Economic Opportunity Mailing List Archive

["Poulton, Colin D" <<address removed>>]

Thanks to Alastair, Andrew and Vinay for getting our discussions going! Whilst 
you are tracking the Economic Opportunity theme, you may also wish to view some 
of the contributions to the Growth and Poverty theme (for example, those from 
Christie Peacock and Dick Tinsley), which are relevant to our discussions. 
These can be viewed at 
http://dfid-agriculture-consultation.nri.org/theme1/theme1.htm by clicking on 
Archive of Discussions - even if you have not registered for Growth and Poverty 
- and you can always respond to them within this theme if you wish.

I discern two main threads in our contributions so far: the (related) 
challenges of providing strong supporting services to small-scale farmers and 
of equipping them to supply increasingly demanding markets. 

Both Alastair and Vinay highlight the importance of credit provision. Alastair 
provides an example of a successful credit scheme in Ethiopia (not focused 
particularly on seasonal finance, but meeting a range of needs of poor rural 
households). It would be good to hear of more successful examples and - a 
personal bias here - I would be particularly interested to hear of cases that 
deliver finance to seasonal agricultural production. Vinay's notes that in 
India significant funds are earmarked for banks to support small-scale 
agricultural production, but these rarely reach the intended beneficiaries. Do 
others have experience (either in India or elsewhere) of card or voucher 
systems that can enhance the links between formal financial systems and 
smallholder farmers? Andrew questions my note of scepticism over some tied 
credit in Asia; Vinay accepts the rationale for such lending, but suggests that 
farmers could be better served by "independent" credit provision, if it were 
available from formal financial systems.

Another service touched upon by both Vinay and Andrew is extension advice, 
noting both the weaknesses of much public extension activity and the importance 
of better advice if producers are to supply ever more demanding markets. The 
momentum to privatize extension provision for poor producers is questioned by 
Vinay (rightly in my view). Technical advice is needed to assist poor producers 
develop their production capabilities and this will over time raise their 
effective demand for privately-provided advice. However, many producers in low 
income countries are not yet at a stage where they can consider paying much for 
advice. Can anyone supply us with positive examples of public sector extension 
efforts assisting farmers to link up to changing markets? Or a counter view on 
the benefits of greater private involvement in extension provision?

As Andrew notes, "Improving the ability of farmers to market diversified 
production to better meet the needs of existing and new markets will ... take 
on increasing importance in the coming years". He notes the challenge posed by 
the rise of supermarkets, but also reminds us that "more traditional marketing 
systems will continue to play the dominant role for many decades to come". 
There is certainly plenty of debate on this point amongst marketing economists 
looking at Africa right now! Vinay's contribution sees the rise of supermarkets 
as offering as many opportunities and threats for small-scale producers. The 
opportunities come from expanding market channels that value quality, thereby 
providing incentives for producers to invest in higher value production (unlike 
traditional market systems that provide few incentives for quality, so 
encouraged little investment in it). Challenges come from the need: to 
aggregate smallholder supplies, so as to be able to supply new markets with the 
quantities that they wish to deal in; and to provide effective supporting 
services to enable small-scale producers to deliver the desired quality 
products (as discussed above). However, Vinay asks, might the demand signals 
from supermarkets may provide incentives for other firms to invest in 
supporting smallholder production and marketing the resulting produce? 
I hope our contributors so far feel that I have handled their contributions 
fairly and that others can provide us with further perspectives and examples on 
the points raised above. I would also like to flag the question of farmer 
organisations and the roles that they can play in linking farmers both to 
higher value markets and to the support services they need to respond to market 
opportunities. Comments on farmer organisations in the Growth and Poverty theme 
have so far been quite downbeat. Do others share this scepticism or would you 
like to offer some more optimistic perspectives?

I look forward to more contributions.

Best wishes,

Colin