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Project Record

Objectives:

Improved access to markets and business services (inter alia) promoted in poor rural areas through increased scope, reach and effectiveness of sustainable farmer organisations.

Background:

Low agricultural productivity is a core problem affecting Malawian rural communities, and the economy as a whole, critically undermining the viability of non-farm activities too. Access to markets is undermined by low marketed surpluses (increasing marketing and transaction costs for buyers and producers, and depressing buyer activity and investment), and this in turn depresses prices to farmers, incomes, production incentives, and the ability to invest in purchased inputs or labour, thereby further depressing production, incomes and linkages within the rural economy. These problems affect both food and cash crops, but are particularly acute for food crops. They directly affect the agricultural activities of slightly larger scale and less resource constrained farmers (many of whom will nevertheless be classed as poor in terms of per capita incomes below US$1 per day), and reduce wage employment opportunities and non-farm income generating opportunities of land scarce households. Poor market access for food crops also affects poor rural and urban consumers who are faced by wide intra and inter seasonal variation in product prices and in many cases higher prices as a result of poor market services. These problems are widely reported and recognised in rural consultations and in policy debate. There are, however, opportunities to improve market access, as evidenced by the success of NASFAM in assisting its members to access markets for a range of crops (with expansion into rice, groundnuts, paprika, cotton and chilli in recent years). The challenge is to extend this to a wider range of crops for a wider range of farmers through development of appropriate institutional arrangements. These arrangements include contractual relations with financiers, input suppliers and produce traders; structures and systems for farmer organisations; and choice and effective management of farmer organisation activities and services.

Intended Outputs:

Critical elements determining success and failure of farmer organisations identified, documented and considered by stakeholders.

Key organisational lessons and benchmarks for the creation and sustenance of different types of farmer organisation identified, documented and considered by stakeholders.

Key policy lessons for the creation and sustenance of different types of farmer organisation identified, documented and considered by stakeholders.

Implementation by coalition members of critical innovations to promote best practice in FOs they are working with and in development of new FOs.

Farmer organisations, NGOs, private sector and government agencies concerned with agricultural production and marketing and with rural welfare better informed about the potential, limitations, challenges, opportunities and best practice in the establishment and operation of farmer organisations and in their relationships with them.

Improved networking and co-ordination between NGOs, private sector and government agencies concerned with farmer organisations, agricultural production and marketing, and with rural welfare.

Progress and Impact:

The project highlighted the long but varied history of FOs in Malawi, high expectations of government and other agencies (NGOs, donors, businesses) for FOs to play a critical role in pro-poor agricultural growth, and hence the need to identify tasks that FOs could effectively undertake and the support they need to undertake these tasks for the mutual benefit of members and other stakeholders. The importance of both commercial and service activities to FOs was also highlighted, and the need to recognise the differences between the structural, regulatory and management challenges facing FOs, private firms and NGOs. FOs major problems were identified as poor conceptualisation of their strengths, weaknesses, opportunities and threats; weak governance and leadership; limited capacity; donor dependency (with distorted incentives and poor sustainability); and poorly informed members. They are also affected by various external problems including Malawian farmers' very limited land access, poor local and national transport infrastructure; poor communication and co-ordination between FOs; poor macro-economic environment; inappropriate attitudes to business; poor security; and impacts of HIV/AIDS. Critical actions by stakeholders to strengthen FOs were identified as more attention to literacy training, constitutional development and sensitisation to problems during FO establishment; greater commitment and continuity in external support; more formal networking and co-operation among FOs and stakeholders within the same area or with related interests or activities (but recognising a fundamental responsibility of government in some areas); the need for an apex body to co-ordinate and represent FOs; benefits to FOs and support agencies if there were a directory detailing FO support and training materials and organisations in Malawi.

Subsequent farmer and organisation studies corroborated and extended these conclusions.
1. Improved access to inputs, credit, produce markets and technical skills in profitable farming enterprises are the main drivers of farmers' forming or joining FOs. While agribusiness firms look for FOs to reduce business costs, NGO's and government aim to facilitate farmers' access to business opportunities and to lower costs in communication, social service delivery and, especially for NGOs, empowerment.
2. For large numbers of operative FOs surveyed, farmers expressed a high degree of satisfaction with services provided.
3. There is a high failure rate when FOs are established principally as mechanisms for credit delivery, but there is still great potential for FOs to be effective channels for credit delivery in the context of other comprehensive services necessary for farm businesses.
4. Profitable farm enterprises, based on prices which give adequate returns to labour, and cost effective and efficient services supporting such enterprises are critical to successful FOs. This makes it very difficult for FOs to provide effective and sustainable support to food production by poorer households, particularly where prices are unattractive.
5. While there are common principles for the establishment and operation of FOs, different types of farm enterprise and industry structure present different opportunities and difficulties. FO structures and relations need to vary to take account of these.
6. Common difficulties with FOs include poor business strategies and skills, poor management, donor dependency, over ambition (by FOs and external agencies supporting them), poor business environment, and poor communication and co-ordination among FOs. To overcome these, the challenge is to find structures and procedures to align the interests of members, leaders and managers.
7. FOs generally face significant difficulties if they attempt to provide services to members instead of facilitating linkages between members and specialist service providers.

While surveyed farmers' general satisfactio

Project Conclusions:

The project has promoted improved FO performance and better understanding of what FOs can and cannot be expected to do, and what complementary policies are needed to stimulate agricultural growth in poor rural areas.

Publications:

STOCKBRIDGE, M., DORWARD, A. and KYDD, J. (2003) Farmer oganisations for market access: briefing paper. Presented at Stakeholders' Meeting on Farmer Organisations in Malawi. Kalikuti Hotel, Lilongwe, Malawi, 18TH and 19TH June, 2003 http://www.wye.ic.ac.uk/AgEcon/adu/research/projects/farmorg/fosumjul.doc

Associated References:

R7151, R7148, R7147