Many of us dream of a world free of poverty, but how can this be realistically achieved, especially for smallholder farmers who make up the majority of the world’s poor?
One important answer to this question is found in our new book Making Markets More Inclusive: Lessons from CARE and the Future of Sustainability in Agricultural Value Chain Development which highlights lessons from one of the most intensely developed agricultural value chain initiatives in the world.
Now in its seventh year, learnings from this project are now being replicated in several agricultural value chains in Malawi, Tanzania, Ghana, India and Mali with funding from the Bill and Melinda Gates Foundation.
But it was in the dairy value chain in Bangladesh where CARE first devoted considerable time, energy and resources to incubate and refine its approach to achieving impact at scale for farmers and others in the value chain. Making Markets More Inclusive takes an in-depth behind-the-scenes look at what CARE has learned in its journey to reduce poverty through market-based approaches. This book should be of interest to practitioners, funders, companies and governments interested in agricultural value chain development for the benefit of smallholder farmers.
The book is rich in detail and insights. Here are the top five lessons on how to make markets work:
- Work along the entire value chain – not just with farmers. Too many NGO value chain initiatives begin and end with the producers. To really get to the heart of improving a value chain, NGOs must understand and work along the entire chain from end to end. Sometimes the intervention that will help famers most has to happen at other points along the chain. For example, even if farmers have all the knowledge and training they need, they still need access to productivity enhancing inputs and access to markets and a transparent way of being paid for their milk. Through persistent information gathering and working with entrepreneurs and companies along the entire value chain, CARE helped remove the most important obstacles for farmers improving their incomes from dairy – but most of these improvements happened in addition to working directly with farmers themselves.
- Experiment and learn – rigidly following plans doesn’t work. If markets and value chains in low-income communities were stable, known and predictable then doing research, developing a plan and tightly following it would be the best way to work. However, neither development work nor markets are static. We usually don’t have (nearly) enough information on the interests, resources and obstacles of everyone along the chain. Therefore, effectively working to enhance markets and value chains requires a different approach that matches the context. This approach must be focused on learning from experimentation, trial and error, and direct experience. Before CARE’s arrived on the scene, surprisingly little was known about the what the dairy value chain looked like, especially from the perspective of smallholder subsistence dairy farmers. Government statistics were inaccurate, out-dated or just not available. Even after data can be gathered, assumptions and proposed solutions must be tested with pilot projects and experiments. For example, many plausible ideas existed on paper for how to sell cattle feed and medicines in remote villages so farmers could improve the productivity of their cows. It took three failed experiments before a viable solution was found (microfranchsing agricultural input shops – which now has a growing network of 48 shops under the Krishi Utsho brand). At the same time, CARE needed to work with the Gates Foundation to change their original milestones and deliverables as they learned about what would really work to enhance the value chain. The overall objectives didn’t change – but discovering the best way to meet them required much experimentation, openness to learning, and a donor willing to be flexible along the way.
- Skilfuly empower women – it’s smart economics as well as well as the right thing to do. The Food and Agriculture Organization of the UN estimates that closing the gender gap in access to agricultural inputs alone could lift between 100 and 150 million people out of hunger. Women provide the majority of agricultural labour in South Asia and sub-Saharan Africa, yet consistently have less access to the resources and opportunities they need to be more productive. Increasing women’s access to land, livestock, education, extension services, and technology boost agricultural production and food security as well as economic growth. CARE originally thought that farmer groups should be organized with at least one male farmer leader because social norms made it easier for them to travel to markets to busy inputs or sell milk. Crunching the extensive data that CARE collected on women’s participation (over 80% of the farmers CARE worked with were women) CARE found that it was, in fact, groups that had all of their leadership positions filled by women that were the most productive and profitable.
- Design for scale from the start – or risk not making a significant difference. CARE’s project has worked with about 50,000 farmers as well as hundreds of entrepreneurs and many companies. Still, on their own, this is a drop in the bucket of Bangladesh’s 160 million people. From the beginning, CARE sought to design interventions to reach a level of scale far beyond the farmers and entrepreneurs they worked with directly. Scale was not being satisfied with 50K farmers, but in searching for and implementing things that would spread through the industry. For example, in partnership with BRAC Dairy, CARE introduced digital milk fat testing to the country. CARE also orchestrated he Krishi Utsho microfranchising network of input shops which are providing services to entire regions.
- Making markets and value chains work for poor producers. From the dozens of market enhancements that CARE piloted and implemented, patterns emerged about what makes markets work more effectively. Four characteristics of successful market enhancements stand out. First, markets work more effectively when power relationships are rebalanced in favor of poor producers. This includes enhancements (such as forming producer groups) that give them more bargaining power, freedom and choice. Second, markets work more effectively for poor producers when they have the information they need – both knowledge about dairying practices as well as information about market prices and opportunities. Third, markets work for poor producers when they have access to the productivity-enhancing inputs and technologies (such as artificial insemination) that they need to produce more with less. And fourth, markets work for poor producers when risk and uncertainty is reduced (such as through improved fat testing methods).
To learn more about CARE’s approach to making markets work, see www.MakingMarketsMoreInclusive.com.
Kevin McKague is Assistant Professor of Entrepreneurship and Strategy at the Shannon School of Business, Cape Breton University, and Senior Fellow, Center for Peace, Democracy and Development, University of Massachusetts, Boston.
Muhamad Siddiquee is Coordinator of Agriculture and Value Chain Programs at CARE Bangladesh.