Facilitating Smallholder Farmers’ Market Access
In the OIC Member Countries
96
Kazakhstan and Tajikistan require the entire truck to be unloaded; traders resort to
informal payments to circumvent these regulations and reduce delays.153
Farmers, believing that traders keep farm-gate prices low to increase their profit margins,
are reluctant to enter into longer-term contractual agreements with traders, who then
cannot sign contracts with larger potato importers. Lower marketing costs, combined with
better access to reliable information in domestic and foreign markets, better marketing
strategies by farmers, and stronger contract enforcement would help farmers as well as
traders to establish a more sustainable potato supply chain.
FRUIT AND VEGETABLES
Vegetables—including onions, carrots, tomatoes, and cucumbers—are major cash and
export crops produced entirely by smallholders; about half of production comes from
household farms (gardens). Vegetable production and exports have increased steadily
since 2007. In 2012, around 1.3 million tons of vegetables were produced. About 66
percent of that production is sold, largely in domestic markets (63 percent), to traders (80
percent), agribusiness (10 percent), and other consumers.154 About 37 percent of
marketed production is exported to Kazakhstan, Russia, Turkey, and China through
traders (80 percent) and foreign trading companies (less than 1 percent). In 2013,
vegetable exports earned about US$ 106 million. Processed tomatoes represented 30
percent of fruit and vegetable exports.155
Despite being in high demand in domestic and export markets, vegetables are grown on
less than 4 percent of arable land. The most frequently cited reasons for limited vegetable
production are the lack of finance to invest in production and uncertainty about market
prices and demand.156 To scale up production, smallholders will need better access to
credit and reliable market information. Credit institutions are reluctant to lend to
agriculture in general and to small farms in particular because of “structural risks
associated with their size, asymmetric information, high transaction costs and high
business risks.” 157 Current collateral requirements are high at around 130 percent.158
Increasing safety and quality requirements are another major issue for vegetable farmers
and food processors. Farmers have limited knowledge about standards at every stage of
the agri-food marketing chain, including standards for soil and water quality, plant
protection, farm hygiene, and environmental and social issues.159 Farmers and processors
also lack knowledge of basic harvesting principles such as timely harvesting, removal of
vegetables with visible evidence of disease or severe insect damage, and careful handling
of perishable produce. The most common and important concern of agribusiness and
153 World Bank (2011b).
154 OECD (2014).
155 OECD (2014).
156 OECD (2014).
157 OECD (2014).
158 World Bank (2014d).
159 USAID (2011).