Zimbabwe: How Niche Markets Influence Agricultural Commodity Prices

4 September 2017

One of the most persistent myths in African agriculture is that commodity prices are set by traders, negatively referred to as 'middlemen'. Paying lip service to understanding market dynamics has seen most interventions designed to get rid of 'middlemen' failing dismally. Working with agriculture markets for the past years has opened eMKambo's eyes to the role of niche markets and different classes of consumers in setting prices of diverse commodities. The power of consumers and niche markets to set commodity prices is based on taste, levels of income, background, age, gender as well as professional and health considerations.

Producers need to know who has the power to determine prices and how. For instance, low income consumers set prices of basic necessities like leafy vegetables and tomatoes while high income households set prices of high value commodities like peas, carrots and others. On the other hand, the extent to which a commodity is frequently consumed or used determines whether it remains a necessity or becomes a luxury. Income levels also control consumer tastes. Rarely do consumers develop tastes for commodities beyond their income levels. To the extent that some low income households are often bigger than their incomes, household size is another key influencing factor.

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