The informal regulation of the onion market in Nangarhar, Afghanistan

G. Minoia, W. Mumtaz & A. PainAfghanistan Research & Evaluation Unit

The first of a series of studies part of the SLRC_Afghanistan research programme that will explore key activities rural people engage with

Guiding questions:How is economic life structured from the actors perspective?How to improve understanding of the diversity and complexity of commodity markets?How to drive more realistic policymaking?

Engaging with the view donors propose on markets

lack of information on prices and lack of access to credit preventing smallholder farmers from taking risks and access markets strengthening markets to combat opium poppy cultivation supporting selected value chain production (CARD-F, 2013)

Two other key dimensions regulating agriculture commodity markets (other than information flow)

Traders are setting the terms of the trade influencing profits, investments and returns; Exchanges are embedded in relationships related to credit, networks and power.

Political and economic market place in Nangarhar are closely intertwined - same actors have prominent positions in each market

Methodology: 2 rounds of fieldwork (56 + 14) interviews

December 2013 21 traders, Jalalabad vegetable market,8 traders, Peshawar vegetable market,18 traders and farmers in Sukhrod, Rodat, Dar i Noor and Bihsud districts.February 201414 between traders in Jalalabad and Peshawar and Farmers in Sukhrod and Rodat.

Why onions in Nangarhar?

Overlapping with SLRC_A political analysis;One of the richer agricultural areas of Afghanistan, with low altitude and relative reliable irrigation good potential for agricultural based growth; The onion cultivation has increased after the decline of opium poppy cultivation as a response to a market opportunity; Onions and Shallots are the 5th ranked commodity in the Afghan exports to Pakistan (PAJCCI 2012); Jalalabad is a key hub between the East and the West, a port between Pakistan and Afghanistan;

Jalalabad onion traders

The sabji mandi of Jalalabad and its traders - Space allocation as manifestation of power; The key features of Jalalabad elite traders Key players over the last decade Exile in Pakistan during the Russian invasion and prosperity under Sherzai Governorate Still influencing the regulation of cross border informal and formal taxation

Networks, language and family ties behind the Pak-Afghan trade;

Social regulation and exclusionary practices -Avoiding the potential for a competitive market - Control over Torkham border revenues;

Prices, Trust and Risks - Market collusion in price fixing When is it profitable to enter a market?

ConclusionsInformation on prices is widely available but significance of informal credit makes relationships critical.Elite traders can maintain control of imp/exp, they can negotiate over border revenues and keep traders in the districts in a subordinated position.Afghan traders in Peshawar made advantage of their refugee status with benefits of traders in Jalalabad and of their Pakistani counterparts.The control of the onion market is deeply embedded in the social relations within Jalalabad these structural dimensions of the market are a constraint for smallholder farmers and traders. there is evidence of some forms of risk taking in those niches where the onion production is particularly favorable, where traders have established connections with Kabul and Peshawar to avoid patron-client relationships with the Jalalabad elite of traders.

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The informal regulation of the onion market in Nangarhar, AfghanistanG. Minoia, W. Mumtaz & A. PainAfghanistan Research & Evaluation UnitSlide Number 2Slide Number 3Slide Number 4Slide Number 5Slide Number 6Slide Number 7Slide Number 8Slide Number 9Slide Number 10Slide Number 11