multipurpose tree species research for small farms: strategies ... - part

Table 3. Common market channels for agroforestry products.
Producer
Producer -
Producer ) Wholesaler
Producer - 1 Contract buyer
Producer - Financier/Wholesaler
Producer - Wholesaler - Processor
Source: Calderon and Diaz (1986).
The simplest system involves direct sale from
the producer to the consumer. Marketing tends
to become more complex as the numbers of
intermediaries and services provided increase.
Some products require minimal services, ie.
fresh vegetables sold to nearby households,
while others necessitate services of time, storage
space, and energy inputs. Harvested coffee and
pili (Canarium ovatum), for example, must be
dried, stored, transported, processed, and
packed for distribution to consumers.
In most cases, farmers perform very limited
marketing services. The value added by these
services is captured by the middlemen who
often have the capital and the necessary
facilities. An example would be a contract
buyer who enters into an agreement with a
mango farmer to harvest and buy the latter's
droduce even before the flowering stage. The
ouyer assumes pre and post-harvest expenses
including flower inducers for the mangoes,
labor, packaging materials, and transportation
services. The financier-wholesaler provides
capital and other facilities to farmers and other
buyers to obtain sizable volumes for distribution
to retailers. Unlike retailers who operate in
small volumes, large trade volumes enable
wholesalers to realize big returns, and where
theycontrol the bulk of the trade, to influence
and set prices.
Marketing Problems, Issues and Strategy
In rural areas of LDCs, the marketing system
is considered inefficicat and is associated wth
exploitation by middlemen. The overall impact
is low producer prices, high jonsumer prices,
and large marketing margins resulting from
high marketing costs or above-normal profits of
middlemen, or both. High marketing costs are
due to operational inefficiencies, ie. poor
packaging materials and traditional post-harvest
47
) Consumer
Retailer - . Consumer
) Retailer - Consumer
) Retailer - Consumer
- Retailer - Consumer
- Retailer - ) Consumer
losses. The above-normal profits of middlemen
result from inefficient price formation due to
foor communication and transportation
acilities, highly segmented markets, lack of
access to market outlets, and highly unequal
bargaining power between buyers and sellers
(Pabuayon 1987).
The lack of market information on the part of
the small-scale farmers and the inability of many
buyers to penetrate remote producin areas due
to poor roads increases the opportunity for the
buyer/trader to exercise monopsony power at
the expense of the farmer. The poor road
conditions directly raise transfer costs to the
consumers' disadvantage. Capital constraints
for bulk procurement and purchase of facilities,
and lack of infrastructure serve as barriers for
potential market entrants leading to a less
competitive market environment.
Upland farmers are constrained by problems
such as the inability to find alternative market
outlets, and low prices (Calderon and Diaz
1986; Calanog 1989). Such disincentives limit
farm output and commercialization. This was
the case where farmers in Camarines Norte
(Bicol) refused to plant Leucaena because there
was no feed mill in the area and fuelwood was
readily available. Taking these products to
markets outside the province would result in
high transportation costs (Capistrano and
Fujisaka 1984). The participants of an upland
development project in Balatan, Camarines Sur
preferred planting fruit trees to hardwood
species because the latter could be difficult to
sell (Duldulao 1979). The farmers in thie tree
planting project in Mindanao felt that PICOP
exercise monopsonistic price control as it was
the sole buyer of.P. falcataria in the area (Chua
and Diaz 1985). Similarly, Aguilar (1982) noted
the oligopsony control oflowland merchants in
the Ikalahan reservation who dictated prices