ICCO, 04 October 2007

Chain empowerment of farmer organizations Lucian Peppelenbos, Senior Advisor Sustainable Economic Development

Context: market conditions Framework chain empowerment (case Mali) Facilitating chain empowerment Key challenges Overview presentation

Context: market conditions

Framework chain empowerment (case Mali)

Facilitating chain empowerment

Key challenges

The context The market has become globalized, integrated, and consumer-driven; state support has been dismantled Four types of markets Staple foods Bulk commodity export Urban markets High-value export All markets are (in-) directly affected by modernization and concentration of retail and processing Centralized procurement (often regional) Specialized wholesalers Preferred suppliers Private grades and standards

The market has become globalized, integrated, and consumer-driven; state support has been dismantled

Four types of markets

Staple foods

Bulk commodity export

Urban markets

High-value export

All markets are (in-) directly affected by modernization and concentration of retail and processing

Centralized procurement (often regional)

Specialized wholesalers

Preferred suppliers

Private grades and standards

Impacts on small farmers Market performance varies across regions; as yet no systematized data Multiples of the national poverty line Average income of rural workers Average income of small farmers

Market performance varies across regions; as yet no systematized data

Then, what is pro-poor growth? In a continent with strong agricultural growth, small family farming is in crisis, due to Exclusion from dynamic markets (3 & 4) Price squeeze on traditional markets (1 & 2) “ Making markets work for the poor” (rather than making the poor work for the market): More than technical efficiency and ‘market access’ Farmers upgrade their position in the value chain to appropriate added value, and to protect themselves from declining terms of trade

In a continent with strong agricultural growth, small family farming is in crisis, due to

Exclusion from dynamic markets (3 & 4)

Price squeeze on traditional markets (1 & 2)

“ Making markets work for the poor” (rather than making the poor work for the market):

More than technical efficiency and ‘market access’

Farmers upgrade their position in the value chain to appropriate added value, and to protect themselves from declining terms of trade

Chain Empowerment: Supporting African farmers to develop markets

Chain Empowerment:

Supporting African farmers to develop markets

Some problems in the field Low return to investments in forward integration Business partnerships fall flat halfway Limited skills of farmer organizations (e.g. discipline) Pressure to deliver results on short term; projects fall flat when funding ends

Low return to investments in forward integration

Business partnerships fall flat halfway

Limited skills of farmer organizations (e.g. discipline)

Pressure to deliver results on short term; projects fall flat when funding ends

Underlying problem Unclear chain strategies: Where are we, where do we want to go, and why? What skills / assets do we need to get there? How much time is it going to take?  Framework for strategic chain empowerment

Unclear chain strategies:

Where are we, where do we want to go, and why?

What skills / assets do we need to get there?

How much time is it going to take?

 Framework for strategic chain empowerment

1 - Chain activities Input procurement Farming Grading and bulking Trading and distribution Processing / warehousing Retailing Etc.

2 - Chain management Information (product & processes) Quality assurance Learning & innovation Chain cooperation Market intelligence Finance Logistics

CHAIN PARTNER CHAIN CO-OWNER CHAIN ACTOR CHAIN ACTIVITY INTEGRATOR Chain management Chain activities VCD framework

1500 women, 40 groups, 1 union Quality improvement, joint processing, joint retailing  the women were to become ‘chain co-owner’ Shea & women in Mali

1500 women, 40 groups, 1 union

Quality improvement, joint processing, joint retailing  the women were to become ‘chain co-owner’

Vertical integration Chain management skills 1 2 Shea & women in Mali

1500 women, 40 groups, 1 union Quality improvement, joint processing, joint retailing  the women were to become ‘chain co-owner’ Price went up from 300 to 700 CFA/kg; improved status; less firewood However, when funding ended, women had no mngt skills, they were mere ‘activity integrators’ Shea & women in Mali

1500 women, 40 groups, 1 union

Quality improvement, joint processing, joint retailing  the women were to become ‘chain co-owner’

Price went up from 300 to 700 CFA/kg; improved status; less firewood

However, when funding ended, women had no mngt skills, they were mere ‘activity integrators’

Vertical integration Chain management skills 1 2 3 Shea & women in Mali

1500 women, 40 groups, 1 union Quality improvement, joint processing, joint retailing  the women were to become ‘chain co-owner’ Price went up from 300 to 700 CFA/kg; improved status; less firewood However, when funding ended, women had no mngt skills, they were mere ‘activity integrators’ Restart: own staff, business plan, chain dialogue, export of kernels, development towards ‘chain co-owner’ Shea & women in Mali

1500 women, 40 groups, 1 union

Quality improvement, joint processing, joint retailing  the women were to become ‘chain co-owner’

Price went up from 300 to 700 CFA/kg; improved status; less firewood

However, when funding ended, women had no mngt skills, they were mere ‘activity integrators’

Restart: own staff, business plan, chain dialogue, export of kernels, development towards ‘chain co-owner’

Shea & women in Mali Vertical integration Chain management skills 1 2 4 3

Shea & women in Mali Lessons learnt: Neglect of chain management, inconsistent project strategy, unsustainable results NGOs important in initial stages – e.g. organizing groups and technical training Support, as soon as possible, the PO directly so to pursue their own business

Lessons learnt:

Neglect of chain management, inconsistent project strategy, unsustainable results

NGOs important in initial stages – e.g. organizing groups and technical training

Support, as soon as possible, the PO directly so to pursue their own business

Chain empowerment strategies 1. Upgrading as a chain actor: The farmers become crop specialists with a clear market orientation 2. Adding value through vertical integration: The farmers move into joint processing and marketing in order to add value 3. Developing chain partnerships: The farmers build long-term alliances with buyers that are centred on shared interests and mutual growth. 4. Developing ownership over the chain: The farmers try to build direct linkages with consumer markets. CHAIN PARTNER CHAIN CO-OWNER ACTIVITY INTEGRATOR Chain governance Chain activities CHAIN ACTOR 1 2 4 3

1. Upgrading as a chain actor: The farmers become crop specialists with a clear market orientation

2. Adding value through vertical integration: The farmers move into joint processing and marketing in order to add value

3. Developing chain partnerships: The farmers build long-term alliances with buyers that are centred on shared interests and mutual growth.

4. Developing ownership over the chain: The farmers try to build direct linkages with consumer markets.

Chain empowerment strategies Where are we, where do we want to go, and why? What is the best position for us? What skills / assets do we need to develop from one position to another? How to monitor progress? How much time is it going to take?

Where are we, where do we want to go, and why? What is the best position for us?

What skills / assets do we need to develop from one position to another?

How to monitor progress?

How much time is it going to take?

Facilitating chain empowerment Chain mapping and assessment Building engagement Value chain upgrading Linking and learning Monitoring and evaluation

1. Chain mapping and assessment Assess markets, risks, opportunities, resources Determine entry points (production & market) Link up with supporting environment 2. Chain engagement Develop chain vision Screen and select partners (production & market) Build relationships, agree on goals and measures 3. Chain upgrading Participatory approach, ownership, savings OD & ID Entrepreneurial attitudes Exit strategy Facilitating chain empowerment

1. Chain mapping and assessment

Assess markets, risks, opportunities, resources

Determine entry points (production & market)

Link up with supporting environment

2. Chain engagement

Develop chain vision

Screen and select partners (production & market)

Build relationships, agree on goals and measures

3. Chain upgrading

Participatory approach, ownership, savings

OD & ID

Entrepreneurial attitudes

Exit strategy

4. Monitoring and evaluation Lack of tools and methods for M&E 5. Linking and learning Chain facilitator Farmer business schools Chain platforms Learning alliance Facilitating chain empowerment

4. Monitoring and evaluation

Lack of tools and methods for M&E

5. Linking and learning

Chain facilitator

Farmer business schools

Chain platforms

Learning alliance

Key challenges Long-term support Entrepreneurial professionalism in POs Farmers leadership and clustering Private sector as “institutional host” Midstream chain actors as key to market inclusion Value chain finance Effective linking and learning among development agencies

Long-term support

Entrepreneurial professionalism in POs

Farmers leadership and clustering

Private sector as “institutional host”

Midstream chain actors as key to market inclusion

Value chain finance

Effective linking and learning among development agencies

Thank you for your attention