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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
1961/62
1963/65
1966/68
1969/71
1972/74
1975/77
1978/80
1981/83
1984/86
1987/89
1990/92
1993/95
1996/98
1999/01
2002/04
2005/07
Agriculturegrossprod:BillUS$2000
2.6 % year
5.1 % year
1974 1982
-3 .1% year
20
30
40
50
60
70
1991/1992 1998/1999 2006
PovertyIncidence(%)
Poverty, rural
Poverty, cocoa
producers
Poverty, national
30.3
17.3
0
500
1000
1500
2000
2500
3000
0
10
20
30
40
1983
1986
1989
1992
1995
1998
2001
2004
2007
Kcal/day/cap
MalnutritionPrevalence(%)
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
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
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
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
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
Tonnesperhectare
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?

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Linking smallholders to markets

  • 2. 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:
  • 3. 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!
  • 4. Leaping & Learning Review Lit. Consult Stakeholders Synthesise cases
  • 6. Framework: three considerations • Essential Public Role • Business model Investment Case Organisation Model Approach to Change
  • 7. Investment: Public Role Rural Investment Climate •Doesn’t have to be perfect! Rural Public Goods • Roads, power, irrigation, etc. • Education, Health, Water • Research & Extension
  • 8. Ghana: correcting investment climate 8 0 1 2 3 4 5 1961/62 1963/65 1966/68 1969/71 1972/74 1975/77 1978/80 1981/83 1984/86 1987/89 1990/92 1993/95 1996/98 1999/01 2002/04 2005/07 Agriculturegrossprod:BillUS$2000 2.6 % year 5.1 % year 1974 1982 -3 .1% year 20 30 40 50 60 70 1991/1992 1998/1999 2006 PovertyIncidence(%) Poverty, rural Poverty, cocoa producers Poverty, national 30.3 17.3 0 500 1000 1500 2000 2500 3000 0 10 20 30 40 1983 1986 1989 1992 1995 1998 2001 2004 2007 Kcal/day/cap MalnutritionPrevalence(%) U5 Underweight (DHS) Food supply (kcal/capita/day) (kcal)
  • 9. Business model: Markets Demand: critical … moving target Exports: great ... 0 10 20 30 40 50 60 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Rwanda's coffee exports Export Quantity (1000 tonnes) Export Value (Millions international $)
  • 10. BUT: Domestic markets > Exports Larger, Growing Faster • Certification: high cost trap?! • [GlobalGap Ken, Sen; Ghana MD2] Less Demanding & Less Risky
  • 11. Coming Home: Kenya’s Green Beans 4 31 0 5 10 15 20 25 30 35 40 45 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Exports (thousands of tonnes) Production minus exports Production (thousands of tonnes)
  • 13. Crafting Links: Horses for Courses? Spot Markets Contracts: just Produce Contracts with Inputs, TA Vertical Integration
  • 14. 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?
  • 16. 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
  • 18. 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
  • 19. Scaling Up Right Organisation Form = Wrong Question? Approach All Important • Challenge Funds • NGO grants •  M & E: document, evaluate But What Public Role?
  • 21. Missing out: yield gaps in Central & West Africa 0 0.5 1 1.5 2 2.5 3 3.5 Maize Rice Millet Sorghum Tonnesperhectare Current yield, av. Potential yield Nin Pratt et al 2011, IFPRI
  • 22. Raising agricultural productivity in LIC High transport costs? Insecure property rights? Learning & knowledge diffusion? Transactions Costs: Incomplete, missing, imperfect markets for credit, insurance, inputs?