evidence gathered during the appraisal, rather than on the subjective opinions of team members or key informants.

Recommendations

These should be presented to meet the needs of clearly identified clients of the rapid market survey. If the study is being done for an entrepreneur, the study should provide clear evidence of opportunities and challenges for his or her business investment options. Similarly, if the target beneficiaries are farmers, the market opportunities should be presented in a way that makes sense to their investment bracket. Typically recommendations are made, in three areas, (i) market opportunities (given by market type, local, national, regional, export, (ii) technical, and policy related. The recommendations should be concise and easily interpreted.

References

Secondary information sources should be listed in a references’ section. These sources may include studies, reports, data time series, and web pages. Sources should be listed by author or organization, and in alphabetical order.

Annexes

The number of annexes will vary according to the information that the report authors wish to make available. RMA reports normally include one annex listing the people interviewed and another outlining the fieldwork schedule. Additional annexes may contain interview checklists and questionnaires, statistical data, figures, graphs, copies of legislation, case studies, photos, and other material.

112

annex 7

Basic

Business Plan

Subsections

Related questions

Project Name:

Name of the agro-enterprise

team and goal of the business

1. Introduction

Address:

What is your contact address

Phone number:

What is your phone number

Vision or Goal:

What is the Vision or objective of the enterprise? With SALES

TARGETS

Describe business:

How long has this group been in existence? Is the group

registered?

2. Business Organization

Name key positions in

Chair, treasurer, secretary, lead farmer, market agent, other business:

Number of members by

Number of men and number of women

gender:

Current savings/ bank

Latest financial statement, savings levels,

statement:

Product Name:

What product will you sell? Drop Down

3. Product

Existing / New:

Is this an existing product or new product for your group?

Benefits to buyer:

Why is the buyer interested in product? Is it cheaper, better quality, local, other benefit or advantage?

Define Target Market:

Define target market (local, district, national, supermarket) 4. Marketing strategy

Location:

How far is this market from the production site (km)

Introduction

Market type:

Is this an existing market or a new market for your group?

Describe Customers

Type of trader, or processor, who is your buyer?

Product

Describe key product

What are the attributes of the product (variety, quality, attributes:

packaging, etc.)?

Price

Describe price setting:

How will the price be established? Offer price, contract price, Place

How will you get product to

Sales team, street vending, carry, pick up, cycle, lorry, donkey market:

Promotion

How will you promote your

Voice, phone, through trader, person to person contacts, other product:

Identify key risks to plan:

Indicate key challenges to the action plan? And how can they be 5. Market RISKS

overcome?

What risk mitigation plans:

Are there ways of minimizing the risks?

Describe you business flow:

Describe the stepwise activities from production to sale

Pre-production activities:

Pre-production: input procurement, nursery,

Production activities:

Production activities: plowing, sowing, weeding,

6. Business Operation Plan

Post harvest activities:

Postharvest activities: drying, sorting storage etc.

Marketing activities:

Marketing activities: buyer linkage, negotiation, transport Essential partners:

Partners may include extension, input supplier, transporter What assets are essential to

Key assets include land, labor, staff, crops, processing methods, plan:

Total material costs

Calculate costs / season / year

7. Production Costs

Total Labor costs

Calculate costs / season / year

113

Subsections

Related questions

Project sales volumes

Planned Sales volumes / Give clear units of sale bag – 100kg 8. Income Streams

Project sales price

Selling price of product Give dollar conversion, 250 shillings /

bag $1 =

Estimate season income:

Estimate seasonal sales

9. Profit and Loss Analysis

Gross Margin:

Calculate Gross Margin and Net Income

Fine tuning

Strategies to increase profit:

What changes can be made to increase Gross Margin and Net Income?

Start up capital requirements:

How much capital do you need to start the business?

Capital funds available:

How much capital do you and your members/partners have?

10. Financial requirements

Capital funds required:

How much capital are you lacking?

Method to raise funds:

How can raise the funds that you are lacking?

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Table of Contents

book attempts to contextualize the methods