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1、Partnering to facilitate smallholder inclusion in value chainsVERENA BITZERCopernicus Institute for Sustainable Development and Innovation, Utrecht UniversityJEROEN VAN WIJKSustainable Development Center, Maastricht School of ManagementBERT HELMSINGInstitute of Social Studies, The HagueVICTOR VAN DE
2、R LINDENSustainable Development Center, Maastricht School of ManagementPaper presented at te EADI Seminar “Promoting sustainable global value chains: the role of governance” held at the Maastricht School of Management, November 26, 20091. IntroductionIn light of the importance of agricultural activi
3、ties 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 opportun
4、ities. 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
5、 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 pr
6、oducts, 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 (Narrod et al. 2009) and agency specia
7、lization 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 rema
8、rkable breakthrough in the international development discourse.However, little is known about the partnership set-up and characteristics to advance the inclusion of smallholders in value chains. Moreover, it is not clear how partnerships deal with the institutional constraints faced by smallholders
9、and to what extent they engage in institutional change. The unclear relationship between partnerships and institutional change for smallholder inclusion is startling, considering that partnerships should be defined in terms of the tasks of institutional change that is to be achieved. In view of the
10、great diversity in the approaches used by partnerships regarding the issue of smallholder inclusion, this paper attempts to clear some of the ambiguity that surrounds the concept of partnerships in value chains. The aim of this paper is to explore the relationship between the institutional change re
11、quired for smallholder inclusion and the type of partnerships that have been set up to achieve this goal. Examining this relationship for 13 case studies from previous research conducted by the authors, this paper will advance the identification of some of the important aspects on which partnerships
12、 differ and which are required for institutional change.This paper proceeds as follows. We first elucidate the institutional constraints faced by smallholder farmers in developing countries and then sketch the emergence of partnerships as new institutional arrangements that deal with these instituti
13、onal constraints. This is followed by a literature review on partnerships to extract key themes on which partnerships differ and which commonly serve as building blocks for partnership typologies. We will operationalize some of these key elements of partnerships based on our case studies and establi
14、sh their relationship with the areas of institutional change required for smallholder inclusion. This will enable us to identify the opportunities and limitations associated with partnerships in value chains.2. Methods and case studiesThis paper forms part of the project “Value chain governance and
15、endogenous growth: How can NGOs, firms and governments achieve inclusion and poverty reduction?” of the Dutch-based Development Policy Review Network (DPRN). The aim is to build on the insights and knowledge of researchers active in the field of value chains in order to create synergies and draw new
16、 conclusions, without necessarily conducting new empirical research. Accordingly, this paper is based on a literature review which comprises literature on smallholder farmers and value chains on the one hand, and on partnerships and collaboration on the other. Furthermore, the paper makes use of pre
17、vious empirical studies conducted by the authors as listed below, which amounts to 13 different partnerships in different value chains as case studies.PaperCase studiesHelmsing, A.H.J. (2008). NGOs and Markets? Small producers and agro-exports in Peru. Draft version.Partnership in the asparagus sect
18、or in Peru (case 1)Helmsing, A.H.J. and Cartwright, A (forthcoming). Enterprise and livelihood and local economic development with a case study of the Wool Chain Initiative, Eastern Cape, South Africa. (JDAAS).Partnership in the wool chain in South Africa (case 2)Van Wijk, J., van der Linden, V. and
19、 de Boer, D. (2009). Economic Impact of NGO-Private Sector Partnerships for Value Chain Development in West Africa. Case studies of Organic fair trade mango in Burkina Faso and Mali Organic fair trade cotton-garment in Burkina Faso, and Sorghum-beer in Ghana. Draft, not for distribution. Expert Cent
20、re for Sustainable Business and Development Cooperation (ECSAD)Three partnerships in Africa: Mango sector (Burkina Faso), cotton sector (Mali), sorghum-beer chain (Ghana) (cases 3-5)Bitzer, V., Glasbergen, P. and Arts, B. (forthcoming). Partnerships in agricultural commodity chains: evidence from th
21、e coffee sector in Peru. Submitted.Six partnerships in the coffee chain in Peru (cases 6-11)Bitzer, V. and Glasbergen, P. (forthcoming). Partnerships for sustainable change in cotton: an institutional analysis of African cases. Draft version.Two partnerships in the cotton sector in Africa*This paper
22、 contains six case studies, but partly overlaps with Van Wijk et al. 2009 (see above) (cases 12-13)3. Institutional constraints faced by smallholder farmersAlthough smallholder farmers dominate much of agricultural production in developing countries and show a higher efficiency per unit of productio
23、n than larger farms (Hazell et al. 2007, Amanor 2009), smallholder farmers face a multitude of constraints that prevent them from accessing profitable market opportunities. Combined with more general problems of poor infrastructure, low education and poor health, Dorward et al. observe that there ar
24、e important technological and institutional gaps that prevent small producers from producing for and transacting in higher value markets (Dorward et al. 2005). Adopting an old-institutionalist view, Hodgson defines institutions as “durable systems of established and embedded social rules that struct
25、ure social interaction” (Hodgson 2003: 163). He distinguishes between primary, evolved and designed institutions. Primary ones are the most basic and resilient; evolved institutions have their counterpart in habits and routines; and designed institutions are the result of reflexive or deliberative a
26、ctions and policies. Consisting of regulative, normative, and cognitive structures, institutions are both constraints and prescriptions to the behaviour of individuals and organizations. They reduce uncertainty, make behaviour more predictable, and unburden social actors from continuously making str
27、ategic decisions (Goodin 1996, Offe 1996, Scott 1995). Contrary to the old institutionalist approach, new institutional economists accentuate only the behaviour-constraining aspect of institutions and speak of institutions as the rules of the game (North 1990), which reduce transaction costs and sol
28、ve problems of information asymmetry (Williamson 2000). Applied to rural areas in developing countries, the new institutional economics perspective has particularly emphasized the role of high transaction costs which lead to coordination failure and hence, market failure. This, in turn, raises trans
29、action costs and thus fuels a low level equilibrium trap, in which rural producers are caught (Dorward et al. 2003). Market failure can bear particularly heavy on smallholder producers as they face a number of constraints, including weak organization, high transaction costs and lack of information,
30、which puts them in a disadvantageous position for participating in value chains under appropriate terms. Thus, whereas market institutions appear as a neutral regulatory framework that serves all market actors in an equal way, market institutions also have normative components. They can be biased ag
31、ainst specific groups, since market institutions determine who participates in markets, the objects of exchange, the rights and obligations of the participants, as well as the rules for exchange (Chang 2002). Worldwide, business environments tend to be less favourable for small enterprises, especial
32、ly in developing countries (Schiffer, Weder 2001). To approach the institutional constraints faced by smallholder farmers in developing countries, we have identified the following four domains to be most important: 1. Access to technology. Agro-food chains have experienced rapid change over recent y
33、ears and demands on suppliers have risen substantially. Technological and managerial innovations are required to link up with (global) value chains and comply with transforming consumer preferences as well as public and private regulations. However, smallholders often have little idea of the quality
34、 standards they must meet, or they lack the knowledge and technology required to meet such standards. More generally, they lack knowledge and skills in modern production and management techniques. This situation is aggravated by lacking or poor information systems in developing countries, including
35、agricultural extension services. Following liberalization and privatization policies, information and extension services were drastically reduced by governmental agencies, while new systems by the private sector have not been able to replace the role and tasks previously fulfilled by the state. 2. A
36、ccess to capital. An important barrier that prevents smallholders from being included in value chains is the limited access to finance. On the one hand, this is a problem of limited offer due to the reduction in rural credit over the last two decades in developing countries. On the other hand, this
37、is a structural problem as smallholders are unable to borrow or only at excessively high interest rates. Farmers are often not considered to be credit worthy because they lack collateral, do not command an ensured income, and have the reputation of behaving opportunistically when it comes to contrac
38、t compliance. In addition to working capital, farmers also lack access to other financial services, including investment capital, alternative collaterals and risk management.3. Access to markets. One of the major impediments for farmers in developing countries is the absence of markets that absorb s
39、urpluses in regions where the majority of the population is engaged in farming. Any surplus of a locally produced crop therefore results in a collapsing local market price, which is a disincentive for designing longer term upgrading strategies (van Huis et al. 2007). At the same time, when markets a
40、re not accessible, smallholder farmers capture little of the value that they create and distribution costs for rurally produced goods are very high (Gulati et al. 2007). 4. Access to farmer organization. Due to their size, small producers cannot benefit from economies of scale that would help to red
41、uce production and/or transaction costs. One way of circumventing the problem of scale diseconomies is by enabling collective action in the form of producer organizations. By now there is increasing evidence that producer organizations allow smallholder farmers to participate in markets more effecti
42、vely (Markelova et al. 2009). Amongst others, producer organizations can improve the position of smallholder farmers by reducing transaction costs of accessing inputs and marketing, and obtaining access to information, technology and credit opportunities. This enables smallholders to compete with la
43、rger producers and improve their bargaining power vis-vis larger buyers. However, in situations of policy biases favouring larger farmers and failure to provide rural infrastructure, collective action alone cannot correct market failure (The World Bank 2007). Firms are normally the key players in th
44、e technological and institutional processes that can overcome the gaps between local institutions/practices and institutions required for participation in value chains, with a more or less active role of governments. As Dorward argued on different occasions for developing countries, NGOs can help ov
45、ercome market and government failures in these processes (Dorward et al. 2003). As a source of collective action, partnerships are presumed in this paper to hold the same potential and generate change for the benefit of smallholders. However, as evolutionary theory recognizes, any (technological) ch
46、ange is influenced by institutional structures, which can either be supporting or obstructing, and which may have a strong influence on the degree and speed of acceptance of new technologies into an economic system. Institutions are thus seen as complementary to technology, which help organizing the
47、 division of labour around these new technologies (Nelson 2002). 4. Partnerships as new institutional arrangements in value chainsPartnerships are defined as voluntary and collaborative arrangements between actors from two or more sectors of society that have an institutionalized, yet non-hierarchic
48、 structure and strive for a sustainability goal (Glasbergen, Biermann & Mol 2007). In the context of value chains, partnerships bring together chain-internal and chain-external actors and focus on various aspects of smallholder inclusion. Inclusion means that smallholders receive access to a (strand
49、 of a) value chain that they have not participated in previously, that they are able to continuously participate in the chain with improved rewards, and that they can voluntarily exit the chain (Riisgaard et al. 2008). In other words, inclusion of small farmers denotes their ability to sustain their participation in a given supply chain over time, which, however, “does not indicate any differences in welfare outc