African informal markets are an open system that is not closed to end users such as vendors, companies, restaurants, hotels and housewives. Farmers have choices between selling to a vendor who buys one basket of tomatoes, to a hotel which wants 200 kilogrammes or a trader who buys 50 crates at once. Many traders who are labelled middlemen buy in bulk in anticipation for selling to more customers from other parts of the country. Obviously, serious farmers who want to be viable would prefer those buying in bulk unlike selling to single customers.
8 January 2018. eMKambo Vibes A dozen shades of middlemenship in African agribusiness
If the demand for commodities comes from other cities located 100 to 500 km away, few farmers have the capacity and patience to wait for buyers from different areas to come and buy in a disorganized fashion. Effective demand from these areas has to be consolidated and that is the role of middlemen, in addition to distributing commodities where they are needed. Traders are the ones who pull demand from far-flung areas. Formal institutions like supermarkets are not prepared to do that, preferring customers who walk into their shops. That is why fruit and vegetable sections tend to be very small in supermarkets.
Agribusiness as unstructured profit pools
The way middlemen are blamed is as if they are standing in the way of farmers who should access predictable profit pools. Yet there is nothing like that. As business models are becoming highly perishable, farmers have to learn to make decisions under conditions of uncertainty. Such decisions are increasingly being shaped by factors outside the control of any single value chain actor. There is no guarantee that good choices of commodities to grow can lead to favorable outcomes. Unless farmers change their mindsets, they will not fully take advantage of their resources. Individual households do not buy in bulk compared to traders.
Bulky commodities like potatoes and cabbages can only get into the market in a more organized way through middlemen who have taken time to understand demand patterns. Same with peas that are than sorted into different categories and sizes by traders in the market. A farmer cannot do everything including mixing different commodities and accompanying his/her commodities to distant markets. That is why uncovering hidden roles and responsibilities of value chain actors is very important. Producers and consumers need each other although they might pretend otherwise. This loudly speaks to economic justice, governance, empathy, ethics and other soft issues that determine success or failure in agribusiness.