Trade Hub Regional Price and Market Information Study

The objective of the study is to identify and analyze sources of price and market information in key countries in the Southern African region. The analysis of the information systems focuses on the quality of their service offerings and the efficacies of their business models. The study also identifies price and market information gaps for the Southern African Trade Hub (SATH) strategic value chains as well as other staple foods and commodities. From the analysis, recommendations are made to SATH to encourageprivate sector/commercial actors to cover gaps in the market.

Main Findings

Based on a desk review of regional price and market information system initiatives and an in-depth review of systems in Malawi, South Africa and Zambia, the following main findings are noted:

• A number of information services, either country or regionally based and mostly government or donor funded, are operational in the region and provide relevant price and market information. Currently this information from different sources is not systematically collected, repacked and offered commercially to interested parties
• Most of the price and market information systems are based on the following 2 models:
  
  • Price and market information is collected from the various traders/processors/exporters/etc. in the market.
  • Priceand market information are discovered from transactions over a commodity exchange. This type of price and market information is more transparent and easier to collect provided the commodity exchange is functional.
• The only price and market information system providing relevant information that operates on a sustainable business model is SAFEX. However conditions in South Africa diverge significantly from all other countries in the region.
• Replication of the SAFEX system in other countries requires not just the setup of an exchange but also the creation of an environment in which the exchange can operate. The exchange is extremely vulnerable to external factors which it has no or limited control.

Based on the value chain analysis of SATH strategic crops and commodities, desk reviews and interviews of key parties that requiring market and price information are noted:

• Small-scale farmers lack information with regards to:
  • Inputs: where to source, price and how to use some of the inputs and credit access
  • Production: technical knowledge, post-harvest, product specifications required by market and location and access to service providers
  • Processing and storage: storage options and storage knowledge
  • Sales and distribution: finding transporters and making use of backloads
  • Market: price information, product specifications required by market and where to find major traders and processors
• Large scale and corporate farmers lack information with regards to:
  • Processing and storage: storage options
  • Sales and distribution: making use of backloads
  • Market: some farmers sell to a brokers/traders based on relationship rather than price information
• Small-scale traders lack information with regards to:
  • Processing and storage: storage options, storage knowledge and access to finance (warehouse receipting) options
  • Sales and distribution: finding transporters and making use of backloads
  • Market: location of small-scale farmers with good quantities for sale, prevailing prices in production areas, price information end users (processors, exporters, etc.), product specifications required by market
• Major commodity traders/exporters/processors lack information with regards to:
  • Sales and distribution: making use of backloads
  • Market: difficulty to access commodities more directly from small-scale farmers, prices of competition, import/export procedures and regulations and production forecasts both local as well as regional

Recommendations for Price/Market Information Development

Recommendations for the Development of Regional Information Systems:

• Actively pursue/support the further development of the transport platform TRANSZAM.
  • Invest in the upgrade of the platform to include all countries in the region, considering the need for further expansion of functionality in the following areas: allow browsing using mobile phones, advertising on the platform and customer rating/reviews of transporters.
  • Promotion of the platform in the countries in the region: Tanzania, Malawi, Mozambique, South Africa, Namibia, Zimbabwe, DRC and Botswana.
• Provision of existing regional information on a commercial basis
  • Actively pursue/support the information development whereby information from existing information systems operational in the Southern African region is systematically collected, repacked and offered commercially to interested parties.
  • Engage organizations like AMT on a consultancy basis to review possibilities for the systematic collection of price and market information from existing regional information systems, repackage this information and possibilities to offer the information on a commercial basis to both SA as well as regional customers.
  • Provide a competitive grant for the systematic collection of information from existing regional systems, repackaging and commercial offering of this information to SA and Southern African regional customers.
  • Potential organizations which could make use of the competitive grant include AMT, SAFEX and commercial banks.
• Recommendations for Country Based Systems with Regional Replication
  • Actively pursue/support the further development of ACE (including its price/market information system)
  • Support ACE with the development of a market based (donor funding only for limited investments/start up costs) business plan for the organization.
  • Based on the ACE business plan SATH may consider providing limited start up support for viable/sustainable ACE operation
• ZNFU E-extension system: Actively pursue/support the development of the E-extension system in conjunction with MUSIKA
• It is recommended not to actively pursue/support the further development of ZAMACE.
  • Closely follow ZAMACE developments over the coming 12-18 months and review progress in areas of; ZAMACE merger with Lusaka stock exchange, development of the agricultural credit act and involvement/interference of GRZ in the maize marketing (FRA operations, export bans, etc.)
  • Ifsubstantial progress is made, reconsider possible support to ZAMACE
• Itis recommended not to actively pursue/support the further development of ESOKO
  • Closely follow ESOKO developments over the coming 12-18 months and review progress in areas of: franchise development of Wellspring and ESOKO system information provision to farmers, traders, etc. in terms of business model development (shift from donor dependency to private sector income generation)
  • If substantial progress is made, reconsider possible support to ESOKO to support business model development and upscale viable (private sector paid) ESOKO price/market information systems in Malawi and the region