Chapter 3


* Input supply,
* Procurement,
* Transport,
* Storage (including the management of food buffer and food security stocks).
* Wholesaling,
* Retailing.

Although, in the past, policy interventions in food marketing have often inhibited the private
commercial sector from effectively and successfully fulfilling its functions, careful and
sequential approaches may be required, in order to ensure that the private sector has a chance
to grow into its new and wider role. If market liberalisation and privatization are introduced
in an abrupt and radical manner, there is the risk that the old system breaks down before a
new and functioning system is established, with severe implications for food security.

The size and structure of private sector operations can vary from small female dominated
village level processing, to the vast scale of operations of transnational companies running
vertically integrated operations from plantation production through processing to retail sales,
covering a number of countries. All share the need for a stable and predictable economic
environment to enable appropriate forward planning.

3.3.2 Co-operatives

The basis of most farmer co-operatives is to achieve economies of scale in transport and
other services, and to raise the bargaining power of farmers over the price and other
conditions of sale of their produce and of farm inputs. This is particularly attractive where
markets are poorly developed and farmers have poor and unreliable links with the national
market.

Co-operatives are normally run by their members and do not set out to be profit-making
organizations. Unfortunately many of them have proved to be loss-making. It may be
difficult to find the necessary management skills in rural areas to ensure effective operation.
Training needs may be high. In some countries co-operatives have been particularly
vulnerable to co-option by the political system. Overall, the co-operative movement has had
very mixed fortunes over the last three decades in many developing countries. Where
education levels are high and institutional support is well developed, then co-operatives have
been successful in improving the economic situation of their members and creating greater
security for them. Where institutions are poorly developed and members' supervisory
abilities are weak, then co-operatives have been very susceptible to mismanagement and
even corruption.

3.3.3 Parastatals

With the changing role of the state, the number of major parastatal organizations has fallen
significantly. In the 1960s, many countries had large government-run marketing
organizations which were an important arm of government policy. They allowed government
to directly influence prices by trading either as monopolies or along side other enterprises.
Their objectives varied according to policy. In some cases, the main objective was to