DAR ES SALAAM: IN last week’s discussion, we attempted to delve into this important subject, highlighting some of the reasons behind the unfavourable conditions facing our farmers.
It should be noted that farmers are disadvantaged worldwide, including in highly industrialised countries; the only difference lies in the extent to which they are taken advantage of.
One common characteristic is that farmers are largely price takers when doing business with other stakeholders in the value chain, such as processors and traders, even when contracts are entered into between the parties.
No wonder that in some countries, laws and regulations have been created to protect farmers from unfair competition and exploitation by other players.
Another area that needs proper attention is farmers’ inability to determine their profits, largely due to poor financial recordkeeping.
It is a no-brainer that when one goes to a cell phone shop, he will find a price tag on any kind of phone, be it an iPhone, Samsung or Tecno that he wishes to buy.
Even if there is room for bargaining, it is the seller who ultimately determines whether the final price will yield a profit. Similarly, no one thinks twice when intending to buy a car.
The least one can do is check the price on the manufacturer’s website or call a car dealer in Dar es Salaam, who will provide the price delivered to his door?
At this juncture, the consumer has no voice; he either accepts the price or foregoes the product. Simple.
In other words, a buyer is forced to conform to the worldview of the manufacturer rather than his own. That is how things operate, and it has been widely accepted.
Anyone who questions it may be deemed odd. But that is not how it happens when procuring crops from farmers.
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It is the buyers who determine the price of crops in the name of market demand. I am not against this narrative regarding market demand, because that is how the current global system operates.
However, this is not how it should ideally be. Farmers, like producers of iPhones or Samsung devices, should be able to set prices based on their costs of production and desired profit margins.
Unfortunately, they are unable to do so because they cannot clearly draw their line of negotiation. Instead, they are forced to accept prices calculated by other players upstream in the value chain.
This reminds me of a revelation by an economist regarding the cotton value chain.
Once cotton has been converted into lint, apparel and clothing, a designer–sitting in an office in Milan, London or New York, under brands such as Gucci, Levi’s or Dolce & Gabbana, may capture about 65 per cent of the profits.
A manufacturer, possibly based in China, earns around 15 per cent. Meanwhile, the farmer receives a measly 2.0 per cent.
To change this scenario, farmers must learn to keep proper records, whether manually or by using technological innovations that are reshaping the world today.
Profoundly, farmers need to learn to work together, this is because their smallness makes them vulnerable to buyers, their bargaining power tends to be so low.
Either way, doing so would give them greater command in the market and enable them to eventually enjoy the fruits of their labour.
If there is a point at which a farmer needs to pull up his socks, it is this one. There is literally no messiah who will step in on his behalf except the farmer himself.