James Paul & The People’s Blog

Published in the Business Authority - Feb23, 2007

Local agricultural products have always had a tremendous difficulty in penetrating the domestic market for a number of reasons some relate to the manner in which the current domestic supply chain from farm to table is organised, the current perception of consumers as it relates to local agricultural products and the tremendous cost advantages that imported products has over locally produced agricultural products. The perception that locally produced agricultural products is on a level playing field as it relates to imported food commodities is a matter of perception which because of the socio economic relationships in the society condemns it to being a myth. Market access therefore has to be a problem in the current environment.

A mere stroll through the aisles of our supermarkets and our major retail stores tell the story, in that one sees a high percentage of imported foods as against locally produced agricultural products. Many times the critics do not appreciate that developed countries have reached a much more developed stage in their industrial superstructure which gives products in these countries a significant competitive advantage. In addition, the entrenched commercial interests develop relationships with businesses in our domestic markets which prejudice local producers of agricultural products. In fact our business relationships seem to be successfully tied to businesses in the developed countries rather than in our communities. Hence, accounting for the significant advantage that imported commodities enjoy over locally produced agricultural commodities in terms of market access.

The lack of significant food processing operations also constitutes a significant disadvantage. This is a direct result of the unwillingness of domestic investors to invest in any serious food processing activity. The examples are few and far between and in any cases there are no great benefits for locally produced agricultural products, since these enterprises buy a ration of “expensive locally produced goods” and cheap imported agricultural commodities. It is clear that in such an environment where commercial relationships are so outward looking there would be tremendous difficulties in developing the commercial relationships that would facilitate market access.

There is constant reference to the fact that local agricultural production exists behind high protective barriers however, this is little consolation to a local producer since the overseas producer enjoys certain economies. These economies include purchasing, finance and technical economies. In addition, in developed countries a much more comprehensive agricultural policy strategy is employed to ensure the survival of agriculture. For instance, many of these countries ensure significant tracts of land are preserved for agriculture; hence the kind of speculation that currently encompasses agricultural properties is reduced. It must be mentioned that even in these countries that follow these policies this has not solved the problem entirely since concern is being expressed over the rising costs of agricultural properties.

The important point to note however is the fact that agriculture in the developed countries enjoys a range of subsidies which reduces the cost of production of commodities. In addition, the impact on the unit cost is significant since the there are both direct and indirect. A startling fact to note is that the beneficiaries are usually large farming operations who are able to take advantage of these subsidies. In addition, the size of these operations compared to ours is mind boggling at best. Market access therefore is the problem since there are too many factors impacting negatively on the ability of local producers’ to secure adequate and sufficient market access.

It is only where there is a determined and conscious effort on the part of farmers, wholesalers and retailers to ensure that locally produced agricultural commodities are provided with shelf space that progress is made. Unfortunately, evidence of such initiatives is few and far between. This must also involve a determined effort on the part of the farming community to ensure that better farming systems are embraced which would ensure a more reliable supply to the consumer.

Posted on July 19th, 2008 by jamesd
Filed under: Articles