Chapter 3


Commodity chains and marketing systems become more developed and more complex as
economies become richer. Production and distribution systems become more specialised,
consumer demand becomes more differentiated and more demands are put on the integrating
functions of the marketing system. This can lead to the rather simplistic assumption that, in -
a monetised market economy, the rich are more integrated into and dependent on the market,
whereas poorer, less secure households continue their day-to-day existence isolated from
and marginal to the market system.

In fact, in many countries the evidence indicates the very opposite. Even in rural areas,
poorer households tend to be more dependent, in relative terms, on markets, in particular
food markets, than rich households. A study in Kenya showed that smallholders buy at least
50% of their fnnd frnm the market (quoted in Ateng, in Gittinger, 1983). All income groups
bought at least one third of their food from the market, and this rose to over 60% in the
lowest income group. The larger the size of smallholding, the greater the proportion of food
that was provided by own production. This is not always the case. In very poor countries,
such as Malawi, surveys have shown that the poorest rural households live outside the
market economy and depend on social exchange and barter to meet their food needs,
especially in poor harvest years. This is because of their total lack of purchasing power and
assets, in a context where markets, in particular labour markets, are poorly articulated.
However, this is the exception rather than the norm.

The stereotype of the small peasant subsistence farmer who is virtually self-sufficient no
longer applies, if it ever did, to most poor rural households. This subsistence farmer was
assumed to have control over his environment, with the exception of the climate, and could,
by careful storage, protect himself against all but the worst of droughts. In reality most small
farmers face the risks of changing market prices for food, labour and production inputs.
Food is not the only commodity which has become increasingly monetised. Land markets
have developed in many countries, and credit is much more widespread. All these
developments increase the risk facing farmers. They can lose their land and become landless
labourers as a result of involvement in credit markets. However, it also offers the
opportunity for spreading risk, by growing multiple commodities, employing some family
labour outside of the farm and giving access to improved seed and inputs. For many rural
households, where population pressure has reduced the amount of land available for farming,
there is no option but to employ a multiple livelihood strategy. In rural areas, that is likely to
involve family members at different stages in the food chain; producing, labouring on other
farms, milling, trading and processing.

The development of complex food chains undoubtedly improves national food security in an
economy, as it increases the integration between different regions, and, if the commodity
chain is efficient, should allow for a lower cost food supply as regions specialise in the
commodities where they have a productive advantage. This does increase regional
 interdependence, and can lead to shortages in times of stress in poorer regions where there is
 less effective demand to pull in food when prices rise in the rest of the country. Equally for
 individual households who are fully integrated into the market economy, if the food chain
 operates well, then it offers the possibility of improved economic opportunities and greater
 food security. However, as will be discussed in section 4, when markets, for whatever