Huang, J. & Reardon, T., 2008, Patterns in and determinants and effects of farmers’ marketing strategies in developing countries. Regoverning Markets Small-scale producers in modern agrifood markets, Meta-analysis of evaluations, IIED, London.

2.3 DIRECT ACTIONS IN COMMUNITIES

2.3.4. Leadership, life skills, empowerment training, literacy/numeracy

Recommendation: 1. Promote group formation in producer organisations (PO). Smallholders might benefit in terms of overall production, quality assurance, costs, marketing and sharing of information. Nevertheless, attention is strongly needed in relation to POs’ typology and kind of produced commodities. Note that member-based POs that only provide benefits to members are preferable to broader community-based POs.

Reference: Huang, J. & Reardon, T., 2008, Patterns in and determinants and effects of farmers’ marketing strategies in developing countries. Regoverning Markets Small-scale producers in modern agrifood markets, Meta-analysis of evaluations, IIED, London.

Evidence sample: A World Bank (2013) study found that producer organisations (POs) can reduce transaction costs per farmer and address information and communication blockages although collective action will also incur internal transaction costs within the POs. Smallholder integration into more demanding value chains may be more successful where producer organisations can facilitate training, aggregation and compliance with standards.

POs can also: facilitate higher producer prices by supplying bulk quantities that have some quality assurance; adapt to market conditions more quickly by seeking alternative buyers; negotiate more effectively with prospective firms; and facilitate finance and technology by channelling outside actors to their members. In this respect, such organisations may play a dual role, acting as a bonding mechanism within communities, but also providing an important bridging function with outside actors (such as firms and development agencies).

However, other empirical studies are more sceptical about POs’ utility. Huang and Reardon (2008) fulfilled a research in 8 countries and found that membership of producer organisations was correlated with participation in modern markets in only half of the countries. For the rest the correlation was not significant or was negative.

They also agreed that the type of PO matters: member-based POs that only provide benefits to members is preferable to broader community-based POs.

The type of commodity is also significant. Barrett (2008) highlights how POs have improved smallholder engagement with firms for cash crops, especially dairy and horticulture. On the contrary, there is limited evidence of successful PO intermediation for staple-food crops. Bernard (2010) concludes that poor small farmers are not well-represented in staple-food producer organisations as the costs of membership are prohibitive.