How can African countries valuate their fluid economies?
Farmers and traders can only know of potential income if they know market prices from various markets such as local markets, district markets, provincial markets and institutional markets like restaurants and hotels. Cost benefit analysis can reveal viable return on investment (ROI) pathways.
AMAJOR headache for many developing countries is developing criteria for valuating highly fluid and transitory economic activities that are now more prevalent. Employment creation in agricultural markets and informal business ecosystems is now a major domain for women and youth, most of whom are highly mobile.
Economic actors in the trading business specialise on fetching commodities from scattered farming areas while others specialise on transportation, loading & off-loading as well as punneting food into diverse nutrition baskets for different consumers. Need for an information
tracking system Valuating a fluid agricultural-driven economy cannot be done without a reliable information tracking system.
Unlike brick and mortar enterprises such as carpentry, construction and metal fabrication, many enterprises are so fluid that different valuation methods are required in order to fully account for their economic contribution and growth patterns.
Unfortunately, most developing countries lack a system for tracking statistics covering all agricultural commodities. There is a tendency to capture statistics on a few colonial crops like tobacco, maize, cotton, cocoa, wheat and sugarcane. No statistics are captured for hundreds of diverse food commodities like horticulture on which the majority depend.
Failure to account for hidden
costs At the production level, the collection of statistics on a few commodities focuses on production costs (mainly cost of inputs) and land areas in hectares, then harvests are recorded in tonnes.
The most important hidden costs that are completely ignored at the production level relate to natural resources such as soil and water.
Just like machinery, land and water suffer from wear and tear. How do we compensate land for losses in nutrients, soil structure, water holding capacity and other forms of degradation?
The same applies with water. Countries and communities are losing through inappropriate use of water. Yet there is no credible assessment criteria for water versus appropriate equipment. The amount of money people pay to national water authorities for drawing water from dams and other reservoirs does not fully compensate for various ways through which water is misused. Due to lack of proper valuation mechanisms, most farmers only realise the cost of land degradation when yields of the same crop from the same land start decreasing.
These are visible consequences of not taking care of the cost component associated with land degradation.
Another serious hidden cost relates to deforestation.
Countries that are earning foreign currency through tobacco production and exporting are yet to factor in the cost of deforestation.
Also in need for valuation is household consumption. There is a tendency to account for what a receipt or pay slip can be produced. Valuing losses at production level does not even adequately focus on physical losses, either through inefficient harvesting methods, pests and diseases which reduce potential yield as well as dry spells, droughts and floods, loss of pastures and many others.
In a changing climate, ways of valuing all these losses in monetary terms are critical. Hidden costs could constitute more than 30 percent and that is too much for struggling economies. Return on investment pathways Where some bit of statistics are collected, the most visible statistics are often on field crops.
Horticulture is neglected in terms of costs, income, potential income at harvest and other elements. This is where understanding markets at granular level becomes very important.
Farmers and traders can only know of potential income if they know market prices from various markets such as local markets, district markets, provincial markets and institutional markets like restaurants and hotels. Cost benefit analysis can reveal viable return on investment (ROI) pathways.
Exploring determinants of value addition and logistics Markets in developing countries are becoming too broad although small.
There are different values for the same commodities due to changes in tastes and preferences. A banana has low value in high production zones like Honde Valley but its value can be tenfold in Hwange or Victoria Falls where production is low.
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