Chapter 4 - Application of the commodity systems assessment methodology

Formation of an Interdisciplinary Team
Preproduction
Production
Postharvest
Marketing and distribution

In the study of a commodity system, it is important to identify: (1) the inefficiencies within the system; (2) the factors adding costs to the product, and (3) cost effective solutions. To achieve this requires a comprehensive and systematic effort.

An ideal food system allows a product to move from the farm to consumer, arriving at the final destination at a price the consumer is willing to pay and with only minimal losses in quantity or quality. Losses which do occur in a food system indicate inefficiencies within that particular system. In many cases, the cost of reducing a loss - e.g. using cold storage or introducing an improved container - is greater than the value of the product saved by the innovation.

An underlying premise of this manual is that the capacity to diagnose problems and identify solutions exists at the country level whether that country is found in Africa, Asia, Latin America, or the Caribbean.

If society wants to improve the efficiency of existing food systems, it must increase the level of knowledge, technology and/or resources available to participants in the system and/or reduce the level of risk in production and marketing. For example, improved market opportunities may motivate farmers to improve product quality by investing more money in farm inputs and cultural practices. Facilitating the availability of-financial resources to groups of farmers to permit the purchase of trucks, storage facilities and necessary equipment may also contribute to improved efficiency of commodity systems. Training of farmers and intermediaries in improved methods of management, production, postharvest handling, and marketing are examples of ways to increase the level of knowledge.

Any successful attempt to introduce innovations into a traditional commodity system will require an integrated effort between those who make the existing system work (farmers, traders, bankers, and truckers, among others) and those who would like to see the efficiency of the overall food systems improved (specialists, support institutions, politicians and other decision makers). Development of efficient commodity systems requires a joint effort between the private and public sectors.

To integrate the practical with the technical, or the private sector with the public sector, requires a detailed understanding of existing systems and how they operate. It requires the identification of the distinct actors in the system and an understanding of the role played by each. Generally, this type of information is not readily available in one document, one institution or the mind of one individual; however, it can be obtained and organized through a systematic effort.

The rest of Chapter 4 is intended to show how information on specific commodity systems can be collected and organized to identify major components, participants and priority constraints. This will facilitate the design of solutions and strategies oriented towards the improvement of food systems in third world countries. These solutions will be the focus of Chapter 5.

Formation of an Interdisciplinary Team

Describing and analyzing a commodity food system is a team effort requiring input from specialists from all the disciplines. One of the first steps in organizing the study of a commodity system is therefore the formation of an Interdisciplinary Team. The exact make-up of this Team will vary with the type of commodity, the availability of human resources and support institutions, and the results desired from the study. This Team should include the specialists most knowledgeable about the diverse components of the particular commodity system - persons from both the private and public sectors, particularly farmers, intermediaries, transporters, agroprocessors, storage facility operators, extension agents, planners, and policy makers.

If the proposed solutions might require support from public sector institutions, then persons from such institutions should be included on the Interdisciplinary Team. In this way the study serves as in-service training for the individuals and may facilitate favorable decision making during the implementation process.

The team should be as few in number as possible but broad-based enough to cover all important components of the commodity system. If the group is too large for effective interchange, it may be sub-divided into two or more interdisciplinary teams which will meet from time to time to exchange knowledge and reach a consensus.

Another option that has worked successfully is to divide the group by discipline, allowing planners and economists to concentrate on Preproduction, agronomists, entomologists and other production-oriented people to work on Production, postharvest-related people to concentrate on Postharvest, and agricultural economists and marketing specialists to work on Marketing and Distribution (Malaysian Agricultural Research and Development Institute, 1988). Each group works separately as a team but reports frequently to the others in plenary session. In this option, each subgroup is composed of persons from similar disciplines; therefore, their analyses are more likely to be carried out in greater depth.

All Team members should make reference to Components 01 to 26 in Chapter 3 and the corresponding guideline questionnaires in Annex 1. The twenty-six components of a commodity system presented in Figure 3.1 are divided into four quadrants: preproduction, production, postharvest, and marketing/distribution.

The presentation of the information generated by the Interdisciplinary Team can be both descriptive and quantitative-presented in the form of text, tables, graphs, figures and maps. The following sections on Preproduction, Production, Postharvest Handling, and Marketing and Distribution present the steps to be taken and tools to be used by the Interdisciplinary Team(s) during the Commodity Systems Assessment. In many instances, examples of how the information can be presented for best effect and analysis are given in Annexes 3 through 13.

Preproduction

Most of the components described in this quadrant (Component 01-07, Figure 3.1) are applicable to more than one commodity and are of a more general nature than are the components of the remaining three sections, which tend to be crop specific.

In the description of the Preproduction phase it is important to assure that the Interdisciplinary Team includes specialists from central and agricultural planning units familiar with institutional structure and services from both public and private sectors. The Team should also include production specialists familiar with natural resources, environmental conditions and existing systems for the production and distribution of planting material.

One of the first types of analysis to be carried out by the Interdisciplinary Team is that regarding institutions. Given the often large number of public and private institutions involved in agriculture development activities, it is often a major achievement just to identify them and their respective divisions/units and functions relevant to the commodity under study. For each public sector institution pertinent to the production and marketing of the commodity of interest, a questionnaire similar to that shown in Annex 2-A should be completed.

In the case of private institutions, care should be taken to identify organizations of farmers and other support groups which affect the production, postharvest handling or marketing of the commodity being studied. Profiles of representative farmers' organizations can be prepared, including information on their backgrounds, organizational structures, characteristics of members, experiences, problems, and needs (see questionnaire format in Annex 2-B).

Information on development projects and activities which affect the commodity system and are sponsored by private sector groups or bilateral, regional, international, or other types of development organizations, should be collected using the guideline questionnaire presented in Annex 2-C.

The collected information can be summarized in table format as presented in the hypothetical examples of Tables 4.1 and 4.2. Details on the more relevant institutions and their programs, projects and actions can be described in supporting text.

Table 4.1: Major public sector institutions involved in planning, research, production, and marketing of commodity X in country Z

MINISTRY	DEPARTMENT OR UNIT	RESPONSIBILITIES
Min. of Planning	Central Planing Unit	Central planning: formulate monitor and evaluate projects
Min. of Agriculture	Ag. Planning Unit	Plan, formulate, and monitor projects. Provide support services
	Ag. Res. & Dev. Division	Research on production and postharvest constraints in fruits
	Department of Agriculture	Farm inputs, training, supervised credit
Min. of Education	Universities	Basic research on fruits and vegetables
	Division of Food Technology	Research, food processing, quality control, postharvest
Statutory body	Marketing Corporation	Provide services: information, packaging, technical assistance
National Development Bank		Provide credit for agricultural development

Table 4.2: Private sector organizations, institutions, and associations involved in the production and/or marketing of commodity X in country Z

NAME	FUNCTIONS/SERVICES/RESPONSIBILITIES
National Small Farmers Association	Provide services: farm input supply, credit, market information, transportation and marketing of produce
Lorry Operators Association	Transportation of agricultural commodities on a fee basis
Organization for Agricultural Development	Provide services to farmers: Information, training of leaders in management, technical assistance in agricultural production, marketing, and project formulation
Food Processors Association	Processing of fruit products: fruit juice, citrus segments, fresh frozen fruit pulp
National Development Foundation	Management of credit programs, training in administration and accounting & technical
Commodity Growers	Provide basic production and marketing services

Those members of the Interdisciplinary Team specialized in production should analyze available information on existing and potential growing areas and compare it with the environmental requirements of the commodity being studied. (For an example, see Annex 10.) Needs for infrastructure in growing areas should be compared with what is already available. Any serious constraints related to roads, transport costs, or others should be identified.

The Interdisciplinary Team should identify, analyze, and summarize existing policies, plans, programs, and projects which affect the commodity of interest. Relevant information on policies, plans, and projects may be presented as shown in Table 4.3 and described in more detail in a baseline document, including respective objectives and strategies. Likewise, existing tax and financial incentives should be identified and described, with a brief analysis of their present or expected impact on the specific commodity.

Table 4.3: Policies, plans, programs, and projects which affect a commodity

IMPACTING AREA	NATURE OF IMPACT
Production policy	Provides subsidies on farm inputs
Agro-processing policy	Promotes local agro-industry via import controls and low interest credit
Agricultural credit	No clear policy; access to credit difficult for small/medium size farmers
Farmer organization	Government policy does not favor or support organization of farmers. Co-operative law outdated
Marketing policy	Government controls on commodity X. Government distribution through statutory marketing corporation
National Plan	Clearly states that agriculture is to receive priority attention
Agricultural Plan	Commodity X to receive priority attention in development scheme
Commodity X Projects	500 acres of land to be developed for the production of commodity X

This analysis of Preproduction aspects should provide a first indication of feasibility of expanding and/or improving the production of the commodity. If, for example, the only feasible growing area requires a road which is not expected to be constructed for several years, it would be impractical to promote increased production of the commodity. Likewise, if planting material is a constraint, the production program may have to be delayed. If institutional weaknesses are detected, policy changes or institutional strengthening activities may be required as a pre-condition. If insurmountable problems are diagnosed at this stage, it may be necessary to stop at this point and select another priority commodity. If the Preproduction conditions look favorable, the Interdisciplinary Team will move on to Production.

Production

While it is true that there are many differences in the production of fruit, vegetables, root crops, and grains, and that each specific crop has its own particular characteristics and needs, it is also true, in general, that nearly all agricultural crops have similar needs. For example, all require some land preparation - even mushrooms and hydroponic vegetables. Most crops are placed in the ground in the form of seed or plants. All require water, fertilizers, weed and pest control. Most undergo pollination and all are eventually harvested. This commonality among crops facilitates the design of a model which can be used for describing the production process for any crop.

The best starting place for an analysis of the production system is the identification of the diverse steps in the production process. For most crops this entails some variation of those shown in Figure 4.1. Based on this general model, steps can be added and/or deleted until all the important steps in the production process have been identified for the particular commodity being studied.

Figure 4.1: Steps in the production process of most crops

The formation of the Interdisciplinary Team should take into consideration these basic steps in the production process. This is to assure that the Team includes members with the necessary expertise for an in-depth and complete analysis. For each step in the production process, the Team must identify the different types of participants and analyze the positive or negative impact of each upon product quantity and quality in the preharvest and postharvest stages. One way of beginning this process is by answering the following six basic questions:

1. Who is responsible for the action?
2. What action is taken?
3. How is the action carried out?
4. When is the action carried out?
5. Why is the action carried out in that manner and not some other?
6. Where is the action carried out?

After discussion and analysis in plenary session, the Interdisciplinary Team can summarize the answers to the above questions in a table format, with the steps of the production process along the vertical axis and the above six questions along the horizontal axis as shown in Form 4.1.

Form 4.1: Summary of production process for commodity X in country Z

STEPS IN THE PRODUCTION PROCESS*	WHO TAKES ACTION?	WHAT ACTION TAKEN?	HOW ACTION TAKEN?	WHEN ACTION TAKEN?	WHY ACTION TAKEN?	WHERE ACTION TAKEN?
Land preparation
Hole preparation
Acquiring seeds/plants
Planting
Fertilization
Irrigation
Pest/disease control
Weeding
Pollination
Pruning & training
Thinning
Harvest

* The steps should be modified in accordance with the particular commodity being studied.

Form 4.1 produces a succinct summary table such as shown in the example for starfruit in Malaysia in Annex 3. The summary table should be supplemented with additional detail presented in tables or text. Descriptive material might include information on such things as common farming systems, methods of propagation of planting material, nursery management and standards used, description of cultivars or seeds, type of fertilization, particular cultural practices, pest and disease control, and impact of preharvest factors on postharvest losses, among others.

The principal reason for describing the production system is to identify operations within the existing system which negatively affect product yields and/or quality, or contribute unnecessarily to costs of production. Although resources and time are not normally available to quantify the actual impact of preharvest factors on either preharvest or postharvest loses, the Interdisciplinary Team (including farmers) can make a useful subjective evaluation of their significance. The results of such an evaluation can then be summarized following the format presented in Form 4.2.

Form 4.2: Magnitude of losses caused by preharvest factors for commodity X in country Z

STEPS IN THE PRODUCTION PROCESS+	NOT SIGNIFICANT		SIGNIFICANT		VERY SIGNIFICANT
	Quan*	Qual*	Quan*	Qual*	Quan*	Qual*
Land preparation
Hole preparation
Acquiring plants/seeds
Planting
Fertilization
Irrigation
Pest/disease
Weeding
Pollination
Pruning & training
Thinning
Harvest

* "Quan" = Quantity of losses; "Qual" = Quality of losses
+ The steps should be modified to reflect the commodity system being studied.

Note: Place "X" in the appropriate box for each step. In those cases where "X" indicates significant or very significant losses, details should be provided in writing. If reliable information is available, the "X" can be replaced by an estimated percentage loss.

Form 4.2 provides a format to indicate the magnitude of losses (both preharvest and postharvest) caused by preharvest factors. For example, improper practices in training fruit trees in the nursery, or on the farm, may cause fruit to come in contact with the ground, resulting in reduced quality, hence unmarketability. Losses may occur prior to harvest as a result of pests or diseases. Produce reaching the point of maturity may be of poor quality for a variety of reasons - as examples, the lack of proper fertilization, poor water management, or inadequate control of birds or other pests, An example of the application of Form 4.2 to the case study of starfruit in Malaysia is shown in Annex 4.

The production specialists, including farmers, may decide simply to indicate the magnitude of the loses with an X in the respective column of Form 4.2, or if they have sufficient information, may choose to estimate the percent of losses at specific points in the system.

The Interdisciplinary Team (including farmers) should be asked to address the following question: Given the existing state of the art, can the preharvest factors causing preharvest or postharvest losses be reduced in technological and/or economic terms? From Form 4.2, the experts should discuss in plenary session each of the causes identified as "significant" or "very significant" and decide whether the causes of preharvest and/or postharvest losses can be controlled or eliminated in technological and/or economic terms. Their responses can be summarized using a format similar to that presented in Form 4.3.

Form 4.3: Feasibility of reducing the preharvest factors causing preharvest or postharvest losses

STEPS IN THE PRODUCTION PROCESS*	REDUCIBLE IN TECHNOLOGICAL TERMS		REDUCIBLE IN ECONOMIC TERMS
	Yes	No	Yes	No
Land preparation
Hole preparation
Acquiring plants/seeds
Planting
Fertilization
Irrigation
Pest/disease
Weeding
Pollination
Pruning & training
Thinning

* The steps should be modified to reflect the commodity system being studied.

By identifying those preharvest factors which experts feel significantly affect either preharvest or postharvest losses and which can be feasibly modified, decision makers are provided with necessary information to help them allocate scarce resources. For example, they may decide to designate resources to eliminate or reduce the indicated constraint, e.g., improve planting material by building nursery infrastructure and training nursery managers. On the other hand, if immediate solutions are not available, they may decide to allocate additional resources for research to identify solutions, e.g., the selection of cultivars tolerant to a specific pest or disease.

Postharvest

Once the production system, with its participants and problems, has been described and analyzed, the Interdisciplinary Team will move on to the handling of the commodity in the postharvest phase.

No technology has yet been developed which can completely stop the deterioration of food, whether in the fresh or processed form. Consequently, once food enters the postharvest state it begins a process of continuous deterioration, and the success of food distribution depends in great part on the capacity and effectiveness of the marketing system and the methods used to reduce the speed of the deterioration processes.

Most chemical reactions in fresh food products are regulated by the catalytic action of enzymes. The activity of enzymes is in turn partially regulated by temperature and tends to increase from two to four times for each 10 degrees Centigrade rise in the temperature of the medium where the reaction takes place. For this reason temperature is considered the most important determining factor in the deterioration of food products and the consequent duration of postharvest life.

The second most important factor, especially in the tropics, is humidity. While high humidity favors growth of fungi, molds and bacteria, low humidity, especially when combined with high temperature, can cause produce such as fruits, vegetables, tubers, roots, and meats to dehydrate, thus affecting weight, quality and appearance. While the deterioration process is relatively slow in the case of grains, the postharvest life span of produce such as leafy vegetables can be as short as a few hours.

In the previous section - Production - the product was attached to the mother plant and all efforts to maintain productivity and quality took place in the farmer's field. In the postharvest stage, the product moves from point to point where conditions, environment and types of treatment vary. In describing the postharvest process, the objective is to identify and describe each point where people, machines, tools, or other physical materials come in contact with the commodity, affecting its quantity, quality and appearance.

For example, improper harvesting or the manner of placing a product in a container may break the skin on the commodity, exposing it to pathological damage at a later stage. Mechanical damage may occur as root crops are dug. Loose packing may cause damage due to vibration during transportation. Weak containers may cause damage from weight pressure. Products may inadvertently be left in direct sunlight or in storage under undesirable conditions of temperature or humidity.

The human compulsion for economic gain or social pleasure may lead some system participants to make decisions which will negatively affect product quality at a later stage - e.g., farmers watering down products or adding soil and stones to increase weight; marketing board personnel failing to remove perishable produce from the sun during a cricket or soccer match. As the number of participants and steps in the postharvest system increase, the opportunities for damage to the commodity also increase.

As a product moves from the point of harvest to its final destination, many types of handling and functions are carried out which affect the particular product. To facilitate the study of the postharvest process, these actions have been categorized into five types.

OPERATION: Those eventualities which a product undergoes and which prepare it for a following step - e.g., the act of harvesting a product, trimming, washing, waxing, and packing, among others.

TRANSPORT: Transport takes place when a product is moved from one place to another, except when such movement forms part of an "Operation" or is caused by a participant at the site during an "Operation" or an "Inspection."

INSPECTION or CLASSIFICATION: This occurs when products are examined to verify their quality, quantity or other characteristics. It includes the process of regrouping products into different categories or classes.

DELAYS (WAITING): This occurs when conditions do not permit or do not require the immediate execution of a planned following step. When the delay is intentional, the action is classified as an "Operation."

STORAGE: This takes place when the product is intentionally placed in a specific location to protect it from adverse conditions or to hold until it can be marketed.

In describing the postharvest system, the Interdisciplinary Team should identify all the important steps where the product undergoes a particular treatment and set-up a matrix similar to that shown in Form 4.4. As each important step in the system is identified, it should be categorized as an Operation (O), Transport (T), Inspection (I), Delay (D), or Storage (S). The movement of the product can then be diagrammed in columns of Form 4.4 by connecting the symbols from step to step with a line.

At this point the Interdisciplinary Team should evaluate its members' experiences and abilities to insure that it has the expertise necessary to evaluate all the steps identified. If it does not, new members should be added to the team.

The next step in describing the postharvest system is to generate the additional information to fill in the remaining columns of Form 4.4, indicating ambient temperature and relative humidity at each step, distance covered when movement is involved, and time required to complete the action. Any other relevant information can be included in the column for observations. Examples of the application of Form 4.4 are presented in Annex 5-A, showing the flow diagram for starfruit in Malaysia, and Annex 5-B, showing the flow diagram of salad tomatoes in the Dominican Republic.

The information from these tables can be presented graphically as shown in Annex 6-A. If a more expressive presentation is desired, the format shown in Annex 6-B may be used.

Form 4.4: Flow diagram of steps in a postharvest system

STEPS IN THE POSTHARVEST SYSTEM*	SYMBOLS					ADDITIONAL INFORMATION
	O	T	I	D	S	Temp	Rel. Hum	Distance	Time	Observations
Harvest
Transport
Assembly
Packing
Loading
Transport
Unloading
Waiting
Stacking
Storage
Loading
Transport
Unloading
Wholesale
Loading
Transport
Unloading
Retail

O = Operation; T = Transport; I = Inspection; D = Delay; S = Storage
* Note: The steps should be modified to reflect the commodity system being studied.

Once the important points/actions through which a particular commodity passes are identified, the subsequent step is the identification of the different participants carrying out the distinct actions. To facilitate this exercise, a format such as Form 4.5, which is similar to Form 4.1 used to describe the steps in the production process, can be utilized to describe the postharvest process.

In Form 4.5, each step in the postharvest process for a particular commodity is listed in the first vertical column. The respective answers to the six questions along the horizontal axis should be written into the corresponding boxes. An example of a completed table, based on a case study of starfruit in Malaysia, is presented in Annex 7. Since the information presented in table format is only a summary. It must be supported by more detailed information describing each step in the postharvest process, participants involved, equipment and materials utilized, and actions taken.

The information gathered by the specialists forming the Interdisciplinary Team will identify the principal causal factors contributing to postharvest losses. It should also permit the identification of those operations which have little or insignificant impact on losses. In plenary sessions, the specialists should agree on the level of significance of postharvest losses at distinct points in the system. That is to say, the specialists should use a subjective or "gut feeling" to decide whether the postharvest losses are high, medium or low at each point in the system. These can be summarized in a format such as Form 4.6.

In the analytical process the specialists must keep in mind that:

1. A low percentage of losses can be significant if the total volume of product handled is large or if the cost of reducing losses is low, and

2. What is viewed as insignificant for one socio-economic strata may be quite significant for another.

Based on the information from the previous tables, interviews with farmers and intermediaries, knowledge and experience of the postharvest specialists, and other descriptive information, graphical presentations can be made which will summarize the range of postharvest losses at different points in the commodity system. Two alternative methods are shown in Figures 4.2 and 4.3. While Figure 4.2 presents the components of the postharvest system and indicates the severity of the losses, Figure 4.3 actually attempts to specify the level of losses at key points.

Figure 4.2: Estimated levels of pre- and postharvest losses of rice in the Dominican Republic, 1982

Source: La Gra, Martinez y Martinez, 1982, p. 50.

Figure 4.3: Steps in the postharvest system for starfruit and estimated percentage losses in Malaysia, 1988

Source: Malaysian Agricultural Research and Development Institute, 1988, p. 47.

Form 4.5: Identification of participants and their respective actions in the postharvest process for commodity X in country Z

STEPS IN THE POSTHARVEST SYSTEM*	WHO TAKES ACTION	WHAT ACTION TAKEN?	HOW ACTION TAKEN?	WHEN ACTION TAKEN?	WHY ACTION TAKEN?	WHERE ACTION TAKEN?
Harvest
Transport
Assembly
Packing
Loading
Transport
Unloading
Waiting
Stacking
Storage
Loading
Transport
Unloading
Wholesale
Loading
Transport
Unloading
Retail

* Note: The steps should be modified to reflect the commodity system being studied.

Form 4.6: Impact of postharvest operations on postharvest losses for commodity X in country Z

STEPS IN THE POSTHARVEST SYSTEM	NOT SIGNIFICANT		SIGNIFICANT		VERY SIGNIFICANT
	Quan*	Qual*	Quan*	Qual*	Quan*	Qual*
Harvest
Transport
Assembly
Packing
Loading
Transport
Unloading
Waiting
Stacking
Storage
Loading
Transport
Unloading
Wholesale
Loading
Transport
Unloading
Retail

* "Quan" = Quantity of losses; "Qual" = Quality of losses.

+ The steps should be modified to reflect the commodity system being studied.

Note: Place "X" in the appropriate column for each step in the system. In those cases where "X" indicates significant or very significant, provide further details in writing. When reliable quantified loss information is available, replace "X" with a percentage.

As was done in the analysis of the production system, the Interdisciplinary Team can ask the question: Given the existing state of the art, can the postharvest factors causing postharvest losses be reduced in technological and/or economic terms? After discussion among the specialists, including farmers, intermediaries and other relevant participants, the answers can be summarized in a table similar to that shown in Form 4.7.

The identification of those points where postharvest losses are felt to be significant will facilitate decision making. If the Interdisciplinary Team feels that losses can be reduced in both technological and economic terms, then innovations and modifications to the system can be suggested. These may include actions or project ideas requiring investments in such things as infrastructure, equipment, tools, materials, training, or policy recommendations which affect the postharvest system.

If it is felt that losses cannot be reduced in either technical or economic terms, then perhaps recommendations can be made for specific research projects to verify low levels of losses at different points in the system, experiments with alternative methods of packing, transport and storage, trial shipments, or others.

Marketing and distribution

Marketing must be considered during the planning of production and throughout all the business activities associated with the flow of goods and services from production to consumption. In this sense, the concept of market is present when the farmer makes decisions about what crops to plant, when to plant, which and how many inputs to apply, how much and what source of labor to use, when to harvest, and when to sell to whom. The intermediary is also thinking of the market when s/he decides what products to buy, what quantities, what quality and at what price; how and when to transport, select, store, package and sell the produce. Marketing is the integrating force for all these different decisions.

Developing countries are keen to increase their earnings of foreign exchange. They normally attempt to do this either by increasing their domestic production of imported items or by increasing their exports of traditional and non-traditional products. Most countries attempt to do both.

Effective marketing, whether local, regional, or extra-regional, requires the ability to provide some minimum quantity of an agreed-upon-quality product to a given market on a regular basis and at a competitive price. When analyzing the marketing distribution system, it is necessary to generate information which will permit a good understanding of the system and its potential for development.

Form 4.7: Feasibility of reducing postharvest losses in technological and economic terms

STEPS IN THE POSTHARVEST SYSTEM*	REDUCIBLE IN TECHNOLOGICAL TERMS		REDUCIBLE IN ECONOMIC TERMS
	Yes	No	Yes	No
Harvest
Transport
Assembly
Packing
Loading
Transport
Unloading
Waiting
Stacking
Storage
Loading
Transport
Unloading
Wholesale
Loading
Transport
Unloading
Retail

* Note: The steps should be modified to reflect the commodity system being studied.

The make-up of the Interdisciplinary Team should include persons knowledgeable of marketing institutions, transportation, agroprocessing, and both domestic and export marketing. As identified in the final quadrant of Figure 3.1, the components dealing with marketing, distribution and agro-processing should be identified, described and analyzed.

Emphasis should be given to the collection of information concerning:

· participants in the marketing system;
· market channels;
· prices, marketing costs and profitability;
· availability and access to financing;
· service institutions and quality of services provided;
· characteristics of consumer demand (domestic and abroad);
· agroprocessing capabilities;
· availability of transport;
· available marketing infrastructure; and
· potential to supply domestic and export markets.

The team should determine the marketing channels for the commodity under study by reviewing the literature on the commodity and interviewing hands-on marketing persons. The information obtained can then be summarized graphic form following the model presented in Figure 2.1-C.

This type of diagram provides three kinds of information:

1. Types of traders or intermediaries involved in the marketing of a specific commodity;
2. Alternative channels followed by the product from farm to consumer; and
3. Estimated percentage of the total amount of produce moving through each point in the commodity system.

Form 4.5 in the Postharvest section will facilitate the identification of the different types of participants involved in the postharvest process, including the diverse marketing intermediaries. Specific information on channels followed and the percentage of total crop moving through each point should be determined or estimated by review of national production and marketing statistics, literature and interviews with knowledgeable persons. For each participant, detailed information can be gathered using questionnaires similar to those for Components 21 to 26 in Annex 1.

Based on available statistics, a table should be prepared which indicates apparent consumption of the specific commodity per capita. This requires information on national production and imports/exports. It should also give some indication of the quantities of the product allocated for seeds and animal consumption and some estimate of postharvest losses. Data should cover a 10 year period, if possible.

An example of how to determine apparent consumption is shown in Table 4.4, using data from a case study of onions in the Dominican Republic. In this case, the second column shows total yearly national production. From this figure the quantity going for non human consumption is subtracted (seeds, animal consumption, and postharvest losses). To the resulting figure, imports are added and exports subtracted. This yields apparent national consumption. Converting to pounds or kilograms and dividing by national population will produce apparent consumption per capita in pounds or kilograms/year.

Table 4.4: Apparent consumption of onions in the Dominican Republic, 1960-77

YEARS	NATIONAL PRODUCTION	SEEDS AND LOSSES	IMPORTS	EXPORTS	APPARENT CONSUMPTION	POPULATION	APPARENT CONSUMPTION PER CAPITA
	(000) Quint	(000) Quint	(000) Quint	(000) Quint	(000) Quint	(000)	(lbs/yr)
1960	241.2	36.2	21.9	-	226.9	3038.1	7.4
1961	284.5	42.7	16.7	-	258.5	3127.6	8.3
1962	293.3	44.0	33.3	0.03	282.5	3219.8	8.8
1963	317.5	17.6	52.2	0.01	352.9	3314.6	10.6
1964	360.5	54.1	7.7	-	314.1	3412.3	9.2
1965	140.0	21.0	34.8	-	153.8	3512.9	4.4
1966	170.0	25.5	49.9	0.05	194.3	3616.4	5.4
1967	150.0	22.5	2.9	0.19	130.2	3723.0	3.5
1968	120.0	18.0	4.1	0.66	105.4	3832.7	2.8
1969	198.5	29.8	26.8	4.88	190.6	3945.7	4.8
1970	220.5	33.1	1.5	2.18	186.7	4061.9	4.6
1971	220.5	33.1	-	0.10	187.3	4181.6	4.6
1972	242.6	36.4	-	0.14	206.0	4304.9	4.8
1973	264.6	39.7	9.0	5.14	228.8	4431.7	5.2
1974	224.0	33.6	3.8	0.70	193.5	4662.3	4.2
1975	189.9	28.5	-	7.65	153.8	4696.8	3.2
1976	157.8	23.7	-	3.16	131.9	4835.2	2.7
1977*	-	-	-	-	-	-	-

* Estimated; "Quint" = Quintal = 100 lb.

Source: Secretaria de Estado de Agricultura, 1977, p. 167.

A marketing study should give some indication of the major marketing costs and the respective profits received by the farmer and each type of intermediary. Efforts should be made to identify case studies in the literature which indicate marketing margins for the selected commodity. If such information is unavailable, and resources permit, case studies may be carried out to obtain at least a general impression of marketing costs and margins. Case studies can be undertaken by interviewing and observing different intermediaries in the marketing channel during the same time period. A few such interviews can provide a rough indication of the respective margins.

A hypothetical example for the presentation of market prices and marketing costs and margins is presented in Annex 8-A, and in graphic form in Annex 8-B.

Postharvest losses often fluctuate with the availability of produce in the market. As more produce becomes available, prices drop, consumers become more selective and more produce is discarded or fed to animals. Since one of the best indicators of volume of produce in the market is produce price, when average monthly wholesale or retail prices are presented in table and graph form, it is easier to visualize what is happening in the marketplace. Periods of low prices normally indicate larger supplies, whereas periods of high prices tend to indicate scarcities of the commodity in the marketplace.

An example of average monthly wholesale prices of sweet potatoes in Santo Domingo, Dominican Republic, over a 10-year period, is presented in Table 4.5. For each year, monthly averages and coefficients of variation are calculated. For each month of the 10-year period, a seasonal index is calculated. The seasonal indexes plotted in graph form yield a seasonal wholesale price index as shown in Figure 4.4 This figure indicates those months in which prices are likely to be lowest (supply greatest) and those months when prices are likely to be highest (supply lowest), based on a 10-year average of prices.

Table 4.5: Average monthly wholesale prices of sweet potatoes in Santo Domingo, Dominican Republic and seasonal price indices (RD$/100 lbs)

Month	1968	1969	1970	1971	1972	1973	1974	1975	1976	1977	Seasonal index
January	3.64	2.44	2.90	2.52	4.02	2.60	7.67	6.57	9.87	6.32	107
February	3.70	2.34	2.85	2.92	3.71	2.43	5.82	5.12	6.44	5.00	98
March	3.03	2.27	3.07	2.79	3.54	2.69	4.02	3.91	4.72	6.24	84
April	2.62	2.22	2.92	2.99	3.31	2.66	3.13	4.31	3.68	9.89	84
May	3.80	2.14	3.34	2.85	3.56	5.91	3.59	7.60	3.37	11.90	91
June	4.81	1.77	3.95	2.60	3.09	4.32	3.26	8.19	3.39		97
July	4.26	1.85	3.65	2.32	2.56	5.47	2.88	9.37	3.32		72
August	5.31	1.93	3.71	2.58	2.93	6.21	3.25	11.22	3.88		74
September	5.30	3.18	5.00	3.39	2.57	9.41	5.22	11.75	5.93		120
October	3.19	3.74	4.61	3.27	3.02	7.75	5.82	10.32	8.04		139
November	2.55	3.30	3.02	3.07	2.62	6.47	6.50	9.81	6.67		113
December	2.41	3.32	2.82	2.51	2.67	6.66	6.24	10.02	7.41		120
Average	3.72	2.54	3.48	2.90	3.13	4.99	4.78	8.18	5.56

Source: Secretaria de Estado de Agricultura, 1977, p. 138.

Figure 4.4: Seasonal wholesale price index of sweet potatoes in Santo Domingo, Dominican Republic 1968-1977

Source: Secretaria de Estado de Agricultura y El Instituto Interamericano de Cooperación para la Agricultura, 1977, p. 137.

The extent to which the quantity of a product supplied or demanded is affected by changes in price is known as elasticity. Most agricultural products have relatively inelastic demand and the price elasticity of demand is usually negative, i.e., less than one. This means that for a given percent change in price, the percent change in demand will be smaller and in the opposite direction. Thus, if price is lowered by 10% there will be a less than 10% increase in demand. If price increases by 10%, there will be less than a 10% decrease in demand.

Price elasticities of demand are useful in determining how consumers are likely to react under given price situations. If price elasticities are available, they should be utilized in the projections of demand for the commodity being studied.

In the analysis of demand, whether domestic or foreign, consumer demand characteristics must be identified and described to help determine the real potential of a particular market as well as the national ability to supply that market. For any commodity it is necessary to know the intended consumer's preference in such things as size, color, weight, flavor, texture, degree of maturity, and preference for package. In addition, it is important to identify potential constraints such as pests, diseases, insecticide residues, and other factors that might affect ability to market.

Form 4.8 is suggested as one method for summarizing such information. An example of the application of this method to four export markets for Malaysian starfruit is demonstrated in Annex 9.

Form 4.8: Characteristics of demand for commodity X in country Z

DEMAND CHARACTERISTICS*	INFORMATION FOR INTENDED MARKET
	Domestic	Export
Preferred cultivar:
Preferred size:
Preferred weight:
Preferred color:
Preferred flavor:
Desired texture:
Preferred degree maturity:
Preferred type package:
No. units per package:
Preferred wt/package:
Other preferences:
Constraints:
Pest problems:
Disease problems:
Insecticide residues:
Quarantine restrictions:
Other constraints:

* Note: This list should be modified based on available information and information needs for the commodity being studied.