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									                   Social and Economic Policy
                Globalization, Growth and Poverty

Regoverning Markets: the Keys to Inclusion of Small-
       Scale Producers in Dynamic Markets

                             (IDRC project No. 103847)

Project Profile
The structure and governance of agri-food markets in developing countries are
undergoing rapid change. Driven by trade liberalization and new technologies in food
processing and retailing, agrifood markets are becoming more concentrated at all
levels (wholesale, retail and intermediary traders). Market expansion is increasing
price competition and new large distribution agents are setting stricter standards in
terms of product quality, reliability and scale of delivery. Procurement patterns are
being adapted to these new requirements and changing the market opportunities for
farmers in the process. For some products, only imports from experienced foreign
producers have so far been able to meet the new requirements. For locally sourced
products, observers fear that new patterns of supply and marketing are inherently
biased in favour of larger farmers because small producers cannot afford to invest in
the new equipment, production inputs and handling methods needed to meet
distributors' increased demands. For all these reasons, concern is mounting among
researchers, policymakers and farmers organizations that the economic
opportunities for small farmers in most developing countries may be shrinking, at the
very moment when renewed effort is needed to lift productivity and incomes among
the rural poor.

Moreover, the agricultural sector is subject to three major challenges at the present
time: climate change, changes in the external market context associated with greater
trade liberalization, and restructuring of internal market conditions. All three
dimensions are under-researched in relation to their significance.

The goal of the Regoverning Markets program as a whole is to secure more
equitable producer and small and medium enterprise benefits in the face of the
unprecedented and rapidly evolving changes in agrifood markets in developing and
transition economies. The general objective of the research component is to
generate high quality and policy relevant research findings and to present them in
ways that will contribute to public and private sector policy formation at national and
international levels. The research component of the current project will be filling a
gap in carrying out a systematic, comprehensive and rigorous investigation into the
extent and features of internal agricultural market restructuring across the whole
developing world.

In this respect, the project will carry out empirical research in seven countries (China,
India, Indonesia, Zambia, South Africa, Turkey, Poland and Mexico), addressing
these concerns. It forms the first part of a global, three component integrated
research-to-policy action project. The research component, the largest of the three,
forms the foundation for the rest of the project activities. It will collect qualitative and
quantitative data for an analysis of market and production conditions in fresh fruit
and vegetable, dairy and (in one case) beef and chicken production in a selected
province or district of each participating country, chosen to be representative of
farming and market conditions throughout the developing world. The findings will
form the backdrop against which to assess "success stories" or case studies of good
practice interventions to ensure small farmers’ access to modernizing agrifood
markets, wherever they might be found. The research will also be the basis for policy
recommendations informed by understanding of the real scale and nature of the
problem, to be promoted through policy platforms in a large number of developing
countries, including but not limited to the seven countries where the empirical
research will be done. Agricultural production and productivity are crucial to efforts to
reduce poverty.

The project has been designed collaboratively by a fourteen-member consortium of
research institutions set up specifically to implement this project. The majority are
located in the developing world (and one in an East European transition country).
The project will be coordinated by the International Institute for Environment and
Development, London, UK.

Specific Objectives
The specific objectives of the research are to add to knowledge by providing
scientifically sound evidence to answer the following core questions:

      What is the nature of the restructuring of the agrifood system downstream,
       and the associated changes in incentives and requirements for the farmer, of
       the products in question?
      What are the market channel choices and multi-market strategies of farmers
       and the determinants of those choices and how are these strategies
       undertaken (individually or collectively)?
      What are the technological, managerial and organizational practices/
       behaviour related to the market channel choices taken by farmers?
      What are the net effects of the combination of farmers` market channel
       choices and the attendant costs of those practices in terms of net incomes
       and entry requirements of the restructured versus traditional market channels
       for the products in question?

Expected Results
The empirical research component of this project will generate new, comprehensive
and systematic evidence on the restructuring of domestic agricultural markets. The
project outputs will inform and enhance other project activities set up to engage
policy communities and other stakeholders (notably farmers’ organizations and
wholesalers and retailers in agrifood markets) in policy debate.

The specific outputs of the research will be authoritative analyses of the dynamics of
market restructuring and identification of the factors which determine the inclusion or
exclusion of small farmers as suppliers to modernizing food markets in different
circumstances. The findings will be rigorous and of global scope and application.

The outcomes expected as a result of the project as a whole will be well-informed
policymaking in this area, directed to incorporating small farmers into modernizing
market structures in ways that increase their productivity and incomes in a
sustainable manner. The project will provide evidence on the patterns and drivers of
inclusive economic growth and poverty reduction and facilitate enhanced
understanding of the dynamics of inequality and exclusion of small farmers in the
face of new market structures and opportunities. It will explore the political economic
dimensions of market restructuring and of possible reforms and identify the
appropriate levels (local, national, international) for pro-equity policy interventions in
the agriculture sector. The placement of the research component within a large,
policy-oriented project will ensure that there is direct input of the research findings
into policy debates that will have high profile and influence by virtue of the global
scale of the activity.


Project Duration and Amount

Duration: June 2006 – June 2008
Amount: 659,200 CAD

Funding Partners
U.K. Department for International Development (DFID): 176,700 GBP; USAID/Cairo:
167,450 USD

For additional information, please contact:

Bill Vorley                                       Elias Ayuk
International Institute for Environment           Senior Program Officer
and Development (IIED)                            West Africa Regional Office (WARO)
3 Endsleigh Street, London                        Avenue Cheikh Anta Diop, Angle
Tel : +44-20-7872 7213                            Boulevard de l'Est
Fax : +44-20-7388 2826                            BP 11007, CD Annexe
e-mail: bill.vorley@iied.org                      Dakar, SENEGAL
                                                  Tel : +221-864 0000
                                                  e-mail : eayuk@idrc.org.sn

								
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