Informal market has smart way of dealing with embedded inequalities

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THE informal market has a smart way of dealing with embedded inequalities in existing market structures as they are an open knowledge-sharing system where actors meet, a local think tank has said.

BY BUSINESS REPORTER

In its latest report, eMKambo said if knowledge is shared among smallholder farmers, medium and largescale producers, traders, transporters and consumers, knowledge gaps and loopholes are reduced.

“Because producers come from different areas, they are more knowledgeable about commodities grown in their areas. By allowing farmers from different areas to meet and exchange value, the informal market enables dialogue which reduces knowledge asymmetry,” it said.

It said improving the supply of information through lowering the cost of airtime does not cover the farmers’ information needs or lead to farmers receiving appropriate information.

“Given that they are also tossed from one information source to another, farmers are saying a fragmented knowledge process cannot be relied upon to address knowledge deficits.

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“Organisations which double up as associations and processors tend to have privileged access to information, which they can hoard and not allow to trickle down to farmers the way it should. This puts farmers at a disadvantage because they would have low negotiation powers,” eMKambo said.

It said as demand and supply mechanisms determine prices in the informal market, a financially illiterate farmer can earn a better price than the one who is able to calculate costs and profit margins.

“For those farmers not sure about what price they can charge for their commodities, the informal market can unlock the true value of a commodity on a given day. A financially literate farmer can do all the costing but can earn less than the farmer who does not do all the calculations,” it said.

“This is partly explained by the fact that in the informal market, competition between products carries the day as opposed to competition between farmers.”

eMKambo said smallholder producers were good at correcting taste because they are also consumers of their products.

“They get vegetables for household consumption from their small gardens and sell surplus to earn income. This means they are much closer in satisfying consumer tastes and expectations. A large number of big producers do not have time to taste their own commodities,” it said.

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