Keys to inclusion of small producers in dynamic

Keys to inclusion of small producers in dynamic markets

Regoverning Markets A global programme of collaborative research and policy support to: • To understand the keys to inclusion into restructured market in order to address implications and opportunities for small scale producers and enterprises • To understand what is best practice in connecting small scale producers to dynamic markets • To bring these findings into the wider policy arena with facts and recommendations, practical action for public sector policy and private sector strategies.

Program Components

Component 1: Studies of market restructuring 1. Horticulture Markets in China 2. Dairy Markets in India 3. Horticulture Markets in Indonesia 4. Strawberry Markets in Mexico 5. Dairy Markets in Poland 6. Horticulture Markets in South Africa 7. Tomato Markets in Turkey 8. Beef and Chicken Markets in Zambia

Component 2: Best Practice Case Studies • Round 1: 15 cases selected from 39 proposals from 23 countries – 6 business models (eg Carrefour, China FFV, Haleeb Food, Pakistan, Dairy) and 7 collective action (Morakert, Hungary, FFV; Normin. Veggies Phil, Vegetables) • Round 2 (on going): 15 case studies selected from 81 proposals

Component 3: Policy Dialogues and Learning Platforms • 8 Reference Group (RG)- 1 for each country with component 1 research • RG is a multi-stakeholder group who provides advice, feedback and helps champion policy and c 3 initiatives • 4 Policy and Institutional Mapping workshops (Turkey, Indonesia, South Africa and Morocco) • Policy and Institutional Mapping Toolkit/Manual/Learning Workshop

Modern Markets

Re-governance and market inclusion: Conceptual framework

The rapid rise of both supermarkets and wholesale markets in China (sales, $ bn) Supermarkets Source: CCAP Wholesale

Retail strategy as practice. . Cash and Carry investor in Pakistan • Cash and Carry investor - 2 stores in 2006, 5 more in 2007 which each store costing $30 -40 m • Suppliers must have tax number, fax machine etc. . • Success of C&C depends on inefficiency of wholesale. Eg tomatoes. Rp 20 at farm, and Rp 140 in city 5 days later, with up to 5 people involved along chain. Broker (arthi) provide very little service other than prefinancing. 40 -45% losses -- packing, logistics, grading. • C&C can buy for Rp 40, sell for Rp 60 and still get enough margin.

Types of strawberry producers in Michoacán, Mexico 1996 1. Traditional system 2. Traditional system with higher input use 2006 1. Traditional system – Cost = $7, 500/ha – 80% of farmers / 25% production 2. Medium tech system – Cost = $20, 000/ha – 15% of farmers / 40% of production 3. High tech system – Cost = $45, 000/ha – 5% of farmers / 35% of production

The Market Divide Fastfood chains Processors Hotels & Restaurants Supermarkets Consolidators Traditional Market - Traders Modern, dynamic market chains

Fragmenting farms (Roy 2006)

Average Farm size: expanding block (source: Roy, 2006)

Regulating buyer power? • Regulation of below-cost selling? – Eg Germany: Restraints on Competition Act (1999) • Regulation of supplier relations? – Eg Germany: Reform of competition legislation, July 2005. Large companies now prohibited from using market power to demand “unjustified and repeated” special terms and conditions from suppliers • Codes of Conduct on supplier relations? – Voluntary? . Eg UK, March 2002 – Mandatory? Eg Argentina, Australia – Europe-wide? Any impact? Transferable from N S?

(service) • Independent growers (Marketing) CLUSTERS Sweet pea Lettuce Tomato Carrots Squash Cabbage Bell pepper • NGOs & POs(Small farmers) • Corporate farms • Input/service providers • Honorary members

Regoverning Markets programme in short. . • Can the new agrifood business drivers be partners in development? • Can smaller scale producers and their organisations be partners in new business? • Can anticipatory public policy make any difference?

Strong link between research and policy and learning platforms