APPENDICES

A. Preliminary Activity Check List
B. Criteria for Screening and Prioritising Market Improvements
C. Market Survey Check Lists
D. Marketing Policy Issues
E. List of Further Reading on Marketing Infrastructure

A. Preliminary Activity Check List

This appendix provides a check list of the basic information and issues that will need to be considered in formulating a market infrastructure development project. Subsequent detailed costing, project feasibility studies, final design, preparation of bills of quantities and other tender documents, and final construction are not considered here.

1. INITIAL BACKGROUND INFORMATION

• has a basic list of markets been drawn-up and their locations mapped?
• have official statistics on agricultural production and urban consumption and background information on marketing been collected?
• have arrangements been made to undertake preliminary surveys of existing markets?

2. FACTORS TO BE CONSIDERED IN IDENTIFYING THE PROJECT AND DEVELOPING A DESIGN BRIEF

The Policy Context

• has the basic purpose and function of the project been defined?
• how does this fit in with other policies?
• what are the priorities in event of conflict with other policies?
• what is its relationship to and impact on related projects?
• what are the main operational elements or functions to be included in the project?
• what is the demand for the project and its relationship to existing facilities?
• who are the likely stakeholders and how will they be involved in the planning stage?
• what are the available financial resources and expertise?
• are there any defined capital and operating cost limits and are there any time limits for expenditure?
• what building standards are required to be adopted?

Marketing Operational Factors

• what are the activities to be incorporated in the project?
• what specific factors govern the layout, relationships and priorities of the project?
• are there specific occupational and work requirements?
• are there specific environmental requirements?
• what will be the method of operation and what types of equipment will be required?
• is there any likelihood of change in the future and what flexibility is required?
• what will be the administrative and management structure?
• is it possible to define details of staff categories?
• what outside services (e.g. cleaning, caterers) or franchises might be used?
• what communications systems are required?

General Factors in Market Master Plan Preparation and Design

• what are the main features of the site’s location?
• what are the characteristics of the site(s) and what planning and other constraints are likely to effect the project?
• what type and quality of internal and external environments are envisaged (heated or cooled, landscaped, etc.)?
• are there critical dimensions and/or areas - (such as a target turnover
• per square metre) or other specific requirements?
• are specific groupings of functions in the market envisaged?
• what are the basic accommodation requirements, such as the number and size of traders’ units?
• has the traffic (pedestrian and vehicular) system been clearly defined?
• are specific provisions under construction and environmental legislation required?

3. FORMULATING THE MARKET PROJECT

Analysing Market Conditions

• has the information on existing throughput and the market channels been correctly analysed?
• have projections been made of future market throughput?
• have estimates been made of sales space requirements and site area?
• have ancillary needs and services been defined?
• are the targets and priorities for the development defined?
• has the management structure been defined
• are the staff training needs defined?

Designing the Project

• has an overall master plan of the market site been prepared?
• are there preliminary designs for individual buildings and infrastructure components?
• have specialised equipment needs been defined?

Evaluating the Project

• has an assessment been made of the potential benefits of the project in meeting its objectives?
• have capital and recurrent budgets and cash flow forecasts been prepared?
• have the development options been evaluated and ranked so a clear solution is identified?
• have the financial and economic returns been calculated for the preferred option? (pre-feasibility study)
• has the preliminary master plan been adjusted to conform with evaluation results and finance available?
• have the legal, environmental and social impacts of the project been evaluated?
• have the mode of implementation, sources of finance and follow-up actions been defined?

B. Criteria for Screening and Prioritising Market Improvements

Among rural and urban retail markets there may be a large number of potential candidates for improvement. At the identification stage it will be necessary to prioritise these so that a realistic improvement programme can be drawn-up. The factors used in the selection criteria and the prioritisation process can be given equal weighting, can be ranked (so that a particular factor which is of importance to the development programme can be emphasised) or can be used in a sequential manner to provide a decision tree.

SELECTION CRITERIA

The most important criteria for selection of markets for improvement are likely to be whether:

• the markets are presently in an unimproved state;
• they have a special function, such as an assembly market (used by producers) or are serving a large rural or urban catchment area. Rural primary markets and urban street markets that have solely a local retail function may not be either financially or economically viable;
• they trade in fresh produce (with the majority of permanent and visiting traders selling fresh fruits, vegetables, fish or meat);
• the sites are on land already owned by local government, a market body or authority, or the local community;
• they can be subject to a formal agreement where the developments would be implemented through market committees established with the agreement of the traders;
• there is a willingness on the part of the market traders to improve the efficiency of the present market operations and to accept higher fee or rental charges as a condition of improvements being made;
• assurances have been obtained that adequate financial revenues from the improved markets could be generated to cover all operational and maintenance costs and provide funds for further market improvements; and
• the private sector is willing to take responsibility for improving individual sheds and stalls, and the project limits its activities to investment in the upgrading of “common” basic infrastructure, such as:
  • site preparation, fencing, parking areas, internal road works and main covered sheds and open sales areas;
  • a simple surface/stormwater drainage system, sanitary accommodation and a water supply; and
  • garbage collection points, collection carts and shade tree planting.

RANKING OF MARKET PROPOSALS

Generally, market improvements are only likely to be viable if the levels of investment are relatively modest. The incremental benefits of undertaking the market improvements should provide sufficient revenues to cover all operating costs, including putting aside a fund for future market expansion. Revenues are often unlikely to be sufficient to cover repayment of capital and interest Ð even assuming a long repayment period and a grace period before repayment. The returns are very sensitive to the daily charges. Thus, after meeting the selection criteria outlined above, the short-list of proposals should be evaluated and ranked according to:

• whether they make a significant contribution (in terms of volume turnover) to the trading of fresh produce;
• their importance in the overall market system, with priority given to unimproved major markets;
• whether it is possible to use an improved existing market site. A new market site should only need to be considered if it is necessary to replace an existing congested site or if there is an urgent need for expansion because of population growth; and
• whether they comply with the local development planning policy framework:
  • the improvements can be linked to other related programmes, such as parallel marketing initiatives, the rehabilitation of rural roads or small-scale civil works (drainage and flood control works, culverts and bridges, in areas adjacent to marketing access roads) that would allow the market to function more effectively;
  • the local community is willing to make an undertaking to maintain the facility once it has been improved;
  • the selected markets are compatible with areas targeted under a needs-based policy (such as high density areas deficient in services) or a sustainable livelihood approach;
  • there is a correspondence with existing lending, donor and NGO programmes;
  • there is a lack of alternative funding sources; and
  • there is the possibility that a programme of works could be packaged together to form viable construction contracts for a series of market improvements.

C. Market Survey Check Lists

The following appendix provides a check list of the type of preliminary surveys and studies needed for identification and pre-feasibility studies for design of a market development project. Depending on its availability the information can be derived from desktop studies (such as published statistics and maps, other studies, planning reports and policy statements) or from preliminary surveys. As surveys are costly and time consuming, it is important to only collect the information needed and to avoid undertaking too early the type of detailed surveys which will be needed for a full feasibility study. *

* Details of survey methodologies and examples of questionnaires are provided in the FAO Agricultural Services Bulletins No. 90 (Wholesale markets: planning and design manual, Chapter 11, 1991) and No. 121 (Retail markets planning guide, Chapter 3, and Annexes A and B, 1995).

The information required would normally include the following:

• What are the existing wholesale and retail market channels for fresh produce and other foodstuffs? Where are the products sold (in wholesale and retail markets, supermarkets, through institutional buyers or through direct sales to consumers) and what is the estimated throughput and role of these different channels?
• Background details on existing traders, their type, location and scale of operation.
• Estimated existing and projected throughput of the new market facilities. For simple markets this can be based on a survey of just the overall quantities of produce traded. For assembly and wholesale markets a more comprehensive food balance approach is needed:
  • the quantity of production in a sub-region or town, including what is produced at home or in hobby gardens;
  • the quantity of horticultural and other food supplies into a sub-region or town - from elsewhere in the country and from abroad;
  • products not marketed because of post-harvest losses; supplies to agri-processing facilities; what goes into temporary storage; what is used for animal feed and seed requirements; and what is directly consumed by the consumer;
  • the existing and projected consumption of food products in the sub-region or town, including that coming from the consumers’ own sources; and
  • what would be the share of trade that is likely to go through the new market, in the short and long term.

• Legal and financial data relating to the local authority’s marketing department, a market authority or private company.
• Details of any relevant background studies on horticulture and/or marketing, including existing and planned wholesale and retail trade developments.

2. PHYSICAL CHARACTERISTICS

Although detailed design will not be undertaken until the feasibility stage some data on the physical characteristics of the market site will be needed to prepare an outline master plan. The scope of the information required, which would usually be derived from desk and on-site studies, would normally include the following:

• market-site location map (and/or aerial photography) and a calculation of its extent;
• details of local planning factors, including the compatibility of the market with surrounding land uses;
• a broad description of topography and soil conditions, including flood and other hazard risks;
• details of the existing (and any proposed) traffic movement patterns, such as the number of vehicles and the proportion of different types of vehicles;
• details of any rights-of-way, drainage and pipeline easements and other legal restrictions on site use;
• the presence of mains infrastructure (power, drainage, water supply, sewerage and solid-waste collection);
• the existence and condition of existing buildings and equipment; and
• information on any special physical requirements.

3. DETAILED INFORMATION FOR FORMULATING WHOLESALE MARKET PROJECTS

With wholesale market projects a more rigorous approach is required in order to make a realistic evaluation. This necessitates further preliminary design work to be undertaken so that a reasonably comprehensive cost estimate and financial analysis can be made. For the purposes of the financial analysis a detailed investigation will need to be undertaken, and this should include all of the main uses* in the existing wholesale market site and any proposals for the future facility. The following information will be required:

• a summary of the general characteristics of each of the main uses (i.e. working hours and throughput);
• estimates of present and likely revenues from renting space and from other income sources, such as the hire of equipment and parking charges;
• the overall area of buildings, the number of traders, size of trading space and the type of facilities provided, including equipment, both existing and proposed;
• the numbers and salaries of management personnel and the services that are provided;
• the capital cost for the future site development and the construction of buildings, sub-divided into infrastructure, buildings and equipment;
• the recurrent cost of services and utilities; and
• information on the site value and the level of land taxes and other legal charges.

* Such as: administration buildings; fruit and vegetable retailing or wholesaling; fruit and vegetable producers retailing or wholesaling; potato retailing or wholesaling; flower and plant retailing or wholesaling; meat retailing or wholesaling; dairy, fish and poultry retailing or wholesaling; dry goods retailing or wholesaling; customs and bonded goods; and ancillary uses.

D. Marketing Policy Issues

The following appendix outlines a number of policy issues which may have a direct or indirect influence on the design of a market development project.

1. DEFINING POST-HARVEST RESEARCH ACTIVITIES

High levels of post-harvest losses of crops, both in the field and during storage and marketing, is often a priority problem. Post-harvest research organizations usually emphasise food technology and post-harvest management (processing, preservation, handling, storage, marketing, loss reduction and harvest maturity) of farm products and by-products, but such activities are not always strongly linked to the needs of the sector. A marketing infrastructure programme may seek to influence the direction of such research in order to address specific post-harvest issues, particularly:

• the requirements for new extension training programmes;
• improved on-farm processing and storage;
• improved packaging, handling and transportation methods; and
• improved operational procedures at pack-house and market level.

2. QUALITY STANDARDS AND PACKAGING METHODS

In many countries produce may either be loaded loose in trucks or packed in unsuitable cartons. Market improvements may include the promotion of an improved packaging system. This needs to be approached with some caution as it can result in an inefficient use of transport, either with return loads of empty non-nesting crates or with the traders having to double-handle the produce to put the produce in their own crates.

3. LEGAL FRAMEWORK FOR MARKETING ACTIVITIES

Interventions possible in a marketing system are largely determined by the regulatory framework for marketing. Frequently, under legislation, municipalities are given the mandate to establish and manage both retail and wholesale markets, sometimes with the mandatory requirement that all fresh produce sold in urban areas should pass through the wholesale market system. However, the legal context for marketing activities may also be lacking and this could prevent the development of the required infrastructure. This may have a direct impact on the market design if new institutional arrangements are to be assumed as the basis for operating the market. In that case, a special decree for the regulation of markets might become a precondition to implementing the project, requiring the general scope of a new or revised Marketing Law to be defined.

E. List of Further Reading on Marketing Infrastructure

ABBOTT, J. C., & J. MAKEHAM, 1979. Agricultural economics and marketing in the tropics, Longman, Intermediate Tropical Agriculture Series, Harlow, England.

FAO, 1986. Marketing improvement in the developing world, FAO Economic and Social Development Series No. 37, FAO, Rome.

FAO, 1989. Horticultural marketing: a resource and training manual for extension officers, FAO Agricultural Services Bulletin No. 76, FAO, Rome.

FAO, 1989. Prevention of post-harvest food losses: fruits, vegetables and root crops, FAO Training Series No. 17/2, FAO, Rome.

FAO, 1991. Wholesale markets : planning and design manual, FAO Agricultural Services Bulletin No. 90, FAO, Rome.

FAO, 1993. Guidelines for the design of agricultural investment projects, FAO Investment Centre Technical Paper No. 7, Rome.

FAO, 1993. A guide to marketing costs and how to calculate them, Marketing and Rural Finance Service, FAO, Rome.

FAO, 1995. Retail markets planning guide, FAO Agricultural Services Bulletin No. 121, FAO, Rome.

FAO, 1997. Market information services - theory and practice, FAO Agricultural Services Bulletin No. 125, FAO, Rome.

FAO, 1999. Wholesale market management guide, FAO Agricultural Services Bulletin (in preparation), FAO, Rome.

KUMAR, K., 1993. Rapid appraisal methods, World Bank Regional and Sectoral Studies, Washington DC.

MAGRATH, P., 1992. Methodologies for studying agricultural markets in developing countries, Marketing Series, Volume 2, Natural Resources Institute, Chatham, Kent.

PRICE GITTINGER, J., 1972. Economic analysis of agricultural projects, The John Hopkins University Press, Baltimore.

HINE, J., 1972. Transport and Marketing Priorities to Improve Food security in Ghana and the rest of Africa, Overseas Centre, Transport Research Laboratory, Crowthorne, Berkshire, UK.

UNDP, 1992. Handbook and guidelines for environmental management and sustainable development, Environment and Natural Resources Group, United Nations Development Programme, New York.

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