Food Policy 34 (2009) 17

Contents lists available at ScienceDirect

Food Policy
journal homepage: www.elsevier.com/locate/foodpol

Collective action for smallholder market access

Helen Markelova a,*, Ruth Meinzen-Dick a, Jon Hellin b, Stephan Dohrn a
a
b

International Food Policy Research Institute (IFPRI), 2033 K Street, NW, Washington, DC 20006-1002, United States
International Maize and Wheat Improvement Center (CIMMYT), Apdo. Postal 6-641, 06600, Mexico, D.F., Mexico

a r t i c l e

i n f o

Article history:
Accepted 2 October 2008

Keywords:
Collective action
Smallholder
Market access
Public and private sectors
High-value crops

a b s t r a c t
The opportunity for smallholders to raise their incomes increasingly depends on their ability to compete
in the market; yet there are many failures in rural markets in developing countries that make it difcult
for them to do this. Understanding how collective action can help address the inefciencies, coordination
problems or barriers to market access is particularly important. This paper draws on the case studies in
this special issue and on other literature to examine the conceptual issues and empirical evidence on the
role of collective action institutions in improving market access for the rural poor. Applying insights from
studies of collective action in natural resource management, the paper examines what conditions facilitate effective producer organizations for smallholders market access, with special attention to the characteristics of user groups, institutional arrangements, types of products (staples, perishables and other
commodities), markets (local, domestic and international), and external environment. The paper also
identies policies and interventions that facilitate collective action for market access among smallholders, and examines whether the public sector, private sector and/or civil society is best positioned to provide such interventions.
2008 Elsevier Ltd. All rights reserved.

Smallholders and markets

Changes in the global agricultural economy
Many of the worlds poor belong to agriculturally based rural
households. In this context, attempts to reduce global poverty
must necessarily focus on smallholder agriculture. While some of
these households are autarkic, most are linked to markets, domestic, national, regional and international. There is increasing recognition that the opportunity for smallholders to raise their
incomes from agricultural production, natural resource management and related rural enterprises depends on their ability to participate successfully in markets. As a consequence, the focus of
research and development has broadened from building up farmers production capabilities to facilitating farmers access to markets (Shepherd, 2007).
Simultaneously, changes in the global agricultural economy
provide smallholder farmers with new challenges and opportunities. Due to increases in purchasing power and the increased
opportunity cost of the time required for food preparation, the demand for higher value and processed food products has grown
worldwide (Gehlhar and Regmi, 2005). Farmers are increasingly
supplying long and sophisticated supply chains and have to meet
stringent food safety standards, particularly in discerning interna-

* Corresponding author. Tel./fax: +1 202 862 5664.

E-mail address: h.markelova@cgiar.org (H. Markelova).
0306-9192/$ - see front matter 2008 Elsevier Ltd. All rights reserved.
doi:10.1016/j.foodpol.2008.10.001

tional markets. Meanwhile, the emergence of supermarkets in

developed and developing countries has implications not just for
their immediate suppliers, but also for the entire food marketing
system, for example, by forcing competing wet-markets to upgrade
their facilities and improve procurement practices (Reardon et al.,
2005).
Despite growing market opportunities, there is a danger that
smallholder farmers will be squeezed out, even though they possess some competitive advantages over larger producers, especially in their low costs in accessing family labour and
intensive local knowledge (Poulton et al., 2005). The disadvantages they face are high unit transaction costs in almost all
non-labour transactions (Poulton et al., 2005). Furthermore, over
the last two decades structural adjustment programmes have led
to a decline in state-funded agricultural support, with the result
that many farmers nd it difcult to access inputs, extension,
and training.
Much of the literature on market access highlights the pervasive
imperfections of markets in the developing world (De Janvry et al.,
1991). Lack of information on prices and technologies, lack of connections to established market actors, distortions or absence of input and output markets, and credit constraints often make it
difcult for small farmers to take advantage of market opportunities. High transaction costs faced by smallholders due to their
small scale exacerbate these challenges, especially in quality-conscious and niche markets such as organic or fair trade (Poulton
et al., 2005). Access to these markets often requires expensive third

H. Markelova et al. / Food Policy 34 (2009) 17

party certication, which in turn may be a major barrier to smallholder participation (Barrett et al., 2001).
The case for farmer organizations
There is increasing evidence that farmer organizations offer one
way for smallholders to participate in the market more effectively.
Acting collectively, smallholders may be in a better position to reduce transaction costs of accessing inputs and outputs, obtain the
necessary market information, secure access to new technologies,
and tap into high value markets, allowing them to compete with
larger farmers and agribusinesses (Stockbridge et al., 2003). In
addition, there is evidence that collective action can help smallholders reduce barriers to entry into markets by improving their
bargaining power with buyers and intermediaries (Thorp et al.,
2005; Kherallah et al., 2002, Devaux et al., this issue).
Research in natural resource management has already demonstrated the advantages of collective action voluntary action by
a group to pursue shared objectives for technology adoption,
and to ensure that resource use is efcient, equitable, and sustainable (Meinzen-Dick et al., 2002). While resource management and
market access pose different obstacles for smallholders, there are
important parallels in terms of the factors that enable group formation and cooperation to serve as crucial mechanisms through
which the poor access vital resources and markets (Thorp et al.,
2005; Heyer et al., 2002).
Collective action and producer organizations are, therefore,
among the foci of the pro-poor market approach. There is, however, a need to determine when supporting producer organizations
make sense. Some see rural areas as so marginal that interventions
to facilitate market access are ill-advised. For example, Hitchins
et al. (2004) refer to a viability void where the rationale and efcacy of income generation promotion is questionable and of a low
priority compared to relief or social protection measures. It is indeed the case that when poverty reduction is the overriding goal,
facilitating access to markets may not be the best way forward.
However, there are also cases when support for farmer organizations can contribute to pro-poor development by mitigating market inefciencies that prevent smallholders from participating in
markets where there are opportunities to raise their incomes.
It is important to understand better when farmer organizations
make sense, when they do not and how they can best be established and maintained. The papers in this issue enhance the conceptual and empirical understanding of the role of collective
action institutions (e.g. rules and norms, producer organizations,
publicprivate partnerships) in improving market access for the
rural poor and the implications that these ndings have for policy.
The objective of this paper is to provide a summary of the issues
that are important for collective action in marketing, drawing on
the established body of literature on cooperation in natural resource management, illustrated with ndings of the studies in this
issue.

Collective action to improve marketing systems

Filling the gaps in imperfect markets
Value chain actors (including farmers) require certain conditions and services from other enterprises and support organizations to effectively participate in the market. Hazell et al. (2007)
highlight the need to have the basics such as rural roads, education,
water, research, and extension for successful market development.
In addition, once established, rural agro-enterprises need to access
services on an on-going basis in order to grow and maintain their
competitiveness (Best et al., 2006; Poulton et al., 2005). These may

include nancial (particularly micro-credit) and non-nancial services, the latter commonly known as business development services (BDS).1
The case-studies in this issue show that while many of these
conditions are not found in rural markets, collective action in form
of producer groups can help to compensate for these other weaknesses by enabling the farmers to deal with transportation costs,
overcome nancial barriers and access other services. For example,
potato farmers in Uganda pooled their nancial resources from
personal savings and loans to nance operations of their group,
and later established a savings and credit co-operative (Kaganzi
et al.). Gruere et al. show that minor millet growers in India organized specialized task-force groups to deal with missing input and
credit markets. Kruijssen et al. demonstrate how a womans group
involved in processing tropical fruits in Thailand was able to purchase valuable equipment that allowed them to transform their
products, achieve a better price and develop new market opportunities.2 The Papa Andina case (Devaux et al.) shows that collective
action can reduce the share of transport costs in the nal product value, thus allowing the potato farmers to bridge the infrastructural
remoteness.
Improving marketing systems
Traditionally, small farmers sold their crops at the farm gate to
intermediaries, often at a low price (Fafchamps and Vargas-Hill,
2005). However, innovations in marketing arrangements can
transform market relations in favour of smallholders (IFAD,
2001), and producer organizations are well-positioned to take
advantage of these new approaches. In addition to lling in the
gaps created by market imperfections, the case-studies in this issue
show that collective action can open up new marketing opportunities for smallholders by introducing innovations to existing value
chains or creating entry ways into new markets. For example, creating new demand for traditional products through processing and
value-adding activities has proved to be an innovative route to
higher prices, such as through design of a branding strategy and
an awareness campaign for minor millets (Grure et al., this issue),
and the use of native Andean potatoes in the production of potato
chips (Devaux et al., this issue). This involved going to different
fora, including chefs, supermarkets and temple festivals. Narrod
et al. (this issue) show that grape producer groups in India were
able to participate in high-value markets by obtaining the required
food safety certications, which otherwise would be inaccessible
to them individually.
Smallholders organized into groups are able to turn to domestic
markets, especially supermarkets, which are growing in number in
developing countries, especially in urban areas (Weatherspoon and
Reardon, 2003). While most of these buyers prefer to deal with larger and medium farmers, there is a potential for small farmers to
access these markets if they can successfully deal with economies
of scale (volume) and co-ordination issues. This is where collective
action in form of farmer organizations can help smallholders to
satisfy the stringent requirements to become part of these procurement systems. There is evidence of willingness on the part of
supermarkets to include upgraded (i.e. with capital, managerial,
coordination, and volume capacity) smallholders into their consolidated procurement chains, especially for the supply of fresh pro-

1
These services include: input supplies (seeds, livestock, and fertilizers); nancial
services (micro-credit); market information (prices, trends, buyers, and suppliers);
transport services; quality assurance (monitoring and certication); technical expertise and business advice; veterinary services; support for product development and
diversication.
2
However, Stringfellow et al. (1997) note that collective ownership of equipment
is particularly challenging.

H. Markelova et al. / Food Policy 34 (2009) 17

duce and dairy products (Reardon and Berdegu, 2002; Farina,

2002).
Supermarkets are not the only potential domestic buyers for the
smallholders products. Hellin et al. (this issue) show that vegetable growers in Central America are also supplying hotels and restaurants with their produce. The case of potato producer groups
in Uganda highlights the growing presence of fast-food chains as
another potential buyer on the domestic marketacting together
has enabled smallholders to reach the necessary quality and volume requirements (Kaganzi et al., this issue).
Many buyers prefer to work with producer groups as these are
better able than individual farmers to provide stable supply of
quality products (Vorley et al., 2007). For the farmers, there are
many incentives to cater to supermarkets as they offer a stable
market with good prots and, in some cases, less stringent quality
and food safety requirements than export markets (Weatherspoon
and Reardon, 2003). Furthermore, the search costs for new markets
are essentially xed, so by going into this supply chain together,
farmers share that cost, instead of each having to bear that cost
on his or her own.
However, it is important to keep in mind that in addition to
multiple market imperfections and challenges of entering existing
domestic and international markets, there are often no opportunities for producers, individually or collectively, to market their particular products. This may be caused by poor market infrastructure
or insufcient natural resource endowments (Barham and Chitemi,
this issue), lack of demand for their specic products (e.g. underutilized species) or an oversupplied market that results in low
prices. In some of these cases, there are no incentives for producers
to organize around marketing, and the costs of doing so might be
quite high. Producer groups would make sense for smallholders
where there are market opportunities to be seized, provided that
the associated transaction costs can be overcome.
What matters for collective action in marketing activities
The extensive literature on factors that are likely to affect collective action, particularly in natural resource management, offers
lessons for collective action in marketing (for reviews see Agrawal,
2001; Baland and Platteau, 1996; Rasmussen and Meinzen-Dick,
1995; Ostrom, 1990). This literature identies three broad categories of factors as important: characteristics of the resource, characteristics of the user groups, and institutional arrangements, plus
the external environment. The latter two categories have principles
that are also relevant for collective action in other arenas, including
marketing. For marketing, instead of resource characteristics, it is
useful to consider the types of products and types of markets.
Group characteristics
Small groups often have higher internal cohesion because it is
easier to know and monitor other members (Coulter et al., 1999).
But larger groups can achieve economies of scale, a particular
advantage in marketing (Stringfellow et al., 1997). The marketing
groups reported in this issue range from 9 to 9000, although the
latter (Kokum in India in Kruijssen et al.) is an exception. As noted
in Table 1, most cases are under 40 members. This may reect the
relatively early stage of development of many of these groups; it
will be worth noting which ones grow or federate as they develop.
In both resource management and marketing, federated organizations that build up from smaller groups offer a way to combine
small base groups with economies of scale. But just as getting collective action at the local level is not automatic, so also the viability
of federations should not be assumed. For example, the cocoa producers federation in Bolivia was able to increase market opportu-

Table 1
Range of group sizes of marketing groups reported in this issue.
Authors

Country

Case

Group
size

Devaux et al.
Devaux et al.
Devaux et al.
Devaux et al.
Devaux et al.
Kaganzi et al.
Kruijssen et al.
Kruijssen et al.
Kruijssen et al.
Kruijssen et al.
Narrod et al.
Narrod et al.
Gruere et al.

Peru
Bolivia
Bolivia
Bolivia
Ecuador
Uganda
Thailand
India
Syria
Vietnam
India
Kenya
India

22
17
9
13
32
120
40
9000
10
160
50*
30
14*

1220

Barham and
Chitemi
Barham and
Chitemi

Tanzania

CAPAC
APROTAC
Chuo Norm Group
Chuo & Tunta Platform
Chimborazo Platform
Nyabyumba farmer group
Cowa
Kokum
Laurel
Coconut bre
Mahagrapes
Green Beans
Millets, pineapple, rice
milling
FAIDA

32*

1540

Tanzania

TIP

38

Range

20
150

Average group size reported.

nities domestically and to reach international markets

(Bebbington, 1996). Their success, according to Bebbington, was
partly based on the organizational structure that adapted existing
forms of collective action, as well as links to government, donors,
and broader networks for technology development and product
transformation.
The natural resource management literature cites clearly dened group boundaries as facilitating collective action. There are
trade-offs between inclusiveness and tighter membership rules
that may exclude the poorest farmers but lead to greater group
effectiveness (Bebbington, 1996; Thorp et al., 2005).
Shared norms and social capital, along with past successes
working together, facilitate collective action in new areas (Agrawal, 2001). This is found not only in resource management, but
also in studies of collective marketing (Bebbington, 1996; Thorp
et al., 2005; Barham and Chitemi, this issue). Marketing organizations that build upon pre-existing social groups have an advantage
because they can build on local norms and trust (Kruijssen et al.,
this issue; Gruere et al., this issue). However, external interventions that push collective marketing on other types of groups
may exceed their capacity or interests (Stringfellow et al., 1997),
which can even erode existing social capital. Thus, it is important
that external programs do not push marketing activities on existing groups unless the members want to do joint marketing.
Interdependence among members generally facilitates collective action. In natural resource management and in marketing,
there is a debate on whether heterogeneity constrains or enables
collective action (see Agrawal, 2001; Baland and Platteau, 1996):
some argue that homogeneity of socio-economic status and values
is necessary (Stockbridge et al., 2003), while others (e.g. Thorp
et al., 2005) cite cases where internal differentiation allowed necessary leadership to evolve. In the Papa Andina case (Devaux et al.,
this issue), the involvement of diverse actors, including not only
farmers but also other actors in the value chain (including chefs),
played a critical role in collective action for innovation, creating
new potato products from which all could derive higher value.
However, this entailed a major investment in building trust among
such diverse actors.
In most types of collective action, appropriate leadership is
important, but the particular traits of leaders may vary. Leaders
should be trusted, able to motivate the members, and have necessary skills for the collective enterprise. Linkages to outsiders are

H. Markelova et al. / Food Policy 34 (2009) 17

especially important for market group leaders, along with key

business skills, as discussed below.
Institutional arrangements
The organizational structure and rules are critical in shaping
any form of collective action. Studies of natural resource management have found the advantage of simple and understandable
rules that are easily monitored, because they increase the likelihood of compliance. Graduated sanctions and low cost adjudication are also critical, along with accountability of the leaders to
the members. Provision for the local group to craft its own rules increases the likelihood that rules will be understood and adapted to
local conditions (Agrawal, 2001; Ostrom, 1990).
Provisions for monitoring and enforcement are especially
important for ensuring transparency in marketing activities (Stockbridge et al., 2003). Unfortunately, many external programs then
impose provisions for transparency, which may not be understood
by local members. This has been especially problematic in many
government-initiated cooperatives, especially in the 1970s and
1980s, where external accounting standards and other regulations
were imposed on groups, rather than allowing them to develop
their own rules. As a result, members often did not understand
the rules or have as strong an identity with the organizations
(Akwabi-Ameyaw, 1997; Pickard, 1970).
Types of products and markets
For resource systems, the degree of predictability, mobility,
storage of the resource and technologies used are all important factors that distinguish between management of water, trees, rangelands and other resources (Agrawal, 2001; Rasmussen and
Meinzen-Dick, 1995). These factors need to be modied to apply
to marketing, but the type of product does affect the difculty of
collective marketing. There are signicant differences between staple foods, perishables and cash crops such as coffee, cocoa or cotton (Poulton et al., 2005). Staple foods are bulky but otherwise
relatively easy to store and transport, compared to perishables
such as horticultural or livestock products. Staples and perishables
may have signicant local, national and export markets with varying degrees of processing, whereas cash crops require processing
and are often associated with exports.
However, without the necessary market contacts who have access to steady domestic or international buyers, it is very challenging for smallholder groups to benet from marketing staples
(Barham and Chitemi, this issue). Although collective action among
smallholder producers of staples offers some advantages in bulking, quality control, or accessing storage and inputs, the incremental benets from collective (as opposed to individual)
marketing is often not enough to offset the transactions costs of
organizing (Berdegu, 2001). Perishable, but potentially high-value
products, are more likely to offer sufcient returns to offset the
organizational costs (Coulter, 2007; Hellin et al., this issue). For
example, in Chile Berdegu (2001, 2002) found that farmers seldom beneted from participation in farmer organizations producing undifferentiated commodities such as potatoes or wheat that
are sold on the spot or at wholesale markets. In contrast, the most
successful farmer organizations marketed high value agricultural
products where farmers faced higher transaction costs.3
Perishables carry a higher risk and generally require greater
technical expertise to maintain quality expertise that small farmers alone may lack. There can thus be greater incentives for collec3
Devaux et al. (this issue) also show how, through collective action for market
development and value addition, staple crops like potatoes can become high value
products.

tive action to obtain access to transport, equipment, cold chains,

technical expertise and market knowledge to enable smallholders
to market perishable horticultural or livestock products. The
growth of quality-conscious, high-value markets like supermarkets
or export markets (as in Narrod et al., this issue) raises the stakes:
even greater care and expertise are needed to meet the higher food
safety standards, but for those who can, the returns are also
greater.
Processing fresh produce offers a way of reducing perishability
and can also increase the value of farmers products (as in the cases
described by Gruere et al., this issue). Commercial buyers and processors of other commodities may have their own estates or buy
from smallholders. There are opportunities for smallholders to capture more of the value of these commodities through ownership of
processing facilities, as illustrated by the El Ceibo federation of cocoa producers in Bolivia (Bebbington, 1996) or the Colombia National Coffee Federation (Thorp, 2002), but this requires a level of
nancial capital and technical expertise that farmers often lack.
Markets for underutilized varieties and species are gaining policy attention as a potential source of livelihoods and a means to
conserve biodiversity. This issue includes case studies of markets
for cowa, laurel, and kokum (Kruijssen et al.), diverse varieties of
minor millets (Grure et al.) and native potatoes (Devaux et al.).
Accessing these markets often demands new skills for farmers
and outside agents in order to expand the market for their products. This is because producers of underutilized species face particularly high transaction costs in terms of market access: they face
additional challenges of poorly-dened markets and weak demand
precisely because their products are less well known. Hence, collective action, leading to a reduction in transaction costs, may be
the most effective way of making conservation cum commercialization work (Grure et al., this issue).
In general, the longer the market chain is, the greater the disadvantages faced by smallholders in market access are. While local
markets are the easiest to access, they may also offer low potential
gains from collective action, because even individual farmers can
sell locally. National markets may offer higher returns, especially
rapidly expanding urban supermarkets or restaurants, as indicated
in the case studies by Devaux et al. (this issue) and Kaganzi et al.
(this issue). Export markets offer high returns, but also present
greater challenges in terms of quality control, transport and market
risks (Narrod et al., this issue).
In the majority of cases, larger companies have an advantage in
both technical and market sophistication, so they can keep a large
share of the value in distant (national or export) markets, even
when smallholders participate (Komarudin et al., 2007). A number
of cases in this issue show how collective action can allow smallholders to tap into these higher value supply chains: grapes in India and beans in Kenya (Narrod et al.), vegetables in Central
America (Hellin et al.), or pineapples and cassava in India (Grure,
et al.). However, care must be taken not to generalize from a few
successful cases; those that have failed in export marketing tend
not to be written about.
External environment
Relations with the markets and the state are two major aspects
of the external environment that studies of collective resource
management have identied as important. It is noteworthy that
strong market linkages are often reported as reducing collective action for managing resources (see Agrawal, 2001), partly because in
communities with less market integration, people are more interdependent, whereas markets allow some to opt out of these multifaceted mutual relations.
In both resource management and marketing, group formation
cannot happen in a context of state hostility (Thorp et al., 2005) or

H. Markelova et al. / Food Policy 34 (2009) 17

macroeconomic instability, both of which can undermine incentives for cooperation. Good governance that ensures legal and credit systems in favour of the poor will undoubtedly increase
economic opportunities for smallholders and provide incentives
to join with others (World Bank, 2001). Governments, for example,
can help ensure that the legal and judicial system supports lowcost contract enforcement, including getting rid of red tape (Marr,
2003; Shepherd, 2007). The formal laws of the state can also determine whether the environment for farmer organizations is an enabling or a disabling one (Stockbridge et al., 2003).

Farmer organizations: who helps and who pays?

Role of outsiders
Collective action and farmer organizations have a positive role to
play in enhancing farmers access to markets, but farmer organizations rarely self-organize on a formal basis. Often, external input is
needed. A minimal level of formality is required to supply restaurants or supermarkets, and even more so to export agricultural produce, due to food safety and other quality standards demanded by
consumers in national and international markets. Most cases of successful collective marketing thus highlight the crucial role of a facilitator who catalyses collective action, provides information and
technical assistance, and builds the capacity of a group to effectively
engage in marketing activities (IFAD, 2001; Chirwa et al., 2005; Kaganzi et al., this issue; Devaux et al., this issue). Such outside assistance can even enable the producers to re-negotiate the power
relationships along the value chain and reach more favourable terms
of trade (Bebbington, 1996; Thorp et al., 2005).
While the literature is clear about the importance of facilitators,
the consensus breaks down when it comes to who is best positioned
to take on this role. The question is critical because major decisions
have to be made about the allocation of public and private monies.
Not all outsiders are seeking to maximize the returns to the community. Commercial agents higher up the commodity chain are particularly likely to have a conict of interest with farmers over the
distribution of surplus along the commodity chain from producer
to consumer. Ribot (1998) shows how prots in Senegals charcoal
commodity chain are concentrated among merchants and wholesalers. Thus, external agents may seek to organize farmers primarily to
increase their own prots. The ability of farmers to obtain a larger
share of the returns depends on their degree of solidarity (social capital), capacity to negotiate (human capital), as well as characteristics
of the commodity itself (e.g. perishability, alternative markets).
While many sources debate whether the private or public sector
is best suited for the facilitation role, many agree that non-governmental organizations (NGOs) with an appropriate skill set may in
fact be the best facilitators of collective marketing activities (Thorp
et al., 2005; Coulter et al., 1999). For example, the M.S. Swaminathan Research Foundation (MSSRF) helped minor millets and pineapple producers in Kolli Hills, India to form specialized groups,
provided certication costs, and even lobbied for greater market
access for these groups (Grure et al., this issue). Kruijssen et al.
(this issue) show that government extension agencies working together with NGOs offer another viable solution.
However, NGOs are not always the most appropriate facilitators
and have not been uniformly successful in enhancing groups marketing performance (Barham and Chitemi, this issue). NGOs may be
tempted to intervene too actively, for instance by baling out farmer organizations in nancial difculty, thereby externalizing some
of the organizations costs (Berdegu, 2001). Ultimately the key issue is to identify the entities be they NGOs, commercial or state
actors who have the qualities required for effective facilitation
such as legitimacy, expertise, appropriate contacts and trust.

State versus market roles

The issue of who should nancially support the establishment
and functioning of producer organizations is part of a wider debate about service delivery. The history of service delivery can
be divided into two broad phases: rst, state-led, and later, market-led provision (Poulton et al., 2005). Under state-led delivery,
business development services were delivered to small enterprises (including agro-enterprises) with the support of donor
and government subsidies. This government-driven approach focused on national goals such as higher employment, rapid industrialization and better export competitiveness (Marr, 2003).
Critics have identied drawbacks to the public provision of BDS,
in particular that it distorts market prices (as services are often
highly subsidized) and undermines the provision of services by
the private sector. State-led provision also means that there is no
feedback to providers on whether their services are appropriate,
as they are not demand-driven. The government-driven approach
was further criticised for being inspired by clientelism and the
use of programmes to build bases for political parties. Ultimately,
public interventions were not seen as sustainable because of their
costs. The Washington consensus in the 1980s and 1990s argued
that market outcomes are not improved (and indeed are worsened)
by state interventions (DFID, 2005). This ushered in the phase of
market-led development.
Market-led development signied a shift in thinking from subsidized supply-led BDS provision to market-determined demanddriven services. The private sector is seen as the driving force behind service delivery and is deemed to be much more efcient than
the public sector (Miehlbradt and McVay, 2003; Ferrand et al.,
2004). Private sector BDS programmes are expected to adopt a
more businesslike working culture, reected in relationships with
their clients that are based around payment for services rather
than free or subsidized services (Sievers and Vandenberg, 2007).
In the majority of cases, however, the private sector has proven incapable of replacing previous state services due to high
transaction costs, dispersed clientele and low (or non-existent)
prots. If services are only offered where demand already exists,
there is a risk that providers will serve only the better-off farmers and ignore those living in marginal areas (Miehlbradt and
McVay, 2003). The result has tended to be an improvement in
access to output markets in accessible and higher productivity
areas but a weakening of output market access in some remoter
areas (Lundy et al., 2002; Poulton et al., 2005). In terms of poverty reduction, it has become clear that conventional policies for
market restructuring and reform such as liberalization and
privatization cannot be assumed to be poverty-reducing
through an anticipated trickle-down process (DFID, 2005).
Governments, donors, and NGOs tend to espouse a pro-poor
growth orientation. While this may be essential to ensure a
more equitable distribution of public and private sector investment, it can often sit uneasily with hard commercial realities.
Shepherd (2007) argues that business development is not and
cannot become synonymous with social policy. If the approach
of linking farmers to markets is to be successful, its proponents
need to accept commercial realities and not prioritise the poverty reduction goal at the expense of business sustainability
(Shepherd, 2007).
In general, the private sectors role in supporting farmer organizations tends to be directed at enabling them to meet quality and
safety standards and to access certication opportunities, so that
their produce fulls the requirements of formal markets. Although
the private sector might be best placed for such activities, the government has a vital role to play in guiding and facilitating this
development and creating an enabling environment for farmer
groups to form and operate. Furthermore, since credit and input

H. Markelova et al. / Food Policy 34 (2009) 17

markets are imperfect and often biased against the poor in rural
areas (Hoff and Stiglitz, 1990), the government has a unique capacity to reduce these constraints through pro-poor policies.
Regardless of who provides facilitation or intervention, it is
important that the groups formed by smallholders should be controlled by the members and adjusted to local conditions to ensure
loyalty and a sense of ownership (Stringfellow et al., 1997; Thorp
et al., 2005). Such local ownership can be promoted through active
local participation and institutional arrangements that complement local conditions, such as available human capabilities and
technology (Bebbington, 1996; World Bank, 2001). Moreover,
when considering where public or private investments should be
made, it is essential to match farmer skills, nancial capacity and
managerial experience to different forms of farmer organization
(Stringfellow et al., 1997; Coulter et al., 1999).

Conclusions: what we have learned

There is much evidence, in literature and in practice, that
smallholders face numerous challenges in accessing markets for
their products in the context of changing global economy. The
case-studies in this issue show that collective action can bring
advantages for smallholder marketing, as it has for natural resource management. First and foremost, acting collectively for
market access can help correct some of the market imperfections, such as high transaction costs and missing credit markets,
and ll in coordination gaps. Moreover, farmers are more able to
obtain necessary information, reach quality standards and operate on a larger scale when they pool nancial and labour resources, enabling them to sell to new domestic or international
markets, which are otherwise out of reach for smallholder
producers.
Many of the group characteristics and institutional arrangements that facilitate collective action for resource management
also seem to apply to collective marketing. It is therefore useful
to consider the group size, boundaries, social capital and heterogeneity, as well as whether rules are locally understandable,
monitored and sanctioned. The capacity of groups to develop
their own rules, rather than just following externally-imposed
rules, is especially important. Higher-value products, which are
often perishable or involve processing, require greater technical
skills, but also offer greater returns to collective marketing compared to staples.
Some degree of outside assistance, both nancial and in capacity building, is often required for producer groups to form and
operate successfully, but this can introduce problems with sustainability versus dependency of the organizations. While NGOs may
be well-suited for the role of catalyst of collective action for marketing, it falls to the public and private sectors to ensure that there
are incentives for farmers to organize through policies and programmes that allow them to access stable and competitive markets. The discussion here and the papers in this issue show that
there are important and complementary roles for government
and the private sector in enabling producer groups to deal with
the constraints they face in marketing their products.
This special issue shows that collective action can play a critical role for smallholders not only to get a better price for their
products, but also to adapt to the changing global supply chains.
But a healthy dose of realism is needed when considering the
applicability and effectiveness of collective marketing. If the
incentives and enabling conditions for farmer groups to form
and operate successfully are missing, collective marketing will
not be protable or sustainable. Understanding and addressing
these challenges will help realize the objectives of pro-poor
market development.

Acknowledgments
The authors would like to thank Andrew Shepherd, Tony Bebbington, and the participants of the CGIAR Systemwide Program on
Collective Action and Property Rights (CAPRi) Workshop on Collective Action and Market Access for Smallholders held in Cali, Colombia in October 2006 for their ideas and comments that contributed
to shaping this paper. Sophie Higman provided invaluable help in
the preparation of this paper and the whole special issue. The
nancial support of the governments of Norway, Italy, and the
World Bank to the CAPRi program is gratefully acknowledged.
References
Agrawal, A., 2001. Common property institutions and sustainable governance of
resources. World Development 29 (10), 16491672.
Akwabi-Ameyaw, K., 1997. Producer cooperative resettlement projects in
Zimbabwe: lessons from a failed agricultural development strategy. World
Development 25 (3), 437456.
Baland, J.M., Platteau, J.P., 1996. Halting Degradation of Natural Resources: Is There
a Role for Rural Communities? Oxford University Press, New York.
Barrett, H.R., Browne, A.W., Harris, P.J.C., Cadoret, K., 2001. Smallholder farmers and
organic certication: accessing the EU market from the developing world.
Biological Agriculture and Horticulture 19, 183199.
Bebbington, A., 1996. Organizations and intensications: Campesino federations,
rural livelihoods and agricultural technology in the Andes and Amazonia. World
Development 24 (7), 11611177.
Berdegu, J., 2001. Cooperating to Compete Associative Peasant Business Firms in
Chile. Ph.D. Thesis, Wageningen University.
Berdegu, J., 2002. Learning to beat Cochranes treadmill. Public policy, markets and
social learning in Chiles small-scale agriculture. In: Leeuwis, C., Pyburn, R.
(Eds.), Wheelbarrows Full of Frogs: Social Learning in Rural Resource
Management. Assen, The Netherlands, pp. 333348
Best, R., Westby, A., Ospina, B., 2006. Linking small-scale cassava and sweetpotato
farmers to growth markets: experiences, lessons and challenges. Acta
Horticulturae 703, 3946.
Chirwa, E., Dorward, A., Kachule, R., Kumwenda, I., Kydd, J., Poole, N., Poulton, C.,
Stockbridge, M., 2005. Walking tightropes: supporting farmer organizations for
market access. Overseas Development Institute (ODI) Natural Resource
Perspectives 99.
Coulter, J., 2007. Farmer Groups Enterprises and the Marketing of Staple Food
Commodities in Africa. CAPRi Working Paper 72. International Food Policy
Research Institute (IFPRI), Washington, DC.
Coulter, J., Goodland, A., Tallontire, A., Stringfellow, R., 1999. Marrying farmer
cooperation and contract farming for service provision in a liberalising subSaharan Africa. ODI Natural Resource Perspecitves 48.
De Janvry, A., Fafchamps, M., Sadoulet, E., 1991. Peasant household behavior with
missing markets: some paradoxes explained. The Economic Journal 101, 1400
1417.
DFID, 2005. Making market systems work better for the poor (M4P) an
introduction to the concept. Discussion Paper Prepared for the ADB-DFID
Learning Event ADB Headquarters, Manila, February 2005.
Fafchamps, M., Vargas-Hill, R., 2005. Selling at the farmgate or travelling to the
market. American Journal of Agricultural Economics 87 (3), 717734.
Farina, E., 2002. Consolidation, multinationalisation, and competition in Brazil:
impacts on horticulture and dairy products systems. Development Policy
Review 20 (4), 441457.
Ferrand, D., Gibson, A., Scott, H., 2004. Making Markets Work for the Poor: An
Objective and an Approach for Governments and Development Agencies. The
ComMark Trust.
Gehlhar, M., Regmi, A., 2005. Factors shaping global food markets. In: Regmi, A.,
Gehlhar, M. (Eds.). New Directions in Global Food Markets. Agriculture
Information Bulletin Number 794. United States Department of Agriculture,
pp. 517.
Hazell, P., Poulton, C., Wiggins, S., Dorward, A., 2007. The Future of Small Farms for
Poverty Reduction and Growth. 2020 Discussion Paper 42. International Food
Policy Research Institute, Washington, DC.
Heyer, J., Stewart, F., Thorp, R. (Eds.), 2002. Group Behavior and Development: Is the
Market Destroying Cooperation? Oxford University Press, New York.
Hitchins, R., Elliot, D., Gibson, A., 2004. Making Business Service Markets Work for
the Poor in Rural Areas: A Review of Experience. Report for DFID. Springeld
Centre, Durham, UK.
Hoff, K., Stiglitz, J., 1990. Imperfect information and rural credit markets puzzles
and policy perspectives. World Bank Economic Review 4 (3), 235250.
IFAD, 2001. Rural Poverty Report 2001: The Challenge of Ending Rural Poverty.
Oxford University Press, New York.
Kherallah, M., Delgado, C., Gabre-Madhin, E., Minot, N., Johnson, M., 2002.
Reforming Agricultural Markets in Africa. Johns Hopkins University, Baltimore.
Komarudin, H., Siagian, Y., Oka, N.P., 2007. Linking Collective Action to Non-Timber
Forest Product Markets for Improved Local Livelihoods: Challenges and
Opportunities. CAPRi Working Paper 73. International Food Policy Research
Institute, Washington, DC.

H. Markelova et al. / Food Policy 34 (2009) 17

Lundy, M., Ostertag, C., Best, R., 2002. Value adding, agroenterprise and poverty
reduction: a territorial approach for rural business development. Paper
Presented at Globalization of Agricultural Research Conference, 2527
February, Turrialba, Costa Rica.
Marr, A., 2003. Institutional Approaches to the Delivery of Business Development
Services: A Review of Recent Literature. Natural Resources Institute, Chatham,
UK.
Meinzen-Dick, R., Knox, A., Place, F., Swallow, B. (Eds.), 2002. Innovation in Natural
Resource Management. Johns Hopkins University Press, Baltimore.
Miehlbradt, A.O., McVay, M., 2003. Developing Commercial Markets for Business
Development Services BDS Primer. International Labour Organization,
Geneva.
Ostrom, E., 1990. Governing the Commons. The Evolution of Institutions for
Collective Action. Cambridge University Press, Cambridge, UK.
Pickard, D.H., 1970. Factors affecting success and failure in farmers co-operative
associations. Journal of Agricultural Economics 21 (1), 105119.
Poulton, C., Dorward, A., Kydd, J., 2005. The future of small farms: new directions for
services, institutions and intermediation. Paper Presented at The Future of
Small Farms Workshop, 2629 June 2005, Imperial College, Wye, UK.
Rasmussen, L., Meinzen-Dick, R., 1995. Local Organizations for Natural Resource
Management: Lessons from Theoretical and Empirical Literature. IFPRI
Environment and Production Technology Division Discussion Paper 11.
International Food Policy Research Institute, Washington, DC.
Reardon, T., Bedegu, J., 2002. The rapid rise of supermarkets in Latin America:
challenges and opportunities for development. Development Policy Review 20
(4), 371388.
Reardon, T., Timmer, C.P., Berdegu, J., 2005. Supermarket expansion in Latin
America and Asia: implications for food marketing systems. In: Regmi, A.,
Gehlhar, M. (Eds.), New Directions in Global Food Markets. Agriculture
Information Bulletin Number 794. United States Department of Agriculture,
pp. 4761.

Ribot, J.C., 1998. Theorizing access: forest prots along Senegals charcoal
commodity chain. Development and Change 29 (2), 307341.
Shepherd, A.W., 2007. Approaches to Linking Producers to Markets: A Review of
Experiences to Date. Agricultural Management, Marketing and Finance
Occasional Paper 13. Food and Agriculture Organization of the United
Nations, Rome.
Sievers, M., Vandenberg, P., 2007. Synergies through linkages: who benets from
linking micro-nance and business development services? World Development
35 (8), 13411358.
Stockbridge, M., Dorward, A., Kydd, J., 2003. Farmer Organizations for Market
Access: Learning from Success. Brieng Paper. Wye College, University of
London, UK.
Stringfellow, R., Coulter, J., Lucey, T., McKone, C., Hussain, A., 1997. Improving the
access of smallholder to agricultural services in Sub-Saharan Africa: Farmer
cooperation and the role of the donor community. ODI Natural Resource
Perspectives 20.
Thorp, R., 2002. Has the coffee federation become redundant? Collective action and
the market in Colombian development. In: Heyer, J., Stewart, F., Thorp, R. (Eds.),
2002, Group Behavior and Development: Is the Market Destroying
Cooperation? Oxford University Press, New York.
Thorp, R., Stewart, F., Heyer, A., 2005. When and how far is group formation a route
out of chronic poverty? World Development 33 (6), 907920.
Vorley, B., Fearne, A., Ray, D. (Eds.), 2007. Regoverning Markets: A Place for Smallscale Producers in Modern Agrifood Chains? Gower Publishing Limited,
Hampshire, England.
Weatherspoon, D., Reardon, T., 2003. The rise of supermarkets in Africa:
implications for agrifood systems and the rural poor. Development Policy
Review 21 (3), 333355.
World Bank, 2001. World Development 2000/2001: Attacking Poverty. Oxford
University Press, New York.