International Institute for Environment and Development - Sustainable markets

Knowledge programme publications

nick.turner@iied.org (nickt) — Tue, 14 May 2013 08:18:23 +0100

The Knowledge Programme Small Producer Agency in the Globalised Market project has promoted cross fertilisation between the work of the Learning Network, the work done by commissioned researchers and the material from the series of provocations held since its inception in 2009. This research aims to reshape the debate on smallholder producers reaching and influencing global markets. All published material is available free to download.

Books and papers

Small producer agency in the globalised market: making choices in a changing world
International expectations for the world’s half-billion small farms are growing, against a very dynamic backdrop. Small-scale farming is expected to contribute solutions in areas ranging from poverty reduction and food security to climate change adaptation.

Small-scale farmer strategies to make markets work
This Reflect and act briefing paper showcases a joint Hivos/IIED project on small producer agency in the globalised market and highlights lessons learnt from this work.

Small-scale farmers' agency in the face of globalisation and rapid rural change: outputs of a global knowledge programme
Brochure with details of project work and related publications produced from the three-year small-scale farmer Knowledge Programme led by IIED, Hivos and a global Learning Network.

Global studies

Filling knowledge gaps has been a major concern of the Knowledge Programme since its inception. The programme commissioned papers on overarching themes. How has the debate on small farmers and globalisation evolved over time? How have small-scale farmers reacted in the face of extremely rapid economic modernisation, or under alternative 'popular' socialist systems? Do we have the right approach to policy and markets for the new rural generations?

Changing perspectives: small-scale farmers, markets and globalisation (Available in English and Spanish)

Small-scale farming and youth in an era of rapid rural change (Available in English and Spanish)

Small-scale farmers in China in the face of modernisation and globalisation (Available in English and Spanish)

Small-scale farmers under socialist governments: Venezuela and the ALBA People's Trade Agreements (Available in English and Spanish)

Regional studies

Actors who work closely with small-scale farmers – in farmer federations, in trade, in support functions and in research – are in the best position to reshape the debate. The Knowledge Programme facilitated a learning space where academics, practitioners and business people could reflect through research and debate in their countries or in international and global meetings and events. The Learning Network was convened in April 2010 and brought together leaders and practitioners from the worlds of academia, farming and agribusiness, from Latin America, Asia and Africa. Members have produced new insights and studies to contribute to redefine the terms of the debate. The findings of these national studies have been compiled in Regional documents.

Innovating to compete: smallholder farmers' agency and markets in East Africa (Available in English and Spanish)

Small-scale farmers' decisions in globalised markets (Available in English and Spanish)

How do small producers in Latin America position themselves to engage with markets? (Forthcoming)

Provocations

IIED, HIVOS and collaborating organisations have hosted a travelling series of seminars across Europe, to explore and stimulate the debate on smallholders and markets. The 'provocations' looked at some of the big assumptions, impacts, benefi ts and risks of common approaches taken by the development community to 'make markets work' for small-scale farmers.

Pro-poor business, development and smallholder empowerment

Rights-based versus market-based development: a false dichotomy for small-scale farmers?

Producer agency and the agenda to 'make markets work for the poor'

Other papers

Small-scale farmers' agency: how the poor make markets work for them (briefing paper)
Instead of thinking about how to make markets work for the poor, we must look at how the poor make markets work for them.

Transforming agriculture in Uganda: nine points for action (opinion paper)

Issue 44: Markets, smallholders and empowerment (Journal publication co-edited by IIED and Hivos, published by Capacity.org

Africa Roundtable report

Asia Roundtable report

Latin America Roundtable report

Minutes from first Learning Network meeting, Geneva April 2010

These titles are also listed within our publications database

Small Producer Agency in the Globalised Market

nick.turner@iied.org (nickt) — Tue, 14 May 2013 08:18:09 +0100

What are the strategies and constraints of small-scale producers in an era of globalisation? This project provides insights that can help in designing better policies and business interventions to support them.

Agriculture is still a small-farm story: half a billion farmers, working on plots of less than two hectares, produce a significant proportion of the world’s food. More than 90% of food in sub-Saharan Africa is estimated to be produced by smallholder farmers, for example. Globalisation, and particularly the food price crises of the past five years, have placed small-scale producers under the spotlight as part of the answer to creating a more sustainable food future.

Some of the challenges facing small-scale farmers are highlighted in a video playlist – click on the playlist and scroll to see all the videos.

Small-scale farmers: important economic actors

A debate has been raging about whether that future is best achieved through inclusion of small-scale farmers in markets, or through resisting the market-based logic of globalisation.

Arguments on both sides often have one point in common: they continue a tradition of viewing smallholders as victims or as beneficiaries of external interventions. They miss producers’ role as economic actors in their own right who analyse their options, manage risks and make decisions.

The joint knowledge programme of IIED, Hivos and Bolivia-based Mainumby Ñakurutú has focused on understanding the strategies and constraints of small-scale producers in an era of globalisation and big changes in rural areas, and to provide new insights that can help in designing better policies and business interventions to support them.

The Programme got underway in 2009 with the establishment of a global peer-to-peer Learning Network, led from Bolivia by Mainumby Ñakurutú. This Network brought together leaders and practitioners from the worlds of academia, farming and agribusiness in Latin America, Africa and Asia, who contributed new insights and studies to the debate.

Filling knowledge gaps has been a major aim of the programme, and research was commissioned on the evolution of the debate on small-scale farmers and globalisation, on how small-scale producers have reacted to economic modernisation in China and to small-scale farmers under socialist governments, and on agriculture and youth.

Provocation series on how to make markets work for small-scale farmers

IIED, Hivos and collaborating institutions have hosted a series of 'provocative seminars' held in different locations across Europe, looking at some of the big assumptions, impacts, benefits and risks of approaches taken by the development community to ‘make markets work’ for small-scale farmers. The seminars have challenged conventional wisdom on how to include smallholders in markets and bring fresh perspectives to the discussion on what works and why.

A compilation of the insights and material gathered from these seminars, from the work of the Learning Network, and the commissioned research is now available. The main issues are summarised in a briefing paper and further discussed in this short film. For further details of other related publications we have produced a brochure.

Report scopes sustainability of China-Latin America relations

mike.shanahan@iied.org (Mike Shanahan) — Thu, 9 May 2013 06:10:30 +0100

Study examining Chinese trade and investment in mining, agriculture and forestry in Chile, Brazil and Peru says sustainability is increasingly on the agenda.

While much attention focuses on Chinese investment and trade in Africa, another story is unfolding in Latin America, with which China will become the second biggest trading partner next year, overtaking the European Union.

A report published today by the International Institute for Environment and Development, says sustainability is increasingly on the agenda in trade and investment relations between the two regions, and that Chinese companies are showing signs of learning from the previous mistakes they’ve made in international investments.

The discussion paper uses primary and secondary data sources and interviews with stakeholders to examine Chinese trade and investment in mining, agriculture and forestry in Chile, Brazil and Peru. It shows how complex interactions between regulations, shareholder and investor demands, consumer preferences and civil society pressure shape the sustainability of these new relationships.

"China’s demand for materials – from timber and minerals to soybeans, its desire to access new markets and its strategy of south-south cooperation and ‘soft power’ diplomacy are driving a boom in trade and investment that will have important implications for the sustainability of natural resource development in the region," says Emma Blackmore, the report’s lead author.

"To satisfy the demands of investors, consumers and other stakeholders, businesses involved in this trade increasingly apply international standards that aim to ensure sustainable, accountable operations."

In addition, there are new national standards being developed and implemented. These include the Guidelines on Environmental Protection for China's Outbound Investment and Cooperation, developed by China’s Ministry of Commerce and Ministry of Environmental Protection, as well as China's 'green credit' guidelines, which should shape the investment decisions of Chinese banks through the assessment of environmental and social risks.

"China's Green Credit guidelines are likely to play a growing role in shaping the nature of Chinese investment both within China and overseas," says Blackmore. "But it will be important to monitor the implementation of these guidelines and their impact."

Much of China's visible investment in Latin American comes from state-owned enterprises. In 2012, in Brazil, these provided 93 per cent of all Chinese investment. And while China’s Industrial Bank has signed up to the Equator Principles -- by which banks can manage environmental and social issues in project financing -- other Chinese banks that lead financing of overseas direct investment have not, and the Chinese government does not yet endorse the Principles. National standards developed in China may end up being far more important – and having more legitimacy – than ‘international’ standards like the Equator Principles.

The report shows how host country legislation and enforcement is also important in determining the performance standards of Chinese companies and in legislating the types of investments that can take place.

Peru, for instance, is more flexible than Brazil in the types of investments it allows. While Chinese investors have set up new companies and projects in Peru that are fully Chinese owned, or obtained majority shares of local companies, Chinese investors in Brazil have typically had to partner with local companies. As a result Chinese investors in Brazil have inherited the sustainability agendas of local companies, which are relatively well developed because of tougher legislation and enforcement and greater external pressures to be sustainable and accountable.

"While Chinese companies have often been accused of performing worse in terms of sustainability than their foreign and domestic counterparts, evidence for this is far from conclusive," says Blackmore.

"Chinese investors face steep learning curves with respect to local practices and the contexts in which they are operating – both cultural and regulatory. But they are showing signs of increased recognition of the importance of sustainability in informing investment decisions and in building long-term relationships and China’s reputation in the region. The key test will be putting these good intentions into practice."

Download the report Sustainability standards in China-Latin America trade and investment

How extractive industries can address conflict and build trust with communities

mike.shanahan@iied.org (Mike Shanahan) — Thu, 25 Apr 2013 08:04:11 +0100

Giant mining, timber, and oil and gas projects provide lessons in how companies can act to address conflict and build trust in communities their activities affect, according to a new book from the International Institute for Environment and Development.

This matters because there are many places, particularly in the developing world, where communities cannot rely upon legal channels to address their grievances about companies’ social and environmental impacts. The work of the UN Special Representative on Business and Human Rights, Professor John Ruggie, has increased awareness about the potential of company-community grievance mechanisms to help fill gaps left by weak legal systems.

"Leading oil and gas, mining and forestry companies are starting to establish their own formal mechanisms to address and resolve local citizens’ grievances," says co-author Dr Emma Wilson. "Grievance mechanisms provide a channel for communities to identify concerns and for companies to address these concerns before they escalate. As part of an effective overall strategy to engage with communities, these mechanisms can help companies to build trust with stakeholders, reduce operational risks and enhance the way they manage project impacts and community relations."

The book includes research from Africa, Asia, the Russian Far East and Azerbaijan that provides insights into how different grievance mechanisms are designed and what affected communities think about them.

The report's case studies include grievance mechanisms used:

by BP Azerbaijan for the 1768km Baku-Tbilisi-Ceyhan pipeline;
in 1.4 million hectares of timber concessions run by Congalaise Industrielle des Bois in the Republic of Congo;
in Sakhalin Energy’s ‘Sakhalin-2’ offshore oil and gas project in the Russian Far East;
by Anglo American across its global operations;
by TVIRD in mining projects in the Philippines; and
by Kaltim Prima Coal in Indonesia.

"It is important that companies resolve grievances in a systematic way and that they have local staff on the ground who can engage appropriately and sensitively with communities," says co-author Emma Blackmore. "Companies can make use of the traditional approaches that local communities already use to make decisions and settle disputes. They can also support activities that build the capacity of government officials and communities to take part in a more informed and meaningful way. This book highlights some examples of how this has been done, and some of the challenges of such approaches."

David Vermijs, independent advisor on business and human rights and the author of one of the chapters in the book writes: "A grievance mechanism is not just a mechanical process or a tool, but requires a change in corporate culture: a fundamental shift in how the company deals with conflict and stakeholder engagement."

Writing in the book’s foreword, Caroline Rees, CCEO of Shift, who has worked closely with Professor Ruggie, says:

"This book makes an important contribution by bringing to light a range of powerful case studies of how companies, often with communities, have built grievance mechanisms that have both enjoyed a good measure of success and offered important lessons. The cases convey varying perspectives on the mechanisms they review, including the crucial perspectives of affected communities themselves. Together, they offer valuable insights into the considerable challenges, and the equally considerable benefits, of effective company-community grievance mechanisms."

Download the book Dispute or Dialogue? Community perspectives on company-led grievance mechanisms

Shaping Sustainable markets

nick.turner@iied.org (nickt) — Fri, 19 Apr 2013 17:00:00 +0100

Shaping Sustainable Markets is a research initiative that explores how the formal and informal rules used to govern markets – called market governance mechanisms (MGMs) – are designed, and how they impact on people, the planet and the economy.

Examples of MGMs include Fairtrade certification and payments for ecosystem services, but there are many others, including market-based instruments and innovative laws and policies. These mechanisms are not equally effective. Through research we identify which mechanisms are working well, and which are not, and we offer lessons on how their design and implementation might be improved. This information is shared on the Shaping Sustainable Markets (SSM) website, the flagship research initiative of the Sustainable Markets group at IIED.

What we do

While all market governance mechanisms — from carbon labelling to diamond certification — aim to improve the contribution of markets to sustainable development, they can have unintended consequences. Carbon labelling, for example, because of the way in which its measurement system is designed, can inadvertently discriminate against small producers in developing countries – and thereby exacerbate poverty. We shed light on whether these mechanisms meet their aims and any unforeseen impacts they might have.

analyse a wide range of mechanisms to explore their impact on sustainable development
assess both the individual and combined impact of these mechanisms and
generate ideas of innovative mechanisms that have yet to be tested in the real world – providing new ideas for 'shaping' markets.

Our ultimate objective is to improve how market governance mechanisms are designed.

Over time we hope to build a set of principles to guide policymakers in designing and implementing effective mechanisms.

Whether you are a business professional, policymaker or researcher, our results will help you in your work.

How we do it

We analyse existing literature and carry out primary research to assess the impacts of a range of mechanisms on sustainable development. What impact do these mechanisms have on society, the environment and the economy? Do they help to alleviate poverty and maintain or enhance the environment?

We also question how these mechanisms are designed and implemented. Are they effective, efficient and equitable? And how does their design and implementation shape their impact on sustainable development? This will involve qualitative analysis using a set of questions we have developed ourselves.

We build on existing research to avoid replicating work, and aim to fill knowledge gaps where possible.

We’ve already carried out research into ISO 26000, collective trademarks, mechanisms that can be used to address the climate change impacts of agriculture, payments for ecosystem services and investment principles. Our latest research – carried out in partnership with Oxfam – explores the policies that can be used to tip agricultural investments and markets in favour of small-scale farmers.

Find out more and get involved

Browse our database of mechanisms to explore which mechanisms are being applied to address specific issues in particular sectors or geographical regions, or visit our library to read our latest publications.

Interested in joining a forum for sharing knowledge, experience and practice relating to the use, design and implementation of market governance mechanisms? Join our community of practice. Or submit research to be published under the Shaping Sustainable Markets series. Sign up to our newsletter to get our latest news.

Want to find out more? Contact Emma Blackmore, IIED

Four actions to reduce the ‘forest footprint’ of commodities

simon.milledge@iied.org (Simon Milledge) — Mon, 18 Mar 2013 14:08:30 +0000

Consumer demand for palm oil is growing fast. It ends up in food products, cosmetics and biodiesel, with demand set to double by 2030. With this expansion leading to large-scale deforestation, how do we reduce the forest footprint of commodities like palm oil, and increase demand for ‘deforestation-free’ ones?

There are a number of measures available to reduce deforestation and limit the forest footprint of commodities. Some of these include: legislation to restrict illegally-sourced imports, improving private sector supply chains, including voluntary moratoria on sourcing products from, for example, natural forests, and consumer-directed campaigns, such as when Greenpeace targeted toymaker Mattel over its use of cardboard made by a company known to destroy Indonesian rainforests.

Another is multi-stakeholder commodity “roundtables” that set standards and certification schemes for sustainably produced products. A key challenge to enacting all these measures is market demand. For example, while over 15% of palm oil globally is reportedly certified by the Roundtable on Sustainable Palm Oil, with certified sustainable palm oil increasing by 70% in volume between 2011 and February 2013, less than half is sold at a premium price. This reduces the incentives for producers to run more sustainable farms or forest enterprises. Meanwhile, the cost for participation in certification schemes and demand for producers to provide constant supplies of sufficient quality and volumes, can act as a barrier for smallholders. Below I’ve outlined what I think are four actions needed to reduce the ‘forest footprint’ of commodities.

1. Reduce costs to help boost demand for sustainably-produced products

Achieving cost savings is central to stimulating greater demand for deforestation-free commodities, such as palm oil. In general, markets appear unwilling to pay the price premium associated with implementing certification schemes, resulting in a much smaller market share and confinement to niche markets. To date, voluntary standards and certification schemes with global reach have achieved less than 1% to 15% market share.

That’s why there is a fundamental need to review entire commodity supply chains and identify options for cost savings, while not compromising social and environmental integrity. While progress may have been made in improving the efficiency of business operations and reducing the upfront costs of certification, there may be unexplored opportunities to reduce the costs that growers, producers and traders face to obtain finance through preferential terms attached to loans and capital or to receive fiscal incentives (such as tax concessions and subsidies)

2. Better support to sustainable commodity suppliers

Addressing demand is, of course, just one part of the armoury in halting deforestation. Equally important are initiatives to support the sustainable ‘supply’ of forest and agricultural commodities within any given landscape.

Boosting demand for sustainable palm oil products is inter-linked with supply side initiatives. For example, growers and producers will only invest in changes necessary to adhere to certain standards and increase traceability within their supply chains if they can see long-term financial gains for their hard work. From a grower perspective, this may mean that they need to see sustained demand for sustainable products and begin to see the trickle down financial benefits from price premiums.

Companies further down supply chains need to act more as partners with those in their supply chains, helping their suppliers to deliver certified, sustainable products. This inevitably means working more with trade associations and smallholder groups, and developing their capacity along the way.

3. Understand and engage with emerging markets

Asian markets are increasingly driving global demands for products, such as palm oil and timber, while land availability in Africa is driving investment in production. Moreover, domestic and intra-regional markets are driving trade dynamics in these emerging economies and less-developed countries, and targeted efforts are required to support locally controlled, forest-based enterprises.

Understanding these dynamic global trade patterns and supply chains and better engaging emerging markets are the greatest challenges to overcome when considering how to reduce commodity-driven deforestation.

We need to move fast to catch up to this changing situation as many existing measures were originally developed to fit the major consumer centres and corporations within Europe and North America.

4. Frame sustainability as an opportunity

‘Sustainability’ has an image problem. When people hear the word they think about risks and money; it’s generally interpreted as involving a set of risks that require social and environmental safeguards, whose implementation inevitably results in increased costs. This discourse needs to shift from risks to opportunities if we want to provide people with incentives to engage.

Definitions of sustainability generally depend on who is ‘selling’ the idea of sustainability – and to whom. Consumers, investors, businesses and producers all have their own interpretations, resulting in a mixed set of expectations from measures that address demand. We need to develop and test frameworks for measuring sustainability that are acceptable to all the different actors engaged in measures to increase demand in deforestation-free commodities. Framing the discourse on security of supply, markets and tenure may be one route forward, providing proxy indicators of sustainability, such as long-term production, economic viability and social protection respectively.

But money talks and we still have a long way to go to make the business case for avoiding deforestation, as many speakers at a recent meeting of forestry and trade specialists organised by IIED, the Carbon Disclosure Project, and The Prince's Rainforests Project pointed out.

IIED shines a light on small-scale mining

mike.shanahan@iied.org (Mike Shanahan) — Tue, 5 Mar 2013 08:22:54 +0000

Small-scale and artisanal mining — a sector that governments and development agencies often see as only as a problem — could be a source of sustainable livelihoods for millions of marginalised people, say researchers at the International Institute for Environment and Development.

Today they have launched a report that identifies the serious knowledge gaps in the sector and sets out options for a major new IIED project-in-the-making. This project will aim to help policymakers ensure small-scale mining meets its potential to improve lives and take better care of local environments.

It will do this by connecting stakeholders, including miners and their communities, and ensuring that better quality information is generated and used effectively in policymaking at local, corporate, national and international levels.

"Small-scale and artisanal mines can be a force for good just as small-scale forestry and agriculture are – but right now they operate in a hidden world," says Sarah Best of IIED. "We want to identify ways to overcome the challenges — in information, investment and institutions — that prevent small-scale mining from realising its potential to contribute to sustainable development."

The sector is a paradox — productive but undervalued, conspicuous yet overlooked, and 'small-scale' but economically and socially significant. It produces about 85 per cent of the world’s gemstones and 20-25 per cent of all gold. Its mines provide jobs and income for 20-30 million of the world’s poorest people and support the livelihoods of five times that number.

Overall, artisanal and small-scale mining (ASM) employs ten times more people than large-scale mining. But it takes place in very remote areas, usually involves poor and vulnerable people, — including women and children — and is renowned for severe pollution and harsh working conditions.

Despite all of this, development agencies and national authorities have historically given little attention to the sector and how to make it sustainable, instead focusing on large scale mining. Rather than supporting small-scale mining, governments’ policies are often poorly designed or implemented, or even repressive. The miners themselves lack access to the rights, financial services, market information and technology they need to make this is a prosperous economic activity with reduced environmental impacts. As a result, many are often driven to operate illegally – and it is this illegality that has biased attitudes about the whole ASM sector.

Donors often ignore small-scale and artisanal mining, perceiving activities such as small scale agriculture and forestry to be more ‘positive’ livelihoods for the poor. Large-scale mining companies often only engage with the small-scale sector in cases of conflict over land and resources.

The report shows that, while there is good hands-on experience and innovation on-the-ground — for instance, with some governments adopting more inclusive policies and with the beginnings of ethical sourcing — these are often not widely known about, or face huge implementation challenges which stall progress.

"Governments, development agencies and the private sector have tended to overlook small-scale mining, seeing it as a source of problems or something that should not exist," says Abbi Buxton of IIED. "This neglect has to end, particularly as the demand for mineral resources continues to grow."

IIED's new programme of work follows earlier work on mining. In 2000-2002, the institute ran the 'Mining Minerals and Sustainable Development' (MMSD) project, a major review that gathered evidence and engaged stakeholders around the question of ‘how can mining and minerals best contribute to the global transition to sustainable development?’

In 2012, IIED published a ten year review to assess progress and identify the way ahead (see MMSD+10: Reflecting on a decade of mining and sustainable development). ASM was identified as an area where little progress has been made over the past decade. This new programme will seek to address some of the underlying and ongoing challenges to ensure progress over the next ten years.

It will overcome weaknesses in the way that knowledge is gathered and influences policy, such as the lack of information from artisanal or small-scale mining communities, and limited coordination between sector stakeholders. It will promote dialogue, learning and leadership at national and international levels and find practical solutions to sector-wide challenges, such as child labour, health hazards, informality, human rights, pollution, and transparency in supply chains. And it will embrace diverse collaborations at national and international level.

The new report presents several programme options that IIED has identified following initial consultations with ASM sector stakeholders. The institute now welcomes responses to these options and expressions of interest in collaboration.

Download the report (available from 5 March)

Reflections on ten years of rating big brands for sustainability

bill.vorley@iied.org (Bill Vorley) — Wed, 27 Feb 2013 12:46:57 +0000

Scorecards that rate big brands according to their social and environmental policies can help shine a light on hidden corners of global supply chains that customers and investors rarely see. But their proof is in impacts on people and planet.

An important new rating system comes from Oxfam. On 26 February, it launched “Behind the Brands”, a report and a scorecard, which benchmarks ten leading food and drink brands for sustainability and justice. It scores the brands under seven themes -- land, women, farmers, workers, climate, transparency and water -- and calculates each score according to four measures: company awareness, knowledge, commitments, and supply chain management.

Commenting that global supply chains “should provide everyone with an opportunity to escape poverty and hunger, and cannot allow the few to profit at the expense of the many” Oxfam makes ten big asks of the big brands. They call for companies to take responsibility and get informed, and to take action over smallholder farmers, labour standards, water, land grabs, and greenhouse gas reporting. Oxfam also calls on governments to do their part.

The report does a great job of highlighting the links between corporate policies and the hidden elements of their supply chains, such as the exploitation of farm workers, and grabs on land and water resources.

The big surprise is the company sitting at the top of the league table. It’s Nestlé, the bête noire of campaigners since the early 1980s, with a score of 54 per cent. After Nestlé come Unilever, Coca-Cola and Pepsico. Languishing at the bottom are General Mills, Kellogg’s, and Associated British Foods.

Such a topsy-turvy table shows how far some companies have travelled since the days of intense ‘food fights’ of the 1990s, when they found themselves on the back foot with very little in their armoury -- except some pretty unsophisticated and defensive PR – with which to respond to NGO campaigns.

But it also partly demonstrates the limitations of league tables that measure policy rather than impact. IIED faced similar challenges a decade ago when we coordinated an effort to benchmark the top UK retailers, with the Race to the Top (RTTT) project

At that time, it was perhaps the most ambitious attempt yet to drive increased transparency in the supermarket sector. A wide alliance of civil society organisations agreed on a mechanism by which they could rate supermarkets according to their impacts – on the environment, on workers and communities and animals, both directly and within their supply chains.

While that initiative ultimately failed in its ambitions to drive transparency across the sector, the involved parties took home some important lessons (see the final report [PDF]), many of which are still valid today.

First, companies need this kind of external pressure but they also need room to innovate. Getting the right combination of carrot versus stick, of naming and shaming versus engagement, and of fixed indicators versus flexibility for innovation is a tricky thing for the watchdogs like RTTT and Oxfam to do.

Second, efforts to measure performance that rely only on policies and company statements have their limits. They can result in measures of what companies aspire to, rather than of observable change, for example in the health of trading relations, or the welfare of workers.

There are ways to measure impact, but they are mostly costly and highly labour intensive. In RTTT we worked with Kent Business School to develop a survey tool to measure the fairness and justice of trading relationships. We supplemented company data with independent external surveys, such as store surveys for local food, or surveys of supermarket suppliers. These tools have since been improved and adapted for wider application (see Measuring fairness in supply chain trading relationships: A methodology guide and Survey Instruments).

One last thing. Many of the indicators in both the Oxfam and RTTT scorecards measured what companies had asked or demanded of others -- their suppliers -- rather than what they were doing themselves. This use of the power of big brands to drive ‘sustainability’ in supply chains can be a double-edged sword. It not only offer potential shortcuts and access to positive change, but also creates a mechanism for companies to pass responsibility on to other, often less powerful, actors. It allows companies to push social and environmental requirements up the supply chain to suppliers and farmers, along with any associated costs.

Much has happened in the ten years between ‘Race to the Top’ and ‘Behind the Brands’. The level of corporate reporting and transparency of many big food brands is in a different league. There is much more constructive engagement between companies and NGOs around environment and development issues.

But in the continued absence of government leadership and a reliance on self-regulation, the fact is that we still need people who can look behind these powerful brands, and see if they’re all they appear to be.

Bill Vorley is a principal researcher in IIED's Sustainable Markets Group.

Forest businesses 'fit for life'

duncan.macqueen@iied.org (Duncan Macqueen) — Mon, 18 Feb 2013 22:14:18 +0000

Those designing forests businesses that are ‘fit for life’ won’t be taking any inspiration from Doha airport, says one weary blogger.

Doha airport at 3am is one of my least favourite places — a soulless, crowded tomb, unfit for purpose where corporate design is at its least humane.

Flights arrive near midnight, spewing sleep-deprived passengers into a directionless white oven of jewellery, perfume and Starbucks outlets. No shops sell travel essentials or even healthy food. A dismal central crèche distributes screams from critically-bored children as far as possible and an endless clang of announcements wakes you to say ‘Doha is a silent airport – please consult the signs for flight information’.

Those signs flip the hundreds of departures from Arabic to English in just the time it takes to find a flight number. Travellers wait, butt-tired from seats with no headrests (just hard plastic dividers to ensure no-one lies down). And when you do finally board, none of the gates have a walkway to the airplanes — those seem to land somewhere else entirely.

Forest connection

Sitting there, however, did give time to reflect on the third Forest Connect meeting, held in Nepal (12-15 February 2013). Nepal is a world leader in community forestry, with roughly 18,000 groups established across 1.8 million hectares and involving 40% of the country’s population. Turning this impressive feat of community organisation into profitable and sustainable businesses is the current challenge.

To share learning on where to spend scarce resources, 18 country teams that support small forest enterprises gathered in Kathmandu. The new Forest and Farm Facility and several other new institutional players also joined the Forest Connect alliance during the meeting.

We kicked off with reports from Brazil, Burkina Faso, Cambodia, Democratic Republic of Congo, Ethiopia, Mexico, Tanzania and Vietnam as well as Nepal. Each had screened multiple small forest enterprise sub-sectors for market prospects and the numerous outcomes the world needs to see from its business models: income generation, gender equity, food security, energy security, climate change mitigation and adaptation, biodiversity conservation and soil conservation without excessive nitrification.

The task was to devise what the Doha Airport designers had so manifestly failed to produce: a business model ‘fit for life’.

To survive on Earth we will clearly need to negotiate fairer greener business priorities and models that meet some basic pre-conditions for involving the poor (for whom survival is a pressing current problem, not a future climate-related one).

Priorities

Inevitably, countries’ environmental, social and market contexts led them to different business priorities. Nevertheless, Forest Connect partners united in prioritising portfolios of integrated, intensified and climate-smart forest and farm products – mixing short term agricultural cash crops, often in agroforestry systems, with longer term options such as timber.

For example, the Nepal team from the Asia Network for Sustainable Agriculture and Bioresources (ANSAB) ranked ecosystem-based agricultural cash crops first, alongside biomass energy briquette production. But they also planned a range of other products from highland coffee, tea, ginger, fruit and medicinal plants to longer term timber options.

The Tanzanian team stressed the need for mixing higher return options, such as timber / fuel wood production from woodlots, with lower return options offering much higher social and environmental gains — such as fertilizer trees and indigenous fruit trees.

A mix of short and long term suits farmers’ cash flow needs. Mixing high return cash crops and lower return social or environmental options suits their broader environmental and social needs. And a diverse portfolio suits farmers' cautious attitude to risk (which climate change reinforces).

Business models

A two day field trip showcased profitable and well-organised community business models, ranging from FSC certified hand-made Lotka Paper and essential oils to packaged charcoal briquettes made from waste-wood (both with community owned market outlets in Kathmandu). All had impressive models of shareholding ownership, structured value chains under local community control, and transparent labour and wage structures. Each was pursuing several income-generating business options simultaneously.

It was agreed that country teams would do more to share their knowledge of business models that work in such complicated situations: where collective decision-making, multiple market links across a product portfolio, and benefit-sharing combine.

Preconditions

Our final day’s discussion reaffirmed the four preconditions for successful business models. Peter deMarsh, of the International Family Forest Alliance, summarised these beautifully as questions that forest farmers ask of any new crop:

“If I plant this, will I have the right to sell it? (Precondition 1 – secure tenure);
“If I plant this, will I be able to sell it for a reasonable price? (Precondition 2 – fair market acess);
“If I plant this will I be able to manage it and protect it against pests and diseases?” (Precondition 3 – technical and extension support); and finally
“If I plant this, will any association that I am able to join be able to defend the three prior preconditions?” (Precondition 4 – freedom of association).

Sharing these preconditions, models and approaches may yet help to develop spaces in which both the human soul and the environment flourish – just don’t look to Doha airport for the answers.

Share the love this Valentine’s day with fairer flowers and chocolates

suzanne.fisher@iied.org (Suzanne Fisher) — Wed, 13 Feb 2013 10:41:46 +0000

It’s that time of year when lovers search about for meaningful Valentine’s Day gifts. Fluffy teddy bears that we would never even consider buying start to look like plausible gift options as the 14^th draws ever closer and we begin to panic.

While some opt for affordable and different gifts (and then ask for guidance as they struggle to find one that fits the bill) many of us go for the safer options: flowers or a box of chocolates.

Here’s a step by step guide to the issues so you can both impress your lover with lovely blooms or choccies and your new-found knowledge on how to share the love more widely.

Fair miles: Flowers and the air miles debate

There’s been a lot of coverage in the media about the environmental benefits of buying food grown locally. But it turns it isn’t always the most environmentally-friendly choice.

A study cited here suggests that because so much energy is needed to heat greenhouses in winter in our colder climate, ‘buying local’ is not always better. For example, British-grown strawberries and tomatoes created more greenhouses gas emissions than ones grown in Spain.

Spread the love globally: Buy flowers that benefit smallholder farmers

Not only is buying from overseas often the most environmentally-friendly choice. Buying flowers grown in Africa can also mean the difference between a family simply surviving or thriving.

But not all flowers bought from Africa benefit smallholder farmers. In agriculture, supply chains operate in global marketplaces where there is growing competition for raw materials, and where the way the industry is structured can make it difficult for small-scale producers to have direct contact with retailers.

IIED has been working with a commercial team and a small Kenyan flower business, Wilmar Agro Ltd, to export flowers grown by smallholder Kenyan farmers to UK and US supermarkets. Read a day in the life of a commercial consultant, William Van Bragt, who has helped Wilmar Agro Ltd develop and manage a commercially-viable and sustainable supply chain and build a network of contacts and links with other businesses.

The bouquets Van Bragt is helping to get onto the supermarket shelves will carry the Rainforest Alliance Certification seal, which means that 70% of flowers in the bouquet need to be from certified Smallholder Farmers.

Like all things in life, while certification schemes can provide producers with benefits – they are no panacea for poor producers as an IIED report looking at food and cotton certification schemes in Asia showed.

The report found that while Fairtrade certification can act as an important safety net by guaranteeing minimum prices for poor farmers, in some cases the share of retail prices that goes to Fairtrade producers is less than for conventional products. Developing long-term relationships with buyers to secure potentially better returns and greater negotiating power in schemes are some of the key benefits to be gained.

Another recent study examining the impact Fairtrade had on rural development in the following sectors found Kenyan Fairtrade flower plantations fared better than non-Fairtrade farms in areas such as health and safety, access to micro credit, education and training, gender relations and community development. For example, female workers on Fairtrade-certified flower farms enjoyed three months of maternity leave plus one month annual leave, while workers on non-Fairtrade farms didn’t. And a credit scheme (financed with Fairtrade premium money) gave workers access to loans at favourable conditions. But these benefits varied depending on the region and on the Fairtrade products being produced.

362 million stems of Fairtrade flowers are sold globally each year. In the UK alone, they account for only 1% of the total UK flower market, but still generate an estimated £26.5 million in retail sales.

Choccies please

And what about those chocolates? Because cocoa farmers are generally quite poor and their farms aren’t very productive, unsurprisingly their children often decide to leave the farm for better lives elsewhere. This is clearly unsustainable both for the farmers and the chocoloate manufacturers. And that’s why many key manufacturers such as Hershey, Mars Incorporated and Uniliver are committing to sourcing their cocoa from certified sources.

More than half the world’s cocoa is grown in the west African countries of Côte d’Ivoire (40%) and Ghana (25%). An independent survey, which is cited in this blog, found that Rainforest Alliance certified farms in Côte d'Ivoire “registered as much as 70% more productivity than a control group of non-certified farms”. Where are those improved earnings coming from? Improved farm management.

A New Business Models for Sustainable trade project written about in this IIED report, is helping us better understand how market systems and supply chains can be coupled with training and services to help farmers run more sustainable and profitable businesses long term.

So, what’s the upshot? Like all things, the picture is more complex than a one line gift card. But by doing your research and buying certified flowers or chocolates you will be sharing the love at home and overseas.

And if you do opt for flowers, care for them and they’ll last longer. Change the water every day and rinse and recut the stems to keep those flowers – and your Valentine – happy.

Getting serious Valentine? Read our report on the ethical flower agents creating new market opportunities for Kenyan flower suppliers, negotiating the terms of supply, and pushing for flexibility with UK retailers. Or read our report on scaling up farmer participation in West Africa to reverse declining yields and falling supplies of cocoa.

SOKO: Learning lessons on how to add value to the East African apparel sector

info@iied.org (Guest Author) — Mon, 11 Feb 2013 12:43:39 +0000

It’s February, and in the fashion world that means that glitzy, glamorous fashionistas will soon be grabbing their Mulberry handbags and tottering on stilletos off to London Fashion Week, the catwalk trade show that started out nearly 30 years ago showcasing established and emerging designers alongside those of New York, Milan and Paris.

This year, London Fashion Week will coincide with the Source Awards, an accolade recently launched by the Ethical Fashion Forum, an online community for ethical fashion businesses. The Ethical Fashion Forum is set to transform fashion by making it easier for fashion businesses and the developing world to mainstream social and environmental best practices through their supply chains and transform livelihoods for workers in Africa.

The aim is to take compliance codes (such as those developed by the Ethical Trade Initiative which regulates practices around working conditions, living wages, etc) and go one step further. The Source Awards recognise the adoption of ethical innovations in say, recycling or the use of organic cotton, into something beneficial for managing a businesses’ bottom line in an environmentally and socially-conscious way. For example, Mantisworld, a global business based in Tanzania which produces 600,000 units a year for international markets, guarantees the organic status of its textiles from the harvesting of raw cotton to the dispatch of the finished garments. ECOMACO from Japan, uses eco-materials (natural materials such as inedible corn and sugar cane, cotton, bamboo and Japanese paper) and local traditional sewing methods to make garments that retail at a cost in line with other designer products.

This IIED briefing paper, Knowledge networks: Adding value to the East African apparel sector, looks at SOKO, which was this year’s winner of the Africa Award, to learn some lessons about how to integrate with global networks, develop local capacity and grow a viable business. Set up in 2009 and based in Ukunda, Kenya, SOKO is a clothing workshop that creates employment and training to some of Kenya’s poorest people. SOKO also produces clothes for one of the biggest online fashion companies in the world, ASOS, for their ASOS Africa and The Green Room collections. While harsh high street trading conditions saw off HMV and Comet stores, ASOS is one of the few UK retailers that saw strong sales in 2012.

Not only does SOKO make clothes and provide employment, it is also growing day by day – growing from 4 tailors to a team of 25 since it started out – and supplying international markets. Watch this video to find out more about SOKO.

How does it do it?

This paper found that SOKO managed this impressive feat in a few ways. It mobilised its ‘friends’ network to get itself started. SOKO’s founder, Joanna Maiden activated her professional and personal networks to get resources, information and support on various things; such as starting out, registering the business, finding a suitable location, sourcing the right components and hiring a team of Kenyan machinists. Joanna’s network is a web of people and institutions, formal ones, such as industry experts, business support organisations and international trade institutions as well as informal ones, such as friends, family, community leaders and university networks.

The research also found another key feature for success: the ‘ethical agent’. Ei8ht, an intermediary and project management organisation skilled in managing the supplier-buyer relationship for fashion, absorbed some of the pressure inherent in these types of relationships and provided key technical expertise in managing the supply chain for ASOS.

Finally, the research also found that Joanna herself has been the ultimate driver of the success of the business. Joanna is a ‘social entrepreneur’ and has the personality traits and character required to keep the business model developing. Her background in PR, marketing and fashion gave her the wealth of connections needed and the innate knowledge and understanding of what is needed to make a good fashion business. Being market-led and consumer-orientated is the true backbone of any successful fashion company.

Why is this important?

Working in Africa has received a lot of attention recently. A World Bank blog recently asked: has Africa outgrown aid? It suggested that “...aid will be increasingly about transferring knowledge rather than money ... know-how and skills will be the name of the game”.

What does this mean for apparel? Well, for SOKO, this meant understanding the importance of using professional and personal networks for starting up a business and for building up in-house ‘knowledge’ in core competencies and skills, especially in inculcating a good understanding of what is fashionable, how to produce a fashion product, and how think like a fashion buyer.

Where does this take us? Is it possible to replicate SOKO’s model of networks and ethical agents elsewhere? Can we engage investment to actively create both the technical and commercial competences required?

Let me know your thoughts.

Read Knowledge networks: Adding value to the East African apparel sector

This paper is part of our Linking World series which aims to identify how organisations and networks can participate in formal markets by looking at successful innovations that link small-scale with large-scale markets and enterprises. The first paper in this series, looks at innovations in business models for delivering affordable and sustainable modern energy services to the poor.

Anoushka Boodhna is a value chain practitioner living in Kenya working with a social enterprise that supports smallholder horticulture farmers. Originally from the UK, Anoushka’s ‘past life’ was with an international fashion brand managing franchise partners in the Middle East. Since 2008, she has been working with smallholder producers and microenterprises in Africa and Latin America.

Resilient Dynamism? An informal word with leaders meeting in Davos

bill.vorley@iied.org (Bill Vorley) — Tue, 22 Jan 2013 21:18:15 +0000

This week political and business leaders gather in Davos to discuss ‘resilient dynamism’, but their distrust of informal economies is a missed opportunity.

This year’s World Economic Forum in Davos has Resilient Dynamism [pdf] as its watchword. The focus will be on growth that can withstand shocks and sustain, among other things, “affordable supplies of critical natural resources.” Five years of volatile food, mineral, and energy prices have added to the sense of urgency among business leaders and politicians to build more resilient economies.

But how will they measure resilience? This year the Forum’s own Global Competitiveness Report proposes to factor in social and environmental measures and come up with figures of “sustainable competitiveness”.

Keeping it formal

The report says one indicator of vulnerability is a big informal economy and that integrating the workforce into official structures makes an economy better able to withstand shocks. So the authors demote countries with large informal economies, such as Mexico or Turkey, in their league table.

But before the leaders meeting at Davos accept that formality = resilience and that informality = vulnerability, they should reflect on how informal economies ensure those “sustainable and affordable supplies of critical natural resources”.

Informal can be responsive, resilient and effective

In most developing and emerging economies, informal markets dominate, show considerable resilience—and are continuing to grow. Entrepreneurial attitudes are often most dynamic here, outpacing the formal sector when responding to new opportunities. Journalist and author Robert Neuwirth observes that the informal economy has evolved into the “economy of aspiration”.

Informal trade’s resilience has much to do with its benefits — for both producers and consumers. For example, research led by the International Livestock Research Institute found that on average 93% of milk produced and sold in eastern African countries came from small-scale producers. And where crop and livestock agriculture is managing to feed rapidly growing urban populations it is usually down to networks of informal trade, not large scale agribusiness.

So why is informal considered vulnerable? Actually, we know very little about formal and informal markets’ comparative resilience to economic, political and environmental shocks. But we can certainly question whether formal markets and value chains — as espoused by so many development agencies — can provide the “resilient dynamism” that Davos leaders seek.

Value from the middlemen

Modern value chains often take out the ‘middleman’, and that can reduce resilience. By paying in cash, accepting small volumes, and being close to producers and consumers, those much-reviled traders provide essential services and take a lot of volatility out of markets.

The informal mining and mineral sector tells a similar but more complex story. Most of the 20–30 million artisanal and small scale miners in the world operate informally and are viewed as a problem rather than a source of resilience. But artisanal and small-scale mining both drives and responds to vulnerability. Over 20% of the world’s gold is mined artisanally by poor and marginalised people, attracted because there are few barriers to starting up such mining, and because gold can be traded for food and shelter. Working conditions are dangerous and exploitation exposes miners to extreme risks, yet even here middlemen can provide social protection that the government can’t — or won’t — provide. Many initiatives have tried but failed to formalise artisanal and small-scale mining, usually because they failed to understand how the sector works for artisanal miners themselves.

Informal markets need formal recognition

Rather than declaring war on informality, governments should, where feasible, be working with it. Yes, it may need some formalisation to be safer, more efficient, and better governed. But governments and local authorities can help modernisation without regulating informal producers out of their markets.

A first step would be recognising informal sectors in legislation. Those in informal markets can associate, to defend their rights, build legitimacy and change others’ perceptions of them: from subversive criminals to entrepreneurs who provides employment and (unlike many in the middle classes) reinvest in their country. There are many opportunities for helping informal producers: through capacity building and technical support, as done in the Kenyan dairy sector, and as set out in a new agreement on mercury that includes artisanal mining.

Whether smallholder farmers, artisanal miners, small traders or small and medium-sized enterprise processors, the informal sector is a huge part of the story behind economic resilience and dynamism in many developing and emerging economies. There is much that global businesses can do to play their part in inclusive and green development. But much of the dynamism and resilience that world leaders in Davos are seeking is going to be found in informal and semi-formal trade, not just partnerships with multinational corporations.

Linking Worlds: linking ‘small-scale’ producers into large and formal markets

() — Tue, 15 Jan 2013 07:53:54 +0000

Small-scale producers and low-income consumers often struggle to participate in formal markets. IIED works to identify how organisations and networks can help overcome this by looking at successful innovations in the systems that link small-scale with large-scale markets and enterprises.

Those innovations might be found in networks, intermediaries or facilitators. They may reduce poverty, offer broader livelihood benefits or ensure more sustainable natural resource use. Overall, they help tackle the marginalisation and exclusion small-scale producers and low-income consumers face in markets. Challenges like high transaction costs, difficulties in aggregating supplies and distributing goods, or power and information asymmetries between buyers and suppliers all work against small-scale operators.

We use the tools of ‘business models’ to understand how innovative links create and capture value – whether that value is economic, social or environmental.

We are sharing our findings through a series of publications. The first examines how the UN’s Sustainable Energy for All initiative might best reach the poorest of the poor.

This research on energy, together with ongoing work on textiles, payment for environmental services, agriculture and small scale mining, highlights several shared lessons:

Commonly used business model tools offer a framework for identifying ‘pro poor’ adjustments without compromising the key elements of a viable business, such as its ‘unique selling point’ or cost structure.
Private sector interventions alone often cannot reach the poorest of the poor. Even reaching those with existing business capabilities and assets may require ‘non-traditional’ business partners, such as government or non-governmental organisations, enterprise associations, social enterprises, communities and those operating in the informal sector.
Understanding socio-cultural context is important when designing business models that include the poor. It is not always possible to scale up or replicate models from one context to another.

For more information contact: Abbi Buxton

Read Abbi Buxton’s blog introducing the Linking Worlds research series

Read our blog on how to add value to the East African apparel sector

New research series kicks off with look at energy delivery models

abbi.buxton@iied.org (Abbi Buxton) — Wed, 12 Dec 2012 13:26:07 +0000

What are the barriers to engaging small-scale producers and low-income consumers, and how can private sector interventions be improved to reach the poorest?

Linking small-scale producers from developing countries into more formal (sometimes developed country) markets to sell their goods can be difficult. The same is true of making sure low-income consumers are able to buy goods – whether shampoo or electricity – that are available in more developed markets.

The dichotomy between small scale and large scale, poor and rich, informal and formal, is the issue that the International Institute for Environment and Development (IIED) is considering in our latest research series, Linking Worlds. The paper series looks across sectors – agriculture, mining, energy and textiles – at the characteristics and rationale for innovative organisational models that engage with small-scale producers or low-income consumers to achieve greater fairness and equity.

Small-scale producers and low-income consumers are often marginalised or excluded from formal or more developed markets. The normal way that the market functions, at both the macro and micro levels, is often unable to overcome high transaction costs, challenges in product aggregation and distribution, and power and information asymmetries between actors.

Popular development responses to building these links have been to reduce costs by cutting out the middlemen, to have more formalised organisational structures among the poor so they can co-operate to compete, or to achieve economies of scale in products for low-income consumers at the bottom of the pyramid.

But these approaches can fail because they do not recognise the importance of intermediaries in a chain, informal ways of trading (that may not be organised by western standards), and applying business approaches that don't consider the nuances of the local socio-cultural context.

Our new research looks at new forms of intermediation that recognise the role played by so called middlemen and the value that they add. All the papers explore the models of intermediation that can reach the poor in new ways and result in real development (and at times commercial) benefits.

The first of this series, Sustainable Energy for All? Linking poor communities to modern energy services, looks at innovations in business models for delivering affordable and sustainable modern energy services to the poor. Energy delivery models are the combination of technology, finance and management required to supply energy to users. The delivery model can be designed as an enterprise, development project or a government programme, but innovations in the key elements of the model will help ensure positive sustainable development impacts. The paper also identifies a number of lessons that are shared across the sectors:

• Business model tools common to management schools can provide a useful framework for identifying where adjustments can be made to a model (whether for profit or not) to make it pro-poor in a way that doesn't compromise the key elements of a sustainable business, such as the unique selling point of a product or the cost structure. This paper employs Osterwalder's business model canvas to map a model and key to this is identifying a value proposition that incorporates social and environmental value, as well as economic value, not only to consumers but also producers and distributors in the chain (who may also be informal).

• Private sector interventions alone often cannot reach the poorest of the poor. They may be able to reach those with certain capabilities and assets but even this may require non-traditional business partners, such as government, non-government organisations, enterprise associations, social enterprises and communities themselves. Business as usual is unlikely to reach the poor as profits margins and time frames are less attractive. Case studies show that the most effective and long term energy delivery models for the poor are designed and implemented through collaboration with non-conventional business partners. Government subsidies, for example, may be necessary to reach the poor in energy delivery, but may need to be structured in a way that demonstrates financial effectiveness in the long term to attract mainstream investors in the scaling up of activities.

• Understanding socio-cultural context is important. This may help identify new entry points for the poor and ways of capturing their dynamism and innovation in designing products and services that meet local preferences, as seen in the energy paper. Designing a model that incorporates local preferences and expectations – such as women's views on health and the commercial value of local fuel wood can be a short-term investment that ensures the long term viability of the model.

This year is the year of the United Nations' Sustainable Energy for Allinitiative. After Rio, there is an increasing emphasis not only in energy, but across all sectors, for the private sector to play a greater role in delivering development objectives. We need to think carefully, and quickly, about how private sector and/or business models are able to deliver fair and inclusive benefits to the poor through the type of innovations identified in our research series. It is only in doing this that we will be able to ensure lasting development impacts.

This was first posted on the Guardian's Sustainable Business site.

Book urges new development agenda for small-scale farming

mike.shanahan@iied.org (Mike Shanahan) — Thu, 29 Nov 2012 06:13:00 +0000

A three-year study of the ways small-scale farmers operate in Africa, Asia and Latin America has prompted calls for a major rethink of development and business interventions.

The IIED–Hivos project’s final output — published today (29 November) — shows how mainstream efforts to make markets work for poor farmers can fail to operate in tune with the ways such farmers themselves try to make their markets work.

"Contrary to the prevailing narrative, and what NGOs, policymakers and donors expect, interventions that aim to upgrade small-scale farmers into high-value, formal supply chains and modern markets tend to benefit only 2-10 per cent of farmers," says Bill Vorley, a principal researcher at the International Institute for Environment and Development (IIED) and co-author of the book.

Vorley and his co-authors point out that most small-scale farmers combine farming with other activities and trade more in informal than formal markets – and rarely through cooperatives or producer organisations that can take advantage of connections with modern markets.

The book shows that rather than being a problem that needs to be fixed, informality can provide the space for small-scale farmers’ agency, to find and build flexibility and resilience in a globalising world.

A central part of the study was managed by a network of farmer leaders, business people, researchers and civil society that spanned Central America, the Andes, East Africa, India and Indonesia. It was led from Bolivia by the Mainumby Ñakurutú Research Centre.

This learning network found that dynamic local, national and regional markets in developing nations give small-scale farmers options beyond those that high-value and modern global supply chains offer. Factors that encourage this include more buyers in the countryside looking for supply, increased trade between developing nations and a growth in urban markets.

At the same time, many small-scale farmers are modernising in their own ways. Rather than rejecting or fully joining modern, globalised markets they are combining aspects of them with informal structures, culture and traditions.

The book draws attention to a key issue: the fact that fewer young people will want to farm tomorrow. Policies and development interventions to support small-scale farmers need to fit with this changing and complex reality to get the future right regarding not only agricultural production and consumption but also youth employment.

Co-author Ethel Del Pozo-Vergnes, a senior researcher at IIED, says it would be better for governments, donors, development agencies and big business to work to understand and support the strategies small-scale farmers are already using, as the combine formal and informal ways to make markets work for them.

The report and regional reports for Asia, Africa and Latin America provide case studies of situations where this is already happening.

"Informality has its downsides," says Vorley. "But it can bring small-scale farmers great benefits – in market access, flexibility and even market power – but policies tend to ignore this potential in favour of formal structures. Shifts in policy that take account of this informality while addressing its downsides would benefit far more farmers."

Download the book

Download the Africa regional report

Download the Asia regional report

Download the Latin America regional report [not yet available]