Strengthening Market Systems for Small-scale Farmers in Developing Countries

Harvest time is the culmination of a season’s work. In good years, a smallholder farming family will grow enough to eat until the next harvest. There may be extra to sell, but this can depend as much on the harvest itself as on the market systems a farmer can access.

Strong market systems open up opportunities beyond subsistence. They can provide a pathway to a higher income that can pay for all the family’s needs and as well as new inputs that can grow yields in the next season. Lacking access to markets can actually stunt opportunities to build a better future.

“Building more resilient livelihoods requires looking beyond any individual’s limitations and identifying systemic factors, like underdeveloped market systems, that keep those limitations in place,” said Michael Carter, director of the MRR Innovation Lab.

MRR Innovation Lab research teams are developing and testing innovative ways to leverage market systems so smallholder farmers can receive the greatest benefits from their work. They are conducting field trials with market system-focused approaches that range from connecting farmers with broader value chains to building opportunities that leverage Africa’s accelerating digital transformation.

The Challenge of Rural Market Access in Developing Countries

Market systems are critical for smallholder farmers in developing countries who rely on agriculture for food and income. These market systems include dealers that supply seeds, fertilizers and other inputs, as well as output markets where farmers can sell their harvests.

Output market systems are in some ways at the foundation of productivity. Lacking access to markets where farmers can profitably sell their produce stunts their investments in productive inputs that can generate stronger, more resilient livelihoods. This in turn reduces the amount of food available within broader value chains.

The importance of strong market systems is well-recognized in development policy. In the U.S. Government Global Food Security Strategy 2022-2026, expanding participation in markets is central to inclusive agriculture-led growth. The U.S. Government Global Food Security Research Strategy 2022-2026 places strengthened access to markets and trade as a critical approach to developing solutions that address the complex of challenges facing smallholder farmers.

Strengthening Value Chains to Benefit Small Producers

“In some parts of Africa, farmers have nowhere to sell their output, or they have little bargaining power,” said Jonathan Robinson, an economist at the University of California, Santa Cruz. “Some farmers have no real way to get their produce to market without incurring costs, so if you have 100kg of maize you can’t take it back because the cost of transport is so high.”

Robinson is leading an MRR Innovation Lab project in Rwanda where one of the main challenges keeping smallholder maize farmers from tapping into commercial value chains is that their produce doesn’t meet the required quality standards. Farmers in these communities typically hand-shell maize kernels and dry them on plastic outside right before the start of the next rainy season.

The World Food Programme’s Farm to Market Alliance (FtMA) connects smallholder farmers to commercial processors that buy maize immediately after harvest. These commercial processors can avoid the risk of contamination and incomplete drying that might shut smallholder farmers out of the value chain.

Robinson’s project, which is co-funded by the Agricultural Technology Adoption Initiative (ATAI) at UC Berkeley, is using a randomized controlled trial to test the impacts of farmers selling to commercial processors through FtMA. These impacts include sales but also whether this market access increases investments in productivity, for example, through the adoption of improved seeds or increases in land holdings.

“Providing a consistent buyer at a predictable price may reduce market uncertainty, encouraging farmers to invest more in productive inputs that increase their output and makes value chains more profitable,” said Robinson.

Leveraging the Digital Transformation to Improve Market Access

Mobile phone technology has transformed communications across Africa, creating vast opportunities to connect with remote rural communities. According to GSMA, a UK-based organization that represents the interests of mobile network operators worldwide, new mobile subscribers in Sub-Saharan Africa will increase from 515 million in 2022 to 613 million in 2025.

An MRR Innovation Lab team led from Lilongwe University of Agriculture and Natural Resources (LUANAR) in Malawi is leading new research that leverages digital technologies to connect farmers to markets and provide extension services. For farmers in this randomized controlled trial, cell phones can overcome remoteness and underdeveloped infrastructure that keep travel and transport expensive.

The project, which is funded through the Feed the Future Advancing Local Leadership, Innovation and Networks (ALL-IN) initiative, is testing two related interventions. The first is a virtual marketplace in the form of a cell phone-based app that connects buyers and sellers. The second is an agricultural extension hotline that farmers can call for advisories to improve the quality of their produce.

“These paired ICT interventions could provide wide benefits across local horticulture markets in Malawi,” said the project’s principal investigator Robertson Khataza, a senior lecturer in resource economics at LUANAR. “They could increase farmers’ profits and reduce spoilage while increasing access to high-quality produce, improving inventory management and higher sales and profits across the value chain.”

Broad-based Benefits from Connecting Smallholder Farmers to Markets

These and other MRR Innovation Lab projects are testing ways to strengthen market systems for small-scale farmers. Stronger market systems can enable a number of development outcomes in addition to higher incomes. These include improved nutrition, more jobs and an increase in the region’s total food supply.

“Improving markets in ways that benefit small-scale farming communities are systemic challenges that require the kind of creative thinking these research projects represent,” said MRR Innovation Lab director Michael Carter. “This kind of research will show how we can make markets work better for all and spur inclusive agricultural growth.”


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This report is made possible by the generous support of the American people through the United States Agency for International Development (USAID) cooperative agreement 7200AA19LE00004. The contents are the responsibility of the Feed the Future Innovation Lab for Markets, Risk and Resilience and do not necessarily reflect the views of USAID or the United States Government.