How every commodity counts in informal agriculture markets

mbareBy Charles Dhewa

In case you always wonder why eMKambo is in the habit of documenting every agriculture commodity in the market no matter how small, there are many reasons. Every commodity including wild fruits performs an important function in the market.

Traders and farmers are now aware that if you see tomato prices remaining stagnant, there is a fruit causing havoc. Consumers come to the market with a balanced nutrition mindset. Each consumer budget covers vegetables and fruits. When a consumer gets to the market and suddenly finds masawu fruit in season, she decides to buy less tomatoes to accommodate masawu for her customers and family back in her residential area. This means masawu starts competing with tomatoes for the dollar, leading to less demand for tomatoes, driving down tomato prices.

Consumer choices have a huge bearing on how commodities compete. For every US$100 000 circulating in the market, consumers collectively spend $60 000 on vegetables and $40 000 on fruits.

An increase in the price of tomatoes can shift US$10 000 from the fruit budget, meaning US$70 000 will buy the same quantity of vegetables while fruits will start competing for US$30 000 instead of US$40 000. Every farmer should keep an eagle eye on fruits because their introduction into the market may mean less income for a tomato producer. It is no longer about focusing on your commodity only but holistically reading trends on the market.

Complementary commodities: Another fascinating market phenomenon is the notion of complementary commodities. A shortage of tomatoes on the market means the price goes up. But tomatoes go into the consumer basket with cabbages and other crops for the same budget. When the price of tomatoes goes up, a consumer sacrifices the cabbage because the tomato has many uses. This means a cabbage farmer gets less money and the price of cabbages goes down, not because there is a glut of cabbages but rather an increase in the price of tomatoes.

Necessities and luxuries in the market: Some commodities are considered luxuries, for example, caroots, fresh peas, beans and butternuts as well as some fruits. An increase in the price of a necessity like tomato translates to less expenditure on luxuries as consumers direct resources to necessities. A shortage in one commodity, especially a necessity, will result in the demand for luxuries going down.

Picture this: A vendor brings US$20 to buy two boxes of tomatoes at US$5 each and a crate of bananas at US$10. If she finds the price of tomatoes to have doubled to $10 per box, she will forgo a crate of bananas and still buy two boxes of tomatoes at $20. This results in the fall of the price of bananas. Tomato is a necessity while banana is a luxury for many households and consumers.

Nutritional balance: A fall in commodity prices on the market sometimes enhances the nutritional balance of households. While a change in the food basket of a household can affect the competitiveness of commodities, for instance, where a household switches from tomatoes to fruits resulting in less competitiveness of tomato business, consumers enjoy nutritional diversity. A fall in the price of some basic necessities like tomato increases the nutritional balance as the same budget can now buy more other commodities like fruits.

Mbare wholesale market analysis

The month of January 2015 saw 30 farmers and 117 traders in Mbare Wholesale Agriculture market trading ten commodities worth $ 793,902.06. Although this was a decline from the December figure by 12.45%, it is still significant given that the majority of farmers were paying attention to field crops. The rainy season tends to present challenges in moving commodities to the market from remote areas due to bad roads and losses caused by rain. The traditional “January disease” partly explains a decrease in the volume of cash in the market. However, a quarter of the commodities were exchanged through barter deals which traders and farmers use to fill gaps left by less cash in circulation. – eMkambo

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