How small-scale farmers make markets work for them

Our new book shines light on how small-scale farmers are making their choices — about how to modernise appropriately, and about balancing costs, risks, benefits and uncertainties.

28 November 2012
Farmers sort tomatoes in Ethiopia.

Farmers sort their tomatoes in Ethiopia. Photo: Stephan Bachenheimer/ World BankCC BY-NC-ND 2.0

These days our email inboxes are filled with proposals for how small-scale farmers should contribute to food security, cut poverty and adapt to climate change. Much of the advice sees small-scale farmers as entrepreneurs who could establish stronger positions in modern markets by organising, cutting out the middlemen and through “inclusive businesses”.

These are powerful and useful ideas, but they won’t necessarily suit everyone. So how well do such external recommendations fit real life, and the ways small-scale farmers try to make their markets work for them? IIED and Hivos set out to investigate through a Knowledge Programme that set up a global learning network to better understand farmers choices and ran a series of ‘provocative seminars’ to challenge conventional wisdom on the theory and practice of ‘making markets work for the poor’. This week we’ve published our findings as a book.

Small Producer Agency in the Globalised Market: making choices in a changing world is the result of three years’ collective work by researchers, business entrepreneurs, farmer leaders and development practitioners.

Opportunities and dilemmas

Rapid rural changes are confronting farmers with both dilemmas and opportunities. Globalisation, modernisation and economic growth in many developing countries are bringing more buyers into the countryside. Roads and mobile phones are improving access to markets and reducing information gaps that previously left farmers at the mercy of traders. Yet youth often have new non-rural aspirations. In China for example, more off-farm employment opportunities with better wages are prompting millions of farmers to completely or partially leave farming.

Working their way

The book shines light on how small-scale farmers are making their choices — about how to modernise appropriately, and about balancing costs, risks, benefits and uncertainties. In other words, how they are exercising their ‘agency’.

In many countries, formal markets linking small-scale farmers to modern national or international supply chains, are growing and working well — at least for those who can meet their stringent requirements. Formal farmer organisations have greatly improved their members’ prospects and some have even changed national policies in favour of small-holder agriculture.

But our research also found many less-formal but equally effective mechanisms for exercising economic agency and ‘cooperating to compete’ — for example, the trust-based marketing among ‘matoke’ (green banana) producers in Kasenda, Uganda, described in our World Food Day blog.

For most small-scale farmers and low-income consumers, and even for the emergent middle classes, the informal and traditional markets remain crucial. Easy access, both for trading and procuring cheaper food, help keep markets resilient. Yet, despite their informality, these markets’ production and marketing networks may be at least as complex and sophisticated as their formal counterparts, demonstrating astonishing economic success.

In Bolivia an indigenous Aymara group controls 90% of the meat market in La Paz. Meat is traded along kinship pathways and distributed to over 2,000 city butcher shops. The relationships along the chains combine economic interest with mutual trust and social policing, letting considerable volumes of produce circulate on the basis of verbal agreements.

Shaping the rules

But although informal arrangements can be enough to assure income, they are not enough to shape the rules of the game — rules that may hurt small-scale producers. They remain vulnerable to policies that don’t differentiate their interests from those of larger-scale producers, and which oblige them to operate at the borders of state institutions and legal regulations.

Spaces in policy making are opening up for farmers to have their say, and the book gives examples from East Africa. To take advantage of these spaces, farmers need to move from protests to proposals, and that requires technical support and the capacity to argue and present evidence. Building these capacities and then taking on an advocacy role has a cost that even formal organisations struggle to meet.  Choosing to stay outside formal organisations and legal regulation can damage small-scale producers’ long term ability to fight for fair policies.

Exploring better support

There’s much debate on what policies can best help small-scale farmers meet the high expectations placed on their shoulders. Improving the institutions and governance of the ‘traditional’ and informal agrifood trade means meeting small producers and low-income consumers in their markets. Our book gathers the fragmented insights that have recently emerged around the world about these markets.

Our book launch on 29 November is part of a two day workshop in Amsterdam where we’ll be meeting with researchers and practitioners who have walked this same path. Together, we will explore how to build an action research programme that can support the benefits of informality in the agrifood sector (market accessibility, flexibility to enter and exit, trust and social control) while fighting its downsides (poor food safety and traceability, corruption and criminality, poor environmental performance, inequities along caste, class and gender lines).

In January we will be publishing a report on the workshop discussions of all these issues. But please don’t wait until then to share your views — we hope you’ll read the book and send us your comments.

If you’d like to know more about this work, contact Ethel del Pozo-Vergnes or Bill Vorley in IIED’s sustainable markegs group, or Josine Stremmelaar at Hivos:

Download a free copy of Small Producer Agency in the Globalised Market: making choices in a changing world published by IIED and HIVOS.