Agricultural Value Chains and Market Facilitation – What we are doing and why it matters
When I walk into a grocery store, I am met with an almost overwhelming assortment of products. Boxed cereal, oranges, kale, peanut butter, milk, bread, meat, gummy candies, pickles, [insert random food item here]. I shop around, usually spending 95 percent of my time in the produce section (just ’cause that’s me) , grabbing whatever seems appealing and hopefully on sale. But the oranges I end up going home with are in my bag because of a long series of market interactions which lined up precisely right. There is an entire value chain, beginning with market actors such as fertilizer and chemical dealers, water pump manufacturers, and seed companies and ending with warehouses, transport companies, and the final retailer that was dependent on strong links between each of the market actors to result in a high quality end product delivered on time to the right place. As I am sure you have realized, the farmer(s) played an integral role in that value chain to actually produce the food.
Shift focus from developed world grocery store to a rural village in Ghana. Sam is a Ghanaian who runs a small agricultural input business that sells seed, fertilizer, and chemicals to local farmers. His income relies on farmers having enough money to buy the crop inputs which increase crop yields and quality. His hybrid seed produces much stronger, healthier plants than those grown from seeds the farmers saved from the previous year, but if farmers are short on money at the beginning of planting season they are less likely to spend money on fertilizer and chemicals and to instead used saved seeds. Looking further up the value chain, farmers rely on *the weather* but also their ability to access markets. Their ability to access markets may be constrained by their ability to transport their product to the trading center, their knowledge of current market prices, and the overall demand for the product they are selling. In many cases, the next step in the value chain is the processor, who adds value to the raw produce of the farmer. The processor relies on the presence of a steady supply of high quality raw product as well as the existence of demand for the value-added product in consumer markets and the availability of reliable transport.
From examining the value chain described, it becomes clear that each market actor is very dependent on all of the others. If the processing plant in a rural region is shut down, farmers are not able to sell their product and the input dealer suffers because farmers do not have enough money to buy inputs. Similarly, if there is not adequate provision of inputs, farmers are unable to produce large volumes of high quality product, and the processing plant is unable to operate at capacity.
In the event of a drought, where farmers are simply not able to make enough money to buy inputs at the beginning of planting season, a typical charity-driven market intervention approach would be to provide farmers with free or heavily subsidized inputs for a year or two to help them get re-established. However, in this time, Sam is put out of business. After the funding for the subsidized input project becomes depleted, farmers are left with no practical way for procuring inputs.
A market facilitation approach to this project would be to facilitate more effective interactions between the various market actors, without becoming a part of the value chain itself. This could be done by helping the input dealer implement a system of pre-payment for inputs at a reduced rate immediately following harvest, or helping the input dealer develop a feasible plan to expand the region he services so that inputs could be sold to a greater number of farmers.
Using a market facilitation approach, rather than a market intervention approach, results in a value chain that will continue to function sustainably after the market facilitation project has exited. The relationships and interconnections between various market actors are strengthened in a way that provides a substantial benefit for all actors. A modification of the workings of a value chain will only continue if there is a good reason for market actors to want to continue the new interaction.
I will be working with the Agricultural Value Chains (AVC) team in Ghana with Engineers Without Borders Canada this summer. The team works in market facilitation as described above to make markets work in the most productive way possible for all actors involved. In the Food for Thought school outreach workshop I have oft presented with the USask EWB chapter, we present the fact that 80% of all people living in poverty in rural Africa rely on agriculture as their sole source of income. To me, this indicates that we have found a leverage point with which to slowly improve the livelihood of people living in rural Africa.
As I live primarily on a grain farm in Saskatchewan, when I am in arriving in Ghana I will be missing seeding back home, and harvest will already be underway by the time I return to Canada. I hope to use this blog to parallel the activities, challenges, successes, and incongruities of agriculture in Saskatchewan and agriculture in Ghana, and perhaps develop some insights into how the two systems might contribute to each other.