Online Reporter
Obert Chifamba
Agri-Insight
IN contemporary times, the agriculture sector has become inherently dynamic under the relentless influence of a multitude of factors that essentially shape farmers’ decisions on crop and animal husbandry.
The farmers have no option but to appreciate the fact that they are navigating an intricate landscape of price signals, consumer preferences and global competition, which requires them to get their act together from the point they decide on what their season is going to look like.
Market forces stand out as a critical determinant of all the decisions they have to adopt while inevitably moving to manage risks that come with their trade and adapting to technological advancements currently happening in farming circles.
Today’s offering will explore how market dynamics shape and influence the choices farmers make, examine the interplay between economic incentives, market access, and external factors such as Government policies and global trade.
It is crucial for farmers to understand these relationships if they are to fully grasp the complexities of modern agriculture and the challenges they face in optimising their production strategies.
My first port of call will be on price signals against the backdrop of the laws of supply and demand. It is important for farmers respond to market prices, which are influenced by consumer demand and supply levels.
Naturally, higher prices for certain crops or livestock can incentivise farmers to allocate more resources to those areas.
It does not require rocket science to acknowledge that all business-minded farmers will typically choose to grow crops or raise animals that maximise their profit margins, influenced by current market trends.
Farmers who produce crops or select animal husbandry activities because a neighbour or friend is doing well run the risk to getting a rude shock when they incur heavy losses and fail to break even.
The choice of crop or animal activities should be arrived at after a serious appreciation of the resources at one’s disposal. Availability of resources should be backed by the availability of a market to absorb the produce at viable prices even though this may change with prevailing economic trends.
Market availability should also encompass factors such as ready access to the selling destinations, such as local businesses or export channels.
This should naturally influence what farmers choose to produce. Poor infrastructure can limit market access, leading farmers to grow less profitable or subsistence crops.
The example of smallholder fresh produce farmers who perennially record huge post-harvest losses because of limited access to markets and poor storage facilities quickly comes to the mind.
The unfortunate reality with this class of farmers is that they produce without a particular market in mind and, when their crops finally reach maturity and are ready for the market, they (the farmers) all go to the same market.
This literally means that they will be competing among themselves, and it will become a matter of survival of those with the best quality products. These are the dangers of producing without a buyer in mind who will absorb the produce upon harvesting.
Usually, these farmers find it difficult to penetrate lucrative markets because they lack bargaining power as individuals and may otherwise fare better in clusters or cooperatives. Belonging to a cooperative or association can help enhance farmers’ bargaining power and market access, allowing them to focus on higher-value crops.
On the one hand, farmers must not give a blind eye to the shifting consumer preferences on the markets.
This wave of change is, in fact, happening globally as people move to embrace new eating trends guided by various health concerns.
The shifts in consumer preferences, such as the push towards organic or locally sourced products, can lead farmers to adapt their practices to meet these demands.
For this one, farmers just need to stay abreast with what is happening globally, and with the advent of improved access to technological gadgets such as smart phones and the internet, they must regularly visit sites on produce marketing and consumer preferences. Information is no longer difficult to acquire given the proliferation of technological gadgets in all corners of the country.
Nearer home, the majority of farmers do not seem to spare a moment to understand the food systems that sustain their communities and see how they can tap into that profitably. The Muslim community, for instance, require thousands of goats during the month of Ramadan commemorations and they always struggle to secure enough goat meat from local producers,.
This simple means that goat farmers may need to think like business people and seek markets aggressively. What stops them from approaching Muslims across the country and talk to them about supplying them with goats before making sure they keep numbers matching the latter’s requirements? Maybe this can be shelved for a question for another day.
There are also crops whose production and performance on the market is influenced by cultural factors.
Regional and cultural preferences can also influence crop selection, with most farmers opting for traditional crops that may be more appealing to local consumers.
The direction agricultural production is taking now requires farmers to broaden their scope of revenue generation by tapping into all possible marketing opportunities even those created by religious, social or political developments.
But while the farmers are seized with making sure they respond to market fluctuations, they also need to deal with issues of risk management brought about by challenges like price volatility.
Farmers can easily diversify production options to mitigate risk to avoid falling victim to price volatility.
They should always have a fall-back position or Plan B in case the first attempt fails.
They can grow multiple crops or raise different types of livestock to buffer against price drops in any single market. It is also about time insurers tailor-make policies that can cover smallholder farmers who in most cases do not insure their activities because they cannot meet some of the requirements by service providers. Availability of crop insurance and forward contracts can influence farmers’ choices by providing a safety net against market fluctuations.
The role of global market dynamics also needs to be highlighted each time we talk about profitable farming issues. It is also important for farmers to benefit from international trade policies and agreements that can open or restrict markets for specific crops and livestock. Some of the global regulations have for decades affected local decisions with cotton farmers, for instance, relying on prices set elsewhere, which do not factor in their costs of production.
Such policies always benefit those countries whose farmers have subsidies to cushion them in the event of bad seasons.
The Government has done a lot to assist farmers in that respect, but it is important if there could a permanent solution that can allow it to focus on other equally important economic matters, and only step in when things spiral out of control and not do so year-in, year-out.
