Policies affect prices, and prices dictate how much poor farmers earn and how much poor consumers spend. Policies also affect
the incentives driving the private sector and the way public funds are allocated across competing priorities. Institutions establish
the rules governing economic interactions and the mechanisms for delivering public goods and services. Markets organize the
way private goods and services are exchanged and how interdependent agents interact along the value chain.
When policies, institutions, and markets fail, key public goods and services are undersupplied, incentives are biased against agriculture, consumers pay too much for food, and relationships that create wealth are ruptured. Research can identify ways in which policies, institutions, and markets can be improved to serve the interests of poor producers and consumers. In January 2012, CGIAR launched such a research program—called Policies, Institutions and Markets, or PIM—to generate knowledge on how these three areas can be improved to help smallholder farmers and poor consumers live better lives.