Concept Note for a CGIAR Challenge Program
Linking Smallholder Farmers to Growth Markets

Background

Agriculture is undergoing a rapid transformation, away from a supply driven agricultural production focus, towards a market-driven "agrifood" orientation. The impact of this change, on people, economies and the natural environment is, and will continue to be, profound. The change has particular implications for smallholder farmers in developing countries. Linking these farmers to growth markets, and retaining a proportion of the value added through post-harvest processing and marketing activities in the rural areas where agricultural raw materials are produced, offers a real option for improving the welfare of the rural poor.

Several options exist for smallholder communities in developing economies to:
·produce and market higher value crops/livestock, especially those where scale economies are less pronounced;
· add value to primary production through on-farm or rural processing, packaging, branding and other marketing arrangements;
· associate with other farmers to overcome scale disadvantages and gain market power;
· seek to differentiate away from "commodities" towards "products" targeted at higher value market segments, including alternative, ethical and organic markets that value more sustainable production systems;
· develop long-term equitable relationships with agrifood enterprises closer to the end customer (larger processors, retailers etc).

For small farmers in developing countries to build on these options requires making difficult and different types of decisions. These will be based on new sorts and sources of information (on market demands, for example) and require different sets of skills, technologies and resources to those needed for traditional commodity production.

Thus, the globalising world economy offers opportunities as well as threats to the small-scale, resource poor farmer. Identifying and realising the opportunities will generally not occur by default. Society has a role to play in enhancing the capacity of the rural poor in developing countries to take advantage of the opportunities offered by global economic integration and in putting into place mechanisms that reduce the threats that will lead to their further marginalisation.

Objectives
The objective of the proposed challenge program is to contribute to improved livelihoods, food security and sustainable development in developing countries through the execution of dynamic post-harvest interventions that equitably link smallholder farmers to growth markets.

Four major areas within the post-harvest field, where collaborative research and development can make a difference in helping small farmers and small rural agroenterprises in developing countries benefit from the changes in the agrifood sector, have been identified:

· Improve the identification of market opportunities, so that farmers and enterprises can become more competitive in a market-oriented environment and able to make sound business decisions by identifying and developing market opportunities for agrifood based products (but not at the expense of environmental or social sustainability).

· Improve market access, by integrating farmers and small rural enterprises with agrifood supply chains that go beyond the local economy, under terms that are equitable as well as competitive, supported by affordable, sustainable and effective local business development services.

· Foster technology innovation, enabling local communities to become more innovative in accessing, developing and applying appropriate post-harvest technologies to produce the products demanded by the market.

· Enhance product quality, so as to consistently meet regulatory standards and consumer demands for high quality, safe food products in their target markets (with corresponding implications at policy level).

Outputs and Impacts
The 'Linking Farmers to Markets' Program is aimed at ensuring that rural people, enterprise and communities in the developing world have access to information, technologies, methods and tools to help them make the right choices when confronted by new market opportunities. The specific comparative advantage of a global program lies in its ability to undertake cross continent analysis of experiences, provide information of a global nature on markets and trade relevant to all stakeholders and catalysing a coordinated effort to R&D interventions in post-harvest research and enterprise development.

The principal outputs from the Program will be:

· Methods for rapid analysis of market demand and supply, spatial analysis of market opportunities, and for analysing the feasibility of business plans based on different levels of investment from clients.
· Methodologies for enhancing access to market information and market intelligence services by farmers and rural enterprises.
· Options for organisational structures and relationships between actors that enhance local innovation and result in greater and more equitably distributed benefits through the supply chain for agrifood products.
· Options for the organisation and the sustainable improvement, in content and delivery, of business development services to small rural agroenterprises.
· Post-harvest technologies that enable smallholders to capitalise on market opportunities, improve competitiveness and adhere to food quality and safety standards.
· Information and decision support tools for introducing or improving post-harvest techniques and technologies at the local level.
· Quality and safety assurance methodologies that can be applied in developing countries by small and medium-scale enterprises.
· Quality and safety objectives for local regulatory systems in developing countries and feasible quality/safety targets for supply chain actors.

The medium- to long-term impact of these outputs will be:

· Strengthened capacity of government and non-government organizations to establish profitable and environmentally sound agricultural enterprises that link smallholder farmers with growth markets.
· On-farm and off-farm income and employment opportunities generated for men and women in rural communities in developing countries that contribute to the alleviation of poverty.
· Reduced rural to urban migration, reduced incentive for the production of illicit crops and motivation to conserve biodiversity, soil and water resources upon which rural communities depend.

Proposal development
The World Bank's Sector Strategy for Rural Development (World Bank, 1997) identifies the task of strengthening the linkage of rural and urban economies through the food, feed and fibre commodity systems as 'essential for fostering growth across the national economy and sustainable growth of the rural economy'. Although critical for the sustainability of income generation in the rural sector, the post-harvest handling and processing, and trading and retailing components of these commodity systems have received scant attention and a low level of investment in terms of public R&D funds. The need for a global initiative around the theme of 'linking farmers to markets' was proposed during the annual meeting of the global post-harvest forum, PhAction, which was held in Eschborn in 2000. Since that meeting, a process has been put in train to identify needs and demands, and develop a coherent set of interrelated R&D themes that address the opportunities and constraints in the post-harvest and marketing sector. Needs and priorities are being identified through a series of regional consultations on post-harvest needs and priorities sponsored by GFAR and FAO. Concurrently, planning meetings with potential project partners have been held in Hanoi and Montpellier, in April and June 2001 respectively, in order to develop the priority R&D themes that are outlined above. At the CGIAR AGM in October 2001, the progress in this process was reported to actual and potential stakeholders at a lunchtime meeting.

Partners
The 'Linking Farmers to Markets' Program will be executed by a consortium of institutions that include members PhAction and their partners in developing and developed countries. The current members of PhAction include:
5 Future Harvest Centers: CIAT, CIP, IITA, IRRI, IFPRI.
6 International Research and Technical Assistance institutions: NRI, CIRAD, JIRCAS, ICFR, FAO, GTZ
1 Donor: ACIAR
Institutions that have intimated interest in being associated with the Global Program include: ISNAR, PRODAR-IICA, SEARCA, ASARECA (Foodnet), EMBRAPA (Brazil), PHTI (Vietnam).

Project teams will be formed around the four prioritised R&D themes. These teams are likely to have a larger number of participating organisations, including major international NGOs and representation of private sector retailing groups.

Funding and funding allocation

The financial resource requirements of the Program are estimated at US$ 10 million per year over a period of 10 years, of which approximately US$ 4 million per year would be counterpart resources from partner institutions.

Governance
The Consortium will have joint ownership and responsibility for the program and provide leadership in the four key theme areas. The CGIAR Executive Council will provide oversight. An advisory committee, with representatives of major stakeholder groups and including GFAR, will provide orientation on needs assessment, priority setting, relevance and quality of science. The committee will delegate to special panels those areas that they consider of critical importance to the achievement of the Program's objectives.