Are Farmers in the Transitional Economies Likely to Benefit from Forming Collaborative Marketing Groups?

Trade liberalization has opened up the food market in many transitional economies. This has created an opportunity for smallholder farmers to access higher-value markets, but it has also exposed them to competition from trading partners. Key issues in linking smallholder producers to higher-value markets are overcoming the diseconomies of size, poor infrastructure, lack of market signals for quality, high transaction costs, and the poor quality associated with traditional supply chains. A common suggestion made by many development workers and politicians to overcome these problems is to encourage farmers to form collaborative marketing groups. Furthermore, there is a common misperception that market intermediaries are taking advantage of the farmers and are the primary cause of poor farm-gate prices. Some schemes which aim to help smallholder producers access higher prices (e.g., Fairtrade) insist that farmers be part of a cooperative that delivers the product to market. Unfortunately, there is abundant evidence from the experience of smallholder farmers in the transitional economies that collaborative marketing groups are seldom competitive in either the traditional market or the emerging market. This paper will look at the question of if and under what conditions smallholder farmers in the transitional economies are likely to benefit from forming collaborative marketing groups. It will use evidence from the literature and the author’s experiences in researching the success of marketing groups in the Philippines and Papua New Guinea. The main finding is that most are doomed to fail unless key prerequisites exist: a comparative advantage for the group and a sufficient level of social capital and trust in the community. A lack of social capital and trust in PNG and the Philippines means that collaborative structures need to incorporate mechanisms that prevail over this problem

The role of grower collaborative marketing groups in developing countries

Purpose of the review: The purpose of this review is to analyse whether collaborative marketing groups are an appropriate form to facilitate the marketing and distribution of product for smallholders in developing economies. It will try to answer the question: Under which conditions would farmers benefit from action to establish a collaborative group to market their product?Main findings: Collaborative marketing groups may be appropriate when certain prerequisites exist. These are a comparative advantage for the group over alternative marketing organisations and trust among the members of the group. A range of other enhancing factors (e.g. the type of comparative advantage, the type of product, supporting organisations and resources) will influence its chances of success and be instrumental in determining which type of collaborative marketing group will be most appropriate. They should not be used as instruments to implement government policy and to overcome all the market failures that constrain farmer development.Directions for future research: Further research is required in developing countries into the relative importance of a range of factors identified as relevant to group success and into the roles and processes used to facilitate their development

Methodological frameworks for research and development on improving linkages and the competitiveness of supply chains

This paper outlines methodological frameworks for conducting research and development with agribusiness supply chains in transitional economies where the objective is to improve the competitiveness of the supply chains in a global environment. The key difficulty when operating with supply chains is the complexity of the issues involved because constraints can occur from production by small farmers through to the relationship between retailers and consumers. Failure to address key constraints can lead to failure to have any impact. This creates problems for integrating research, because researchers are generally trained in disciplines that cover only a small proportion of the issues and operate from differing epistemologies. The other difficulty is to incorporate a framework for change management, since good research is not much use unless it leads to positive outcomes. A framework for managing these problems is outlined, which has been developed and trialled in work with vegetable supply chains in the Philippines and coffee supply chains in PNG. The framework incorporates a dualistic agribusiness systems model for mapping the chain issues and combines this with a pluralistic framework derived from Checkland's soft systems methodology for research analysing the system. This is integrated with a participatory action research methodology for change management

A Neo-Institutional Assessment of Cooperative Evolution: Comparing the Australian Wheat Board and the Fonterra Dairy Group

Agribusiness,

Collaborative groups: themes for success and the role of universities

The development of supply chains in agriculture has resulted in improved efficiencies and greater returns but the distribution of benefits within the chain is just beginning to be considered. Farmers, because they are perfectly competitive firms, face particular challenges in dealing with supply chains, which are otherwise composed of oligopolistic firms. In order to secure an equitable distribution of benefits from a supply chain, farmers will have to form some sort of group (e.g. a cooperative). Cooperatives, however, have a number of well-documented shortcomings as an institutional form. This paper identifies factors associated with the successful formation of collaborative groups drawing on experiences in Australia and the United States. Key success factors common to both countries include strong leadership, planning, the development of effective standard operating procedures, the creation and sustenance of social capital, and the availability of outside assistance. An agenda for research and outreach by universities and others is proposed

Emerging possibilities and constraints to Papua New Guinean smallholder coffee producers entering the speciality coffee market

Papua New Guinea produces around 1 percent of the world's coffee, most of it Arabica. The average price it achieves for its coffee is below the price of many comparable Arabica-producing countries. Most of Papua New Guinea's coffee comes from smallholders producing parchment using a village-level, wet processing method. One of the major obstacles to the improvement of coffee quality in Papua New Guinea is the failure of the current marketing system to give the right price signals to growers, in terms of different prices for different qualities of parchment. The marketing system is highly competitive, with large numbers of traders and roadside buyers purchasing small quantities of parchment from smallholder coffee producers. Since many of the taste faults in coffee cannot be detected at the parchment stage it is not possible to reward smallholders who produce superior tasting coffee. Historically, two coffee chains have coexisted in the Papua New Guinea industry, with the plantation chains, a remnant of colonial occupation, producing higher quality coffee for the speciality market. In contrast, the smallholder chains produce coffee for the soluble market. While the market determines quality and hence price essentially by consistency of taste, the government regulated grading system for green bean determines quality by bean size and the level of defects. The two are not necessarily correlated. Furthermore, cultural differences between plantation farmers, exporters and smallholder farmers, contribute to the perception by smallholders that lower prices are due to excessive profits in the processing export sector rather than to any inherent problems with coffee quality. A number of solutions have begun to emerge which will be explored

Quality and Ethical Sourcing among Smallholder Coffee Producers in Papua New Guinea

In order to participate in the emerging speciality coffee market, there is a requirement for traders to implement third party certified quality assurance systems to verify that appropriate practices to protect the environment and worker welface have been followed. This paper explores both the opportunities and impediments associated with teh introduction of ethical procurement systems in teh Papua New Guinea coffee industry. While remoteness and inaccessibility supports sustainable production systems, without a significant improvement in the way in which smallholder farmers process their coffee, price premiums in the long-term cannot be justified. Poor infrastructure, high costs and the high likelihood that collaborative marketing groups will fail present additional impediments

To Be, or Not To Be, That Is the Question - In a Group That Is

There is a perception in Western Australia that some regions do not have many farmer groups and that there are large numbers of farmers who aren't involved with group activities. This was seen to be a problem for government and industry research organisations that are attempting to encourage change in rural communities through group processes. This perception was not supported by the results of a study of in which 172 south western grain belt farmers were surveyed at three major field days in WA during 2002. With 79% of those surveyed currently involved in an average of 1.7 farmer groups, it can be argued they are heavily involved with group activities. Interestingly older farmers tended to be involved in more groups. Those that are involved in groups do so to gain information, social interaction and to improve themselves, their enterprise and the community; whereas those not involved said they have other sources of information, limited time and the groups offered were not perceived to be applicable. Another trend emerging in WA is the increasing role and membership of farmer initiated and managed groups.Agribusiness,

Utilisation of cattle manure and inorganic fertiliser for food production in central Uganda

Cattle manure and inorganic fertiliser use in smallholder peri-urban crop-livestock farms in Uganda was investigated by conducting a survey of 40 farms in the central districts of Wakiso and Kampala. The results showed that the major benefits obtained from cattle manure application were increased yields (52.5 %) and low cost of manure purchase (37.5 %). The major problems associated with its use included weight and bulkiness (75 %), lack of labour (67.5 %), insufficient quantities (55 %), high transportation and application costs (37.5%), enhanced weed infestation (35 %), poor hygienic conditions (32.5 %) and lack of storage facilities to maintain quality attributes of manure (32.5 %). A large number of farmers supplemented the cattle manure with other animal manures, such as poultry (45 %), pig (38 %), goat (33 %) and rabbit (18 %) manures where available. The majority of farmers (95 %) never supplemented manure with inorganic fertiliser claiming that it was expensive in terms of purchase and transportation (90 %) and lack of capital to purchase the fertilisers (67.5 %). Farmers were aware of the benefits of using cattle manure as a source of fertiliser in their crop-livestock production system. However, the nutrient content of cattle manure was low (0.42-0.56 % total N), being attributed to poor handling, collection and storage of manure, insufficient fodder and poor livestock diet, which need better management to maximise nutrient recovery. There was little information available to farmers regarding optimum management and rates of fertiliser application (both inorganic and organic) to improve crop yields, which is required to improve food security and economic development in Uganda. Ugandan extension services should therefore make efforts to intensify education among farmers in relation to soil fertility management options. In addition, farmers should collect and store the manure properly and preferably in a covered pit to enhance manure quality. Effective manure handling and storage systems should be designed that reduce loss of nutrients after excretion and during composting. Farmers should explore the viability of community based manure collection initiatives at the farm level where manure transportation costs are shared and hence minimized

Combining Biophysical and Price Simulations to Assess the Economics of Long-Term Crop Rotations

Biophysical simulation models (e.g. APSIM) using historical rainfall data are increasingly being used to provide yield and other data on crop rotations in various regions of Australia. However, to analyse the economics of these rotations it is desirable to incorporate the other main driver of profitability, price variation. Because the context was that APSIM was being used to simulate an existing trial site being monitored by a farmer group Gross Margin output was considered most appropriate. Long-run rotational gross margins were calculated for the various rotations with yields (and other physical outputs) derived from APSIM simulations over a period of 100+ years and prices simulated in @Risk based on subjective triangular price distributions elicited from farmers in the group. Rotations included chickpeas, cotton, lucerne, sorghum, wheat and different lengths of fallow. Output presented to the farmers included mean annual gross margins and distributions of gross margins presented as probability distributions, cumulative probability distributions and box and whisker plots. Cotton rotations were the most profitable but had greater declines in soil fertility and greater drainage out of the root zone.Crop Production/Industries,