Enhancing the competitiveness of rural agroenterprises through better integration of supply chains and delivery of effective business support services.

At the PhAction annual meeting last year in Montpellier, the proponents of Theme 2, which include GTZ, NRI, CIRAD, IITA, and CIAT, decided to put forward a concept note to BMZ for funding through its targeted funding facility for International Agricultural Research Centres. Traidcraft was invited and accepted to participate in the project proposal preparation. In September and October, the group worked by e-mail to develop the concept note that was presented by CIAT on behalf of PhAction in November.

In February 2002, we were informed by BMZ that the concept note had been accepted for full proposal development. Representatives of the participating institutions met in Eschborn, Germany, hosted by GTZ, on 22 and 23 April to discuss and prepare the outline of the proposal according to the BMZ guidelines. The proposal aims to generate and organize information resources for use by development organizations that will assist them in the establishment of effective and equitable linkages between the small-scale agrifood sector of developing countries (farmers, processors, traders etc) and emerging domestic and international agrifood markets, which have been segmented according to consumption trends. Although the work will focus its attention on E. Africa and S. Asia, the search for methods and tools developed by others for inclusion in the information resource base will be cast globally. There is a close correspondence between the developments reported in Theme 1 and what we hope to achieve in this project in terms of web tools. A summary of the proposal that was presented to BMZ is provided below. We expect to hear in October whether or not the proposal has been approved for financing. Should we be successful, the project would get under way during the first trimester of 2003.

Title:
Attacking rural poverty through trade: linking smallholder farmers to high value agrifood markets in E. Africa and S. Asia.

Goal:
To enhance livelihood options for the rural poor through organizational schemes that deliver long-term linkages with high value, agrifood supply chains.

Purpose:
Development organisations have access to and are using a range of information resources that assist in the organisation of effective and equitable linkages between the small-scale agrifood sector of developing countries (farmers, processors, traders etc) and emerging domestic and international agrifood markets segmented according to consumption trends.

Outputs
1. Information resources inventoried and organised, and a "road map" and guide for the process of linking smallholder farmers to high value markets developed.
2.Methods and tools validated and adapted through action research carried out with selected enterprise/supply chain development projects
3. Options for improving the sustainability and benefit distribution of supply chains in which smallholders are major actors, investigated and evaluated.4.
Sustainable community of practice with access to project results for achieving developmental impact.
5.Project effectively managed, monitored and evaluated

Project justification
Ensuring that the rural poor benefit from globalisation, that agrifood trade works to reduce poverty, rather than exacerbating it, is critical for many developing countries. Small farmers run the risk of being forced to link to, or becoming marginalised by, agrifood supply chains that are increasingly competitive and vertically integrated, in a sector that is becoming highly concentrated (especially in international markets). High value agrifood goods (produce and products) have the potential for smallholder farmers to escape from the syndrome of producing low value, poor quality products for local markets where consumers have only low purchasing power. Demand for such products is increasing, in domestic, developing country and international markets. However, an understanding of which market segments and supply chains offer the best prospects for meeting poverty alleviation and environmental objectives, of how the rural poor can link to these chains in a manner that is both equitable and commercially viable, and whether these markets have the potential to make a major impact on rural poverty are all lacking at present. While some valuable experiences that cross the barriers between "development" and "commerce" exist, these remain small islands of success. This project aims to expand the number of such cases, and bring R&D expertise to bear on them so that general lessons can be drawn, impact maximised, and a comprehensive suite of methods and tools organised.
Expected uses and users of research results

The research results will be made available through the website and other channels (eg CD-rom) as an inventory of methods and tools (combining those already available with others developed during this project), together with a guide that facilitates their selection and use depending on the development situation encountered. The project will also result in a creation and consolidation of a community of practice (comprising the project partners and involved stakeholders) that could develop a continuing R&D agenda, beyond the life of this project. Users of the research results will be development institutions, primarily large international and Southern NGOs, but also local development public sector authorities, private sector industry associations, and rural community organizations involved in supporting the development of competitive yet equitable links between poor rural people, including smallholders and the landless (who can benefit through generation of employment), and higher value domestic and international markets.

Research methodology and procedure
This project will:

Inventory and organise existing information resources for linking smallholder farmers to markets, especially higher value markets.

Involve partners and stakeholders in the development of guide or "road map" for their use in different situations/contexts.

Conduct strategic research on major issues, using graduate students supervised by NRI and CIRAD.

Conduct action research to validate and refine methods and tools, as well as to address research issues, in specific locations/supply chains and with local stakeholders.

Add value to this through cross-project analysis and systematisation of results.

Incorporate these results, and information resources developed from them, into the guide and road map.

Create, promote and develop a web-based platform for the dissemination of the above outputs, and a virtual channel for stakeholder input to project decision-making.

Involve all partners and relevant stakeholder representatives in project decision-making, through a steering committee that meets regularly during the lifetime of the project.

The project will focus on supply chains for higher value and value-added agrifood products from S Asia and E Africa, in international and domestic markets. Within the international market, emphasis will be placed on supply chains linked to the EU. Potential action research sites have been identified in both E Africa (Uganda, Tanzania, Kenya) and S Asia (Sri Lanka, India).

Conclusions from completed studies
During the development of the PhAction "linking farmers to markets" initiative (GTZ and PhAction, 2000), the development of efficient, equitable and responsible agrifood supply chains was prioritised based on the experiences of PhAction members and their partners. The review document prepared for this process stresses the importance of seeking value added markets, complementing production of basic commodities, for poverty alleviation through rural agroenterprises (Wheatley, 2001). For small farmers in developing countries, building on these options requires making difficult and different types of decisions, based on new sources of information (on market demands) and which require different sets of skills, technologies and resources to those needed for traditional commodity production.

R&D assistance should:
a)
take a more demand-driven, production to consumption chain and systems approach that includes technological, marketing and organisational aspects of post-harvest components of these chains, as well as crop and livestock production itself;
b)
focus on "processes", for example certification, grades and standards, rather than on inputs and technologies, and
c)
work more closely with the different stakeholders, including the private sector and NGOs that are involved in such supply chains, to identify and build on concrete opportunities.
While a number of different approaches, methods and tools to facilitate and support this endeavour have been developed, a systematic guide and road map for their use is lacking, and their dissemination is patchy.

Stakeholders
Stakeholders will be have opportunities to make direct input to project decisions, though membership of the steering committee and of the wider community of practice, as this develops. Site-specific action research will involve relevant stakeholders active in those locations. Key stakeholders in each of the following major categories will be identified:

International (Northern) and national (Southern) NGOs that operate or facilitate access to higher value supply chains, including organic and ethical/fairtrade segments.

Private sector agrifood enterprises/industry associations (mainstream food industry companies, major retail groups in the South and in Europe, food industry trade associations).

Public sector agencies - EU and developing countries. Food quality and safety (regulatory and policy making bodies), and relevant government departments.

Regional networks or institutions and public sector agencies -developing countries. Rural development ministries/departments and food industry and food quality/safety organizations

Local grassroots community organizations, associations, producers' organisations and enterprises in the developing world, plus their support institutions (public sector and NGOs).

Leading scientists:
Rupert Best (leader), Rural Agroenterprise Development Project, and Nancy Johnson, Impact Assessment Project, CIAT

Collaborating institutions.
Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ): Division 45-Rural Development. Christian Henckes (Eschborn) and Volker Steigerwald, GTZ, Sri Lanka.
Natural Resources Institute (NRI): Claire Coote.
Centre de Coopération Internationale en Recherche Agronomique pour le Développement (CIRAD): Denis Sautier.
Traidcraft, UK: Geoffrey Bockett.
International Institute for Tropical Agriculture: Shaun Ferris, coordinator of Foodnet
Sri Lanka: Ministry of Central Region Development, Kandy District.

Budget total requested
US$ 1,356,480 over a period of 3 years (? 1,474,434 at an exchange of US$ 1.00 = ? 0.92).