Market Voices: How to ensure fair trading? The buyers' perspective

How to develop an agricultural trading system that is fair for all?

Farmers complain of low prices and other woes they suffer in the hands of buyers during agricultural sales -- but buyers, too, complain of facing inconsistencies and unfair trading practices. It is their expectation to gain profits from the money and energy they invest. However, they say they realise few profits and, indeed, are prone to huge losses. What leads to such a scenario?

We continue with the Market Voices film series and in this episode, buyers explain the factors that make trading practices unfair to them. This episode follows the first in the series: ‘Commodity Markets: The Farmers’ Perspective'.

Quality and pricing

It is an indispensable truth that high quality products fetch higher prices at the market. It is this way with crops. Buyers expect to purchase agricultural produce that is of high quality and free from impurities. However, they say this is not always the case when they go to buy crops from farmers.

Donald Manyera is a farm produce trader. He says farmers often cheat when it comes to crop quality.

“Farmers usually mix well-dried crops with partially dried [crops] and bring to us. When we buy the crops, we realise later in dismay that the partially-dried crops have developed moulds, which causes rotting. As such, we tend to sell the produce to food processors at very low prices, incurring losses in the process,” he said.

Towera Jalakasi, a buyer cum agri-food processor explains as follows: “There is also corruption at play. Farmers are told what nature of produce we want, but they tend to supply [produce] with good quality only on top. When we unpack the bag, the rest is of very low quality... This is a challenge to us, as we throw away produce which has already been paid for.”

Yusuf Jangiya, a trader from Mangochi, says because the quality of most farm produce has been compromised, traders also deliberately buy at low prices.

Mr Jangiya said: “We cannot buy produce of low quality at the same price as those of high quality. When we buy the low-quality produce at a bargained price (which is lower than the set price), farmers say we have exploited them, when they compare to a colleague who had high quality produce and has been bought at a good price.”

Issues of low prices do not spare some of the buyers who sell their produce at city markets.

Stella Tsoka Jimu, a trader from Chikwawa, says that she, too, sells the produce at a low price in city markets. Thus, she does not have an option but to bargain with the farmers. It’s the only way she can cover other expenses like transportation.

“For instance, if the market price in the city is 250 Kwacha per kilogram, and we buy from farmers at 200 Kwacha per kilogram, what remains has to cater for transport, labour and other costs. As such, we earn a very minimal profit. Most of the times we break even,” she said.

Watch: The Commodity Market – Informal Buyers’ Voices

Modes of payment

While trading is based on trust, the trust is not always there. Traders who buy products in bulk prefer to pay farmers later, mostly, by cheque. This does not go well with farmers who are at times skeptical of the processes, or need the money urgently.

“In most cases, farmers prefer to be paid instantly once we buy their produce. This is difficult for us because we cannot travel with large amounts of money. Thus, we prefer to send the money after collecting the goods. Reaching an agreement on that has been a problem in the past. Thanks to mobile money transfers, it is a bit easier nowadays,” noted Jalakasi.

On the use of cheques, it is said that farmers do not understand the mechanisms behind it. SunSeed Oil Limited Food processor and buyer, Victor Mkandawire, explains more:

“With us, payment is through cheques but many times, it becomes difficult for a farmer to understand that with the piece of paper (cheque), one can withdraw money from the bank. They want to be paid instantly and use the money for their immediate needs. As such, an agreement is always difficult,” he said.

It is obvious that from the buyers’ perspective, fair trading practices can be achieved if there is improvement in the quality of farm produce and systems of payment. But, what mechanism can be put in place to fit both farmers and traders to ensure fair trade? Maybe the next episode will answer this?

Watch: The Commodity Market – Formal Buyers’ Voices