The world is becoming increasingly integrated. Material goods, money and information move in larger volumes, faster and more frequently than ever before and this process, commonly referred to as "globalisation" is accelerating. This new era is driven by advances in technologies, logistics, speed of information flow and more liberalised trade policies that have fostered the penetration of "global market forces" into national economies that were previously more isolated from their influence and effects. This was especially true of the agricultural sector of developing economies, which were heavily protected by national trade barriers. The way the agricultural sector develops within this rapidly evolving trade scenario will have a large impact on the ability of countries, particularly developing countries to achieve major policy goals such as poverty alleviation, food security and enhanced environmental sustainability. Agriculture is often still the largest sector of their economies, and a majority of the population are rural. Agriculture is undergoing a rapid transformation, away from an agricultural production (supply driven) focus, towards a market-driven "agri-food" orientation. The impact of this change, on people, economies and the natural environment, are (and will continue to be) profound.

Two trends are clearly associated with the increasing complexity of the agrifood sector: declining real prices for basic agricultural commodities (Rosegrant et al, 2001), coupled with an increase in the value added off-farm through post-harvest processing and marketing. The end result is that the percentage of the final consumer price reaching the farm gate has consistently decreased. Increases in productivity have failed to compensate farmers for unit price declines, even in developed countries. For developing countries, retaining a proportion of the value added through post-harvest processing and marketing activities, in the rural areas where the raw materials are produced, offers scope for improving welfare of the rural poor.
Several options exist for this:

Produce and market higher value crops/livestock, especially those where scale economies are less pronounced

Add value to primary production through on-farm or local 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, 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.

Thus, while 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. The implication here is that society has a role to play in ensuring that the rural poor in developing countries are not disadvantaged by global economic integration.
This means that R and D assistance should:

Take a more demand-driven, production to consumption chain and systems approach, that includes post-harvest and marketing components of these chains as well as production (i.e. move from "Agriculture" to "Agri-food")
Work more closely and participatively with the different stakeholders, including the private sector and NGOs that are involved in such supply chains, to identify and build on concrete opportunities
Develop methods and tools to assist farmers, and farmer groups, in making these new types of decisions.

The institutions involved in PhAction are concerned that the threats and opportunities described above are not being adequately met at present, and that a more co-ordinated effort is needed if the advantages of integrated global economy are to outweigh the disadvantages for the rural poor in developing countries.

The Linking Farmers to Markets initiative
Goal of the initiative: 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, rural processors and traders to growth markets

Purpose:
To design and execute globally relevant and well-focused inter-institutional post-harvest research and development projects that will achieve effective and co-ordinated interventions to benefit the poor in developing countries.

Outputs:
The initial output of this initiative will be concept notes for 4 well-defined theme areas, each one addressing a major challenge to providing more effective links between smallholder farmers and growth markets. Projects will be developed within each theme area.
Priority theme areas and their interactions
The PhAction consultation process during 2001 has helped to define four major theme or challenge areas within the post-harvest field. These are four areas where collaborative research and development can help small farmers and small rural / urban agro-enterprises in developing countries realise positive outcomes from the changes now occurring in the agri-food sector.

To benefit from these changes, rural people, enterprises and communities will need to:

Become more competitive in a market-oriented environment, able to make sound business decisions when identifying and developing market opportunities for agrifood based products (but not at the expense of environmental or social sustainability).

Link 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.

Become more innovative in accessing, developing and applying appropriate post-harvest technologies to produce the products demanded by the market.

Consistently meet regulatory standards and consumer demands for high quality, safe food products in their target markets (with corresponding implications at policy level).
These four areas are interrelated. Becoming more market oriented, and identifying realistic opportunities that are sustainable in commercial, social and environmental terms is a first step. Once opportunities are identified, specific supply chains (market linkages) can be developed, and the necessary services tapped. Within the supply chain, technology is a key factor determining efficiency and competitiveness, as well as environmental sustainability (e.g. recycling of wastes and by products). Technology is also related to food quality/safety standards, as is the integration of the different actors in the supply chain.

In each of these four areas, the choices made by small enterprises and rural communities can vitally affect local development. Selecting the wrong market, product or crop, making the wrong type of linkage with traders, food processors or exporters, investing in the inappropriate technology and producing poor quality products can all result in commercial failure, or in short term economic gains at the expense of longer term social and environmental sustainability. Making the right decisions is very important for these rural actors and their communities.

The PhAction "Linking Farmers to Markets" initiative 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 in these complex situations. During the meetings held in Hanoi and Montpellier, in April and June 2001 respectively, each of the four theme areas was developed with this in mind. The outcome is a description of the major issues in each theme area around which collaborative R and D projects can be developed. Specific projects developed within each theme areas will build on existing activities of the institutions and organisations involved, with added value derived from the global reach of PhAction, and the capacity to synthesise and analyse diverse experiences across regions, commodities markets and institutional/organisational settings. In these projects, PhAction members will work hand in hand with partners in developing countries, local and international NGOs, the private sector and advanced research institutes. One innovative feature of these partnerships will be the emphasis placed on bridging the gap that exists between agriculture and enterprise development, especially as regards methodologies for market identification and development, enterprise and supply chain organisation, and product quality/safety assurance schemes. Outputs from the projects that are developed within these theme areas will be both developmental (e.g. more successful and diverse rural / agro-based enterprises and livelihoods, stronger support institutions) and research oriented (e.g. decision support tools and methods that are international public goods).

Within this rationale, PhAction will provide a bridge between the development community, which supports and implements project in the thematic areas of and academic research institutions, many of them in the developed world, whose strength is in the development of conceptual models and analytical frameworks.

In this scenario, PhAction members can usefully:

Develop a guide to methodologies to identify and evaluate market opportunities
Share innovative examples of supply chain organization and business development services
Produce inventories and descriptions of initiatives in value adding technologies
Strengthen food quality issues, related to health and trade
Review, synthesise and disseminate learning and good practices
Facilitate experiences and new learning
Lobby for policy support
To accomplish this, PhAction can work with a range of partners and clients at three levels: Macro, meso and micro:

Micro-level: individual farmers, processors, traders etc
Meso-level: groups of farmers/processors, support institutions (development agencies, local NGOs and public agencies) and specific supply chains of interest (private sector)
Macro level: policy makers, regulatory bodies, academic institutions.

Strategic Development thinkers
(IDS, ISS, ILO etc.)
Policy makers
(Development banks, natl. govts.)

PhAction members
(NRI, CIAT, CIRAD, IITA
etc.)

Development experiences
(intern. NGOs, private sector)
Selected development experiences
(IDC, GTZ, Traidcraft etc.)

Figure 1. PhAction as a bridge between development action and strategic thinking

Theme area 1:
Developing Methodologies for Identifying and Evaluating Market Opportunities

Making more successful linkages between farmers and markets means making better decisions about what to produce, how to add value to it and where to sell it. Information from the market is critical to making these decisions, but often this information is not available, or it is poorly used. Additionally, farmers, and the institutions that support them often are more familiar with making choices based on agricultural production criteria alone, than on integrating this with market information. Since rural areas are increasingly exposed to free markets, thanks to policies of trade liberalisation and removal of parastatal marketing agencies, they need to be competitive to survive. The capacity to access and use market information is therefore vital. Many tools to assist enterprises in this task are available, or under development, but have not been systematically evaluated. This theme area seeks to assist both private sector enterprises and their support institutions to make this shift from a production to a market orientation, and so facilitate the process of identifying and developing market opportunities.

Theme area 1
Goal: to improve the quality of market and marketing related decisions made by rural agroenterprises and organisations that support them.

Objective 1: to develop and evaluate methods for spatial market opportunity analysis.
Within a given area (watershed, political unit) opportunity identification requires the integration of market and agricultural production information. This is amenable to GIS-based applications. Some elements of a methodology utilising GIS are under development (CIAT, IFPRI) but need to be evaluated and refined for use each spatial level.

Objective 2: developing rapid decision making tools to analyse selected products based on market demand and supply chain efficiency.

Once the market opportunities have been identified (Objective 1) the market characteristics for each priority product need to be defined (market structure, conduct and performance, demand trends, segmentation and targeting, supply chain characteristics etc). A variety of methods and tools are available but many were developed for urban, non-agricultural enterprises, and will have to be adapted and evaluated for use in rural enterprise situations in developing countries.

Objective 3: developing rapid decision making tools for business evaluation and investment programmes
The next stage in agroenterprise development is to assess the feasibility of the new business areas identified. This takes into account not only market information, but also production, technical, financial and environmental considerations, to enable an enterprise to decide whether or not the investment will meet its objectives (which may well have social and environmental elements in addition to the purely financial). Tools that are appropriate to the capacity and scale of rural enterprises will be developed and evaluated.

Objective 4.Building capacity in market analysis and business feasibility evaluation.
Many of the public sector and civil society organisations that support rural development (including the research community) are still operating under a production or supply orientation. They recognise the need to become more market oriented, but lack the internal capacity to achieve this. Capacity building programmes that foster the institutional shift to a market oriented strategy are required. This objective will support the design and evaluation of such programmes.

Three dimensions were identified which provide a framework for development and evaluation of the decision-making methods and tools described above:

Client type: private sector farmers/enterprises (individual or in associations), and their support institutions (research and development sector agencies in public and private sectors, and NGOs)
Market type; local, national, regional, global or niche markets
Spatial application zone: enterprise/farm, community, watershed, regional or global.

IITA, CIAT, CIRAD, IFPRI and NRI are key PhAction members already involved in the development and evaluation of specific marketing methods and tools for agroenterprise projects in Africa and Latin America. Regional networks in Africa such as FOODNET/ASARECA are be key actors in this theme area, with funds to support projects within this theme area that are relevant to the needs of their clients.
Theme area 2: Enhancing the competitiveness of rural agro-enterprises through better integration of supply chains and delivery of effective business support services.

With the increasing concentration and vertical integration of the food industry, the development of long-term relationships within the production-consumption chain is seen as a source of considerable competitive advantage. Integration of small producers and rural enterprises into these "supply chains" is critical for long-term access to markets, especially growth and high value markets. But this integration needs to be equitable as well as competitive.

Successful enterprises require a range of services. While micro-finance and other financing schemes have solved many of the problems inherent in delivering financial services to the rural poor, non-financial services (termed Business Development Services or BDS) still suffer from a supply-driven ethos, with inappropriate and poor quality services. Privatisation of the public sector has reduced the supply of such services drastically in many countries, especially in remote rural areas. Implementation of more demand-driven mechanisms to improve the delivery of BDS in rural areas are critical. This will require a shift from the supply side mentality of many providers, but also a balanced partnership between private and public sectors together with other actors in wider civil society.

The two issues of BDS delivery and integration of supply chains are both organisational in nature. This theme area thus focuses on organisation in the agrifood context, with two objectives under a common purpose:

Theme area 2 goal: To integrate smallholder farmers and rural agroenterprises, in an equitable and sustainable manner, into value-adding supply chains serving growth markets.

Objective 1: to identify and evaluate 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 in growth markets.
Emphasis is placed on:
Rural enterprise clusters (groups of locally concentrated small enterprises in one sub-sector and market) where potential for collective action to develop such supply chains is most likely to exist.
Equitable and efficient mechanisms for supply chain linkages between small- and large-scale agrifood enterprises.
Mainstreaming organic and ethical (alternative) trade markets.

Objective 2: to identify and evaluate organisational options for sustainable improvement in content and delivery of business development services to small rural agroenterprises.
Emphasis is placed on:
Identifying effective demand for services
Mechanisms for developing markets for services in rural areas (including the informal sector)
Definition of roles for private sector, NGO and community organisations and the public sector in service delivery and finance (and possible subsidy), depending on context.
Schemes for organising services at local level in rural areas.

This theme area attempts to integrate approaches from the small enterprise development field with those of the rural agrifood development area. PhAction recognises that considerable experience is available in Advanced Research Organisations (e.g. on BDS delivery and supply chain organisation) in the small enterprise development field, although often in an urban context. Equally, the private sector and NGOs have experience in a number of specific cases that can supply lessons learned.
The following process is proposed to combine these experiences with those of PhAction members and partners:

1. An initial learning process in which PhAction members, partners and clients, and relevant agencies from the small enterprise field, can develop a common analytical framework. The research products should also be defined at this stage, based on client needs.
2. The specific project components outlined above can then be developed in an integrated fashion in specific locations (case study sites) where PhAction members and their partners are working (or planning to work).
3. The research products will be tested and validated in other areas.
4. A cross-site component to the project will ensure the overall co-ordination of activities, the development of the common analytical framework, and undertaking the subsequent analysis of the experiences.

Within this framework, a specific project is now under discussion involving CIAT, CIRAD, NRI and GTZ together with Traidcraft and ITC.
The project would build on their existing R and D activities in supply chain organisation and BDS delivery, which include:

BDS support to export horticulture in several countries (NRI)
Agroenterprise clusters and their supply chain linkages (CIRAD, CIAT)
Local BDS support systems in Latin America (CIAT).
Producer qualification and supply chain organisation in Sri Lanka and Cambodia (GTZ)
Supply chain organisation for alternative trade markets in Malawi (Traidcraft)

Theme area 3: Developing and disseminating post-harvest technology for rural industries

To meet the challenges and opportunities of globalisation, farmers, processors and traders need appropriate techniques and technologies to expand their markets, enhance their competitiveness, add value and improve quality of their products. Success in these endeavours will help the long-term sustainability of often remote rural communities, and the livelihoods of rural people, as well as potentially producing positive benefits for the natural environment. However, this depends upon accessing technology that is appropriate for the commodity, production systems and agro-ecological conditions, and the local capacity for manufacture, operation and/or maintenance, as well meeting the needs of the end market. While many such technologies exist, these may not be accessible to rural enterprises in developing countries to lack of information, local manufacturing capability, infrastructure or operational expertise.

Theme 3 Goal: To improve food security and strengthen the competitiveness of small and medium enterprises by improving the development and uptake of innovative post-harvest technologies and techniques for smallholder rural producers.

Objective 1. To undertake information and technology needs assessments which will enable the better use of technologies for reducing post-harvest losses and improving the marketability of smallholder rural produce.

Objective 2. To develop, and foster adoption of, post-harvest technologies that enable smallholders to capitalise on market opportunities, improve competitiveness and adhere to food quality and safety standards through new and existing collaborative partnerships.

Objective 3. To improve adapt and improve use of information and decision support tools for introducing or improving post-harvest techniques and technologies, and train end-users in the application and improvement of these tools

Key elements in achieving these objectives are:
Technology needs assessment of rural industries and post-harvest enterprises in selected key commodities/areas
Inventory of innovative post-harvest processes, technologies, processing products and techniques and manufacturers as well as infrastructure requirements and constraints
Private sector linkages for the development of products and technologies, aiming to strengthen technology uptake and market development.
Participatory development, verification and adaptation of innovative technologies
Development of training materials, facilitation of training and fostering of new networks for technology and information exchange (e.g. FAO-INPhO)
Information system design and decision support tool development, including for the exchange of information between developing countries.
Training of trainers and end-users in the use of technology information systems

Priorities identified for project development within this theme area are:
S and SE Asia: Vietnam, Bangladesh, Thailand, Nepal (IRRI, ACIAR.): Innovative technologies for drying and storage of rice, wheat and maize
Sub-Saharan Africa: Benin, Ghana, Guinea Conakry, Uganda (CIRAD, IITA): Food processing technologies for yam, cassava, and maize
Global: Colombia, Peru, Venezuela, Tanzania, Malawi, Nigeria, Kenya, Vietnam, and Thailand (CIAT, CIP, IITA) Production and processing of cassava, sweet potato, soybean and maize, for protein and energy for animal feeding.
Tropical regions: (ACIAR, NRI, CIAT) Under-utilised commodities and by-products (fruit, vegetables and cereals) - income diversification and value adding; market access/quarantine treatment; better use of by producer reducing contaminants; documentation of traditional practices for storage and processing

Theme area 4: establishing realistic food quality and safety objectives for small rural agroenterprises: learning and projecting from experience.

Many developing countries have difficulty meeting the food quality and safety standards of export markets. These standards are becoming more stringent overtime, in response to consumer concerns (e.g. mycotoxin and pesticide levels in tropical produce). Within national urban markets in developing countries themselves, consumer demand for safe and high quality food products is rising rapidly, and can result in loss of market share to imported food products.

In order to operationalise food quality and safety programmes in developing countries, it is necessary to understand the determinants of quality. This maybe incomplete for many tropical products. National food quality standards may be set unrealistically high (using international codex standards), yet enforcement is sporadic. More appropriate and achievable quality objectives can be set and enforced. The quality challenge is particularly acute for small-scale enterprises. Food quality is a function of the whole supply chain, requiring co-ordination among actors handling the produce. Diagnosis at critical points where quality can lost is vital, but can be expensive. Adherence to quality assurance programmes can, however, bring benefits at consumer level. This theme area is proposed to develop and evaluate the methodologies required for small and medium scale enterprises to overcome these quality and food safety challenges in both national and export markets. This requires action at the level of the regulatory organisations as well as the enterprises/supply chains themselves.

Theme area goal: to contribute to the equitable and sustainable integration of small and medium scale rural agroenterprises into value-adding supply chains serving growth markets.

Objective 1. To develop quality and safety assurance methodologies that can be applied in developing countries by small and medium-scale enterprises, and build capacity in the institutions that support them, so that their products meet appropriate regulatory standards and quality requirements for national and export markets.

Objective 2: To develop appropriate quality and safety objectives for local regulatory systems in developing countries through the application of risk analysis techniques, including assessment of human health risks and identification of feasible quality/safety targets for supply chain actors.

Six components that contribute to the above two objectives have been identified:
1. Participatory research with supply chain actors to identify and quantify constraints and develop better understanding of how quality deteriorates (critical control points), and problems in compliance with regulations; followed by on site studies of quality formation using alternative techniques for production, handling, storage etc, and considering their economic costs and benefits.
2. Develop and test rapid, low cost diagnostic techniques, appropriate for use by small-scale enterprises.
3. Develop appropriate food quality and safety objectives, using principles of risk analysis, based on the problems encountered in 1 and a determination of the acceptable levels of quality for the consumer and an assessment of the capacity of local supply chain actors to meet safety and other quality objectives.
4. Design, implement and test appropriate food quality assurance schemes, based on the safety and quality objectives identified in 3, and using the "good practices", TQM and HACCP approaches as appropriate with small-scale enterprises in these supply chains. This will be monitored and evaluated, with analysis of costs and benefits.
5. Develop and test outreach and training programmes for introducing quality assurances systems with enterprises and regulatory/standards organisations.
6. Establish food quality and safety management networks at national and regional level, involving stakeholders, to review standards and objectives of quality programmes and determine new needs over time.

Key supply chains have been identified for this theme area to focus on, balancing different end-markets (national or export), types of quality/safety issues (mycotoxins, pesticide residues etc) and storage/shelf live characteristics: Agricultural commodities around which this theme area could develop are: groundnuts, maize, roots and tubers, dairy products, poultry, fresh fruits and vegetables, coffee and cocoa.

Implementation will be based on existing project activities of PhAction members, especially CIRAD and NRI, including West Africa (Senegal, Benin, Ghana) Asia (Vietnam, India) and Latin America (Brazil, Paraguay, Bolivia, Colombia)

Bibliography

GASGA 1999. Seminar 11. The importance of postproduction to sustainable rural livelihoods. NRI, University of Greenwich,102pp.

Goletti F. and Wolff C. 1998 The impact of post-harvest research. Paper presented at the meeting on post-harvest research, International Centers Week, Washington DC, IFPRI, 73pp.

Gottret , M.V. and Raymond, M. (1999) An analysis of a cassava integrated research and development approach: has it really contributed to poverty alleviation? Presented at Poverty Workshop, San Jose, Costa Rica, September 1999. CIAT, 31pp.

PhAction Seminar 12: Proceedings of the Eschborn seminar. INPhO website. FAO/GTZ.

Rosegrant, M.W.; Paisner M.S.; Meijer, S; Witcover, J. (2001). 2020 global food outlook: trends, alternatives and choices. IFPRI, Washington D.C.