Agricultural Market Development in the South Pacific

Abstract

The work is directed towards providing appropriate policy prescriptions for agricultural market development in developing countries in the South Pacific. constraints on agricultural market development arise from both structural and operational factors in the agricultural marketing systems in the region. The purpose of the analyses undertaken is to determine whether these constraints are responsible for limiting increases in the productivity and incomes of South Pacific smallholders and, if so, how they might be relaxed. Structural factors are chiefly analysed in terms of the activities of large marketing institutions and the role of village organisations, and their influences on agricultural marketing conduct and performance. Analysis of operational factors is focused on the ways in which agricultural market participants and producers respond to economic changes in the agricultural marketing system: especially, how they alter resource use in response to changes in commodity prices and price risks. Analyses are predicated on results obtained from an assessment of recent agricultural marketing performance and determination of the main factors influencing this performance. Results obtained indicate that the evolution of agricultural marketing systems has retarded market development, particularly by perpetuating a dualistic market structure and suppressing the development of small-scale indigenous market participants. It was also found that supply response varies between the export and domestic agricultural markets. Response appears to be positive and inelastic in the short run in export markets. In domestic markets, however, 'target income' suppliers appear to predominate. Little evidence was found of adverse effects of price risk on participation in agricultural markets. The major adverse effects of risk appear to derive from unreliable behaviour of marketing institutions, particularly in providing services to other market participants.