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Case Study Commodity Chain Analysis Analysis of the Suburban Market Horticulture Sub-Chain of Bamako (Mali) Bockel, L., 1 Tallec, F.,2 Policy Officer, Agricultural Policy Support Service, Policy Assistance Division, FAO Consultant, Agricultural Policy Support Service, Policy Assistance Division, FAO

EASYPol Module 048

Resources for policy making

FOOD AND AGRICULTURE ORGANIZATION OF THE UNITED NATIONS, FAO

See also the Value Chain Analysis software The FAO-VCA software tool carryies out value-chain analyses for agricultural and rural development policies. By storing relevant data it can calculate flows of physical outputs and inputs, flows of aggregated costs, value-added and net benefits. In addition, it allows users to directly compare different hypothetical scenarios. FAO-VCA Software Tool» Value Chain Analysis for Policy Making: Methodological Guidelines for a Quantitative Approach»

See all VCA material on EASYPol resource package: Value Chain Analysis About EASYPol EASYPol is a multilingual repository of freely downloadable resources for policy making in agriculture, rural development and food security. The EASYPol home page is available at: www.fao.org/easypol. These resources focus on policy findings, methodological tools and capacity development. The site is maintained by FAO's Policy Support Group.

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Case Study on Commodity Chain Analysis: Analysis of the Suburban Market Horticulture Sub-Chain of Bamako (Mali)

Table of contents 1 Summary .....................................................................................1 2 Introduction .................................................................................1 3 Framework of the commodity chain .................................................3

3.1 Definitions and object ................................................................. 3 3.2 Results expected from the commodity chain analysis (CCA) ............ 3 3.3 Analysis, follow-up and management of a chain ............................. 4 3.4 Steps of chain analysis ............................................................... 5

4 Collection and data processing ........................................................7 4.1 Type of data to collect, sources, collection methods ....................... 7 4.2 Comments on the methodological process used in the horticulture

market survey ........................................................................... 8 5 Zoom on the sub-chain ................................................................ 10

5.1 Situation of the fruit and vegetable chain at national level ............. 10 5.2 Area of study of the suburban market horticulture of the sub-chain. 13 5.3 Database from the suburban market horticulture survey. ............... 14

6 Functional analysis ...................................................................... 20 6.1 The different agents of the sub-chain .......................................... 20 6.2 Sub-chain channels ................................................................... 20

7 Marketing analysis ....................................................................... 21 7.1 The upstream chain .................................................................. 21 7.2 The downstream chain .............................................................. 23

8 Financial analysis ........................................................................ 25 9 Results of the analysis ................................................................. 25

9.1 Role of the current policies ......................................................... 26 9.2 Agent strategy and evolution of the chain .................................... 26 9.3 Environment of the chain, service, popularization, credit ............... 26 9.4 Institutional aspects, regulation, land propriety,… ......................... 26

10 Economic analysis using shadow prices .......................................... 27 10.1 Calculation of the shadow prices ................................................. 27 10.2 Consolidated account of the chain ............................................... 28 10.3 Policy Analysis Matrix (PAM) ....................................................... 29

11 Wording of exercises ................................................................... 30 11.1 Exercise 1 ................................................................................ 30 11.2 Exercise 2 ................................................................................ 30 11.3 Exercise 3 ................................................................................ 30

EASYPol Module 048 Applied Material

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11.4 Exercise 4 ................................................................................ 30 11.5 Exercise 5 ................................................................................ 30 11.6 Exercise 6 ................................................................................ 31 11.7 Exercise 7 ................................................................................ 31 11.8 Exercise 8 ................................................................................ 32

12 Results of exercises ..................................................................... 32 12.1 Exercise 1 ................................................................................ 32 12.2 Exercise 2 ................................................................................ 33 12.3 Exercise 3 ................................................................................ 34 12.4 Exercise 4 ................................................................................ 34 12.5 Exercise 5 ................................................................................ 35 12.6 Exercise 6 ................................................................................ 36 12.7 Exercise 7 ................................................................................ 46 12.8 Financial impact on the income ................................................... 46 12.9 Financial statement of the government ....................................... 48 12.10 Exercise 8 ................................................................................. 48

13 Conclusion .................................................................................. 49 14 Readers’ Notes ............................................................................ 49

14.1 Complementary capacity building materials .................................. 49 14.2 EASYPol links ........................................................................... 49

15 Further reading ........................................................................... 50

Case Study on Commodity Chain Analysis: Analysis of the Suburban Market Horticulture Sub-Chain of Bamako (Mali)

List of tables Table 1 - Areas devoted to market horticulture and number of farmers Table 2 - Employment of continuous labor according to farm area Table 3 - Average equipment level by market gardener Table 4 - Equipment costs per market gardener Table 5 - Operating costs per market gardener in the 1994-1995 campaign Table 6 - Cultivated Areas per type of market gardener Table 7 - Produces of small farmers (<1000 m²) Table 8 - Produces of average farmers (1000-5000 m²) Table 9 - Produces of big farmers (>5000 m²) Table 10 - Private importing traders sales Table 11 - Marketing costs Table 12 - Seasonal variation in price on the Bamako’s market (DNSI 1995) Table 13 - Calculation of the shadow price Table 14 - Consolidated account of the chain Table 15 - Policy Analysis Matrix of the consolidated chain Table 16 - Functional analysis table of the sub-chain Table 17 - Calculation the import costs (private importing traders) Table 18 - Assessment of the marketing costs of the importing traders Table 19 - Cost distribution by item (private importing traders) Table 20 - Annual marketing costs by type of agent Table 21 - Accounting input sheet of production-trading account Table 22 - Production-trading account of importing traders Table 23 - Production-trading account of fertilizer service providers Table 24 - Production-trading account of the small producers Table 25 - Production-trading account of the middle producers Table 26 - Production-trading account of the big producers Table 27 - Production-trading account of all the producers Table 28 - Production-trading account of the retail wholesalers Table 29 - Production-trading account of the retailers Table 30 - Global production-trading account of the chain Table 31 - Distribution of the total value added by group of agents. Table 32 - GP distribution Table 33 - Sharing of the profit generated by the chain Table 34 - Consolidate account of the government Table 35 - Beneficiary population

Case Study on Commodity Chain Analysis Analysis of the Suburban Market Horticulture Sub-Chain of Bamako (Mali)

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1 SUMMARY

This module illustrates how Commodity Chain Analysis (CCA) can be used in a case study. It belongs to a set of modules which discuss how to use step-by-step procedures for commodity chain analysis. The reading of the theoretical modules EASYPol (thematic overview and analytical tools) before this one is advised to understand the exercises of this module. It introduces a real situation where experts have to construct a commodity chain analysis. There is a complex empirical database illustrating a typical situation (data more or less joined by hectare, perimeter, operator, area). This briefly shows the framework and the methodological approach of the commodity chain analysis (section 3 and 4). Therefore, this module provides the context of the commodity chain and sub-chain. The following sections allow one to illustrate the different steps of the workshop, that is to say:

functional analysis of the suburban market horticulture sub-chain (section 6),

marketing analysis, with information gathered from traders (section 7),

financial analysis (section 8),

interpretation of the results of this analysis (section 9),

section 10 includes other developments, as well as, economic analysis using shadow prices (PAM and indicators).

2 INTRODUCTION

This module, stemmed from a Malian case study1

, includes a set of exercises which discuss how to use step-by-step procedures for commodity chain analysis (from functional analysis up to the financial and economic account). The suburban market horticulture sub-chain of the Bamako district is used as a support for these exercises.

This module was used as a support for a training workshop in 1995. The workshop became integrated with the training activities organized by the Malian «Cellule de Planification et de Statistiques» of the Ministry of Rural and Environmental Development. This case study was prepared by Louis Bockel, as part of the program MLI/91/005. Participants realized the commodity chain analysis, using data from a specific survey, without additional pre-established analysis framework. During the workshop, participants went in the field for additional information (interviews to traders and retailers). The purpose of this was to formalize participants with a real situation of team work.

1 Based on a translation from the French “Cellule de Planification et de Statistiques” (CPS) of French Ministry of Rural and Environmental Development (MDRE) within the framework of PAMOS project “Appui à la Mise en Oeuvre du Schéma Directeur” (MAL/91/005).


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Objectives

This module illustrates how Commodity Chain Analysis (CCA) can be used in a case study of a given commodity chain. It is an applied material which uses the conceptual presentation of the chain analysis (the first four modules EASYPol). This module can be used in different contexts such as:

reference materiel for policy analysts in carrying out their on-the-job tasks,

in academic courses.

Targeted audience

This module is intended for a wide audience, ranging from policy analysts and decision makers, to development practitioners, training institutions, and media. It is of particular relevance to senior and mid level officials and professional officers in ministries of agriculture, livestock, forestry, rural development, and cooperatives, including line departments and training institutes/units. It should also be of particular interest to senior executives of parastatals, financial institutions, and NGOs/CBOs. Suitably adapted, it may also be used as a reader in undergraduate courses in development.

Required background

No specific technical background, beyond reasonable language skills, is required for this module. However, it is anticipated that individuals with a degree in economics (trainees should have a minimum understanding in micro-economics), and agricultural or rural development related areas, and those with several years of experience in agricultural policy analysis or development planning and implementation, at a mid to senior level position, should have little difficulty in grasping the module’s content. At the end of this module, there are some exercises. This module is complemented by a set of “spreadsheet tables” and related pictures that can be used to highlight selected exercises. To find relevant materials in these areas, the reader can follow the links to other EASYPol modules or the references2

. This module belongs to a set of modules which discuss how to proceed step by step on commodity chain analysis.

This case study also includes computer flashes and elements of critical thought. Some stages of the work that need debating by the team are also pointed out.

2 EASYPol hyperlinks are shown in blue, as follows :

- training paths are shown in underlined bold font; - other EASYPOL modules or complementary EASYPol materials are in underlined bold

italics; - links to the glossary are in bold; and - external links are in italics.

http://www.fao.org/docs/up/easypol/335/CCA_048EN.XLS�


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Computer flashes in this module contain practical advice. They facilitate data organization and data processing by spreadsheets (Excel, …). An Excel file contains the whole analysis and the results of exercises:

Some elements of critical thought and methodological comments on this approach will appear in this case study, in boxes like this.

This kind of box shows the stages of work that need brainstorming, arguments by team or with some external agents.

3 FRAMEWORK OF THE COMMODITY CHAIN

3.1 Definitions and object

Today, flows of commodities between areas of production and areas of consumption, in a given sector, as well as the different steps in processing may be analyzed through different approaches 3

In this approach, by commodity chain we mean all the economic agents who work directly in the production, the processing, the marketing, or the forwarding up to the market of a same agricultural (or breeding) product

.

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.

A chain analysis is usually undertaken to understand how a specific activity gets organized. This case study must analyze all the steps of this activity, including, for each step, the financial, marketing, human, policies and economics points of view.

3.2 Results expected from the commodity chain analysis (CCA)

Before we start a study of a commodity chain, we need to draw up the objects, and the questions we are looking for. These can be very different:

Chain organization, agents concerned, comparison between productive areas,

3 Commodity Chain Analysis. Constructing the Commodity Chain: Functional Analysis and Flow Chart, EASYPol Module 043, illustrates the global commodity chain and the value chain and justifies the use of commodity chain analysis in these EASYPol modules. 4 G. Duruflé, P. Fabre, J. M. Yung, Les effets sociaux et économiques des projets de développement rural: manuel d'évaluation, Ministère de la Coopération, 1988.

http://www.fao.org/docs/up/easypol/335/value_chain_analysis_fao_horticulture_bamako_exercises_048en.xls�

http://www.fao.org/docs/up/easypol/330/value_chain_analysis_flow_charts_043en.pdf�



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Outlet of the chain, marketing channels, development of the national consumption and the exports,

Importance of the chain, in comparison with the agricultural sector,

Financial situation of agents, increase in value of farmers’ work,

Distribution of the value added within the chain,

Balance sheet of the government: receipts (taxes, subsidies, supported cost of state participants in the chain)

Effect of the government’s measures on the chain (devaluation of the FCFA), simulation of the effects of policy measures (liberalization of the price of the inputs),

Inventory of problems encountered by agents, and conceivable solutions to boost, increase and reorient the chain (as part of a policy to support a product, or as part of a support to put in place a concerted management of a chain by agent5

Economic and/or commercial interest of the processing of a product, economic and/or commercial interest of an activity,

),

… The results of a commodity chain analysis that are expected can require a readjustment of the study process on a precise focus (ex: marketing study).

3.3 Analysis, follow-up and management of a chain

How are analysis, follow-up and management of a chain differentiated?

Chain analysis: Generic term employed for all the stages of the basic analysis as a whole (from the functional analysis up to the economic analysis). This analysis can be limited to one aspect of the chain (ex: marketing).

Follow-up of a chain: Usually employed for the process of periodic actualization of technical and financial information (as prices) and for the periodic realization of chain economic analysis (cost production, value added, Policy Analysis).

Management of a chain: In the upstream analysis of a chain, this covers two aspects:

o the management of administrative policy measures and investments, o the internal organization of the chain (partnership) managed by the main

state/private participant/agent (cooperatives, groups, factories, exporter,…)

5 The concerted management of a chain by private agent allows one to decrease the gathering cost, transport and marketing, and to improve the quality of the final product,... in return for contractual agreements for the distribution of gain (ex: best price to producers if they decrease the number of loading place, if they guarantee a level of quality of the production,...)


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3.4 Steps of chain analysis

In the upstream analysis, the work starts by gathering the information. First the documentation must be gathered and analyzed, then the information must be completed and upgraded by the work in the field (survey, interviews of agents (see section 4). Actual commodity chain analysis covers the following steps, developed later: Step 1. Functional analysis (channels, agents, flows) Step 2. Marketing analysis Step 3. Processing analysis (for the record) Step 4. Analysis of the stocking function (for the record) Step 5. Financial analysis (costs analysis and value added) Step 6. Policy analysis and analysis using shadow prices (with the PAM matrix) In the downstream analysis, results allow us to analyze of the issues of the chain (strategic diagnostic based on the problems/ constraints felt by agents), the “macro-management” of the chain (management of the policy-administrative measures from the chain) and the “micro-management” of the chain (partnership, organization of agents to improve results in the chain, …).

a. Functional analysis (channels, participants, flows)

The question here is to determine every step of the chain (production, marketing, processing, transport, export …). At every step, current agents are established and their function is specified (for example, at the step of the production, we can have the input supply and the management by a state organization and the profit realized by several types of agents6

b. Marketing analysis

).

The marketing analysis is often realized outside the framework of the “typical” chain analysis (financial account of the chain). Its aim is to study thoroughly the analysis of the marketing channels in a chain, to provide a detailed description of the constrains met by the agents (wholesalers, carrier, exporters, retailers…). In this case, the topics covered by the marketing analysis are the following:

supply organization and regularity, pre-financing,

types of transaction,

purchases financing (bank credit, family loan, self-financing),

credits (kind of financing and problems),

supply problems (market quality or organoleptic,…),

markets (kind of equipment, organization, insufficiency,…),

6 To have more information, see Commodity Chain Analysis. Constructing the Commodity Chain:

Functional Analysis and Flow Chart, EASYPol Module 043.




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seasonal problems, price evolution,…

areas of sale: international, national, sub-regional,… market,

export (administrative proceeding, financing, logistic, juridical framework of exporters, taxes, quality control,…),

professional organizations and their role.

c. Processing analysis (for the recorder)

Clearly the processing analysis doesn’t concern only commodity chains that include a step of processing. It can have several concurrent processings for one product (for example, industrial rice growing, small-scale husking, and personal husking). We will need to able to compare them. The elements of this analysis are the brief description of the technology and its control capability (effect on the quality, and on the plant output), operational and gathering costs, downstream/ upstream prices, upgrading possibilities. The information gathered will be used during the financial analysis (comparison between costs price/ kg, according to the channels of processing-marketing).

d. Analysis of the stocking function (for the record)

This step is often covered by the marketing analysis when it is connected to a business strategy: stocked volumes, stocking time, losses, cost and profits, best/ low prices (bridging the gap).

e. Financial analysis

The financial analysis of a chain is calculated from agent accounts and consolidated accounts of the chain. The purpose is to show the financial situation for each type of agent and the financial profit of the whole chain7

f. Policy analysis

.

The purpose is to analyze the impact of the current agricultural policies on the chain, thus to simulate the possible effect of new economic/ legislative/ regulation measures, based on the framework of the financial analysis. By simulating changes in economic/legislative/regulation measures, we can get commodity chain results with/without the effect of the measure, money constituting the impact of the measure (which can be calculated at either the whole commodity chain or at the specific agent level).

7 For more information, see Commodity Chain Analysis: Financial Analysis, EASYPol Module 044.

http://www.fao.org/docs/up/easypol/331/value_chain_analysis_financial_analysis_044EN.pdf�


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For example:

stop of subsidies for fertilizer,

price increase of transport due to a price increase of fuel by 20%,

reduction of the FOB price for the export,

water royalties increase (rice chain),

effect of a devaluation by 50%. Subsequently, the economic analysis using shadow prices allows us to construct the Policy Analysis Matrix (PAM) in order to compare the current proceeds of a chain with the proceeds in a completely liberalized economic environment. PAM allows us to compare between different chains from a same country or from different countries. Finally, it facilitates the comparison between different policy alternatives for a same chain.

4 COLLECTION AND DATA PROCESSING

4.1 Type of data to collect, sources, collection methods

a. Type of data to collect

Important data for the chain analysis is the following: Functional level: Relationships between the agent, the upstream chain (who the

produce is bought from), the downstream chain (to whom the produce is sold), quantity...

Processing Volumes, ratio, losses, and costs. Stocks Volume, costs, margin, best/ low price. Marketing Purchase and selling price, required quality, supply regularity, kind

and payment period, logistic, competitors… Costs of the chain Agent costs (purchase of inputs, tools, rents, maintenance, services,

transport, sundry expenses, taxes, staff) which depend on the studied product.

Chain diagnosis Qualitative data on problems/ constraints perceived by agents,

propositions made for decrease heavy constraints on the activity.

b. Data source and collection methods to be uses

The first stage of collection is to assemble all the available bibliographical information. Depending on the chain analysis topic chosen, the expert must inventory organizations or firms in which he will find relevant documentation.


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National statistics (statistic section from the ministries concerned, service reports) to provide documents on annual studies on the state of the economy, results of the last agricultural census, consumption surveys.

Among other state organizations, technical ministries concerned which realized the latest surveys on our commodity chain (ad hoc survey from technical services, surveys realized within projects…) as well as research centers, higher education establishments, state firms, chamber of commerce, farmer’s associations, …

Private sector or private management which are well enough equipped with various surveys on our commodity chain (cotton, rice, sugar…). Trade associations must be explored.

NGOs and local engineering departments that have worked on our commodity chain and financial backers that work or have worked on a project in relation with our chain.

The second step is to update and check data source by working in the field. This would include surveys/ interviews of the chain’s agents for a better knowledge of the cost structure, the socio-economic situation and the main constraints which can be met throughout the work. These direct contacts with the agents of the chain can be realized as follows:

A survey (50-80 agents) on a limited sample is often necessary where there is a large number of agents (as producers, retailers…), especially when we seek to update quantitative data. If means are limited, we can work in "rapid rural appraisal" (RRA), through informal meetings with groups of agents (farmers from the same village, retailers in the same market). It is better to obtain/ verify quantitative data with its extent of variation.

Interviews with an open questionnaire are more appropriate when there is a limited number of agents.

4.2 Comments on the methodological process used in the horticulture market survey

The survey was realized in September 1995, among horticulture market producers of the suburban area of the Bamako district. The aims of this pilot-survey were: (i) to provide a first database for the chain analysis, (ii) to provide elements for the finalization of a methodology with a view to include the fruit and vegetable sub-chain in national agricultural statistics. The latter contributed to change the framework of the survey (expansion of the sample and collected data, changeover from a light survey to a statistic survey). The people in charge of the survey expanded it to 380 horticulture market producers. Finally, after screening of the incomplete survey, the analysis was limited to 303 producers, that is 16% of the producers’ census in the Bamako district. A recent census of these producers facilitated the work. Moreover, some market horticulture farms were analyzed in greater details, and made it possible to complete the understanding of the farm


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system. The interviews with open questions have been realized by the participants to the training workshop for retailers and wholesalers downstream the chain and for traders upstream the chain. A first questionnaire was formulated and tested during the pre-survey. This allowed to establish the kind of possible answers that might be given and to identify which questions might generate misunderstandings (bad answer, no answer...). This allowed the amendment of the questionnaire. In this horticulture gardening market survey, the number of cycles per year and the number of different farms (18 models) complicated matters. Pre-survey work showed some other difficulties; at first, the incapacity to obtain quantities produced by farmers who sell their vegetables by bed collected by retailers; secondly, the variability of current according to dry season/ rainy season, differences in bed size, depending on the farmer… Once revised, the questionnaire used covered the following elements (developed into 10 pages, in the survey):

General characteristics:

age, sex, education, marital situation, farmer’s origin, family size, other activities, previous activities,…

Farm size:

total area, cultivated area, cultivated area for horticulture market (number and size of beds),…

Labor: family labor, permanent and temporary labor, which salaries,…

Infrastructures (well, drill hole, store...)

type, number, cost, average useful life, maintenance cost, financing type,…

Large equipment (with depreciation, useful life > 2 years)

type of equipment, number, cost, average useful life, maintenance cost, financing type,…

Small equipment:

quantities, annual purchases, cost, place of purchase.

Operating costs on the campaign 1994-95:

inputs, packing, rent, royalties, quantities, annual costs, place of purchase.

Marketing:

selling type (on the spot, wholesale sold, other), modalities (sold for cash, on credit, other).

Personal consumption.


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Organization of producers (cooperative, association, group,…)

Net problems

Production:

Number of cultivated bed in dry season/ rainy season, by type,

Average income by bed in dry season/ rainy season, by type. The survey was based on a APCAM’s census8

, realized in March 1995 (1875 market horticulture farms in Bamako). The method of survey used is the “stratified sample survey”, the stratification method based on the census areas.

The data collection in the field was realized by four interviewers from the Agricultural General Management, in a 13-day lapse.

Box 1. Critical comments on the approach used.

The inventory of the current knowledge compared to the specific needs for information for chain analysis (see section 4.1.2) should have made it easier to target data, rather than a survey at farmer’s level.

The farms that were followed at the same time of the survey would have allowed a reduction of the main questionnaire, had we used them to collected data less subject to variations (input price, unit price, useful life of equipment, selling price of vegetable beds, quantity of vegetables produced by bed…)

The survey allowed to obtain the flows of vegetable production only in terms of sold value.

The processing of data allowed us to obtain quickly the main gross data by way of crossed tables with results presented by type of farm (less than 1000 m², 1000 to 5000 m², and more than 5000 m²; total). Parallel to the main survey, five market horticulture farms were analyzed in greater detail (several visits spread in time) for additional information.

5 ZOOM ON THE SUB-CHAIN

5.1 Situation of the fruit and vegetable chain at national level

Some surveys were realized during the last five-six years. Some projects were introduced in the purpose of increasing the production and promoting the market and the process of horticultural produce. Yet there is poor knowledge of this sub-sector because of a lack of reliable statistics, informal aspect of the activities and geographical scattering of the production areas.

8 French acronym of “Assemblée Permanente des Chambres d'Agriculture”.


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The horticultural production has had a substantial growth during the last years in Mali. Several factors contributed to the development of this activity, among which:

the increasing demand from national and sub-regional markets, in relation to the demographic growth and change of diet, especially in an urban environment,

an overall economic situation where the downgrading of the standard of living and the underemployment brought a share of the population to look for other incomes,

The greater areas of production of the country are: Sikasso (with Bougouni and Koutiala), Niger’s Office, Dogon land, and the Bamako basin. The total of area used for horticulture would be 800 ha. ca. The distribution of these areas is uneven, but their increase is significant, not only in the large areas of production, but also around the urban center of Bamako, Segou and Mopti. The large areas of production specialize in different kinds of products; the region of Sikasso produces mostly fruits (mangos, citrus fruits) and tubers (potatoes, sweet potatoes, yam), the Niger’s Office produces mostly garlic and shallot, the Dogon land produces shallot and tomatoes. The Bamako basin is specialized in potatoes (Kati), tomatoes (Baguineda), mango (Koulikoro, Baguineda) and perishable fresh vegetables (lettuce, carrot, cabbage, beetroot) meant for the capital’s market.

Box 2. Assessment of the fruit and vegetable production

There are no reliable statistics by breakdown for fruit and vegetable production. The few surveys available assess the Malian horticultural production between 100.000 and 150.000 ton/year with an important participation of the Sikasso area which provides more than 80.000 ton. The Dogon land and the Niger’s Office produce about 30.000 ton each one. According to the same source of assesses, the Bamako basin would produce about 7.000 ton, and the rest of the country 3.000 ton.

Presently, the horticultural production is divided in a vast range of production systems which have different evolutions, constraints and developments:

Managed market horticulture intended for the national or sub-regional market, carried out in state-owned areas; this kind of system faces some seasonal problems of marketing, in relation to the saturation of the market during periods of important production, and to the disorganization of the supply channels.

Horticulture in small farms which practice a hollow or pluvial culture system. This system has important problems of management service, underdevelopment of marketing systems, credit and input supply, and has difficulties in relation to the land system.

Market horticulture and fruit plantations (citrus fruits, bananas) in the small and medium private irrigated areas (3% out of the total). They are managed by individuals or groups of individuals, usually state employees, retired


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people, traders and young graduate people who use their own financial resources. The performance of this system varies and depends on the technical skill and the management ability of producers.

The sub-urban market horticulture is mainly represented by the green belt of Bamako and other regional capitals, especially Segou, Sikasso and Mopti. This production system has had for some time known an important growth in relation to the increasing demand for fresh vegetables in urban environment. Producers are confronted with (i) land problems (area absorption by urban fabric), (ii) problems in selling the production in certain periods, (iii) lack of stocking and marketing infrastructures.

Market horticulture of farm systems for personal consumption: family gardens cultivated by women, in the pluvial systems, and country gardens cultivated during the second season in the hollow or near a river. The prospects for development of this system are connected to the increase of personal consumption of vegetables in farms, to the increasing demand in the rural areas, and to the spread of technologies adapted for the processing of the product.

The sub-sector employs 50.000 planters and producers. This line of occupation is not very structured. In 1991, there were 13 market horticulture cooperatives gathering 4.000 individual members and a National Union of Cooperatives of planters and producers from Mali (French acronym: UNCPM) which represents this sector at national level. Usually, these organizations are not very dynamic internally and have some problems with management; often causing discontentment within the organization. Compared to food crops and industrial cultures, fruits and vegetables have received little technical support. At institutional level, management is inadequate and staff lack qualification, thus making popularization difficult for the agents, who rarely receive a specialized training on fruits and vegetables. The connection between research and development is practically null and the results of the research are rarely spread. Agronomical research has some acquired knowledge on technical itineraries for the main horticultures (varieties, manure, maintenance), identification and method of fight against main ravagers, selection and production of seeds of certain local hybrid varieties. However, there are insufficiencies in the diversification, the spreading of the production and the method of conservation of the produce. As regards input supply, after the gradual withdrawal of the government, the private sector seems to be able to look after the seeds and fertilizers supply for producers. However, considering the lack of regulations, the quality and the efficiency of the products are not always guaranteed. The atomization of the demand, due to the lack of producers’ organization, has a negative repercussion on the input costs, mainly in the furthest areas of the capital.


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As regards credits, various organizations (notably NGOs) intervene in the framework of informal credit programs. The BNDA, with these credit possibilities, brings its support to cooperatives and country associations for the input supply. However, this is limited to only a few managed areas. In Mali, as well as in most countries in the Sahel, market horticulture productions are mainly seasonal, and concentrated during the period December – March. The seasonal fluctuation of the product price reflects the agronomical and climatic constraints, as well as the underdevelopment of the marketing and processing systems. The market is saturated and the prices drop at the end of the dry season. At the end of the wintering, the prices are very high and part of the demand (onion, tomato paste) is satisfied by importing from neighboring countries or from Europe. Supply channels usually suffer a lack of modern transport and stocking facilities and the underdevelopment of the marketing infrastructure. The marketing chains are characterized by a poor organization uninformed producers, a high number of middlemen by the dominant position of a limited number of wholesalers who do in fact have means of transport, financing and stocking. The inter-regional flows reflect a main convergence, first of all to Bamako’s market, second, to regional capitals nearest to each production center. Within the export market exists an important trade for certain produces (onion, potatoes, mango and capsicum) which goes up to Ivory Cost, Burkina-Faso and in minor importance, to Guinea, Sierra Leone, Mauritania and Senegal. Exports to Europe are practically confined to the mango trade and the string (or French) bean trade meant for France. However, there is a decline of this type of export mainly due to difficulties such as the elevated costs of air transport, the competition with other countries, and the lack of appropriate infrastructures.

Box 3: Fruit and vegetable consumption per inhabitant

Fruit and vegetable consumption per inhabitant is assessed at 15 kg/year for the whole country. The consumption per capita in urban environment is assessed at about 25 kg/year. In Bamako, the consumption has doubled in the last two decades, from 15 up to 34 kg/inhabit/year.

The survey on urban household expenses assesses that fruits and vegetables constitute 5% of the household expenses. In the whole country, these expenses were of about 27 billion FCFA and 41 billion FCFA if we include personal consumption in monetary terms (35% of the production).

5.2 Area of study of the suburban market horticulture of the sub-chain

The area of study is limited to six districts of Bamako, where 1875 producers work on 320 ha of parcel devoted to market horticulture (283 ha actually cultivated).


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Table 1 - Areas devoted to market horticulture and number of farmers

Less than 1000 m²

1000 to 5000 m²

More than 5000 m²

Total

Areas (ha) Num of farmers Average area (m²)

43.1 13.4% 1129 60.2% 381

116.1 36.2% 571 30.5% 2034

161.6 50.4% 175 9.3% 9234

320.8 100% 1875 100% 1711

Bamako District (Census APCAM, March 1995)

5.3 Database from the suburban market horticulture survey.

a. Socio-economic data

In the Bamako District, the average age of a farmer is 45 (9% less than 30 years old, 12% more than 60 years old), 87,5% of the farmers are men. Women farmers (12,5%) mostly work on parcels less than 1000 m². The average size of market horticulture households is 11 people. The size varies from farms of 9 people who work on less than 1000 m², to farms of 15 people (and more) who work on more than 5000 m². The market gardeners are mostly from Sikasso (47%), Koulikoro (20%), Bamako (17%) and Segou (9%). Eighty one per cent of the farmers practice only market horticulture culture; 19% have another professional activity (salaried employees (31%), traders (20%), housewives (17%), and craftsmen. To a lesser extent, there are also students, military, state employees). Among the market gardeners who practice market horticulture as sole activity, 62% had already been farmers, 14% were salaried employees, 9% were traders, and 5% were craftsmen. Regarding the conditions of land usage, most of them are rented (55%), 28% dispose of free use of land, 12% have no authorization, and only 4% of farmers are landowners.

Table 2 - Employment of continuous labor according to farm area

<1000m²

1000-5000m²

>5000m²

Average

% of farmers employing continuous labor

47% 83% 96% 73%

Number of continuous workers by farmer

0,6 1,5 2,5 1,3


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In terms of work, continuous labor employment mostly depends on the kind of cultivated areas. The 1875 market gardeners of Bamako employ 2469 continuous workers (23.210 men-month). The monthly salary amounts to 4860 FCFA, plus the food cover of the labor which is about 20.000 FCFA per month, and some beds at the worker’s disposal. On the other hand, only 13,9% of market gardeners employ temporary labor, that is to say 260 producers, (9% of the small market gardeners versus 31% of the important market gardeners). Thus, 408 people work as temporary labor, for 26 days/ year in average. With only 5,6 workers-day of temporary labor by market gardener, Bamako holds some 10.500 workers-day/ year, that is to say, the work equivalent to 50 continuous workers.

b. Capital of infrastructure

The inventoried capital of infrastructure is quite limited; in average 70% of the market gardeners have a cesspool (value 12.300 FCFA) at their disposal, 27% a private well (value 27.300 FCFA), 2,6% of farmers use a collective well, 2% of farmers have a drilling at their disposal, 2,3% of farmers have a private basin at their disposal, 0,7% of farmers use a collective basin, 1% of farmers use a backwater, 3% of farmers have a hut at their disposal (value 35.000 FCFA). In terms of depreciation costs of infrastructure by market gardener, the figures are the following:

Small producers, 7725 FCFA of annual depreciation costs of infrastructure

Middle producers, 16069 FCFA

Big producers, 19169 FCFA

c. Equipment

The small equipment and the redeemable equipment are distinguished according to their average useful life:

the small equipment, renewed practically each year, includes “Daba” (800-1000 FCFA/unit), watering can (1400-1600 FCFA/unit), bucket (750-1000 FCFA/unit), mattock (750-900 FCFA/unit), and spade (1200-1600 FCFA/unit).

redeemable equipment (average useful life of 2 years at least) includes motor pump (175.000-45.000 FCFA according to the power), wheelbarrow (4.000- 22.000 FCFA according to the type), rake (1.500-1.700 FCFA), pulverizer (13.000-28.000 FCFA/unit), and water pipe.

It must be noted that while the use of motor pumps, wheelbarrows and pulverizers is almost null for small producers, for big producers it is quite common. 99,8% of the equipment is sold on the market, 0;02% is sold in market gardeners cooperatives which are now merely representative.


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Table 3 - Average equipment level by market gardener

Average number <1000m² 1000-5000m² >5000m²

Small equipment

Daba 2,98 5,92 8,98

Watering can 2,19 3,14 4,31

Bucket 1,66 2,18 2,44

Mattock 2,00 2,25 2,80

Spade 0,33 0,63 0,88

redeemable equipment

Motor pump 0,03 0,05 0,53

wheelbarrow 0,01 0,18 0,60

Pulverizer 0,02 0,12 0,37

Rake 0,03 0,20 0,53

Water pipe 0,17 1,54 13,96

Table 4 - Equipment costs per market gardener

costs per market gardener <1000m² 1000-5000m² >5000m²

Small equipment 9435 15531 22794

Depreciation of the equipment 4764 5928 68831

d. other production costs

Besides the costs in relation to the equipment and the infrastructure, the average costs per producer include seeds, chemical fertilizers, manure, insecticide, renting of services (fertilizers, herbicides,…), royalties, oils and fuel, temporary and continuous labor, food for salaried employees, rented parcel,…

e. Market garden productions

Each market gardener has one or several parcels (gross area) at their disposal. The net area that may be cultivated corresponds to the part of the parcel that was formed into market horticulture beds. In average, these beds cover 56% of the total parcel for small producers and middle producers. For big producers, the part of the parcel in beds is more limited (30%), because they also possess a part of the parcel in fruit-bearing culture. The actually cultivated area depends on the number of cycles realized on the culture beds.


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Table 5 - Operating costs per market gardener in the 1994-1995 campaign

Expends (FCFA) <1000m² 1000-5000m² >5000m²

Seeds 22788 32061 63318

Fertilizer 7166 2464 29717

Manure 11681 18487 30934

Insecticides 1829 4907 11200

Technical service renting 1840 2449 3000

Oil and fuel 4748 5980 46941

Continuous labor 29448 63748 119796

Temporary labor 3300 2049 15167

Food for salaried employees 123861 365506 464055

Parcel renting 10726 17694 27533

Other 3 - 2222

TOTAL 93548 159916 349827

Table 6 - Cultivated Areas per type of market gardener

Unit (m²) <1000 m² 1000-5000 m² > 5000 m²

Average gross area available

Net area cultivated

(by bed areas of culture)

Area actually cultivated

(Beds number x 1,25 m²)

Coefficient of intensification

381.8

213.8

1022.1

4.8

2033.3

1138.6

2019.4

1.8

9234.3

2770.3

3083.1

1.1

The different market horticulture productions realized are shown in terms of bed numbers cultivated, in gross value of the production (during the dry season and the rainy season), and by kind of producer, in the three following tables:


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Table 7 - Produces of small farmers (<1000 m²)

Beds cultivated in Total Gross proceeds per bed

Dry season Rainy season beds DS RS (DS) (RP)

(FCFA) (FCFA)

Lettuce 267 158 425 618 554 Onion 7 0 7 1069 1250 Tomato 35 1 36 691 1250 Carrot 124 39 163 834 1002 Cabbage 54 27 81 1072 1357 Turnip 4 5 9 773 870 Capsicum 6 2 8 890 933 Pimento 0 400 Aubergine 2 2 742 533 Gombo 10 3 13 725 905 Melon 0 Cucumber 3 8 11 881 1167 Beetroot 20 6 26 1274 1250 Squash 0 Leafs 13 6 19 378 281 N'goyo 2 2 522 610 Potatoes 4 4 Other 3 4 7 1008 575

For small producers, lettuce is dominant with 52% of beds cultivated. The other dominant productions are carrots (20%), cabbages (10%), beetroots (3%) and tomatoes (4%). The best produces are onions, tomatoes, cabbages and beetroots.

Table 8 - Produces of average farmers (1000-5000 m²)


Dry season Rainy season beds DS RS (DS) (RP)

(FCFA) (FCFA)

Lettuce 434 282 716 592 580 Onion 35 9 44 1112 1841 Tomato 11 5 16 977 1212 Carrot 256 80 336 813 987 Cabbage 153 80 233 1197 1419 Turnip 14 5 19 906 946 Capsicum 22 10 32 862 1129 Pimento 0 1000 Aubergine 6 2 8 1327 1167 Gombo 21 11 32 1147 973 Melon 0 1750 Cucumber 11 6 17 886 777 Beetroot 74 32 106 1368 1342 Squash 0 1667 1000 Leafs 7 3 10 588 311 N'goyo 5 2 7 1079 1125 Potatoes 2 8 10 375 Other 15 8 23 1356 956


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For average producers, lettuce is on 44% of the cultivated beds. The other main produces are carrots (21%), cabbages (14%), and beetroots (7%).

Table 9 - Produces of big farmers (>5000 m²)


Dry season Rainy season beds DS RP (DS) (RS)

(FCFA) (FCFA)

Lettuce 564 397 961 595 658 Onion 164 22 186 1201 2250 Tomato 48 23 71 1577 1041 Carrot 278 136 414 867 1277 Cabbage 198 103 301 1479 2086 Turnip 10 7 17 1083 929 Capsicum 13 4 17 1160 1130 Pimento 6 1 7 725 450 Aubergine 21 6 27 1607 1111 Gombo 83 63 146 1653 1364 Melon 14 9 23 1000 700 Cucumber 19 26 45 1036 1417 Beetroot 80 33 113 1748 1670 Squash 0 3000 Leafs 25 6 31 378 440 N'goyo 20 8 28 970 1286 Potatoes 9 19 28 375 Others 30 19 49 1651 1133

For big farmers, lettuce remains the first production on 39% of the cultivated beds. The other dominant productions are carrots (17%), cabbages (12%), beetroots (5%) and onions (8%). If we consider the whole area, four dominant productions emerge: the lettuce, the carrot, the cabbage and the beetroot. The tomato, which requires an extended area, is mainly cultivated at Baguineda (more than in the suburban areas). The same goes for the onion and the shallot produced in the Niger’s Office and in the Dogon land, and for the potatoes produced near Kati.

f. Other aspects

With regard to the kind of financing used by market gardeners, 99% work on their equity, 0,7% on credit, and 0,3% on gifts from friends or relatives. Only 6% of the producers are members of a cooperative against (13% among the big producers), but more than 64% are members of an association. 29% are not connected to any organization. When market gardeners identify their main problems, 61% speak of land problems (77% of the answers in the small producers), 21% talk about the marketing, 10% talk about the equipment, 2% talk about the seeds. Problems with marketing, as well as with the equipment, increase in proportion to the size of the farm.


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6 FUNCTIONAL ANALYSIS

This part of the analysis was very much debated, mostly to determine the limits of the sub-chain to be studied, to distinguish the different agents, to determine the flow channels relevant enough to be included. There is no need to complicate the chain analysis with secondary elements.

6.1 The different agents of the sub-chain

The agents identified in the chain are the three different types of producers. According to the census, there are 1129 small producers (<1000 m²), 571 middle producers (1000-5000 m²) and 175 big producers (>5000 m²). Upstream of these producers, the 3-4 private importing traders (who provide 99% of the inputs), and the 25-30 fertilizer service providers, were included in this commodity chain. The activity of these agents is actually very dependant on this chain. Also upstream but outside the chain, are the breeders who provide the manure, and the craftsmen whose part of the equipment is sold directly to the producers (other part is sold by the private traders). Downstream of the chain, the marketing channels are very short, given that the market of the final consumption is very near. When the producers sell “directly” on the market, it is usually through their spouse who works as a retailer (only for the consumers) or as a retail wholesaler (for the consumers and the other retailers). In this case, the spouse may be considered as an agent. When the producers sell directly on their farm, they sell by bed or half-bed, either to retailers or to wholesalers (most of which are women looking for additional income). Thus, two types of agents can be identified downstream: retail wholesalers (assessed at 300) and retailers (assessed at more than 600).

6.2 Sub-chain channels

Upstream sub-chain channels include: Manure: (quantity assessed 4600 ton) Breeder out of the chain producers Fertilized, seeds: (quantity assessed: 81 ton of fertilizers and 1400 kg of seeds) Private importing traders producers

Insecticides: (quantity assessed: 4030 liters) Private importing traders

producers (3430 l)


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fertilizer service providers (600 l) Small equipment: (quantity assessed at about 23 000 tools/year) Craftsmen out of the chain

80% producers 20% Private importing traders producers The downstream sub-chains illustrating vegetable marketing are the following: (Quantity assessed at about 11500 ton of fresh vegetables) Producers 60% to the aux retail wholesalers - 83% consumers - 17% retailers consumers Producers 40% to the retailers consumers The percentages above indicate how the flows are divided. These rough assessments are based on discussions with the agents, upstream and downstream of the chain.

It is to be noted that the survey should have allowed us to obtain quantitative data on the input and production flows between the agents of the sub-chain. Given the lack of data, rough assessments were made on the basis of production costs and gross value of the production.

Moreover, given the available data on this chain, relevant to the informal sector, it was not possible to have a census on the number of agents (except for market gardeners). We therefore used to assessments. For example, for the retailers:

sales on the market / average daily sales per retailers x nb of market days

7 MARKETING ANALYSIS

This section includes the presentation of data collected with the agents of the chain who look after the inputs marketing in the upstream chain, and the market horticulture produces in the downstream chain.

7.1 The upstream chain

In the upstream chain, data collected by the survey is limited to the participant agents and the inputs, tools, … and to the expenses of the producers. Contracting agents in the upstream chain (private importing traders and fertilizer service providers) allowed us to bring additional data on the type of flow (see section 6.2), realized margins and a rough assessment of part of the costs.


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Given the limitations of the available data, this step of the analysis gave rise to much debating in the work team, notably in the setting of certain hypothesis (extrapolation based on the results of the discussion with the traders).

a. Fertilizer service providers

The fertilizer service providers have a total turn over in the chain, which corresponds to the cost of the service by all the producers (assessed at 4.000.000 FCFA). Their costs are assessed in percentage of their service sales. Thus, 30% of their gross profit was considered to be devoted to the insecticide purchase, 5% to the equipment maintenance, and 12% to the amortization (pulverizer, bicycle, motorcycle). These agents of the chain also provide other services out of the chain. Some people realize this work as an additional activity to their main job.

b. Private importing traders

Private importing traders are considered to sell to the producers 20% of the small tools, 100% of the insecticides, 100% of the fertilizers, and 100% of seeds used. Moreover, they also sell insecticide to the fertilizer service providers. The proceeds of their sales were assessed through the producer and the fertilizer service provider expenses.

Table 10 - Private importing traders sales

Proceeds of sales (millions FCFA)

Assessed quantities

Sale to the producers:

Small tools 4,701.9 4700 units

Seeds 55,115.1 1378 kg

Chemical fertilizers 20,430.4 81 ton

Insecticides 6,864.0 3432 liters

Sales to the fert. serv. pro.

Insecticides 1,200.2 600 liters

Except for small tools, all these products were imported, with a 6% tax; traders pay the customs transit by 5% of the total price. Moreover, the average profit margin realized by traders is assessed at 25% for seeds, 18% for fertilizers, and 40% for insecticides (percentages calculated on the purchase value, with tax and transit cost). Small tools sold by the private traders (20% of the whole) are bought from local craftsmen. It is resold with a limited margin of 10%.


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In the case of these traders, the marketing costs were assessed at 40% of the gross profit margin.

The corrector coefficients are used to obtain the import value, from the selling value. They allow one to deduct the selling value, the profit margin and the custom transit. They are used as divisors.

Example of the seeds:

1,39 = (1+ 0,25) x (1+ 0,05) x (1+ 0,06)

The gross profit margin is deducted from the selling value less the purchase value (which corresponds to the import cost with the taxes and custom transit).

7.2 The downstream chain

In the downstream chain, we find numerous micro-traders, usually women, distinguished into two groups:

the retail wholesalers (daily sales of about 65 kg)

the retailers (daily sales of about 30 kg) The two groups differ insofar as the first one can also resell to other retailers, they have a bigger working capital, and most of them are market gardeners’ wives.

a. Selling terms

With regard to the marketing by producers, 14,5% of then sell directly on the market (31% of the small producers, 7% of the middle producers and only 2% of the big producers). This direct sale is usually borne by the producer’s wife who works as a retail wholesaler. Thus, the activity will be considered in the framework of the activity of the retail wholesalers. The greater part of the marketing is realized by the sale on the farm to the retail wholesalers or to the retailers (85,5%). The latter come and get supplies every two days. In terms of payment, 14% of the producers sell only by cash, 6% only by credit, while most of them use both methods (80%). Retail selling on the market presents a large variability of the prices according to the season and to the vegetables’ freshness. Thus, vegetables sold 100 FCFA in the morning, can be let at 10-20 FCFA at the end of the afternoon or the next day, to limit the unsold produce and loss, due to the damage problem.

b. Proceeds of sales, profit margin, agent costs

Firs-hand direct contact with the agents allowed us to assess the daily selling value. They were assessed per retailer at 4000-6000 FCFA. For the retail wholesalers, these daily sales were assessed at 12.500 FCFA (10.000-15.000 FCFA). These agents work


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every day of the week throughout the whole year. Annual sales per agent can be assessed at 1.800.000 FCFA for the retailers and at 4.500.00 FCFA for the retail wholesalers. The average gross profit margin noticed is of about 30% when the purchases are from the producers or the direct sales on the consumption market. When retailers buy through a retail wholesaler, their profit margin is more limited (about 15%), leaving retailers with a residual margin of 15%. The principal costs related to marketing are market taxes, the stocking, the transport of the purchases to the market, and the transport of the agent and his personal food.

Table 11 - Marketing costs

Daily expenses Equivalent in cost per kg of product

Retail wholesalers.

Retailers Retail wholesalers.

Retailers

FCFA/jour FCFA/jour FCFA/kg FCFA/kg Market tax 50 50 0.8 1.7

Stocking 80 50 1.2 1.7

Purchase transport

200 100 3.1 3.3

Agent transport 300 250 4.6 8.3

Food 250 250 3.8 8.3

Total 880 700 13.5 23.3

c. The markets

Retailers and retail wholesalers realize their sales on the urban market of Bamako. The main markets are (i) the Medine market, which includes the wholesale and retail wholesale market, mainly supplied by the Sikasso’s suburban area, as well as a retail market, (ii) the Niarela market. The selling authorization on the market is charged at 50 FCFA/table display/ day. Some retailers share the same table; the right of stocking on the market is also charged.

d. Seasonal problems and variation in price

The prices are at their lowest from February to April, and at their highest from June to August. In 1995, the price differential recorded was the following:


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Table 12 - Seasonal variation in price on the Bamako’s market (DNSI 1995)

Minimum recorded Maximum recorded

month price (FCFA/kg) month price (FCFA/kg)

Lettuce March 99 May 261

Beetroot March 175 July 889

Carrot March 179 July 700

Cabbage February 59 June 402

Onion April 140 July 344

Tomato March 125 July 306

Aubergine March 87 July 272

The price evolution indicates important seasonal gaps, prices being multiplied at least by 2,5 (maximum going up to 7). We notice a slight fall of prices in comparison with 1994 for those produces (lettuce, cabbage) whose supply quickly increases.

8 FINANCIAL ANALYSIS

Data on the chain cost is available in the sub-section 5.3 for the market gardeners. The upstream chain costs (inputs marketing) and the downstream chain costs (produces marketing) are available in section 5.

For the realization of the financial analysis, you will need to work on the computer. The method proposed in this section includes a framework that will facilitate the processing by spreadsheet (Excel), following certain principles:

The financial analysis needs the setting of the production-trading account for each type of agent, then the aggregation of these accounts by segment of the chain first, then for the whole chain. This work is facilitated by using a framework of the same production-trading framework account for all the accounts. The framework of account will built as well as an accounting input sheet including all the possibilities of costs and products which could appear in the different agents.

The accounting input sheet will then be copied to have enough accounts at one’s disposal. All the accounts will be arranged in tabular form, to facilitate the reading.

See the application on Excel file.

9 RESULTS OF THE ANALYSIS

The use of the results of the analysis and their interpretation are realized by a team and should bring forth relevant elements of diagnostic.


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9.1 Role of the current policies

Current policies have not developed any real control of the activity. The weak tax system of the activity (imports and trade) facilitated the development of this sub-chain. Nevertheless, there is a major problem in the activity at the land level (pointed out by two third of producers). The land situation remains very precarious for 40% of the market gardeners (in situation of “free using of the lands” or without authorization), precarious for 55% (renting). This results in a limited level of investment.

9.2 Agent strategy and evolution of the chain

The suburban market horticulture sets up a strategic model of subsistence in an urban environment. The producers’ behavior results in a minimization of the risk (credit almost absent) and in a search for quick and regular incomes. In fact, the shorter production cycles are obviously the most developed (notably the lettuce).

9.3 Environment of the chain, service, popularization, credit

As regards services, the chain has functioned so far with limited support of the popularizers. The credit used in the chain stays limited at an informal level and it mostly concerns downstream agents (retail wholesalers and retailers) who can pay the producers after the sales. Formal credit stays very marginal (0,7% of the producers). Presently, cooperatives have lost their real functionality in term of services; their role is limited to their representation, though they represent only 6% of the producers (still members). Their land intervention was reported where market gardeners paid sometimes a kind of “protection”. On the other hand, the associations of producers gather 64% of market gardeners and constitute a major element in the management of the perimeter, of collective infrastructures, and of upstream relations (about inputs). The latter could be an important basis of support from which to improve the services, notably to introduce credits in the chain (association of credit self-managed?)

9.4 Institutional aspects, regulation, land propriety,…

The land problem requires flexible solutions allowing a maximum of market gardeners to work at least by contractual renting. We would need a contractual system ensuring them a minimum period to operate. Furthermore, it would be necessary to facilitate propriety access (credit, “Plan of Land Occupation” including areas reserved to the market horticulture). Any other regulation, notably in terms of marketing, could spoil the good functioning/execution of the chain and its social impact.


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10 ECONOMIC ANALYSIS USING SHADOW PRICES

This step of the analysis was not realized during the workshop. It was included in the case study to show the use of MAPs in the analysis of chain.

10.1 Calculation of the shadow prices

Shadow prices calculated here are coefficients allowing us to convert the values expressed in market price in values expressed in efficiency prices. The current tax rate is 6% for input imports (already included), 30% for oil and fuel imports, and 20% for the other imports. The renting cost is considered as a non-included transfer in the economic analysis. The family labor is counted in the economic analysis. Data being insufficient, the calculation of shadow prices, integrates data previously used in other similar analyses (equivalent to hypotheses).

Table 13 - Calculation of the shadow price

Market costs Taxes Non Labor Factor of

price (FCFA) tradable conversion II Out of the chain

Tool expenses 100,0 15,0 3,0 15,0 67,0 0,97

Seeds 100,0 100,0 1,00

Chemical fertilizers 100,0 100,0 1,00

Manure 100,0 20,0 80,0 1,00

Insecticides 100,0 100,0 1,00

Oil and fuel 130,0 100,0 30,0 0,77

Renting cost 100,0 0,00

Transport 100,0 70,0 15,0 5,0 10,0 0,85 Other AESC9 100,0 30,0 6,0 64,0 0,94

Sundries manag...

100,0 20,0 4,0 25,0 51,0 0,96

Value added

Family labor 0,0 100,0 1,00

Continuous labor 100,0 100,0 1,00

Temporary labor 100,0 100,0 1,00

Food for workers 100,0 100,0 1,00

Taxes 100,0 100,0 0,00

Depreciation 100,0 20,0 4,0 76,0 0,96

9 AESC: All External Services Costs


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10.2 Consolidated account of the chain

This account allows us to show the intermediate results necessary to the construction of the Policy Analysis Matrix (PAM). The opportunity cost of the labor is calculated as follows:

for small producers, the family labor is assessed at 1,5 people x 20 days/year,

for middle producers: 2,5 people x 200 days/year,

for big producers: 3,5 people x 200 days/years. The average opportunity cost of the labor is assessed at 790 FCFA/day (average salary of a day laborer).

Table 14 - Consolidated account of the chain

Market price

Rate conv.

Goods tradable

Good non

tradable

Other domestic factors.

Total

II Out of the chain

Tool expenses 23 039,1 0,97 3 352,2 3 352,2 14 973,1 21 677,5

Seeds 39 651,2 1,00 39 651,2 0,0 0,0 39 651,2

Chemical fertilizers 15 595,7 1,00 15 595,7 0,0 0,0 15 595,7

Manure 29 157,4 1,00 0,0 5 831,5 23 325,9 29 157,4

Insecticides 5 202,7 1,00 5 202,7 0,0 0,0 5 202,7

Oil and fuel 16 989,7 0,77 13 069,0 0,0 0,0 13 069,0

Renting cost 50 051,7 0,00 0,0 0,0 0,0 0,0

Transport 135 362,9 0,85 80 540,9 5 752,9 11 505,8 97 799,7 Other AESC 88 751,1 0,94 25 027,8 0,0 53 392,7 78 420,5

Sundries manag. 0,0 0,96 0,0 0,0 0,0 0,0

Value added Opport. costs of family labor

0 1,00 - - 590 639,7 590 639,7

Continuous labor

92 004,5 1,00 0,0 0,0 92 004,5 92 004,5

Temporary labor

7 549,9 1,00 0,0 0,0 7 549,9 7 549,9

Food for workers

372 652,6 1,00 0,0 0,0 372 652,6 372 652,6

Taxes 22 534,9 0,00 0,0 0,0 0,0 0,0

Depreciation 480,1 0,96 92,2 0,0 350,3 442,4

TOTAL 899 023,5 182531,7 14936,6 1166394,5 1363862,8 The production realized by this sub-chain being consumed totally on the local market, without competition from imported products, and the suburban market horticulture being specialized on the very perishable vegetables (as lettuce), it was realistic to use the same value for the proceeds using the market price and the proceeds using the shadow price.


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10.3 Policy Analysis Matrix (PAM)

The credit balance of the market price shows the profitability of this sub-chain. The profitability for the community (balance using shadow prices) is very positive (more than 40% of the proceeds of the chain), indicating an efficient use of the income and a positive contribution at a national level. The difference between the balance using market price and the balance using shadow price is mainly due to the opportunity cost of the family labor.

Table 15 - Policy Analysis Matrix of the consolidated chain

PAM of the chain Proceeds Goods Domestic Balance tradable factors

Market price 2 307 627,7 100 478,4 798 545,1 1 408 604,2

Shadow price 2 307 627,7 182 531,7 1 181 331,1 943 764,9

Balance 0,0 -82 053,3 -382 786,0 464 839,3

PNC Protection nominal coeff 1,00

PEC Protection effective coeff 1,04

DRC Ratio domestic resource costs. 0,56

The PNC is not very interesting (no calculation of value of imports parity for the proceeds of the chain). The PEC close to 1 indicates a chain is functioning almost in an optimal way. It is superior than 1, because the VA distributed to the agents is superior to what it represents for the community. The ratio DRC of 0,56 shows the efficiency of the chain using the domestic factors. The RFC (Ratio of Factor Costs) is 0,36 (in relation to the non-including of the family labor in the calculation of the market price). Except for import taxes and the license on the market, interference of the government in the sub-chain is insignificant. It has no control over the production prices, no state organization looks after the upstream chain (inputs, processing). The sub-chain functions in a situation of total economic liberalism. The lack of credit, the economic weakness of agents, and especially the land precariousness of the producers have resulted in an economic behavior of minimization of the investment (less than 1% of amortization).


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11 WORDING OF EXERCISES

Functional analysis

11.1 Exercise 1

Preparation of the functional analysis table and the graph: On the basis of the data provided in section 6, set a functional analysis table, and a graph of the sub-chain. Marketing analysis

11.2 Exercise 2

Calculation of the marketing costs: On the basis of the data provided in section 7.1.b, try to start from the sales of importing traders to calculate the imports value, customs taxes at imports and transit costs. Then, try to calculate the gross profit margin and deduct the marketing cost.

11.3 Exercise 3

Calculation of the expenses by breakdown: On the basis on an importing trader interviewed on his expenses (see section 7.1.b), breakdown the 6.760.000 FCFA of total expenses of the importing traders The annual expenses indicated by the importing trader were the license (830.000 FCFA), store rent (1.200.000 FCFA), the salaried employees (600.000 FCFA), transport (100.000 FCFA) and the other AESC (100.000 FCFA).

11.4 Exercise 4

Extrapolations of the yield observations: On the basis of these average daily expenses by retail wholesaler and by retailer (section 7.2.b), it is necessary to obtain an assessment of the annual expenses for the 294 wholesalers and the 627 retailers, knowing they work almost every day throughout the year (360 days). Financial analysis

11.5 Exercise 5

Inventory the intermediate inputs (II): On the basis on the data provided in the section 7, establish list of intermediate inputs for all the agents, distinguishing the II out of the chain (bought out of the chain) and the II within the chain (services or inputs bought from agents within the chain). Ex: the manure bought from the breeder by the market gardeners is a II out of the chain, while the manure bought by the market gardeners from the private importing traders is a II within the chain.


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Remark 1: a product bought by an agent out of the chain, then resold to another agent within the chain appears in both categories. Remark 2: the market horticulture products are also a II for the upstream agents who buy them from the producers.

11.6 Exercise 6

Setting up the production-trading account: (i) Prepare a typical production-trading account (including all the possibilities

of products and costs in the chain encountered by agents) in order to use the same accounting framework, to prepare an account for each agent.

(ii) Realize a production-trading account for each type of agent on the basis of the available data in the previous sections.

(iii) Consolidate the 3 accounts of the different types of producers into a general account of producers. Then, consolidate all the accounts of the chain in a global account of the chain.

In a typical production-trading account (accounting input sheet), the right hand side enumerates the products realized outside the chain and within the chain and the left hand side enumerates all the expenses of II outside the chain and within the chain.

The Subtracting of these II to the Product allows us to obtain the Value Added (VA) in which are distinguished the work income (continuous and temporary labor, food for salaried employees), taxes, financial expenses (insignificant in this case study), then the Gross Profit (provide for a GP item by type of agent). The amortization, integral part of the GP, is also specified10

11.7 Exercise 7

Analyze the value added distribution by agent: Analyze then interpret/ comment the results of the previous exercises:

Analyze the VA distribution by agents generated by the chain,

Compare the GP by agent,

Determine the profit generated by the sub-chain on the salaried employees (% of the VA and comparison with the agents),

Calculate the government’s financial statement of the chain.

10 See Commodity Chain Analysis: Financial Analysis, EASYPol Module 044.



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Results of the analysis

11.8 Exercise 8

Socio-economic effects of the sub-chain: On the basis of an average-sized of household of 11 people for agents, and 3 people for salaried employees (size hypothesis of household confirmed by participants), calculate the total number of beneficiaries. About one million people live in Bamako (90.909 households) and the suburban area provides 11.275 ton of fresh vegetables per year. The urban consumption of vegetables is 34 kg/year/inhabitant (all origins merged). Calculate the urban consumption of vegetables from Bamako by inhabitant (kg/inhabitant, and value in FCFA/inhabit/year), and the urban consumption of vegetables covered by suburban market horticulture, and comment.

12 RESULTS OF EXERCISES

12.1 Exercise 1

Table 16 - Functional analysis table of the sub-chain

Step in the chain Function Agent «Products»

Upstream Supply Processing services

Breeder out of the chain Craftsmen out of the chain Private importing traders Fertilizer service providers

manure small equipment fertilizer seeds processing insecticides

Production cultivation Small producers Middle producers Big producers

Fresh vegetables

Downstream marketing Retail wholesalers Retailers

Fresh vegetables sold on the spot


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Graph of the sub-chain

12.2 Exercise 2

Table 17 - Calculation the import costs (private importing traders)

Selling value Coeff corrector Value import Custom taxes

AESC transit

to obtain import value

CAF 6% 5%

seeds 55 115,1 1,39 39 651,2 2 379,1 2 101,5

fertilizer 20 430,4 1,31 15 595,7 935,7 826,6

insecticide 8 064,2 1,55 5 202,7 312,2 275,7

3 627,0 3 203,8

Breeder 46000 t manure

Craftsmen 23000 tools

Import inputs 4030 l insecticides

81 t fertilizer 1400 kg seeds

Out of the chain

Within the chain

Retail wholesalers

Market horticulture producers

11500 t production

Private importing traders

Fertilizer service providers

Retailers

Households


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Table 18 - Assessment of the marketing costs of the importing traders

(000 CFA) Gross margin Operating costs (40% margin)

seeds 25% 11 032,9 4 413,2

fertilizer 18% 3 124,4 1 249,8

insecticide 40% 2 316,2 926,5

Small tools 10% 427,4 171,0

Total 16 901,1 6 760,4

This allows us to have a rough estimate of other costs, which could be broken down on the basis of data from the interviews of the upstream private traders.

12.3 Exercise 3

Table 19 - Cost distribution by item (private importing traders)

Example survey

distribution /item

Costs

FCFA % 000FCFA

License 830 000,0 29,33% 1 982,7

Rent 1 200 000,0 42,40% 2 866,6

Salaried employees 600 000,0 21,20% 1 433,3

transport 100 000,0 3,53% 238,9

Other AESC 100 000,0 3,53% 238,9

TOTAL 2 830 000,0 100,00% 6 760,4

The gross profits of these upstream agents are studied in the financial analysis section.

12.4 Exercise 4

Table 20 - Annual marketing costs by type of agent

Annual expenses for all the agents

Retail wholesalers. Retailers

(294 agents) (627 agents)

000 FCFA/an 000 FCFA/an

Taxes market 5 298,6 11 294,2

Stocking 8 477,8 11 294,2

Purchase transport

21 194,5 22 588,4

Agent transport 31 791,7 56 470,9

Alimentation 26 493,1 56 470,9

Total 93 255,6 158 118,6

The calculation of the GP by agent is available in the financial analysis section.


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12.5 Exercise 5

II out of the chain are:

Tool expenses (bought from craftsmen)

Seeds (imported by the traders)

Chemical fertilizers (idem)

Manure (bought from the breeders by the producers)

Insecticides (imported par les traders)

Oil and fuel

Renting cost (building, land, stocking of the produces in the market)

Transport

Other AESC (ex: transit, maintenance equipment,…)

Sundries manag.ED

II within the chain are:

Small tools (bought from importing traders by the farmers)

Seeds (idem)

Chemical fertilizers (idem)

Insecticides (idem)

Technique service renting (fertilizer services)

Lettuce (bought form producers by the retailers or the retail wholesalers)

Cabbage (idem)

Carrot (idem)

Beetroot (idem)

Other market horticulture produces (idem)

NB: The four main market horticulture produces were specified in the II, the others were included in “Other market horticulture produces”.


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12.6 Exercise 6

Table 21 - Accounting input sheet of production-trading account

Production-trading account Agent:

EXPENSES INCOME

I.I. OUT OF THE CHAIN SALES OUT OF THE CHAIN

Tool expenses Lettuce

Seeds Cabbage

Chemical fertilizers Carrot

Manure Beetroot

Insecticides Other market gard. produces

Oil and fuel

Renting cost

Transport

Other AESC

Total II out of the chain 0 Total Sales 0

I.I. IN THE CHAINS SALES IN THE CHAIN

Small tools Small tools

Seeds Seeds

Chemical fertilizers Chemical fertilizers

Insecticides Insecticides

Techn service renting. Techn service renting.

Lettuce Lettuce

Cabbage Cabbage

Carrot Carrot

Beetroot Beetroot

Other market gard. produces Other market gard. produces

Total II in the chain 0 Total Sales in the chain 0

TOTAL II 0 TOTAL INCOME 0

VALUE ADDED

Continuous labor

Temporary labor

Food for workers

Taxes

GP traders upstream

GP service providers

GP producers

GP Retail wholesalers

GP Retailers

including depreciation

TOTAL VALUE ADDED 0

TOTAL EXPENSES 0 TOTAL INCOME 0


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Table 22 - Production-trading account of importing traders

Production-trading account Importing traders upstream

EXPENSES (000 FCFA) INCOME (000 FCFA)


Tool expenses 4 274,4 Lettuce

Seeds 39 651,2 Cabbage

Chemical fertilizers 15 595,7 Carrot

Manure Beetroot

Insecticides 5 202,7 Other market gard. produces

Oil and fuel

Renting cost 2 866,6

Transport 238,9

Other AESC 3 442,7

Total II out of the chain 71 272,2 Total Sales 0,0


Small tools Small tools 4 701,9

Seeds Seeds 55 115,1

Chemical fertilizers Chemical fertilizers 20 430,4

Insecticides Insecticides 8 064,2


Lettuce Lettuce

Cabbage Cabbage

Carrot Carrot

Beetroot Beetroot


Total II in the chain 0,0 Total Sales in the chain 88 311,6

TOTAL II 71 272,2 TOTAL INCOME 88 311,6

VALUE ADDED

Continuous labor 1 433,3

Temporary labor

Food for workers

Taxes 5 609,7

GP traders upstream 9 996,3


GP producers


GP Retailers


TOTAL VALUE ADDED 17 039,3

TOTAL EXPENSES 88 311,6 TOTAL INCOME 88 311,6


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Table 23 - Production-trading account of fertilizer service providers

Production-trading account Service providers



Tool expenses Lettuce

Seeds Cabbage

Chemical fertilizers Carrot

Manure Beetroot

Insecticides Other market gard. produces

Oil and fuel

Renting cost

Transport

Other AESC 200,0

Total II out of the chain 200,0 Total Sales 0,0



Seeds Seeds


Insecticides 1 200,2 Insecticides

Techn service renting. Techn service renting. 4 000,7

Lettuce Lettuce

Cabbage Cabbage

Carrot Carrot

Beetroot Beetroot


Total II in the chain 1 200,2 Total Sales in the chain 4 000,7


VALUE ADDED

Continuous labor

Temporary labor

Food for workers

Taxes

GP traders upstream

GP service providers 2 600,5

GP producers


GP Retailers

including depreciation 480,1




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Table 24 - Production-trading account of the small producers

Production-trading account Small producers



Tool expenses 8 521,7

Seeds 0,0

Chemical fertilizers 0,0

Manure 13 187,8

Insecticides 0,0

Oil and fuel 5 360,5


Transport

Other AESC 3,4



Small tools 2 130,4 Small tools

Seeds 25 727,7 Seeds

Chemical fertilizers 8 113,0 Chemical fertilizers


Techn service renting. 2 077,4 Techn service renting.

Lettuce Lettuce 256 362,0

Cabbage Cabbage 96 522,4

Carrot Carrot 145 329,7

Beetroot Beetroot 34 450,9

Other market gard. produces Other market gard. produces 87 818,5



VALUE ADDED


Temporary labor 3 725,7

Food for workers 139 839,1

Taxes

GP traders upstream


GP producers 364 375,5


GP Retailers

including depreciation 14 100,1


TOTAL EXPENSES 620 483,5

TOTAL INCOME 620 483,5


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Table 25 - Production-trading account of the middle producers

Production-trading account Middle producers (1000-5000 m2)




Seeds 0,0


Manure 10 556,1

Insecticides 0,0



Transport

Other AESC 1,7















VALUE ADDED




Taxes

GP traders upstream




GP Retailers



TOTAL EXPENSES 707 810,9

TOTAL INCOME 707 810,9


41

Table 26 - Production-trading account of the big producers

Production-trading account Big producers (>5000 m2)




Seeds 0,0


Manure 5 413,5

Insecticides 0,0



Transport

Other AESC 388,9



Small tools 797,8 Small tools




Techn service renting. 525,0 Techn service renting.








VALUE ADDED




Taxes

GP traders upstream




GP Retailers





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Table 27 - Production-trading account of all the producers

Production-trading account all producers merged




Seeds 0,0


Manure 29 157,4

Insecticides 0,0



Transport 0,0

Other AESC 394,0








Lettuce 0,0 Lettuce 566 463,6

Cabbage 0,0 Cabbage 331 092,9

Carrot 0,0 Carrot 358 825,5

Beetroot 0,0 Beetroot 139 233,4

Other market gard. produces

0,0 Other market gard. produces 335 957,9

Total II in the chain 91 112,1 Total Sales in the chain 1 731 573,3

TOTAL II 183 491,8 TOTAL INCOME 1 731 573,3

VALUE ADDED




Taxes 0,0

GP traders upstream


GP producers 1 077 267,8


GP Retailers


TOTAL VALUE ADDED 1 548 081,5

TOTAL EXPENSES 1 731 573,3 TOTAL INCOME 1 731 573,3


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Table 28 - Production-trading account of the retail wholesalers

Production-trading account Retail wholesalers



Tool expenses Lettuce 368 201,4

Seeds Cabbage 215 210,4

Chemical fertilizers Carrot 233 236,6

Manure Beetroot 90 501,7

Insecticides Other market gard. produces 218 372,6

Oil and fuel


Transport 52 986,1

Other AESC 26 493,1

Total II out of the chain 87 957,0 Total Sales 1 125 522,7



Seeds Seeds




Lettuce 339 878,2 Lettuce 65 143,3

Cabbage 198 655,7 Cabbage 38 075,7

Carrot 215 295,3 Carrot 41 264,9

Beetroot 83 540,0 Beetroot 16 011,8


201 574,7 Other market gard. produces 38 635,2

Total II in the chain 1 038 944,0 Total Sales in the chain 199 130,9

TOTAL II 1 126 901,0 TOTAL INCOME 1 324 653,6

VALUE ADDED

Continuous labor

Temporary labor

Food for workers

Taxes 5 298,6

GP traders upstream


GP producers

GP Retail wholesalers 192 454,0

GP Retailers





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Table 29 - Production-trading account of the retailers

Production-trading account retailers



Tool expenses Lettuce 369 475,9

Seeds Cabbage 215 955,3

Chemical fertilizers Carrot 234 044,0

Manure Beetroot 90 815,0

Insecticides Other market gard. produces 219 128,5

Oil and fuel


Transport 79 059,3

Other AESC 56 470,9

Sundries manag..




Seeds Seeds




Lettuce 291 728,8 Lettuce

Cabbage 170 512,8 Cabbage

Carrot 184 795,2 Carrot

Beetroot 71 705,2 Beetroot


173 018,3 Other market gard. produces

Total II in the chain 891 760,3 Total Sales in the chain 0,0

TOTAL II 1 038 584,7 TOTAL INCOME 1 129 418,7

VALUE ADDED

Continuous labor

Temporary labor

Food for workers

Taxes 11 294,2

GP traders upstream


GP producers


GP Retailers 79 539,8





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Table 30 - Global production-trading account of the chain

Production-trading account Global chain



Tool expenses 23 081,8 Lettuce 737 677,3

Seeds 39 651,2 Cabbage 431 165,7

Chemical fertilizers 15 595,7 Carrot 467 280,6

Manure 29 157,4 Beetroot 181 316,7

Insecticides 5 202,7 Other market gard. produces 437 501,1



Transport 132 284,3

Other AESC 87 000,7




Seeds Seeds




Lettuce Lettuce

Cabbage Cabbage

Carrot Carrot

Beetroot Beetroot



Total II in the chain 0,0 Total Sales in the chain 0,0

TOTAL II 398 633,4 TOTAL INCOME 2 254 941,4

VALUE ADDED




Taxes 22 202,5

GP traders upstream 9 996,3

GP service providers 2 600,5

GP producers 1 077 267,8

GP Retail wholesalers 192 454,0

GP Retailers 79 539,8


TOTAL VALUE ADDED 1 856 308,0



46

12.7 Exercise 7

Table 31 - Distribution of the total value added by group of agents.

VA generated Percentage

per type agent of the total VA

(000 FCFA) (%)

Importing traders 17 039,3 0,92%

Fertilizer service providers 2 600,5 0,14%

Small producers (<1000 m2) 541 187,1 29,15%

Middle producers (1000-5000 m2) 645 205,9 34,76%

Big producers (> 5000 m2) 361 688,6 19,48%

Retail wholesalers 197 752,6 10,65%

Retailers 90 834,0 4,89%

TOTAL 1 856 308,0 100,00%

The value added generated by the activities of the sub-chain is about 1,8 billion FCFA. This short sub-chain (market proximity) is especially advantageous for producers who realized 83,4% of the value added generated by the chain. The upstream chain realized only 1,1% of the value added. This is also due to the non-inclusion in the chain of breeders and craftsmen whose sales represent part of the value added. Downstream, wholesalers and retailers realized 15,5% of the value added.

12.8 Financial impact on the income

As regards gross profit, the sub-chain generates 1,36 billion FCFA, of which 79% is devoted to producers; 1% to the upstream chain, 20% to the downstream chain. The higher import GP by agent is related to the private importing traders (2,5 million FCFA by agent). The lower GP is related to the fertilizer service providers (number of agents probably overestimated and activities of the agents not limited to market horticulture). It is to be noted that among the producers, the GP varies from 1 to 4,5, according to farm size. Small producers (<1000 m²) realized a GP of 323.000 FCFA, that is to say the equivalent to a monthly salary of 27.000 FCFA (38% higher than a day laborer working 25 days a month), the big producers with a GP of 1.467.000 FCFA (equivalent to 122.000 FCFA by month) earn the salary of an executive. The retail wholesalers realize, in average, a GP of 650.000 FCFA on the sub-chain (to be added to the other sales, notably fruits). The retailers, with a GP of 126.000 FCFA are in a precarious situation, even if this is only an additional income to the household, as it is often the case.


47

Table 32 - GP distribution

GP generated per type of

agent

Percent. of total GP

Number agents

GP generated per agent

(000 FCFA) (%) (people) (FCFA)

Importing traders 9 996,3 0,73% 4 2 499 081 Fertilizer service providers

2 600,5 0,19% 27 96 314

Small producers (<1000 m2)

364 375,5 26,76% 1 129 322 742

Middle producers (1000-5000 m2)

456 031,9 33,49% 571 798 655

Big producers (> 5000 m2)

256 860,4 18,86% 175 1 467 774

Retail wholesalers 192 454,0 14,13% 294 653 788 Retailers 79 539,8 5,84% 627 126 766

TOTAL 1 361 858,4 100,00% 2 828 481 593

Table 33 - Sharing of the profit generated by the chain

Part of the VA Part of the VA

(000 FCFA) (%)

AGENTS (GP)

Importing traders 9 996,3 0,54%

Fertilizer service providers 2 600,5 0,14%

Small producers (<1000 m2) 364 375,5 19,63%

Middle producers (1000-5000 m2) 456 031,9 24,57%

Big producers (> 5000 m2) 256 860,4 13,84%

Retail wholesalers 192 454,0 10,37%

Retailers 79 539,8 4,28%

OTHER (salaried employees ...)

Continuous labor 464 697,1 25,03%

Temporary labor 7 549,9 0,41%

Government (taxes) 22 202,5 1,20%

Other (financial costs) non inventoried

TOTAL 1 856 308,0 100,00%

The sharing of the GP only concerns the agents; the following results are proposed to show the other gross profits generated by the chain as well. More than 25% of the value added is “shared” in the form of salaries and food for salaried employees. Taxes paid by the agents of the chain to the government correspond to 1,2% of the value added generated (22 billion FCFA).


48

12.9 Financial statement of the government

The quasi non-intervention of the government in the chain (limited taxes, absence of state organization except for some popularizers of the Bamako district), doesn’t seem to have disturbed a fast development of the sub-chain.

Table 34 - Consolidate account of the government

Consolidate account of the government Incomes Various taxes 22 202,5 Using negative GP of state organizations 0,0 Subsidies 0,0 Results 22 202,5

12.10 Exercise 8

Table 35 - Beneficiary population

Number Average size Beneficiary household population

AGENTS

Importing traders 4 11,0 44

Fertilizer service providers 27 11,0 297

Small producers (<1000 m2) 1 129 11,0 12 419

Middle producers (1000-5000 m2) 571 11,0 6 281

Big producers (> 5000 m2) 175 11,0 1 925

Retail wholesalers 294 11,0 3 238

Retailers 627 11,0 6 902

OTHER 0

Continuous labor 2 469 3,0 7 407

Temporary labors 408 3,0 1 224

Total 5 705 39 737

The suburban market horticulture is a profitable activity for about 6.000 households representing a beneficiary population of about 40.000 people in the Bamako district. Considering these figures, the sub-chain is an activity particularly generating of employment, thus representing one of the standpoints of the informal sector. The quick development of the suburban market horticulture activity, including more than 11.000 tons of fresh vegetables per year on Bamako’s market, gave rise to an evolution of the consumption by providing, in average, 11,3 kg of vegetables per capita per year at a very good price, even for vulnerable groups (see the price evolution according to the condition of the sold produce).


49

This partly explains why the consumption per capita in Bamako has doubled, going from 15 kg to 34 kg/year. Moreover, it shows that 33,5% of the vegetables consumed in Bamako are from the suburban market horticulture.

13 CONCLUSION

This module puts into practice the conceptual presentation of the chain analysis (the first four modules EASYPol). The suburban market horticulture sub-chain analysis of the Bamako’s district (Mali) is used as a support for this methodological approach. This module sets up a framework of experts in charge of analyzing the chain. There is a complex empirical database which illustrates a typical situation (data more or less joined by hectare, perimeter, operator, area).

14 READERS’ NOTES

14.1 Complementary capacity building materials

Download the spreadsheet tables and related pictures that can be used to highlight selected exercises during the lectures or when trainees are in working groups. The trainer may also consider the opportunity to present the relevant segments of the country case study based on real data: Case Study on Commodity Chain Analysis: Irrigated Rice Chain of the Niger’s Office (Mali): Financial and Economic Account,

14.2 EASYPol links

Module EASYPol 047.

This module belongs to a set of modules about the Commodity Chain Analysis.

Commodity Chain Analysis. Constructing the Commodity Chain: Functional

Analysis and Flow Chart,

EASYPol Module 043 Commodity Chain Analysis: Financial Analysis,

EASYPol Module 044 Commodity Chain Analysis: Impact Analysis Using Market Prices,

EASYPol Module 045 Commodity Chain Analysis: Impact Analysis Using Shadow Prices, EASYPol Module 046

See the case study using the Commodity Chain Analysis : Case Study on Commodity Chain Analysis: Irrigated Rice Chain of the Niger’s

Office (Mali): Financial and Economic Account,

EASYPol Module 047

See all VCA material on EASYPol resource package: Value Chain Analysis

http://www.fao.org/docs/up/easypol/335/value_chain_analysis_FAO_horticulture_bamako_exercises_048EN.xls�

http://www.fao.org/docs/up/easypol/334/value_chain_analysis_irrigated_rice_niger_047EN.pdf�





http://www.fao.org/docs/up/easypol/332/value_chain_analysis_market_Prices_045EN.pdf�

http://www.fao.org/docs/up/easypol/333/value_chain_analysis_shadow_prices_046EN.pdf�



http://www.fao.org/easypol/output/browse_by_training_path.asp?pub_id=336&id_elem=336&id=336&id_cat=336�


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15 FURTHER READING

Aldridge, Kimberly M., A framework for analyzing alternative institutional arrangements for the cereals market information system in Mali, Mémoire de “Master of Science in agricultural economics” au Michigan State University, 1992, pp 15-40.

Audette, R., Lariviere, S., Martin, F.; Analyse de filière dans le secteur agroalimentaire:

guide de réalisation d'une étude filière, rapport préliminaire ACDI - Eco. rurale inc., 1994.

Bourgeois, Robin, La constitution des filières et les institutions quaternaires, 1998. Daviron, Benoît, Les défaillances de marché et les filières agricoles, 1998. Fabre, P., Note de méthodologie générale sur l'analyse de filière, Document de

formation pour la planification agricole n° 35, FAO ESPT, 1994. Hugon, Philippe, Avantages comparatifs, compétitivité et organisation des filières,

1998.

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