Participation in High-Value Agricultural Markets

Completed Projects

Ethiopia Cereal Availability Study

Ethiopian cereal markets have seen a dramatic rise in prices in recent years, despite consecutive years of good harvests. Understanding this puzzling trend has direct implications for food policy, particularly local food aid procurement by the World Food Programme (WFP) and other agencies, humanitarian assistance programs, and various social safety net programs. The following hypotheses are generally given to explain this trend:

  • Growth in rural cereal demand as a result of agricultural diversification into high-value agricultural commodities.
  • Growth in rural cereal demand due to large-scale transfers into rural areas from the new Productive Safety Net Program (PSNP).
  • Informal exports of cereals into neighboring countries.
  • Increased “hoarding” of cereals by farmers and/or traders in anticipation of higher prices.
  • Inflationary pressure from increased money supply, new job creation, and disbursement of large volumes of credit to both rural and urban sectors.
    The objective of this project is to test these commonly held hypotheses.

Development of Lao Poverty Maps and Socio-Economic Atlas

In 2006, the data from the 2005 Population and Housing Census of the Lao People’s Democratic Republic became available, creating an opportunity to examine spatial patterns in a wide range of socio-economic variables, including poverty and inequality. The Swiss Agency for Development Cooperation provided funding for the North-South Center (as prime contractor) and the International Food Policy Research Institute (as subcontractor) to work with the Lao National Statistics Centre in order to a) estimate and map poverty and inequality at the district and sub-district levels, b) study the relationship between poverty and various geographic characteristics, including access to markets, c) produce a socio-economic atlas of the country, and d) increase the capacity of local researchers to analyze survey data, carry out poverty mapping analyses, and use geographic information systems software.

The poverty mapping analysis was carried out using small-area estimation methods. More specifically, the relationship between per capita expenditure and household characteristics was first estimated using the 2002–2003 Lao Expenditure and Consumption Survey. Next, this relationship was applied to the same household characteristics in the 2005 Population and Housing Census to estimate per capita expenditure for each household in the Census. The results were then aggregated to administrative areas to estimate poverty and inequality.

The poverty mapping study found that the incidence of rural poverty was highest in the mountainous areas along the eastern border of the country and lowest in areas specialized in high-value agricultural commodities, such as Xayaburi Province and the Bolevan Plateau. Climate, topography, and access to markets were all statistically significant factors in explaining poverty rates. Travel time to an urban center or a river and the existence of a road into the village were the best predictors of the poverty rate among the variables tested.

In addition to the poverty mapping report, the project produced a socio-economic atlas of the Lao PDR and carried out training in survey data analysis, poverty mapping, and GIS software. The high-resolution poverty maps were adopted as official estimates by the Lao government.

The project’s findings can be found at http://www.laoatlas.net.

Assessing the Impact of Increased Global Food Price on the Poor

The global food crisis of 2007–2008 prompted considerable research into the causes and effects of the rise in food prices. One important research question was the role of world commodity markets in influencing local prices, while research area focused on the impact of higher prices on different types of households. In this context, the Department of International Development (DfID) of the United Kingdom funded a study with two objectives: 1) to measure the transmission of food prices from the global market to local markets in four Sub-Saharan African countries and 2) to estimate the distributional impact of changes in staple food prices in one African country, Ghana.

IFPRI researchers examined this issue using more than 60 price series from a dozen countries in sub-Saharan Africa. One part of the analysis showed that local food prices in Africa rose an average of 63 percent between mid-2007 and mid-2008. Maize, wheat, and rice prices rose the most, while the price increases of root crops and beans were more modest.

A statistical analysis based on an error correction model, however, showed that only 13 local prices had a long-term relationship with international prices of the same commodity. International price transmission was considerably greater for rice than for maize. It is hypothesized that there is normally little linkage between international and local prices, but African prices rose in 2007–2008 as a result of exceptionally large increases in world prices, higher fuel prices, trade restrictions imposed in response to the crisis, and (in some countries) local factors such as poor harvests in Ethiopia and political disturbances in Kenya.

The analysis of the impact of higher food prices on household welfare in Ghana confirmed that the effect is generally negative. However, the average effect of food price increases on households is relatively small. For example, the 81 percent increase in maize prices that occurred during 2007–2008 is estimated to have increased the national incidence of poverty by less than 1 percent. The negative effects on urban households are largely offset by the positive effects on net selling households. Nonetheless, the impact on specific types of households can be relatively large. In addition, the results are surprisingly sensitive to the relationship between producer prices and retail prices.

2020 Fruits and Vegetables

This study reviews the global patterns of growth and change in the production and trade, as well as examining the role of private quality standards, food safety regulations, and phyto-sanitary controls in affecting the participation of poor farmers in developing countries. It is being carried out with the Asian Vegetable Research and Development Center (AVRDC).

Impacts of Improvement of Market Infrastructure in Tanzania: The Case of Fruits and Vegetables Market in Morogoro and Kibaigwa Grain Market

The government of Tanzania through its Ministry of Cooperatives and Markets is trying to better connect small holders to markets through the development new market places. These new market places not only look to solve the infrastructure gap but also the institutional gap. In each of these markets an institutional arrangement is present to improve standards, marketing risk, and to better link producers to consumers. As a result IFPRI decided to evaluate this initiative to identify its impacts, strengths and weaknesses in such a way to cooperate in their improvement and replicability in the future. The evaluation will focus on the reduction of transaction costs; improvement of grades and standards; increase in demand for their products; and impacts over household’s welfare and time allocation within the household (i.e. the new markets could imply for example that women had to be more time in the market reducing their time to their household).

Contract Farming of Poultry and Milk in India

This study quantifies the true costs and benefits of using contract farming to support smallholder participation in growing markets for milk and poultry in India, vis-à-vis alternative forms of support to smallholders, taking into account any hidden subsidies and taxes within a given institutional framework. This project aims to find ways to: (a) lower smallholder farmers’ transaction and production costs; (b) increase smallholder farmers’ access to services; (c) ensure product supply; (d) promote or maintain the spatial distribution of intensified animal production to reduce negative impact on the environment and public health; and (e) promote the equitable development of the community at large. This study is being carried out with Karnataka Veterinary, Animal and Fisheries Sciences University and the National Centre for Agricultural Economics and Policy Research.

Contract Farming for Equitable Market-Oriented Smallholder Swine Production in Northern Vietnam

This project seeks to identify a set of policy and intervention options for the facilitation of profitable market-oriented pig farming partnerships involving smallholders, and to understand barriers to participation of the poor in contract farming and other marketing arrangements in Northern Vietnam. It assesses a variety of institutional arrangements through selected case studies, and provides information on marketing arrangements for pigs and pig products under different institutional forms, and on contractor strategies for targeting and selecting producers in Northern Vietnam. This ILRI-administered project involves staff from both ILRI and IFPRI in collaboration with Hanoi Agricultural University.

Contract Farming of Poultry in Bangladesh

The main goal of this project is to identify forms of contract farming as a market institution or coordination that will allow effective and remunerative smallholder market participation for production of broiler and eggs in Bangladesh. This study analyses the structure and conduct of hatchery, feeds and equipment industries serving the poultry sector and compare the geographical distribution of and access to these inputs along with health, extension and credit services of poultry farming under independent and the identified contract farming arrangements in Bangladesh. Results of this study will be compared with on-going studies on contract farming of poultry and dairy in India and pigs in Northern Vietnam. This ILRI-administered project involves staff from both ILRI and IFPRI in collaboration with Bangabandhu Shaikh Mujibur Rahman Agricultural University.

Seed Development Programs in Sub-Saharan Africa

Sub-Saharan Africa has the highest incidence of poverty among the major regions of the world. The index of food production has been stagnant or declining over the past two decades. And 64% percent of the population of sub-Saharan Africa lives in rural areas and roughly three-quarters of the poor in Africa live in rural areas, raising rural income is a key to poverty reduction in the region. In the long run, urban migration and the growth of non-farm rural income will contribute to rural poverty reduction, but for the foreseeable future, increasing agricultural productivity of small farms in Africa is a necessary condition for reducing rural poverty.

As part of the preparations for investments in African agricultural technology by the Bill and Melinda Gates Foundation, this project will review the experience of programs to promote the production, dissemination, and adoption of improved seed and planting materials in sub-Saharan Africa. The project has five objectives:

  • To review the experience of different approaches to support varietal development, evaluate their effectiveness, and assess the factors associated with the success of each approach.
  • To assess the experience of different programs to support high-level training in the agricultural sciences (focusing on seed development), evaluate their effectiveness, and assess the conditions under which each approach is likely to be successful.
  • To evaluate the experience of alternative programs for producing and distributing improved seed to farmers, including an assessment of what works and what does not work under different conditions.
  • To critically examine programs to improve small farmers access to improved seed and vegetatively propagated materials and the factors driving successful adoption by small farmers.
  • To describe successful and unsuccessful approaches for making crop demand more elastic in order to avoiding price collapse as a result of productivity increases, as well as strategies for avoiding circumstances where this is likely to occur.

The project will examine the basic food crops, focusing on grains (maize, rice, sorghum, and millet) and tubers (cassava and yams). The project will also review programs working on pulses and cooking bananas, although the number of programs and the volume of research is more limited for these commodities.

The final product of this project consists of a comprehensive review of the literature on seed sector development in sub-Saharan Africa and a searchable bibliographic database of relevant documents.

This study was commissioned by the Rockefeller Foundation with funding from the Bill and Melinda Gates Foundation.

Livestock to 2020: The Next Food Revolution

The objective of this study was to document the dramatic growth in demand for animal products and the implications for related agricultural markets, as well as to discuss emerging policy issues related to the environment, human health, and animal welfare. The study involved a review of existing literature, analysis of secondary data on trends in the production and consumption of animal products, and simulations of future trends using the IFPRI IMPACT model. The project was completed in 1999. It was carried out in collaboration with the Food and Agriculture Organization (FAO) of the United Nations and the International Livestock Research Institute (ILRI).

Fish to 2020 and the Role of Aquaculture

The goal of this project was to describe the global trends in production, trade, and consumption of fish. In addition to highlighting the rapid increase in fish consumption and the growing role of developing countries in fish production, the study reported on the results of simulations using IFPRI’s IMPACT model of global fish markets. The study builds on a 1999 book by ICLARM (now the WorldFish Center) and IFPRI, reporting on extensive consultations on key policy research issues in the fisheries sector. The new 2020 study estimated and projected the rapid growth in consumption, production and trade for a wide variety of fisheries products in a wide variety of parts of the world. It demonstrated the fast growing role of developing countries (particularly China), the nature of the shift from capture fisheries toward aquaculture and its implications for animal feeds, and the implications of all these trends for trade, sustainability and poverty reduction. It was completed in 2003 with WorldFish.

Income Diversification and Poverty in the Northern Uplands of Vietnam

This study examined patterns of income diversification and its relationship to poverty in the Northern Uplands region of Vietnam. The study made use of two national household surveys (the 1993 and 1998 Vietnam Living Standards Surveys), a focused IFPRI farm survey, and a regional Social Accounting Matrices (SAM) to examine patterns of diversification. It demonstrated that diversification is occurring even in the poorest, least commercialized region. It showed that diversification has contributed to rural income growth, but the contribution was less than that of yield growth in this region. It also argued for greater attention to marketing issues in diversification programs and extension efforts.

Fruits and Vegetables in Vietnam: Adding Value from Farmer to Consumer

This study involved surveys of horticultural producers, traders/exporters, and processors, as well as analysis of a national household survey. The study contrasted the widespread small-scale horticultural production with the small but rapidly-growing export horticultural sector. It recommended that the government redirect efforts away from production campaigns and state-owned processors and toward agricultural research and the development of institutions for grading, certification, and vertical coordination.

Livestock Industrialization, Trade and Social-Health-Environment Impacts in Developing Countries

This study, completed in 2001, used surveys of farmers, traders, and processors, as well as a policy simulation model, to examine the livestock sector and the impact of various policy options.

African Horticultural Exports

Two related studies examined horticultural exports in selected African countries. One evaluated the impact of horticultural exports on small farmers and poverty reduction in two countries, while the other focuses on the policy environment that facilitated horticultural exports in four countries.

True and False Economies of Scale Among Small and Medium Scale Livestock Producers

This study was undertaken with International Livestock Research Institute (ILRI) and national collaborators in Kenya, the Philippines, and Bangladesh. The country reports and national workshops have been completed. IFPRI’s contribution was a collaborative field study in the Philippines, which is currently under review as an IFPRI Research Report.

Causes and Consequences of the Industrialization of Livestock Production

This study was carried out with Food and Agriculture Organization (FAO), International Livestock Research Institute (ILRI), and local collaborators in Brazil, India, the Philippines, and Thailand. Six volumes were posted on the FAO/LEAD website at http://www.fao.org/WAIRDOCS/LEAD/X6115E/X6115E00.HTM (Phase-I) and http://www.fao.org/WAIRDOCS/LEAD/X6170E/X6170E00.HTM (Phase-II), and the summary volume is being prepared as an IFPRI Research Report.

Income Diversification in South Asia

This is an on-going program involving various activities and studies carried out under the South Asia Initiative. An international conference was organized in India to assess experiences with diversification in various South Asian countries. A study of the regional patterns in crop diversification in India has been completed in preparation for more in-depth studies.

Peru Potato Marketing Project

The objective of this study were, a) assess the impact of new and complex contracting schemes, as opposed to traditional marketing channels on small farmers’ welfare, and b) explore the critical factors that determine the small farmers enter these institutional arrangements. In this context, two critical factors were stressed: access to credit and size of the agricultural plot. The results point out that market failure in rural Peru is widespread due to many problems like poor infrastructure, market segmentation, poor enforcement of contracts, imperfect information, high risk, and regulatory uncertainty, among the most important. Under this scenario, it is unrealistic to expect that agro industry by itself will be successful in connecting small farmers to output markets. Such a situation of non-competitive markets and inefficient private provision may justify Government and/or NGO intervention. However, these interventions need to be cautious to avoid amplifying these problems and further retarding or, even worse, impeding the development of efficient and competitive markets.