Release number IFAD/11/07

Rome, 15 February 2007- Poor rural producers are not fully benefiting from new markets because their products do not have the added value needed to compete against more powerful retailers such as supermarkets, experts said in a round-table discussion at the Governing Council meeting of the International Fund for Agricultural Development (IFAD).

Supporting poor rural producers' access to "value chains" - the range of activities that are necessary to bring a product from production to consumption, including processing and marketing - can help farmers better promote their products. Panellists urged development practitioners to analyze value chains to help better understand farmers' challenges, identify relationships and see who has the power to govern the chain.

Maria Oliva Lizarazo, director of the IFAD-supported Rural Microenterprise Development Programme in Colombia, described a successful project in that country in which farmers themselves had recognised the need to develop new ideas and markets - or they would not survive.

Although adapting to engage in the current market was not part of the original project design, Lizarazo said farmers realised quickly that they had to have better quality produce and had to be more innovative to become competitive.

“They went from being passive actors to active actors who also recognised that their own change would affect a whole chain of actors,” she said.

Hans Posthumus, an enterprise development consultant, said the emergence of large supermarket chains and a shift in power from producers to retailers have changed the structure of the agribusiness sector worldwide and stand to threaten efforts to reduce poverty.

Some 40 countries depend on a single commodity for more than 20 per cent of their exports, making them vulnerable to price shocks and changes in market demands. Other issues such as HIV/AIDS and migration also affect local markets.

“More needs to be done to document trends and changes,” said Posthumus. “Although the development of value chains can improve access to new markets, there can be disadvantages for rural employment. For example, there may be an increase in casual and unskilled labour for which people are paid less.”

Goran Damovski, supply chains integration officer for the IFAD-supported Agricultural Financial Services Project, described the work currently being done in a region where nine value chains are supported. His experience has shown that donor groups need to invest large amounts of time and money to make these initiatives successful. Increased collaboration between all the actors in the chain is crucial and all actors in the process from production to consumption need ongoing support.

Christian Borgemeister of the International Centre of Insect Physiology and Ecology (ICIPE) said he has seen the benefits of interventions in East Africa where bee-keeping businesses in particular have been successful in marketing honey. 

ICIPE is one institution that focuses on providing training and skills for these farmers so that they can meet the health standards of export countries and define other niche markets in which they can compete.

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IFAD is a specialized agency of the United Nations dedicated to eradicating poverty and hunger in rural areas of developing countries. Through low-interest loans and grants, it develops and finances projects that enable poor rural people to overcome poverty themselves. There are 185 ongoing IFAD-supported rural poverty eradication programmes and projects, totalling US$6.1 billion. IFAD has invested US$2.9 billion in these initiatives. Cofinancing has been provided by governments, beneficiaries, multilateral and bilateral donors and other partners. At full development, these programmes will help nearly 77 million poor rural women and men to achieve better lives for themselves and their families. Since starting operations in 1978, IFAD has invested US$9.5 billion in 732 programmes and projects that have helped more than 300 million poor rural men and women achieve better lives for themselves and their families. Governments and other financing sources in the recipient countries, including project participants, have contributed US$9.1 billion, and multilateral, bilateral and other donors have provided another US$7.1 billion in cofinancing.