Facilitating Smallholder Farmers’ Market Access
In the OIC Member Countries
7
aggregation is to support the formation of producer organizations and build their capacity
to operate effectively. Neither donors nor governments are well suited to provide the
business development and management training that producer organizations need to
operate more effectively; those skills are delivered better by private service providers or
NGOs with the appropriate capacity. What government and donors can provide, however,
is indirect support—for example, through instruments such as demand-driven funds to
support producer organizations’ developmental needs
Aside from producer organizations, other institutional arrangements are evolving to
better link smallholder farmers to markets. One promising approach is productive
alliances, which have four building blocks: organizing farmers, linking them to markets,
investing in production and marketing, and providing technical assistance. In productive
alliances, the main instrument for forging the links between producers or producer
organizations and agribusiness has been competitively allocated matching grants.
Contract farming is another avenue for enabling smallholder farmers to enter markets
from which they are normally excluded, owing to distance, standards, processing
requirements, or other factors. Smallholders who have access to assets and capital and
who regularly produce marketable surpluses are in the best position to benefit from
contract farming. Contract farming may not be suitable for asset-poor smallholder farmers
or even the majority of smallholders, who are largely subsistence farmers (unless they are
part of an effective producer organization, with requisite management and financial
capabilities).
A final consideration is that insufficient or uneven investment in rural health and
education places smallholder farmers at a disadvantage in adjusting to rapidly evolving
agri-food markets. The technical skills and knowledge that all farmers, particularly
smallholders, require to participate effectively in modern agri-food value chains will only
increase. Programs to improve farmers’ knowledge of production and marketing
strategies, comply with grades and quality standards, and ensure that their production
practices are sustainable will likely have better outcomes if the farmers who participate
have basic education, including literacy and numeracy. A healthy, educated rural
population is in a better position to benefit from the changes and opportunities that
accompany structural transformation and make the transition to work outside of
agriculture.
In summary, no “silver bullet” exists to link smallholder farmers to markets. Successful
policies and interventions to improve smallholders’ links to markets will be shaped by a
particular country's current position in the process of structural transformation, its
endowments, both natural and man-made, and by where the country is heading.
Nevertheless, OIC member countries have much to gain from sharing first-hand
experiences with strategies that successfully linked smallholders to markets, as well as
strategies that failed. Two particularly important areas for technical cooperation are to
better understand how to foster effective producer organizations and how to establish
effective platforms for consultation and collaboration across the public sector,
agribusiness, producer groups, and innovation-driven agencies. Evidence indicates that it
is often easier to form producer organizations than it is to make them financially viable
and sustainable. Issues that warrant attention include the identification of appropriate