Food marketing and processing costs account for 50 to 70 percent of the total cost paid by consumers in Southern Africa for staple maize meal. Strategies that can successfully drive down costs within the marketing system can simultaneously raise the incomes of the farmers; improve people's food security and disposable incomes.
The food marketing systems in much of Southern Africa appear to be increasingly segmented into two channels that are poorly integrated. On the one hand, 'formal' marketing channels link commercial farmers to large grain trading processing and retailing firms with growing subsidiary contributions networks through Southern Africa. By contrast the 'informal' marketing systems in the region, on which most small scale farmers rely are generally characterized by:
- Spot markets transactions allocations with weak mechanisms for marketing based risk management;
- Weak information systems for reporting local market conditions;
- Limited coordination between input delivery, farm finance, and crop sale, resulting in part from poorly functioning input credit systems in which non repayment remains a ubiquitous problem and;
- Small businesses with relatively little political influence or voice in the determination of regulations governing the agriculture sector. This contrast markedly with formal sector firms, which have organized lobbies and are widely perceived as having a legitimate interest and voice in the determination of regulations governing agricultural markets.