Linking Farmers to Markets in Ghana
After 40 years of working with smallholder farmers in developing countries in a career spanning Africa, Asia and the Caribbean, I have to tell you: smallholder farmers work really hard! In many instances, they work the earth with crude hand tools under a hot sun and in near-drought conditions. They may have a single growing season of only a few months. If they’re fortunate, they feed their families that year and have enough left over for the next year’s seed. So, understandably, they are risk-averse. They are reluctant to change how they farm just because someone says that this seed or that cultivation technique will improve their production. A crop failure — for whatever reason — could mean family members starve.
But as hard as they work, they want just as badly for their children to succeed in school and to lead productive lives. For years that’s how I explained to my children my international agricultural development work. I would say, “I’m helping small farmers do better so that their kids can go to school.” Simplistic, sure. But it’s also true. The men and women smallholder farmers work extremely hard to feed their families, and they want very much to raise healthy, educated children.
So what’s the secret to helping them change how they cultivate and prosper? I believe that such behavior change takes gradual learning by the individual farmer. When they see something working better in their neighbor’s field, they often emulate that behavior. They want that improvement for their own fields and families. And the next step of testing it and learning what works in their field is a gradual process that, when successful, leads to broader adoption. And that leads to prosperity!
But one farmer prospering isn’t sufficient. An individual farmer will struggle until the critical mass of behavior change is reached by neighboring farmers and the marketplace in which they participate actually changes. For the farming improvements to go to scale and become sustainable, there has to be some organization that represents a group of farmers when dealing with input vendors and crop buyers. This organized representation provides a sustainable nucleus for area farmers, empowering them to build productivity more broadly. In doing so, it gives them the collective market power to negotiate better deals on inputs, aggregate and dry harvested crops in a protected space and negotiate better prices in bulk sales. Incentives to change are then aligned: the farmers gain livelihoods, the vendors gain sales and the market buyers gain products to onsell in the growing added-value food markets.
Helping Partner Countries on their Journey to Self-ReliancePhoto by Lauren Bell for ACDI/VOCA
The United States Agency for International Development (USAID) has in recent years emphasized a more entrepreneurial approach to foreign assistance, crowding in additional private and public investors alongside traditional project implementation. This is a welcome invitation to program implementors to involve in-country partner firms and NGOs more profoundly in a market-based programmatic solution that ultimately leads to sustainable economic change.
A country’s self-reliance stems from two mutually reinforcing factors:
- Commitment: the degree to which a country’s laws, policies, actions and informal governance mechanisms, such as cultures and norms, support progress towards self-reliance
- Capacity: how far a country has come in its ability to manage its own development journey across the dimensions of political, social and economic development, including the ability to work across these sectors
Aside from the specialized tasks related to governments creating an appropriate policy environment, I am, for the moment, focusing on the changes in the commercial sector that lead to sustainable change in how a country’s markets function. These are the changes that will motivate a government to make policy changes. I believe that the commercial voices of an inclusive agricultural economy advocate for business-friendly administrative reforms.
How to Link Farmers to Markets
An inclusive market systems approach tries to make markets more inclusive while also making them more competitive. It also makes markets more resilient and better able to face future market fluctuations. To achieve this, donors and implementers of development projects catalyze changes that benefit actors across a market system, including the poor and otherwise disadvantaged as well as the middlemen and end markets, through economic and social incentives.
Faced with an ineffective market system, these changes go to the root causes of failure, such as risk aversion, lack of trust and cooperation, or constraining policies and social norms, and not just the symptoms of failure, such as limited use of new technologies or poor access to financial services. The result is more durable and meaningful change in targeted agricultural markets and food systems.
To uncover the root causes, this inclusive market systems approach integrates political, social and economic analyses by looking at a broad range of value chains, end markets and interconnected systems to assess how the system is performing, before zooming in to understand why it is performing that way. Ongoing analysis informs a clear vision for inclusive systems change and provides a roadmap for development project outcomes and activities. Facilitating local ownership and minimizing direct delivery of activities is critical to ensuring projects sustain key services and functions and adaptive management.
Crucial to the success of this approach are market-based solutions and market actors’ new behaviors. Banks and financial institutions open new finance options for collaboration with value chain businesses. By working from a market development orientation, projects incentivize market actors to invest in more inclusive business models and relationships that reduce the risk for all parties. To reduce the risk for farmers and to encourage innovative commercial behaviors, implementing partners encourage shared market information and stronger commercial relationships between farmers and other commercial market stakeholders.
These are the kinds of transformative market-based changes that incentivize governments to reform laws and administrative rules in ways that reinforce an economic growth pathway to self-reliance.
The benefits of the inclusive market systems approach are many:
- Scale and impact – Targeting broader systems changes driven by local market actors allows development interventions to reach more people with more impact.
- Sustainable – Facilitating businesses and other market actors to address the root causes of underperformance in agricultural market systems has the potential for lasting impact beyond a development intervention.
- Value for money – By leveraging market actors and private investment, donors and implementers of development interventions can do more with less.
- Evidence-based – Market systems approaches are driven by causal logic models and continual monitoring and learning that allow donors and implementing partners to make evidence-based decisions and course correct quickly.
Projects Driving Innovation in GhanaPhoto by Lauren Bell for ACDI/VOCA
This inclusive market systems approach is currently at work in Ghana, where the USAID/Ghana Agricultural Development and Value Chain Enhancement II project supports smallholder farmer competitiveness and scales up investments in emerging commercial maize, rice and soybean value chains.
Funded by USAID and implemented by ACDI/VOCA, the project applies a facilitative value chain approach, linking smallholder farmers to markets, finance, inputs, equipment and information through larger commercial farmers and traders who have the capacity and incentive to invest in smallholder production. These linkages build the capacity of smallholder farmers to improve their businesses through better production and post-harvest handling practices. It incentivizes these farmers because they can realize better sales prices for quality products.
In Ghana’s poultry sector, another project is working to increase the competitiveness of the domestic production and processing of poultry meat and eggs. Almost unique among development projects, the Ghana Poultry Project improves access to affordable financing by promoting partnerships among financial institutions, buyers, and suppliers.
The United States Department of Agriculture funds the project, which ACDI/VOCA and TechnoServe implement. Project activities encourage the creation of outgrower supply chains and input quality control management systems for poultry producers. These commercial relationships promote quality standards, strengthen business planning and market penetration, and reinforce buyer-supplier linkages.
Achieving Self-Reliance is Possible
Achieving self-reliance among smallholder farmers requires an inclusive market system in which farmers can see new, within-reach opportunities more clearly and incentives to change farming practices. Only then can they build and retain assets through low-cost investments. As economically empowered individuals facing fewer risks, these smallholder farmers can realize the benefits of new information and communication technology to learn about market opportunities or save and transfer money. They can reduce their post-harvest losses, improve their product’s quality to meet market requirements, and optimize their product delivery timing. Ultimately, the goal is for them to forge new commercial partnerships with buyers in formal markets that will endure.
Ending global hunger can only occur if we change farmer behavior. And to free today’s smallholder farmer to innovate and improve productivity, we need to link them more closely to their markets.
By Paul Guenette, ACDI/VOCA's Senior Advisor to the President