Regional Markets

Regional Markets for Local Development
here). Nevertheless, as most projects focused on improving the income of smallholders,
there is some documentation of the changes on the producer side.
In most cases price setting was seen as beyond the control of smallholders, except when
they cooperated with actors higher up in the value chain, usually through the support
of external agents and donors. There are several reasons that can explain this effect. In
some cases farmers lacked strong organisational capacity for group marketing and still
negotiated with buyers (traders, processors and exporters) individually. In cases where
farmers organisations or other collective action agents were stronger, there were reports
of improved producer prices (FoSHoL, NGOMA, the cotton case in Zimbabwe).
NGOMA reported that farmers received better prices for their milk after the revival
of two dairy cooperatives. The FoSHoL seed initiative generated increased incomes for
multiple actors involved in the value chain, seed growers, seed processors and traders.
Poor market information was another source of insecurity for farmers during price
negotiations (mentioned in the RUDI and coffee cases in Tanzania). Asymmetric market
information—compounded by poor financial literacy and incomplete cost calculations—makes
it very difficult for farmers to negotiate effectively on prices. In other
cases, prices were directly set by other actors altogether. The Senegal case described
price setting by the state (in supposed consultation with farmer organisations), and the
coffee case in Tanzania indicated that the Coffee Board set minimum prices. In the
cotton case in Zimbabwe, in a rather chaotic market place, buyers have all the power
to set prices on a ‘take it or leave it’ basis. Here the smallholders’ collective actions did
make a difference, resulting in higher prices for the 2009–2010 season. Still, the cotton
market is far from free. It is hampered by poor communication systems and monopolistic
tendencies in the cotton industry.
In the Fairtrade case there is more confidence that the interventions resulted in higher
prices for producers. Fairtrade certification may even have multiplier effects, raising
producer prices for other non-Fairtrade farmers as a result of competition introduced
by Fairtrade elsewhere in the chain. The Zimbabwe banana case did explicitly link
prices with quality, and improvements in production did bring in higher quality premium
prices (although, it should be noted that this effect is primarily seen in exportoriented
value chains). RUDI’s report, stating that mislabelling and mixing of rice is
a common practice used to increase rice prices at point of sale, does emphasise that
special value is attached to known high-quality types and brands of rice in the regional
Tanzanian market.
The overall conclusion is that the situation with producer prices in local chains is slightly
different from the conditions found in regional export-oriented chains. Increases in
producer prices are clearly evident in a number of export-oriented cases, but are less
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