Associations

Smallholders in our country often find it hard to sell their products in the market for a good profit because of poor infrastructure. The transaction costs in reaching markets are therefore high for small volumes of product, and there is often no guaranteed sale on reaching the market. A lack of power in sale negotiations also means that smallholders tend to be ‘price takers’ rather than ‘price makers’.

Grouping together to transact sales is a way to deal with these constraints. Sufficient quantities of product can be delivered to meet the demands of large buyers and bargaining power is increased. It is also easier for groups to obtain information about the real value of their products though one member being responsible for this role and then sharing information with the whole group.

Without such income from sales, farmers do not have the capital to develop their farms further through the purchase of inputs such as new crop varieties, fertilizer, pesticides and equipment. Emphasis on ways to improve the ‘value chain’ for smallholders, such as through establishing seller groups, establishing market information systems, and developing secure means for financial transactions, are very important.