Chapter 3


Marketing too can be seasonal. Some food commodities are difficult to store and will only
be available for short periods of time after the harvest. Others are available all year round,
because they can be stored fairly readily. Depending on the grain, storage may be more
appropriate in a milled or unmilled state. For grains which are stored unmilled, then milling
will be a regular activity throughout the year. If the grain is normally stored in the milled
form, milling will be concentrated in the post-harvest period.

Flows of grain can vary throughout the year, both in quantity and even in direction. In
Indonesia, a combination of lower storage costs in urban areas, plus flows of imported grain,
which come in through large urban ports can result in the situation shown in Figure 3.2.

In the immediate post-harvest period, a, rice is flowing from the rural areas to the urban area,
and the urban price is higher than the rural price, by the amount of the marketing margin.
Prices are beginning their seasonal rise. At time b, when the rice price equals p, imports of
rice become competitive with dmesti rice in the urban areas, and rice stops flowing from
the rural as into the urban areas. However, rural prices continue to rise, until, at time c,
they start to exceed urban prices. When rural prices exceed urban prices by the rural-urban
marketing margin, then mported rice starts to flow from urban areas to rural areas. As rice
starts to come in from the next season's harvest, at time f, rural prices start to fall until at
time g, the harvest is fully in, prices have reached their seasonal low and the process starts
again.

The same phenomenon could result if the government operated a buffer-stock policy,
releasing rice onto the urban market at price p.

The price changes involved in these switches in direction of grain flows will affect the food
entitlements of different groups of the population in different ways. Those who earn their
income outside of the food chain will only be affected by the food price rises, but those who
are actively involved in trading may find that, at certain times of the season, their income
goes down, as rice no longer flows from rural to urban areas. Rice is usually imported
milled, and this may reduce income earning opportunities for food processors and millers at
certain times of the year. Seasonal variations in food security are not simply linked to
seasonality in production, but to the changes in quantities flowing through different links in
the food chain, and the resulting opportunities to earn income.


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