Share

International policy centre for inclusive growth, working paper no. 64, June, Danuta Chmielewska and Darana Souza (2010)

Analysis of the Brazilian food acquisition programme indicates that initiatives that jointly support food production and food access through agricultural market options for smallholder farmers can simultaneously offer an important commercial possibility for producers and play a significant role in improving their market capabilities.

In most developing countries, the small farmers constitute the majority of the farming community. They also account for a large share of the rural as well as the total poor population in these countries. Given that agriculture continues to be the main source of livelihood for large proportion of small farmers, viability of cultivation is crucial for their survival as well as overall reduction in poverty. Ability to access markets on fair terms, both as producers and as consumers, is an important aspect of viability of farming and overall livelihood security. This is all the more important in an environment where market-led policies, including trade liberalisation and decline in State support for agriculture, are threatening both viability of small-holding cultivation and food security in many developing countries. In this context, policies that provide smallholder farmers opportunities to access assured markets at remunerative prices are an important step in countering the trend of declining food security as well as for ensuring viability of small holding cultivation.

Chmielewska and Souza, analyse one such programme being carried out in Brazil, namely, Brazil’s Food Acquisition Programme (Programa de Aquisição de Alimentos, PAA), initiated in 2003. The programme focuses on the “two basic conditions for food security: food availability and food access”. The programme, funded by the federal government, aims to meet these two goals by buying agricultural products from targeted small holder farmers and by distributing the products bought, to the population that faces food insecurity. Under the programme small holder farmers can sell any agricultural product at pre-specified prices and quantities.

The authors consider for their study two specific components of the programme, namely those that “combine food access and food production through the direct purchase of agricultural goods”. From the point of view of small farmers, these programmes provide an opportunity to access markets as they are often left out of public procurement owing to “administrative requirements for mandatory bidding processes and because of their size/capacity to deliver”.

Using a case study based methodology, the authors analyse the impact of the programme on market-oriented production and organisation-related practices of small famers and farmers associations in three municipalities in the State of Sergipe. In particular they seek to examine whether these programmes hinder or improve small famers’ ability to build market linkages in other channels.

The study brings out several interesting impacts that the programme has had on production related practices among beneficiary farmers. According to the authors, the programme by guaranteeing market for the produce at remunerative prices provides the necessary stable condition for “farmers to invest in their production and their organisations”. There has, therefore, been a marked increase in area cultivated, diversification of agriculture produce, increased use of inputs, increase in quality consciousness and labour use.

The programme has also helped strengthen farmers’ associations, especially in cases which mandates “public purchases to be made from formal groups”. In such cases, legal status of existing associations have been regularised, there has been an increase in their “membership as well as greater involvement by the members in the associations’ activities”. In addition, in some cases, the programme has had the beneficial impact of “increasing investments in the organisations’ infrastructure”.

However, there has been little change in other market channels accessed by small farmers. This is not surprising given that small farmers often have limited access to local markets other than in the form of individual sales in street fairs or through middlemen. The former is often beset with demand and price fluctuations. The latter option, on the other hand, is often exploitative rather than being beneficial. In either case, there are little prospects of prior commercial agreements so that the consequent instability in price and demand pose considerable risks for producers.

Thus in “most cases, the PAA has become the main or sole market for its beneficiaries, given its advantages and the limits that producers face in their other commercial options”.

At the same time, through its influence on prices, the PAA has indirectly affected these two market channels. One, the prices offered under PAA is now used as a benchmark in negotiations with middlemen. Two, because of reduced supply in the local market, prices have increased, thus favouring all farmers, including those not involved in the programme.

Despite these positive impacts, there are several caveats that the programme suffers from. The authors point out that, in general, because of lack of adequate planning capacities and unavoidable weather-related damages to crops, small farmers cannot maintain delivery of the quantity and quality of the items originally proposed. The problem is further exacerbated because of payment delays arising from administrative rules that are required to be fulfilled for getting payments.

The time gap between projects also create uncertainties for famers and in some cases, the long interval can result in over-supply in the local market and therefore result in dramatic drop in prices. These factors, the authors argue, can hamper “the development of production and organization-related practices”.

In this context, the authors make several recommendations that such food production support initiatives need to take into account to ensure long-term sustainability of market-oriented production by small farmers’ and their access to alternative market channels. They point out that, the PAA needs to be complemented by additional support such as providing technical assistance services in the area of production planning, in order to support farmers’ production and organizational process. Also, while steps need to be taken to bring about a mix of access to private as well as public markets, in situations of limited viability of private markets “direct procurement actions will probably be more effective and necessary”. On the whole, with regard to the PAA, the authors conclude that while it has had several positive impacts, but given that small holder farmers’ access to private markets are unstable, there is a “need to ensure the  long-term continuity” of the programme.