Agricultural Marketing Brands – SS3 Horticulture and Crop Production Lesson Note (Second Term)

An agricultural marketing board is a government-run organisation that buys crops from local farmers and sells them, mostly to other countries.

Behavioural objectives

By the end of the lesson, students should be able to:

1. define an agricultural marketing board;
2. state the main functions of marketing boards;
3. explain the role of marketing boards in the economy;
4. describe how a marketing board buys and exports farm produce;
5. list the limitations that led to the cancellation of most boards in 1986.

What is an agricultural marketing board?

An agricultural marketing board is a government-run body that buys farm produce at a set price and sells it at home and abroad.

• Owner: the government, not private traders.
• Main buyers: the board buys from farmers, then sells to foreign companies such as chocolate and oil makers.
• Aim: to protect farmers from being cheated by private traders.
• Crops handled: mainly export crops such as cocoa, groundnut, palm produce and cotton.
• Examples: the Cocoa Board and the Groundnut Board.

Why do farmers need marketing boards?

Small farmers need marketing boards because they often cannot sell their crops at a fair price on their own.

Take a cocoa farmer in a small village with 50 bags of good beans. The problems are:

• No transport: the farmer has no truck to carry the crop to a buyer.
• No price information: the farmer does not know the world price of cocoa.
• No buyers: the farmer knows no international buyers.
• Middlemen: a middleman is a trader who buys from farmers and resells at a profit. Some pay very little.

The marketing board solves these problems by acting as the farmer’s buyer and seller.

What are the functions of marketing boards?

There are four main functions of marketing boards: buying and collecting, price stabilisation, grading, and storage.

1. Buying and collecting

• The board sets up buying centres near villages.
• Farmers do not have to travel far to sell.

2. Price stabilisation

• Price stabilisation means keeping the price paid to farmers steady, even when world prices change.
• The board announces a fixed price at the start of the season.
• If the world price drops, the farmer still gets the promised amount.
• This is regarded as the most important function.

3. Grading and quality control

• Grading means sorting produce into classes of quality, such as Grade A and Grade B.
• The board inspects the harvest to make sure it is clean.
• Good grading helps Nigerian crops earn a good name abroad.

4. Storage and warehousing

• The board builds large warehouses.
• Crops are kept safe from rain and pests until a ship is ready to carry them abroad.

What is the role of marketing boards in the economy?

Marketing boards help the economy by earning foreign exchange, funding research, developing rural areas and raising government revenue.

• Earning foreign exchange: sales of cocoa, palm oil and groundnuts abroad bring foreign money such as dollars and pounds into Nigeria.
• Funding research: part of the profit goes to research institutes, such as the Cocoa Research Institute of Nigeria (CRIN), to develop better seeds.
• Developing rural areas: the need to reach farmers often guides where roads and electricity lines are built.
• Government revenue: surplus money (profit) is used by the government for projects such as schools and hospitals.
• Steady farm income: fixed prices give farmers a regular income and encourage them to keep farming.

How does a marketing board buy and export farm produce?

A marketing board buys and exports produce in four steps: announcing the price, collecting the crop, paying the farmer and exporting.

1. The announcement: at the start of the season, the board announces the producer price, which is the price paid to farmers.
2. The collection: farmers take their harvest to Licensed Buying Agents (LBAs), who buy on behalf of the board.
3. The payment: the farmer is paid at once, in cash or through a bank.
4. The export: the board cleans, grades, bags and ships the produce to foreign buyers.

Why did most marketing boards fail?

Most Nigerian marketing boards, including the Cocoa Board and the Groundnut Board, were cancelled in 1986 because of five main weaknesses.

1. Underpayment to farmers: the board sometimes set the price very low to make a large profit. Farmers felt cheated and some stopped growing the crops.
2. High administrative costs: too much money went on offices and salaries for board members instead of farmers.
3. Corruption: some Licensed Buying Agents cheated farmers on the weight of bags or kept money for themselves.
4. Inflexibility: with a fixed price, farmers could not gain when the world price rose very high.
5. Political interference: the government sometimes used the board’s money for politics instead of agriculture.

What is the difference between the marketing board system and the free market?

Under the marketing board system, the government buys and sells farm produce at a fixed price.

Under the free market system, farmers sell to any buyer who offers the best price.

What is the modern situation?

Nigeria today uses a free market system in which farmers sell to whoever gives the best price.

• Risk: without boards, farmers may be at the mercy of private middlemen during a bumper harvest.
• Calls for return: many people want marketing boards brought back to protect farmers.
• Proposed changes: modern versions are discussed with better technology and less corruption.

Evaluation

1. What is an agricultural marketing board?
2. State four functions of marketing boards.
3. Explain how a marketing board earns foreign exchange for Nigeria.
4. Describe the four steps in how a marketing board buys and exports a crop.
5. Give three reasons why most marketing boards were cancelled in 1986.

Assignment

Explain how price stabilisation protects a cocoa farmer when the world price of cocoa drops. Then give two reasons why some people want marketing boards to return today.