THE ESTABLISHMENT OF THE ALBANIAN MARKET INFORMATION SERVICE
Christopher Grace
USA
BACKGROUND
Albania is mountainous country with
only about 700,000 ha of arable land. More than 130,000 ha of
this area has a slope greater than 25 percent. This area is devoted
to the production of tree crops. The most important crops are
wheat and maize. About 60 percent of the arable area, 420,000
ha is irrigated. Approximately 20 percent of the arable land is
double cropped, usually a vegetable crop, normally following wheat.
Pasture land covers about 430,000 ha. The land in the coastal
plain and eastern highlands are fertile. The cropland in the hilly
and mountainous regions is poor and acidic. This area amounts
to about 300,000 ha. The country has a Mediterranean climate with
most of the rain falling between October and April. Precipitation
ranges from about 1,000 mm/year in the lowlands to 3,000 mm/year
in the mountains 1/.
Before the advent of democracy the country was isolated from the rest of the world. The economy was centrally planned. Autarchy was practiced.
The sudden change in the style of government and the formation of a democratic government in March 1992 that adopted tight fiscal policies precipitated several notable events in the agricultural sector. These were:
The result of these changes created
a highly fractured agricultural sector both in the sense of its
dispersed land holdings and its understanding of a modern western
style agriculture. At the same time, the Ministry of Agriculture
and Food was poorly equipped, in the broadest sense, to tackle
the problems created by the above changes. In these difficulties,
Albanian agriculture is the only major functioning industry in
the country to-day.
MARKET INFORMATION
Under central planning a single price
for a given item prevailed in the market throughout the country.
Conversations with farmers in early 1994 revealed that they had
a good local market information system. This system was dependent
on someone visiting the local market and returning with some price
information usually a range of prices for a variety of products.
Itinerant traders told a similar story. More often than not, this
type of trader, purchased his produce on the basis of his local
knowledge which very often meant he had personal connections in
the locality or had previously been a member of that community.
Overall, there was an informal local market information system
and to some extent the information existed between regions. The
flow of information in this informal system was, and still is
primarily based upon word of mouth. This information system is
limited to its audience and area of coverage.
Extensive inquiries revealed that nobody
had an overall view of the agricultural retail prices in Albania
on a weekly basis. A monthly statistical bulletin of market prices
had a limited circulation but it was privileged information. This
state of affairs was hardly surprising, when you consider that
as recently as 1991 it was the central planners who decided what
was produced and where.
One of the fundamental aspects of a
market economy is the free flow of information. It is the lubricant
of the market economy. This allows, the public at large, to assimilate
the information, process it, then make decisions based on it.
What was absent in Albania was a public reporting service of agricultural
retail prices from the markets in the country. This was the reason
for establishing a market reporting service primarily aimed at
the agricultural industry, particularly farmers, enabling the
market participants to make decisions concerning the production,
distribution and marketing of produce.
The primary function of a market information
service is to collect, process and analyze market data and disseminate
it to the public in a continuous and timely basis.
The aim of this service is to increase market transparency, which may be defined as the full awareness of all parties involved, of the prevailing market prices and other pertinent information. In turn, this allows arbitrage to occur. Arbitrage is buying a product at a low price and selling it at a higher price. There are two types of arbitrage 3/, which are:
Both types of arbitrage took place in
Albania. Spatial arbitrage primarily occurred between May and
mid-October with perishable commodities - fruit, vegetables and
to some extent liquid milk. Winter vegetables such as leeks and
spinach fell into this category from November to March. Temporal
arbitrage was confined to storable products. These were wheat,
potatoes, onions, apples and cheese in the winter months from
November to mid-April.
Other functions that the market information service can facilitate are:
Price information facilitates the allocation
of agricultural resources and the functioning of the market. Without
it, both operate imperfectly.
Characteristics of Market Information
The Albanian public and particular farmers
were not used to receiving retail price information from a government
ministry, nor were they used to expressing an opinion about it.
Many of the initial items proposed for data collection were based
upon a variety of opinions within the Ministry of Agriculture
and Food. A flexible approach was adopted to accommodate change.
Before collecting any data there are several questions that need to be asked of a market information service. Broadly they are:
The first question above, essentially asks what are the characteristics of good market information? They are 4/:
The above characteristics are the criteria
of a good market information service. (A market report is attached
for the reader's information).
Data Collection
The success of any market information
service depends upon the quality of the data. To be of any value,
agricultural commodities must be clearly defined and quoted in
known specified standards.
A vital component in the establishment
of a successful market information service is the training of
market reporters. These were the local Ministry of Agriculture
and Food officials in the districts. They were well acquainted
with the local conditions. Initially six were trained. A further
six underwent training as the service expanded.
Retail prices were collected on the main market day usually a Saturday or a Sunday by sampling at the front, middle and back of the market for a variety of items. An arithmetic average was computed for each item in each market. On the Monday mornings the average retail prices were telephoned to the Ministry of Agriculture and Food. The data was entered and stored in a computer program.
Random checks were carried out by a
third party on the market reporters to make sure that the correct
prices were being reported. In addition, short discussion and
training sessions were held on a monthly basis at the Ministry
of Agriculture and Food for these district officials.
Data Processing and Analysis
At the monthly meetings data sheets
from the market reporters were returned to the Ministry of Agriculture
and Food. These prices were checked against the existing prices
that had been received by telephone and entered into a computer
program. Errors were corrected.
The analysis took the form of a comparison
of prices of the previous week with the current week together
with any relevant information eg a field trip, weather reports
or a visiting district official. A short written commentary, often
indicating possible trading opportunities, was given (see attachment)
together with a print-out of the prices from the reporting markets.
On the far right hand side of the price table a range of prices
was given for each reported commodity. Double stars in the tables,
indicate that the product was not reported. Either the product
was absent when the data collector visited the market or he failed
to notice it when he collected his prices. Usually it was the
case that the product was absent from the market. To a lesser
extent, quarterly reports were produced in basically the same
format as the weekly reports but giving quarterly averages and
graphs showing seasonal trends of a selected group of products.
Copies of both of these publications were distributed to the market
reporters at the monthly meetings to provide them with feedback.
Information Dissemination
The weekly price bulletin was released
on Tuesday midday to the public and the media - newspapers, radio
and television. The price information was broadcast later the
same day on the national radio and television.
The state radio broadcast lasted for
ten minutes after the main news at six pm with a rebroadcast the
following morning at 7.30 am. The format of the broadcast covered
twenty main items -cereals, fruit, vegetables and meat from the
twelve markets. The announcer's voice was clear and well enunciated,in
between each item a few short bars of music were played to hold
the listeners' attention.
One regional radio broadcast has started
in the north east of the country with a format similar to the
national broadcast but only concerned with the main market in
the locality. This market was also reporting retail prices to
the Ministry of Agriculture and Food in the capital.
The state television broadcast was either
before or after the main news on a Tuesday night at 10 pm. The
content of the program was similar to that of the radio - cereals,
dairy products, vegetables, fruits and meat. Average retail prices
were presented in a tabular form, followed by a bar graph presentation
giving the high and low price range by location, compared to a
national average.
The national press printed the retail
price bulletins the first morning after the Tuesday price release.
The information was available in the Wednesday morning newspaper.
More often than not, the bulletin was quoted word for word.
Overall national access to the information
was good with at least 75% of the farms owning either a radio,
television or both, with ownership highest in the mountainous
region 5/! In the initial stages of this project, it was very
important to establish and sustain the linkages with the press
and state radio and television broadcasting bodies, the only channels
for such communication. Their co-operation was fundamentally important
to the success of the program.
Costs
The major part of these costs were staff
salaries. The additional costs were; initially some on-site training,
a computer and a printer, photocopy paper, telephone calls, toner
for a computer printer and photocopy machine and the travelling
costs of the market reporters to the monthly meetings. The total
cost amounted to about US$15,000 per year, not a particularly
high cost for a national marketing service.
Users
Anecdotal evidence gathered from field
trips around the country showed that farmers and traders were
aware of the price information broadcasts from either the radio
or television. Remember this was the first time that there had
been a market reporting service in the country. Some of them,
predominantly itinerant traders, were acting upon it to their
advantage.
After a year of public broadcasting
new participants in the market arena started to regularly appear
in the marketing office in the Ministry of Agriculture and Food.
They fell into two groups:
× Bulk
buyers of agricultural commodities as represented by government
institutions such as the, Tirana School District, hotels, two
military regiments, Ministry of Internal Security and the Ministry
of Prisons. This group bought from wholesalers at 10% to 15% below
the quoted retail price.
× Farming
co-operatives that were principally interested to find out where
the best markets were in their locality.
Based on first hand and anecdotal evidence,
there is a gradual awareness in the agricultural sector of how
to utilize market price information. This is the beginning of
the establishment of a agricultural market economy.
CONCLUSION
In a relatively short period of time Albania has made some very significant progress in the development of its agricultural market economy. Certainly the establishment of a market reporting service has:
Market information is the lubricant
of the market economy. Without it, agricultural resources cannot
be allocated to their best use by decision makers nor can there
be the development of markets and ancillary services. Omitting
such a service is to condemn agriculture to stagnation, where
it could otherwise be a driving force in a transition economy
as it is in Albania today.
RECOMMENDATIONS
Establishing a market information service
is not easy. Much preparatory work must be done before creating
the service. Here are some guidelines for the creation of a market
reporting service born from experience in Albania.
1) Define clearly and logically what
department in the Ministry of Agriculture will be responsible
for this service.
2) Clearly define what agricultural
commodity prices you want to collect. Remember there is a cost
to collecting data.
3) Train your market reporters well
and be prepared to keep retraining them and training replacements
as some will undoubtedly be moved to other tasks or leave government
service.
4) Define your audience (farmers, wholesalers,
retailers).
5) Clearly define at what level or levels
prices are going to be monitored at - farmgate, wholesale or retail?
6) In the beginning, keep the system
small by limiting the number of reporting markets. This will allow
you to refine the market reporting service. Once mastered, it
can then grow in a controlled, purposeful manner.
7) Keep everybody involved with this
service informed, from the market reporters to the news broadcasters.
Strengthen the linkages between them.
8) Create a database for analytical
purposes - policy makers, farmers, wholesalers, retailers etc.
9) Remember the essence of this operation
is speed and accuracy. Weekly retail price information has a limited
life. If the data cannot be collected, processed, analyzed and
disseminated in four days, do not do it.
10) Marketing is an active process that
does not stop. If a reporting time falls on public or national
holiday publish the information as soon as possible after that
date.
11) When the market reporting service
is established and is disseminating information, have a series
of public programs on radio and television explaining particularly
to the agricultural sector, how to use this information.
12) Above all, keep everything simple.
The essence of this operation is speed and accuracy. The market reporting service will contribute to greater rational decision making in the areas of production, distribution and marketing of agricultural produce. Providing such a service will help agriculture make the transition to a market economy.
References
1. An Agricultural Strategy for Albania,
World Bank and European Community pg 1.
2. Results of the 1994 Special Agricultural Survey, Ministry of Agriculture and Food, Service of Statistics and Information, table 21 pg. 31.
3. An Assessment of The Indonesian Horticultural
Market Information Service by Andrew W. Shepherd and Alexander
J.F. Schalke AGSM Occasional Paper No. 8, pg. 1.
4. Users Guide FAO Agri-Market by Bridget
Poon, FAO, Rome, Italy, 1994 pages 10-11.
Full table at Microsoft Excel file