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My name is Carlos F. Ostertag, a member of CIAT´s Rural Agro-enterprise Development (RaeD) Project (HQ in Cali, Colombia). I have been following this very interesting thematic discussion, mainly by reading DFID´s and the moderators´ basic documents plus the summaries prepared by the moderators, mainly due to lack of time. I would like to congratulate DFID and the support staff for this extremely valuable initiative and also the participants for the very rich contributions. CIAT´s RaeD Project was derived from the previous cassava utilization (post-harvest and marketing) section that operated in the eighties. The RAeD Project focuses on developing methods, instruments and information that facilitate the linkage of small farmers or small rural producers (SRPs) with growth markets. In other words, our theme is rural business development (RBD). We consider that our direct clients are pro-poor development agencies. We originated in Latin America in 1995, but we expanded to Africa several years ago and recently to Asia. We have been funded mainly by DFID and IDRC. Our perspective coincides with many of the concepts raised during these last weeks in this consultation on agriculture. Our approach recognizes that RBD focusing on SRPs has two pillars: (a) a facilitating environment that includes appropriate international and national pro-poor policy, capable pro-poor government agencies and NGOs, and improved rural business development services (RBDS), plus (b) effective rural business organizations and entrepreneurs, that are the basic and essential unit to promote rural development, growth and innovation. We call this orientation the "Territorial approach to rural business development" or TA-RBD. In this approach we incorporate participatory methods and business and market orientations. Our approach includes local pro-development team-building and strategic planning, identification of marketing opportunities for SRPs, selected production chain analysis and strengthening strategies, plus RBDS analysis and strengthening strategies. As all methods should be, it is dynamic and we are now incorporating more of pro-poor policy aspects. As Manfred Beier, put it, "people cannot be developed, they have to develop themselves". This is the main reason why we are also working in methods for reinforcing participatory methods and the business/market orientation and skills among development agencies and SRP business organizations, which we call Learning Alliances and Action Alliances, respectively. I would like to note that the last three paragraphs are referring to strategies for reducing the inherent risk in SRP´s business activities, which has increased greatly due to incorrect international and national policy. In Latin America, with the dualistic agricultural structure, rural-urban migration has occurred in the last sixty years, promoted by economic development models that have mainly supported large-scale farmers. Most of the small-scale farmers left live in poverty, are resource-poor, live in marginal areas, and have poor access to markets. They are confronting multiple, well-known constraints such as deficient basic infrastructure and services, inappropriate international and domestic policy and a lack of sufficient and appropriate RBDS. However, they still represent nearly 40% of the population and are key suppliers of staple crops, fruits and vegetables, in the region. When developing methods for identifying market opportunities in a reference site in southwestern Colombia (1994), I recognized the diversity in small-scale farmers and used the same small-farmer categorization mentioned by Karim Hussein in this consultation. In fact, I found that degree of market orientation was highly correlated with level of well-being. I would like to point out that Amartya Sen, in the eighties, clarified that food security does not include only self-provisioning or subsistence farming but also income generation for buying food. The conflict between these two objectives is really not so strong as some people try to suggest. Therefore, we can also argue that, while rational pro-poor policies are essential, local interventions cannot be generic, but should be designed according to specific conditions, such as SRP typology, regional potential and available market opportunities This means that development strategies promoting self-provisioning and intensification, agricultural and non-agricultural diversification, value-addition, and improving market access are all valid for SRPs. I also see a role for subsidies and exit strategies for SRPs when the situation is hopeless, as was already suggested in this consultation. As already mentioned by several participants in this consultation, increased crop yields are not the solution for rural poverty. I am not denying the importance of production technology, but everybody knows that real prices of basic staples and commodities are going down, for example, coffee, cocoa, milk, etc. And of course we have the huge subsidies for farmers in the North that result in literal dumping in the South of basic agricultural products. Instead, what is required is a straightening of international and national pro-poor policy and a more diversified portfolio of development interventions where yields too, can have a function. In addition, let´s remember that currently a great proportion of the price of processed and/or transformed agricultural products is formed outside of the farm. This point also stresses the importance of agriculture, if we take into consideration the value chains derived from it, or upstream and downstream linkages, as Jonathan Innes has already pointed out. I think small-scale farmer associations and collective action are essential for RBD. Association is convenient for (a) taking advantage of market opportunities both related to basic crops or market niche products, for export or for local markets; (b) providing a portion of RBDS; and (c) regulating prices. My experience, however, as was already mentioned by Dick Tinsley, is that farmer association does not come easy. However, there is strong evidence that enticing small-scale farmers with attractive market linkages can accelerate collective action. People really do need a very good justification for working together. This underlines the importance of the market orientation, but clarifying that the objective does not have to be crop substitution but rather crop or product diversification, which are very different concepts; the latter concept is not in conflict with food security. This also suggests that the profile and role of the rural extensionist has to change radically, from somebody focused only on production technology and yields, to somebody with a more holistic, entrepreneurial vision focused on market opportunities, the entire production and marketing chain, possibilities for both collective action and strategic alliances along the chain. There can be several strategies for the insertion of small-scale farmer associations in production chains or value chains, and agribusiness. These strategies refer to "how the association inserts itself in the production chain" and also, on who leads the process or makes business decisions. Vertical integration (participation in more than one chain link) is one option, but given their weak business orientation and skills, is not easy and implies high risk. In this case, a development agency with the necessary business skills or a professional business manager can assume leadership. Another more realistic option would be for associations to seek alliances with the private sector (including some middlemen) in other chain links. This option can also consider internal or external business leadership if necessary. I totally agree with Manfred Beier´s view relative to the need for donor agencies to be more cautious and selective when handing funds to the public sector. The donor should make sure that the government is really committed to- and has a coherent pro-poor strategy, that ministries of agriculture or state development agencies are in fact appropriately staffed and exhibit real operational capacity, and that they can be held accountable for the financial resources they receive. I would even extend this caution when donors deal with NGOs. Rural development and poverty reduction does not require more diagnosis; if we wait more, we will probably not have many people left, surviving in rural areas. What we need is action. And action requires funds, committed and accountable governments, correcting international trade and pro-poor policy, and well-focused and operational research and development institutions. Recommendation to DFID My recommendation to DFID relative to action and funding priorities for promoting rural development and reducing rural poverty is the following: 1. Unite with other large, international donors and apply pressure on the public sector to obtain coherent pro-poor policy and intervention strategies, adequate staffing and operational capacity, plus accountability. 2. Support and fund the public sector in reaching the objectives of the previous point, including formal and informal training for public staff, and the re-engineering of public extension services. 3. Fund and distribute serious studies revealing the negative impact of the North´s agricultural subsidies and trade policy in rural livelihoods of SRPs in the South. 4. Finance learning processes (methods, instruments, information) among development agencies to improve pro-rural poor interventions; these processes can be facilitated by international research organizations. 5. Finance appropriate technology development and diffusion for SRPs, especially related to LEIA, fruits, vegetables and livestock. 6. Finance RBDS, with an emphasis on appropriate services for identifying market opportunities, stimulating formation of small-scale farmer business associations, and coaching SRP business organizations. 7. Finance exit strategies for SRPs when required. 8. Provide support to Fair Trade (North-South linkages) to increase its market share in world trade. 9. Fund incentives that can promote alliances between the private sector and the SRPs. Regards, Carlos Carlos F. Ostertag, MSIM Andean Regional Coordinator Rural Agro-enterprise Development Project CIAT Office Phone: (57-2) 445 0088 ============================================================= To send a reply to this message that goes to all list members, make sure that you send your reply to <address removed> To unsubscribe from this list, send an email to "<address removed>", with the message body: unsubscribe science-and-technology <your-email-address>
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