Newsletter Special Edition August 2003

Five parallel sub-plenary sessions were organized and designed to maximize interaction among the members of the different GFAR stakeholder constituencies in discussing emerging themes around which potential GPPs could be developed. The themes, selected on the basis of some of the initiatives currently under development by some GFAR stakeholders, include the following: (1) Rural Knowledge Systems and Innovation Processes; (2) Agrobased Small and Medium-sized Enterprises and Markets in Developing Countries; (3) Agriculture-Livestock Integration; (4) Organizational Partnerships for Agricultural Research; and (5) Innovative Policy Directions and Approaches for Sustainable Agricultural Development. A non-exhaustive list of issues for discussion prepared by the Secretariat, was made available to each sub-plenary session as guidelines in order to stimulate discussion (Boxes 8 to 12).

The challenges posed by globalization are particularly acute for developing countries, where small-scale producers, processors and traders face increasing competition and market volatility. With the objective of identifying priorities for action in ARD, GFAR recently facilitated an RPS exercise and organized in collaboration with AGST, five regional workshops on the status of the post-harvest sector, from both an institutional and a stakeholder perspective. Both activities have clearly outlined the importance of a market-oriented approach in solving the problems of agricultural development. More specifically, it was highlighted that the objectives of poverty eradication and food security cannot be reached simply by increasing food production through the development of appropriate technologies and therefore marketing activities need to be further expanded.

For these reasons, while remaining cognizant of regional and sub-regional background differences, a market approach in ARD can offer a tool for improving the livelihoods of the rural poor, for example by diversifying the range of products that can be produced and by satisfying increasing consumer demands related to food availability, quality and safety. Within this context the development of agri-SMEs directly addresses the issues of adding value and employment generation thereby substantially contributing to social and economic development.

Session Structure

The session was chaired by Rodney Cooke, Director of the Technical Advisory Division, IFAD. The keynote address was delivered by Ade Freeman from ICRISAT, Kenya. As resource person Giséle d'Almeida, President of Interface, Senegal, also made a presentation. The rapporteur was Nerlita Manalili, Program Head of the Agro-Industrial Development Program of SEARCA, The Philippines.

Presentations

The first presentation by Ade Freeman on Agrobased SMEs and Markets: Challenges and Opportunities for the Poor outlined the importance of advancing agrobased SMEs in fostering economic and social development. He noted that the contribution of SMEs to rural development is increasingly recognized and is backed by a clear and convincing set of data.

He then concluded by raising five key issues to guide the subsequent discussions: (1) the challenge of upgrading SMEs through capacity development, training and increased efficiency in production; (2) how to foster competitiveness of agri-SMEs through better access to resources such as information, creating more stable macro-economic policies, increasing the provision of financial and non-financial services, and addressing the key issue of unfair market trade; (3) the need for a better understanding of the market particularly through the sustainability of innovations, the changing nature of market structure, and cases to draw lessons from; (4) the importance of partnerships between the private and public sectors and NGOs; and (5) the critical role of science and technology in such areas as determining quality standards.

The second presentation, by Giséle d'Almeida, stressed the need to concentrate on the adoption of a rural innovation approach - an increase in productivity or competitiveness of a given product as a consequence of an improvement in either production or marketing technologies or know-how. She also shared the recommendations made by the private sector to the FARA plenary on research priorities which stressed the importance of facilitating access to information and the transfer of advanced technology to the private sector and adopting a stronger market-oriented approach in agricultural research.

Discussion Summary

Following the five guide questions provided by Ade Freeman, subsequent discussions raised issues on the need for provision of appropriate financial services (e.g. a better access to credit) and the need to create better linkages between microfinance institutions and banks. Some participants highlighted the importance of enhancing north-south collaborations to facilitate the transfer of knowledge and improve the links between research centers and end-users.

Other issues specifically related to market and trade aspects were (1) the competitiveness of products and the need to concentrate on domestic markets (i.e. imported products are often less costly than those nationally produced thereby out-placing the local producer); (2) the effects of non-tariff barriers; (3) market information; and (4) corruption as a constraint to competitiveness.

It was also stressed how foreign aid policy needs to be more supportive towards local market development. In particular, investments in developing countries are too often directed at upgrading local small-scale farmers to produce for export, subjecting them to a high grade of volatility and at the same time oblige producers to comply with very strict international quality and safety standards. Participants discussed the need for more attention to how enterprise development impacts the environment and how gender concerns can be critical to agri-industrial development.

Participants agreed that agro-enterprise development can be seen under the general theme of enterprise development and in this way it is necessary to draw lessons from existing enterprise development literature.

The discussion was then concluded by identifying key cross-cutting researchable areas to be further analyzed and developed for concrete action.

Partnerships - How can partnerships foster the development of agri-SMEs? For example, by broadening the nature of partners or enhancing the role of NGOs and farmers thereby increasing the exchange of information and knowledge sharing.
Markets - How are markets changing the nature of demand? There needs to be a better understanding of the market particularly with regards to market information and access to services. In particular, it was suggested to intervene on the certification of quality standards.
Science & Technology (S&T) - How can S&T foster SME development? For example, by improving the cost of production and quality standards to increase competitiveness and lessening the impact on the environment. It is generally recognized that S&T plays a crucial role in development issues; but how can we best use it, and which are the most appropriate ways to transfer and develop efficient and quality know-how?
Training - There is a need to identify the types of training that can best contribute to the development of agri-SMEs. For example, some participants outlined the need to transfer knowledge to the farmers with the aim of improving their business skills.
Rural finance - How can we develop a sustainable funding strategy for agro-industrial development? The provision of credit is essential for Agro-based SME development. To often rural poor are faced with difficulties in accessing sustainable financial services.

Next Steps

Given the great number of issues raised and discussed in this sub-plenary session there is an increasing need to continue discussions on this subject. As a follow-up it was suggested to coordinate a workshop on the theme of Linking Farmers to the Market, to be held at FAO Headquarters in Rome in October 2003. This event is being co-organized by the GFAR Secretariat, FAO/AGST and PhAction Network, and will take into account the outcomes of the GFAR conference. The aim is to move forward towards the formulation of a GPP on this subject.

Box 9. Issues for Discussion-Agrobased Small and Medium-sized Enterprises and Markets in Developing Countries

The importance of a market-oriented approach in the solutions of problems related to agricultural development is central. This is clearly highlighted in the regional priority-setting (RPS) exercise facilitated by GFAR, as well as in the results of five regional workshops on post-harvest conducted by the FAO.

Keeping in mind regional differences, it is important to highlight how various market approaches can play a role in fostering agricultural development through, for example, product diversification, responding to the growing consumer needs and ensuring food quality and safety, among others. Within this context the development of agri-SMEs will have an important contribution to make in eradicating poverty and attaining food security.

Guidelines for the discussion

Importance of agri-SMEs development for rural development:

Role of agri-SMEs in linking production and market
Emerging markets for agri-SMEs in developing countries
Importance of market information

The role of partnerships in enhancing the development of agri-SMEs:

Collaborations between research centres and universities, institutional bodies, NGOs and the private sector
Networking to facilitate information-sharing and regional exchange of experiences

Lessons learned:

Concrete examples of successful partnerships in agri-SMEs development, highlighting success factors
Constraints/ bottlenecks/difficulties in establishing SMEs and possible ways by which these can be addressed
Obstacles in gaining market shares.

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