This chapter sets the framework for the guide byconsidering different types of rural and urban retail markets,how the! operate, what are their likely physical andinstitutional deficiencies and what benefits might be expected ifthese defects are remedied. The general focus of the manual isOft markers for the trading of fresh produce, such as vegetables,fruits, grains, fresh meat, fish, eggs and poultry.
Before looking at the markets themselves it is first necessaryto define what is meant by retailing. The purpose of retail shopsor markets for any commodity is to provide an environment forlooking at and buying merchandise that is displayed for sale.With a conventional shop, including a large-scale supermarket,there is usually a sales area where goods are displayed, a shopfront used for advertising the goods and a service area wheregoods can be received, re-packed and stored. With a market stallthese functions occur at one place.
A retail market, like any other type of market, is a locationat which there is a public gathering of buyers and sellers at aknown time. All retail markets involve a large number oftransactions of relatively small quantities of goods on aface-to-face basis between a seller and buyer. An essentialfeature of a market is the opportunity it can provide toimmediately and easily compare prices between different sellersof the same product.
Functions of markets
Markets provide low-cost retailing facilities based onsmall-scale operations and are typically found in the low andmiddle-income, higher density areas of cities and small towns andin the centres of villages in rural areas. The main functions ofmarkets are:
- to provide opportunities for the exchange of goods and for sales by producers in rural areas;
- to provide, at assembly markets, opportunities for the bulking-up and export of goods and produce to outside areas;
- to provide easy access to a wide range of produce for consumers;
- to provide an important means of generating a diversity of retail outlets in towns and cities by supplying low-cost space for street vendors who use stalls or carts and do not therefore require buildings; and
- to provide an opportunity to achieve improvements in food hygiene standards and reductions in post-harvest food losses.
Evolution of retail markets
Retail marketing systems in western countries have broadlyevolved from traditional street markets through to the modernregionally based hypermarket or out-of-town shopping centre. Abroad review of the history of retailing and its relationship tothe growth of settlements is contained in Chapter 2.
Variation in the types of market, whether rural or urban, canbe broadly defined according to a number of characteristics:
by physical and spatial characteristics.
- undifferentiated open sales spaces, operated by an individual hawker or peddler, shown at its simplest and most rudimentary form in Figure 1;
- street or roadside markets (common in both rural or urban areas);
- open-air markets (typically in a paved urban square);
- covered markets (more usual in urban areas, as in Figure 2);
- small-scale retail shops associated with urban market areas; and
- markets sharing a number of the above characteristics, most commonly found in the centre of small rural towns, as shown in Figure 3.
by type of commodity traded:
- horticultural produce, such as fresh fruit, vegetables and flowers;
- freshly slaughtered meat;
- fresh and dried fish; dry foods, including grains;
- cooked food ("street food");
- household, non-perishable consumer goods and utensils;
- cloth and clothing; and, most commonly
- a heterogeneous market, trading in a wide range of goods.
by time of operation (and services that are offered):
- markets offering a wider range of trading functions than retailing, typically those which are combined retail and wholesale markets found in small towns and cities.
- buildings or areas specialising as markets on one day in the week or at a specific time of the day (the whole or part of the site may be used for different purpose at other times such as a car park, as sports facilities or as a cinema, as illustrated in Figure 2);
- weekly or seasonal markets as shown in Figure 4 (generally termed "periodic markets" in rural areas or "weekly markets" in urban areas). A specialized form of seasonal market is the assembly market where the emphasis is on the sale of goods to outside buyers rather than to local consumers; and
- markets operating every day on a permanent site, whether from a fixed building or a mobile stall such as in Figure 5 (possibly with expanded activities at weekends or on specific days).
by type of ownership and operation:
- by urban municipalities or rural local authorities:
- by government or parastatal organizations;
- by private enterprise;
- by religious or charitable foundations and other organizations, such as tracers' associations; and
- open markets operated on "common land" not owned by any individual or organization.
Justificationfor market developments
A market is usually located at a critical point in the overallmarketing, transport and passenger movement system. In the caseof rural areas, and in many urban areas, markets also form themain link between agricultural producers and consumers.
In formulating a market development programme, whether for anew or upgraded market, there is a great temptation to attempt tosolve all the problems experienced at a market by adopting aradical physical solution. Responses to problems might includecomplete rebuilding, relocation to a new site or the separationof one function of the market (e.g. wholesaling) from the otheruses. It is often found that such radical approaches may be bothimpractical and unnecessary. The best option may be to developand rationalise operations on the existing site including,particularly, improving the market's management system.
First of all it is necessary to be very clear as to what arethe constraints that a development programme will need toaddress. A survey and analysis of present market characteristics,conditions and operations is invariably required (these areelaborated in Chapter 3 and in Annexes A and B). Typical problemsa market may exhibit can be broadly classified into physicalproblems and social and managerial problems.
Physical problems: these might include thefollowing:
- insufficient sales space, particularly of temporary spaces at peak periods and during peak seasons, leading to produce being sold in the open, with consequent spoilage;
- the presence of poorly designed and constructed sheds, making the marketing process inefficient and inhibiting customer flow;
- a general lack of building maintenance;
- insufficient circulation space and traffic management measures, leading to vehicular and pedestrian congestion;
- lack of parking provision and areas for unloading;
- poor condition of roads and paving;
- inadequate drainage and severe flooding problems, leading to produce losses and potential health problems;
- inadequate site security and overnight storage facilities; and
- inadequate hygienic provision for meat, poultry and fish handling, including a lack of refrigeration facilities.
Social and managerial problems: these mightinclude the following:
- difficulties in enforcing the market bye-laws and regulations;
- an inefficient use of market sales space with low sales volume per trader and low rents;
- a high demand for places in the market, reflecting either uncontrolled use of space or relatively high profit margins; and
- a market management system where there is no clear relationship between revenues and costs and, consequently, the market is underfunded, especially for repairs and maintenance.
Components of a market development project
The implementation of a market improvement programme canbecome a vehicle for addressing the physical andsocial/managerial problems outlined above. It is important tostress, however, that a project should not be artificiallyexpanded to deal with peripheral problems unless there is anadditional budget available for that purpose. With the exceptionof main urban covered markets, therefore, infrastructureimprovements are likely to be very modest.
The typical range of construction works that might be neededfor the upgrading of rural markets and small-scale urban marketscould include: internal access roads and parking, paving andsales pitches, surface water drainage, including perimeterdrainage and outfall structures, perimeter fencing and accessgates, tube wells/hand pumps, latrines and, if appropriate, theprovision of a market supervisor's office. Traders themselves cancontribute to the improvement of the market by, for example,improving building spaces which they rent on a long-term basis orby providing temporary shade structures.
There is little point in undertaking market developmentimprovements unless they result in a positive socio-economicimpact. To achieve such an aim effective regulation of markets isessential. Inside the market, both hygiene rules and revenuecollection activities have to be enforced. Of equal Importance,however, will be the maintenance of order outside the market.Licensed traders in a market will not be willing to cooperate inraising standards if they face competition from unlicensedoperators outside who do not pay any of the costs involved inproviding a proper service. On the other hand, market developmentshould not be used to artificially reinforce exploitation oftraders by providing a monopoly in retail trade to an influentialminority.
Existing rules should be enforced within the framework of acoherent policy on the numbers of licenses to be issued and thesites at which selling is allowed. Street hawkers, for example,can play an important role in retailing of low-cost cooked foods,but this should not be allowed to conflict with the activities ofmarkets. One of the major goals of a market development programmeshould be to re-establish a framework for managing markets. Oncecreated, a wide range of benefits might be expected from aproject. These are outlined below. Such benefits may form thebasis of the project formulation and economic analysis explainedin Chapter 8.
Reductions in crop losses
Many projects are justified on the basis of reductions in croplosses through quicker and better handling in an improved market.However, such losses can be overestimated. Savings are sometimesquoted as being between six to ten per cent of produce by valuebut this would be very high in normal circ*mstances. Harvestingand handling at the farm and damage during transport are usuallyfar greater sources of post-harvest loss than the limitedhandling that takes place in a market. A more realistic level oflosses at market level is in the range of two to five per cent ofthe value of the produce in the case of rural markets and evenless with urban markets.
With the most up-to-date facilities there will always be acertain amount of wastage that cannot be reduced and, whereproduce is of relatively low value, such as tomatoes in the glutseason, the effort involved in loss reduction may not even beworth taking. Nevertheless, the provision of covered stalls,better storage and, in many countries, an end to flooding ofmarkets in the rainy seasons, will all help to reducepost-harvest losses to more acceptable levels.
An important aspect of produce loss is pilferage. This can bevery much more significant than other losses and may be radicallyimproved by better fencing and security arrangements. Thereduction of congestion by the improvement of access to a marketwill also help to reduce losses artificially created by aninability of producers or traders to sell produce.
Improved efficiency of market operations
Improved conditions in a market can result in substantialsavings for market operators. The potential for greaterthroughput due to an improved layout and the elimination ofcongestion, resulting in reduced vehicle operating costs (seebelow) means that operating expenses for both users andmanagement will be reduced. These savings should be reflected inhigher rental levels and charges.
However, the present situation in many markets is one of verylow rents. Where public facilities are charged out to users atlower than normal levels, the facilities are likely to be usedinefficiently. Increasing rents and the level of charges to morerealistic levels without a parallel improvement in benefits tomarket traders, in terms of maintenance or services available, islikely to be met with strong resistance from market users.Improvements have to lead to savings in the trader's operatingcosts or otherwise market prices are likely to increase tocompensate for the additional costs.
Public health benefits
In the case of urban markets, health gains, while they arevirtually unquantifiable in financial or economic terms, arelikely to be the greatest project benefit. Markets are a majorpotential source of infection from food and water-borne diseases.The central location of many street markets and theirrelationship to the public transport system may offer aparticularly rapid way for disease to spread. Such diseases canarise from a number of sources, including;
- poor sanitary conditions for the slaughter of poultry and the sale of meat and fish;
- lack of public toilet facilities, including hand washing facilities;
- inadequate market cleaning provision and solid-waste disposal practices; and
- contaminated food resulting from a lack of adequate paving and drainage, particularly critical during the rainy seasons.
The most immediate health benefit is likely to be a reductionin the more common and less threatening diseases, such asgastro-enteritis and worms. However, if only one epidemic of amore dangerous but less common diseases such as cholera, isprevented or reduced, a market programme will have beenjustified.
Amenity and aesthetic benefits
There can be substantial improvements in amenity andconvenience for all users from market improvements and this hasalways been viewed as the main benefit of programmes implementedin urban areas. Traders will usually have better stalls withgreater protection from the sun and rain. while consumers will beable to make their choices from produce that is more cleanly andattractively displayed.
In the case of market improvements in traditional urban areasthere may also be a conservation gain, with related benefits tothe tourist trade. Many markets are important public buildings(such as the Starbroek market in Georgetown, Guyana and the OldStone Town Market in Zanzibar) and when they have been upgradedthey can provide the basis of an integrated area improvementprogramme. Figure 6 is a typical example of such an areaupgrading, where a proposal for pedestrianisation of a section ofa small coastal town in Britain was developed around theimprovement of its fishing port and associated market,
Time savings
Time savings can occur in two ways: for market users and forother road users. In the case of the former the savings willoccur because the market improvements reduce waiting time forthose delivering and collecting produce. Such savings will tendto be greatest in the case of assembly markets, where theessential function of the market is one of providing atrans-shipment point.
Time savings for other road users occur when the presentarrangement of a market has an impact on the adjacent roadsystem. For example, the fruit and vegetable assembly market atAl Husainiah in Yemen straddles the main highway between the portof Hodeidah and the city of Taiz and the whole south-central areaof the Republic. This is an extremely busy road with an averagedaily traffic level of 2,865 vehicles travelling in bothdirections. During the market's peak season it takes road traffican hour or more to get through the market area. On that basisthere would be considerable benefits to other road users if themarket was relocated away from the main road.
Generation of public funds
Many local authorities face severe budgetary difficulties andincreased revenues from retail markets would consequently be verywelcome as a useful means of generating additional income. In thecase of private markets the same arguments will generally apply.
Provided that the raising of these funds takes place withinthe context of a general improvement in market management theadditional funds can provide a significant contribution toupgrading the quality of services offered to both rural and urbanresidents. The profits will be available for the provision ofadditional market facilities and for re-investment in othermarkets and infrastructure. The importance of this is emphasizedby the fact that unimproved markets often do not even cover thecost of the staff employed to run them, let alone operations andmaintenance, the cost of capital or the rental value of the site.
Income generation is equally important with the introductionof structural adjustment programmes, where in many countries theopportunity is often taken to rationalize the operation of formercentralized, state-operated food distribution facilities in orderthat they can operate as commercially run retail markets. Anexample of this process, taking place in China, utilizing thesite of a state-owned facility, is shown in Figure 7.
Income from additional services
A variant of income generating benefits arises when a marketis able to provide services additional to those available before.An example of this is the provision of chill stores for thestorage of fruits, meat and fish, and banana ripening rooms.Grading and packing facilities are also a possibility. However,the introduction of such additional facilities needs to beapproached with some caution. There is little point in raisingthe standards of produce presentation if there is no local demandfor graded produce.
Impact on agricultural production
Market developments can stimulate increased growth inagricultural production by providing access to marketopportunities arising from demographic and income changes. Such"induced" growth is particularly important forsmallholder producers who may rely on markets as their sole ormain outlet. With the development of an economy they may begin toface stiff competition from larger commercial operators able toafford the use of more sophisticated techniques, such as on-farmgrading and packing, and direct sales to supermarkets. Raisingstandards in markets is likely to provide a means by whichsmall-scale vegetable and fruit producers can improve theefficiency of their marketing in order to compete effectively inthe sale of greater quantities of cheaper produce.
