Facilitating Smallholder Farmers’ Market Access
In the OIC Member Countries
12
To examine the role of smallholder farmers in agricultural markets in OIC member
countries, this study draws on case studies from eight member countries representing the
five stages of structural transformation: Nigeria and Mozambique (agriculture-based);
Uganda, Indonesia, Bangladesh, and Turkey (transition 1 and 2); and Jordan and Kyrgyz
Republic (urbanizing and urban). About 44 percent of the population in OIC member
countries resides in these eight countries.
In terms of international trade, “market access” typically refers to the conditions set by
countries (such as tariffs and other trade policy instruments) for specific goods to enter
their markets. In this study, however, “market access” refers to the many dimensions
through which farmers connect or link to markets—the various institutional
arrangements, marketing systems and channels, physical and financial infrastructure, and
policies that directly or indirectly influence how smallholder farmers gain access to buyers
and consumers of their marketable surplus.
Structural Transformation and Economic Growth: Implications for
Connecting Smallholder Farmers to Markets
Ideally, structural transformation entails a shift of labor from agriculture to other sectors
where incomes are higher on average. Agricultural output continues to grow through
productivity gains, powered by the adoption of new technologies and increases in human
and physical capital. As the share of food consumers relative to food producers grows,
markets become more important, and the agribusiness sector grows in response. When all
goes well, the reallocation of resources within the economy and the adoption of new
technologies in agriculture combine to support widespread growth throughout an
economy. The rural poor who engage in farming benefit from gains in agricultural
productivity, and their rural communities benefit from spillover gains. The urban
population, especially the urban poor, benefits from lower food prices. This virtuous form
of structural transformation and rural change has been repeated in many places, but it is
far from a guaranteed outcome.
Each country takes a unique path of development, yet there are some powerful patterns of
development that link agricultural growth and economic growth. In one such pattern, the
agricultural sector comes to comprise a smaller share of the economy. This pattern is seen
in OIC member countries as a whole. maps agriculture’s share of GDP against
average per capita income, adjusted for inflation. The data points include every available
observation for each OIC member country from 1961 to 2012 for income levels less than
US$ 20,000 per capita. In general, agriculture makes up a larger portion of the economy
when countries are poor, but its share tends to drop quickly as countries develop.
The shift occurs largely because incomes outside of agriculture are generally higher than
in agriculture for low-income countries. As the skill level of people working in agriculture
rises and opportunities in other sectors become available, some people leave the sector.
Increasingly, the jobs and the people move to urban areas. Although there is less
conformity to this pattern of development across countries at different income levels, the
general downward pattern is clear .