Partnering to facilitate smallholder inclusion in value chains

In light of the importance of agricultural activities for the livelihoods of millions of people in rural areas, poverty-alleviating growth depends to a high degree on access to lucrative consumer markets. However, smallholder farmers in developing countries face various institutional constraints that hinder them taking advantage of market opportunities. A lack of information on prices and technologies, lacking connections to market actors, underdeveloped financial markets and scale diseconomies make it difficult for smallholders to reach out to international or new domestic markets. Thus, new institutional arrangements are needed to fill the gap in between current local practices/institutions and the institutions required for participation in value chains. As an example of a new institutional arrangement, partnerships between businesses, NGOs, farmers and public agencies have emerged to create new and better outlets for smallholders’ products, achieve positive socio-economic and environmental outcomes for farmers, and serve the purpose of pro-poor growth. By building on the expertise of each member, partnerships are an example of collective action based on differences in comparative advantage and agency specialization to create collaborative advantage. Actors have different roles that can complement each other and address the institutional constraints faced by smallholders, thereby fulfilling development goals and private business interests at the same time. For this reason, partnerships have made a remarkable breakthrough in the international development discourse.