Facilitating Smallholder Farmers’ Market Access
In the OIC Member Countries
6
standards, plant protection, and animal health measures. Beyond these considerations, a
country’s contract law, competition policy, investment policies, regulations (of the
environment, labor, health, and safety), and procedures for starting a business, getting
utility connections, registering property, and obtaining finance are also important.
Transport and energy infrastructure are fundamental for improving access to markets. In
2004, only 53 percent of the rural population in OIC member countries had access to an
all-season road.6 Investments to improve road infrastructure and extend and upgrade
rural feeder roads in main production zones tend to have high payoffs. Investments in
ports and railway systems are also critical in many countries. Sporadic investments to
build and upgrade infrastructure will not be sufficient; consistent investment is needed to
maintain that infrastructure adequately. Improvements in logistics are also fundamental,
as logistics impact the efficiency and reliability of supply chains. Access to electricity—as
well as its cost and the dependability of supply—influence the market opportunities
available to smallholders, their production costs, and marketing costs. In about 45 percent
of OIC member countries, less than half of the rural population has access to electricity 7.
Investments in rural electrification are important to spur private investment in modern
agri-food chains.
Telecommunications infrastructure plays an outsized role in modernizing marketing and
widening participation in value chains. Mobile phones can convey timely, accurate
information on prices, buyer contacts, distribution channels, specifications for grades and
standards, and storage recommendations. Such information significantly reduces the
transaction costs for smallholders. One of the case studies highlights how mobile phones
have reduced the number of intermediaries in staple food value chains, enabling farmers
to sell directly to wholesalers. Phones can effectively deliver advice, access to agricultural
inputs, and a growing range of financial services to large numbers of smallholder farmers.
Finance also brings smallholder farmers into markets and increases their incomes by
enabling them to invest in new technologies, purchase better inputs, and ultimately
improve productivity. Financial services are developing rapidly, yet a majority of
smallholders still cannot take advantage of them. New strategies are needed to permit
more flexible forms of agricultural lending while guaranteeing that borrowers repay.
Although many innovations in agricultural financing exist, they are not widely known;
some promising developments are presented here.
Innovative institutional and organizational arrangements must be promoted to ensure
that modern agri-food supply changes are inclusive. A concerted effort by the public
sector, private sector, donors, and non-governmental organizations (NGOs) is needed to
build and reinforce smallholders’ links to markets. Government and the private sector are
facilitating linkages for smallholders in a number of ways, and the primary lesson from
these efforts is that aggregation is a prerequisite for connecting smallholders to more
coordinated supply chains. An important means for government and donors to support
6 An “all-season road” can be transited year-round by the prevailing means of rural transport (typically a
pick-up or a truck that does not have four-wheel-drive).
7 World Bank (2012f, 2013f).