What a Fuel Station Knows That a Feedmill Does Not

I drove out during the day to meet with a procurement officer. On the way I noticed I was running low on fuel. By the roadside were two fuel stations. I looked up at the price board in front of them, each displaying the prices of the fuel they sold. I drove in to buy from the fuel station with the higher price.

My purchase from the fuel station with the higher price might not sound logical or economical. Both fuel stations sold at different prices, but with very close margins. One sold for 1,320 Naira per litre, while the other sold for 1,325 Naira per litre. I bought from the latter because I trusted their fuel quality and the price difference was negligible.

The fuel price transparency helped me make an informed decision. I purchased at a slightly higher price despite having a lower option. Value for money was more important to me than price itself.

I spoke with different procurement officers in feedmills across the Lagos-Ibadan corridor. They talked about unreliable supply of their main raw material, maize. The price at which they buy maize exists within their network but is not published publicly. The price you get depends on existing relationships within the network.

Each time, after inquiry, they made calls to get a current update on pricing or gave a random figure off the top of their head.

I interacted with traders in Dawanau market, Kano, inquiring about the prices of maize per truck for institutional supply. Each time, after inquiry, they made calls to get a current update on pricing or gave a random figure off the top of their head. The transactions within the supply chain happen inside an information vacuum, meaning decisions that affect other factors within the value chain are made with insufficient data.

From my research mapping, there is no definitive anchor for the pricing of maize as there is in the petrol sector. The fuel station buys fuel upstream at an informed price, as it knows how much it will be sold for at retail.

A published buying price of maize would do the same for feedmills. It can be a social media channel or a public board showing updated prices. Platforms like AFEX already provide this pricing solution, but it has not been widely adopted within the price-layering networks.

Trust within the commodity value chain is established by this solution. Farmers know how much their maize is being sold for at the institutional level. They can measure their inputs against that anchor and sell at prices just below the published buying price to leave enough margin for aggregators to function. Middlemen margins are not cut short. They lose their information monopoly but now have to compete on service. Buyers would purchase based on quality and competence, just like the informed decision I made during my fuel purchase. This is better for the whole supply chain, including the middlemen, long-term.

A displayed buying price from feedmills attracts better suppliers and reduces procurement friction. The information vacuum still prevails despite the existence of data infrastructure, due to its slow adoption.

The buyer who withholds their price retains a negotiating advantage. In a system with no external pressure to disclose, that advantage is rational to protect.

If institutional buyers are frustrated by unreliable supply, and publishing their buying price would attract better suppliers, why don't they?