Market Voices: Is a win-win approach possible for farmers and buyers?
Both farmers and the buyers of agricultural products complain that they face challenges and unfair trading practices in current markets – as explained in the PROSPER programme’s films: Commodity Markets – The Farmers’ Perspective and Commodity Markets – The Buyers’ Perspective. However, the last film in the series highlights the allure of agricultural cooperatives, a little-used but promising approach in Malawi, which may offer the possibility to overcome mistrust on both sides and create fairer trading conditions.
Cultivating the trust of buyers
Buyers who buy in bulk believe they have a saner experience, and enjoy fairer trading practices, if farmers work in cooperatives. Cooperatives sell their produce in bulk and this reduces the traders’ burden of scouting villages for individual sellers.
In fact, institutions across the agriculture industry lobby for farmers to be in cooperatives – for the reason that it gives farmers greater bargaining power, unlike when they operate individually.
Donald Manyera, a national aggregator of agricultural produce, says that as traders, they feel comfortable buying from cooperatives as they are well organised and have rules that govern them.
“Cooperatives are good at taking care of their produce thus, we are assured of buying quality produce,” he said.
Although cooperatives prove their worth in terms of fair trading, very few Malawian farmers belong to cooperatives. This is principally so because farmers want to realise their money the moment they have sold their produce to meet their pressing needs. As a member of a cooperative, one has to wait for the produce to be sold (in bulk) and have the money remitted later (which takes time). Because of this, most farmers are reluctant to join.
Mixed experiences of cooperatives
Some cooperatives have tarnished records, as Mary Kabango, national level aggregator, explains:
“We used to enter into agreements with farmers. We used to provide them with inputs such as seeds and train them in the proper way of growing and managing their crops. But, instead of planting the seeds, they ate them, while some sold the seeds before the rains commenced. When we went to inspect the fields, they gave excuses and when it was harvesting time, they used to sell the produce to other buyers and even to vendors. Then, they would lie to us that the crops were stricken by diseases. As such, we were making losses. The result is that we put on hold the agreement.”
Farmers too have had their own share of misery from buyers’ despite being in a cooperative. Elufe Nthepheya, a farmer from Chikwawa explains.
“We formed a cooperative of about 20 people. After harvesting our maize, we looked for buyers to buy our produce. When they came, we charged the price but they bargained a lot. We ended up selling at a very low price as we didn’t have anywhere to go. Because of this, we are reluctant to proceed.”
Other farmers opted to sell to vendors at a low price instead of agri-food processor companies who buy at a good price, because they took long to come and buy the produce. Since farmers rely on their produce for livelihood, they prefer selling faster to meet their needs than hoarding the crops.
With robust rules and systems, cooperatives can work
Experience has shown that if proper structures are put in place, selling through cooperatives can be a win-win situation for both farmers and buyers.
Some farmers contracted National Smallholder Farmers Association of Malawi (NASFAM) for access to markets. Osman Masima, a soybean farmer from Mangochi explains how they are reaping gains with NASFAM:
“As a cooperative, we engaged NASFAM. When we have harvested our produce, we transport to NASFAM for safe keeping. NASFAM finds companies who buy at good prices right there at NASFAM premises. Previously, we used to engage vendors who used to buy at very low prices such as 120 Kwacha per kilogram, but companies buy at more than 400 Kwacha per kilogram.”
Masima says since they engaged NASFAM, they are now enjoying the fruits of their toil and their livelihoods have improved.
Watch : The Commodity Market – Voices from the Market