THE MIDDLEMEN | Acadlly

The middlemen are the wholesalers and the retailers who are in-between the producers and the consumers. They specialize in performing activities relating to purchase and sales of goods in the process of their flow from the manufacturers to the final consumers.

The presence of the middlemen in the distributive trade cannot be overlooked as they play a vital role in linking the producers with the ultimate consumers for effective trading activities.

ARGUMENT FOR OR SURVIVAL OF MIDDLEMEN

Sometimes, middlemen form organizations that are influential enough to control prices. The middlemen have continued to wax stronger in spite of all the strong arguments for their elimination.

The functions being performed by the middlemen to both the producers and ultimate consumers cannot be performed by either the manufacturers or the consumers. In spite of all these criticisms, it becomes clear that middlemen will continue to flourish because of the vital role they play in the distribution of goods between the producers and the final consumers.

ARGUMENT AGAINST OR ELIMINATION OF MIDDLEMEN

The wholesaler is sometimes regarded as an unnecessary feature of the economics organization for the following reasons

High prices of goods – he causes unnecessary price increase by adding to the cost of goods without directly adding value to it.
Creating an artificial scarcity of products by hoarding part of their goods in order to earn higher prices for themselves
Tax evasion: despite the fact that wholesaler earn a lot of profit, many of them evade tax.
Payment of low producer prices to farmers for their agricultural produce.
Disguised Unemployment: the presence of wholesaler encourages large scale disguised unemployment. They are usually under-employed
Existence of middlemen makes the chain of distribution of goods longer
The middlemen, sometimes, misinform the consumers
The middlemen can cause price fluctuation of goods in the market

REASONS THAT MAY WARRANT BY-PASSING THE MIDDLEMEN

Some manufacturers by-pass the wholesaler and sell to retailer for the following reasons

Where perishable goods are involved
The establishment of warehouses by producer
Indiscriminate increase in prices of goods and services
When good are branded
When consumers combined to buy in bulk
When manufacturer open their retail stores
Their creation of artificial scarcity
Where the goods produced are highly technical or made to individual specifications

PROBLEMS OF DISTRIBUTING AND MARKETING OF GOODS IN WEST AFRICA

Poor and inadequate transportation facilities
Inadequate storage facilities
Too many middlemen
Administrative bottleneck in the collection and handling of goods
Inadequate credit facilities
Imperfect nature of the market due to inadequate information
The tendency to hoard goods in anticipation for higher prices
Inadequate infrastructural facilities
Inadequate dissemination of information

EFFICIENT WAYS OF DISTRIBUTING AND MARKETING OF GOODS IN WEST AFRICA

Good and efficient transportation network
Provision of good storage facility
Formation of consumer and wholesale co-operative societies
Goods rationing in case of essential commodities.
Provision of credit facilities to wholesale and retailers
Providing adequate information of the market situation
There should be legal action against hoarders
Establishment of more market places
Construction of good road network
Improvement in communication system

ROLES OF GOVERNMENT IN DISTRIBUTIVE TRADE

The government at whatever level has a major role to play in the distribution of goods through the establishment of distributive agencies such as:

Establishment of the Nigeria National Supply Company (NNSC) Ltd
Marketing Board
The River Basin Authorities to encourage large production and distribution of agricultural produce
Provision of good transport system
Provision of better storage facilities
Government agencies help to stabilize prices in order to check inflation
Government agencies help to prevent artificial scarcity of goods
Government agencies also play the role of price control
Establishment of communication system

EVALUATION

Why are the wholesalers and the retailers regarded as middlemen?
Explain the cogent reasons why middlemen should be eliminated in the distribution channels.
Who are the middlemen?
Write a short note on the elimination of middlemen

GENERAL REVISION

What is a cooperative society?
Mention five types of cooperative.
Has the concept of opportunity cost any relevance to the economy of West Africa Countries.
Middlemen do encounter the problems in the process of carrying out their business. Discuss
Discuss the different types of agriculture system that is in West Africa

WEEKEND ASSIGNMENT

Which of the following functions do retailers perform in an economy? (a) production (b) exchange (c) hoarding (d) distribution
One of the arguments against the presence of middlemen in the distribution chain is that they (a) can be found always every here (b) Helps in keeping prices stable (c) cause increase in the prices of commodities (d) are commissioned agents
One of the greatest demerits of the middlemen in Nigeria is that they (a) sell in small units only

(b) increase the prices of goods and services at will (c) store goods in warehouses that are spacious enough (d) do not advertise their goods

Distribution involves the (a) transfer of goods and service from wholesaler to consumer (b) transfer of goods and services from production centre to consumers (c) movement of goods and services by middlemen to centres (d) transfer of goods and service from one market to another
A major function of middle men in Nigeria is the distribution (a) commodities at all consumers regardless of income (b) commodities to consuming centres (c) wealth to all (d) economic facilities to all

THEORY

What functions do retailers perform for manufacturer?
Discuss five problems encountered in the process of distribution of goods in Nigeria.