What have we learned from trying to help poor farmers use markets better?

After some pretty rarified policy wonkery on agriculture and development last week, Erinch Sahan, an Oxfam private sector adviser, summarizes what we have learned from our work in the field  (for once, the right expression). And no, there doesn’t appear to be much obvious overlap with the topics covered in the earlier posts, but I think it’s there if you dig a bit.

Like most NGOs, Oxfam has lots of ‘livelihoods programmes’ that try and find ways to use markets to improve people’s incomes and economic security. Usually, this is around agriculture, as we see the huge potential in smallholder farming. Recently, we’ve been trying to capture the underlying philosophy behind this work. By ‘we’, I mean a bunch of livelihoods advisers, led by markets guru David Bright. I’m not sure there’s a definitive set of interventions that constitute an ‘Oxfam approach’ to ‘gendered market and enterprise development’ (sorry), but we have found that our philosophy doesn’t fit neatly with the standard models floating around in this field, such as value-chains, sustainable livelihoods and making markets work for the poor (M4P). This is because, at its heart, Oxfam programmes are sceptical about getting just any kind of economic growth. We’ve seen that this can leave the poorest behind and fail to address inequality between men and women. However, triggering the right economic opportunities for poor people is tricky and the approach can look very different in different contexts. So having said all of that, here’s where we’ve got to on an alternative:

1. Intervene to rebalance power in favour of poor producers, particularly women

Sounds good, but how can it be done?

a) Support producer organisations. Ok, there are probably as many bad examples of collectives, co-operatives and other producer organisations as good ones, with most excluding women, but let’s not throw out the baby with the bathwater here. Collective market action is a great way to get to the volume of production you need to interest buyers, and also means you have the power to get better deals on inputs and services. There is a plethora of research on this and we wrote a book that attempts to describe what good ones look like, as well as running a research project on women’s collective action.

b) Support specialised enterprises that help smallholders trade. We love smallholders here at Oxfam and think that businesses that try to help them are just as super. If we can create a business that goes and finds different market options for smallholders, we’ll support this business with financing, training, information, machinery or whatever is needed to make it viable. These businesses can also provide services to ensure women and other marginalised smallholders can access markets and help them get their product quality right. All this can really empower smallholders to choose the best deal, rather than take whatever is on offer. Sometimes money can be made by doing these things, but the enterprise must be focused on being an intermediary for smallholders. It’s even better when smallholders themselves own these enterprises.

c) Give direct support to allow the poorest to make a start. Especially to small businesses that are creating jobs and market opportunities for poor people. This can be a crèche so women are freed to participate in business or sometimes it’s providing finance, such as match funding for a harvesting or processing machine. Where possible, we want the business, business partners, markets or the local government to provide support for these things, but where these fail, we are willing to step in to get things going. However, the end goal is always to create a business that can stand on its own feet. The challenge is doing it sustainably, so the asset (e.g. easily repairable machinery) is used to generate a revenue stream, rather than being left to go rusty.

d) Change the rules of the game. That means helping poor people gain a voice with their governments or in how a company operates. It could mean setting up the right forum for them to talk or getting people to speak collectively, so the many small voices become one bigger voice. It could be about building coalitions with those who share their interests (including local businesses). It could be as simple as having somewhere to resolve contract disputes between a company and a farmer or working to ensure women can take higher value roles beyond the low or unpaid roles customarily considered ‘women’s work’. Here’s an example from Colombia.

e) Build on catalytic events. It’s as much about the when as the how. We do this by being opportunistic and jumping in when something big has happened to shake things up. That can be a new government that is changing the regulatory landscape, a major new investor who’s challenging existing monopolies or even a natural disaster that means much of the local economy is being rebuilt. These are situations where we can take the ‘market systems approach’ (see below) and look for ways to shift the balance of power in favour of small producers

f) Ask the question at every opportunity, how is this empowering women? The focus needs to be on women right from the very beginning (starting with research on the roles women play in the market and the home).

2. Look at the whole market-system

The points above are key to our livelihoods programmes, but how do you choose where or how to intervene? We do this by putting on a market-systems lens. We’re most like M4P in this respect and least like value-chains (which essentially focus on connecting producers to buyers). By market-systems I mean spending time to understand all the things that surround poor producers and their enterprises, including government, infrastructure, and hidden forces such as cultural beliefs and practices. It’s about identifying and ‘unlocking’ hidden problems that cause the whole market-system to fail for poor people. An example is providing finance for remote, rural and women-owned enterprises. We also try and work out who is going to ‘drive’ that new service or change the policy or grow the trade in the system when we withdraw. We often have to help out to pilot the new service or prove the benefit of changing the policy etc. 

3. Also intervene outside the market system

Poor people don’t only interact with the market system but also with their household system and the eco-system. Women in particular are heavily constrained by what happens in their homes as well as the market and everyone can be held back when nature stops cooperating (e.g. soils becoming infertile or rivers running out of water). Often, we intervene in all three systems. For instance, a programme may try to free women up from onerous chores at home (intervention in the household system, such as installing local water standpipes to avoid a 2 hour daily walk), while helping a new producer-owned business get off the ground (intervention in the market system, such as helping locals demand a new road), and also teaching new ways of conducting sustainable agriculture (intervention in the eco-system, such as knowing how to adapt to heavy but infrequent rain). We’ve found that intervening in one system alone while ignoring the others can be ineffective.

4. Intervening directly where facilitating is not an option

If we find a way to play a direct role to help poor people, we’re happy to play that role. This could mean giving cows to women with absolutely no other assets so they can get on the ‘first rung’ of the economy to produce, consume and sell small amounts of milk. But what we can do on our own is always going to be a drop in the ocean, so we search for ways to get those already in the system to play this role. This could be a local bank lending people money so they can buy their own cow, or a local company who’ll benefit from the improved productivity agreeing to provide farmers with training. However, too many of the people we want to help are too poor for those in the system to bother doing business with them. And where we can’t find a way to get markets to work for the poorest, we’re open to intervening directly. This may be as simple as paying for analysis to show how women producers are key to a business. This is probably where we disagree most with the M4P crowd (we agree strongly on the systems stuff).

These are just snippets of things we’ve noticed in the programmes we like best. Feel free to comment/add your own.

Small farms can be beautiful – how farmers’ markets changed attitudes and policies in Colombia

As a curtain raiser for this week’s GROW Week at Oxfam (see bottom of this post), this piece appeared on the Guardian Poverty Matters site last Friday, as my contribution to Sunday’s Blog Action Day, which this year coincided with World Food Day. I’ll also be doing on online Q&A (on Facebook) on the issues behind the campaign from 1-2pm tomorrow (Friday 21st October).

Small farmers get a bad press: developing country governments often see them as a developmental throwback and hanker after the glitter of modernity offered by large-scale investment in biofuels or export crops. Aid agencies and donor governments with more money than staff prefer the scale the big farms can offer. But there are at least two good reasons for sticking with a small-is-beautiful approach.

First, investing in small farmers brings a developmental double whammy: it helps put food into circulation and at the same time boosts the income of some of the poorest people on the planet – small farmers. It is an enduring and horrible irony that the people who grow the food are often also the ones who go hungry, because their crops are too paltry, or prices too low, for their harvest to see them through the year.  Jobless agribusiness growth in the farm sector won’t help those people; boosting small farm output will.

Secondly, helping small farmers get access to the kinds of things big farmers take for granted – bank loans, technical support, land rights, can have a catalytic effect on their productivity. That particularly goes for women farmers, who in many countries grow most of the food, but have least access to such support. Forget all those myths about stick-in-the-mud peasants – most small farmers are businesspeople, keen to experiment, manage risk, break into new markets and better themselves.

One example from dozens in Oxfam’s work around the world. Small-farmers supply 67 per cent of the food consumed in Colombia’s capital Bogotá (7 million population), but they weren’t earning a decent price for their produce. Much of the produce sold in urban markets is handled by commercial intermediaries, who buy from individual producers at low prices and then sell high.

So Oxfam teamed up with local NGOs and peasant organizations and tried to find out what the problem was by asking the key decision makers – for example, government officials who thought that the peasant economy was no longer viable and that “The peasants are lazy, they support the armed groups, they take advantage of the drug mafias, and take their cut growing coca.” What emerged was the need to change attitudes towards peasant farmers, both among officials, and the urban public.

The timing was propitious: in 2004, the Office of the Mayor of Bogotá had begun to speak openly for the first time about poverty and food security. It had drawn up a draft ‘Food Supply Master Plan’, but this failed to recognize the potential of small producers. The plan was based on obtaining food supplies for the minimum possible price, but did not consider the needs of producers or the potential for reducing rural poverty. Instead of a minimum price, campaigners demanded a ‘fair price’ principle.

The Mayor’s Office remained sceptical of the peasants’ ability to supply food efficiently, so the project organized farmers’ markets in strategic locations around the city, including the main square. Officials and shoppers were duly impressed by the level of organization and capacity on display, but also by the prices. Monitoring showed that the average net increase in prices for farmers was 64 per cent in wholesale markets and 52% in retail while urban consumers also benefited, paying average prices lower by some 15 per cent (a bit different from farmers’ markets in the UK…..).

The markets, backed by some savvy media work, got the message home. The Mayor agreed to revise the city’s plan to one based on fair prices, and backed it up with some investment to help small producers supply the city and representation for small farmers on the relevant committees.

Since then, more than 30 municipalities in the area around Bogotá have decided to organize their own local markets; Bogotá’s Mayor has signed contracts with five other regional governments pledging to increase rural investment for food production and we’re now trying to replicate the initiative in Medellín and Cali, the two other mayoral cities in Colombia.

There are hundreds of millions of small farmers who could benefit from schemes like these. When it comes to ending hunger, how food is grown and marketed (and who by) matters at least as much as growing more of it.

And here’s more about GROW week

Should we buy roses from Ethiopia?

OK, back to Ethiopia week. On leaving Addis, we head off to the Rift Valley on one of Ethiopia’s many excellent roads (shame about the driving…) to an enormous flower farm owned by a company called Sher, which rents them out to three large Dutch flower companies, including Herburg Roses Ethiopia plc, who we are meeting. And I mean enormous – rows of identical green plastic greenhouses, each one a kilometre in length, covering a total of 325 hectares so far, and aiming to reach 450. What follows is a classic flying NGO visit – a hurried conversation with the managers, a quick chat to some workers, and then we have to leave with a steadily accumulating series of unasked or unanswered questions, what the French call pensées d’escalier (‘thoughts on the stairs’).

So what is (more or less) certain? Roses have boomed in Ethiopia, overtaking Kenya this year. According to Alemayehu Geda, an economist from Addis Ababa University, about 100 firms are involved, 2/3 of them foreign-owned. Cut flower exports have risen tenfold over the last 3-4 years and now bring in an annual $170m in 2008 – that’s 11% of national exports. Peter van Heukelom and Jos Kliks, respectively Herburg’s Managing Director and Farm Manager, think Geda’s figure may even be too low. 90% of Ethiopia’s roses go to Holland.

Flowers create jobs: Herburg needs 26 people per hectare to grow its flowers, which is a lot more than can make a living from a hectare of any other crop I’ve come across. And Ethiopians want to work there, as the long lines outside the farm gates demonstrate.

Flowers bring in vital foreign exchange. The deal between the Ethiopian government and the foreign investors specifies a minimum of €0.08 must enter Ethiopia per flower. Herburg alone exports 80 million roses a year to Holland – that’s a guaranteed €6.4 million entering the country.

But only a tiny proportion of the sales price reaches Ethiopia: Peter says he would be happy to earn €0.13 a stem, (i.e. above

3p for you; 97p for us.....

the minimum set by the government), but a 12 rose bouquet on a UK supermarket website costs £40, or €3.91 per rose. That means 97% of the final value of the rose you buy in the shop never reaches Ethiopia!

The companies spend a fair amount on social responsibility, including a gleaming hospital, free to all employees, and a nursery and primary school. Herburg is regularly audited and certified on both its environmental and social performance by MPS, a quality assurance company.

Herburg pays no corporation tax, because of a five year tax holiday that runs out next year. But even after that, as long as Ethiopia prevents companies from repatriating profits, they will probably make sure their pricing policy ensures that profits accrue in Holland, so little corporation tax will be paid in Ethiopia.

Beyond that, a one hour visit leaves a large cloud of uncertainty. Wages are low (about $28 a month for a packing worker, $50 for her supervisor), but that is reportedly a good deal more than the minimum wage and the few workers we speak to see it as a good, secure job.

On the environmental questions that always surround flower farms, Peter and Jos point to their MPS certification and say that the firm uses only organic chemicals, and takes great pains to clean up its effluents. A local environmentalist claims the fish are dying in the lake, but the lake looked luxuriant and was full of birdlife (including fish eaters), so who knows? Certainly not me. And I have no way of knowing the health impacts on the workers, if any, of chemical use, although Peter stresses that they are required to wear safety gear and fined if they fail to do so. And I have no information on the views of the small farmers evicted (with compensation) by the government to make way for the farms.

So on the basis of this sketchy information, do I think we should continue to buy Ethiopian roses? Yes. Does Ethiopia earn a fair proportion of the final price for its roses? No. Should we keep up pressure on the companies involved to improve wages, conditions and environmental management? Definitely. I suspect not all readers will agree, though……..