Regional Markets

1 Introduction
is used). Market knowledge can be instrumental for securing these additional funds.
Partly, this access has been facilitated by enhanced telecommunications networks, for
example, mobile phones have opened up ways to acquire this knowledge. Also physical
access to new markets is improving across the developing world. After a long period of
steady deterioration, road networks are again being built and upgraded. Of course, their
construction still reflects their primary functions, i.e. linking the large cities and centres
of mineral extraction to harbours; however, also strategic roads are being built (e.g.,
between East African countries in the framework of their further economic integration).
A huge impulse to local economic growth, the growing urban centres, and thus
to rising local food crop production is the result. In addition to examining this physical
infrastructure (roads, telecommunications etc.), we will also deal with organisational
infrastructure or institutional development. Institutional infrastructure has been recognised
for some time now as an important production factor that reduces transaction
costs. Institutional development means that relationships are being developed and trust
is being built (Nederlof and Pyburn 2012), and it often is a prerequisite for changes in
physical infrastructure (Kirsten et al. 2009). Even though the issue of reducing transaction
costs is key to both physical and organisational infrastructure, we will discuss these
issues separately in the concluding chapter, where we will go into detail on the governance
of value chains and the various models presented in the cases.
A focus on producer and consumer prices
Policies on prices have evolved throughout the past decades. In the 1970s and 1980s,
marketing boards (parastatal organisations that managed the purchase and marketing of
food crops in many of the countries in the developing world) generally tried to maintain
low food prices in order to reduce living costs for urban consumers. It was considered
that with low food prices, the costs of labour could also be maintained at low
levels, which would translate into competitive prices for industrial products on the world
market. However, this low food price policy in developing countries resulted in very
low market participation of smallholders in commodity production. With the Structural
Adjustment Programmes (SAPs) of the 1990s, the food markets in the South were liberalised
and local markets regained strength as food commodity prices increased and the
livelihood of rural smallholders was improved. For poor local and urban consumers, of
course, the price increase was a problem. Subsequently a focus on reducing transaction
costs developed, most strongly with multilateral institutions, to protect their interest and
safeguard their living costs against high food commodity prices. For example, market
price information systems were developed, to make farmers, traders and retailers aware
of prices and thus of opportunities to optimise market opportunities (both on the producer
and consumer side). Road and market infrastructure as well as reducing the costs
of bridging the physical distance between farmers and consumers were areas of action.
Reducing the number and importance of middle-men has also always been a point of
attention, which sometimes resulted in a complete redesign of the value chain.
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