Charles Dhewa Features correspondent
Climate change is not just calling for more knowledge but effective awareness about a wide range of issues like changes in consumption patterns.
While people in different communities have developed tastes for particular commodities; sadza, beef, bread and milk, climate change will force them to cultivate tastes for climate-friendly commodities like small grains and wild fruits. Continuous honing of tastes for maize, wheat and rice and other fashionable commodities may be counter-productive when such crops may be threatened by a changing climate. Any reduction in these production of commodities will see communities and whole countries depending on food aid.
A sustainable solution is broadening people’s tastes for diverse local commodities. Comparatively fewer resources can be used in cultivating tastes for local commodities than importing foodstuffs whose taste cannot be controlled locally.
How can nutrition drive consumption patterns?
It is time for African nutritionists to develop and share knowledge on how local people can develop affordable nutrition baskets so that nutrition becomes the main driver of consumption patterns among all classes of consumers.
Once nutrition baskets are developed, people will not be terrified by poor rains which only affect a few commodities like maize while some local commodities can actually thrive under low rainfall conditions. A recent visitor to eMKambo from a western country expressed his observation that funny shaped fruits produced in African environments had a superior taste than well shaped western fruits that many consumers find tasteless.
African informal markets have ways of putting taste in the fore-front of food marketing. In every informal market, customers have an opportunity to taste food. There is a conscious recognition among traders that, of all human senses, taste has a final say on whether a consumer will pay for commodities.
Price is not the main determinant unless where food is seriously unavailable. Informal markets have mechanisms for expanding niche markets through tasting, trust and relationship building. Who sets prices in informal agricultural markets? 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 level. To the extent that some low income households are often bigger than their incomes, household size is another key influencing factor.
Significance of customer characterisation
While different categories of customers are key determinants of commodity pricing and the behaviour of commodities on the market, the development of a niche market begins with the origins of particular commodities.
Most commodities are produced in particular natural regions where they become staples for local people and tastes are developed. When people from different natural regions migrate to urban centres, they move with their food systems and associated tastes. Where the market uses its convening power to pull commodities from different natural regions, urban consumers from those regions are the first port of call for commodities from their original areas.
Those who grew up eating tubers like cassava or yams are quick to fetch these commodities from the market and those who grew up eating small grains are the first demand zone for commodities from their home areas.
How commodities cultivate their own niche markets
Once commodities are in the public market, they start building their own niche markets through characterizing customers by gender, age, level of income, etc. The development of niche markets is driven by knowledge sharing.
Consumers are exposed to knowledge on how to use particular commodities they see in the market for the first time. Through informal markets, there is sharing of knowledge on the benefits, preparation methods and all unique features attached to commodities. As tastes improve within a particular niche, the commodity stabilizes and strengthens its sustainability in the market together with price elasticity. Any changes in supply will not affect price elasticity.
Rather it stabilises prices in ways that lure consistent supply. This is unlike once-off commodities that are bought only during festive seasons like Christmas or when consumers earn a bonus. Such commodities are not good at sustaining agribusinesses. They can only be good for particular niche markets like high income households. Niche markets drive the promotion of a commodity in the markets. It is important for producers to understand niche markets.
Changes in staple food status
Due to continuous presence in the market, some commodities carve a staple food status for themselves. For instance, in most African cities, western leafy vegetables and Irish potatoes have become part of staple foods. These commodities have developed their own niche markets defined by household income and household sizes. As long as producers are able to meet standards and specifications, business viability around these commodities is assured.
Some of the consumption patterns are being driven by age, status and health consciousness. From an age perspective, the young generation’s diets are largely influenced by external diets.
A notable trend is that young people’s choice of commodities is slowly taking the route of western diets. That is why they flood food chain stores. It means producers and value chain actors keen to tap into this young consumer base have to mimic food chain stores in everything including packaging and transactions methods.
However, they have to also be on the look-out for the band wagon effect among youths who influence each other through peer pressure expressed through consuming commodities that are not good for their health. Smart ways of changing habits have to be crafted.
Status and health consciousness
Some consumers are being forced to consume specific commodities due to health recommendations. Another group that has become conscious of healthy eating is deliberately and carefully choosing health diets. Some choices could be influenced by level of income and status in the community. The gender dimension of consumption decisions is also worthy examining. For instance, pregnant women can consume certain foods as informed by healthy practitioners and institutions.
However, what remains to be explored is the role of health consciousness in triggering taste, especially among low income households where choices are mainly controlled by income. If done properly, this could address malnutrition which has a negative bearing on national budgets of many developing countries.
Prevention is better than curing. On the other hand, from a status angle, some consumers do not want to be associated with public markets, preferring to buy in food chain stores. This is more a status thing than rational nutritional consideration. In most cases, the market ends up following this customer niche to meet its demands. However, there is price discrimination which is why up-market prices tend to be at least 30 percent higher.
How data enables tracking of progress at meaningful levels of detail
Having taken into account many factors from a market perspective, producers can adequately inform themselves to decide for whom to produce specific commodities and in what quantities. Without customer segmentation, characterisation and preference mapping, price alone is no longer informative for decision-making.
Data and evidence can show how much each niche market is absorbing. If all farmers produce peas who will take them? High value commodities may not meet the interests of more than 70 percent of the consumer base.
Customers tend to build blocks by diversifying taste – first into their budget and then adjust the ladder either upwards or downwards according to circumstances. Within customer segments there is transition from one class to another depending on changes in circumstances like new income streams.
That is why real-time evidence cannot be over-emphasised in generating trends. Policy makers and financial institutions should be able to accurately tell whether the consumption of maize, potatoes or any commodities is increasing or decreasing so that production can adjust accordingly.
Sustaining customer bases
Once a niche market has been developed, how do we address seasonality in ways that sustain a customer base? There is need for post-harvest models like cooling, drying and ripening to ensure consistent supply and satisfying of various niches. This will stabilise prices and enable farmers to specialise.
Eventually some farmers can decide to produce commodities that do not last six months on the market. While irrigation schemes are being revived in Zimbabwe, they should be used to strengthen niche customer bases rather than focusing on staples which most farmers can produce for themselves to last a whole year.
Since most irrigation schemes have enough capacity for intensive production, business models should be built around irrigation schemes to ensure supply of different niche commodities all year round.
Once customer niches, consumption patterns and volumes are clear, it becomes easy to figure out the correct national food requirement. Exporting commodities with no clear picture on local markets exposes local markets to cut-throat competition from export markets.
The demand for technology should be driven by agriculture in ways that strengthen irrigation schemes and other intensive production systems. At the moment, most of the people adopting digital technologies are not in agriculture. That is why digital technology adoption is not going hand in hand with growth in the agriculture sector.
Charles Dhewa is a proactive knowledge management specialist and chief executive officer of Knowledge Transfer Africa (Pvt) (www.knowledgetransafrica.com) whose flagship eMKambo (www.emkambo.co.zw) has a presence in more than 20 agricultural markets in Zimbabwe. He can be contacted on: [email protected]; Mobile: +263 774 430 309 / 772 137 717/ 712 737 430.