Poor rural people rarely control the conditions that determine their livelihoods. Geographically dispersed in remote rural areas, small producers lack the basic infrastructure — banks, roads, power supplies and Internet connectivity — needed to run a business.
Most cannot produce a large enough volume of products to interest buyers, and, when they do, they are often hit with high transaction costs, making it difficult to earn a living and compete in markets.
Smallholder farmers often lack opportunities to negotiate better terms of trade for their agricultural products and to hold governmental and non-governmental organizations accountable for their role in rural development. Their powerlessness is closely linked to a lack of services, as well as the limited provision, and quality, of public goods.
However, effective rural institutions and organizations can help poor rural people overcome these barriers by:
- increasing their productivity and profitability by giving them direct access to critically needed resources, services and markets;
- reducing the price of inputs for farmers through larger collective purchases; and
- acting as a forum for exchanging knowledge and experience, as well as jointly-owned assets, such as equipment and machinery.
Organized groups and communities are more likely to have their voices heard and their demands met. When farmer organizations and cooperatives join forces at higher levels, they can influence policy dialogue and decisions that affect their ability to succeed.
Strong rural institutions also promote social cohesion and stability, decreasing the adverse consequences of political and economic disenfranchisement.
Institutions as drivers of rural change
IFAD is dedicated to securing rural people’s access to productive resources and strengthening rural institutions and organizations. Functioning, inclusive institutions are key to rural transformation and to ensuring that our poverty reduction efforts are sustainable.
Organizations such as market associations and cooperatives help rural women and men negotiate better prices for their produce and access markets. These organizations also facilitate dialogue among smallholder farmers, governments, donors and the private sector.
When rural voices are heard, it is more likely that pro-poor policies will be comprehensive, complementary, and well-placed to meet the diverse needs and realities of small producers in rural communities.
Training, financing and practical support
IFAD-supported projects provide training and financing to support a diverse array of organisations, including water users’ groups, agricultural producer and trade associations, and women and youth associations, among others.
Our activities strengthen rural institutions and develop their organizational capacity — at both the local and national level — so that rural people can overcome social, political and economic barriers, and seize wider opportunities.
For example, we partner with rural financial institutions, such as banks, micro-finance institutions and credit unions, to make it easier for marginalized groups such as indigenous peoples, youth, and women to access loans and credit for their farm and off-farm activities, including for longer-term investments.
IFAD also provides resources to support communities with planning processes, with a particular focus on women. Community-driven development approaches rely on local committees to prioritize investment needs for rural development. It also helps ensure IFAD-supported activities reach as many people as possible.
We have also helped to produce a Toolkit, a Field Practitioner’s Guide, and a Good Practices Guide to support rural institutions and organizations increasing food security around the world.