Traditional domestic markets and marketing systems for agricultural products. Background paper for 2008 World Development Report

This paper examines the major types of marketing system linking producers and consumers of domestically consumed agricultural products in different contexts, and the opportunities and constraints these offer to poor producers (and consumers). The marketing system is considered to involve physical assembly, handling, storage, transport, processing, wholesaling, and retailing of agricultural products, together with services directly supporting these activities, such as market information, establishment of grades and standards, financing of marketing activities, and price risk management. The authors consider marketing systems for four major types of product: cereals, roots and tubers, livestock products, and fruit and vegetables. For each of these they briefly discuss the major characteristics of supply and demand that affect market structures and prospects for growth in domestic demand being supplied by domestic smallholder farmers. This leads on to examination of different marketing systems that have developed for these products in different contexts, and consideration of the effectiveness of these systems in supporting growth and serving the interests of poor consumers and producers. Specific issues around problems of price instability and risk management are considered for cereals, and new opportunities arising from the spread of information and communication technologies examined. The paper concludes with discussion of the opportunities and constraints for small scale farmers engaging with these marketing systems, and of policies to support small farmer engagement