Participation in High-Value Agricultural Markets

Outcome Statement

IFPRI’s research on participation in high-value agricultural markets has contributed to a better understanding of the issues and opportunities related to this subject. In addition, several recent projects conduced under this program had a major impact on an international level as well as on developing country policy design towards the rural poor.

In 2006, the program conducted an in-depth review of the literature on developing the seed sector in sub-Saharan Africa. The project examined the seed development programs and strategies that have been implemented, described their outcomes, and made recommendations for the implementation of the Rockefeller-Gates Program for the African Seed Sector (PASS), which would invest in improving seed systems in Africa. The study found that in the 1970s and 1980s, African seed systems were dominated by public research institutes and state seed enterprises. Disgruntled with the high costs and poor performance of this system, most countries liberalized their seed markets, allowing private seed companies to compete and sometimes privatizing state seed enterprises. Private seed companies have entered, particularly in the production of hybrid maize seed and vegetables, but they are reluctant to produce open pollinated varieties. The study recommended the following policies and programs to stimulate private sector involvement in African seed systems: access to public germplasm, seed legislation to clarify the rules of the sector, relaxed varietal release regulations, voluntary seed certification, lower barriers to seed trade, more effective extension services, more careful design of relief efforts, and promotion of retail agro-dealer networks. In addition to expanding the formal sector, the study noted that governments need to improve the informal seed sector, which continues to provide 90% of the seed used by farmers. Possible measures include farmer training, seed fairs and vouchers, the use of farmer cooperatives and organizations to multiply seed, and more information on the operations of the informal seed sector.

This review is being used as an input in the design of a US$ 150 million program to improve seed systems in the region.

In addition, in 2008 we launched a project that seeks to increase the availability of spatial socio-economic data in quantity and quality in order to facilitate informed policy-making in Lao PDR by enhancing knowledge on poverty and contributing to a better analytical approach of the Lao Government. The study examined the spatial distribution of poverty in the country, as well as the impact of agro-climatic conditions and market access on poverty. It identified some errors of omission and inclusion in the official list of 47 “poor and deserving” districts, toward which many public programs and international projects are targeted (www.laoatlas.net).

The results generated great interest and the project leader was invited to give a presentation at a regional UN conference. The Vice-Minister of Planning and Investment has endorsed the results and stated that they should be considered equivalent to official poverty estimates. He has furthermore stated that the list of 47 “poor and deserving” districts may need to be revisited in light of these findings. Donors are rethinking their targeting strategies in light of the finding that only a small share of the poor live in these districts.

Another study on cereal availability in Ethiopia was designed to examine alternative explanations for the high price of food, including the possibility that diversification into high-value commodities is to blame. As a result of the study, four hypotheses have been excluded: cross-border exports, hoarding by farmers or traders, diversification, and changes in the marketing behavior of farmers. The debate now focuses more on general price inflation and the possibility that food production estimates have been overstated.

The project has been influential at many levels. By demonstrating the cash-transfer program is not large enough to have a significant effect on cereal demand, the results may have facilitated the decision to increase the value of the transfers. Also, the findings from this project facilitated discussion between the Ethiopian Government and its development partners in the policy intervention to deal with current macro and food insecurity situation. Finally, a senior research fellow of the program was invited at an in-house expert consultation in the design of a large agricultural market program in Ethiopia to be funded by the European Commission.

Finally, our research on diversification into high-value agriculture was cited in the 2008 World Bank Development Report in the section on “Opportunities for a new agriculture through diversification” in Chapter 2. At least six papers prepared by members our program were cited in various places in the Report, including the drafting of key sections on the definition of high-value agriculture and the reasons HVA is likely to be pro-poor.