Reflections on Market based Approaches

It is now evident that well-structured Market based interventions provide effective pathways out of poverty for small holder farmers. This is done by creating business links for poor small scale producers with the larger market systems through a number of concepts including; Inclusive business, Business at the centre of the pyramid, inclusive markets and so on. The ever changing global social and economic scenario brings in new forms of vulnerability and affects the way market work. Reflecting on the market based approach in an ever changing global environment is essential for practitioners and development workers.

 

In this post however, I focus on highlighting some of the negative or unintended challenges that can be observed with market based livelihoods as a practitioner, and by way of reflections gathered through interactions with different actors in this field. Some of the challenges include the following;

  • Market based approaches in the long term tend to undermine the indigenous adaptive capacity of the rural poor by exposing them to highly demanding and volatile Markets. Most practitioners have argued that this can perpetuate a top down model of development in which farmer’s decisions are made for them.
  • Links to markets and market systems tend to concentrate mainly on the technical aspects without paying attention to farmer’s ‘agency’ to make informed decisions, influence systems around them and engage effectively with policy.
  • How market based interventions can empower farmers beyond just the ones who are market ready.
  • Market approaches can bring producers into trading relationships with unequal conditions of very unequal negotiating power and very unequal information.
  • Interventions have tended to emphasize on high value export markets at the expense of domestic markets and staple crops undermining household and regional food security.

Given the above scenario, the need to continually learn from practice and regularly refine our approaches to ensure effectiveness and minimise unintended challenges is important. Have others experienced some of the challenges mentioned above and if so what could be the best way of addressing them? How can such challenges help improve programme design?

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It seems to me that markets can have two impacts on adaptation and vulnerability.

  • Adaptive capacity- traditionally farmers may adapt to changing climate and other conditions. If markets send contradictory signals (e.g. prices of non climate change sensitive crops rising), this capacity may be compromised.
  • Vulnerability – traditionally farmers have had to deal with volatile systems (e.g. the climate) and have done this through spreading risk (e.g. different crops, different planning times, different zones).  Therefore if market development encourages farmers to reduce diversification this can lead to greater vulnerability (both to climate and to market volatility).

There is a challenge for Oxfam’s work implicit in this. Our market development work takes as its focus a market for a particular crop. The rationale for a focus on a single crop market is that markets are complex and it is difficult if not impossible to work on multiple markets. The danger of course is that, by increasing the attractiveness of one crop, you encourage a shift away from diversified agricultural approaches.

One strategy to address this issue could be to avoid a focus on crop markets and instead focus on the (non crop) markets that support agriculture – e.g. inputs, finance, extension etc - and the enabling environment (e.g. policy, gender, environment etc).

If this is accompanied by increased farmer agency (linking to your other point) farmers could be in a better position to make their own rationale choices and to adapt. If we did this could we strengthen adaptive capacity rather than potentially threaten it? Could this be a way to reduce vulnerability to volatility in markets and the climate?

In terms of farmers being in unequal trading relationships this has to be a cornerstone in all of our work. I previously worked with the Practical Action PMSD approach. This places an emphasis on empowering marginalised actors (i.e. poor farmers) prior to any intervention starting. We would spend time with farmers improving their capacity to understand the market and to engage with other market actors. The PMSD road map sets out some of the ways in which this can be done. I spoke to someone recently from Practical Action who said, as an indicator of the significance they would give to this stage, that they would be prepared to spend a year simply doing this and nothing else.

In Oxfam we would usually aim to do this in the context of support to cooperatives but there may be other ways and we should be continually looking at how to strengthen this. Would we spend a year simply doing this?

The point regarding reaching farmers who are not market ready is spot on. How do we do that? We need to understand this much more or it will continue to be an Achilles heel. And we may have some learning already in our programmes. For instance we have market programmes that include social protection components. Some have helped marginalised people access markets - for instance in Asia where the provision of communal land to poor women led to them starting to engage in market oriented agriculture. There are also opportunities in working with markets that are suitable for landless and marginalised people. For instance the Enterprise Development Programme has supported enterprises that process mushrooms – a crop grown by women with no land. Likewise Practical Action have supported market development for Non Timber Forest Products in Nepal – collection of NTFPs being confined to marginalised landless people.  

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