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Rural Poverty Report 2011
stocks and price management mechanisms were dismantled, leading to increased
short-term variability in commodity prices. 154 For major food staples too, the role of
the state in marketing and price setting was rolled back – although there are many
notable exceptions, especially in Asia. Marketing was opened to the private sector,
and barriers on imports of foodstuffs were reduced. Many smallholder farmers
benefited from these changes; however, many others – especially those in the more
remote, poorly connected areas – lost reliable markets and incomes and faced a
worsened risk environment.
In parallel with the dismantling of state-centred marketing governance systems, a
whole set of new factors have reshaped agricultural markets in developing countries
in recent years. At the national level, these include urbanization and population
growth, growing per capita incomes, changes in consumer preferences, the
modernization of food processing and retailing, and improvements in transport and
communications infrastructure. 155 At the global level, developing countries have
become increasingly attractive sources of markets and agricultural supply for large,
multinational agro-food companies.
The trade environment has also changed – partly through slow, incremental changes
in the global trade regime, in public and private quality standards, and in bilateral and
regional trade agreements, and partly through the increasing importance of fast-growing,
non-OECD economies as importers and exporters of agricultural products. Particularly
in Asia and the Pacific, there has been substantial growth in agricultural trade. By
2007/2008, Asian agricultural imports made up a quarter of global trade, mostly for
cereals, oil crops, meat and horticultural products. 156 India and China have dominated
these trade flows, both as exporters and as importers. As a result of all these factors,
agricultural produce markets are increasingly differentiated in many countries. They
range from, at one extreme, village markets selling locally produced, locally consumed
products to, at the other extreme, global markets selling packaged, off-season vegetables.
There are both traditional and modern markets, with varying degrees of integration
at the local, urban, national, regional and global level. Market differentiation offers
new opportunities for smallholder farmers, along with new risks and barriers.
Urban markets
Urban markets have changed profoundly over the past 30 to 40 years as a result of
rapid growth in urban populations, both in large cities and in smaller urban centres.
In many countries, this has been accompanied by higher incomes and the emergence
of a sizeable middle class with changing tastes and consumption patterns; in some
areas, it is also linked to women’s growing participation in labour markets, to the
wider availability of electrical home appliances and other factors. Overall, in most
countries there has been increasing demand for food, and particularly for highervalue
produce such as vegetables, fruit, meat and dairy (see table 2). More people