Linking smallholders to markets

SF engage less with markets than expected

• to specialise

• to get external inputs, technology

Given Opportunities:

• [Missing, inappropriate technology]

• High transport costs

• Uninsured risk

• High information & transactions costs

Because:

Linking SF to Market

Parastatal

Too often:

High Cost

Inefficient

Politicised

Then Market

Farmer groups & associations

Private firms, agri-business

NGOs

Private foundations

Gov’t agencies

Now

So much to learn from these!

Leaping & Learning

Review Lit.

Consult Stakeholders

Synthesise cases

CONSENSUS & DEBATE

Framework: three considerations

• Essential Public Role

• Business model Investment

Case

Organisation Model

Approach to Change

Investment: Public Role

Rural Investment Climate

• Doesn’t have to be perfect!

Rural Public Goods

• Roads, power, irrigation, etc.

• Education, Health, Water

• Research & Extension

Ghana: correcting investment climate

8

0

1

2

3

4

5

19

61

/62

19

63

/65

19

66

/68

19

69

/71

19

72

/74

19

75

/77

19

78

/80

19

81

/83

19

84

/86

19

87

/89

19

90

/92

19

93

/95

19

96

/98

19

99

/01

20

02

/04

20

05

/07

Agr

icu

ltu

re g

ross

pro

d:

Bill

US$

20

00

2.6 % year

5.1 % year 1974 1982

-3 .1% year

20

30

40

50

60

70

1991/1992 1998/1999 2006

Pove

rty

Inci

den

ce (

%)

Poverty, rural

Poverty, cocoaproducers

Poverty, national

30.3

17.3

0

500

1000

1500

2000

2500

3000

0

10

20

30

40

19

83

19

86

19

89

19

92

19

95

19

98

20

01

20

04

20

07

Kca

l / d

ay /

cap

Mal

nu

trit

ion

Pre

vale

nce

(%

)

U5 Underweight (DHS)Food supply (kcal/capita/day) (kcal)

Business model: Markets

Demand: critical … moving target

Exports: great ...

0

10

20

30

40

50

60

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

Rwanda's coffee exports

Export Quantity (1000 tonnes)

Export Value (Millions international $)

BUT: Domestic markets > Exports

Larger, Growing Faster

• Certification: high cost trap?!

• [GlobalGap Ken, Sen; Ghana MD2]

Less Demanding & Less Risky

Coming Home: Kenya’s Green Beans

4

31

0

5

10

15

20

25

30

35

40

45

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

Exports (thousands of tonnes)

Production minus exports

Production (thousands of tonnes)

ORGANISATION MODELS

Crafting Links: Horses for Courses?

Spot Markets

Contracts: just

Produce

Contracts with

Inputs, TA

Vertical Integration

Enigma of Association

Information costs of dealing with many SF real & high

• Dunavant distributors: 65 SF each

• Mukwano farmer groups = 54k SF

• Kabale potato farmer association

Aggregation often

essential

But: few self-sustaining co-operatives!

Why not more?

APPROACHES TO CHANGE

Processes > Form

• Build capacity, competence

• Don’t replace

Enable, Facilitate private & collective

initiative

• Exit strategy

• Where are learning thresholds?

Temporary support may be needed,

but …

Monitor, Learn, Adapt

DILEMMAS

Social Inclusion

Firms work 1st with better-off SF

Functioning collectives may exclude poorest

• Ken SF green bean 15 jobs/ha

• BF shea factory: 1,500

• Moz cashew factory, etc.]

A? Jobs on & off

farm

Scaling Up

Right Organisation Form = Wrong Question?

Approach All Important

• Challenge Funds

• NGO grants

• M & E: document, evaluate

But What Public Role?

[SLIDE DUMP]

Missing out: yield gaps in Central & West Africa

0

0.5

1

1.5

2

2.5

3

3.5

Maize Rice Millet Sorghum

Ton

ne

s p

er

he

ctar

e

Current yield, av.

Potential yield

Nin Pratt et al 2011, IFPRI

Raising agricultural productivity in LIC

High transport

costs?

Insecure property rights?

Learning & knowledge diffusion?

Transactions Costs: Incomplete, missing, imperfect markets for credit, insurance,

inputs?