ISSN 1020-7317

4Marketing Extension Guide

Planning and designingRURAL MARKETS

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related to agricultural marketingplease contact:

Agricultural Marketing GroupAgricultural Support Systems Division

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00100 Rome, Italy

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http://www.fao.org/ag/AGS/subjects/en/agmarket/agmarket.html

4Planning and designingRURAL MARKETS

FOOD AND AGRICULTURE ORGANIZATION OF THE UNITED NATIONSRome 2003

byJohn Tracey-White

Marketing Extension Guide

All rights reserved. Reproduction and dissemination of material in thisinformation product for educational or other non-commercial purposes areauthorized without any prior written permission from the copyright holdersprovided the source is fully acknowledged. Reproduction of material in thisinformation product for resale or other commercial purposes is prohibitedwithout written permission of the copyright holders. Applications for suchpermission should be addressed to the Chief, Publishing ManagementService, Information Division, FAO, Viale delle Terme di Caracalla, 00100Rome, Italy or by e-mail to copyright@fao.org

FAO 2003

The designations employed and the presentation of material in thisinformation product do not imply the expression of any opinionwhatsoever on the part of the Food and Agriculture Organizationof the United Nations concerning the legal or development statusof any country, territory, city or area or of its authorities, orconcerning the delimitation of its frontiers or boundaries.

Preface

Upgrading rural markets is one way to improve accessto marketing opportunities. This guide is designed toassist community planners, rural engineers andagricultural extension units to formulate and implementrelevant market development plans.

The types of issues covered in this guide includedesigning markets that meet a community's social andeconomic needs; working with communities to identifytheir marketing problems and to choose a site for a newmarket; using appropriate and simple methods to surveyand plan the site layout and to design market buildings;preparing a market development proposal and makingbudget estimates; undertaking simple social andeconomic feasibility studies; looking for financing andconstructing the market; and managing, operating andmaintaining the market.

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Contents

Preface .............................................................. iiiAcknowledgements .......................................... viii

Introduction ........................................................ 11 Identifying the need for rural markets ................ 52 Assessing market trading requirements .......... 173 Working with farmers and traders .................... 254 Identifying the space required ......................... 335 Choosing the right site ..................................... 436 Preparing the site plan ..................................... 537 Deciding on the buildings

and equipment needed .................................... 658 Checking the markets viability ......................... 799 Constructing the market .................................. 89

10 Operating and maintaining the market ............ 97

Annexes ......................................................... 105Glossary ......................................................... 117Further reading .............................................. 119

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Figures

1 Outline of work for the planning, design and construction of rural markets .......... 2

2 Examples of marketing channels ..................... 103 Central places in a rural area .......................... 134 Market location characteristics ........................ 465 Market site analysis ......................................... 486 Basic layouts of rural markets .......................... 587 Example of a rural market site plan ................. 638 Design of market stalls .................................... 689 Layout of market buildings ............................... 70

10 Market infrastructure and facilities ................... 74

Tables

1 Types of rural market intervention ................... 152 Calculation of future market throughput .......... 223 Market needs assessment

and ranking of users priorities ......................... 314 Sales space calculation

for a basic rural market .................................... 355 Estimating trading spaces

for a basic rural market .................................... 376 Estimating overall land uses ............................ 417 Site analysis

example of ranking alternatives .................... 508 Market development costs ............................... 829 Annual market recurrent costs ......................... 83

10 Annual market benefits .................................... 8411 Viability of a simple market development ........ 86

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Annexes

A Survey checklist ............................................. 106B Assessment of supply and demand ............... 109C Infrastructure design and space standards ... 115

Forms (Annex B)

1 Estimating local farm production ................... 1092 Estimating use of market outlets ................... 1103 Average annual food consumption ................ 1114 Annual farm household food needs ............... 1125 Total annual farm use .................................... 1126 Marketable annual surplus or deficit .............. 1137 Annual sales apart from rural markets .......... 1138 Annual market throughput ............................. 114

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Acknowledgements

The author would like to acknowledge the assistanceprovided by FAOs Agricultural Marketing Group. AndrewShepherd acted as overall technical editor and EdwardSeidler provided comments on the draft texts. FrancescaCabr Aguilar revised the text. In Bhutan Peter Schmidtand Chris Butters were responsible for early drafts of anumber of the illustrations. Tom Laughlin wasresponsible for the overall graphic design of the manual.

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Introduction

This guide is intended to provide a step-by-stepapproach to the planning, design and construction ofsimple rural markets. Whether the market is to be builtby national or local government, by donors, by a localcommunity or privately, the assistance of extensiondepartments, planners and rural engineers will berequired. Such assistance is likely to include:

j identifying marketing problems and needs;j helping with selection of market sites;j planning, implementing and operating effective

market improvement activities; andj following up and evaluating the results of the

development.

The guide follows the development process fromidentification of the need for a market through tooperation of that market. Although each stage in theprocess is presented as a separate chapter the stagesare not necessarily independent of each other. Adiagram of the planning process is shown on pages 2and 3 (Figure 1) with a brief description of each stageand indications of where findings may be used to modifythe work of previous stages. An outline of all stages andsteps is shown on page 4. 1

STAGE 1IDENTIFYING THE NEED FOR RURAL MARKETS The process starts with

understanding the marketing system and the different

types of rural markets as well as their relationship to

settlement patterns. This understanding is then used

to identify the need for market improvements.

STAGE 2ASSESSING MARKETTRADING CONDITIONS

The next stage is to assess probable supply and demand conditions for the identified markets. Limited surveys

may be required to estimate market throughput, so as to

allow design to proceedSTAGE 4

IDENTIFYINGTHE SPACE REQUIREDData collected through

consultation with existing or potential users, field surveys and desk studies of existing information are analysed to

decide what space andmarket accommodation is

required.

STAGE 5CHOOSING

THE RIGHT SITEThe next stage is to agree on

the market site location, identify any potential

problems and decide on whether an environmental

impact assessment isneeded. Different options may be assessed and the site availability checked.

STAGE 3WORKING WITH

FARMERS AND TRADERSConsultations are

undertaken with market users and local communities

to identify their presentproblems and future needs - leading to proposals on how these might be met. Special needs, such as targeting of particular groups, may also

be considered.

Note: Initial conclusionsregarding the need for market

improvements (Stage 1) may be altered either after an

assessment of market supplies is made (Stage 2) or after detailedconsultations with users (Stage 3).

Possible feedback

Planning stages

KEY

Only if market already exists

2

Figure 1Outline of work for the planning,design and construction of rural markets

STAGE 7DECIDING ON THE BUILDINGS AND

EQUIPMENT NEEDEDNext comes the detailed design of buildings, stalls

and equipment. In discussion with the users, the various

options that are available are identified and their relative

advantages assessed

STAGE 8CHECKING THE

MARKETS VIABILITYCost estimates are preparedand an assessment is made

of the markets viability. Sometimes it is necessary at

this stage to look again atthe design and make

modifications. STAGE 10OPERATINGAND MAINTAINING

THE MARKETFinally, the market needs to be put into operation; space must be let, fees collected

and market operations regulated.

STAGE 9CONSTRUCTING

THE MARKETSources of funding areconfirmed and designs

finalized with users. Tender documents are prepared,followed by tendering and letting of contracts. The

construction is carried out and monitored to ensure thatwhat is being done conforms

to the original design.

STAGE 6PREPARING

THE SITE PLANAfter identifying a market site, a draft master plan is prepared. This provides a

framework for all the activities that will take place

within the market

Note: Estimates of space andaccommodation (Stage 4),together with the detailed

design of buildings that flow from them (Stage 7), may need to be modified after

working out the cost of the proposed market (Stage 8).

3

4STAGE 1IDENTIFYING THE NEED FOR RURAL

MARKETS

Steps1.1 Identify market channels in rural areas1.2 Define responsibility for decision-making1.3 Review planning considerations1.4 Identify market improvement options

STAGE 2ASSESSING MARKET TRADING

REQUIREMENTS

Steps2.1 Decide on design information needed2.2 Assess supply and demand2.3 Estimate the market's throughput

STAGE 3WORKING WITH FARMERS

AND TRADERS

Steps3.1 Consult with the users3.2 Provide support to the market committee3.3 Assess user needs

STAGE 4IDENTIFYING THE SPACE REQUIRED

Steps4.1 Estimate sales space requirements4.2 Identify trading spaces4.3 Decide on the markets facilities4.4 Determine the area needed for the site

STAGE 8CHECKING THE MARKETS VIABILITY

Steps8.1 Estimate development costs8.2 Estimate recurrent costs8.3 Estimate benefits8.4 Test financial viability8.5 Assess the proposals8.6 Amend the designs

STAGE 9CONSTRUCTING THE MARKET

Steps9.1 Obtain consents

and agree on the financing9.2 Prepare tender documents

and tender the works9.3 Let construction and equipment

contracts, supervise construction and monitor implementation

9.4 Confirm practical completion and evaluate the works

STAGE 10OPERATING AND MAINTAINING

THE MARKET

Steps10.1 Commission the market10.2 Agree on space allocation and leases10.3 Agree on the market fee schedule10.4 Agree on the market regulations

STAGE 5CHOOSING THE RIGHT SITE

Steps5.1 Review suitability of site locations5.2 Reviewing site features5.3 Determine if an environmental

assessment is needed5.4 Prepare an impact statement5.5 Review site options and availability

STAGE 6PREPARING THE SITE PLAN

Steps6.1 Gather design data6.2 Organize land uses6.3 Plan vehicular access and circulation6.4 Plan for supplementary uses6.5 Finalize the site plan

STAGE 7DECIDING ON THE BUILDINGS

AND EQUIPMENT NEEDED

Steps7.1 Design buildings7.2 Design infrastructure7.3 Identify environmental impact

mitigation measures7.4 Decide on market equipment

A step-by-step outline of the planning process

1 Identifying the need for rural markets

STAGE 1IDENTIFYING THE NEED FOR RURAL MARKETS

The problemAn efficient marketing system can provide better pricesto producers and improve the availability of competitivelypriced produce to consumers. In some cases newmarkets or improvements to existing markets in ruralareas can help overcome many of the marketingproblems faced. However, before considering whether tocarry out improvements to markets and what type ofimprovements to introduce, it is important to be sure thatmarkets, or lack of them, represent the main problem.Other causes of inefficient marketing could be:

j poor roads;j a lack of knowledge about marketing among farmers;j an inadequate quantity of products to attract sufficient

traders.

The benefits of marketsFormal markets in rural areas play an important role inimproving agricultural marketing. They can:

j provide a location at which farmers can meet withtraders;6

Stage 1 reviews existing marketing problems

that may be solved by either new or improved

markets, and identifies the kind of market

needed and the improvements that will most

benefit local communities. At the end of this

stage, and subject to discussions with the

existing or potential market users (see Stage 3),

it should be possible to provisionally address

the following points:

How the marketing system works and how

this relates to the local settlements.

Who would be responsible for managing

the identified market once it has been

constructed or improved.

Special planning issues that need to be

considered, such as developing markets in

particular settlements, markets associated

with particular road improvements or the

needs of special groups.

The types of marketing improvement that

are needed and where they will be

undertaken.

j increase retail competition by providing a convenientplace where farmers can meet with consumers;

j improve hygiene, if existing marketing activities arecarried out in an insanitary manner;

j reduce post-harvest losses by providing protectionfor produce from direct sunlight, rain, etc.;

j make marketing a more pleasurable activity; andj provide a focal point for rural activities.

Location for trade. Traders who buy produce fromfarmers for transport to urban markets experiencesignificant costs in travelling from farmer to farmer to buysmall quantities. This is not a major problem if farmersare situated close to major roads and traders simplydrive along the road buying from each farmer. Whenfarmers are at the end of poor quality local roads,however, traders lose considerable time. Costs are alsohigh because traders often use the same large vehiclesthat they use for journeys to urban areas, and poor roadconditions may damage those vehicles.

Farmers are also at a disadvantage because they aremore or less forced to accept the price the trader offers.They cannot compare the price they are offered with theprevailing local price because there is no local market.Even if they have access to information about the pricesin urban markets they cannot really use that knowledgeto negotiate with traders because they have no realisticidea of the costs faced by the traders in travelling to theirfarm or village.

For these reasons assembly markets have tendedto develop in rural areas. They provide a convenientlocation for traders to meet with farmers. In some casesthese markets operate seasonally or on only one or twodays of the week. In others, they operate more or lesscontinuously, with large-scale traders sometimesemploying agents in several such markets to buy on theirbehalf.

Retail facilities. In some countries farmers travel fromdoor to door to sell their produce. This can be timeconsuming and exhausting and may require investmentin transport, such as a bicycle. Door-to-door selling alsomakes price setting difficult because farmers have littleinformation regarding prices being charged by othersellers. Markets, on the other hand, provide a locationwhere all buyers and sellers can meet. Consumers cansee the range and prices of produce on offer and makechoices based on their preferences and income. Sellerscan take their produce to one location rather than havingto go from door to door. They can see how much of aparticular product is on offer, compare the quality of theirproduce with that of other sellers, and set their pricesaccordingly.

In order to achieve such benefits, however, marketsmust be situated in locations acceptable to both sellersand buyers. This is emphasized strongly in this guide.There have been many examples of new markets beingconstructed in unsuitable locations and never being 7

used! Existing market sites, or places where buyers andsellers meet informally (e.g. a plot of land at the side ofthe road), are usually the best places to construct newmarkets because they are clearly at locations favouredby the users.

Improve hygiene. Existing markets are often justareas of available land that buyers and sellers findconvenient to use. They may be well established in thesense that they have existed at the site for a long time,or they may be temporary, for example, a vacant plot ofland used until it is reclaimed by the owner for someother purpose. Either way, hygienic conditions areusually very poor. In most cases there are no toiletfacilities or running water and probably no arrangementsfor waste disposal. In the rainy or monsoon season themarket area may be extremely muddy, but sellers maydisplay their produce on the ground, with a risk ofcontamination from the soil or mud. Many municipalmarkets are like this, even though users are oftencharged a fee. Improved markets should minimize all ofthese problems. Apart from providing a healthier overallmarket environment, such improvements can reduce thedanger of food contamination.

Reduce post-harvest losses. Unimproved marketsusually lack any form of shelter. Produce is displayed andstored in the sun. Apart from conditions being verydifficult for those using the markets, the lack of protectionfrom the sun can have a major impact on the life of fresh

produce and on its nutritional value. Leafy produce, forexample, can be kept fresh by protecting it from the sunand by keeping it moist. This is not possible in marketsthat do not have either shelter or fresh water supplies.

Provide a rural focal point. Retail markets frequentlyplay an important social function. Farmers in manycountries prefer to take their own produce to marketrather than sell it to traders. The visit to the rural centreprovides them with the opportunity to buy itemsunavailable in their villages and to catch up with localnews. In many countries markets function as more thanjust trading places. They are the focal point of a ruralcentre and provide an important place where people canmeet. Markets that are attractive places to do businessdraw buyers and sellers alike. Competition is promotedamongst sellers and at the same time the sellers have alarge number of potential customers.

8

Step 1.1Identify market channels in rural areas

As a first step towards identifying requirements for newor improved rural markets it is important to understandhow existing marketing functions. The most commontransactions in rural areas are described below.

Farm-gate purchases. Purchase of produce may be onan individual basis at the farm gate. Buyers go to thefarm, usually at a pre-arranged time. In some cases,such as with fruit crops, the produce can be sold on thetree or in the field and the buyer arranges for itsharvesting. In other cases the sales may be throughmarketing groups or cooperatives. The farmers in thiscase may wait for the trader at collection centres.

Local (primary) markets. These markets are usually fordirect sales of small quantities of produce by farmers tovillage traders and rural consumers. Rural primarymarkets often form part of a network arranged on aperiodic basis, such as on a specific day of each week.They are commonly organized at a central place in avillage or district centre or beside a villages access road.In some instances, markets in small towns also providean assembly function.

Assembly markets. Larger rural markets are foundwhere greater quantities of produce are traded, either bythe producers themselves or by traders. Theseassembly markets (gathering produce in largerquantities for onward sale to outside buyers) are oftencombined with local rural markets and are normallysituated on main highways, other local main roads ornear to ferries. Traders or collection agents working onbehalf of urban wholesalers normally purchase produce.The market operations may be year-round or seasonal,depending on the types of crops being marketed.

Direct sales to urban markets. Farmers may also taketheir produce directly to urban areas, either to a retailmarket or to a wholesale market.

Note: The diagrams in Figure 2 on pages 10 and 11show examples of how farmers market their products.

9

FARM

Farmer sells at farmgate Farmer or trader takes produce to urban markets

Farmer takes produceto local primary market

Farmer unloads produce and sells it in small quantities

to consumers

Farmer takes produce to assembly market

Buyerpurchases produce at assembly market

ASSEMBLY MARKET

LOCAL PRIMARY MARKET

RURAL

Figure 2Examples of marketing channels

10

WHOLESALE MARKETRETAIL SHOP

RETAIL MARKET

FARMERS' MARKET

Produce is unloaded, weighed and delivered

to wholesaler

Retailers purchase produce from wholesalers and take it to their shops

Retailer sells produce to consumer

Retailer sells produce to consumer

Farmer sells produce to consumer

URBAN

11

Step 1.2Define responsibility for decision-making

There is no right way to operate a rural market. Theextent to which the public sector and local communitiesare involved depends on who pays for the developmentand who maintains it. The involvement of centralgovernment in small marketing infrastructure is usuallylimited to capital expenditure, the maintenance beingundertaken by local government or the community itselfusing locally generated funds such as the market fees.A market committee (or, perhaps, a local ruraldevelopment committee) would usually be the keydecision-making body. The existing market users shouldbe closely involved with decisions about whether toimprove a market, or to develop new infrastructure (seeStage 3). Most development should involve a high levelof local initiative. Sufficient time should be given at thestart to ensure the communitys involvement in thedesign process and to establish ownership of the facility.

Step 1.3Review planning considerations

Not all villages have permanent markets and thedistance to market can vary a lot. A key concept in ruraldevelopment is how rural settlements relate to the overallpattern of towns and villages.

Relationship of markets to settlement patterns.Some settlements act as central places, providing thepopulation of the surrounding catchment area withgoods and services.They may also function as points forassembly of local farm produce for onward movement tourban areas. There are usually three levels of centralplaces in rural areas (see Figure 3):

j growth centres;j district centres; andj rural service centres.

1. Growth centres: major regional or provincial towns.The centre contains a range of services such as acollege, a hospital, banks, a major market (often withsome wholesaling functions) and specializedshopping facilities.

12

Provincial capital

Town Town Town

Village

VillageVillage

VillageVillage

Village13

Figure 3Central places in a rural area

Major markets

District markets(some with

assembly function)

Primary markets(periodic)

Growth centre

District centres

Ruralservice centres

14

2. District centres: rural settlements whose primaryfunction is to provide administration and to deliverpublic services. These centres might contain asecondary school, a health clinic and a market, whichcould perform assembly functions for the district. Themarket is often found close to a bus station and anumber of permanent shops.

3. Rural service centres: normally located in the centreof a village (and associated smaller villages) servinga population of around 5 000 people and an area notusually exceeding a 10-kilometer radius. Servicesprovided at such a centre could include a primaryschool, a health post or dispensary, a police post anda primary market, often operating periodically. Marketcatchment areas are often defined by bus routes (orsometimes by short river journeys) and by walkingdistance. This could be up to one hour (i.e. 5 to 6kilometres) or even more.

Planning policies. Local planning authorities may haveclear plans as to which settlements should be developedand which should not. Ranking systems are sometimesused to determine which settlements are to be givenpriority. This is often based on rural road developmentpolicies. The guidance of local planning authorities onhow to interpret such policies should always be obtainedwhen planning markets.

Step 1.4Identify market improvement options

Justification for new markets. The basic choice isusually between choosing a new site or upgrading anexisting market or trading area. The better option isnormally to improve conditions on an existing site,particularly if this can be accompanied by improvementsin the markets management.

Deciding on rural market improvements. It isnecessary to adopt some objective criteria inconsidering options for market improvement. This willdepend on need (see Stage 3) and the markets financialor economic viability (Stage 8). However, at an earlystage, some overall criteria must be adopted to allow apreliminary selection of markets to be made. Thefollowing are some criteria that could be used:

j Improvement or construction of only those marketsthat have an assembly function and can promoteagricultural production could be considered.

j The improvement of primary markets that have onlya local retail function, or the construction of newmarkets, might be linked to those areas with anexpanding population.

Table 1Types of rural market intervention

Type of market Reasons for undertaking improvements Ownership Possible interventionsExisting primary markets Inadequate and insanitary facilities Public Repair existing facilities

located in traditional rural Poor management New building and infrastructurevillage centres Production growth Private Planning assistance

Population growth Repair existing infrastructure

Primary markets in newly Production growth Public Site acquisitionplanned rural settlements Population growth New building and infrastructure

Private Planning assistanceNew infrastructure

Existing assembly markets Inadequate and insanitary facilities Public Repair existing facilitiesPoor management New building and infrastructureProduction growth Private Planning assistanceAgricultural diversification Repair existing infrastructure

New assembly markets Production growth Public Site acquisitionAgricultural diversification New building and infrastructure

Private Planning assistanceNew infrastructure

15

j Market improvements might be planned where thereare poor public health and sanitation conditions inexisting markets because of inadequate space andfacilities available in the market area.

j Improvements could depend on the willingness ofmarket traders to improve the efficiency of existingmarket operations and to accept higher rents andcharges to cover the costs.

j Emphasis could be placed on those markets wherethe private sector takes responsibility for improving

individual sheds and stalls, allowing the improvementprogramme to concentrate on upgrading commoninfrastructure (i.e. roads, paving, fencing, drainage,toilets, etc.).

An initial assessment can be made using thesecriteria.This will reduce the need to cover all the marketsin an area and should simplify the design process. Asimple chart could be drawn up to classify the potentialmarket interventions, as shown in Table 1.

2 Assessing market trading requirements

STAGE 2ASSESSING MARKET TRADING REQUIREMENTS

Overall approachWhat is supplied to the market? In Stage 1 thereasons why market improvements might be neededwere broadly identified. This stage involves estimatingthe levels of supply that could pass through new orimproved markets. For existing markets the assessmentcan be based mainly on observing what is happening inthe market. Where there is no existing market theassessment must be based on local supply and demandestimates and forecasts.

Supplies to a market and the type of market usedvary depending on the type of local agriculture. Forexample, in areas where there is large-scale productionof fruits and vegetables for urban areas, a new orimproved assembly market may be required. In areaswhere production is primarily of export commodities,which usually have well-established independentmarketing channels, only rural retail markets may berequired.

Catchment areas. One of the most difficult points toconsider is the catchment area to be served by a18

Stage 2 involves the review of data necessary

for market design. Existing agricultural

production statistics can be used together with

surveys to estimate supply and demand. The

following activities should be carried out:

Collection of information on local crop and

livestock production, on the functioning of

the various marketing channels and on

general trade conditions in the markets

catchment area.

For new, larger markets and assembly

markets, an assessment of the supply and

demand conditions.

An estimate of the present quantities of

produce that are traded and a projection of

the future market throughput.

particular market. This could be reviewed by looking atthe production areas within walking or animal cartdistance of a market, in which case a maximum radiusof 10 km from the market might be a reasonableassumption. When an assembly market is beingplanned, and farmers have access to public transport orsmall trucks, a longer distance could be assumed. Ifthere are no other large rural centres with markets acatchment area for an existing or new assembly marketcould have a radius as high as 50 km.

Step 2.1Decide on design information needed

Secondary data. All rural planning depends on theavailability of information.The first approach to collectingthis information is to undertake a review of existingpublished documents and maps, such as regularpopulation and agricultural census reports. These

provide what is usually referred to as secondary data,examples of which are:

j population data (age composition, gender, migration,and mortality rates, annual growth rates);

j agricultural production data areas and yields,location of agricultural production areas (irrigated andnon-irrigated), forested areas, fishing concessions;

j relevant studies on crop marketing, existing marketchannels, location of agroprocessing and storagefacilities; and

j available site engineering data and maps, strategicand physical planning standards and master plans,environmental data and building cost data.

Primary data. Primary data may also be needed. Thisinvolves working with communities, market traders andfarmers to collect data and, if necessary, undertakingfield surveys to fill gaps.

Market surveys. The types of survey that could beundertaken are as follows:

j inventory surveys that describe physical and tradingconditions in existing markets;

j traffic surveys to measure the number of vehiclesusing a market, the mode of transport used and theorigin and destination of agricultural produce;

j socio-economic and environmental impact studies ofspecific issues or areas; and 19

j case studies of small businesses, such as markettraders, to investigate their financial viability. This isparticularly important in order to evaluate theircapacity to pay increased fees, which may benecessary after making improvements or building anew market.

The market inventory survey (detailed in Annex A)usually consists of two parts: a general review of marketoperations and a physical survey, which involvesmapping the site and its facilities.

For more complex markets (such as an assemblymarket) this data should be supplemented by a trafficand origin/destination survey. Where there is a total lackof information on production, a sample survey of farmhouseholds may be necessary, although this level ofinvestigation is probably not appropriate for most ruralmarkets. A count of the existing sellers and observationof the market users activities, together with discussionswith traders, should be adequate for most markets.

20

It is essential to review production of both crops and livestock in the area to be served by the market.

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Step 2.2Assess supply and demand

It may be necessary to make an assessment of potentialsupply and demand to determine the existing or likelyflows through new markets. The methods for doing thisare shown in Annex B and the steps involved are asfollows:

j review crop and livestock production, to identify thequantities that could be marketed;

j review the role of market channels, to find out wherethe produce is presently going;

j review existing consumption, on the basis of averagefood consumption levels;

j determine on-farm use, to identify what is retained bythe farmers for their own use; and

j determine non-market sales, to quantify how muchproduce is not likely to go through the market.

Step 2.3Estimate the markets throughput

Existing throughput. The last step at this stage is toestimate the planned markets throughput. The basiccalculation method, which is the same for both primaryand assembly markets, is shown in Form 6 in Annex B.Using this method for each of the main crops it ispossible to estimate the following on an annual basis:

j marketable surplus;j total non-market sales;j planned or existing market sales;j imports into the area to meet any deficit; andj total market throughput.

Future market throughput. In calculating future marketthroughput additional factors need to be considered.Thefuture throughput of produce marketed at an assemblymarket is dependent on how local production increasesand what proportion of this increased growth will passthrough the market. For a primary retail market the futurethroughput will depend on local retail demand, which willbe affected by local population and income growth. Theeasiest way to handle this calculation is to assume thatthe competition from other marketing channels remains 21

22

Table 2Calculation of future market throughput(tonnes per year)

Fresh Present Retail trade Assembly trade Total produce through- Through- Growth Future Through- Growth Future future

put put factor put factora b c d e f g h

(60% of a) (b c) (40% of a) (e f) (d + g)

Vegetables 2 000 1 200 1.40 1 680 800 1.40 1 120 2 800

Potatoes 2 500 1 500 1.40 2 100 1 000 1.60 1 600 3 700

Fruits 2 000 1 200 1.40 1 680 800 1.50 1 200 2 880

Meat 800 800 1.40 1 120 - - - 1 120

Eggs 500 500 1.40 700 - - - 700

Fish 200 200 1.40 280 - - - 280

Total 8 000 5 400 7 560 2 600 3 920 11 480

a constant proportion, to divide the market throughputinto retail and assembly trade and then to apply growthfactors for:

j retail trade, based on population growth andchanges in consumption (remember that censusdata is often out of date and this may be significantwhen growth rates are very rapid); and

j assembly trade, based on expected productiongrowth for different crops.

To make projections it is necessary to assume a timeperiod. In financial and economic analysis this is usuallytaken at 20 to 25 years, based on the life of theinvestment. However, such long-term projections aredifficult to justify and would give an exaggeratedimpression of demand for space. For rural markets a10-year projection period is more appropriate. Forexample, if the growth is 3.5 percent per year, for10 years it will be a growth factor of 1.03510, roughlyequivalent to a 40 percent increase or a multiplier of 1.4.

In many cases, of course, a market has a mixture offunctions. For example, retail trade might account for 60percent of the total and the balance might be assemblytrade. This assumption is made in the example shown inTable 2.

Given the uncertainty of making such estimates it isusually necessary to make two projections high and

low of future throughput, which reflect optimistic andpessimistic views of likely growth scenarios. The basisfor the growth factors should be discussed with localagricultural officers to ensure that they are consistentwith current information and policies.

As was suggested earlier, for simple improvements toan existing primary market such detailed calculationscan be omitted. By counting the number of stalls (n) andmultiplying this by the average daily sales per trader (s)and the number of marketing days (d) in a year, a roughestimate of the annual total (T) throughput can bederived. T = n s d. This can be projected into thefuture using a simple growth factor (as in Table 2).

Note: More detail on methods that can be used toproject demand is given in the FAO Agricultural ServicesBulletins Nos. 90, 121 and 141 (see Further Reading atthe end of the guide).

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Planning and designing RURAL MARKETSPrefaceContentsAcknowledgementsIntroduction1. Identifying the need for rural markets2. Assessing market trading requirements3. Working with farmers and traders4. Identifying the space required5. Choosing the right site6. Preparing the site plan7. Deciding on the buildings and equipment needed8. Checking the markets viability9. Constructing the market10. Operating and maintaining the marketAnnexesGlossaryFurther reading