Market linkages between smallscale producers and dynamic markets: The Regoverning Markets Program Bi

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Market linkages between small-scale producers and
dynamic marketsThe Regoverning Markets
ProgramBill Vorleybill.vorley_at_iied.orgwith
Estelle Bienabe estelle.bienabe_at_cirad.frPresent
ed at FAO-IAMA Workshop The Rural Poor and
Tomorrows Markets, Palma, 23-24 June 2007
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Where small-scale producers meet tomorrows
markets

• Exports to home markets of global TNCs
• The green bean story
• Global TNCs investing in emerging markets
• Retail Metro, Makro, Tesco, Carrefour, Wal-Mart
• Processing Nestle, Danone, Frito-Lay
• New regional players
• Retail Reliance in India, Wu-Mart in China,
  Falabella in L America, Shoprite in Africa

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Re-structuring, Re-governance..

• Marketing strategies built around..
• Consumer assurance
• Reliability of supply
• Lower prices
• Through
• Preferred suppliers
• Own brands
• Traceability
• Private standards
• Economies of scale
• Logistics
• Shaping regulation
• Deregulation
• Liberalization
• Market concentration

• New entry requirements technology,
  organisation, scale, finance
• Collaborative business models

• Imports set price and quality
• Buyer power

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Markets working for the poor?
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The green bean storyKenyan small-scale growers
and EUREPGAP (NRI/IIED)

• Formal participation by smallholders supplying
  the main exporters has fallen quite sharply (by
  60) since pre-2003
• Smaller exporters rely heavily on donor support
  for smallholder certification, (40-100 of
  establishment costs)
• Some of these companies report that they cannot
  see how the system can be maintained once donor
  support is withdrawn

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Makro
Trad Wholesale
Buy tomatoes for Rp40, sell for Rp60 and still
get enough margin
Buy for Rp 20 at farm, and sell at Rp 140 in city
5 days later, with up to 5 people involved along
chain. Broker provides little service other than
pre-financing. 40-45 losses -- packing,
logistics, grading
Suppliers must have tax number, fax machine etc..
Suppliers part of informal economy
Must be able to guarantee source of product
(avian flu..)
No traceability
Must deliver to collection centre
Will not work with co-ops
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Reliance Fresh 157 outlets across 18
states. Plans 4,000 stores by 2010, 5,000 by
2012
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Being a partner in development of small producers
and traders can avoid future policy shocks
MediaDip.com NewsWing.com
Roadside vegetable vendors demonstrated in front
of a Reliance Fresh Store in Ranchi, Jharkhand on
8 May 07
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Policy to anticipate
Emerging markets e.g. Vietnam
Maturing markets e.g. South Africa
Fragmented markets e.g. Pakistan
Consolidated marketse.g. W. Europe
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Regoverning Markets programme in short..

• Can the new agrifood business drivers be partners
  in development?
• Can smaller scale producers and their
  organisations be partners in new business?
• Can anticipatory public policy make any
  difference?

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Program organization

• Now in Phase 2, ends March 2008
• Three components
• Decentralised regional coordination and
  leadership
• Advisory Groups (global and national)
• Funding US4m, from DFID, CIDA, Cordaid, ICCO,
  USAID

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Regional Coordination
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Program Components
Tom Reardon (MSU), Jikun Huang (CCAP)Julio
Berdegue (RIMISP), Lucian Peppelenbos (KIT),
Estelle Bienabe (UP/MOISA) Felicity
Proctor,Larry Digal (UPM)

• Whats happening?
• Empirical research
• What is best (or better) practice?
• Case studies
• What should we do?
• Policy and institutional mapping
• Policy dialogue

(service)
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Component 1 Studies of market restructuring

• Centre for Chinese Agricultural Policy
• Centre for Management in Agriculture (CMA),
  Indian Institute of Management
• Centre for Agricultural Policy and Agribusiness
  Studies (CAPAS) of Padjadjaran University
• Secretariat of Agricultural Development, State of
  Michoacán (SEDAGRO), with RIMISP
• Warsaw University Department of Economics
• University of Pretoria
• Economic Research Centre on Mediterranean
  Countries with collaboration of MOISA Montpellier
  
• Farming Systems Association of Zambia

• Horticulture Markets in China
• Dairy Markets in India
• Horticulture Markets in Indonesia
• Strawberry Markets in Mexico
• Dairy Markets in Poland
• Horticulture Markets in South Africa
• Tomato Markets in Turkey
• Beef and Chicken Markets in Zambia

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Research questions
Survey/data

• What is observed market restructuring? What are
  determinants?
• What are observed marketing choices of farmers?
  What are determinants?
• What are impacts of market restructuring on
  farmers?
• What are implications?

• Macro/industry survey
• Trader survey
• Village survey PRA
• Household survey
• Household survey
• Policy Dialogue

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Village-level survey, Shandong
Photo CCAP
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Component 1 Preliminary findings (meso)

• Where there are medium/larger farmers in a
  generally strongly dualistic system where small
  farmers dominate (such as in Mexico and Zambia,
  and even in Indonesia for potatoes), then the
  restructuring tends to favour medium farmers, and
  the small farmers struggle in the new economy
• Very little discernible impact at village level
  where there is no medium/larger farm sector, eg
  China
• Important policy implications!

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2. What is best (or better) practice? Case studies
Market innovations
Policy innovations
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Case study analysis policy innovation

• Argentina Best Commercial Practices Code,
  adopted in 2000
• To prevent conflict and solve disputes between
  suppliers, processors and supermarkets
• Improving competitive conditions under asymmetric
  trading conditions, paving the way for more
  rational, equitable and thus, sustainable trade
  scenarios
• Mediation and arbitration are at first instance
  private, and are referred to government
  competition office for final appeal
• Has since been international replicated in
  Colombia (2004), Mexico (2006) and Costa Rica
  (2006)

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Case study analysisBusiness model collective
action

Receptive business sector
Trained/empowered farmers
Partnership facilitator
Facilitating policy sector
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NorminVeggies

• INNOVATIONS
• Competence building linkages with other groups
• organized vegetable industry groups (PVIDB)
• government
• resource organizations, (GEM-USAID)
• business sector
• academia
• New business model with NorminCorp as market
  facilitator and run professionally as a business
  entity
• Product consolidation through clustering of
  growers. The cluster as a product supply unit
• Strong encouragement of shared core values -
  interdependence, responsibility, commitment,
  trust
• Case included in WDR 2008

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Photo SPAR
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3. What should we do?- Policy and institutional
mapping- Policy processes
Philippines
Turkey
Indonesia
If we understand the process, we can design
policies to shape the way in develops
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Policy and Institutional Mapping Methodologies

• Asia training workshop
• Toolkit available October 2007

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Launched Nov 2006..
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Retailers as development actors?

• "In supporting farmers to participate in the
  global supply chains, donors should exchange
  experience, develop a common understanding of the
  supermarket revolution and establish dialogue
  with these supermarket chains.
• www.ruralforum.info

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Outputs

• Phase 1 book
• Website www.regoverningmarkets.org
• By March 2008
• Conference 21-22 Jan 2008
• Cases studies and 2-page policy briefs
• Empirical research reports and policy briefs
• Policy mapping toolkit
• Country and regional processes
• Synthesis
• Ensure relevance for producer organisations,
  private sector