a market facilitator's guide to participatory agroenterprise development

Shaun Ferris, Elly Kaganzi, Rupert Best, Carlos Ostertag, Mark Lundy, and Tiago Wandschneider

A MArket FAcilitAtor’s Guide to

Participatory Agroenterprise Development

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A MArket FAcilitAtor’s Guide to Participatory Agroenterprise Development

Shaun Ferris, Elly Kaganzi, Rupert Best, Carlos Ostertag, Mark Lundy, and Tiago Wandschneider

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Copyright © 2006 Centro Internacional de Agricultura Tropical

Reprint edition published by Catholic Relief Services, Baltimore, 2008.

ISBN 0-945356-36-6

First edition published 2006 byCentro Internacional de Agricultura Tropical(International Centre for Tropical Agriculture)Cali, ColombiaISBN 958-694-083-7

For information, addressCatholic Relief Services228 W. Lexington St.Baltimore MD 20201USAwww.crs.org

AGROVOC descriptors in English:1. Agroindustrial sector. 2. Development projects. 3 Small farms. 4. Planning.5. Partnerships. 6. Community involvement. 7. Marketing. 8. Market research.9. Supply balance. 10. Teaching materials. 11. Latin America. 12. Africa. 13. Asia.

Local descriptors in English:1. Agroindustry. 2. Participatory research.

AGROVOC descriptors in Spanish:1. Sector agroindustrial. 2. Proyectos de dessarrollo. 3 Explotación en pequeña escala.4. Planificación. 5. Coparticipación. 6. Participación comunitaria. 7. Mercadeo.8. Investigación de mercados. 9. Oferta y demanda. 10. Materiales de enseñanza.11. América Latina. 12. África. 13. Asia.

Local descriptors in English:1. Agroindustria. 2. Investigación participativa.

This report is made possible by the generous support of the American People through the United States Agency for International Development (USAID) Bureau for Democracy, Conflict, and Humanitarian Assis-tance’s Office of Food for Peace under the terms of Catholic Relief Services’ Institutional Capacity Building Grant Award Number AFP-A-00-03-00015-00. The contents do not necessarily reflect the views of USAID or the United States Government.

Contents

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PagePreface ixAcknowledgments xIntroduction and Background to the Guide 1

Purpose 1Objectives 1Who Should Use the Guide? 2How to Use the Guide 2

THE THEORY

Section 1. Overview of the Participatory Agroenterprise Development Approach 5Introduction 5Why Use this Approach? 7Key Features of the Participatory Agroenterprise Development Approach 7Entry Points for Starting an Agroenterprise Development Process 9

Section 2. Marketing Basics 11Why Is Marketing Important? 11What Is Marketing? 11Supply and Demand 13The Marketing Mix 13Market Participants and Intermediaries 13Types of Market 15Marketing Functions and Services 15Business Development Services (BDS) 17Market Drivers and Trends 18The Marketing Context for Small Farmers 20

Section 3. Institutional Preparation and Planning 22Rapid Reconnaissance Survey 22Assessing Levels of “In-House” Skills for Agroenterprise and Market Facilitation 23Selecting Partner Organisations 23Example of Partners 24Evaluating Farmer Group Organisations 25Networking and Establishing Ground Rules 26Client Support and Provision of Physical and Financial Assets 27Exit Strategies 30

Section 4. Tools for Working with a Community 34Working with the Community 34The Philosophy behind Community Engagement 34Gender Sensitivity and Cultural Values 34Getting to Know the Community 35Participatory Tools for Community Diagnosis and Market Planning 36Evaluating the “Entrepreneurial Spirit” or Finding the “Sparky People” 47Summary 49

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PageTHE PRACTICAL WORK

Section 5. Management and Partner Selection 53Management and Partners 53Additional Tools for Selecting Enterprise or Farmer Groups 55Identifying Leadership Qualities 55Farmer Groups 55Farmer or Product Clusters 56

Section 6. Project Site Selection and Evaluation 57Project Site Resource Assessment 57Community Action Planning (Visioning) 58Forming Committees 60Visioning to Develop a Common Goal for the Future 63

Section 7. Product Screening and Market Opportunity Identification 65Options for Product Screening 65Importance of Community Participation 66Strategy 1: Screening “Existing” Products 67Strategy 2: Surveying to Identify Market Opportunities 69Market Survey Results 71The Dynamic Nature of Markets 71

Section 8. Selecting the Best Product or Enterprise Option with the Clients 72Establishing Evaluation Criteria 72Selecting the Most Viable Agroenterprises from a List of Options 73Why Learning these Skills Is Important 76

Section 9. Market Chain Analysis 78Introduction 78Sub-sectors and Market Chains 79A Method for Rapid Market Analysis 81Using the Market Survey Results to Develop a Proactive Enterprise Plan 86

Section 10. Developing an Enterprise or Intervention Action Plan 87Designing Action Plans for Selected Enterprise Interventions 87Detailed Enterprise Planning 89Business Checklist 94Policy Interventions 94Adapting to Risk 94Taking the Plunge 96

Section 11. Evaluating Progress and Scaling Up 98Monitoring and Evaluation 98Planning the Next Enterprise 100Next Steps for the Market Facilitator 100Monitoring the Rural Agroenterprise Development Project 101

A Market Facilitator’s Guide to Participatory Agroenterprise Development

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PageAppendices 105

1. Criteria for Selecting Communities 1072. Assessing the Capacity and Competence of Agroenterprise Personnel 1083. Farmer Group Competence Checklist 1094. A Summary Description of “Appreciative Inquiry” 1105. A Suggested Outline of a Project Site Resource Assessment Report 1116. An Example of a Questionnaire for Identifying Market Opportunities 1137. A Report Outline for the Market Opportunities Identification Study 1148. Checklist for a Market Chain or Sub-sector Analysis 1159. A Summary Sheet for Market Interviews: An Example from a Banana Survey 117

10. An Outline for Writing Up a Market Chain Report 118

Glossary 121

Bibliography 129

Contents

PageList of Figures

1. Flow chart of key stages in the participatory agroenterprise development approach 62. Market chain showing actors, functions and services 143. Using the Ansoff matrix for risk assessment 21

4A and 4B. The River Code scene 1 “Bearing the load” 374C. The River Code scene 2 “Let’s work together” 384D. The River Code scene 3 “Crossing together” 384E. The River Code scene 4 “Together we can succeed” 39

5. Community resource map developed for Tororo Village, Uganda 406. Market map, existing groundnut marketing, Embu District, Kenya 457. Market map, desired marketing for groundnut in Embu 468. Partnerships and links in the working group 549. Steps in arranging a market survey 68

10. Results of a market survey conducted by farmers in Uganda 6911. Selecting market options according to three levels of selection or discard 7312. An example of a production matrix 7413. An example of a marketing matrix 7514. Profitability analysis: “gross margin” for beans in Uganda 7615. Idealised scheme of a sub-sector and its many market chains 7916. Links in the market chain and business support services 8017. Market chains for local, domestic and international products 8318. A checklist questionnaire and the key informants 8419. Prioritising critical points in the market chain and activities to address them 8820. Wealth or enterprise transitions for clients in agroenterprise development 104

List of Tables1. The marketing mix: product, price, place, and promotion 142. Transitional exit strategy with a 5 to10-year time frame 323. Cropping calendar for various products and poverty indicators 414. Importance of crops for income within the group 425. Historical calendar for Mbuule village, Tanzania 436. Institutional inventory of services received by Ttaago village, Tanzania 447. Activity options to shift from today’s situation to a desired state 478. Tool kit for participatory diagnosis and market mapping 509. Checklist for analysing a project site for agroenterprise development 58

10. Agroenterprise checklist at community level 5911. Suggested organogram of posts within a farmer group 6112. An example of an organogram of posts within a farmer group 6213. Visioning from current to a desired state, Katamata Group, Tanzania 6414. Matrix format to plan which data to collect at which point of sale in the chain 7015. A matrix of the final evaluation and selection of income-generating activities 7716. An example list of prioritised interventions and associated chain actors 8817. Actions to be taken at specific points in the market chain 8818. Financial requirements, sources and activity sequencing matrix 8919. General action plan for Nyabyumba Farmers Group enterprise, Uganda 9120. Detailed “portion only” of action plan for the Nyabyumba Farmers Group, Uganda 9321. Business checklist to review enterprise plan 9522. Changes in horizontal and vertical linkages 10323. Product value market type assessment matrix 10324. Example of capacity framework for evaluation of process performance 103


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PageList of Boxes

1. An example partnership between CIAT and Africare, Kabale, Uganda 252. How financial conditions affect planning 293. Examples of committees in Kware Vegetable Growers Group, Hai District, Tanzania 624. Case study: Enterprise selection by the Katamata Farmers Group, Tororo, Uganda 775. Enterprise design with the Nyabyumba Farmers Group, Kabale District, Uganda 97

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Preface

Discover your InnovationDiscover your InnovationDiscover your InnovationDiscover your InnovationDiscover your Innovation

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This Market Facilitator’s Guide is a productof the experiences and lessons learnedwhile implementing agroenterprise projects ineastern and southern Africa. The Guide is basedon a resource-to-consumption framework, whichis the central theme of the “enabling ruralinnovation” (ERI) approach for ruraldevelopment. This approach seeks to empowerfarmer groups with the necessary skills to makeinformed decisions for their economicdevelopment, based on an analysis of theirsurroundings, assets and skills. The methodologyalso aims for outcomes that are equitable, genderfocused and participatory.

The central figure in this Guide is the “marketfacilitator”, whose role is to identify marketopportunities with representatives from farmergroups and guide the groups through a processof market analysis and business planning todevelop a new agroenterprise. The Guide adviseson issues such as project site selection,partnership development, communityinvolvement, participatory tools for marketopportunity identification, enterprise selection,and methods for agroenterprise design anddevelopment.

This Guide is one of a series of agroenterprisepublications developed by CIAT’s RuralAgroenterprise Development project. The aim ofthis set of methods and tools is to enable serviceproviders to empower rural communities toengage more effectively in the marketplace so asto increase their income, their capacity toinnovate and ultimately improve their livelihood

options. To date, the titles in the CIATAgroenterprise “good practice guide” seriesinclude:

· Strategy Paper: A Participatory and Area-based Approach to Rural AgroenterpriseDevelopment.

· A Guide to Developing Partnerships, Area-based Resource Assessment and PlanningTogether.

· A Guide to Identifying Market Opportunitiesfor Smallholder Producers.

· Strategies to Improve the Competitiveness ofMarket Chains for Smallholder Producers.

· Evaluating and Strengthening Rural BusinessDevelopment Services.

· A Market Facilitator’s Guide toParticipatory Agroenterprise Development.

· Collective Marketing for SmallholderProducers.

· A Guide to Rapid Market Appraisals toSupport Smallholder AgroenterpriseDevelopment.

· A Guide to Policy Analysis for SmallholderAgroenterprise Development and Advocacy.

Note to usersService providers should read the guides in theirentirety, to absorb the ideas and concepts priorto starting the fieldwork. Our experience hasshown that best results are attained when theseprocesses are not implemented in a mechanicalmanner; rather that the principles are interpretedand adapted to local conditions based on themarketing environment, available resources, andanticipated scale of implementation.

Acknowledgments

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The CIAT team would like to thank the manypartner institutions, farmer groups, traders andparticularly the market facilitators that workedalongside CIAT’s Enabling Rural Innovationteam since 1998 and contributed towardsdeveloping this guide to the agroenterprisedevelopment approach.

Particular thanks go to the Catholic ReliefServices for their increasing support to thiswork, Africare, NARO’s Bulindi AgriculturalResearch and Development Centre, HoimaDistrict Local Government, Hoima DistrictFarmers Association, and Africa2000 Network,all in Uganda; Concern Universal, Plan Malawi,Department of Agricultural Research Services(DARS), Lilongwe Agricultural DevelopmentDivision (ADD), in Malawi; and TraditionalIrrigation and Environmental DevelopmentOrganisation (TIP), District Agricultural andLivestock Development Office (DALDO), FaidaMaLi, World Vision, Sanya Area DevelopmentProgramme (SADP), and Usambara Lishe Trust(ULT), in Tanzania.

We also thank Joan C. Uy, Chair of the ResourceMobilisation Committee of Normin Veggies and

President/General Manager of Normin Corp,Mindanao, the Philippines, for her support withbusiness plans.

We give our special thanks to CIDA, DGDC andDFID for their logistic and financial supportover many years which have enabled partnersto learn, discover and create this body ofknowledge.

Thanks also go to USAID and CRS for providingfunds to publish these documents.

Technical and language editing of thisdocument was done by Libby Finney andElizabeth McAdam.

A special word of thanks goes to Joel Opio inUganda for his pencil drawings. These simpleillustrations faithfully depict the differentstages of participatory agroenterprisedevelopment and capture the culturalbackground of the farmer groups with whom weworked.


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Introduction and Background to the Guide

Working with smallholder farmers to design andset up new income-generating enterpriseopportunities is complex, taking time anddedication to be successful. However, it can alsobe highly rewarding, as it touches on crucialsocial issues such as building trust, learningnew skills and, when done well, produces manybenefits for the community.

For service providers, the agroenterpriseapproach offers not only a method foraddressing rural poverty, but also theopportunity of finding ways of stimulatingdemand for technical and social innovations. Ithelps identify areas that require support fromresearch, finance, and local policy. As such, thisagroenterprise approach can provide thetantalising “win–win” situation for serviceproviders and their beneficiaries.`

PurposeTraditionally, agricultural support from serviceproviders has focused on increasing production.This approach works well if the primary concernis food security and if a ready buyer is availablefor any surpluses. Unfortunately, increasingsupply often only works for a limited period,with local markets becoming quicklyoversupplied as production increases. Following

the laws of supply and demand, rapidoversupply in the market leads to rapidly fallingprices and, in the long run, reduced income forfarmers.

In other words, instead of producing what themarket wants, farmers and their facilitatorsoften expend energy on finding markets for whatis produced. Lack of attention to marketsfrequently results in farmers being “stuck” withunwanted produce that they are forced to sell atvery low prices because of the market’s lack ofinterest.

This Guide seeks to promote a simplemethodology that service providers can use tohelp farmer groups and local entrepreneurs toproduce goods and services based on marketdemand. It deals specifically with methods foridentifying and evaluating market opportunitiesand for selecting the most attractive businessoptions a given community may have.

ObjectivesThis manual’s overall objective is to guidemarket facilitators and other service providersthrough a participatory process for identifyingmarket opportunities and developing viableagroenterprises that are sustainable and which

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improve the incomes of rural farmers,processors, and traders. Specifically, themanual aims to:

• Provide facilitators with skills in articipatorymethods that will enable them to helpfarmers engage with markets.

• Guide in market identification and selectionof attractive enterprise options, based oninformation gathered from the market andmarket chain.

• Build agroenterprise skills within thecommunity so that groups can continue toeffectively engage with the marketplace inthe future.

Who Should Use the Guide?The Guide is intended for use by any institutioninterested in building staff capacity in marketfacilitation. The manual focuses on how amarket facilitator can help development agentswithin a rural community and farmer groupsassess market opportunities and develop newagroenterprises. The market facilitator may bean extension officer in agriculture, animalhusbandry, and fisheries; a communitydevelopment officer; or a staff member of a non-governmental organisation (NGO) or otherprivate establishments, including farmergroups, co-operatives, and businesses.

How to Use the GuideThe Guide is divided into sections thatcorrespond to key stages of agroenterprise

development. The order of tasks is planned sothat results obtained from one section are usedas the starting point for the next section. Thesections are:

1. Overview of the participatory agroenterprisedevelopment approach.

2. Marketing basics.3. Institutional preparation and planning.4. Tools for working with a community.5. Management, and partner selection.6. Project site selection and evaluation.7. Product screening and market opportunity

identification.8. Selecting the best product or enterprise

option with the clients.9. Market chain analysis.

10. Developing an enterprise or interventionaction plan.

11. Evaluating progress and scaling up.

Although the Guide describes a systematicprocess for agroenterprise development and isdesigned to be followed from start to finish, themethod should not be considered as “fail-safe”.Any type of business is inherently risky and theuser should therefore adapt and apply themethods according to the needs, skills, andresources of local farmer groups and theirservice providers.

THE THEORY

Blanca4

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Overview of the Participatory Agroenterprise Development Approach

Overview of the Participatory AgroenterpriseDevelopment Approach

SECTION 1

By the end of this section, the reader should havea basic understanding of the:

• Sequence of tasks in the participatoryagroenterprise development approach.

• Reasons for using such an approach.• Entry points for different types of service

providers and clients.

IntroductionThe Guide describes a strategy developed byCIAT’s Rural Agroenterprise Development(RAeD) project to address the entrepreneurialdevelopment needs of institutions that supportrural communities. The methods, tools, andlearning approaches described here are theresult of many collaborative projects undertakenover the last 10 years in Latin America, Africa,and Asia. The implementation draws heavily onexperiences with partners in Africa andhighlights methods that can assist a facilitatinginstitute to focus on realising new businessopportunities for rural communities. The basicsteps in the strategy are shown in Figure 1.

Together, these methods make up thecomponent parts of what is termed “an area-based, participatory approach to ruralagroenterprise development”. This approachwas developed in response to demand frompartners in agricultural development whowanted a systematic method for shifting from afood security strategy that focused onproduction to a market-oriented approach thatemphasises income generation and marketdemand.

In this Guide, the term agroenterprise refers to abusiness venture, typically small-scale, that canbe undertaken either on-farm, or a service thatcan be used to support other businesses. Theagroenterprise is generally focused on groups ofactors at the producer level and individualactors that provide services within the marketchain.

Examples of agroenterprises include a crop orlivestock product which is produced by a farmergroup and sold into an identified market; aproduct which is processed in some fashion to

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Figure 1. Flow chart of key stages in the participatory agroenterprise development approach.

Identify site

Form working group

Area-based resource assessment

Strategy 1Lower risk, short term

Strategy 2Higher risk, longer term

Select the most promising, existing,higher income product(s)

(market penetration)

Market opportunity identification(diversification)

Market visitsMarket chain analysis

Intervention design and implementation

Assess probability of intervention and scale up

Knowledge management and policy messages

Evaluate process performance and impact

Activities: Working group Market team Intervention group

Select market options and interventions(classify market options according to

risk levels)

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add value to a primary product, such as cerealproducts that are bulked and graded, cassavathat has been processed into dried chips, or milkprocessed into cheese for sale into an identifiedmarket. In the service area examples include,providing a service such as the provision ofinputs, processing (such as a shelling service togroundnut producers) and advisory services suchas supporting the marketing of farmer groupproduce.

The participatory agroenterprise developmentapproach provides the user with a stepwiseprocedure for introducing new marketingtechniques to a rural community. (Criteria forselecting communities are given in Appendix 1).We fully appreciate the challenges in changingthe habits of farming communities, particularlypoor communities. Therefore, any agencyconsidering this approach should carefullyconsider the time and resources required. Theproblems associated with marketing and settingup new organisational structures pose seriouschallenges to poor farming communities,particularly those who have been accustomed toproducing only basic food staples for foodsecurity.

Why Use this Approach?The economic prospects of many ruralcommunities in many parts of the developingworld, particularly in Africa, are not improving.Despite considerable gains in productivity of foodcrops, the income of farm households is, in mostcases, falling over time because of a combinationof weak local economic growth and increasingcompetition from global markets.

Unfortunately, the real price or value of mostagricultural commodities has declined over thelast 2 to 3 decades. Smallholder farmers arefacing increasing competition from medium-sizedto large-scale farmers. As such, most small-farming families are stuck on a production“treadmill”, whereby many millions of individualfarmers produce the same undifferentiatedcommodities, using traditional, low-inputsystems. Inevitably, these farmers are pricetakers in the market and their food-securityapproach, which focuses on always increasingproduction, can depress the market situationeven further. The options small farmers have toconfront this adverse market situation are to:

1. Improve the competitiveness of theirproducts in local, national, and regionalmarkets.

2. Achieve economies of scale throughcollective action for production andmarketing.

3. Gain access to business developmentservices that improve access to higher valueand/or more competitive markets andprovide employment opportunities.

4. Diversify into higher value crops and/orlivestock that are linked to growth markets.

5. Add value to products by changing farmingpractices to access higher income markets,enhance product quality, and incorporateprocessing activities.

6. Enter new types of business agreementsbased on forward sales (contract farming) or“appellation1” that “lock in” buyers overlonger time periods at advantageous rates.

7. Find off-farm work options or migrate tomore lucrative employment areas such asurban centres.

The agroenterprise methods developed by RAeDhave incorporated these basic marketing andbusiness principles in a stepwise process thatfacilitates market engagement. The approach is(1) non-commodity specific, (2) supports abalance between on- and off-farm interventions,and (3) supports collective action,diversification, and “added value” as viablepathways out of poverty.

Key Features of the ParticipatoryAgroenterprise DevelopmentApproachDefined geographical areaThe approach focuses on improving thelivelihoods of beneficiaries within a definedgeographical area2. Product selection andintervention design are based on expectedemployment and income impact in a targetedregion or area. While the approach aims to havethe greatest impact on community-basedagroenterprises, it also takes into account thedevelopment of business services and changesin local policy and regulatory frameworks. Thegeographical focus of this approach also aims to

1. Appellation is a system by which a product isdifferentiated on the market based on its place ororigin, specific method of production or acombination of product qualities such as variety,year, production method and place of origin. Wine isa good example of a product that uses appellation todistinguish products and thereby add value based ona specific variety of grape, year of production andlocation of vineyard.

2. Geographical area or territory.

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enhance monitoring, and to facilitateinstitutionalising and scaling up the processwith local partners.

ParticipatoryThe approach is participatory. At the projectlevel, this approach aims to establish a “workinggroup” of stakeholders who share a commongoal in improving business activities. Thisinformal group comprises developmentagencies, public and private service providers,traders, and entrepreneurs. At the communitylevel, the approach aims to empower farmergroups and local service providers in developingnew agroenterprise options. These stakeholderscan participate at different stages of theapproach but all influence the decisions thatare made in planning, experimenting,implementing, and scaling up the interventions.

Growth market focusThis approach is market-led, not production-led. The objective is to enable enterprises andentrepreneurs in a given area to identify andaccess remunerative opportunities for existingor new products in existing or new markets. Theapproach focuses on interventions withproducts having growth potential or onconsumer groups with increasing income.

“Thinking outside the farm”The approach encourages partners andstakeholders to “think outside the farm”. Thisconcept underlies the approach’s focus on themarket chain, thus supporting interventionsthat address critical constraints at differentpoints along the market chain or addressmarket chain efficiency through better access tobusiness support services. The agroenterpriseapproach therefore aims to implementinterventions that achieve the greatest impactfor a given investment. Market-basedinterventions include collective action,facilitating market linkages, strengthening localbusiness services, and disseminating improvedproduction approaches and other innovations.

Fostering business linksMany development approaches focus entirely onone type of market chain actor: the resource-poor smallholders. While farmers are importantbusiness partners, market linkage may be moreeffective when undertaken alongside or inpartnership with larger farmers or by linkingwith larger traders or processors. Such linkswill give buyers greater confidence and will alsoprovide a learning ground for farmers with fewer

resources to see practical ways of improvingtheir farming and marketing practices.

A stepwise approachThe agroenterprise method comprises severalsteps, which can be aggregated into activitiesimplemented by groups of actors. Three keyareas of activity are (1) developing project sitepartnerships and resource assessment,(2) market analysis, and (3) intervention design,implementation, and scaling up. These activitiesare led by members of the working group,market survey team, and enterprise groups,respectively.

ScaleableA major feature of this method is the ability toscale up from successful pilot work withsupport from partners. Interventions should bebiased towards those that can reach largernumbers of beneficiaries at the outset, as it iseasier to scale up from a larger starting pointsuch as many farmer groups than from alimited pool of beneficiaries.

Encouraging continuous innovationMarket engagement is a continuous processrather than a one-off exercise. Markets aredynamic and agroenterprises will be constantlyconfronted by new challenges andopportunities. The agroenterprise approach canenable local stakeholders to follow up on newdevelopments and identify appropriatestrategies and interventions. Mainstreaming theapproach within local planning and policyprocesses is a useful way of enabling localdevelopment agencies to assist agroenterprisesin tackling emerging challenges, when directproject work is phased out.

Builds skills and empowering communitiesThe approach builds on the existing skills andresources of local communities, includingfarmers, processors, and traders. The goal is tobuild capacity in local service providers, farmergroups and local entrepreneurs so that thecommunity can benefit from being involved inthe approach over the long-term. The approachdoes not promote the supply of services fromdevelopment agencies, but the facilitation andstrengthening of local actors in the privatesector.

Accommodating minority issuesAgroenterprise is gender neutral in the sensethat markets, in most cases, accommodateeveryone. However, this approach can be

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adapted to support the specific needs ofwomen’s groups and address the needs ofvulnerable groups such as the youth, the old,and people living with HIV/AIDS.

Flexible but rigorousAgroenterprise activities are complicated socialactivities that need to be facilitated by skilledstaff with motivated partners. In all cases, theapproach requires that methods andinstitutional arrangements be adapted to localconditions and that roles and responsibilities beagreed on at the outset. Planning andinvestment should be client-led andperformance be critically observed. Success isonly possible when the agroenterprise method isapplied with both effort and dueprofessionalism.

A long-term frameworkOur experience shows that for this approach tobe effective, service providers and farmer groupsneed to acquire new skills and different ways ofdoing business. This change requires time andfinances, which is why we recommend theapproach is first introduced with a long-termcapacity-building programme, typically for atleast 2 to 4 years, depending on local capacitiesand market access. However, successfullyintegrating all the components of anagroenterprise development process in ashocked society may take 8 to 10 years. Suchtime is needed to establish numerous farmergroups and then link them into second-orderassociations and strengthen local businesssupport services so that they have sufficienteconomies of scale to compete on a long-termcommercial basis in the marketplace.

Cautionary noteIn certain locations, for example, areas sufferingfrom civil insecurity or chronic food insecurity,this method may not be appropriate.

Entry Points for Starting anAgroenterprise Development ProcessThe entry point for the agroenterprisedevelopment approach is flexible, depending onfactors such as:

1. The in-house agroenterprise developmentcapacity of the lead organisation involved ina new project.

2. Skills, asset base, and level of organisationof the intended client or beneficiary group.

3. The level of participation.

4. Whether decisions have been made at aproject’s outset on the products and/ormarket chains to be supported throughoutthe project.

5. Level of intervention at the outset, that is,will the project start by supporting a few(1–10) or many (20–50+) farmer groups?

6. Financial resources, manpower, and timeavailable to undertake the task.

These issues need to be fully discussed at theoutset of an agroenterprise developmentprocess, so that partners are clear about theirroles and responsibilities and the targetedcommunities also have clear expectations.Development agents have different capacitiesand skills, and rural communities are alsohighly heterogeneous in terms of social classes,asset base, level of organisation, agroenterprisecapacity, and access to both markets andsupport services. This mix of skills andopportunities means that agroenterpriseactivities must be tailored to local conditionsand that a project can start at various entrypoints in the process. The following sectiondescribes a range of different entry points thatapply to different types of client groups andappropriate strategies.

Entry point 1: Starting outThis may be the entry point for marketfacilitators who are using an agroenterprisedevelopment approach for the first time, or whoare working with farmers that are not wellorganised. Farmers in this category tend tooperate as individuals, occasionally sellingsmall amounts of surplus produce to themarket. Key issues to take into considerationare (1) sensitising partners in the selected areathat a project will be piloting an agroenterprisedevelopment approach, (2) organising farmersinto functional groups, and (3) initiating theapproach through a pilot project, using existingincome-oriented products grown by mostfarmers in the targeted community or area.

The main task for the approach is to conduct apilot enterprise so that both the marketfacilitator and farmer groups can betterunderstand how marketing works and howfarmers can work together. The focus of thisentry point is to (1) improve the farmers’organisational skills and enable them to marketexisting products more effectively, (2) finddevelopment partners who will work towards acommon goal, and (3) gain in-house competencein agroenterprise activities.

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Entry point 2: More organised farmersThis entry point is for farmer groups who aremore organised, working in groups that sellproducts collectively and/or on a regular basis.For this type of farmers or groups, theintervention should focus on diversification orfinding ways to add value to their produce. Ifthe group has a strong opinion on a newproduct in which to invest next, then themarketing process should proceed to a marketstudy of that product. If the group wants toevaluate new products, it should proceed with aparticipatory market opportunities identification(MOI) study. The MOI will provide a list of newopportunities to assess in more detail throughmarket-chain analysis and enterprise design. Atthe same time, the market facilitator shouldalso work to strengthen business and marketlinkage skills. The group should also initiatesavings schemes and maintain regular recordkeeping in preparation for linking with financialservices.

Entry point 3: Well-organised farmersIn this case, farmers are working in groups andadding value to a range of low and higher valueproducts. The focus of this entry point is to(1) improve competitiveness of existing highervalue options; (2) increase scale of operations,including linking with other larger organisationsor farmer groups; (3) evaluate new opportunitiesfor higher value options; (4) strengthen thegroups’ business skills; and (5) increase linkswith more specialised service providers orhigher order market-chain entrepreneurs. Theprocess should begin with a business plan ofthe existing product portfolio and a review of itsfinancial management. The market facilitator inthis case advises on ways to optimise existingactivities, seeks out new higher value options,and then proceeds to strengthen financial skillsand improve links to financial and marketingand/or business services.

Entry point 4: Pre-selected commodityDevelopment projects often start with a plan toinvest in a particular commodity or product.The selection of a product is often part of apre-project design phase that reviewsmacroeconomic data to prioritise products, orselect products based on stakeholder

workshops. Whatever the process, if a producthas been pre-selected, then the starting pointwill be a more detailed market chain study ofthat product. This will enable the marketfacilitator and farmer group to focus on aparticular market chain, to supply a local,district, national or specialised market option.The market facilitator may also need to work onimproving farmer group organisation to supplya given market and also initiating links withother service providers.

Entry point 5: Existing buyer or contractfarmingSometimes, an entrepreneur, trading company,or new type of “market linkage” NGO willapproach a service provider and ask for supportin supplying a particular product or commodity.In such a case, higher order market actors willdrive the marketing process. The serviceprovider’s role will then be to work with farmergroups to design enterprise plans for thecompetitive supply of the identified product.This process will rapidly move from design toimplementation. The service provider will focuson building farmer organisation and seekingsupport from specialised service providers toevaluate new technical innovations to increasethe competitiveness of the supply.

Entry point 6: Support for businessdevelopment servicesSometimes, discussions with farmer groups andtraders, or findings from the marketing studieswill reveal that the most important constraintfor improving a marketing chain is to acquireaccess to a particular business support service.This service may be related to inputs, valueaddition, storage, or market linkage. In thiscase, the market facilitator should work withother players in the market chain or localentrepreneurs to develop or access the servicethat will address the key constraint. By workingat a higher level in the market chain, this typeof intervention aims to have greater benefit formany lower order chain actors such as farmersfor a limited investment. The market facilitatorwill need to determine the most cost-effectiveway of enhancing specific service provision andwork to strengthen the business unit at thislevel.

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Marketing Basics

SECTION 2Marketing Basics

In this section, the reader is taken through areview of basic marketing principles.

The information within this section is essential forservice providers who have limited knowledge ofmarket economics and business strategies.

For market facilitators who do have a goodgrounding, this section provides a reference fordiscussion with client groups and other partners.

Why Is Marketing Important?In today’s commercial world, success in themarketplace is becoming increasingly importantfor livelihood development. Rural communitiescan no longer rely on governments to providesubsidies for agricultural goods and services.Increasing competition across the world meansthat farmers are not just competing with theirneighbours for local markets, but also withfarmers from other countries. Within thisenvironment, understanding how marketsfunction and how to engage in the marketplaceis a vital skill. Such skill comprises an ability toidentify, quantify, and meet the needs, wants,and desires of consumers, that is, of thosepeople who create market demand.

To be successful in the marketplace, ruralcommunities need to adopt new technologies,access new types of information, and gain newenterprise skills so that they are in a position toevaluate and invest in new opportunities as theyarise. In the future, successful smallholderfarmers will be those who can produce qualityproducts and find ways of adding value to theseprimary goods. In most cases, smallholders willnot be able to compete as individuals, and willneed to bulk their commodities with otherfarmers through group marketing. As farmergroups gain new marketing skills, they will alsoneed to take on new contractual arrangements toensure a more consistent supply of goods to aknown buyer at a pre-arranged quality, volume,and price.

To enable rural communities achieve these goals,the next generation of service providers also needto acquire marketing and agroenterprise skills.

What Is Marketing?Marketing can be described as the “delivery ofcustomer satisfaction at a profit”. However, themarketing process has many elements, and asconsumers become more discerning, marketing

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develops into a more sophisticated area ofresearch and social interaction. For the last50 years, attitudes towards marketing havechanged dramatically, as the businesscommunity changed from focusing on productionto product quality, to sales, to marketing and,most recently, to social marketing. This rapidevolution has been driven by the need forcompanies to remain competitive in themarketplace. Being competitive is based on theability to attract new customers with the promiseof better value and retain existing customers bydelivering satisfaction. The role of the marketinggroup is therefore not only to capture today “ourhearts and minds”, but also to identify what wewill need tomorrow.

Because of the increasing exposure to marketingand its concerted effort to sell things to people,widely differing views exist on marketing. Somepeople view marketing as “an essentialcomponent of sound business practice”, whereasothers consider marketing as “a fraudulentactivity used to persuade people to buy goodsthey don’t need at inflated prices”. Like it or not,marketing is an evermore pervasive element ofour daily lives and being successful at marketingproducts is crucial to developing a sustainablebusiness or agroenterprise.

According to Kotler et al. (2002), marketing canbe defined as “a social and managerial processby which individuals and groups obtain whatthey need and want through creating andexchanging products and value with others”. Theprocess of marketing is therefore finding ways toprovide people with products and services thatthey either need to function normally or desire toimprove their well being.

Marketing aims to service three distinctcategories of need. The first refers to basicphysical needs such as food, clothing, shelter,and safety; the second to social needs, whichrelate to belonging and affection; and the third toindividual needs, which relate to satisfyingyearnings for knowledge and self-expression. Thelast category includes wants or desires, which gobeyond the immediate needs for basic humanoperations and social interaction. Desires are anunlimited set of perceived needs that people seekto satisfy through ideas, products, and services.

Whichever category, the consequences aresimilar in the marketplace, in that, when wantsare supported by the ability to pay, these wantscan be translated into market demand.

If we consider products and services as benefits,consumers will choose those products andservices that provide them with the best value formoney. Value is based on an individual’sestimation of satisfaction; many degrees offulfilment exist when making a purchase.Decisions to buy a given product are based on amultitude of cultural, ethical, moral, weather,and wealth-related reasons. Aiming to make ourchoices easier, producers and marketing agentshave developed a mesmerising range of quality,price, and emotionally loaded options.

For example, when buying what seems to be aninnocuous pair of sports shoes, consumers facean incredible range of options in the marketplace.Some consumers may buy a simple pair of shoesthat will enable them to play sports at low cost,let’s say $10. Others will select the latest fashionof a world brand in sports shoes, endorsed by aworld-renowned sports star for $150. The brandshoes apparently offer more than the cheap shoessuch as ultimate levels of technical protection forthe heel, instep, and toes, foot comfort, luxuriousmaterials, and other less tangible features thatreflect highly valued aspects of style, glamour,and status. Marketing is therefore based aroundthe idea of providing a range of products withdifferent value-to-price levels that matchconsumers’ needs, desires, and ability to pay.

Given this modern and globalised view ofmarketing, how does this relate to smallholderfarmers located in remote rural settings? At firstglance, not much, but when we analyse thesituation of smallholder farmers, we canrecognise that they have all the same elements ofa commercial company. Farmers have valuableassets such as land and location. They knowwhat is grown or produced in their locality andcan access labour, albeit their own and theirfamily’s. They produce a range of goods andservices for others in the community and knowwhat community members like in general andwhat they can afford.

However difficult their situation in regard toinfrastructure, social organisation, remotenessfrom markets, and income levels, all farmers sella proportion of their produce and many offerservices to others. Therefore, all farmers have asales and marketing challenge and as such canbenefit from increasing their knowledge aboutmarketing and how to engage the marketplace.

As many of these ideas may be abstract to thefarmers on first hearing about them, the service

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Marketing Basics

provider needs to adapt the marketing approachso that selected farmer groups can, withpractice, gain marketing skills to sell their goodsand services more profitably and on a moresustainable basis.

Given this introduction, the first rule ofmarketing for small-scale farmers is to:

Produce what you can sell, instead oftrying to sell what you have produced

This is a simple rule, but to achieve this in theagricultural context means that farmer groupsand service providers need to know whatconsumers are demanding in the marketplace;how the laws of demand and supply affect prices,price trends, and volumes being sold; and how tointerpret these laws in terms of their own marketopportunities.

Supply and Demand• Supply: the quantity of products that

producers can offer for sale.• Demand: the quantity of products that

consumers can buy.

The marketplace generally operates on the lawsof demand and supply. In simple terms, this canbe interpreted as “when supply increases, pricesfall and vice versa”. To make informed decisions,clients (farmers, processors, and traders) need toknow how their production fits within this law inthe marketplace.

Although, the law of supply and demand appearssimple, in reality, the dynamics of themarketplace are complicated. Many factors andtrends (see “Market Drivers and Trends” onpage 18) affect the workings of the market and,consequently, influence supply and demand.Factors affecting supply in agriculture includeweather, seasonality, access to inputs, roads,and transport to market. Factors that affectdemand are consumer driven and include price,quality, availability, and awareness of theproduct.

The Marketing MixTo address these market issues, producers andsellers develop marketing and business strategiesto improve product sales. The basic componentsthat sellers use in developing a marketing planare referred to as “marketing variables”,“marketing mix”, or simply as “the four Ps”—Product, Price, Place, and Promotion (Table 1).

In the participatory agroenterprise developmentapproach, the market facilitator will guide farmergroups through a series of activities that willcollect information from the market that isrelated to market demand, market supply, andhow the four marketing variables can be used toincrease sales and revenue. Readers who areinterested in more detailed information on thismarketing topic should consult marketingtextbooks such as those by Kotler et al. (2002).

Market Participants andIntermediariesAs part of work, the market facilitator will beexposed to a number of new terms used todescribe market actors, types of markets and thedifferent roles and functions that people performin a market chain. Many different types ofparticipants or market actors are involved inproducing, buying, processing, selling andreceiving agriculture produce. There are alsopeople involved in providing services to supportthe sales of a given product. Marketintermediaries or “traders” are the people whohandle a product from the time it leaves the farmuntil it reaches the hands of the final consumer.The links between the producer and theconsumer are often referred to as the marketchain, shown in Figure 2. The following sectionprovides a list of some of the most importantmarket intermediaries, where they work andtypes of functions that they are involved with inagricultural marketing.

Important market chain actorsCollectors: These are small, mobile traders whovisit villages and rural markets. They buy fromvillage bulking agents and directly from farmers.Collectors operate over short distances; theytrade small volumes at a time, using limitedamounts of money and use simple means oftransport, such as donkeys, bicycles, motorbikesand carts. They are most common in areas wherefarmers are poorly organised.

Assembly traders: These traders normally buyfrom farmers and collectors, and sell to largerwholesalers. Their main function is to gatherproduce for sale to large traders who do not havethe time to carry out small purchases fromscattered producers and collectors. Assemblytraders are normally based in rural markets ortowns. They may own or rent small, motorisedtransport vehicles and small storage facilities.

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Consumption

Retailing

Trading

Processing

Trading

Post harvesthandling

Production

Research

Transportation

Government policy regulation

Communications

Production input supply

Financial services

Market information and intelligence

Figure 2. Market chain showing actors, functions and services.

Marketing variable Definition Aspects of this variable include:

Product Everything that we sell that satisfies a Variety, quality, design, characteristics,need or a want; includes material objects, brand, packaging, sizes, services,services, persons, places, organisations, guaranteesand ideas

Price The monetary value that a seller seeks from Price lists, discounts, price margins, credita buyer for a product or service conditions

Place • Distribution and marketing channels Market sales points, spatial coverage of• A series of independent organisations market sales points, locations within

involved in the process whereby the markets, inventories of products,consumer or industrial user can use or transportation channelsconsume the product or service

Promotion The means for convincing or persuading Advertising, personal sales, trade andpotential users of the quality or features of consumer promotions, public relationsthe products or services being offered

Table 1. The marketing mix: product, price, place, and promotion.

Technical & business training & assistance

Wholesalers: Wholesalers vary in size, but dealwith larger volumes than collectors andassemblers and often store goods. They normallyown or rent medium to large vehicles fortransporting agricultural products, and own orrent medium to large size storage premiseswhich allows them to postpone sales in

anticipation of price rises, i.e., to speculate onthe market. These traders cater for the needs oflarger markets with many other wholesalers,retailers and consumers, i.e. large towns andcities. They sometimes buy produce fromfarmers and collectors, but tend to rely onassembly traders and other wholesalers as the

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Marketing Basics

main source of supplies. Wholesalers sell in bulkto other wholesalers, processors, industries,institutional buyers and retailers.

Retailers: The main role of retailers is thedistribution of products to consumers. Theirfunction is to obtain supplies and display themin forms and at times convenient to consumers.Retailers are very diverse in size and operationfrom small kiosks and hawkers or roadsidesellers that sell small volumes of a limitednumber of goods, to shops, and supermarketchains that deal with a vast range of agriculturalproducts. Some retailers specialise in specificproducts, whereas others sell a range of fresh,processed and frozen products.

Processors/commercial buyers: Processors areindividuals and firms involved in thetransformation of agricultural commodities. Riceand maize millers, bakeries, fruit juice makersand cassava starch manufacturers are examples.Processors can be small household enterprisesor fairly large formal firms. Large processorstend to have significant stocks of raw material toensure continuous processing activity and highutilisation of installed equipment during the off-season.

Types of MarketThe market intermediaries operate for the mostpart in a range of different market locations, asillustrated below:

Assembly marketsThese are markets where produce is sold byfarmers and small local traders before beingtaken to wholesale markets. Assembly marketsplay an important role because it is moreefficient for traders to be able to purchase fromfarmers at a few places, at a particular time,rather than visit individual producers on anad-hoc basis. Assembly markets are normallylocated in rural areas, but can often be found insmall towns close to farming areas.

Wholesale marketsWholesale markets are generally found in largertowns and cities. These are markets whereretailers and businesses buy their supplies.Farmers can deliver produce to wholesalemarkets; however, the main suppliers areusually traders who have bought from farmersand small traders. In most cases, a wholesaler inthe market will buy agricultural produce for saleto retailers or wholesalers from other markets.

Wholesale markets offer the advantage of tradinglarge quantities of produce in one place whichenables prices to be based on the level of supplyand demand of produce to the market.

Retail marketsThese are markets where consumers and smallbusinesses, such as restaurants and street foodvendors, buy their supplies. Retail markets canbe found in rural as well as urban areas. Manyvillages have their own retail market. They mayopen daily or at certain days during the week.Formal retail markets account for only a smallshare of sales as consumers can also buy fromsmall retail shops and supermarkets, as well asfrom traders and entrepreneurs selling fromtrucks, bicycles, and roadside stalls.

SupermarketsAs urbanisation has created ever larger marketcentres with higher levels of market demand,supermarkets have emerged as a convenient,safe, well managed marketplace for the mid tohigher income urban consumer. Supermarketsare rapidly becoming a feature of large towns invirtually all countries including developingcountries. Farmers can sell to supermarkets butthe buying conditions are more stringent thanthe wholesale markets, in terms of food quality,but also in terms of supply frequency andfinancial regulation.

Marketing Functions and ServicesMarketing functions are the roles performed bymarket participants as the produce moves fromthe farm to the consumer. Each function isassociated with the provision of one or moreservices and each of these services add value tothe produce. Below some important marketfunctions are explained.

BulkingOne of the most basic marketing functions thatcan be performed by farmer groups or localtraders is to bulk produce from several farmers.This enables the farmers to sell larger amountsof product at one time which enables, forexample a farmers group to negotiate for morefavourable prices with traders. Farmers whobulk 2 to 3 100 kg sacks of produce can only sellto a local trader. If farmers wish to negotiatewith a larger trader, they may need to bulk, 2 to10 metric tonnes of produce to fill a pick up orlorry. For the traders this is attractive as itreduces the costs of collecting small amounts ofvariable quality product from many sources.

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Therefore the trader is willing to pay a higherprice per kg for the bulked commodity.

CleaningHarvested produce needs to be cleaned beforeprocessing and/or consumption. Through thisactivity, foreign matter such as sand, straw andstones are removed. Agricultural produce can becleaned by hand or through the use of manualand motorised equipment.

DryingMoisture content (m.c.) influences theperishability (or shelf life) of a product and theefficiency of processing. For many products,moisture content is the most critical qualitycriteria, especially those products that are likelyto be stored for a considerable period of time,i.e., from 1 to 6 months. Consequently, buyersoften have maximum moisture contentspecifications. For crops such as maize, they areoften harvested with a moisture content ofperhaps 20% to 23%. Field drying, if conditionsare sunny, can dry this down to the optimalmoisture content of 11% to 13% m.c. If the cropis sold with a moisture content above 14%, it islikely to suffer from serious storage problemsassociated with pests and diseases. In this casea higher price is paid for grain which is in theoptimal storage range of 11% to 13%.

Sorting or gradingHarvested produce usually requires some formof sorting to meet the grades required byprocessors, exporters, and consumers. Sortingdifferentiates produce according to certainattributes or characteristics, including variety,size, colour, shape, degree of impurity, andripeness. Because the sorting of produce islabour-intensive and time-consuming, marketparticipants will only be willing to sort theirproduce if buyers are prepared to pay a higherprice for differentiated and higher qualityproducts.

Standard weights and measuresAnother aspect of grading is to sell produce instandard unit measures of length, weight orvolume. Standard weights and measures wereintroduced to make trading both more efficientand also so that buyers and sellers who wereunable to meet to negotiate a transaction wouldstill know how much they were buying for agiven price. As with sorting and grading, the useof standard units provides an opportunity toeither reduce the number of intermediaries, who

need to physically see a product as it flowsthrough the market chain, or provides a meansfor very distant buyers to buy without seeing theproduct.

Standard weights and measures include the useof national, imperial or metric units, all of whichcan be understood and verified throughout theregion of trade. For international trade, thestandard units normally refer to centimetres andmetres for length, weight as measured by grams,kilograms and metric tonnes and volume asmeasured by litres, and cubic metres. Producethat is sold in sacks are generally sold instandard 20, 50 or 100 kg units. These areeasily recognised and allow for rapid transfer ofgoods upon agreement of sale.

ProcessingSome agricultural products require processing inorder to meet consumers’ needs and tastes. Forexample, in urban areas people have moresophisticated demands and are prepared to payfor processed foods, including prepared foods,canned and frozen products. In some cases,agricultural commodities cannot be consumedwithout processing. This is the case, forexample, of rice and livestock. Paddy rice mustbe milled into rice and animals must beslaughtered, dressed, and divided intoconveniently sized pieces before they can beconsumed. Finally, processing may prolong theshelf life of a product, as in the case of maizeflour and dried or canned fish.

StorageTo avoid price slumps and reduce post harvestlosses, storage facilities are needed at variousstages of the marketing chain. For someproducts storage is not feasible due to productperishability, as in the case of tomatoes, whereasmore durable agricultural commodities may bekept for very long periods. Sometimes storage isrequired for just a few days, while the product isawaiting transport or the seller is searching forbuyers.

Storage involves costs and risks. For storage tobe profitable, the actors involved must receive afuture price that is higher than the present priceplus storage costs, including rent, labour, pestcontrol, product losses, and interest rates on thecapital borrowed. In practice, the costs ofstorage depend on the commodity stored, thetype of storage system, and unpredictable andvariable factors, such as the incidence of pests

17

Marketing Basics

and climatic conditions. Considerable amountsof money can be gained or lost by storingproduce at one time of the year and selling at alater time. Typically traders who store produce,buy when prices are low, at the peak of theharvest season and sell the stored grains asprices start to increase.

However, speculative storage is fraught withrisks, prices vary for many reasons and storedgoods are often lost due to losses from pests anddiseases, adverse weather and other factors.There are considerable skills needed to be able tospeculate on markets and this is why moststorage is undertaken by traders whounderstand the finer details of marketingcompared with farmers, who are morespecialised in production.

Packaging, labelling and brandingMany products need to be packaged in some wayif they are to be marketed widely and efficiently.Packaging reduces physical deterioration, theftand adulteration of produce. It may also ensureproduct cleanliness and facilitatestandardisation of weights and measures.

Packaging also provides producers with theopportunity to differentiate their product bylabelling with product attributes including a logoto identify the source, product descriptions,ingredients and/or sales instructions. Thisinformation can be used for promotion andadvertising purposes, making the product moreattractive to the consumer. In time, a wellrecognised label with strong consumer loyaltycan become a “brand”, which many consumersrecognise as a product with strong consumersupport.

Business Development Services (BDS)In addition to the market intermediaries whodirectly handle the transfer of produce throughthe market chain are a number of businessdevelopment services (BDS) that are critical foreffective marketing performance. To improvemarket efficiency participants in agriculturalsupply chains require a number of supportservices to develop their business activities.There are many support services, here we willfocus on: supply of inputs, research,advisory/development services, transport,communications, market information, andfinance.

The role of BDS in marketing and agroenterprisedevelopment cannot be underestimated as theseare the services that not only enable the marketto perform efficiently, but they are alsoresponsible for a large part of the newinnovations that can occur in a market andprovide for increased competitiveness andtherefore sustainability.

Supply of inputsAccess to good quality and affordable inputs, inthe right form and volume, is critical to theactivity of different actors in a market chain.Key inputs for farming include seed,agro-chemicals, irrigation water, agriculturalimplements, and post harvest equipment.Processing often requires access to water andelectric power, equipment, and spare parts.

ResearchResearch is essential for the development ofappropriate technologies and methods thatenhance production, post harvest, storage,processing and marketing. The development andrelease of improved varieties can lowerproduction costs, increase produce supply andquality, reduce product perishability, and/orenable off-season production. The development ofagro-processing technology can reduce waste andcosts, increase production capacity, and improveproduct quality. It is often new technologies thatmake the difference between subsistence andmore competitive production.

Advisory services (extension/ development)To be successful market participants can benefitconsiderably from specialised information andadvice on their area of action. This may cover awide range of areas, including production,natural resource management, post harvest,processing, marketing, management, andbusiness planning. Such services are provided byagricultural and market extension officers,government agencies and information services,non-governmental development organisations(NGOs) and consultancy firms are commonsources of specialised advice and information.

TransportA major cause of marketing problems often liesin the limited availability and high cost oftransport services, especially in remote areasthat are difficult to reach. Transport of producefrom such areas is only justified when the sellingprice in destination markets is well above thepurchasing price in those areas. The transport

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market, like any market however, offers a rangeof different modes, and prices. Farmers shouldfind the most cost effective means oftransporting their goods and constantly reviewthis market in order to find the most costefficient means.

CommunicationsPost, telephone, SMS, e-mail, Internet servicesand word of mouth are critical for smoothinformation flow and low-cost transactionsalong the market chain. The increasingavailability of mobile phone networks, e-mailand Internet services in the developing worldhas had a major impact on the efficiency ofmarketing systems and for many market actors,the mobile phone is the most effective means ofcommunication. In areas where mobile phoneshave become ubiquitous, many buyers will onlynow operate with suppliers that have a phone,to ease and reduce the costs of transaction.

Market informationMarket information is essential for decisionmaking, reducing transaction costs and risks,enabling efficient storage, and facilitating theflow of goods from production to consumptionareas. Access to information reduces businessrisk and allows market participants to exploreprofitable opportunities and meet consumerneeds. The scope for cheating and unfair pricingpractices is also significantly reduced wheninformation is available to all marketparticipants. Although, most developingcountries have national policies to providemarket information to farmers, in a timely andaccurate manner, this is rarely the case.

Farmers should have an idea of input sourcesand prices, current product prices in localmarkets, the degree of price volatility in thesemarkets, the best time of the day to sell, andprice trends and seasonality. They should alsohave information about the number and type ofbuyers operating in different local markets, theirvolume and quality requirements, and sellingarrangements.

FinanceFinance is necessary for goods to move alongthe marketing system. Farmers need topurchase inputs and may want to hold on totheir crops after harvest to benefit from higherprices. Traders and processors need to financeinvestments as well as marketing andprocessing activities.

In most developing countries it is difficult toaccess formal bank loans. As a result, farmers,traders and processors tend to rely on savingsand informal sources. Farmers may receiveinputs from traders or commercial buyers oncredit, repaying the loan at a later date withproduce or cash. They may also sell their cropson credit, thereby helping to fund the activity ofbuyers. Wholesalers and processors may advancefunds to collectors and assembly traders for thepurchase of agricultural products.

Marketing chainsAll of these marketing actors, functions businessservices and policy frameworks, provide theoperational environment in which marketingchains operate3. Market chain being the termused to describe the multiple market channelsthrough which a product or service moves untilreaching the consumer. Farmers rarely sell anagricultural product directly to the consumer.Instead, agricultural products tend to changehands several times and go through differentstages before being consumed, as shown inFigure 3.

Market Drivers and TrendsSeveral key factors drive changes in themarketplace in terms of the quantity, quality,and types of products that are in demand. Thefollowing overview describes the major factorsthat influence market trends and how theseaffect markets, whether for the short, medium, orlong-term.

Population growthIn Africa, the rate of population growth rangesfrom 2% to 3%. This means that, every year, asignificantly higher number of people need to besupplied with agriculturally based goods. Formany countries in sub-Saharan Africa, thepopulations are likely to double within the next15 to 20 years, suggesting a significant increasein demand for basic goods.

UrbanisationLast century, the world urbanised at an alarmingrate, and about 50% of the world’s populationnow lives in towns and cities. In developednations, the level of urbanisation is particularly

3. In this manual, the terms marketing chain, marketchain, product chain, supply chain, and value chainare used interchangeably.

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Marketing Basics

high, but rates of urbanisation are, in fact,highest in developing countries, especially inAfrica. The rapid movement of people from ruralareas to urban centres means that moreconsumers want to buy, not grow, food.

Rising incomes, particularly urbanIn most countries, incomes are rising. Asincomes grow, people tend to spend a lowerpercentage of their income on food. This meansthat people can select either higher quality ormore processed foods. The fastest rate of incomegrowth is found in urban centres and, as ageneral rule, the larger the urban centre, thewider the range of products that are in demandin terms of type, quality, and quantity. In Africa,the emerging middle class is demanding moresophisticated goods, a demand that is beingpromoted by the rise of supermarkets.

Market liberalisationThis term refers to the process by which controlof the marketplace is released or “liberated” fromthe strict regulation or control of Governments.In many cases, State-led marketing led tomassive internal debts, as Government regulatedmarkets to meet their budgetary needs. Lack ofcompetition, weak business/marketing skills andlow efficiency led to a distortion of incentives,often producing low prices for farmer’s goods andhigh prices for consumer’s goods. In some casesthis problem was coupled with high levels ofcorruption. When Governments requiredinternational support to offset serious debt, theywere asked to relinquish control of the market byfinancial institutions such as the InternationalMonetary Fund. The Government, in all cases,still provides a regulatory framework but themechanics of the market is organised andimplemented by a host of private sector actorsand companies. This has in most cases led to theemergence of a more competitive marketingsystem, although in poor countries a trulycompetitive entrepreneurial sector is yet toemerge.

GlobalisationThis term is used to describe the recent impact ofinnovations in communications and transportsystems on trade and the increasing integrationof world markets. This process has encouragednations to free up their economies and increasetheir volume of trade, including agriculturalproducts. Although increased economicliberalisation and openness has been proved tolead to growth, for many developing countries,

liberalisation can cause serious economicdifficulties. Globalisation is considered by manyto be the most influential trend on market forces,having both a positive and negative effect forproducers.

Declining commodity pricesOne devastating effect of globalisation has beenthe steady fall in global prices of majoragricultural commodities traded on the worldmarket. For virtually all of the top 20 tradedagricultural commodities, their value has fallento its lowest level in more than 40 years. Thiseffect is caused by the declining value of primarygoods relative to manufactured goods over timeand a general oversupply to major markets.

Market concentrationFor the last 20 years, the number of buyerstrading on the international market has radicallyshifted from very many local business traders toa few large international trading houses. Formajor commodities such as wheat, maize,soybean, coffee, maize, and vegetable oil, thenumber of traders per commodity has fallendramatically to 5–10 major international tradinghouses, such as ADM, Cargill, and Louis Drefussin the grain markets, or Sara Lee and Nestlé inthe coffee markets. This loss in competition atthe trader level in the market chain has meant asignificant shift in market power away fromfarmers to buyers. This loss of negotiating powerfor farmers means they are increasingly lockedinto a price structure dominated bymultinational buyers. The danger of thissituation is that the few buyers have the marketpower to maintain low prices and establishcartels.

Retailing and vertical integrationThe fall in the number of international buyers isreflected in a similar effect for the retailer sector.In developed nations, for the last 20 years, manyhundreds of village shops have been supersededby a few national or now multi-nationalsupermarkets. For many sectors, supermarketsare the dominant buyers and farmers arerequired to meet their stringent quality controlsand price structures. Sometimes, companiesalong the supply chain merge so that theybecome integrated or “interlocked” organisationsthat can grow, transport, process, package, andretail goods. This type of operation is efficientand can effectively lock out smaller growers fromthe market.

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Consumer concern for food safetyIncreasing supplies of food into urban centreshas led to situations of mass poisoning. In Kenyain 2004, more than 100 people died of aflatoxinpoisoning after eating poorly stored maize. Beefcarrying mad cow disease, white wine mixed withglycols, peanuts contaminated with alflatoxins,coffee containing mycotoxins, and numerousother cases have either caused mass illness ordeaths and have led to major new campaignsand legal regulations to make food as safe aspossible for the public. Such problems mean thatconsumers want to be sure of the quality of thegoods they consume.

Industrialised nations have introduced stringentfood safety laws that enforce adherence tospecific quality standards. Companies that fail tomeet such standards are fined and the defectiveproducts destroyed. To sell food products inindustrialised countries, suppliers must meetfood safety requirements, and products aretested on departure and on arrival. Failure tomeet standards leads to termination of contracts.The stringency of food safety laws, oftendescribed under sanitary and phytosanitary(SPS) requirements, is rapidly becoming a majortrade barrier for goods into developed nations.Food products are now required to carrytraceability tags to further ensure food safety. Inmost developing countries, food laws are seldomenforced but they are being developed and willeventually become an important issue forfarmers selling goods on the market.

The growing importance of sustainabilityissuesIncreased productivity can severely affect naturalresources. In the agricultural context, this canmean overuse of inorganic chemicals andpesticides. For farmers, this can mean that theirland becomes less productive and they need tomove onto virgin or more marginal land, therebyaccelerating environmental degradation.Consumers have reacted against this with a shifttowards demanding products that are producedorganically or at least using “clean” productionsystems. Consumers will also pay a considerablepremium for products that can show they wereproduced under environmentally friendlyconditions. In the future, the use of sustainableand environmentally friendly production systemsis likely to become a more important issue.Already, the “organic” market is growing by 20%per annum.

Information and communicationtechnologyThe advent of computers and, particularly,mobile phones is rapidly changing the ability ofcommunities in rural areas to communicate andgain new information. The mobile phone isconsidered to be the most applicableinformation and communication product and, inthe future, as phones become more widelyavailable they will become an essential tradingtool. Already, in many countries, buyers insiston their suppliers being contactable and, forsales of higher value goods, access to phonetechnology is fast becoming an essential elementof the marketing toolkit.

Niche markets and fair tradeAs consumers become more sophisticated theycan afford to pay a premium for exotic, novel, orspecialty products. These new types of “lifestyle”products, that is, products that fulfil the needsof a very select consumer interest group, havecreated a new market segment related to “niche”products. Specialty coffee, produced from alimited number of farms is an example of aproduct that is in such scarce supply that it cancommand a price many times higher than themainstream coffee product. Similarly, someconsumers will only buy goods that are fairlytraded, and the charity organisation Oxfam haschampioned the idea of “fair trade” products,which pay farmers a fair price for a qualityproduct.

Biotechnology, new crops, and newmarkets for biofuels, biodegradables,biomedicines, and nutracueticalsAnother emerging market is being createdaround new types of organic products. Theseinclude genetically modified organisms (GMOs),plant-based biomedicines, biofuels, plantproducts with high vitamin or mineral content,such as vitamin-A-rich sweet potatoes andiron-rich beans. Although GMOs suffer fromsome consumer rejection, their high productionperformance will probably mean that they willfind buyers and that the GMO market will grow.

The Marketing Context for SmallFarmersDespite their production potential, smallholderfarmers confront serious constraints in profitingfrom their resources. Communities need todevise evermore innovative ways of using their

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Marketing Basics

labour, resources, and skills to take advantage ofnew business opportunities. In many cases,current trends will continue to marginaliseincreasing numbers of small-scale rural farmers,with particularly negative effects on those thatare least organised and distant from markets. Toaddress these changes, rural communities needto adopt strategies, including agriculturalextensification, intensification, diversification,and mixed on- and off-farm income streams.They need to find ways to make their productionmore competitive, add value to primary goods,and target higher value products into growth andhigher value markets.

For a more detailed discussion of the changesthat have taken place in Africa as a result ofagricultural marketing liberalisation and theimplications of this for farmers who now have toproduce for the market rather than supplyingmarketing boards, see also FAO’s MarketingExtension Guide No. 1 “A Guide to MaizeMarketing for Extension Officers”4 No. 2 inthe Marketing Extension Guide series,“Understanding and Using Market Information”this includes a discussion of factors affectingsupply and demand.

Preparing for riskOne of the more difficult tasks, when developingmarketing strategies is to assess the level of risk

associated with a new business option. Whenworking with poor smallholder farmers it isimportant to find a simple means of assessingan appropriate level of risk that a farmer orfarmer’ group should take on when developinga new enterprise.

Tools such as the Ansoff matrix (Figure 3) areused to categorise risk options, by comparingtypes of products and markets. In this matrix,risk increases from 1 (low risk) to 4 (highestrisk). Market analysis based on demand andprofitability often highlights higher riskoptions and enterprise groups need to beaware of the risks and benefits from high profitoptions.

The market facilitator can use the Ansoffmatrix to guide groups towards a sensible levelof risk based on their experience and financialoptions. In this case, facilitators may advisenewly formed farmer groups to select optionsthat are based on market penetration with theview that farmers should test new markets in astepwise manner starting with test plots andmarket trials before engaging in larger scalesupply.

For groups with more experience in marketing,higher risk, higher return strategies are likelyto be more attractive. To facilitate theidentification of market opportunities andevaluate prospects for diversification, CIATdeveloped a guide: Identifying and assessingmarket opportunities for small rural producers(Ostertag, 2006).

4. (for free copies e-mail [email protected]).(www.fao.org/ag/ags/subjects/en/agmarket/understanding.html)

Existing products New products

Existing markets 1. Market penetration (lowest risk) 3. Product development

New markets 2. Market development 4. Diversification (highest risk)

Figure 3. Using the Ansoff matrix for risk assessment.

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SECTION 3Institutional Preparation and Planning

By the end of this section, the lead organisationshould have:

• Made an initial survey of the area andpotential partners.

• Identified a site for intervention, that is, a“project area”.

Time frame: 2 to 3 weeks.

Rapid Reconnaissance SurveyAs part of the planning process, the leadorganisation, that is, the organisation that willsupport a market facilitator, should start out byundertaking a rapid reconnaissance survey ofthe area in which they intend to work. Thisinformation will provide a better understandingof where to start activities and how to link withpotential partners. The survey, which shouldnot take more than a week, should gathergeneral information on the following areas:

Social contextGeneral information on the targeted area,including its history, climate, population, socialgroups, and outlook.

Natural resourcesBasic soils, water, specialisation in any crop,livestock, natural resources, areas ofoutstanding beauty, specialist skills.

Local production resourcesTransport system, market infrastructure, farmsizes.

Social capitalInventory of institutions and developmentagencies working in the area and of what theydo; determination of their interest in learningmore or participating in the market-orientedwork being planned; interviews with communitygroups to evaluate levels of social networking,existence of groups for political organisation,

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Institutional Preparation and Planning

savings, production, etc., with information ongroup size, numbers, age, strength, etc.

Business organisationInterviews with larger traders to gain a basicunderstanding of the major goods, products,and services traded in the area. Majorchallenges and opportunities, as viewed fromthe private sector. Interviews withentrepreneurs who process goods, especially thelarger entrepreneurs and traders who often havea broader view of the market. Interviews withleading service providers from the inputsupplies, micro-finance and banking sectors toassess investment processes and potential.

Growth commercial marketIn addition to the project site survey, the leadagency should also consider the widermarketing situation of the cluster of districts orcountry in which the project is beingestablished. This study should only take3 to 5 days, start with a review of nationalbusiness statistics of the country to determinekey areas of income from the agricultural sector.Meeting with the agricultural managers of largeagricultural development projects, agriculturalbanks and if possible holding short lunch typemeetings with leading industrial processors andtraders. These rapid interviews will enable theagency to gain an understanding of the principleagro-industries in the country or major demandcentres near to the intended project site and toevaluate if these industries offer an potentialmarket options. Linking into growing industrialmarkets can be a highly effective way of linkingfarmers to market and mature industrialmarkets offer the possibility of access to stablegrowth market opportunities and in some casescontractual arrangements.

In undertaking these areas of analysis, much ofthis information is likely to be available fromsecondary data sources and other developmentorganisations and can be used as the basis onwhich to identify like-minded partners toinitiate a “working group”. At this stage, theservice provider should define the criteria forselecting enterprise groups (i.e., farmer groupswho will develop new businesses) and forselecting a defined area in which to implementthe project.

Assessing Levels of “In-House” Skillsfor Agroenterprise and MarketFacilitationAs agroenterprise is often a new area of work,the lead organisation may benefit from firstevaluating its own “in-house” skills andcapacity for marketing and agroenterprisedevelopment. This information will be useful forassessing current status and for makingdecisions on the level of capacity buildingrequired to achieve a desired output, andprovide an idea of expected performance in thefield. Clearly, an organisation with strengths ineconomics and marketing is more likely toachieve more rapid results in agroenterprisedevelopment than organisations with staff whoare skilled in agronomy and health.

In evaluating in-house capacity, the lead serviceprovider should consider the following aspects:

• The number of staff with time committed toagroenterprise activities.

• Qualifications of staff, experience, andinstitutional rating, that is, managementdays, agricultural advisor days, field staffdays.

• Level of training in participatory skills,including (1) community mobilisation,(2) formation of farmer groups, (3) marketvisits, (4) market analysis, (5) businessplanning, (6) savings and loans and/ormicro-finance, (7) agroenterprisedevelopment, and (8) business developmentservices.

• Experience in the skills listed above, that is,have these skills been put into practice? Ifso, what were the results?

• Access to training materials to assist in amarket facilitation activity.

Staff members should discuss these ideas andperhaps complete the capacity analysis boxgiven in Appendix 2. A similar exercise can alsobe undertaken to evaluate other partners in anobjective manner. If the group being analysedscores highly (e.g., more than 30), then they willhave strong marketing and enterprise skills thatare well suited to rural business development.However, if the score is less than 10, then theteam may benefit from training.

Selecting Partner OrganisationsAgroenterprise development is a complex task.To link activities and actors along a marketchain in an effective manner requires careful

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gathering of relevant information as well asskills in building relationships. It is unusual tohave all the skills required within oneorganisation. Hence, success in agroenterprisedevelopment usually requires that organisationsfind like-minded partners from the public andprivate sectors to support the process at specificpoints. Partners are also essential in scaling upactivities.

When selecting partners, the initiating team,which may include partners from research,education, or development, should addresssome basic questions: (1) whether a prospectiveorganisation has the resources and interest tosupport a “market facilitator”, (2) if theorganisation’s management is fully committedto supporting the exercise, (3) whether partnersare aware that agroenterprise development is along-term process linked to seasonal cycles,meaning that the process takes a minimum of6 months to implement, but usually requiring atleast three seasons—which can take up to36 months—to complete, and, finally, (4) if thistime frame is agreeable, then does the instituteselected to support a market facilitator meet thefollowing criteria:

• What new skills does this partner offer thegroup?

• What are its objectives?• What activities does the organisation

undertake to achieve these objectives?• Does it have the financial and technical

skills and/or resources required?• Does it work in the same or desired

geographical area?• Does it have experience in agroenterprise

activities?• Is it interested in or capable of a long-term

commitment to agroenterprise?• Can it mobilise funds for activities in

agroenterprise development?• Does it work with other agencies such as

research or micro-finance?• Does it have staff trained in using

participatory techniques?

Other more specific issues include:

• Does the organisation work on a time-boundproject (e.g., 1 to 3 years) or on a longer-term basis?

• Is its goal to empower a community withskills, or to provide services to enable it tobetter access markets?

• Does it provide communities with assetssuch as seeds, tools, loans, or livestock, ordoes it take a more facilitatory role insupport of other tertiary partners?

• What are its entry and exit strategies?

In many cases, agroenterprise development willbe a new area of activity for at least one of theorganisations and therefore the selection ofpartners may not be based on their current levelof skills. The decision to set up a partnershipmay be based on their performance in the field,their ability to resource new activities, theinterest of their staff in this new area, and alsotheir vision of how agroenterprises will supporttheir client communities.

In some cases, a relationship may need to bestrengthened so that performance can bemonitored more effectively. For example, aformal or informal “Memorandum ofUnderstanding” should be prepared on how therelationship will operate, with information onshared roles and responsibilities and anyfinancial arrangements that are tied tofieldwork.

Partners should discuss these are issues as theanswers may influence how an agroenterprisedevelopment approach is planned andimplemented. Future plans will be particularlyinfluenced by the level of investment available toconduct surveys and initiate new agroenterpriseprojects with farmer groups. Likewise, a projectneeds to know if, in the future, funds will beavailable for partners to scale up from pilotprojects.

Once the partners are selected, they then needto select candidates for the role of “marketfacilitator”. This person should be interested inthe new role, be dynamic, have strongparticipatory skills and, if possible, have somebackground in business. In some cases, thismay require hiring a new type of person to theorganisation.

Example of PartnersIn three African reference sites, institutions thathave undertaken this activity in Africa withCIAT’s Enabling Rural Innovation groupinclude:

UgandaCatholic Relief Services, Gulu District;Africa2000 Network, Tororo District; Africare,

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Kabale District (Box 1); National AgriculturalResearch Organisation (NARO), BulundiDistrict; from the private sector; Uganda GrainTraders Ltd.; Radioworks; and mobile phonecompanies.

TanzaniaTraditional Irrigation and EnvironmentalDevelopment Organisation (TIP), LoshotoDistrict; Faida MaLi and Hai District Counciland the Catholic Relief Services in Mwanza.

MalawiPlan International, Kasungu District; DistrictAgricultural Research System.

On a larger scale, the Catholic Relief Serviceshave undertaken a regional shift towardsagroenterprise development, with 9 countriesparticipating in an East African LearningAlliance. The countries involved include:Burundi, Eritrea, Ethiopia, Kenya, Madagascar,Rwanda, South Sudan, Tanzania, and Uganda,as part of the agroenterprise learning alliance.

Host institutions may be governmental or non-governmental, agriculturally-based or morebroadly development-oriented, or focus onproduction or business development services.

Evaluating Farmer GroupOrganisationsAlthough the focus of the agroenterpriseapproach is the market chain, in manysituations considerable market facilitation willbe required to support producers or farmergroups. This is because farmers are often theweakest link in the supply chain. In our view itis unlikely that effective enterprises will bedeveloped by working with individual poorfarmers, clearly individuals who haveresources can and do establish successfulenterprises. For smallholder farmers, there isconsiderable evidence to show that organisingfarmers into groups is an effective way oflearning new ideas and becoming morecompetitive through for example gaining fromeconomies of scale.

The market facilitator should however alwaysverify that group work will be of benefit to thefarmers, as there are no absolute rules thatfarmers must be in groups.

As with all communities there are many socialsegments within any given society and farmerhave different levels of assets, skills andcompetence. It is important that a marketfacilitator understands the capacity of farmersworking within a group to match appropriatelevels of risk with the farmer abilities. To assist

Box 1

An example partnership between CIAT and Africare, Kabale, Uganda

Why and how was the NGO Africare chosen to carry out agroenterprise development activities with CIAT?

CIAT’s research group has worked with Africare’s field and management staff for many years in Kabale Districton participatory research on bean production. Over this long-term relationship, the two institutions had builttrust, strong lines of communication, and a common vision of what they would like to see happen in their areasof operation.

The partnership began with limited interaction, with the two institutes operating small field trials. CIAT neededa development agency in the highlands of southwestern Uganda that could finance and provide logisticresources field staff, and could scale up successful ideas with other communities. The Africare team was seenas a potentially strong partner as they had well-trained staff on long-term contracts.

The two institutes have since built a good track record of working on common issues related to food securityand farmer field experimentation. Linking Africare into a more market-oriented arrangement was a case ofnatural progression, with no need for additional memorandums.

The institutions work well on marketing and see this new area of intervention as building on previous activitiesand as supporting their vision of promoting food security and income-generating activities.

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the market facilitator in assessing farmergroup capacity, we have developed a shortchecklist of criteria that will help indetermining competency and experience(Appendix 3).

The competency checklist is something thatcan be used by the market facilitator in a focusgroup discussion with farmers. Or thechecklist can be adapted and given to thefarmer group themselves for means of selfevaluation.

Matching risk with farmer groupcompetencyThe idea of matching the risk of certainagroenterprises with farmer group competencyaims to avoid a situation whereby farmers takeon inappropriately high levels of risk from theoutset. The market facilitator can use simpletools such as the Ansoff matrix (Section 2,Page 21) to alert the group to the level of risk.The group members should also be aware oftheir exposure to risk based on specificaspects of a business plan such as level ofinvestment required, labour required, thetypes of buyer and the time to first payment orbreak even. The market facilitator should alsoask the farmer groups to select which productsthey want to invest in based on their decisionsof an acceptable level of exposure to risk.

Giving the final choice of which product toinvest in, the farmers group enables certainsegments of a community to come together andtake on a particular market chain, the poorergroup perhaps opting for a lower risk optionswhereas farmers with more assets or greaterlevels of marketing skills may want to worktogether on a more specialised, higher riskoptions.

This self selecting approach to riskmanagement is attractive as it provides theopportunity to take the agroenterpriseapproach to a community, but then promotesthe idea of the agroenterprise groups beingformed on a self-selection process.

In this way the approach remains inclusive,flexible and offers a democratic way of workingwith different segments of the poor within aless advantaged community, withoutattempting to evaluate wealth and herd peopleinto class-based groups.

Networking and Establishing GroundRulesHaving identified partners, the next stage is tomake clear agreements on how the process willbe conducted with particular respect to inputs,assets, and messages given to the beneficiaries.

Level of interventionTo maximise the benefits of agroenterpriseinterventions, market facilitation should not beconfined to one group of farmers, one processoror one trader for several years before beingexpanded into new areas. Instead, the goalshould be to work within a market chain at anetwork level, testing the process with manyfarmer groups, several processors and/ortraders. In Uganda, CIAT is developingAfrica2000 Network’s capacity for marketfacilitation, with facilitators operating in eightdistricts with more than 50 farmer groups andmany types of traders.

Scale can only be achieved from a reasonablestarting number and therefore the initial level ofintervention must not be a restricting element ofa strategy which aims to introduce marketinginto the farming system. The market facilitatorshould operate at a level where impact isconsidered to be the most effective, whileproviding tangible and concrete support tofarmer groups. For a selected market chain, themarket facilitator should start with a minimumof five farmer groups and also focus on potentialservice providers, and aim to scale up thenumber of farmer groups after one season. Atthe end of 2 years, the facilitator should beservicing at least 20 farmer groups, eachcomprising 20 to 30 farmers.

Planning for scaleScaling up is an issue that the supportorganisation and market facilitator need toconsider from the outset. A major reason forestablishing a working group is to prepare forscaling up, and the lead organisation shouldidentify partners who can disseminatesuccessful interventions through theirnetworks. However, scaling up should start onlyfrom an initial point of success. The leadorganisation can therefore realistically beginreplicating the process more widely only whenthe market facilitator has undergone at leastone effective enterprise cycle (i.e., fromidentifying a market to selling the product orservice). At the end of this first enterprise cycle,the facilitator should then assess the interest

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and commitment of other like-minded serviceproviders in the project area to take up theapproach. Hence, the lead institution needs toappreciate that, in the early stages of theagroenterprise process; many partners may onlyplay an observer role.

Given that the pilot project is successful, thenext stage in scaling up will be for the leadservice provider to apply the approach to morefarmer groups within the project’s area. Thescaling up process should either (1) encouragemore groups to sell a selected product into anidentified market, thus achieving economies ofscale; or (2) empower many groups to diversifyinto a wider range of products and markets.

Whatever the aim for scaling up, the leadorganisation should investigate opportunitiesfor networking so that other service providersmay gain skills in agroenterprise developmentand apply the methodology more widely. If thepilot project and initial learning occurs over 1 or2 farming seasons in a year, then scaling upshould be implemented in the next 2 or 3 years.With many successful projects, scaling up isoften not achieved because the implementinggroup spends too long on the pilot stage. Aproactive approach to scaling up must thereforebe adopted.

Our experience suggests that if the pilot studyworks well, then the lead institution should aimto rapidly increase the number of farmer groupsby the second, and certainly the thirdenterprise cycle, or farming season. Scaling uprequires considerable effort and resourcesinvested in capacity building, which may meantraining partners for 12 to 24 months. Trainingis also best applied with incremental sessionson each skill in the agroenterprise process,starting with pilot sites on existing productsand then progressing to full market-opportunitystudies, to developing new enterprise options,and strengthening local business supportservices.

Client Support and Provision ofPhysical and Financial AssetsRural development inevitably involves theinvestment of resources into a specificcommunity through direct investment, creditschemes, or skills and/or technology transfer.We hope that such investments will have long-term benefits for the community and certainly

hope to avoid any negative interventions. Somedevelopment agencies have considerableresources that must be spent within a limitedperiod. Under such conditions, service providersare greatly tempted to force-feed localcommunities with new assets and “pump up”their ability to increase production and supplylocal markets. This, however, can becounterproductive, unless sufficient funds arealso invested in developing adequate marketoptions.

In today’s less interventionist environment,development organisations are increasinglyinvesting fewer resources in direct inputs (e.g.,seeds and tools) and emphasising facilitation.The aim is to empower the local community totake a more proactive approach to their income-earning abilities.

However, the ability of farmer groups to respondto market signals will depend on the targetedcommunity’s position within the livelihood or“wellbeing” (wealth) spectrum. Somecommunities, for example, are in extremepoverty and/or shock because of:

• Food scarcity through weather.• Calamity such as war, drought, or floods.• Chronic political insecurity.• Lack of income opportunities by virtue of

remoteness from markets.• Traditional lifestyles that are only

intermittently cash-based.

In such cases, service providers should workwith the local community and donororganisation to decide on asset buildingapproaches before embarking on a transitiontowards a marketing approach. However, theservice provider should clearly maintain thatthe work’s goal is to build up sufficient localassets and then quickly move into a moremarket-led approach to avoid laying thefoundation for continued dependency. Even insituations where farmers are food insecure,markets can be highly resilient, usuallyrecovering effectiveness after most shocks. Theservice provider should therefore work withcommunities, providing only the most essentialassets and looking for market options as soonas they emerge. Long-term provision of freeassets leads to dependency and negativeincentives for market development, thusrelegating farming communities to long-termpoverty.

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No handoutsIn most situations the best advice for a marketfacilitation project is to adopt the strategy ofno handouts. This makes the rules ofengagement clear and although the enterprisedevelopment process may be slower comparedwith financially supported or subsidisedmethods, it is also more likely to be sustainable.

Internal savings and loansIn the past 5 years there has been a generalrethink regarding the use of credit in ruraldevelopment. Whereas non-governmentalorganisations (NGOs) were highly supportive ofcredit systems, problems associated with poorrates of repayment, inability of clients toovercome churning5 and lack of sustainability ofthe credit institutions has encouraged severalNGOs to place more emphasis on group savingsschemes and also on developing group skills tointernally loan their funds at profitable rates.Simple savings methods such as merry-go-rounds and crisis savings, starting with very lowinputs are one way to inculcate the idea ofsavings. This approach is highly consistent withthe agroenterprise approach as groups can startwith a low investment business plan and asgroup savings increase, so can the ambition ofthe business plan. Profits from the group can bere-invested into the group business or loaned,either within the group or to other clients outsideof the group to increase the income earningcapacity of the savings.

Use of loans and creditFor many farmer groups, market opportunitiesare available but can only be accessed if “short-term” capital or material support is available. Itshould be remembered that farmers should notbe encouraged to take free inputs if they are atall capable of entering a business arrangement.It should also be noted that many agencies thatare not specialised in finance have a very poorrecord of loan recovery.

However, once a facilitator has identified that acritical investment is needed to access aparticular market such as seed, fertilisers,pesticides, packaging materials, or transport,the service provider should develop a businessplan that will enable farmers to buy those

requirements through some form of paybackscheme. This may include discounting the creditthrough cash, labour, or at least paying back thecost of seed with part of their harvest.

The principle of the agroenterprise developmentapproach is that farmers enter a businessagreement, becoming business partners, andtherefore cannot consider any credit given as asoft loan or potential gift.

We emphasise this principle because farmers willadopt very different attitudes towards enterpriseoptions when given a choice between free inputsand repayment schemes. In the free input orheavily subsidised situation, ownership orapplication to a business process is generallyweak. The incentive or implication is to reduceresponsibility and reward failure. In contrast,when incentives are placed on individualperformance and assets and inputs are tied togroup responsibility for repayment, theimplications are that greater individual effortleads to higher reward, but that all groupmembers are accountable to each other. Peerpressure is a powerful community force that theservice provider should use to guide the group inworking towards success.

Rules of engagement for creditThe use of credit requires financial skills andsound business management. Where possible,the service provider should enable farmers toaccess financial credit through an experiencedthird-party financial agency such as a micro-finance union. Service providers who are focusedon production and marketing should usually avoidplaying the role of credit agent because thisgenerally means the service is poor andundermines the market for more specialised localservice providers.

However, and unfortunately, in many remote ruralareas, few specialised financial services exist, andfinancial agencies are even fewer that will lend tofarmers who have no collateral assets. In this less-than-desirable situation, the lead service providermay need to provide a short-term credit facility. Insuch circumstances, the service provider shouldseek the advice of a local financial agency toestablish near-market conditions for loan ratesand to understand and where needed clarify theground rules and the responsibilities of the farmergroup being considered for a loan. The informationin Box 2 describes the conditions stipulated for afarmer group in Uganda, where no micro-financewas available to support the group.

5. Churning is a term used to describe a situationwhereby money is cycled through a business withvirtually no profit. Hence money circulates but whencosts of borrowing have been removed the return onthe investment hardly merits the effort put in.

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Box 2

How financial conditions affect planning

In Uganda, a service provider and farmer group developed a business plan to supply an identified market with5 tonnes of beans. The initial enterprise plan, based on free inputs, included developing a group production plot,paying for all labor needs, and clearing previously unused land.

When the group was informed that the business would be supported through a loan, the farmers changed theplan entirely. Funds were borrowed only for essential capital items. The group production approach wasreplaced with farmers producing individually, and hired labour was replaced with family labour. The onlycollective action was for marketing. The simple change in incentives changed attitudes and group dynamicsentirely as reality set in.

The service provider endeavored to find a finance agency to administer the loan and set an interest rate. Amicro-finance agency advised that it did not loan to farmers who did not have title deeds for their land. Theagency also informed the group that they only provided short-term loans, starting at US$5 (or local currencyequivalent) for 1 or 2 months, with initial repayments starting after 10 days. This loan instrument wasdeveloped for petty trading. If a borrower was successful and credit worthy, then he or she could borrow up to$500, repayable within 18 months. Interest rates were 25% over 3 months, that is, 100% per annum.

On revising the implementation plan, instead of borrowing US$1500, the farmers wanted to borrow US$500for one season, that is, 4 to 5 months. Inflation rate in the area was calculated as being about 10%. For thefarmer group to understand how to calculate the rate of inflation, the calculation was based on the annualincrease in price of a locally available industrial product, such as a bicycle. Loan conditions were thereforemade as follows:

1. The initial capital sum would be given to the group only when they had set up a bank account.2. The funds deposited would be the responsibility of the financial committee.3. An interest rate of 20% was agreed on.4. The loan would be used for one cropping cycle, that is, for a maximum of 6 months.5. The funds would be used only for the expenditures agreed on in the business plan.6. Group members would not conduct cash transactions.7. Group members may apply for funds to buy inputs such as seed, fertilizers, and pesticides, or finance

activities such weeding or harvesting. For physical assets, the requestor would be given the physical inputto the value of the funds requested. For seed, farmers would be given seed, based on market prices. Labourwould be provided through labour vouchers given to the requesting farmer, based on a daily or task-basedrate. The labourer could redeem payment from the treasurer on completing the task set (e.g., preparing0.5 acres of land for planting). The treasurer provides cash to the chairperson and/or deputy chair forpurchases only in the presence of another committee member.

8. The group would meet regularly (weekly) to review payments made and compare notes on crop performanceagainst the activities laid out in the business plan.

9. At sales, the group would sell collectively, with profits being shared according to the amount of producethe farmers contributed to the collective sale. Any costs would be subtracted from the resulting incomebefore distribution to farmers.

10. The group requested two responsibility clauses:• Farmers who defaulted on the loan would be identified but costs would be covered by the group.• In the case of a general crop failure, the farmer group would not be obliged to sell their assets to pay

for the loan.

Such conditions should be revised on a case-by-case situation. The purpose of the loanapproach, albeit subsidised, is to introduce theconcept of the cost of finance to farmers. Ideally,the level of the loan should be made in an

incremental manner to help build financialskills within the group, encourage members tokeep records, develop group responsibility, andprepare the group for future dealings with aspecialised financial agency.

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Information from service providers confirms thatrepayment levels from farmer groups, especiallythose who have received free inputs, are low.Where possible, therefore, loans should beadministered through a third party. Many localmicro-finance agencies are under funded andwill discuss terms with an agricultural serviceprovider who has funds to support farmers.

Risk or enterprise fundsEnterprise development is inherently risky. Inthe business environment, failure occurs andthe service provider should factor thisprobability into the planning process and insome circumstances, may consider sharing therisks associated with it. For an enterprise groupwho are learning new skills in developing abusiness, they invest time and money into anew business without knowing if it will beprofitable. To encourage more marginalisedfarmer groups, or groups living in extremepoverty, to embark on developing anagroenterprise, the service provider mayconsider sharing the cost of risk by providing“financially appropriate” grants to support“activities” such as:

1. Preparing a business plan.2. Setting up an association of enterprise

groups.3. Experimenting with a particular product,

process, or livestock.4. Training on critical points such as quality

control for products, establishing apackinghouse, and training in businessskills and book keeping.

5. Pilot site development.

The idea of “financially appropriate” support canbe linked to daily wages when funding thepreparation of a business plan or the time toundertake a production-based experiment.Examples of how such support has been giveninclude the following:

In the Philippines: farmers were provided withspecialised plastic containers and labels to packtheir high-value vegetable crops and tag themfor transport to the market. The tags were todetermine produce sourcing for both paymentand rapid source location if there were problemswith the product. In this case the costs of thecontainers were discounted from profits, whenthe business was operational.

In Tanzania: farmers were provided with seedsof a new variety of tomato and given fertiliser for

a test plot to encourage them to compare theirlocal varieties with the new variety fromresearch. The farmers were not paid to do theexperiment, because their labour wasconsidered as matching the grant. The risk orenterprise fund is therefore used to share therisk of introducing or testing an innovation.

In Uganda: a grant was given to a localmanufacturer to build a prototype cassava-processing machine for a farmer group settingup a pilot site for cassava processing. Theinformation gained at the pilot site was used toverify and substantiate the ideas of the initialbusiness plan, which, if successful, could bereplicated by other farmer groups.

In Vietnam: farmer groups were given grants ofUS$3 to $5 to cover costs in preparing abusiness plan. The opportunity costs for locallabour were set at about US$0.80 per day andthe loan, therefore, would cover the farmer’stime for about one week. In this case, the fundwas used as an incentive for farmers to work oncollecting information and developing their ownbusiness plan.

The size of grants from a risk or enterprise fundshould be carefully considered in terms of costsharing and potential profit. At the mostcommon level, with small-scale enterpriseoptions, the risk fund would typically operate ata level of US$10 or local currency equivalent,increasing to levels of $200 to $300 with largerbusiness options, and more often with highervalue products. Sometimes, the level ofinvestment can increase as the scale of theenterprise increases.

When the enterprise’s operations reach beyonda threshold level, for example, $500, the serviceprovider should opt for a more sophisticatedapproach whereby the risk investment fund isrepaid, based on the enterprise’s profits. Whensuch a risk investment arrangement is beingused, then the lead service provider shouldhand its management to a third-party specialistfinancial agency, and guarantee the use of riskfunds by that agency.

Exit StrategiesAs with scaling up options, the leadorganisation should also make plans for thetime it intends to invest with a community orcluster of farmer groups. If the goal is toempower many communities with marketing

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skills, then the lead organisation will need tomake some decisions on the amount of time itcan dedicate to a typical farmer group.

Exit strategies can be time bound, for example,2 to 3 years of support to a given number offarmer groups before withdrawing.

Alternatively, the initial service provider willbegin by spending years 1 to 2 with a selectnumber of farmer groups to build in-housecapacity, adapt the process to local conditions,and build up a group of interested partners.

In years 3 to 5, the provider will step back fromfrontline fieldwork and focus on market linkageand networking the agroenterprise developmentapproach through other service providers. Atthis time, the provider can also shift its focustowards the capacity of local business supportservices, giving particular attention to linksbetween farmer groups and market informationand financial services.

In years 6 to 7, the agroenterprise approachscales up through third-party organisations

working alongside their selected farmer groups.The lead service provider can then focus moreon supporting local business developmentservices that will enhance the sales capacity ofselected market chains.

In years 8 to 10, several organisations,including the instigating lead provider, canwork to strengthen networking across farmergroups in much the same way that micro-finance operations link groups of borrowingagencies. A final area of intervention from theservice provider may at this point include localand national policy advocacy (Table 2).

The time frames suggested in this model dependon the capacity and abilities of farmer groupsand the strength of markets in being able tosupport many farmer groups.

The service provider may also choose only toapply learning skills and then exit. This processwould initially take one season to get farmers tomarket and then an additional year to pass onthe enterprise skills, that is, it would be a2-year process.

32


Tabl

e 2.

Tra

nsi

tion

al e

xit

stra

tegy

wit

h a

5 t

o 10

-yea

r ti

me

fram

e.

Tim

ea

6 m

onth

s1

to 2

yea

rs2

to 5

yea

rs6

to 7

yea

rs8

to 1

0 ye

ars

Lead

ser

vice

•G

ain

in-h

ouse

Est

ablis

h a

•Fo

cus

on s

calin

g u

p•

Eva

luat

e lo

cal B

DS

•Fo

cus

on b

road

-bas

edpr

ovid

erco

mpe

ten

cem

onit

orin

g an

dth

rou

gh in

tere

st g

rou

pop

tion

s fo

rse

rvic

e pr

ovis

ion

su

ch a

s•

Init

iate

eval

uat

ion

part

ner

sst

ren

gth

enin

gfin

ance

an

d m

arke

tin

tere

st g

rou

ppr

oced

ure

•Pr

ovid

e tr

ain

ing

to o

ther

•Li

nk

farm

ers

to B

DS

info

rmat

ion

part

ner

s th

rou

gh a

prov

ider

s•

Init

iate

wor

k re

late

d to

lear

nin

g al

lian

ce p

roce

ss,

•Li

nk

farm

ers

to o

ther

polic

y an

alys

is a

nd

i.e.,

incr

emen

tal l

earn

ing

hig

her

ord

erad

voca

cy•

Init

iate

pro

cess

of w

orki

ng

entr

epre

neu

rsw

ith

BD

S p

rovi

ders

•In

itia

te w

ork

on p

olic

yan

alys

is a

nd

refo

rm

Farm

er g

rou

ps•

Farm

ers

orga

nis

e•

Sta

rt s

avin

gs•

Farm

ers

focu

s on

new

•Li

nk

wit

h o

ther

•Pa

y fo

r se

rvic

es t

o su

ppor

tin

to a

mar

keti

ng

sch

eme

prod

uct

sfa

rmer

gro

ups

for

grow

th in

pro

duct

sal

esgr

oup

•In

trod

uce

M&

E•

Str

engt

hen

rec

ord

keep

ing

sele

cted

pro

duct

s•

Lin

k w

ith

or

deve

lop

limit

ed•

Sta

rt e

nte

rpri

sepr

oces

sfo

r fin

ance

an

d m

onit

orin

g•

Sta

rt p

roce

ss o

fco

mpa

ny

asso

ciat

ion

s fo

rcy

cle

wit

h a

pilo

t•

Exp

and

•E

xper

imen

t w

ith

in s

elec

ted

asso

ciat

ion

bu

ildin

gco

mm

erci

al s

ales

proj

ect

ente

rpri

ses

mar

ket

chai

n t

o im

prov

een

terp

rise

Part

ner

sO

bser

ve f

irst

En

ter

lear

nin

g•

Sca

le u

p pr

oces

s w

ith

new

•W

ork

wit

h B

DS

Take

on

mor

e sp

ecia

lised

ente

rpri

se c

ycle

allia

nce

pro

gram

me

farm

er g

rou

ps a

nd

thei

rgr

oups

role

wit

hin

th

e ag

ricu

ltu

ral

part

ner

s•

Lin

k to

spe

cial

ised

sect

or•

Intr

odu

ce e

xper

imen

ts t

oin

nov

atio

n p

artn

ers

acce

lera

te in

nov

atio

n

Res

earc

her

s•

Wor

k w

ith

farm

er g

rou

ps a

nd

SPs

to

•W

ork

wit

h lo

cal s

ervi

ce•

Wor

k w

ith

loca

l SPs

Con

tin

ue

proc

ess

ofid

enti

fy n

ew m

arke

tspr

ovid

ers

to s

cale

up

loca

lto

sca

le u

p lo

cal

intr

odu

cin

g n

ew in

nov

atio

ns

•W

ork

on t

ech

nol

ogy

inn

ovat

ion

to

supp

ort

abili

ty t

o pr

ovid

e su

cces

sfu

lab

ility

to

prov

ide

into

th

e sy

stem

sele

cted

mar

ket

chai

ns

tech

nol

ogie

ssu

cces

sfu

l•

Wor

k w

ith

hig

her

ord

erte

chn

olog

ies

trad

ers

and

proc

esso

rs t

o•

Spe

cial

ise

in c

erta

inin

crea

se p

rosp

ects

of

scal

ing

tech

nol

ogie

s an

du

p an

d va

lue

aggr

egat

ion

soci

al o

rgan

isat

ion

proc

esse

s

(Con

tin

ued

)

33


Tabl

e 2.

(C

onti

nu

ed.)

Tim

ea

6 m

onth

s1

to 2

yea

rs2

to 5

yea

rs6

to 7

yea

rs8

to 1

0 ye

ars

BD

S p

artn

ers

Wor

k w

ith

farm

er g

rou

ps t

oD

evel

op p

aym

ent

Spe

cial

ised

loca

l SPs

em

erge

iden

tify

mos

t cr

itic

al s

ervi

ces

proc

esse

s to

su

stai

nlin

ked

wit

h s

elec

ted

and

loca

l su

ppor

t se

rvic

essu

cces

sfu

l mar

ket

chai

ns

Hig

her

ord

er•

Lin

k n

ew le

vel m

arke

t-•

Prim

ary

proc

essi

ng

New

mar

kets

dev

elop

, ba

sed

onen

trep

ren

eurs

chai

n p

laye

rs w

ith

push

ed b

ack

to r

ura

lm

arke

t in

telli

gen

ce a

nd

succ

essf

ul f

arm

er g

rou

ps t

oar

eas

tech

nol

ogy

scou

tin

g an

dst

ren

gth

en m

arke

t lin

ks•

Iden

tify

new

appl

icat

ion

•Li

nk

wit

h r

esea

rch

to

mak

epr

oces

sin

gn

ew t

ech

nol

ogie

s av

aila

ble

oppo

rtu

nit

ies

to li

nk

wit

h fa

rmer

-pr

oces

sor

grou

ps

a.

BD

S =

bu

sin

ess

deve

lopm

ent

serv

ices

; M&

E =

mon

itor

ing

and

eval

uat

ion

; SP

= se

rvic

e pr

ovid

er.

34


SECTION 4Tools for Working with a Community

By the end of this section, the market facilitatorshould have:

• A good understanding of the mainparticipatory tools required.

• Have trained interested partners in the use ofthese tools.

• Pilot tested unfamiliar tools.

Working with the CommunityThe agroenterprise development processinvolves a series of steps to be undertaken inparticipation with farmer groups and otherpartners. The process of holding joint meetingsand planning sessions builds trust and sets aclear code of practice. The way the localdevelopment institute works with a communityis a critical part of the process. The leadinstitute and its partners must create acommon understanding and maintain aconsistent message. As shown in Figure 1(Section 1, page 6), the first activities aim toselect a project area and community groups,then analyse the participators’ and communityassets, BUT, these activities should be done in aparticipatory manner. The “market facilitator”must therefore be well prepared before startingto work with partners and the targetedcommunity.

The Philosophy behind CommunityEngagementThis approach to agroenterprise developmentaims to empower local communities to use theirown skills and resources to identify marketopportunities and develop new agroenterprises.To achieve this goal, participatory tools are usedin a learning-by-doing framework for learningtogether and for imparting knowledge to clientgroups.

The market facilitator should make it clear tothe targeted community that the support givenfor agroenterprise development will operate for alimited period, as is designed by the projectteam. The market facilitator, as the namesuggests, will play a catalytic function and isnot a supplier of goods and services.

The following text provides an outline of thetypes of participatory tools used to supportcommunities, together with examples of tool useand the types of results expected from anagroenterprise perspective.

Gender Sensitivity and CulturalValuesIn developing successful business options, keysocial values of trust, honesty, group support,

35

Tools for Working with a Community

and responsibility should be shared and agreedon. Not only should the agroenterprisedevelopment approach lead to skills in incomegeneration through building local enterprises, itshould also seek to promote core values ofgender equity and social responsibility. In ruralcommunities, women play an important role inboth family affairs and working on the farm.However, their inputs are often undervalued;they are under represented in decision making,and often do not receive equity of benefits. Themarket facilitator should pay special attentionto the values and needs of women’s groups andother vulnerable groups within a communitysuch as the youth and those living with HIV/AIDS. In many localities, gender specialists canassist in working with communities.

Getting to Know the CommunityA major role of the “market facilitator” is to gaina sound understanding of the clients within thetargeted area and build a trusting relationship.This can be achieved by mobilising thecommunity and through dialogue. Typically,mobilisation starts with informing local leaders,elders, or chiefs about the intended programme.Permission is sought and leaders are tasked toinform and prepare the community for the firstmeetings.

In Uganda, for example, the Local CommunityChairman6 is briefed about the intended activityin his or her community and asked to call ameeting of the residents. This type of meetinghelps to establish a higher degree of acceptabilityfor the future project within the community. Evenif only a subset of the community is directlyinvolved from the outset, the community has beeninformed. Some members may have had theopportunity to learn and others will actively seekinvolvement based on this initial meeting. Gainingsupport from local leadership is an important firststep in community development, and the marketfacilitator should make time to discuss ideas withcommunity members and take their advice as afirst step towards building a relationship.

Building confidenceFirst meetings are important. The “marketfacilitator” should use these opportunities tolisten and learn about the communities in theproject’s selected area, their composition andfarming system. This information will help thefacilitator and other supporting partners to gainfirst-hand experience of the opportunities andproblems that the community faces.

6. Local Community Chairman: this basicadministrative position represents a village of 50 to150 households.

36


Some farmers will be suspicious or sceptical ofthe facilitator’s motives and many will not fullyparticipate in the early meetings. The “marketfacilitator” therefore needs to “break the ice”, tohelp farmers feel more comfortable at meetings,get to know each other, understand theirinvolvement in this process, and feel sufficientlyat ease to share information. Some of the poorerfarmers in the community often prefer to keepquiet and let the wealthier or more educatedfarmers do all the talking. The visit of a newteam often creates considerable expectations offree handouts, whether in cash or in kind. Thefacilitator needs to read these signs and findways to inform the group about what will beprovided and, importantly, what will not beprovided. By working with farmers in an openway, trust will be gained and much betterparticipation achieved.

Participatory Tools for CommunityDiagnosis and Market PlanningTo get to know a community and gatherinformation in a participatory manner, CIAT’sEnabling Rural Innovation team uses thefollowing tools:

• River code.• Community resource maps.• Seasonal crop calendars.• Ranking, scoring, and weighting.• Historical calendars.• Client profiling.• Market flow mapping.• Visioning.• Market visits.• Participatory monitoring and evaluation

methods.

These tools can be used either alone or incombination. The market facilitator shoulddecide which tools are best suited for theprevailing conditions. The information gainedthrough these tools should form the basis onwhich to develop commonly agreed plans fordeveloping agroenterprise options that willimprove the community’s wellbeing.

Useful tips for the facilitator• Some of these exercises take a lot of time, as

much as one half or a whole day. You mustbe mindful of the farmers’ time and explainat the meeting’s outset how long it will take.If the exercise coincides with crucialcommunity activities, the participation ofthe entire community might be compromised.

• Always plan for the meeting to take longerthan anticipated, as many communitiesneed time to gather, to resolve issues andcome to consensus.

• Start meetings by introducing yourself andyour assistants. Explain what will be doneand why. Give the farmers time to introducethemselves. Set a time frame.

• If the exercises take the whole day, makesure that the farmers are provided with food,either by paying the community to preparefood or bringing soft drinks and bread,maize, or rice, depending on the locality.Share this responsibility with thecommunity such that both sides pay for partof the process.

• If many people come to the meetings, createseveral smaller groups. These usuallyenhance participation. By working ingroups, you may also reduce time taken toconduct the meetings and ensure a lot ofinformation is collected.

• Use methods that collect the most necessaryinformation needed for agroenterprisedevelopment in the shortest amount of time.Carefully select a minimum number of toolsto gather information. Do not use these toolsa way of passing other people’s time andalways see how information can be focusedon market development.

• Come to the meetings prepared. For mostexercises, you will need marker pens ofdifferent colours, flip chart paper, and tape.If you want community representatives tokeep records, provide them with pens andnote books.

• Use “energisers” when a meeting becomesunproductive, especially, after 1 hour ofwork or after lunch. These short exercisesget people onto their feet, get their bloodcirculating more vigorously, and helprefocus their attention. Make this fun!

River code(Time required: 1 to 2 hours)The river code is an activity used to explain tothe community the market facilitator’s role toempower and guide the community. The mainmessage is that the facilitator’s role is not toburden people with assistance and leave themstranded in the middle of the river, but to be aguide. However, as the market facilitator willnot be there forever, the farmers need to learnfrom him or her.

37


To conduct this exercise, the facilitator needstwo pieces of rope or branches to represent thebanks of a river, some paper to represent stones(or draws large circles on the ground torepresent stepping stones) by which to cross theriver.

The facilitator takes aside three members of thefarmer group and gives instructions for a three-act “role play”. The audience is told that therope or sticks are the river banks and that twopeople are trying to cross the river. They want tofind something better on the other side(Figure 4A). The group acts out the play in mimeto the rest of the group.

In the first act, two people attempt to cross theriver. One person, representing a serviceprovider tries to carry the other person (farmer)across the river on his or her back, Figure 4A.The service provider finds the task of carryingthe man/woman across the river difficult. Thecarrier gets too tired to continue. He or sheleaves the person being carried behind in themiddle of the river and returns back to theoriginal side of the river. The person who wasbeing carried is abandoned to his or her fate,receiving no more help (Figure 4B).

In the second act, the task of crossing the riveris repeated with the same person representingthe service provider, leading another person(Figure 4C). In this second act, the leader doesnot carry the other, instead holds his or herhand and shows very clearly where the nextstone is positioned. The two people take time to

cross the river but, by showing the second personwhere the next stone is located, the two manageto cross the river (Figure 4D).

On reaching the other side of the river theycelebrate. The person who helped the farmer tocross the river then waves goodbye and leaves theplay. The person who was shown the way returnsback to the original side of the river.

In the third act, the person who was successfullyshown how to cross the river takes a member ofthe audience and shows him or her how to crossthe river. The person does not hold hands withthe member of the audience but leads him or herto the edge and then shows where to step. Therole play ends when the two people have finallycrossed.

When the role play is over, the group reforms andthe facilitator leads a discussion about what theplay represented. The story’s key element is thatthe river is the challenge. In the agroenterprisecontext, the river is the work that has to be doneto find a new market opportunity. The first side ofthe “river” is where the community is now. Theother side of the “river” is where the communitywould like to be. To achieve their goal,community members must cross the “river”.

The play involves three characters, two arefarmers and one is the facilitator. In the firstscenario, the facilitator brings everything to thefarmer. In reality, this represents a serviceprovider supplying the community with freeseeds, tools, fertiliser, credit, transport, and

Figures 4A and 4B. The River Code scene 1 “Bearing the load”.

A B

38


traders. However, after some time, the serviceprovider gets tired of continuing, such as when aproject ends. When this happens the farmer isleft behind because he or she does not know howto get to the other side. That is, the farmer wasbeing “carried” and when support was withdrawnhe or she was unable to continue along the samepath.

In the second instance, the service providerempowers the farmer by guiding him or herthrough the “river”, clearly showing the“stepping stones” that the farmer needs to use toget to the other side. This time the farmer isslower to cross but gets there by working withthe service provider. At this point, the serviceprovider leaves. However, the farmer has learnedhow to cross the “river” and can now return to

Figure 4C. River Code scene 2 “Let’s work together”.

Figure 4D. The River Code scene 3 “Crossing together”.

39


where he or she was and, most importantly,help others cross the “river”.

After the play, the market facilitator leads adiscussion about what the play represented,who did what, and how this relates to ideas onenterprise skills, learning, and communityempowerment. The facilitator emphasises themerits of learning by doing, compared withsupply-driven solutions that may lead todependency.

Community resource maps(Time required: 2 to 3 hours)This graphic tool is used with the community orvillage to develop a map, that is, a spatialinventory, of its physical features andresources. The exercise can be carried out witha subset of the community or by the farmergroup with whom the market facilitator will beworking. The village (community) resource mapshould be one of the first tools used because itopens up the community and ensuresparticipation.

The facilitator starts by asking farmers to drawa map of their community or village, beginningwith boundaries. Then various features areadded such as houses, churches, schools,medical clinics, roads, fields, crops, livestock,water, and wetlands. The map is drawn on a flipchart. The farmers, men and women, are givenmarkers to draw their assets. Every farmer is

encouraged to contribute to the map, thefacilitator should not ask for each asset, butallows the group to think about what they haveand so build up a picture of their assets.

If paper is not available, the map can be drawnon the ground, using various objects such asstones, bricks, fruits, or other plant materials toshow the community’s various landmarks andresources. The facilitator should ask people whatis most useful in terms of their marketingactivities and what people lack in terms ofgetting to the market. The facilitator shouldensure that no one dominates the map-drawingexercise. By the end of the exercise most membersshould have participated in drawing the map.

If possible, a digital photo should be taken of thismap as a record. Figure 5 shows a resource mapwhich was developed for Tororo, Uganda.

Seasonal calendars(Time required: 2 to 3 hours)Seasonal calendars are important tools forgetting to know farmers, the type of farmingsystems being used, the number of croppingcycles that exist in the year, how they relate toincome and food security, and how farmers’ lives,and therefore labour, are organised throughoutthe year. These tools can be used to highlightproblems and major activities, and evaluatecropping options, ranking them from low-value tohigh-value.

Figure 4E. The River Code scene 4 “Together we can succeed”.

40


The facilitator may also want to use this tool todetermine trends in cropping, that is, to discoverwhen to introduce new crops or products andthe best time to test an enterprise option. Forexample, in the dry season, cropping is limitedand farmers maybe interested in testing a newshort-cycle crop in the wetlands as an off-seasonalternative. Labour is often available in the off-season and this could be a good time for a pilotproject.

The facilitator can draw on a flip chart or on theground, the months of the year from January toDecember and then ask the farmers to fill in theactivities they carry out each month. Thefarmers should indicate the months of the rainyand dry seasons, and provide supplementaryinformation on activities associated withproblems such as when pests and diseases areprevalent, when roads are impassable, ormarkets are oversupplied. The facilitator shouldattempt to understand the magnitude of theseopportunities and challenges throughout theyear (Table 3).

Product ranking and scoring(Time required: 2 to 3 hours)This method is used with farmer groups to gainan idea of what is produced by the community,how much is produced, and for what purpose.The facilitator should draw up separate tables forfood crops, livestock, and cash crops. For each ofthese tables, the farmers should draw up a list ofthe products they grow. The next task is to rankthese products.

To find the rank order of the products withineach of these categories, the products can beweighted to explain their importance. Sometimes,a sample of the products being evaluated can beobtained to focus the discussion. Each farmercan then be asked to vote or put a stone next tothe most important product. Pictures can also beused so that farmers who cannot read well canparticipate fully.

Products can also be compared for differentpurposes such as (1) food security, (2) cashincome, (3) high value, (4) home nutrition, or(5) women’s income/medicinal products. On

Figure 5. Community resource map developed for Tororo Village, Uganda.

41


Tabl

e 3.

C

ropp

ing

cale

nda

r fo

r va

riou

s pr

odu

cts

and

pove

rty

indi

cato

rs.

Mon

thC

ropa

Iris

h p

otat

oes

Bea

ns

Cab

bage

Sor

ghu

mPe

asLa

bou

rPy

reth

rum

Pyre

thru

mPo

vert

yFa

min

e(p

yret

hru

m)

(yea

r 1)

(yea

r 2)

Jan

Wee

din

gH

arve

stH

arve

stPl

anti

ng

Har

vest

–G

ap fi

llin

g–

Plan

tin

gLC

Man

uri

ng

Feb

LCPl

anti

ng

–Pl

anti

ng

––

Wee

din

gM

anu

rin

gM

arch

LCW

eedi

ng

Wee

din

gPl

anti

ng

–W

eedi

ng

–S

pray

ing

Apr

ilPl

anti

ng

Har

vest

LCM

ayPl

anti

ng

Plan

tin

g–

LCS

pray

ing

Plan

tin

gH

arve

stM

anu

rin

gJu

ne

Wee

din

gW

eedi

ng

–M

anu

rin

gJu

lyW

eedi

ng

Wee

din

gS

pray

ing

Har

vest

–H

arve

st–

Spr

ayin

gH

arve

stW

eedi

ng

Au

gH

arve

stH

arve

stH

arve

stW

eedi

ng

––

Sep

tH

arve

stLC

LC–

LC–

–O

ctLC

Plan

tin

gPl

anti

ng

–Pl

anti

ng

Har

vest

––

Nov

LCW

eedi

ng

Wee

din

gLC

Har

vest

Plan

tin

gS

pray

ing

Dry

ing

Dec

Spr

ayin

gH

arve

st–

Plan

tin

g

a. L

C =

lan

d cl

eari

ng.

42


comparing products, the facilitator should makeit clear that the product with the most votes willbe considered as the most important. Once thefacilitator has the results, he or she shoulddiscuss them with farmers to confirm them andbe sure that all agree with the results.

Another method is to use pairwise ranking(Table 4). With this method, the farmersexamine pairs of crops and indicate which ismore important than the other. Againimportance needs to be clarified so that peopleknow what they are voting for.

When conducting this exercise for pilot projectselection, make sure that this is discussedbeforehand and that the group understandswhy ranking is important. If this exercise isbeing done with farmer groups, other importantinformation to be gathered includes:

• How many people in the group produce theproducts being discussed?

• Market locations for this product.• Market conditions (price, frequency of

supply, minimum lot size and qualityrequired).

• Traders involved.

If this information is being used to select anexisting product for a pilot project, then thefacilitator should aim for a short-cycle productthat brings high income, has high marketdemand, and is produced by most of the farmergroup’s members.

Historical calendars with a focus onmarketing(Time required: 2 to 3 hours)Historical calendars are important for giving apicture of the situations farmers haveexperienced over the previous 5 to 10 years.This exercise forms the basis of “visioning”,which is discussed below. Few activities startfrom zero, as communities change over time andmany have received assistance from many

sources over time. The facilitator shouldunderstand what has happened in the past.For example, has the community undergonemajor shocks, natural or political? How did thisaffect the community? Has the communitybenefited from a new infrastructure or aninnovation? How has the market changed overthe past 4 to 5 years? By learning how thecommunity adapted to these changes, thefacilitator will better understand thecommunity’s strengths, opportunities, andattitudes to risk, and better evaluate changesrelated to community links, infrastructure,market options, and innovation.

As agriculture is based on natural resources,the facilitator should also understand whatchanges have taken place in the resource base,particularly in terms of quality. Have yieldsdropped because of soil degradation and/or newpolicies on land size holdings? Table 5 shows ahistorical calendar made for Mbuule Village,Tanzania.

Historical calendars help farmers see how theyrespond to change and the impact they have ontheir resource base. This can have a predictiveimpact and the facilitator can guide the farmersto interpret the pattern of events in theirhistory.

To prepare historical calendars with marketingand innovation events, a facilitator needs:

• Paper and markers so that farmers preparea matrix, with years on the one hand andsignificant events during each year on theother.

• Timelines. The facilitator obtains one byasking the farmers how far back they canremember events that have happened intheir village. People often rememberparticular events such as the inaugurationof a new President or a World Soccer Cup.The facilitator should use these events to setup timelines.

Table 4. Importance of crops for income within the group.

Maize Beans Rice Chillies

Maize

Beans

Rice

Chillies

43


• The farmers then recall major events thatmay have taken place in each period. Thefacilitator should make sure all arerecorded. He or she should also ensure thatelderly farmers are involved as they mayremember over a long period of time.

• To discuss with the farmers the main factorsthat have changed their village and farmingsystems within the timeframe selectedtimeline and show how these factors mayhave changed their lives.

• To encourage the farmers to discuss thehistorical calendar. This helps inunderstanding farmers’ decisions and evenenhances understanding of the communityor village.

Evaluating service provision(Time required: 1 to 2 hours)This tool is used to evaluate the availability ofservice provision in the project area, score theirvalue from the farmer’s perspective, and findout from farmers if business support servicesare available that should be developed tosupport the new agroenterprise project.

This tool helps build up a picture of services thatthe community can access. The inventory can bedone in the same way as the historical calendarbut, in this case, the facilitator should find outfarmers’ views on the value and quality ofservices being offered. This discussion should beused to study trends in service provision, howthese have changed, and how farmers perceive orapprove of the changes being made. Are theservices free or require payment? Which servicesare missing? Who are the best service providersto link up with in any agroenterprise project?Table 6 shows an inventory of services receivedby Ttaago Village, Tanzania.

Market mapping(Time required: 1 day)Because the market facilitator’s role is to focusefforts on agroenterprise options, an importantparticipatory tool for evaluating market optionsis the market map. This tool is similar to theresource map but, in this case, provides anopportunity for mapping a specific product’splace in the market chain. To make this relevant,the facilitator should select the higher incomeproducts that were determined in the product-ranking exercise and use these as examples.Market mapping is conducted in two stages:

Table 5. Historical calendar for Mbuule village, Tanzania.

Time Event Impact

1980 Road built by Chinese in 1982 Enabled us to get to nearby towns and sell ourbeans to more traders

1985 Major famine in 1987, due to El Niño Lost all livestock and received food aid1990 New school opened in the village All children went to school

Labour prices increased1992 NGOs informed us about HIV/AIDS We found many people were sick1995 Coffee prices fell to low levels. In 1997 maize Farmers pulled out coffee

prices were very good, but crops again failed NGO’s introduced fruit treesdue to poor rain Built more stores for grain

2000 Cameroon nearly won the world cup First time we saw colour TV, started merry-go-Started our farmer self-help group round savings scheme to help with funeral rites.

Many people lost relatives to HIV/AIDS2001 Catholic Relief Services started new projects Seed fairs enabled partners to gain a range of new

on health and gender varieties2002 Micro-finance opened office in nearby town We lost money in loan system because some

Drought caused first season crop failure members defaulted. Lost livestock, no food aid2003 ERI arrived and conducted a village mapping Village group started experimentation with grains

exercise and vegetables2004 More people worked with vegetables as prices Started to listen to market information services to

were good and started to work with “Ssalongo learn more about marketstraders” to sell produce

SOURCE: ERI-CIAT’s Enabling Rural Innovation team.

44


Stage 1: Farmers are asked to draw the marketchain map for production, processing, storage,and sales of a selected product to all its currentmarket outlets. This map should provideinformation on the product’s varieties, how andwhere it is produced, the types of materials orequipment used for production (e.g., seeds,sprayers, or irrigation), methods of post harvestprocessing such as dehulling or grading,storage, and transport to market. The mapMUST include prices, volumes, and howproducts are sold (such as in bowls or bags,collectively or by individuals). If possible, thegroup should also provide details of the peopleto whom they sell, give distances to markets,and highlight major problems in the marketchain. Challenges to marketing may includefactors such as few traders, lack of storage, poorroads at certain times of the year, lack ofmarket information, no access to credit, and lowor volatile prices.

In this exercise, farmers are often familiar withonly a part of the entire market chain. Forexample, farmers in Embu District, Kenya,produce green gram. They could provide a

marketing map that extended only 5 km fromthe village. However, the market facilitator knewthat these green grams were taken to the capitalcity of Nairobi, which is 200 km away and fromthere exported to India. To assist with filling insome of the gaps, a similar exercise wasconducted with a group of local traders, whocould fill in more of the gaps in the market mapfor that commodity. The service provider alsotook one or two farmers from the Embu farmergroup to visit a large wholesale market inNairobi to discover where the produce went fromthere.

In most cases, however, produce is sold locallyand the farmers and local traders can buildup a reliable map of the current situation(Figure 6).

Stage 2: The process is repeated with a farmergroup but, this time, they write on the map howthey would like to see their market chain for aselected product in the future. This enablesfarmers to start thinking what they want fortheir future, that is, to start “visioning”. Thiscould be described as setting the conditions on

Table 6. Institutional inventory of services received by Ttaago village, Tanzania.

45


each side of the “river” in the “river code”. Themarket facilitator plays a critical role in makingsure that farmers take time to systematicallyconsider each step, paying attention to detail.The farmers start with the variety used andcomment on each stage of the production-to-sales chain to see what changes they would likemade. In the example described above, thefarmers showed that they produced at thesubsistence level, using a hand hoe as theirmain tool. They produced a limited amount ofgroundnuts, lacked appropriate drying or storagefacilities, and linked with intermediaries fromoutside the village to sell their produce (Figure 7).

In the map for the future, the Embu FarmersGroup showed the farmers working together.They have access to tractors to plow the land,and crops are planted in rows and later sprayed.The houses have roofs of iron sheeting and aretherefore more suitable for storage. The farmersproduce a lot of groundnuts, which are sold inbags in large consignments. The farmers hire apick-up truck to take their goods to a range ofmore distant markets and to add value to thecrop.

The map on existing conditions enables thefacilitator to understand the current situationand the problems associated with existing

methods. The map on the desired future is avision of what farmers would like to achieve. Itbecomes the basis for the next stage in theagroenterprise development process, which is tobuild a common plan on how to improvemarketing opportunities.

Visioning(Time required: 1 day)Visioning is a process used by the marketfacilitator, partners and farmer groups todevelop a joint plan of action that, afteradditional market studies, will lead to anintervention plan. This process starts by lookingat where the farmer group is today and where itwould like to be in the future. This is the “rivercode” in reality. The facilitator should work withthe farmers to systematically write down all theactivities that must be in place for the farmersto get from where they are today to their desiredstate. This type of planning can be either shortterm or long term.

To learn more about “visioning”, the group canstart by looking at their resource map of thevillage or community (Figure 5) and thenprepare a “desired” state of that village orcommunity. This activity will allow the group toshow what they would like to achieve over, forinstance, the next 10 years. It is a useful way of

Figure 6. Market map, existing groundnut marketing, Embu District, Kenya.

46


finding out the group’s and/or community’sambitions. The facilitator must be sensitive to thefact that different segments of the communitymay have different outlooks and aspirations.

If the time horizon is reduced to 5 years, thegroup will need to prioritise issues and bring in agreater degree of reality. Such a reduction maysuggest that they can achieve half or a quarter ofwhat they would like in 10 years. The time framecan then be reduced to 3 or 1 year. The group willthen need to assess what they can achieve insuch a reduced time horizon. Each time the timeframe is reduced, a greater degree of reality andpossibility enters the discussions. A facilitateddiscussion can then help prioritise specificactivities that will work towards achieving afeasible and desired aim.

Another tool for helping with visioning is“appreciative inquiry”. The facilitator starts byfocusing on what is working well in thecommunity and how it can be strengthened. Thegroup therefore builds on past successes ratherthan trying to overcome an insurmountable list ofproblems. Appendix 4 summarises this well-documented process.

For those who are more problem oriented, analternative approach is to list the major

constraints to achieving an established vision orgoal. The facilitator works with the group to listand prioritise constraints and then find ways toaddress the most critical. In many cases, acombination of appreciative inquiry andconstraint analysis proves the most effective.

Regardless of the approach taken, the groupdevelops a list of activities to meet their vision.These activities can be systematically divided intoshort, medium, and long-term issues. Visioningstarts by listing the set of activities that need tobe changed to achieve success. Such activitiesinclude production, post harvest handling,marketing, and business development services.

Production• Area of land to be planted.• Tools to be used (diversify from hand hoes to

animal traction or tractors).• Agronomic practices to be changed (seed

type, variety, planting density, weedingmethods, fertiliser application, irrigationusage).

• Monitoring of fields, particularly for highervalue enterprises.

Note that the same can be done for livestockenterprises.

Figure 7. Market map, desired marketing for groundnut in Embu.

47


Post harvest handling• How to harvest, when and by whom?• Storage options and facilities.• Sorting, grading, packing, and labelling.

These issues should focus on the identifiedmarket opportunity and the level of detail,depending on purchasing conditions, that aregiven by the buyer.

Marketing• How the group would like to market its

produce.• Transport, and delivery schedules.• Payment terms (checks, need for a bank

account, signatories to the account).• How the money shall be shared in the group.• Investment plans for the group and savings

mechanisms.

Business development services• Which services are the most important.• Which services need to be strengthened.• Should services be paid and, if so, how.

The facilitator can then lead the group througha final process of making decisions on what canbe achieved, including financial aspects, byusing local skills and resources and what canbe achieved only with external support. Thisinformation can be further refined by providinginformation on service providers who have theskills to assist with any given problem (Table 7).

As the market facilitator gains experience, thevisioning approach can be applied directly to areal-life enterprise situation such as “supplyingbeans to an identified buyer”. In this case,visioning starts by systematically recording thecurrent situation, and includes the followingspecific tasks:

• Pre-production issues, related to marketinformation.

• Production issues.• Harvesting.• Marketing.• Post-sales evaluation.

The process of intervention planning isdiscussed in more detail in Section 10.

Evaluating the “EntrepreneurialSpirit” or Finding the “SparkyPeople”Setting up new business ventures and keepingthem competitive requires more than justfollowing instructions. The types of people fromthe community who take on the marketfacilitator’s role and are included in the workinggroup and marketing teams should be peoplewho have either experience in business or havea certain aptitude and desire to undertakebusiness development. Our experience showsthat not all development agents or production-based researchers can make the move fromproduction or community support to workingwith markets. The right type of person musttherefore be selected or the “sparky people”found. Whether people have an aptitude formarketing scenarios can be rapidly discoveredby using some simple tests.

Incentives (such as small amounts of cash) areneeded in order to run these tests (which areconducted as games). Where possible, thefacilitator should use cash or other attractiveprizes that will reward the successfulparticipants.

Defining the “entrepreneurial spirit”The “entrepreneurial spirit” is somewhatintangible; it involves doing things in new ways,

Table 7. Activity options to shift from today’s situation to a desired state.

Today, where Short-term Medium-term Long-term Where wewe are activities activities activities want to be

What can be achievedwith existingresources?

What activities orinterventions requireexternal resources?

48


innovative thinking, being creative, and havingdetermination and drive. But how can suchqualities be recognised in service providerpersonnel and in communities? How can thesecharacteristics be best harnessed to the causein hand?

A dictionary definition of enterprise is abusiness, firm, organisation, or project,especially one requiring boldness, initiative, andenergy. The definition of spirit is the non-physical aspect of a person concerned withprofound thoughts and emotions such asattitude, character, and temperament. Theseideas can be applied to a business, organisation,or movement, and the qualities do notnecessarily have to include the motive for profit.

Three tests are given below for evaluating theentrepreneurial and risk assessment qualities ofmembers within a group.

Test 1: Identifying entrepreneurialcharacteristicsThe first test for the group is to ask them toname three world-famous entrepreneurs andthen three from their area. Divide the group intosmaller groups of 3 to 5 people and ask them toprovide a list of 10 words that explain why thesepeople were successful. Entrepreneurs can befamous business people, artists, or spiritual orethical leaders. Having written up the lists, thegroups should re-convene and discuss thefindings in a plenary session. Why were thesewords chosen and what do they imply. Does anygroup member have these qualities? Could theydevelop them? What makes some people moresuccessful than others in business matters?How can these types of skills be refined withinthe individual and within the group?

Test 2: Making your first $10This game aims to test the ability of groupmembers to “think outside the box”. For thistest, the facilitator will need to have participantsor groups in a room or defined area in which heor she has hidden a US$10 (or local currencyequivalent) note under an object in the room,such as under a table or chair, or behind acurtain or board before the group arrives. Thefacilitator can opt to leave some riddles or cluesin the room or meeting area to help participantsfind the money. The participants must not knowwhere the money is hidden.

To start the test, the facilitator should ask theparticipants to sit down and then ask them a

question: “how do you make your first $10?”There are no further instructions given. Thetime frame for this game is 10 to 15 minutes.Observe how the group reacts to this test. Thefacilitator can answer questions from the group.Encourage them, but do not tell them thatmoney is hidden in the area, or give veryobvious clues of its location. Did they find themoney? To find the answer to the riddle, seebottom of page on Appendix 7. After havingsolved the riddle, the group should discuss theimplications of the game, and why it isimportant to think about how to solve problemsand do so quickly rather than wait for someoneto show them the way.

Test 3: Being a successful risk managerThe aim of this game is find out why peopleselect leaders and then test the risk-takingapproach of their leader and his or her ability towork with the team. This game can be played ingroups of 15 to 30 people. The facilitator shouldfirst divide the participants into groups of3 to 5 people. Within the small groups, themembers should select a chief executive officer(CEO), someone who has the qualities andcharacteristics that were found in Test 1.

To play the game, the teams should compete fora prize and winner takes all. The prize could bea marketing book, or the team members couldprovide a minimum stake of their own money.In this case, each team member will provideUS$0.10 to $0.50 (or equivalent in localcurrency) as their entry stake. The CEOs bringtheir group’s game stake to the facilitator whoholds it for the winning team.

The CEOs are separated from their team and, ifpossible, provided with seats in front of thegroup. They then receive the followinginstructions:

1. The CEOs will be asked a series of questions.They can decide to choose questions fromdifferent categories of $1000, $5000, and$10,000. The questions for this game can bebased on local general knowledge or basedon marketing questions.

2. Each correctly answered question willreceive a score to the value of the questionanswered. The CEO can then opt to pass orask for another question.

3. The CEOs will continue to answer questionsuntil either they pass or answer a questionincorrectly. If the answer is incorrect, thevalue of the last question is deducted from

49


the amount accumulated through correctanswers. Hence, if the CEO starts with ascore of 0 and answers two $1000 questionscorrectly, but answers a $5000 incorrectly,the score for that round will be -$3000. If aCEO passes, s/he keeps the money theyhave won up to that time.

4. The CEOs can ask for assistance from theirrespective team members ONCE only in thegame.

5. Answers that are shouted out by teammembers will receive a $5000 penalty fine atthe facilitator’s discretion.

6. The game is played for three rounds ofquestions. However, more rounds can beadded.

7. At the end of the questioning, scores aretotalled and the team with the highestpoints wins the prize.

This session is concluded with a review of theCEOs’ performance. Did the CEOs adjust to therisk of the questions? Did they work with theirteam effectively? Did they have a sensiblestrategy for using their team’s money? Wouldthe CEO be re-elected by the team?

“Blue Bean Test” for Baseline andEvaluating Behavioural ChangeTo better understand a farmer group’sknowledge about marketing approaches, asimple test can be applied to find out how theyapproach the idea of a new product. Do theysystematically work with the market or do theysimply follow instructions from a serviceprovider. The group is asked if it would beinterested in producing “blue beans”. A typicalresponse might be, “Yes, if you will buy them”,to which the facilitator may respond, “Noproblem, I’ll take all you can grow”. For farmerswho do not have a systematic approach tomarketing, their response is often a very positiveyes, that they will start growing the beanstomorrow!

However, they make this response even thoughthey have never seen a blue bean, nor do theyknow if it grows in their area, or which marketthey are targeting, or if alternative and bettermarket options exist. Where the group shows noclear approach to marketing, the facilitator hasto start from the beginning. In contrast, if thefarmers do have a strategy in dealing with themarket, the facilitator should listen carefully

and see how well this fits in with the plannedagroenterprise approach. He or she can thenbuild on the group’s current skills.

As a monitoring tool, the “blue bean”, or otherinvented product, the question should be askedagain after the farmers have undergone sometraining on how to engage the market. If thefarmers have taken on the new skills, theirresponse to such a question would includequestions such as Does the crop grow here?Can you give us a sample so we can test it tosee if it grows under our conditions? What is theprice of the blue bean in the market? Is thisprice higher than the best bean marketvarieties? Is the bean being sold for a local orinternational market? Who is buying theproduct? Can you give us names of some buyersso we can survey the market ourselves? Do youhave any information about the product, itsprice trend, quality requirements, or markettrends? If we go into production, will this be acontractual agreement? Will you provide anyadditional inputs to assist in production? If themarket fails, can we eat this crop?

The facilitator should compare the group’sanswers at the end of the process with thosegiven at the beginning. If the group does not askthese types of questions, that is, to test if aproduct has market demand, the facilitator willknow that they did not fully understand theprocess and a new approach to capacitybuilding is therefore needed.

If the farmers have a clear strategy forinvestigating new market options, then thetraining process has at least achieved its firstaim of transferring the inquiry process.

SummaryAll these tools can be used to generate a widerange of information. However, for theagroenterprise development process, specificinformation should focus on that required todevelop the desired enterprise option. Asummary list of the main participatory tools andtheir specific uses is provided in Table 8. Forfurther information on the use of participatorytools in the community setting, see ERI’sVisioning Guide by Sanginga and Chitsike(2005).

50


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THE PRACTICAL WORK

Blanca52

53

Management and Partner Selection

SECTION 5Management and Partner Selection

By the end of this section, the lead organisationshould have completed the following tasks:

• Set up a management process.• Selected a site in which to provide

development services.• Selected partners to work with.

Time frame: 1 to 2 weeks.

Possible requirementsPer diem costs for the facilitator if he or she isnot from the area and in some casesrefreshments for community members.

Management and PartnersThe agroenterprise development process iscomplex and one organisation is unlikely tohave all the skills necessary to implement itsuccessfully. The project will therefore needpartners and management. In our experience,action requires three types of organisationalplayers:

1. Management team.2. Working group (market survey team).3. Enterprise groups.

The type of network envisaged for this process isoutlined in Figure 8.

Management teamThis team is charged with the overall design,implementation, and monitoring of the project.As mentioned before, the lead organisationprovides the market facilitator. Sometimes, themanagement team may be a partnershipbetween a research and development agency.The team is responsible for making the followingtypes of decisions:

• Selecting a project area or site ofintervention.

• Initiating and convening a working group.• Establishing criteria for selecting client

enterprise groups.• Providing skills training, inputs,

investments, and other services.• Duration of project implementation.• Scaling up approaches.• Entry and exit strategies.

Working groupThe “working group” provides a focal pointwhere representatives of interested partners can

54


convene to design and assist in implementingagroenterprise work plans. Its role is to promoteimproved working relationships between serviceproviders, local government, small farmers, andtraders who operate within a defined projectarea.

The working group will also work withstakeholders to develop the rules of engagementand establish the consortium’s goals. At anoperational level, the group will providetechnical oversight, training, access to partners,monitoring and evaluation, and a means formanaging field activities. It will also supportcore members to scale up successful activitiesin the future. Its key tasks are to:

1. Schedule events and maintaining a focus ongoals.

2. Ensure that meaningful results aregenerated.

3. Ensure that these results support inter-organisational or group processes.

4. Lead the market survey team.5. Document monitoring and evaluation

outputs.

The working group will begin as a looseassociation of partners with a common orshared interest in improving their marketingskills and commercialisation of activities.During the agroenterprise development process,membership is unlikely to remain constant,with some members falling out because of lackof resources or change in focus. Other memberswill enter the group as the process gainstangible results and some specialists may beco-opted into the group. Specialised membersmay become more interested in joining orplaying an active role, once market chains areoperating.

Working GroupPolicy and implementation

Specialists

Traders/entrepreneur

Finance

Chamber ofcommerce

Research

Development agencies

Governmental extensionagencies

NGOs

BDS BDS BDSPA FA FA

FG FG FG

FG FG

FG FG FG

FG FG

FG FG FG

FG FG

Farmergroups

Facilitator of the process

Figure 8. Partnerships and links in the working group.FG = farmer group; FA = farmer association; BDS = business development services provider;NGO = non-governmental organisation; PA = partner agency; Working group = informal consortium of partners.

55

Management and Partner Selection

Enterprise groupThis group comprises clients or businesspartners. Typically, these are farmer groups, butthey could also be groups of traders, localentrepreneurs, or processors. At the farm level,the enterprise group should be an organisedfarmer group who will work alongside serviceproviders to implement specific agroenterpriseprojects in selected market chains. Within agiven market chain, service providers can belocal entrepreneurs or businesses who aim toprovide business development services (BDS).Farmer groups and BDS providers are the basic“units of change”, that is, these actors will drivethe marketing process and catalyse change inthe delivery of goods to markets.

If farmer groups are poorly organised, or simplyfollow the instructions of service providers, theenterprise is likely to be unsustainable. An earlytask of market facilitation is therefore to buildcapacity in the farmer group. For additionalinformation on group formation and ideas oncollective marketing, see Robbins et al. (2005),Collective marketing for smallholder farmers.

Additional Tools for SelectingEnterprise or Farmer GroupsClient and business partner profilingCommunities are heterogeneous, comprising arange of social “wealth” or “wellbeing” groups.Understanding wealth rankings is important forprocesses such as agroenterprise developmentwhere investment and risks are involved.Evaluation of social wealth categories can be asensitive issue, so it needs to be handled withthought. Some social groups, particularly thosewith a steady income, can have very differentaspirations to less financially secure socialgroups. Typically, the wealthier people in thecommunity will have more assets, live on thebest land, often have a better education, bemore interested in trying new ideas, and moreprepared to take on new or riskier challengesthan poorer segments of the community.

If the facilitator feels that the community maybenefit from particular social groups working ondifferent enterprise options, then he or sheshould carry out a wealth ranking analysis. Thisis often best done with focus groups. Types ofquestions to use with these groups can includethe following:

• Who owns cattle in the community?• Which members in the community own the

most land?• Which members have access to or have their

own transport?• Who has access to mobile phones?• Who travels most frequently to larger cities?• Are there differences in where people access

water, if so why?• Which members of the community have had

the most years of schooling?• Who produces crops for distant markets?

Identifying Leadership QualitiesA critical aspect within the development of anycommunity is the presence of people withleadership qualities. The term leadership hasmany meanings but, in this case, communityleaders are those people who are looked up tofor guidance, support, and advice, whetherspiritual, financial, farming, or medical. Thesepeople are often well respected and the marketfacilitator can save considerable time andenergy if such people play key roles in theagroenterprise development process. Becausepeople tend to copy those they admire, anexcellent way of scaling up within thecommunity is to help local leaders show theway. The facilitator can discuss this idea with afocus group, to find out who in the communityhas these qualities. These people can then besought out and asked if they would assist themarket facilitator to develop the agroenterprisedevelopment process.

Farmer GroupsThere is growing consensus that if smallholderfarmers in developing countries are to succeedin the increasingly competitive marketplace theyneed to be better organised. Over the past20 to 30 years, many different approaches havebeen attempted. Some of the successfulorganisational structures include primarysocieties, self-help groups, and, more recently,savings and internal loans groups. All theseorganisations are based on the principles of“collection action” or the co-operativemovement, which offers members theadvantages of economies of scale.

Members of co-operatives gain considerableadvantages in terms of accessing newinformation, credit, low-cost inputs, and higher

56


market prices. Unfortunately, for many farmers,the advantages of the co-operative approachhave been outweighed by repeated financiallosses caused by widespread mismanagement ofcapital funds by their executive committees.Consequently, many farmers are now highlysuspicious about joining co-operatives,particularly those run by the government, whichhave also been politically manipulated.

Despite the problems, most communities havesome level of group organisation such assavings groups or rotating funds (“merry-go-rounds”), which help groups of friends save andpay for essential costs such as medical bills,school fees, weddings, and burials. These typesof groups are generally self-selected, have alimited number of members—typically 10 to 30people—are from a similar social class, andtrust each other.

These qualities of self-reliance and collectiveaction are extremely useful in relation toenterprise development and collective marketinggroups. Rather than attempt to set up new

groups, a facilitator may find it easier toevaluate and work with groups already existingin the community. For more details of groupformation and collective action, see Robbins etal. (2005), Collective marketing for smallholderfarmers.

Farmer or Product ClustersTo support information flow, productaggregation, and quality standards, a usefulstrategy is to cluster farmers of the sameproduct in a geographic area. Thus, when onefarmer group is supplying a market effectively,the facilitator should evaluate the opportunitiesfor linking other farmer groups into the firstgroup and scaling up production. Using thismechanism, the facilitator can work directlywith one group and then support other groupsthrough demonstration and linkage with theirrepresentatives. This process will enable thefarmers in one area to specialise and worktogether in terms of innovating around aproduct.

57

Project Site Selection and Evaluation

SECTION 6Project Site Selection and Evaluation

By the end of this section, the market facilitatorwill have:

• Selected a site for intervention.• Undertaken a participatory analysis of the

site’s assets.• Undertaken visioning with the community or

farmer group to develop an action plan.

Time frame: 2 weeks.

Before starting to work with a community, theinitiating agency should decide on the physicalboundaries of the work area. This decision maydepend on the programme’s goals but, for manyorganisations, the choice is based on theircurrent area of operation or a government ordonor’s recommendations. The project’s area ofoperation is often defined by a local politicalarea, a village or cluster of villages, or, in thecase of faith-based organisations, diocesanboundaries. Sometimes, a project may operate

over a larger physical domain such as awatershed or an agro-ecozone.

The working group should consider ways ofdelimiting the area in which the agroenterpriseintervention will take place. Criteria for selectingan area include:

• Defining the communities with which towork with and limiting the area to the zonewhere they are found.

• The area where the partners are working.• Does the area allow for scaling up?• The size of project area possible without

compromising the quality of work.• Where should the agroenterprise activities

start?

Project Site Resource AssessmentOnce the project area is decided on, the nextstep is to conduct a rapid resource assessment

58


of the area. Because this is a participatoryprocess, this task should be done with selectedmembers of the working group. The diagnosticstudy should pay particular attention to theassets available to the enterprise or farmergroup, as this is the group who will be investingtime and resources. The facilitator should workfrom the perspective of smallholder or localentrepreneurial investments. To help withinterviewing rural communities, severalparticipatory tools, described in “Section 4:Tools for Working with a Community”, can beused. Checklists for analysing the project areaand conducting community interviews are givenin Tables 9 and 10.

This survey is not only useful for the workinggroup to itemise the major physical, social, and

economic assets available but it also provides abaseline at the outset of the process. The aim ofthis survey is to present an organised andconcise report that lists and evaluates the mostoutstanding aspects of the site or communityand major market options and trends so thatthe facilitator and partners are equipped withvaluable information to help plan newenterprise options. Appendix 5 provides asuggested outline of a resource assessmentreport.

Community Action Planning(Visioning)The final section of the participatory reportshould be a series of plans developed by thecommunity’s agroenterprise groups of what they

Table 9. Checklist for analysing a project site for agroenterprise development.

Assets Issues to include

Physical Geographic location (map)Climate (focus on enterprise group’s locations)SoilWater resourcesRoads, paths, trailsVegetation

Social Community inhabitantsDemographyEducation levelsHistoryShocks (environmental, political)

Economic Major economic and business activitiesProduction capacity, specialisationPredominant production and marketing systemsCommercial activitiesElectrificationMarket locationsDemand channelsConservation issues and natural resources

Institutional Types of organisations in the area: farmer co-operatives, trade associations, finance banking andmicro-finance, chambers of commerceGovernmental structuresEducation accessNGOs and others operating in the areaHistory of intervention activities in the area

Innovation Introduction of new crops, livestock, processed productstrends Change from rain fed to irrigated production

Community social fabricBanking options, increase in remittancesNew business opportunitiesChange in telecommunications, Internet, mobile phones

59


would like to achieve through agroenterprisedevelopment. Community members should beencouraged to draw on the information theygenerated in the diagnosis to develop a jointaction plan to achieve their vision.

The facilitator helps the farmers to first developa generic or idealised action plan from theirvisioning process. They are then led through aseries of iterative cycles in which the farmerslist their priorities and attempt to explore howthey can realise their plans. The plan shouldinclude a simple analysis of what can beachieved with no external funding and what canbe achieved only with additional support orinputs. If additional inputs are needed, then thegroup should indicate where these might comefrom and how likely they are to be realised.

By narrowing down the goal and time frame, thefacilitator should ensure that the actionsproposed by the farmers are realistic and

achievable. At each stage in the process, thecommunity should take into account theirassets, partners, and comparative advantages.The community should also develop prioritiesand plans for both food security andagroenterprise options. When the facilitator isworking with several groups, the goals of theother groups should be included in thediscussion so that the farmer groups can startworking on similar products to achieve greatereconomies of scale.

At this stage, the plan should not be exhaustive,as the farmers will not receive additionalinformation on product options. The main pointof planning here is for the group to start makingdecisions about their future activities andinvestments in a business-like fashion. Thefacilitator should ensure equal participation ofmen and women in this exercise. Emphasis ontransparency and equity of inputs and outputsis crucial for this type of work.

Table 10. Agroenterprise checklist at community level.

Information required Tools usedAgricultural activities• List food crops grown by group members Brainstorming• Relative importance of each? Seasonal crop calendar• List income from crops, livestock, and forest products currently sold Product ranking• Relative importance of each? Market mapping• Where is each product sold? Venn diagrams• To whom is each product sold? Ranking• Volumes sold? Historical timelines for innovation• Who provides technical and other services? Timelines• How good are these services? Resource mapping• Any new crops fast becoming important to the area?• Have any major buyers come or left the area?

Assets for comparative advantage• What natural, human, social, physical, or other assets does the Brainstorming

community possess? Resource maps• Biodiversity, climate, soils Focus groups• Physical features: lakes, rivers, mountains Key informant interviews• Infrastructure, e.g., roads• Know-how for producing specific goods, education, skills, value-

adding options• Social cohesion, community spirit• Individual entrepreneurial flair

Innovation analysis• What innovations have occurred in the last 5 to 10 years that have Brainstorming

had a major effect on business opportunities? Resource maps• What innovations have occurred but have not been accessible? Focus groups• What types of innovations are required by the community? Key informant interviews

60


Organising the farmer or enterprise groupGroups are established for many reasons, butfew are specifically established for businessdevelopment. Hence, in an early meeting withthe market facilitator, a diagram or organogramof the group’s current organisation should bedrawn up. This session should include theroles and responsibilities of the key positions(Table 11).

Constitution or membership rules andregulationsMost groups have a simple set of rules that areestablished at the outset. A savings group, forexample, may require its members to pay anentrance fee and agree on the terms by whichthey save and make loans to members. As thegroup takes on financial liability for groupmembers, a simple set of rules should be inplace for members to adhere to, with penaltiesfor non-compliance.

Registering groups and opening a bankaccountIn some countries, groups are only recognisedfor support if they are registered with the localadministration at some level. In some countries,

registration is a legal requirement; in others, itis considered useful, but not mandatory. Wherepossible, all groups should open a bankaccount, to hold their savings and have regularrecords of deposits and withdrawals.

Forming CommitteesInevitably, the transition of an existing group,which may have originally been set up for self-help, into a more business-like group is likely todemand greater commitment from its membersin terms of time and investment of land, labour,and finances, and developing new skills. Giventhe need for additional activities, groups shouldconsider establishing new positions orcommittees to oversee more specialisedactivities (Table 12).

The formation of any new committee should beled by the community with the facilitatorassisting the process. As shown in Table 12, thegroup will be managed by the executivecommittee, which oversees the enterprise’sactivities, whereas specialist activities can bedelegated to other group members. Where thecurrent group does not possess these skills,members may co-opt new members.

61


Table 11. Suggested organogram of posts within a farmer group.

Name Role Responsibility Term of office

Chairperson To lead the group, resolve To take major decisions, 1 year, renewable at annualdisputes, set out the plan delegate activities, monitor general meeting

progress

Treasurer Financial officer, to report To maintain all financial 1 year, renewable by vote of groupto chairperson and records and conduct financial members at annual generalmembers transactions on behalf of the meeting

group

Secretary Record keeper To take records of all meetings 1 year, renewable by vote of groupand key decisions of the group members at annual general

meeting

Mobiliser Group socialiser and To maintain links between 1 year, renewable by vote of groupmotivator members, keep members members at annual general

informed of new events and meetingtime of next meetings

Monitoring Progress monitoring To develop a monitoring plan 1 year, renewable by vote of groupagent and record progress against members at annual general

milestones meeting

Member To implement the group plan

The importance of elected committeesCommittee members, when selected by thecommunity, receive full co-operation and canfocus on specific tasks. Committee membersassist group members by collecting informationon specific issues such as market prices andcommunicating this information to themembers. An experimentation committee could

also be put in place to spearhead the farmerparticipatory research for the selectedagroenterprise options. Box 3 describes thecommittees belonging to the Kware VegetableGrowers Group, Tanzania.

The community should seek to select committeemembers on a merit basis, using such criteria

62


Table 12. An example of an organogram of posts within a farmer group.

Name of Members Role Responsibility Term of officecommitteeExecutive Chairperson Support day to day Take major decisions, 1 year, renewable atcommittee Treasurer activities of the delegate activities, annual general

Secretary group review progress meeting

Marketing Market officer Collect and advise on To conduct regular 1 year, renewable bycommittee Sales person market information market visits, collect vote of group

Treasurer key market data and members at annualSecretary develop business general meeting

options on behalf ofthe group

Experimentation Researcher 1 Evaluate innovation Undertake experimental 1 year, renewable bycommittee crops/livestock options options on behalf of the vote of group

Researcher 2 group and report back members at annualM&E officer on effectiveness of new general meeting

technologies, methods

Monitoring Chairperson Monitor progress Record progress against 1 year, renewable bycommittee Treasurer across committees milestones for marketing vote of group

Market officer and innovation members at annualResearcher general meetingM&E officer

Box 3

Examples of committees in Kware Vegetable Growers Group,Hai District, Tanzania

The Kware Vegetable Growers group has three committees:

1. Management Committee composed of a Chair person, Secretary, Treasurer and 2 ordinary members.2. Experimentation committee comprising 4 members.3. Monitoring and evaluation committee, having 3 members.

These committees were agreed upon by the entire group and meet regularly on behalf of the group to plan andimplement activities. During overall group meetings that take place every Sunday, the management committeecalls on the other committees to brief the group on status and progress. There are no incentives for thecommittees and individual involvement in the committees is borne out of the individual interests to support thegroup.

as experience, standing in the community,holding of other positions, ability to read andwrite, being a good speaker, and being respectedfor fairness. The group may benefit from notelecting political leaders. The group should avoidforming large committees as these will rapidlylead to problems of co-ordination. Neithershould the group set up committees or positions

that have no real role or if no-one is available totake on the activity. To avoid potential conflicts,the process should be highly participatory andselection of members should be open to allinterested persons. The effectiveness of thecommittees should be reviewed at least once peryear and committees should be discontinued ifthey are found not to be useful.

63


Visioning to Develop a Common Goalfor the FutureFollowing the analyses at the participatorycommunity level, the market facilitator shouldwork with the partners within the workinggroup and representatives of the enterprisegroups to formulate a joint action plan. Thisaction plan outlines key or common problemsand how the partners and enterprise groups canembark on a series of activities to overcomethem. This is related to what can be done in theshort, medium, and long-term and what can

be achieved with local and external resources(Table 13).

Outline of the project area assessmentThe market facilitator should write a15-to-20 page report on major findings,challenges, and current plans (Appendix 5). Thereport should highlight the short, medium, andlong-term challenges and the activities thatfarmer groups have planned to achieve theirgoals. The report with clear recommendationsshould then be circulated among the workinggroups and discussed with the enterprise group.

64


Tabl

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65

Product Screening and Market Opportunity Identification

SECTION 7Product Screening and

Market Opportunity Identification

By the end of this section, the market facilitatorand community should have:

• Decided on a pilot site in which to market testan existing product or demand-based process.

• Designed a market opportunity survey.• Evaluated demand and buying conditions for

product options.• Selected a product for additional market chain

analysis.

Time frame: 2 weeks.

This section describes a “screening process”,which is used to make an objective decision onthe product to select for market chain analysisand agroenterprise development. If a producthas already been selected according to a pre-project design phase, stakeholder workshop, ormacroeconomic decision, then the reader may go

directly to “Section 9: Market Chain Analysis” orSection 10: “Developing an Enterprise orIntervention Action Plan”.

This section aims to help partners understandmarket demand for specific products andprovide a means of comparing different types ofproduct options such as pineapples, beans, andpigs. Common evaluation criteria that are usedare production requirements, marketingrequirements, and profitability. A significantaspect of this process is to also evaluate newproduct options that may enable or encouragefarmers to diversify their products into highervalue options that can take advantage of growthmarkets.

Options for Product ScreeningBefore embarking on this next phase of thework, some decisions must be made on:

66


1. The type of survey.2. The survey’s scope.3. The survey team’s composition.4. The level of participation.

Methods for product surveyingType of survey: Two main options exist forselecting survey types. Choosing the option orstrategy to follow should be based on theworking group members’ experience and thelevel of risk or innovation being sought by thefarmer group or investor. The market facilitatorshould help the partners make a decision.

Strategy 1: Selecting an existing product(lower risk). This is for groups with limitedexperience in marketing and agroenterprisedevelopment. With this strategy, workfocuses on evaluating demand, marketprospects, and services for existingproducts in a localised area. The marketingstrategy for this approach is called “marketpenetration”, and is an ideal approach to beused as a pilot project. The time frame foragroenterprise development based on thisstrategy can be reduced to one season.

Strategy 2: Identifying a new product(higher risk). This is for more experiencedmarket facilitators or more organised farmergroups. With this strategy, work includes amore open product evaluation process, amore diverse range of products, and greateremphasis on market demand. The keyquestion is whether demand for the productis increasing, stagnant, or declining over theprevious 1 to 3 years. This marketingstrategy is normally called “diversification”and the selection can include specificproducts that are of interest to clients orinvestors. The time frame for this processmay extend beyond one season.

Survey’s scope: Whichever strategy is chosen,the size of this preliminary survey still needs tobe defined in terms of which type of products toinvestigate (high or low value), how many peoplewill be involved, how many markets will bevisited, and which types of markets the surveywill examine. The decision on scope is usuallybased on the time and resources available.

Selecting the marketing survey team: Basedon the type of product and therefore thecomplexity of the analysis, the working groupshould select participants for a joint marketingteam. Typically, marketing teams will comprise

the market facilitator and 2 to 4 representativesfrom the working group, including, if possible,one or more farmer representatives. Marketteams of 2 or 3 are generally more effective thangroups of 5. If more people are involved, theseshould be separated into teams of 2 or 3 people.Each group should include one person who isfamiliar with market analysis. Market interviewsoften touch on sensitive issues such as prices,profits and sources of produce or finances. Thistype of information is only shared with smallteams. Interviews with traders should onlyinclude one trader and a maximum of twointerviewers.

Level of participation: Where possible, serviceproviders or farmers should be involved in all theplanning and implementation stages of themarket survey, as this facilitates the transfer ofmarketing skills. However, the level ofparticipation also needs to be practical. As a ruleof thumb, the level of participation of thebeneficiaries declines as the scale andcomplexity of the study increases.

In the past, product screening and marketanalysis (discussed below) were undertaken by aconsultant or project staff member who wouldfind out what farmers and working groupmembers wanted to develop into newenterprises. The results would then be presentedto and discussed with the working or farmergroups for their final decision on the option toselect for further analysis and investment. Thisconsultant or project staff-led activity remainsvalid, particularly if the project area underanalysis is large, if the products underconsideration require specialist knowledge, or ifthe project has limited time or resourceconstraints. However, where possible, marketsurvey work should be undertaken with amanageable level of participation to prevent top–down processes and to increase ownership ofresults.

Importance of CommunityParticipationAlthough farmers are familiar with markets, theyare not familiar with market surveys. For many,their participation in a market survey will betheir first time to systematically evaluate buyingconditions for products in a market. Clearly, thistype of work requires good communication andinterpersonal skills, so farmer selection for thistask is important—they must be knowledgeableand motivated. Where possible, a gender balance

67


in the chosen group should be maintained.Essentially, participation is important sopartners can learn and repeat the exercise ontheir own initiative at a later time.

Strategy 1: Screening “Existing”ProductsFor groups who are conducting agroenterprisedevelopment for the first time, starting with anexisting product is advisable. Decisions onwhich product to select can be based on:

• Findings from the project site resourcesurvey.

• Findings from stakeholder analysis.• Focus groups with farmers.• Macroeconomic analyses, including the

project site.

The simplest way of reducing a list of preferredproduct options to a manageable number fordemand analysis is to choose products havingthe highest volume and value.

• If secondary information from the projectsite is separated into food security andincome-generation products, then themarketing team can select the first 3 to 5income-generating products for the client orbusiness partner groups.

• A product can be selected according to acombination of information from the workinggroup members and discussions with farmergroups. When dealing with farmer groups,products can be selected according to thefollowing criteria:- Products that are mainly produced for

income.- Products that are produced by most

group members.- Products that will attract investment

from farmers, service providers, or localentrepreneurs to establish a newenterprise.

The advantages of selecting an existing productare twofold: (1) the working group or marketingteam can start working on agroenterpriseoptions relatively quickly, and (2) farmersalready know how to grow the product and canfocus more on its marketing aspects.

Product market screening surveyHaving selected potential products, themarketing team should develop a plan and aquestionnaire to evaluate those products’

marketing prospects at selected market outlets.Usually, market screening focuses on localmarketing outlets. It begins with a marketmapping exercise that will enable the marketfacilitator and marketing team to visualise thetypes of market they need to survey for theselected products, as different types of productsmay have different market outlets.

The team should also plan the logistics of gettingto the markets. In some cases, the marketfacilitator may, before the survey, undertake arapid reconnaissance of the targeted markets tolocate vendors selling the selected products andso make arrangements for market visits(Figure 9).

Survey protocolAs with all survey work, a standard series of stepsshould be observed when interviewing informants.

1. Select and brief survey team members onthe purpose for the exercise.

2. Plan the survey on the results needed andlink activities to a time frame.

3. List survey sites to be visited.4. Plan number of interviews per site.5. Prepare a questionnaire or checklist.6. Pre-test the checklist in a local market

before undertaking the survey.7. Prepare an introduction as to why you are

doing the survey. Make sure that everyonewho is being interviewed understands youraims.

8. Ask permission to undertake an interviewfrom all managers and supervisors at thelocation of the interview, whether at amarket, hotel, or shop.

9. If possible, arrange meetings before youarrive.

10. Be sure that the interviewee has time for theinterview or re-arrange for a better time ifthey are busy.

11. Always show respect for an interviewee’stime; do not take more than 20 to30 minutes of their time.

12. If interviewing in a market, stop questionswhen the person being interviewed is dealingwith their customers.

13. Always thank them for their participation inthe interview.

An example questionnaire or checklistThe pre-screening survey aims to find out whichproducts are showing strong market demand andattractive business characteristics. The marketingteam needs to discover which product (or

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products) is (are) the best option and who arethe potential buyers. The types of questions tobe answered in the pre-screening survey are:

• What is your name, telephone number, andcontact address?

• Could you tell me if the market demand forproduct X is growing, stagnant, ordeclining?

• Are there any times in the year whenproduct X is scarce? If so, why?

• How do changes in the season affect prices?• What are the prices differences according to

size or class?• If the price of product X is very high, what

other products do people buy instead?• What quantity of product X do you

purchase? And how often?• How many other traders are there like you

in the market?

• Can you estimate the quantity of product Xpurchased by this market?

• Who is the largest trader in product X?• Who do you buy from? And where are they

located?• What is your minimum purchase volume for

product X?• What is your frequency of purchase for

product X?• What is your main source of product X?• What price do you buy product X per unit?• What are you currently selling product X?• What are your main marketing costs?• What are your terms of payment?• Would you be interested in buying from a

farmers’ group?

Results from the market visitFollowing the market visit, the market teamshould review and write a summary of theinformation gathered. Figure 10 provides an

Preliminary: The survey team or farmer group selects some products for which they would like to collectmarket information. The first surveys will focus on existing products. New products may be investigated in a

follow-up study at a later date.

The market facilitator reconnoiters the principal markets and selected market outlets for the products.Basic information is collected for comparison with group data. Traders that the farmers may visit are

informed about the visit and permission is sought.

The checklist or questionnaire for the market study is prepared by the farmers and facilitator. This is testedwith some of the markets or retailers who have shown interest in being involved or within a nearby trading

centre. This ensures free interaction with traders.

A program for the visits is prepared. Market survey groups are defined to study different products. Thecommittee can divide responsibilities between those who will ask questions and those who will record the

information. Both men and women should be selected for these tasks.

The market survey is conducted. The survey team or farmer group puts questions to traders, managers, orpersons running the businesses. The market facilitator accompanies the team or group.

The facilitator brings the survey team or farmer group together to analyse the results of the market visit.Results are tabulated according to a predetermined format. The information is organised to be

communicated back to the working group or farmer group.

Those who participated in the market visit present the results of the market study to the rest of the workinggroup or farmers in the community. Decisions are made as to which options should be further analysed.

Figure 9. Steps in arranging a market survey.

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example of information, where, in this “marketsurvey”, the farmers evaluated market prospectsfor beans, rice, tomatoes, onions, potatoes, andfresh cassava.

The information shown in Figure 10 is specificto a trader who supplied a local school. Thereport was organised to reflect the product,quantity purchased in numbers of bags,frequency of supply, source of product, price,payment terms, and the trader’s interest indealing with a farmer group. This type ofsummary should be completed for each marketoutlet.

The time required for this exercise will dependon the number and distances between thedifferent market outlets. Typically, participatorymarket visits to evaluate 3 to 5 products willtake 4 or 5 days, that is:

• On Day 1, the market committee isintroduced to the concept of participatorymarket research and how it is conducted.The questionnaire or checklist is thenprepared. The checklist should be tested in a

nearby market before the main study iscarried out.

• Days 2 and 3 will be spent in the markets,gathering data.

• On Day 4, the market study’s results areprepared and synthesised.

• On Day 5, the findings of the market surveyare presented to the group members orwider community.

Presenting the information: Having gatheredinformation from the market, the data should bediscussed by the marketing team and writtenon a data summary sheet. This information willbe used as the basis for discussions with theworking group or farmer group onselecting the best product or enterpriseoptions (see “Section 8”).

Strategy 2: Surveying to IdentifyMarket OpportunitiesThe survey to identify market opportunitiesseeks “new opportunities” for enterprisedevelopment. The focus in this approach istherefore on diversification, emphasisingmarket demand for new and higher value

Figure 10. Results of a market survey conducted by farmers in Uganda.

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products rather than working with existingoptions. A key question is whether demand for aproduct is increasing, stagnant, or decliningover the last 3 years.

First, a survey team is formed. This shouldinclude the market facilitator and selectedmembers of the working group or farmer group.The survey team should begin by planning thesurvey’s scope, discussing with the workinggroup and farmer group, the types of productsto be evaluated, as this will determine whichsales outlets will be included in the survey. Thefarmer groups may have a particular interest inlivestock, fruits, or a niche product such as“organic coffee”, which considerations should beintroduced into the survey’s planning andquestionnaire format.

Having established the study’s focus,preliminary market chains for the variousproducts should be drawn up to determine whatinformation is known, what information isneeded, which types of people should beinterviewed, and where the interviews shouldtake place (Table 14). This session should endwith a timetable and list of interviews to hold,questions to ask, and the names of the people toconduct the survey. The matrix in Table 14 willassist in this planning process.

In strategy 2, the list of locations to study maybecome longer as it will include more distant orspecialised market outlets. This type of survey,therefore, requires careful planning and mayneed additional support from experts in eithermarketing or specialised products.

The next stage is for the market facilitator todevelop a questionnaire with the survey team.This should be simple and easy to use(Appendix 6). In this rapid method, the samplesize is not statistically measured but, as a rule ofthumb, the survey should visit at least 3 to5 sites within each type of sales outlet. The moreoutlets there are within a type, the more samplesshould be taken. For example, kiosks are likely tobe more numerous than small shops. The surveyteam would therefore plan to visit more kiosksthan small shops to gain an idea of a product’smarket demand. The group should also considercollecting more data if the information is highlyvariable or to stop collecting when 2 or 3 sitesgive similar information.

Once the questionnaire has been finalised andpre-tested, the next step is for the survey team tocontact key informants at the market outlets andconduct the survey. This exercise quantifies therelative demand for specific products and gathersinformation on buyers, changes in demand,

Table 14. Matrix format to plan which data to collect at which point of sale in the chain.

Products in Products in Products of interest Estimated Sample sizehigh demand scarce supply to the project or number of

farmer groups sites

Local market

Next largesttown market

Supermarket

Small shops

Local stores,kiosks

Restaurants

Institutionalbuyers

Processingfactory

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product prices, volumes, and buying conditions.The survey team can also use this opportunityto discuss selling options with traders andretailers, and so initiate the process of buildingcontacts in the market.

This exercise allows selected market committeemembers to find out for themselves the demandfor products in nearby market outlets. Thesurvey team will be able to identify the range ofagricultural products on sale, study the buyingconditions and quantities purchased, and notemarket trends.

Market Survey ResultsThis type of survey can generate informationfor “long lists” of options for enterprisedevelopment, for example, more than30 products within a 2 to 3 day period. Whenthe survey includes several additional categoriesto be studied such as fruits or dairy products,many options and market outlets exist for suchlists, such as supermarkets, which may have20 to 30 products within one product line. Thesurvey team can collate its findings in the formof a report (Appendix 7).

The survey team should not feel overwhelmed bythe high numbers of potential products becausethe next step is to use marketing filters to selectthe best option for the target group.

Researching markets for processedproductsFor community groups planning to work onprocessed products for sale to consumers, goodadvice on market research techniques can be

7. (www.fao.org/ag/ags/subjects/en/agmarket/research.html)

found in FAO’s Marketing Extension GuideNo. 3 “Market Research for Agro-processors”7.Before any agro-processing venture is started,or before an existing venture decides to expandits product line, an understanding of the marketfor the planned products is essential. Farmersand rural processors need to be sure that theycan sell what they produce at prices that givethem a good profit. They need to have a realisticidea of the quantities they can sell and be surethat the facilities they build and the equipmentthey buy are suitable for those quantities, beingneither far too large nor too small. They need toknow where they can sell their products andhow best to distribute them to consumers. Last,but not least, they need to be certain that theraw materials, other ingredients and packagingthey require will be available when needed, at aprice that permits profitable processing andmarketing.

The Dynamic Nature of MarketsAs buying conditions in markets are constantlychanging according to season, trends, and manyother factors, the working group or farmergroup must understand that single visits tomarketing outlets only provide a snapshot of themarket situation. To follow trends, the surveygroup or market committee member needs toundertake further visits over the year to monitorchanges. Farmers can follow up on morelocalised market changes once they know howto conduct the market study.

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SECTION 8Selecting the Best Product or

Enterprise Option with the Clients

By the end of this section, the market facilitatorand community should have worked with clientson the following:

• Determining selection criteria.• Selecting the most viable option for the

community.• Developing a business plan.• Developing an enterprise action plan.

Time frame: 1 week.

At this stage, the facilitator has assisted thecommunity to generate market information onseveral products. Depending on the strategyused, the survey team will have gatheredinformation on either (1) a limited number ofexisting products, or (2) a considerably largerset of products that include traditional andnew options. Having generated this list ofpotential options, the survey team, guided bythe market facilitator, should now reduce thelist to the most profitable and viable products

for agroenterprise development. To filter out theless attractive options, the survey team uses theinformation they have collected and develops aseries of selection criteria (Figure 11). Thesummarised results are then presented to thewider group, who makes a final selection.

Establishing Evaluation CriteriaSeveral criteria can be used to evaluate theagroenterprise options. These criteria should bewell defined and easily understood by groupmembers:

• Smallholders can easily produce the options.• The options are attractive as a business

proposition.• The options would contribute to production

sustainability.

Because most farmers in rural communities aresmallholders, the options chosen must be easyto implement or, if a new product is selected,

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Selecting the Best Product or Enterprise Option with the Clients

then the farmer groups should have access tosufficient technical service providers. Generally,the option should have low technicalrequirements, with the initial costs of productionbeing affordable. Ideally, the option chosenshould be attractive, not too long-term, andprovide a reasonable return. Farmers and lessexperienced market facilitators should start thisprocess with a short-cycle product, so that theycan go through the process reasonable quicklywithout losing interest of the actors involved.Contributing to production sustainability is alsoan important criterion because smallholderfarmers have little land and often farm on low-fertility plots with limited inputs.

Selecting the Most ViableAgroenterprises from a List of OptionsThe market survey team, with the facilitator’shelp, must write up the enterprise selectioninformation. Once this has been done, a working

group or community meeting should be called toreview the process of enterprise selection. At thecommunity level, all farmers should be invitedand the meeting should be as participatory aspossible. Selection should be based on a three-stage discard (i.e., product removal) process(Figure 11).

• Discard 1: Obvious products that have littlehope for success.

• Discard 2: Removal of options based onproduction, marketing, and profitability data.

• Discard 3: Final selection by most farmers.

Discard option 1: Removing obviously“no hope” productsAny product option that the farmers or project isnot interested in is removed from the “long list”.Such a “long list” will not occur where only“existing” products are studied, but only whenthe survey team generates option lists based onmarket demand.

Filter 1: Obvious discardCriteria: Can be grown

in project area,investment limit

Filter 2: Selection matricesCriteria: Production,

marketing, financial/and orprofitability

Filter 3: Farmer decisionsCriteria: Farmer or investor

has casting vote onfinal selection

Initial longlist of

products

Finalselection of

marketopportunities

by farmers

Filter 1: Obvious discardMany options: 10–15

Filter 2: Selection matrices10–15 down to 3–5

Filter 3: Final selection3–5 down to 1–2 for

market chain analysis

Selectionrates

Figure 11. Selecting market options according to three levels of selection or discard.

SOURCE: Adapted from Abele et al. (2004).

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Reasons for discarding an option include theproduct being unable to grow in the area, beingcostly to grow, or being too risky to produce.Examples of such products may include exotichigh-value fruits and vegetables, tabooproducts, illegal products, products that requirespecialist skills, and very long-term productssuch as hardwoods.

Discard option 2: Enterprise criteriaThis series of options must be measured againstindicators of business viability. The facilitatorand market survey team should take time to gothrough this information, so that the method isunderstood and can be explained to other groupmembers in a comprehensible and interestingmanner. Selection criteria in this case focus onrequirements for (1) production, (2) marketing,and (3) profitability, based on investment, asfollows:

Production analysis: For all options, thesurvey team and market facilitator shoulddetermine what is required to produce them.Each product should be assessed, using acommon set of production requirements, forexample, rainfall, soils, altitudes, inputs suchas fertilisers and pesticides, major pests anddiseases, and other potentially useful agronomicinformation (Figure 12). From this information,

some enterprise options may be automaticallydisqualified because the area is unsuitable fortheir production. For example, if rainfallrequirements are higher than the area’s rainfalland irrigation is not possible, then those optionsshould be discarded. The complexity of thematrix, and therefore of the informationrequired, will be based on decisions made by thesurvey team.

Marketing analysis: This information is criticalbecause it gives the survey team and farmers anidea of the best enterprise options in terms ofselling the product. From this information,the survey team will gain a reasonableunderstanding of the risks involved and the levelof effort required to reach purchasing standards.This information focuses on demand status,prices offered for each product, minimumquantities purchased, the means and terms ofpayment, delivery conditions, and qualityrequirements (Figure 13).

Profitability analysis (financial): The finalevaluation provides a means of comparing theprofitability of different enterprises. This methodrequires some mathematical skills and thefacilitator should ensure that calculations aredone correctly. Based on the informationgathered at the market, the analysis outlines the

Figure 12. An example of a production matrix.

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costs involved in producing and bringing theproduct to market against the income that willbe received. The market facilitator shouldensure that this analysis is done in the simplestand yet most conclusive manner (Figure 14).

Gross margin analysis is a fairly simple way tocompare profitability of an enterprise acrossdifferent types of products. “Gross margin” isthe final income after all production costs havebeen subtracted from the sales income. Theprofitability of an enterprise is a very importantselection criterion. In some cases, this exercisemust be undertaken over several years, as someenterprises only show profit after 2 or 3 years.

Discard option 3: Final enterpriseassessment by working or farmer groupThe final selection of the most suitable productto develop into an enterprise should bedetermined through dialogue between workingand producer group members. The facilitatorcan use either “product cards” or a “summarysheet” so that it is simpler, particularly forfarmers, to compare the enterprise optionsagainst their constraints and opportunities.

The marketing committee member shouldpresent the information to members fordiscussion and the final selection of one or twooptions that will be developed further into new

business options. If the farmers fail to come to aconsensus in selecting a product, the facilitatorcan use several methods, listed below, to arriveat an agreed choice. Other criteria that arespecific to farmers’ interests can also beincluded to provide a common appreciation ofhow a decision is being made and guide thefinal selection of a given product option foragroenterprise development.

• Weighting and giving scores to variousoptions.

• Using the one-man one-vote criterion.• Applying pairwise ranking to the products.

These methods can help farmers make adecision agreed on by all members. Thisexercise should be facilitated so that all presentfeel satisfied with the outcome. Because of thesignificance of this exercise, the facilitatorshould ensure that it is done thoroughly andthat the farmers understand that a cleardecision is being made.

Through this process, the working group orfarmer group will assess the differententerprises and justify their preferences. Goingthrough this exercise significantly improves thegroup’s understanding and assessment of thevarious enterprises.

Figure 13. An example of a marketing matrix.

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Why Learning these Skills IsImportantIf the farmers properly understand this processof information gathering and selection, theirconfidence in enterprise development will be

Figure 14. Profitability analysis: “gross margin” for beans in Uganda.

built, and they may use the exercise insubsequent studies to find a new enterpriseoption. Box 4 gives an example from Tororo,Uganda, and Table 15 gives a matrix ofprioritised interventions and associated chainactors.

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Box 4

Case study: Enterprise selection by the Katamata Farmers Group,Tororo, Uganda

Preparing for market visitsThe market facilitator in this study was from the NGO, Africa2000 Network. Dates for market visits were agreedon by the committee, together with the facilitator, who wrote letters to several business men and women in theTororo markets, requesting permission for the farmers to visit their enterprises. A date and time was agreed onfor the visits. Before visiting, the farmers studied the market checklist and agreed on the questions to ask thebusiness people. The committee was separated into two groups, both composed of women and men. Each groupelected a leader to record the information gathered. Ten committee members chaired by Mr Alojo led the marketstudy. The facilitator, joined by another from CIAT, accompanied them.

FeedbackThe market study feedback session, led by the marketing committee, was attended by 26 members: 10 womenand 16 men. After presenting the market information, the results were discussed. At the first level of selection,farmers arrived at a list of commodities that they could produce. This list included beans, groundnuts,tomatoes, kale, amaranth, green gram, and field peas.

As part of this process, farmers were guided through a gross margin analysis of two selected crop enterprises todetermine their profitability. The analysis showed that beans had returns of 160,000 Ugandan shillings perhectare. In contrast, groundnuts had returns of up to 455,000 Ugandan shillings per hectare. Groundnuts andbeans were selected as the most attractive enterprise options and an experimental plot was set up to evaluatethe production from new varieties of these crops.

Selection criteriaSeveral selection criteria were considered, including market demand, price, production costs, availability of oraccess to improved varieties, availability of certified seed and other agricultural inputs, maturity period(preferably short), perishability, post harvest storage, pest and disease management, transport costs, andquality and/or amount of produce required by buyers. Groundnuts were noted as having two planting seasonswhereas beans could have as many as three planting seasons, if planted at the correct intervals.

Table 15. A matrix of the final evaluation and selection of income-generating activities.

Product Market demand Technical and Economic feasibility Farmer organisationenvironmental feasibility exists

Beans

Pork

Pineapples

Scoring High 6 Low 0 High 4 Strong 3Medium 4 High 5 Average 2 Medium 2Low 2 Op. cost 0 Weak 1

Non-existent 0

Availability of Existence of local Equity in distribution Other criteria Total scoreservice support know-how about of benefits infor the product crop/product community

Scoring Yes 2 Yes 1 No. of beneficiaries: Degree of importance:No 1 No 1 High 3 High 3

Intermediate 2 Intermediate 2Low 1 Low 1

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SECTION 9Market Chain Analysis

By the end of this section, the group should have:

• Undertaken a rapid market chain study.• Written up a market chain report.• Reported findings back to the group.

Time frame: 2 to 3 weeks per market chain,depending on chain length and survey teamexperience.

IntroductionMarket chain analysis is the most complexanalytical stage in the agroenterprise processand many fieldworkers find this task ratherdaunting. This section provides a method thatcan be used and adapted by non-specialists toundertake a simple analysis, focusing on part ofa selected market chain. The goal is to obtain amore detailed understanding of the actors,activities, costs, and opportunities related to theflow of a particular product and associatedservices, starting with farmers and ending withthe targeted buyers and/or consumers. Theseissues need to be understood to identify criticalconstraints, opportunities, and the entry points

for agroenterprise intervention. The informationgained through market chain analysis alsohelps in identifying the best market chain towork on for a specific client and in locating keymarket chain actors who will buy produce. Theknowledge obtained will play a critical role indesigning, implementing, evaluating, andscaling up enterprises.

The method offered here relies on a combinationof secondary data, a review of trends, andprimary data collected by interviewing marketchain actors. With this information,opportunities and constraints can be evaluated.Results are mainly descriptive and the analysisdoes not require sophisticated econometricskills. However, when implementing a marketchain analysis, the survey team should takeinto account the complexity of the sub-sectorsunder study, the time and resources available,and the capacity of the staff involved. Some sub-sectors may have a multiplicity of supply chainsand products, as shown in Figure 15. This typeof survey will often benefit from or even requireexpert consultant support. The leadorganisation should evaluate demand for this

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Market Chain Analysis

type of service as this may be an area that canbe developed into a future businessdevelopment service.

As a rule, farmers would not lead this processand they are unlikely to ever undertake this sortof analysis on a routine basis. The marketfacilitator will therefore need to find partnerswith specific skills from research or otherdevelopment agencies. Farmer representativescould be included in the survey team andundertake specific parts of the analysis.However, involvement should be restricted tospecific opportunities identified, based on thefindings for the survey (e.g., small dotted lines)(Figure 15).

Sub-sectors and Market ChainsTo help demystify some of the jargon used inmarket analysis, some key terms and theirmeanings are briefly described below(see also Glossary):

A sector usually refers to all activities within themandate of a single Government Ministry, suchas agriculture, health and education; hence theMinistry of Agriculture services the agriculturalsector. A “sub-sector” is the term used todescribe activities within part of a sector.Therefore within agriculture, the term sub-sector can be used to describe all the activitieswithin one part of the agricultural sector, suchas the cereal sub-sector, fish sub-sector orlivestock sub-sector, etc. The term “sub-sector”is also used to describe activities that relates toonly one particular commodity, such as themaize, rice, cassava, beef sub-sectors. The termsub-sector essentially describes the activitiesand market channels, through which productsand services are delivered to buyers. Buyersinclude traders, processors, wholesalers, andretailers (Figure 16).

A product is the basic unit being traded. It isusually categorised into one of three types:

Product 2

Product 3

Product 2

Product 1

Product 1

Product Types

Market Types

Local

District

National

Regional

Int Export

Figure 15. Idealised scheme of a sub-sector and its many market chains.[Dotted lines refer to local links within a market channel; this is often the limit of work that can be done withfarmer participation. The channel can be followed beyond a district to a national level and this maybe possiblefor farmers if they are going to the main capital city market, but as stated previously, as the analysis becomesmore distant and complex the level of participation would logically decrease.]

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Consumption

Retailing

Trading

Processing

Trading

Post harvesthandling

Production

Research

Transportation

Government policy regulation

Communications

Technical & business training & assistance

Financial services

Market information and intelligence

• Primary product: This is the basic unitharvested from a farmer’s field, for example,“maize cobs”.

• Secondary products: These are sub-productsderived from maize cobs such as grain,flour, and stover (maize stalks used asfodder).

• Tertiary products: Further differentiation orprocessing of secondary products, includingstarch, snack foods, processed animal feeds,and industrial products.

The more a product is subdivided ordifferentiated, the more specialised are themarkets and buying conditions.

Distribution indicates the movement of products.Primary produce from one or many farms ispurchased by local or travelling traders, whotransport goods between markets. Thesetraders, also called intermediaries, play the roleof bulking farm produce, which is then soldthrough a range of markets, including assemblymarkets, wholesale markets, industrial buyers,retail markets, supermarkets, restaurants, andhotels. Niche markets are a relatively newconcept, describing a highly specialised type ofmarket that supplies a limited number of

consumers, with a high-value or scarceproduct. The opposite of the niche market is thecommodity market, which deals in moregeneralised, bulk goods.

These market outlets may have local, national,regional, and possibly export destinations. Thelinks, based on the number of transactions thatoccur between the farmer and final consumer isdescribed as the market chain. Figure 15 showsseveral products being supplied throughtransaction points to several different types ofmarkets, along individual market chains. Thedotted and dashed line represents one marketchain or channel.

In the literature, market chains aresynonymously referred to as production chains,supply chains, market channels, or valuechains. At each stage in the market chain, theproduct changes hands through chain actorsand, at each transaction, costs are incurred andgenerally some form of value is added.

Value addition includes simple tasks such asbulking, cleaning, grading, and bagging. Valueaddition can also include moving a productnearer to a larger demand centre or town; and


Figure 16. Links in the market chain and business support services.

Production input supply

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numerous types of processing, packaging, andpromotional and marketing additions thatchange the product and attract consumers.

The value chain can also refer more specificallyto the addition of value or worth, as the productprogresses from the primary producer to thefinal consumer. This term is used for particularmarket chains that have been systematicallyorganised with the actors involved workingtogether to raise the efficiency and quality ofsupply, that is, the chain itself. Improvingmarket chain performance is the goal of manyenterprise projects, and value chain conceptsare at the heart of sound agroenterpriseprocesses.

Market chains operate over different spatialdomains, and also supply different types ofconsumers. These consumer categories, whichinclude rich, poor, young, old, ethnic, andindustrial buyers, are referred to as segments.Each segment has specific demandrequirements based on price and qualityparameters. Marketing plans aim to match theneeds of these segments with a specific product.

The performance or efficiency of a market chainis a result of how well the actors in the chainare organised and also how well the chain issupported by a range of business developmentservices (BDS). Business services includeresearch entities, input suppliers,communications organisations, transporters,local administration, market information, andfinancial services. Market chain performancecan often be increased more effectively byimproving or gaining access to BDS, rather thanassisting an individual or group of actors in amarket chain. Market analysis therefore aims toassess both goods and services along the chainand the relative strengths of market informationand/or signals.

A Method for Rapid Market AnalysisThe rapid market appraisal (RMA) methoddescribed below is based on that developed byHoltzman (2002). This method relies on semi-structured informal interviews with keyinformants8 and a minimum number of

participants at different stages of the marketchain or sub-sector. This method is usually ledby an experienced analyst, with support fromnon-specialists, particularly when the study isextensive or sufficiently complex to requireexpert knowledge. However, it can be applied toless complex market chains or to parts of amarket chain by researchers with less formaltraining in economics and by local actors withsome degree of facilitation.

The interview approach provides the surveyteam with an opportunity to gather primaryinformation from several market chain actors,working on the product in question. The RMA isa way of (1) gaining a view of how a commoditysub-sector is organised, operates, and performs;(2) identifying sub-sector constraints andopportunities; (3) identifying specific marketchains that are most appropriate for a clientgroup or investor to compete in; and(4) prescribing interventions in the organisation,technology, and management of a specific partof the sub-sector.

Undertaking a sub-sector or market chainanalysis is a way of gaining insight into the(1) operations of specific market channels whilefocusing on their growth potential, (2) activitiesand efficiency of actors along the chain,(3) business support services involved, and(4) policy and regulatory frameworks. With theinformation from the analysis, opportunitiesand constraints can be identified within specificmarket chains, and ways can be seen toimprove a defined client’s capacity to competemore effectively. Sometimes, the survey willidentify several potential market chains thatshould be prioritised according to market type(local, national, and export). The analysisshould also identify the best points of leveragewithin a market chain by investing to improvemarket chain performance. Such leverage mayfocus on technology, specific chain-actorperformance, improving BDS, or changingpolicies.

The basics steps in an RMAThe main steps of conducting an RMA of acommodity sub-sector are as follows:

1. Define the sub-sector or market chain to beanalysed, outlining critical constraints andopportunities, and the need for study. Drawa sub-sector map and make decisions on thescope of the survey required.

8. A key informant is a person with expert knowledge ofa particular area, in this case a specific area ofinformation related to the market chain beingstudied.

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2. Plan the basic survey overview; identify teamcomposition, and delegate roles andresponsibilities. Link activities to timeframes and budget.

3. Conduct a focused review of relevantliterature. Collect and tabulate readilyavailable and relevant secondary data.

4. Based on findings from secondary data,define key study areas, and make strategicdecisions about where to allocate scarcetime and resources. Define issues, priorities,and questions for focused study. Review thebudget and time frames.

5. Identify and interview knowledgeable“observers9” of a sub-sector to obtain theirviews, opinions, and suggestions.

6. Identify, select, and conduct semi-structured informal interviews with “marketactors10” in the sub-sector or market chain(define sample size, cross-check process).

7. Visit physical facilities (e.g., markets,warehouses, transport, and cold storagefacilities) and observe performance ofmarketing functions.

8. Share and discuss findings, draft a report,and present it to clients and interestedstakeholders.

9. Revise the report, based on feedback, andpropose the next steps:• Recommend policy and regulatory

reforms• Develop innovations in technology,

institutional arrangements, andorganisation or coordination ofmarketing functions (and a monitoringplan)

• Further, focused, applied research

Defining the scope of a survey of asub-sector or market chainThe planning of a market chain analysis shouldtake into account the complexity of the sub-sectors under study, the time and resourcesavailable, and the capacity of the staff involved.As Figures 15 and 17 show, some sub-sectorsare characterised by a multiplicity of supplychains and products. Although some marketchains will require expert assistance foranalysis, others are much less complex and can

be analysed, using basic common sense and asystematic approach to data collection.

The market survey team for this exercise willinclude the market facilitator, a local serviceprovider, and a representative of developmentagencies from the working group. More than oneteam can be used in the field, but as withmarket visits, small teams are conducive todiscussing sensitive information. Farmerrepresentatives can sometimes be involved,taking part in selected market visits, especiallywhere market chains are local. For marketfacilitators who have not undertaken this typeof work, an economist should be hired to helpwith the first survey. Such initial assistancewill enable the market facilitator and team tobrainstorm and discuss the relevance ofinformation gained, and analyse and reporton it.

Defining the study’s scope is a critical decisionin market chain analysis, because the processrapidly becomes more complex and costly withdistance from the farm gate. The survey’s scopecan be defined by initially drawing a preliminarysub-sector or market chain map to permitthinking through the different stages of amarket chain. The market facilitator shouldundertake this exercise with the survey teammembers, focusing on the team’s understandingof the market chain.

The survey team may decide to limit the studyto local markets or to conduct a market chainanalysis within the project’s geographicboundaries. If the group decides to extend theirunderstanding of the market chain, thefacilitator should contact traders or transportersto access more information on the chain and thevarious market outlets to prioritise visits tospecific markets where a product is sold.Brainstorming sessions with these “keyinformants” will provide the survey team withadditional information on the chain and mayintroduce new ideas and areas for study into theanalysis.

In most cases, the market survey team mayhave to travel outside the project area to followthe product to its final market destinations, orat least to the terminal markets within thecountry. The market facilitator should workwith the survey team to write up theseexperiences. The survey, however, should startwith local situation to see what products andprices are available.

9. Observers are knowledgeable about a market chainbut are not directly involved in the businessoperations of the market chain

10. Market actors are active members of the marketchain.

83


FAO has recently published a MarketingExtension Guide on Horticultural Marketing11.This also provides useful advice on techniquesfor carrying out surveys of markets and markettraders and provides check lists of questions tobe asked. The Guide also provides valuableadvice on marketing development approachesthat have been found to work well, and provides10 case studies of successful marketingextension.

Review of relevant literature andanalysing available secondary dataOne team member should review the literatureand analyse secondary data. Donor agencies,business associations, local universities, orresearch institutes are useful sources ofinformation. Unfortunately, most marketingdata in developing countries are not up-to-dateand this needs to be factored into the review.However, information such as prices trends,volumes traded, key market players, and firms

is usually available, often at market offices,chambers of commerce, and some governmentaland research bodies.

Identify key areas of researchAlthough a survey needs to be broad enough toobtain a good overview of the market chain, itcannot cover all topics in depth. The team needsto prioritise areas of study and the methods forexamining these components. The time andresources (e.g., number of analysts andlogistical support) allocated to the study willhelp limit the survey’s scope. The survey teamsshould be in small groups of 2 to 3 analystsworking together.

Interviewing key informantsIdentifying and interviewing a small butpurposely selected sample of key informants ina commodity sub-sector is a critical element ofan RMA. Small samples of informants need tobe chosen at each stage of the sub-sector ormarket chain. Information given by intervieweesshould be cross-checked against what they do,how they behave, what analysts observe abouttheir operations, and what other key informants11. (www.fao.org/ag/ags/subjects/en/agmarket/

extension.html)

Figure 17. Market chains for local, domestic and international products.

84


think about the constraints and opportunitiesthey identify. Cross-checks are done by askingsimilar questions with actors at different levelsof the market chain (this is a procedure referredto as “mirroring”). Another technique is tocompare the responses from individuals or firmsat the same stage of the sub-sector or atadjacent stages in a market chain. This type ofcross-checking, based on several differentmarket actors at one point in the chain, is atechnique known as “triangulation”.

As a rule of thumb, a minimum of three to fiveinterviews of actors or firms are conducted ateach stage in the market chain. The degree ofheterogeneity of firms with respect to responsesand specific characteristics will influencesample size. The more diverse the responses orfirms are at each stage with respect to productthroughput, degree of market linkage, productmix, management, technology, and geographicdistribution, the larger the sample of informantsrequired. As the sample size gets larger at each

stage, an appropriate stopping point is wherethe responses become consistent. The list ofpotential types of key informants is large, asshown in Figure 18, but a market survey teamwill choose those types most relevant to theinquiry.

Key informants• Traders (brokers, itinerant traders,

wholesalers, retailers).• Managers or production managers of

processing firms.• Importers/exporters.• Institutional buyers (e.g., supermarket

chains, schools, hospitals, military).• Shopkeepers, open market stall holders,

kiosk vendors.• NGOs, missionaries.• Extension agents.• Managers of governmental agencies.• Farmer groups, farmers.• University or agricultural researchers.• Input producers and suppliers.

Figure 18. A checklist questionnaire and the key informants.

85


Semi-structured informal interviewguidelinesA checklist should be prepared for use ininterviewing different types of key informants inthe commodity sub-sector (Appendix 8). Thisshould include important topics and subtopicsto cover, or several series of sequencedquestions designed for a probing, logical,stepwise inquiry. Using these guidelines helpsmake the interviews more consistent,systematic, and focused. After each interview,the analyst should prepare a summary sheet ofmost relevant information. These summarysheets are particularly useful in discussionsduring the survey and for preparing the finalreport (Appendix 9).

Conducting on-site interviewsInterviews should be held at the place ofoperation. Facilities should be visited to observepost harvest handling, sorting and grading,storage, transport, and transaction activities.This is done to cross-check what sub-sectorparticipants say, with how they behave, andwhat are their usual practices. Where good data

are missing, a site visit can also help toestimate the scale of operations. For example,approximate wholesale market throughput for aparticular product can be estimated, based onobserving a business day and asking differentwholesale traders about their sales volumes andmarket activity at different periods of the yearrelative to that day.

Report writingAfter completing the fieldwork, the teammembers should meet and discuss theirpreliminary findings before too much writinghas been completed. This useful exercise forcesteam members to present tentative findings,conclusions, and hypotheses to other teammembers, who can challenge and debate themor simply get a better grasp of the bigger picture.The team leader should lead the report’spreparation. An outline for writing the finalreport is given in Appendix 10. The summaryshould be no more than 10 pages and be madeavailable to clients, local administration, policyadvisors, and key stakeholders.

86


Presentations need to be rehearsed and shouldtake less than one hour. Care should be takenagainst overwhelming the audience with detailsand technical digressions.

Using the Market Survey Results toDevelop a Proactive Enterprise PlanThe RMA will collect a considerable amount ofinformation for a specific product, related to itsmarket chain’s actors, efficiency, andopportunities or constraints. The informationshould highlight growth potential of the productwithin the market chain and the efficiency oraccess to business support services. All thesedata are extremely valuable for the next stage:to develop the enterprise plan.

To begin planning for enterprise development,the market survey should provide prioritisedinformation on options for specific chain actorsand service providers such as:

• Information on buyers, types of dealsavailable, and their buying conditions (price,

locations, minimum quantities purchased,standards of quality, frequency of supply,payment conditions, willingness to enterinto sales discussions).

• Options to improve market chainperformance based on specific interventions,prioritised according to client needs.

• Opportunities for technology innovationsthat would provide value-addedopportunities at specific points in the chainand also facilitate the sub-sector.

• Opportunities for organisational innovation,for example, by forming farmer or traderassociations.

• Enterprise-level technical assistance thatwill increase competitiveness.

• Areas in which business support servicesand facilities need to be improved such asmarket information, production andmarketing research, and extension toincrease demand or reduce transaction costsfor client groups.

• Reform options for policies and regulations.

87

Developing an Enterprise or Intervention Action Plan

SECTION 10Developing an Enterprise or

Intervention Action Plan

By the end of this section, the farmers andservice providers must have made a planincorporating all of the necessary arrangements toset up the selected enterprise or market linkage.

This includes organising factors of production,post harvest handling, and marketing at the farmlevel, and providing services at critical points inthe market chain.

Group members should share roles andresponsibilities, provide for investments and loanrepayment schemes, understand how to monitorprogress, and know how to use profits or dealwith losses.

Designing Action Plans for SelectedEnterprise InterventionsThe first issue to evaluate from the marketsurvey information is the type of interventionsthat could increase chain competitiveness. Theroles of the actors associated with each specificintervention should also be examined.

Prioritising and sequencing interventionsThe working group and service providers shoulddiscuss and prioritise critical points in themarket chain (Figure 19). Based on thisanalysis, the group needs to make decisions onhow to sequence the interventions. Thisplanning process can be broken down intosteps related to market evaluation, pre-production, production, post harvest andmarketing interventions as shown in Table 16.

As part of the planning process, interventionscan be ordered into short, medium, and long-term activities. This process can also be appliedto research opportunities if there are no readilyavailable innovations to meet the critical points(Table 17).

Financial supportThese activities then need to be budgeted. Auseful exercise is to determine what can bedone now with existing sources of funding,followed by determining what may be possiblewith support from savings, or from partners,and concluding with the resources that must

88


Activities1.11.2...

Activities2.12.2...

Activities3.13.2...

Outputs1.11.2...

Outputs2.12.2...

Outputs3.13.2...

Where weare now

Where wewant to beObjective 1 Objective 2 Objective 3

Figure 19. Prioritising critical points in the market chain and activities to address them.

Table 16. An example list of prioritised interventions and associated chain actors.

Farmer group Trader/ Government Retailer/ProcessingEntrepreneur extension/NGO factory

Market evaluation Making decisions on Investigating Confirming Information onwhat to sell market options production product quality

requirements required

Pre-production • New variety Supply of inputs Experimenting with• Arrangement of new varieties

savings scheme

Production IrrigationPost harvest Storage facilities • Bulk sales of Linking farmer

5 tonnes groups with• Access to milling contract buyer

machine

Market sales Collective action Contract with farmergroup for 50 tonnesof produce

Table 17. Actions to be taken at specific points in the market chain.

Activity Actions

Short Medium Long

Enterprise developmentMarketingProductionPost harvestProcessingBusiness organisation

Research/InnovationMarketingProductionPost-harvestProcessingMarketingBusiness organisation

89


be raised through external sources to conduct aprioritised activity (Table 18). With theseplanning schedules, the group will be able todecide on where to invest funds or effort toreach the enterprise goals.

Group meetingsThis type of dialogue negotiation may needspecific meetings to be set up between keymarket actors and farmer groups. To ensurethat people’s time is well used, initial planningmeetings can be held with particular groups ofactors along the market chain such as traders,processors, or farmers, before holding onemeeting for all the chain actors.

Where supplying a business developmentservice (BDS) might provide the best return oninvestment for the market chain actors, the BDSsupplier should discuss the terms andconditions for payment with farmer groups orthe opportunities for scaling up operations withlocal service providers.

BDS interventionsThe market facilitator and working groupmembers should “think outside the farm” whenmaking a decision on the best place tointervene. Often, one well-placed BDS maysupport increased production from very manyfarmer groups. The costs of improving a serviceat a higher stage in the market chain may alsocreate considerable benefits for many farmergroups in the project area. All too often,opportunities for BDS support are neglected asdevelopment agencies focus too heavily on“being busy” on the farm.

The role of the market facilitator and marketsurvey team will be to link BDS providers withfarmer groups so they can improve marketaccess through these services. The “rules of thegame” may need to be defined, so that groupmembers, by virtue of being group members,can make gains in using a service. Sometimes,

simple BDS may even be provided by a groupmember.

New contractual arrangementsSimilarly, access to better contractual situationssuch as selling produce directly to a processor,large or high-value buyer, or factory may alsoprovide farmer groups with significantly betteroptions than merely improving sales in localmarkets. Contract farming is becomingincreasingly important in developing countriesand has many advantages in terms of inputsupply and access to more reliable markets.Often, contract farming is a less risky entrypoint into higher value products.

The role of the market facilitator and marketsurvey team will be to set up meetings fordialogue between the farmer group andcontractor, so that the farmers can sign a dealthat is suitable and achievable, and hassufficient safety net clauses to accommodateunexpected failures on both sides of thearrangement. For example, for farmers, thismay include the need for a crop failure clause,which means that they do not have to pay backinput loans in subsequent seasons, when theircrops have failed due to lack of rains.

Farm interventionsOften, with improved BDS and bettercontractual arrangements, new marketopportunities will demand farmer groups tobecome more competitive at the productionlevel. Working group members will thereforeneed to transform the information gatheredthrough market visits or market chain analysesinto a business design that can besystematically written into an action plan.

Detailed Enterprise PlanningTransforming marketing data into an actionplan requires careful attention to detail. Forfarmer groups, the members need to considerall the sequential steps required from

Table 18. Financial requirements, sources and activity sequencing matrix.

Intervention financing Time frame

Short Medium Long

Local resourcesLocal savingsPartner resourcesExternal resources

90


pre-production, through production, to postharvest handling, and finally to marketing theproduct. The action plan also needs to take intoaccount organisational issues within the group,investment issues, and how to overcome specifictechnical issues through support from serviceproviders.

Visioning is an important tool in this process,which can be used by the facilitator to set theboundaries of the exercise. As indicated in“Section 4: Tools for Working with aCommunity”, the group needs to consider wherethey are today (i.e., now) and what they need toachieve to meet market demands in terms ofprice, quality, quantity, and timeliness.

Once a plan has been outlined, the planningprocess should begin. This process will includeactivities at four levels, marketing, businessplanning, production and post harvest.

Marketing the produce is the most important dayin the farming calendar. All the previous effortcomes down to the value of the transaction, thesale. The plans for this moment are thereforecritical. The group should decide how the salesdeal will be done, how their collectivemarketing12 will take place, and to have “totalclarity” about how profits or losses will be shared(Table 19).

At the production stage, farmers need to list allrequirements such as seeds, land, labour, andcapital, to meet the market needs. In Uganda,farmers had the challenge of shifting from asingle harvest of mixed potatoes that was sold atone time, to a new sequential system ofproducing 5 tonnes of a specified variety ofpotatoes, every month throughout the year. Toachieve this new market requirement, farmersneeded to make sure that, across their group,the correct quantities of seed potatoes wereavailable to be planted by each farmer, and thatall the necessary agronomic practices were inplace and verified. The farmers needed to identifyand prepare land, procure seed, organiseplanting dates and regimes so that they couldsupply the market at the expected time. All ofthese activities needed to be checked, verified,and summarised as a production calendar.

To make this type of shift, more detailedplanning is often required (see information inTable 20). In this case each section has beengiven further detail by linking activities withnames, dates, areas and very specific tasks foridentified members of the group. This level ofplanning and continuous follow-up is requiredto ensure success, particularly in higher valueproducts.

When making calculations and assumptions foryield, time to harvest, rains, etc., the groupshould be very conservative in expectations.Even if a scientist informs the group that theyields of a new variety will be at least double theproduction of local varieties, the group shouldcalculate according to data from on-farmexperimentation, or take into account that on-farm yields are typically 50% to 70% of thatproduced through research trials.

The group should also factor in effects of regularproblems that they experience such as rainsbeing 2 weeks later or earlier than normal,specific pests affecting yields, or some farmerswho joined the plan dropping out. A general ruleis to take 10% to 15% off any optimisticassumptions to avoid disappointment.

For post harvest handling, the group shouldplan for sorting, grading, packing, and in somecases, storing the produce once it is harvested.This planning should be done before harvesting.Farmers should share roles and take onresponsibilities for each other. Excellent cropquality in the field can easily be lost throughpoor post harvest handling. Particular attentiontherefore needs to be given to ensure the crop issold in its best condition. Transport to themarket must be organised.

At each stage—production, harvesting, and postharvest handling—the group should be clearabout costs and make sure that, as quality ismaintained, the costs incurred do not outweighprofits.

The role of the market facilitator and surveyteam in this case is to guide the farmer groupthrough the development of the business planand to set up a monitoring process, so that thegroup committee members can review progressmade. However, farmers and localentrepreneurs can become involved in theseissues, if they see the benefits. In somecountries, community members have beenelected to local administrative posts to help the

12. Please note: this Guide supports collective marketingit does not support collective production methods.Farmers should produce the same product for aspecific market, but production should be based ontheir land, using their skills and inputs.

91


Tabl

e 19

. G

ener

al a

ctio

n p

lan

for

Nya

byu

mba

Far

mer

s G

rou

p en

terp

rise

, Uga

nda

a .

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spon

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on

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keti

ng

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an

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t2n

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and

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paym

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lead

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and

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of t

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)

92


Tabl

e 19

. (C

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93


Tabl

e 20

. D

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tion

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of a

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94


community to access better resources fromGovernment.

Business ChecklistHaving completed the enterprise plan, themarket facilitator should work with themarketing officer or main investor to review thebusiness targets, using a simple checklist. Thischecklist enables the enterprise team to reviewwhether the target figures are well linked interms of marketing, production, and financing.The team can also review management aspectsand, once developed, this checklist will also beused in monitoring and evaluation. Table 21shows that the level of review depends on thetiming of supply and value of the product, withthe number of reviews increasing with the valueand regularity of supply.

Policy InterventionsBased on the findings from the market survey,significant gains may be made throughrelatively low investment changes in local policyor regulatory reform. This type of work is bestaddressed by development agencies and suchchanges are likely to be slow in coming tofruition. However, as with BDS, the impact ofsuch changes may significantly outweigh anon-farm intervention and may enable farmers toaccess new markets that were previouslyinaccessible.

Examples of this type of intervention may be arelaxation or adjustment in border tariffs, a

reduction in the number of taxation points for aproduct, the introduction of a new livestockauction site, a change in quality standards, orremoval of a regulation that is no longerappropriate.

The role of the market facilitator and surveyteam will be to raise such issues with localdevelopment agencies and administrators toshow the benefits of such changes for thebusiness community.

Adapting to RiskSometimes, such action planning may revealmajor challenges that the group had notpreviously noticed. These need to be addressedand changes made in the plan. Or, where thegroup may not feel sufficiently confident to takeup the challenge, it should first do additionaltesting of certain parts of the plan.

Shifting to lower risk productsWhen a farmer group feels that the risks ofproducing a selected product are too large totake on, they can either reconsider it or drop itin exchange for a less risky option on the list ofidentified market opportunities.

Experimentation and innovationIn other situations, the farmers may find itnecessary to more thoroughly test a specificvariety in the following season and at severalsites to determine the best way of producing itfor the market. Even for livestock options,

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Table 21. Business checklist to review enterprise plan.

Marketing• Who is our buyer• Sales targets• Define the product

– What is quality class A B C– What are the alternative markets– Packaging– Labelling of farm produce for traceability

• Price– How will farmers/BDS be paid– Promotion (what will attractive the buyer)– Distribution (what is the logistics needs)

Production target• Production target to match sales target

– Schedule of delivery (weekly, monthly)– Production inputs needed– Technology requirements

– Upgrading of production– Needs in post harvest

Financial targets• Capital requirements for production target• What needs to be available for start up• What is needed for operational• Sources of capital

– Local– External (grant CRS, loan, conditions)

Profitability• Target profitability• Financial evaluation compared with existing• Sensitivity of the income and costs

– Where is the critical point

Management• Who does what?• How are they paid• What are their incentives

Review process• Review the system every 3 to 6 months• Compare targets. Are they well linked• What changes are needed• More regular review process as the product

increases in value

additional experimentation may give the farmergroup the necessary confidence to invest moreheavily in a specific enterprise. Being able toexperiment is a particularly useful skill for agroup to develop, especially if the aim is to builda diversified product portfolio in the future.

The introduction of experimentation into themarketing process is a vital part of catalysinginnovation systems and all members in themarket chain should be encouraged to try outnew ideas as a means of developing morecompetitive approaches to the market.

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Business visitsIn some cases, there are benefits fromorganising a visit to another group or businessto see how a particular product is beingproduced and/or processed. This type ofexchange visit is often very effective inconvincing people about the merits of new ideas.

Pilot projectIn a split decision case, where some farmers arekeen to proceed and others are unsure, thegroup may decide to observe the potentialsuccess of a new enterprise with only a limitednumber of group members running it. This is anormal business decision, to pre-test an idea tomake sure that all the parameters that were“visioned” by the group can be verified as a liveenterprise, although on a small scale. This pilottesting or experimental stage is a strategy tominimise risks.

Sharing risksSometimes, the market facilitator may want tosupport farmer confidence in a particular

activity by, for example, sharing the costs of atest study, giving support to additionalmarketing work, or subsidising loan costs. Thistype of arrangement is possible if an enterpriserisk fund is available and open to this type ofrisk hedging process.

Taking the PlungeOnce the action plan has been developed,reviewed, and agreed on the only thing left to dois to implement the plan. The role of the marketfacilitator is nearly complete at this stage, butthe group may require additional “confidencebuilding” support so that the plan is put intopractice. The market facilitator may, at thisstage, work out a schedule for visiting the groupduring the growing or production season to seehow the plan is progressing and to discuss anyproblems that the group has encountered. Box 5describes the design of an enterprise conductedby the Nyabyumba Farmers Group, KabaleDistrict, Uganda.

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Box 5

Enterprise design with the Nyabyumba Farmers Group,Kabale District, Uganda

The Nyabyumba Farmers Group was formed in 1998, with 40 members, to produce seed potatoes, the firstbatch of which they received from Africare through the NARO1 research station. In 1999, the group becamepart of a farmer’s field school, learning how to increase yields for both household use and the local seedmarket.

In 2003, the group found that the market for seed potato was dwindling because the market for ware potatowas limited. With support from PRAPACE2 and CIAT, the group set out to find new market opportunities fortheir potatoes and to develop a new business plan. From the market survey, Nando’s fast-food restaurant inKampala was identified as a high-value buyer. Nando’s was 450 km from the farmers’ village and qualitycriteria were stringent.

Identifying critical points and constraintsHaving established their current situation and desired future situation, the farmers identified critical pointsand the actions required to achieve their vision. The changes needed to successfully supply Nando’s includedthe following:

• Production: The cycle needed to shift from two seasons’ supply to a monthly supply of 10 to 15 tonnes ofpotatoes. Such a change meant new varieties, staggered planting times, different harvested tuber size, andquality control of tubers. To achieve this, the group needed buy micro-irrigation systems and receiveconsiderable training from NARO and Africare.

• Post harvest handling: This had to be improved by hiring warehouse space, collecting produce for transportto the market, sorting, grading, packaging, and labeling produce so that payment could be made back tothe correct farmer.

• Marketing: The farmers had to negotiate with transporters, maintain a relationship with the buyers,particularly Nando’s production manager. The group needed to buy a phone.

• Strengthening the group’s business organisation: The group needed to open a bank account, borrow moneyfrom their community, learn how to manage their finances, and maintain both savings and regular recordkeeping.

• Securing adequate service provision: The group required considerable technical assistance from inputsuppliers and research support.

Designing an action planOn identifying the critical points just outlined, the farmers and their market facilitator held a workshop todefine the activities to be undertaken, their sequence, and their implementation so that the desired outputsare achieved. The action plan established for starting up and consolidating the potato enterprise is shown inTables 19 and 20.

1. NARO = National Agricultural Research Organisation of Uganda.2. PRAPACE = French acronym for Regional Research Network for the Improvement of Potato and

Sweet Potato in East and Central Africa.

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SECTION 11Evaluating Progress and Scaling Up

This section completes the Guide onAgroenterprise development by offeringsuggestions on monitoring and evaluating theagroenterprise’s progress and planning for thenext enterprise.

Monitoring and EvaluationOnce an enterprise group starts its newbusiness venture, new activities or problemsalmost inevitably arise that must be addressedquickly and decisively. Perhaps someassumptions made in the plans did not workout as expected, or unexpected events occurredthat had positive or negative effects onperformance. To be able to address situationsquickly, the group must follow events closelyand meet regularly to discuss progress andresolve problems that arise. The learningprocess is assisted enormously if the group hasa monitoring plan and keeps regular records forproduction, finances, and discussion points.

These records are invaluable for the productionand marketing phases and for managingfinancial transactions.

The group should pay particular attention tokeeping weekly or fortnightly records of thefollowing issues:

• Are the marketing, production, financial,and management targets well linked?

• What changes are needed?• Financial transactions, particularly for

inputs and sales, must be kept up-to-dateand checked for accuracy.

• Loan records should be monitored andborrowers should be informed regularlyabout amounts that are due. These must becollected when produce is sold.

• Records of production performance shouldbe kept by the individual farmers.

• Notes on any problems encountered shouldbe discussed and addressed.

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Evaluating Progress and Scaling Up

The value of these records will increase withtime. The records will also enable the group tolook back to see how their business isprogressing and how decisions were made.Keeping records are valuable for not onlymonitoring change, but also for verifying creditworthiness, retaining information on groupintegrity issues, and recording the quality ofservices provided to the group.

The market facilitator should also keepsystematic records. The level of recordsmaintained by the market facilitator will dependon the number of farmer groups beingsupported but, in each case, records should bemaintained in field books for each project areaand on a computer. All computer records shouldbe backed up (copied) in at least one other datastorage medium.

After the first cycle of market evaluations,designing an enterprise, and piloting andimplementing the first action plan, farmers willthen sell. This is a crucial time for the group,because it is only at this time that the value oftheir efforts will be assessed by the marketplace.Success at this stage is measured in the simple

reality of profit margins, and failure, in financiallosses.

After the group has made its sales, the marketfacilitator should work with the group to assesstheir expected level of profit against real income.Groups who had not kept records on productionor finances will be severely hampered in theirability to benefit from this session.

Those groups who wisely keep records can gothrough their finances (see Box 2, page 30) tocarefully calculate their gross margin. Whateverthe result, the facilitator and group membersshould discuss the key elements that led tosuccess or failure. Problematic events aresometimes beyond the farmers’ control, and allbusiness transactions should be recognised ascoming with some degree of risk. Sometimes,unexpected events may count in the farmers’favour and profits maybe more than expected.

As well as comparing results from the enterpriseand their collective action, the farmers shouldalso discuss the performance of the enterpriseoption against the other products in their farmmix. In some cases, the farmers could be

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encouraged to invest more land and labour inthe joint marketing venture or enterprise, ordiscuss the prospects of an alternative product.

Planning the Next EnterpriseFor the farmersHaving digested the lessons from the firstenterprise cycle, the group should start torepeat the market planning and organisationalexercise, taking into account any changes thatwere a problem, or led to a lesser performancethan expected in the first round. Success in thefirst enterprise should encourage the farmers toincrease their level of investment in, or areagiven to, the new enterprise.

Farmers appreciate the logic of “more risk, moreprofit” and therefore planning in the secondcycle should at least consider the evaluation ofnew, higher value (or higher volume) marketoptions. These new considerations can beincluded in a market identification study asdescribed for Option 2 (see “Section 7”).Furthermore, promising options that are notwell-known to the full group can be introducedin an experimental phase, so that newopportunities can be developed for futureapplication. Entering into a market-led cycle ofexperimentation, followed by implementation, isa major achievement in this exercise andfarmers should be encouraged to adopt thisapproach whenever possible.

People’s performanceThe success of a project is often said to be 70%dependent on the people who implement it and30% on everything else. The same is true whenthings fail. In addition to evaluating theperformance of a crop or livestock option, thegroup should also review the performance ofgroup members, particularly the committeemembers. Performance monitoring is a sensitiveissue, but it should be discussed constructively.The market facilitator should be sensitive toproblems in group dynamics and find ways ofsuggesting where changes may help.

Next Steps for the Market FacilitatorManaging innovationThe market facilitator’s role is clearlydemanding, but it is also rewarding if the grouptakes on new skills and benefits from them. Afirst measure of success in marketexperimentation will build confidence in therelationship between farmers and the facilitator,placing the facilitator in a highly catalytic role.

The facilitator should be able to encouragefarmers to learn from their experiences and totake the process forward on their own initiative,especially where the group needsencouragement to evaluate new innovationsfrom a technological or organisationalperspective. The trust that a facilitator has builtshould be used wisely in terms of introducingnew concepts in a systematic manner.

The exit strategyAs with all processes, a market facilitator canalways do a great deal more to help farmers andto develop new business options andrefinements. However, time is our most preciouscommodity and the market facilitator should bekeenly aware that, as well as this current group,many other farmers will also benefit from suchsupport. A facilitator whose group has gonethrough more than two cycles of success in themarketplace should therefore be encouraged toeither exit or scale up. This is the essence of the“river code” (see “Section 4”).

Scaling upThe speed at which a process can be scaled upis determined by four key aspects: (1) pastperformance, (2) partners, (3) resources, and(4) numbers involved from the outset. Processesshould only be scaled up when there issomething tangible and positive to scale up. Themarket facilitator should try to scale up ideasand opportunities with partners who alsounderstand the process. Additional training atthis stage may be more profitable at the partnerlevel rather than with other farmer groups. Theresources the market facilitator has cantherefore be directed to support partners, withthe increase depending on previous investmentin developing partnerships with like-mindedpeople and organisations at the working groupstage.

Scope of support and scaling upA well-trained market facilitator could probablywork with 5 to 10 farmer groups, eachconsisting of 20 farmers, in the first year. If theprocess is successful and there is demand fromother farmer groups, then the market facilitatorcould add 5 more groups each season to achievea final number of 20 to 30 groups within24 months. With more than 20 to 30 groups,the market facilitator may find that the “quality”of capacity building is compromised and thatother strategies need to be developed to supportadditional groups. Such scaling up strategiesmay include:

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Using clusters: Building clusters of farmergroups who will focus on one commodity is oneway for the market facilitator to work in adedicated manner with a limited number ofgroups. These lead groups agree to providemarket and production-based support to helpanother 5 farmer groups. This approach rapidlybuilds scale if the initial groups work on oneproduct and then transfer the skills for thisproduct to other farmer groups in the vicinity.This approach may be advantageous as it willallow the cluster of groups to gain from largereconomies of scale in both input and outputmarkets. The marketing committee member ofthe initial groups will be responsible forfocusing on market dynamics and trends,particularly supply constraints. Thedisadvantage of this approach is that the skillslearned by the secondary group may be lessdetailed and probably more production-basedthan the first group.

Linking clusters to associations: Onceseveral farmer groups are working within adefined area or focusing on a particularproduct, there may be advantages in linkingthem with a larger apex group or association.The association will then represent them forservices and input supplies. Although higherorder structures have many advantages, basedon economies of scale and sharing of resourcesand services, these can only be achieved if theproducer groups and their associations havesufficient volumes of product and a trulydemocratic management that works forassociation members.

Working with partners: As mentioned inSection 1 (“Overview of the ParticipatoryAgroenterprise Development Approach”), amajor reason for establishing a working group isto identify organisations working in the areathat have a common vision. Having identifiedthese partners, the market facilitator can run aseries of training courses to increase thenumber of market facilitators in the area. Inthis way, the partner organisations can identifytheir own farmer groups and thereafter developcluster groups.

Short-term support: To enable the marketfacilitator to cover larger areas within a projectsite, the agency should consider limiting groupsupport to two seasons before moving onto thenext batch of groups. This would enable themarket facilitator to increase both the numberof groups supported over 2 to 5 years and the

cover. In this case, the use of short-cycle cropsmay mean that up to 20 groups can undergotwo enterprise cycles before direct support iswithdrawn. This process may benefit fromsimple tests to evaluate learning of skills.

Information and communicationtechnologies support: In most countries,farmers listen to radio and, in some countries;they have access to mobile phones and/orInternet cafés or tele-centres. If these areavailable, the market facilitator can use thesemedia outlets to promote agroenterprisedevelopment and provide information on how toundertake this process through radio dramas ortalk shows. This approach may create demandby farmers and hopefully more partners. A radiocampaign should be supported by a hard copy“guide” so that interested service providers andmembers of a farmer group can read aboutagroenterprise development and implement itthemselves.

In Uganda, the FOODNET marketing groupdeveloped two 10 part series of radioprogrammes to support marketing bysmallholders. The first series was entitled“marketing together” which is adapted from theCollective marketing manual, written byRobbins et al. (2005). A second radio series wasdeveloped, entitled “market to market”comprising ten, 15 minute episodes based onscripts adapted from the work of Shepherd(2000) on “Understanding and using marketinformation”. Several partners have also takenFAO’s DVD video on marketing extension anddubbed this with local languages for localviewing.

Whatever the case, planning will be vital at thisstage, so that all team members are fully awareof how the process is implemented, of whatworks well in this project area, and what doesnot. The rest is down to hard work,determination, and some luck. Enjoy!!

Monitoring the Rural AgroenterpriseDevelopment ProjectThe final aspect of Agroenterprise developmentis to evaluate the entire process. This evaluationshould be conducted by a research group,working alongside the market facilitator andworking group. The overall monitoring shoulddraw lessons from the experience and comparethe level of progress with other approachesbeing undertaken in the project area and other

102


areas. For this type of analysis to lead to usefulconclusions, some form of comparative analysisframework must be developed. It should alsoanswer fundamental questions on theeffectiveness of market-led approaches for ruralcommunities. Three areas should be analysed:process performance; equity, wealth, orenterprise transitions for beneficiaries; andinstitutional change.

Process performance1. To determine whether the agroenterprise

development is an effective mechanism forempowering resource-poor ruralcommunities to link with markets?These findings will be based on howoutcomes such as how much income wasgenerated by the enterprise team throughthe new business plan, what changes weremade in product and market types and howdid social interactions and networkingchange? Data should be collected toevaluate levels of success across differententerprise groups, and the simpleevaluation tool in Table 22, may assist incollecting information on changes inhorizontal linkages (i.e., within chain actorssuch as farmer to farmer) and in verticallinkages between chain actors.

2. What was the level of communityparticipation and empowerment in theprocess of evaluating the market, designingthe enterprise and monitoring the outcomes.

3. What type of product value or market typecombinations work best with selectedcommunities, using the CIAT approach,compared with other approaches beingimplemented by other developmentagencies? This activity may involvedeveloping a matrix to assess processperformance against product and markettype (Table 23).

4. Does agroenterprise development developnew market or business entrances,including farmer groups, BDS providers,and entrepreneurial links?

5. What are the minimal/threshold resourcesand capacities needed to participate incommunity enterprise projects? How doescapacity, levels of organisation, andcompetence affect process performance? Thematrix in Table 24 may be used to evaluatethe process’s performance and evaluate theeffect these factors have on the marketfacilitator’s ability to scale up activities.

6. Does agroenterprise development facilitatebetter working relationships acrossdevelopment agencies? And between publicand private-sector agents? How doesagroenterprise development contribute tochanges in rural livelihood strategies? At thecommunity and administrative levels?

Equity, wealth, or enterprise transitionsWhich community members benefited mostfrom the agroenterprise development process?

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Table 22. Changes in horizontal and vertical linkages.

Give information on changes Give information on type of buyer that Volumes ofin group you sold to in these years sales in MT

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

Table 23. Product value market type assessment matrix.

Local market District market National market Export market

Low value crop product

High value crop products

Livestock products

Processed products

Service provision

Table 24. Example of capacity framework for evaluation of process performance.

Increasing levels of farmer experience and organisation

Process Individual A farmer group not Farmer group formally FG’s formally linkedperformance farmers linked to other groups linked to other first order to second order

groups (no second order associations/hierarchy) co-operatives

No serviceprovider (SP)

SP withproductionskills only

SP withproductionand marketingskills

Specialistmarketing SP’s

Direct PrivateSectorcontractingagents

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Does the agroenterprise approach improve thelivelihoods of particularly vulnerable groupssuch as women and the poorer social segment?

For this type of analysis, a typology ofbeneficiary groups may be useful, and could beincluded in the baseline survey work. This typeof ranking could incorporate relationshipsbetween current activities and economicengagement with markets. The typology shouldinclude some form of wealth, asset, or marketaccess ranking, which will enable the project’sstaff to compare process performance acrosslocations, enterprises, and partners. Transitionscould be shown as in Figure 20.

Does the agroenterprise approach stimulateinnovation cycles and streams?

Does the agroenterprise approach stimulategreater investment in sustainable naturalresource management?

Institutional change1. How can the agroenterprise approach be

institutionalised?2. How can decision support tools be

integrated to develop improved marketlinkage for farmers?

3. What information and technical support dosmall-scale farmers need to make well-informed decisions?

4. What enabling institutional and policyarrangements (research–extension linkages)are needed for a more productive andmarket-orientated agriculture?

These are suggested evaluation approaches, andthe market facilitator and working group shouldselect the most appropriate area of questioningor adapt new questions to discover the value ofusing the agroenterprise development approach.

Figure 20. Wealth or enterprise transitions for clients in agroenterprise development.

Safety netmost

vulnerable

Seekingeconomicsecurity

Assetbuilding

Growthfocus

Specialisationfocus

Businessbuilding

Low riskstrategies

Medium riskstrategies

Higher riskstrategies

APPENDICES

Blanca106

107

Appendices

APPENDIX 1

Because working in all potential communities may notbe possible, exploratory visits and communitymeetings will help identify communities that havepotential for impact and for scaling up the process.The following questions can be used for decisionmaking:

• Is there a real potential for working in thiscommunity? (agro-ecological and socioeconomicconditions)

• Do farmers see a good opportunity for investingtime and resources to resolve their problems?

• Do farmers have issues that they considerimportant enough to commit their time andresources?

• How many farmers in the community and nearbyvillages face the same issues?

• Is the potential high for scaling up to includenearby villages?

• Are farmers already seeking solutions to theirproblems?

• Do potential options and technologies exist thatcan be offered to farmers and which may providesubstantial benefits?

• Are there active groups, local social organisations,or farmers working together to seek solutions toproblems?

• Are there development organisations working in thecommunity, or any willing to work in the

Criteria for Selecting Communities

community and commit resources (human,financial, and physical)?

• Is there an active extension or development workerwith sufficient motivation and skills to be a marketfacilitator? Or other person willing to learn newskills and tools?

• Is there potential for empowering women andpromoting gender equity?

• Have farmers or partners expressed any demands?• What are the lead organisation’s research interests?

What technologies can it offer? What are itsresearch issues?

• What is the past history of communities workingwith organisations and external institutions?

Other criteria for selecting communities may include:• Access to the village, that is, if the road to the

village is passable during all seasons.• Availability of basic development work, for example,

agricultural activities already exist in the area thatcan intensify farmers’ interest and willingness to dodevelopment work.

• Motivation of extension worker responsible for thearea, that is, this person should be hard-workingand have good relationships with farmers.

• The partner is willing to make an input in thedevelopment work, that is, it should be able to meetsome of the project’s expenses.

108


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109

Appendices

1. Are farmers organised into a group or groups?

If farmers are not organised into groups, the marketfacilitator should work with the community todetermine how it could best organise itself in this way.See Section 5 on organising farmer groups and seeRobbins et al. (2005), Collective marketing forsmallholder farmers.

If farmers are organised into groups

2. Why are the farmers organised into groups?3. If farmers are organised for production, would

they be interested to work together in groupmarketing and business investment?

4. Would the farmers want to re-group intodifferent types of groups based on the type ofproduct being produced, or the risk level of theenterprises identified?

For established groups

5. Does the group have a name? If so, what is it?6. How many members are in the group?7. Is the group expanding in numbers or

declining?8. For how long has the group been in existence?9. Are the group members more or less of the same

wealth ranking?10. Does the group have elected positions? Name

the posts.11. How often are the posts re-elected?12. Do the group members feel that the elected

members are doing a good job?

Services received or given by the group

13. What types of services does the group receive?14. Is the group linked to a full or part time service

provider?

15. Are any of these services linked to marketing?16. What types of records does the group keep?

Production budgets, trader lists, etc.17. What types of marketing skills have been

learned?18. Are these skills effective in increasing their

incomes?

Group marketing

19. Does the group sell products collectively?Or as individuals?

20. What types of products are being sold into themarket?

21. What quantities are being sold into the market?22. Who is the person who negotiates for the sales

of their produce?23. Does the group have any contracts for supply to

buyers?24. What does the group do if they do not have

enough products to supply a contract?25. Are the levels of sales increasing?26. Are the levels of profit increasing?27. Is the group linked to any other groups?28. Is the farmer group linked to a second order

association?29. How many products does the group sell to the

market?30. Does the group have contractual arrangements

for product sales?

How formal is the farmer group

31. Does the group have a bank account?32. Does the group have an internal savings and/or

loans scheme?33. Does the group use credit?34. Does the group have a business plan?35. Is the group registered with anyone?

APPENDIX 3Farmer Group Competence Checklist

110


APPENDIX 4A Summary Description of “Appreciative Inquiry”

Definitions and • A strategy for intentional change that identifies the best of “what is” to pursue dreams and possibilitiesprimary purpose of “what could be”.

• A co-operative search for the strengths, passions, and life-giving forces that are found within everysystem and which hold the potential for inspired, positive change.

• A process of collaborative inquiry, based on interviews and affirmative questioning that collects andcelebrates “good news stories” of an organisation, community, or system; these stories serve toenhance cultural identity, spirit, and vision.

Potential uses • Vision development.• Strategic planning.• Community development.• Evaluation.

Ideal conditions Identified need or desire for:for use • Organisation or systems change.

• Positive, solution-focused, energising approaches.

Systems and situations possess:• Commitment to change as an ongoing process, not as a one-time event.• Leadership belief in the positive and affirmative process as a viable change driver.

Potential • Change in basic orientation from problem-focused to possibility or solution-focused.outcomes • Established climate of continual learning and inquiry.

• Renewal of group energy, hope, motivation, and commitment• Improved working relationships and conflict resolution.• Focus on results.

Key principles Four guiding principles:and assumptions • Every system works to some degree; seek the positive and appreciate the “best of what is”.

• Knowledge generated by inquiry should be applicable; look at what is possible and relevant.• Systems are capable of improvement and can learn how to guide their own evolution; so, consider

provocative challenges and bold dreams of “what might be”.• The process and outcome of the inquiry are interrelated and inseparable; so, make the process

collaborative.

About reality:• Reality is created through language, thoughts, images, and beliefs about reality.• The act of asking a question influences the system’s reality in some way, that is, questions are a form of

intervention.• The types of questions we ask determine the types of answers we receive, with “the seeds of change

being implicit in the very first questions we ask”.• We manifest what we focus on and we “grow toward what we persistently ask questions about”.

About problem-solving . . .:• Appreciative inquiry (AI) is distinctly different from problem-solving; AI focuses on a desired future or

outcome, built on the strengths and passions of the past and present.• Problem-solving attempts to analyse deficits, identify root causes, then fix problems or correct errors;

because it searches for problems, it finds them.• AI does not ignore problems—it recognises them as a desire for something else, and works to identify

and enhance the “something else”. AI asks the question “what would it look like if it weren’t a problem?”

Typical duration Planning, inquiry, and interview phases: typically, 1 to 2 months.

Process: steps of The process usually takes participants through the stages of the “4-I cycle”a:implementation • Inquire: Appreciating and valuing the best of “what is”.

• Imagine: Envisioning “what might be”.• Innovate: Designing “what should be”.• Implement: Implementing “what will be”.

AI principles are adapted and customised to each individual situation. The full AI process typicallyincludes:• Selecting a focus area or topic(s) of interest.• Conducting interviews designed to discover strengths, assets, unique attributes.• Identifying patterns, themes, and/or possibilities.• Creating bold statements of ideal possibilities (“provocative propositions”).• Co-determining “what should be” (common ground on principles and priorities).• Taking or sustaining action.

a. Also known as the “4-D cycle”: Discover, Dream, Design, Delivery.

111

Appendices

ReportThe outline of a report evaluating a project area is given below. Such a report should not exceed 30 pages. Onlysummary tables are given in the main text, with detailed supporting information, production data, lists oforganisations and individuals, and background data placed in the appendices.

The analyst should focus on the project area and avoid collecting or analysing information for a general perspective,keeping in mind the types of information that will be useful in terms of agroenterprise options and would interestthe types of clients envisaged for the project.

Executive summary• Brief introduction to the project area.• Assets of main interest in the project area for an agroenterprise.• Short list of agroenterprise options.• Agroenterprise options, prioritised by:

- Client type.- Market type (local, national, regional, and international or export).- Crop, livestock, or processing options.

• Investment opportunities.• Experimental innovation opportunities.• Critical constraints.

Introduction• Rapid overview of the project area’s economic status• Economic development prospects• Summary of main economic activities by scale, value, and client types

Rapid agroenterprise analysisReview of the main enterprise or livelihood options followed in the project area:

Scale Value Client type

Local Low Low incomeNational Medium Middle incomeRegional High Higher incomeExport High Investors

Asset analysisUse categories only if relevant to the prioritised agroenterprise(s).

Physical• Geographic outline of project area (map).

- Boundaries.- Roads.- Market towns.- Market linkages.- Agroenterprise locations.

• Climate (focus on agroenterprise group locations).• Soil types.• Water resources (rivers, boreholes, and access issues).• Roads, paths, trails (indicate trends).• Vegetation types (based on altitude).

APPENDIX 5A Suggested Outline of a Project Site

Resource Assessment Report

112


Social• Community members.• Demography.• Education levels.• History.• Shocks (environmental, political).

Economic• Outstanding economic activities.• Production capacity, specialisation.• Predominant production and marketing systems.• Main commercial activities in the project area.• Main commercial activities of clients.• Power sources, that is, level of electrification.• Market locations.• Demand channels.• Conservation issues and natural resources.

Institutional• Types of organisations in the area, for example, farmer co-operatives, trade associations, finance banking and

micro-finance, and chambers of commerce (place lists in appendices).• Governmental structures (provide administrative structure, evaluate strengths).• NGOs and other development partners operating in the area (evaluate strengths and interest in joining a working

group on specific commodities or entire process).• Research partners and their interest in the project.• History of intervention activities in the area: governmental, private sector (indicate trends of value to

agroenterprise options).• Information on past and current investment trends (who, what, where, and when).

Innovations• List key innovations related to technology.• Innovations related to communications.• Innovations linked to production systems.• Institutional innovations.

Conclusions

Recommendations for next steps

113

Appendices

APPENDIX 6An Example of a Questionnaire forIdentifying Market Opportunities

Section 1. Information on contact and interviewer

1. Person interviewed:

2. Market chain position:

3. Job/position:

4. Business name: Phone number:

Address:

5. Interviewer(s):

Section 2. Strategy: Products showing good sales growth6a. Compared with last year, how were the sales volumes of (BEANS) in your business?

greater equal less

6b. To what extent have things changed? not much to some degree greatly

Do you know why things have changed?

7. Which types of beans are in highest demand?

a. b.

c. d.

Section 3. Beans

Red speckled Red White OtherPriceVolume of salesQualitySourceMinimum purchaseOther

Would you be interested in buying beans from a farmer’s group? yes no

If yes, please state your terms of business

114


Planning process• Forming the survey team.• Information from initial farmer meeting to find out what crops or livestock the farmers are interested in.• Outline of plan (focus on existing products or full diversification process).

- Strategy 1: Selecting existing crops with farmers (outline process is used).- Strategy 2: Selecting “product strategies” in survey.

• Discussion on level of participation (scope of survey, number of participants, involvement in particular markets,e.g., local, national, or export).

• Survey questionnaire.

Results from survey• Long list of options from the open market survey.• Selection criteria used to discard options from the long list.

- Discard level 1 options.- Discard level 2 options.- Farmer criteria.

• Data for the production matrix.• Data for the marketing matrix.• Data for the financial matrix.• Short list.• Review of discussion with farmer groups.• Selected products by farmer groups.

Discussion• Review of final selection (reasons why).• Next steps.

APPENDIX 7A Report Outline for the Market Opportunities

Identification Study

Answer to riddle on how to make your first $10. Get up and go and look for it!!

115

Appendices

Topic Subtopics Questions and/or comments

Personal Name For established firms, obtain a business card or mobile phoneinformation Physical address number for future reference

Telephone

Type of business Value addition How does the respondent add value to the product, where isPhysical functions this in the market chain? Does he or she change its formExperience (processor), move it (transporter), store it (wholesaler), sell it

(retailer), or consume it? Does vertical integration exist?

Demand Quantity • Quantity sold normally, e.g., per day, weekType of buyer • To whom do you sell?Seasonality • Do the volumes of sale change over time?Variety • Are there different varieties?Consumer preferences • If so, what is their respective demand or preference?Price data • What is the price variation as per differences in varieties?

• Do changes in prices occur over time?• If so, why?• Are there problems selling the products?• If so, what are they?

Supply Source by area • Where are your supply areas (geographically)?Source by type of person • Who do you buy from?Price • Where do you buy from? (meeting point)Quality • At what price do you buy the product?

• Does the price change over time? If so, why? How?• Do you have problems getting products? If so, what are they?

Quality Perishability • What is the quality of the product along the chain?Post harvest issues • What is the product’s shelf life?

Storage Quantity • How much do you usually store?Time • For how long?Storage problems • Do you have storage problems?

• Do you experience storage losses?

Marketing Forms • What are your marketing costs?costs Proportions • What is their proportion?

Grading and Grading incentive • Do you grade or sort?sorting • Do better grades fetch higher prices?

Market Sources • Do you get market information, e.g., on prices?information Spatial arbitrage • If so, who from and how?

• Is there a relationship between prices in different areas atgiven times?

APPENDIX 8Checklist for a Market Chain or

Sub-sector Analysis

(Continued)

116


Topic Subtopics Questions and/or comments

Price formation Market power • Who determines the price?• How is the price determined?• If the firm or individual is a price taker, find out why

Institutional and Associations • Do you belong to an association?legal framework • Are there any market regulations? If so, what are they and

how do they affect your business?

Market structure Competition • Number of sellers• Is there price competition?• Is there non-price competition? If so, what for (e.g.,

interlocking markets)

Credit availability Sources and type • Are there any credit institutions?• Do you use them?• What are their rates of interest?

Appendix 8. (Continued.)

117

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118


Introduction• Setting the boundaries of the study or market

chain being analysed (partial or full).• Economic development prospects for the selected

chain.• Trade and competitiveness: recent changes,

performance, and market options.• Prioritised enterprise opportunities for the selected

product according to:- Market channel (local, district, national,

regional, or export).- Scale of investment.- Client type.

Production issues• Production zones.• Seasonality of production.• Importance of the product to income, rural

livelihoods, and economic growth.• Principle production and marketing constraints

limiting the sub-sector13.• Medium and long-term market outlooks across the

sub-sector for local, national, regional, and exporttrade.

Demand analysis• Size and growth rate of market for this commodity

or products.• Price trends, including recent, past, short or

medium-term, future (try to find trend data).• Product type for which demand is growing or

where.• Principal buyers of this product (segment showing

most interest).• Buying conditions.

- Market requirements in this product area, whatcustomers or importers will pay for.

- Quality and health standards that must be met.- Processing and packaging requirements.- Volume and delivery time requirements.- Product differentiation needed to succeed in the

market.• Chief competitors and the advantages they enjoy.

APPENDIX 10An Outline for Writing Up a Market Chain Report

• Market barriers (e.g., skills required, volumes beingsought, investment needs, costs of entry, taxation,collusion, intimidation, or high level ofcompetition).

Supply analysis• Analyse the supply chain including:

- Production costs.- Margins down the supply chain (producer,

assembler, trader, wholesaler, and retailer).- Assess possible changes that would overcome

bottlenecks within the system.• Principle constraints to producing this commodity.• Costs of production.

- Agronomic problems, e.g., disease, pesticides,seeds, and labour.

- Infrastructure.- Inputs, e.g., fertilisers, pesticides, seeds, and

labour.- Finance and credit.- Technical skills of labour force.

• Quality control measures.• Real and relative returns.

Market barriers• Marketing barriers (local, national, and regional).• Finance.• Price information.• Grades and standards, health certifications.• Market links.

Institutional arrangements and policy constraints• Private-sector organisation and institutional set up

along the production and marketing chain.• Local administration barriers.• Governmental barriers.• Trade barriers.

Regional comparison of comparative orcompetitive advantages• Highlight most competitive areas and products.• Analyse the areas with a comparative advantage

that is being exploited and other areas that mayhave comparative advantage but are not realisingthis potential.

• Given that future R&D investment is limited,suggest where specific types of investment wouldprovide the most economic gain.

• Evaluate research innovation options.13. See “Section 9” for a discussion of the terms

“market chain” and “sub-sector”.

119

Appendices

The way forward: Production and market growthstrategies for the sub-sectorDevelopment strategies for the sub-sector on anational and regional advantage basis:• Give a clear view on growth markets and product

areas.• Provide a simple breakdown of market options

according to:- Market type (local, district, national, and export).- Relate this information to client types.

• Briefly analyse the priority requirements needed toenter these market opportunities (changes inproduction, processing, quality control andenhancement, product differentiation, technology,and investment).

• Provide ideas on who could contribute to makingthese enterprises happen, the respective roles andactions of private and public sectors (i.e., whocould do what?).

• Short and long-term actions needed (balancingpoverty reduction and growth objectives).

Priority areas of intervention to support enterpriseoptionsAreas where project support will have the greatestimpact on production and growth of selectedenterprises:• Capital and technological development.• Improved planting material or product

improvement.• Processing and processing efficiency.• Market information.• Attracting additional investment and technology.• Policy, legislative, and institutional support.• Indicate costing, timing, phasing, and prioritisation

of these proposals.

Conclusions• Major findings for market size, trends, and

opportunities by market type, that is, local,national, regional, and international.

• Recommendations and steps for futureinterventions.- Commercial enterprise development (based on

client investment capacity).- Research opportunities.- Development needs.- Policy options.

AppendicesCurrent structure of productionVolume of productionVolumes sold in targeted marketsNumber of farms or farmers involved in productionPrincipal inputs and supplies for productionRecent trends in the above and outlook

Current post harvest operationsStorage and processingTransportPrinciple actors in these activitiesTechnologies used for value-added processing andproductsRecent trends in the above and outlook

BLANCA 120

121

Glossary

AdvertisingAny form of marketing communication in thepaid media.

AflatoxinsNatural by-products produced by theAspergillus flavus and related fungi.

AgentA channel institution which represents one ormore suppliers for a fee.

Agri-businessInvolves the manufacture and distribution offarm supplies, production operation on thefarm and the storage, processing, anddistribution of farm commodities and itemsmade from them.

Agricultural extensificationUsing more land or animals to increaseagricultural output.

Agricultural intensificationIncreased agricultural output from increasedproductivity or yield per unit of land.

AgroenterpriseA business or firm, typically small-scale innature, often based in a rural location thatproduces and sells agriculturally-basedproducts or services.

AppellationSystem by which a product is legallyprotected to support marketplacedifferentiation based on its place or origin ormethod of processing.

ArbitrageThe simultaneous purchase and sale of acommodity in two different markets to takeadvantage of differences in prices of thatcommodity in the markets.

AssetItems of money value owned by a business orperson, including such items as land,buildings, machinery, tools, etc.

BarterThe direct exchange of goods and servicesbetween two parties, often without cashconsiderations.

Glossary

BenchmarkingThe process of comparing the company’sproducts and processes to those of acompetitor or leading firm in other industriesto find ways to improve quality andperformance.

Biodegradable productsProducts made from biological materials thatbreak down within a relatively short period oftime when disposed of or left to degradeunder natural conditions. These products arenot considered harmful to the environment asthey break down into non-noxious products.

BiomedicinesMedicinal products produced from plants andanimal products.

BiotechnologyNew area of biological science pertaining topropagation, transformation and therecombination of genetic materials that isconducted in controlled, sterile conditions.This technology often uses sophisticated non-traditional methods for enabling geneticpropagation and genetic manipulation, isused to produce genetically modifiedorganisms (GMO’s).

BrandA name, term, sign, symbol, logo, phraseintended to identify the goods or services ofone seller to differentiate them from those ofcompetitors. A recognised brand is one whichhas strong customer loyalty.

BrokerA channel institution which puts a specificbuyer(s) and seller(s) in contact with oneanother for one or more commodity(ies) orservice(s) with a view to achieving a sale orbenefit.

BudgetAn amount of money set aside to cover the totalcost of a communication campaign or othermarketing activity.

Business Development Service (BDS)Any business or business entity that offersinformation and activities in the marketingsystem that facilitates a second businessthereby improving its operational and pricingefficiency. In some cases the term BDS is usedto capture all of those business services otherthan financial services, such as input supply,processing, and advisory services.

122


CapitalProductive resources (goods) that are available,as a result of past human decisions, to produceother want-satisfying goods.

Ceteris paribusHolding some variables constant, whilst lettingspecific variables change.

C.I.F.A contract of sale “cost, insurance freight” ofthe documents of title, not the goods, wherebythe buyer is under an obligation to pay againstthe shipping documents irrespective of thearrival of the goods.

Collective actionTerm used to describe group activities, used toincrease economies of scale.

CollusionProcess through which traders artificially fixprices above the price they would achieve in asituation of perfect competition.

CommodityProduct for sale in the marketplace. Termoriginally coined to differentiate products thatwere essential, termed utilities, with newproducts such as coffee and cocoa that wasconsidered to be exotic and desirable.Nowadays, commodities tend to be used forproducts in high volume trading.

Comparative advantageOne country enjoying a lower production ratio(input to outputs) than another country undertotal specialisation.

Comparative analysisComparing the same set of statistics within acategory of one country with another for thepurpose of estimating potential demand.

CompetitionA product, organisation or individual, in eitherthe same or another category, which can bedirectly substituted one for the other infulfilling the same needs or wants.

Competitive strategyThe adoption of a specific target market andmarketing mix stance in the marketplace.

Co-operativeA collection of organisations or individuals,pooling their resources in order to gaincommercial or non-commercial advantage inbuying, selling or processing goods and/orservices.

Customer satisfactionThe extent to which a product’s perceivedperformance matches a buyer’s expectation. Ifthe product’s performance falls short ofexpectations the buyer is dissatisfied. Ifperformance matches or exceeds expectations,the buyer is satisfied or delighted.

DemandThe quantity of products that the consumerscan buy.

Differentiated productA product that has undergone some form ofvalue addition to distinguish it from othersimilar products, through means such asgrading, sorting, packaging, branding, orspecialised marketing, such that it attracts ahigher price and targets a more specialisedmarket.

DiscountA reduction in price on purchases during astated period of time.

Distribution channelAn institution through which goods or servicesare marketed giving time and place utilities tousers.

DumpingThe selling of goods or services in a buyingcountry at less than the production unit pricein the selling country, or the difference betweennormal domestic price and the price at whichthe product leaves the exporting country.

DutyThe actual custom duty based on an importedgood either on an ad valorem, or specificationamount per unit or combination of these two.

Economic rentReturn in excess of opportunity cost, oftenenabled through political protection.

Effective market demandWhen needs and desires are supported by theability to pay.

Elastic supplyA supply elasticity coefficient of more than oneindicates an elastic supply, the percentageincrease in supply being greater than thepercentage increase in price.

EntrepreneurPerson who organises resources to produce andmarket goods and services.

ExchangeThe act of obtaining a desired object by offeringsomething in return.

Exchange rateThe ratio of exchange of one currency toanother.

ExportingThe marketing of surplus goods produced inone country into another country.

FirmA decision making business entity that usesresources hired from households to producegoods and services for sale to households orother consuming units.

123

Glossary

Fixed costsThese costs incurred for resources that do notchange as output is increased or decreased.

F.O.B.A contract of sale “free on board” whereby theseller undertakes to place the goods on board anamed ship at a named port and berth andcarry all charges up to delivery over the shipsrail.

Focus groupA small sample of typical consumers (orinterest group) under the direction of groupleader who elicits their reaction to stimulussuch as an advertisement, an idea, a questionor concept.

Foreign exchangeFacilities’ business across national boundaries,usually expressed in foreign currency bought orsold on the foreign exchange market.

Future optionA legally binding contract to deliver/takedelivery on a specified date of a given qualityand quantity of a commodity at an agreed price.

GatekeepersPeople in the organisations buying centre, orpoint in a market chain, who control the flow ofinformation to others.

Global productsProducts designed to meet global marketsegments.

GlobalisationThe integration of international transport,finance and communications systems andservices to enable transnational trading ofgoods and services.

Gross domestic product (GDP)The value of all goods and services produced bya country’s domestic economy in one year.

Gross marketing marginThe sum of all marketing costs plus profits.

Gross national product (GNP)The market value of all goods and servicesoutputted by residents of a country in one yearincluding income from aboard.

HedgingA mechanism to avoid the risk of a decline inthe future market of a commodity, usually byentering into future markets.

Horizontal integrationThe combination of two of more enterprises orfirms operating at the same point in the marketchain.

Human capitalThe educational investment that improves theknowledge and productivity of people.

Human needA state of deprivation that can be addressed orreduced by a product.

Human wantsThe form that a human needs takes as shapedby culture and individual personality.

Income elasticity measurementsA description of the relationship between thedemand for goods and changes in income.

Income elasticity of demandThe responsiveness of quality purchased to a1% change in income, ceteris paribus.

Income per capitaThe market value of all goods and servicesoutputted by a country divided by the totalnumber of residents of that country.

Inelastic supplyProducts that have a supply elasticity betweenzero and one the supply elasticity is consideredto be inelastic. The percentage change insupply is less than the percentage change inprice.

InflationA condition where demand outstrips supply orcosts escalate, affecting an upward change inprices.

Information systemA system for gathering, analysing and reportingdata aimed at reducing uncertainty in businessdecision making.

InnovationAn idea, service, product, or technology thathas been developed and marketed to aconsumer who perceives it as novel or new. It isa process of identifying creating and deliveringnew product or service values that did not existbefore in the marketplace.

Input marketsMarkets where inputs such as seeds, tools,fertilisers, and agro-chemicals are sold. Theseare generally sold through specialised dealersthat only trade in input supplies.

InterestThe charge made for borrowed money. The rateat which we discount future economic goods.

Interest rateThe price of borrowed money.

IntermediariesDistribution channel firms or persons, thathelp to find the customer or make sales tothem, including bulking agents, wholesaling,retailers that buy and resell goods.

International productsGoods or services seen as having extendedpotential into other markets.

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Joint venturesAn enterprise in which two or more investorsshare ownership and control over propertyrights and operations.

Key informantsActive and leading members of the marketchain.

Key observersPeople who are knowledgeable about a marketchain but are not directly involved in thebusiness operations of the market chain.

Letter of creditA method of international payment whereby thebuyer instructs his own country bank to open acredit with the seller’s own country bankspecifying the documents which the seller hasto deliver to the bank for him/her to receivepayment.

LevyA tax imposed by government, to meet aspecific objective.

LicensingA method of foreign operation whereby anorganisation in one country agrees to permit afirm in another country to use themanufacturing, processing, trademark, know-how or some other skill provided by thelicensor.

Local productsGoods or services seen only suitable in onesingle market.

LogoSymbol or emblem used to identify a specificproduct and for marketing purposes todifferentiate a specific product from similaritems.

Mark of origin (appellation)System by which producers and processors canlegally register their products such that noother producers or processors can use thisname, title or logo, unless they produce theproduct within a legally recognised area orterritory and use specifically laid down methodsof production and/or processing.

MarketThe set of all actual and potential buyers of aproduct or service.

Market chainTerm used to describe the multiple marketchannels through which a product or servicemoves until reaching the consumer.

Market efficiencyA comparison of the value of output to thevalue of inputs used in the marketing process.

Market entryThe way in which an organisation entersforeign markets either by direct or indirectexport or production in a foreign country.

Market holding priceThe charging of a price at what the market canbear in order to hold market share.

Market information services (MIS)People, equipment and procedures to gather,sort, analyse, evaluate and distribute needed,timely and accurate information to marketingdecision makers.

Market mixThe set of controllable tactical marketingvariables including: product, price, place andpromotion, that a firm blends to produce theresponse it wants in the target marketplace.

Market positioningThe adoption of a specific market stance,leader, challenger, follower, flanker or adopter,vis-a-vis competition.

Market researchThe function that links the consumer,customer and public to the marketer throughinformation—information used to identify anddefine market opportunities and problems, togenerate, refine and evaluate marketingactions; to monitor marketing performance andto improve the understanding of the marketingprocess.

Market segmentA group of consumers who respond in a similarway to a given set of marketing stimuli.

Market segmentationDividing a market into distinct groups of buyerswith different needs, characteristics orbehaviour, who might require separateproducts or marketing mixes.

Market speculationA marketing strategy whereby buyers holdstocks of a product in the hope that prices willincrease so that they can maximise profitswhen they decide to sell. Physical speculationrequires that a lot or amount of produce ispurchased and stored. There are costsassociated with storage and for a speculation tobe profitable, the final sales value must bemore than the costs of storage.

Market supplyThe quantity of products that is offered for sale.

MarketingPlanning, executing and controlling theconception, pricing, promotion and distributionof ideas, goods and services in order to buildlasting, mutually profitable exchangerelationships satisfying individual andorganisational objectives.

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Marketing costsAgricultural marketing refers to the activitiesinvolved in taking a product from the farm gateand delivering it in the form, at the time and tothe place that the buyer requires. Such costsare therefore incurred through handling,transport, storage, processing, packaging,market fees, risk management, brokerage,export handling and others.

Marketing processThe process of analysing market opportunities,selecting target markets, developing amarketing mix and managing the marketingeffort.

Marketing strategyThe marketing logic by which the business unithopes to achieve its marketing objectives.

MediaAny paid for communication channel includingtelevision, radio, posters, etc.

MiddlemanPerson who trades in goods, a buyer and sellerof goods and services.

MycotoxinsToxic or noxious chemicals produced by certainmychorrhiza that grow on food products thathave been harvested and stored in sub-optimalconditions.

Net marketing marginExcludes normal marketing costs, therebyproviding a measure of the profit realised. Netmarketing margins may however also includethe remuneration of the trader or processor’slabour, in which case it is not an exact profitindicator.

Niche marketingAdapting a company’s offerings and products tomore closely match the needs of one or moresub-segments where there is often littlecompetition.

Non-tariff barriersMeasures, public or private that causeintentionally traded goods or services to beallocated in such a way as to reduce potentialreal world income.

NutracueticalsProducts that have medicinal/pharmaceuticaland/or nutritional value, that are derived fromplant or animal products. Examples includehigh iron producing beans, bananas thatcontain insulin.

Opportunity costThe value of other opportunities given up inorder to produce or consume any good.

OptionA bilateral contract giving its holder the right,but not the obligation to buy or sell a specifiedasset at a specific price, at or up to, a specificdate. Type of financial instrument that givesthe holder the right to buy or sell futurecontracts.

Output marketsMarkets where harvested products are sold—these are the more traditional assembly,wholesale and retail markets.

PackagingActivities involved designing and producing thecontainer or wrapper for a product.

PatentingLegal mechanism, used to protect productsfrom being copied by other entrepreneurs. Thepatent scheme usually lasts for a designatedperiod of time, 10 years, after which time, thescheme either elapses or the inventor or ownerprovides evidence of innovation to renew thepatent to protect the value of the givenintellectual property.

Penetration priceThe charging of a low price in order to gainvolume sales conducted under conditions oflittle product uniqueness and elastic demandpatterns.

Physical distributionThe act and functions of physically distributinggoods and services including the elements oftransport, warehousing and order processing.

PlaceAll the company/firm activities that make theproduct or service available to the targetcustomer.

PriceThe amount of money charged for a product orservice, or the sum of the values thatconsumers exchange for the benefits of havingor using a product or service.

Price ceilingThe maximum price which can be chargedbearing in mind competition and what themarket can bear.

Price elasticity of supplyDefined as a measure of the percentagechange in quantity supplied in response to apercent change in price. A supply elasticity of0.4 for cotton in the short run means that thequantity supplied increases 0.4% for a 1%increase in the price of cotton.

Price escalationThe difference between the domestic price andthe target price in foreign markets due to theapplication of duties, dealer margins and/orother transaction costs.

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Price floorThe minimum price which can be chargedbounded by product cost.

Primary dataThat data which is collected and generated aspart of a survey. Unpublished data fromindividuals or organisations.

ProductAnything that can be offered to a market forattention, acquisition, use of consumption thatmight satisfy a want or need. It includesphysical objects, services, persons, places,organisations and ideas.

Product strategyA set of decisions regarding alternatives to thetarget market and the marketing mix given aset of market conditions.

PromotionActivities that communicate the product ofservice and its merits to target consumers andpersuade them to buy. The offer of aninducement to purchase, over and above theintrinsic value or price of a good or service.

QualityThe totality of features and characteristics of aproduct or service that bear on its ability tosatisfy stated or implied needs.

QuotaA specific imported amount imposed by onecountry on another, when once filled cannot beexceeded within a given time. When a quota isin force the price mechanism is not allowed tooperate.

Relationship marketingThe process of creating maintaining andenhancing strong value laden relationshipswith customers and other stakeholders.

RetailerA channel institution which acts as anintermediary between other channelinstitutions and the end-user and who usuallybreaks bulk, charging a margin for its services.

Secondary dataThat data which already exists in other texts.Published accessible data from a variety ofsources.

SectorRelates to the all activities under the mandateof one government ministry, such agriculture,health, education, justice.

ServicesActivities or benefits that are offered for sale.

SMSShort message service, text used to transferinformation via mobile phones.

SpeculationThe purchase or sale of title to goods orfinancial obligations in the expectation offavourable price movements.

StandardisationSame goods or services marketed in eitherproduct, distribution or advertising form,unchanged in any country.

Strategic business unitA self contained grouping of organisations,products or technologies which serve anidentified market and competes with identifiedcompetitors.

Strategic planA plan that describes how a firm will adapt totake advantage of opportunities in itsconstantly changing environment, therebymaintaining a strategic fit between the firmsgoals and capabilities and its changing marketopportunities.

Sub-sectorA part of a sector, which can mean, withinagriculture that a sub-sector focuses on onearea, such as grains, fish, livestock, etc. or canbe more detailed to all that relates to oneparticular commodity, such as the maize, rice,cassava, beef sub-sectors.

SubstitutesTwo different goods or resources between whicha choice is made to satisfy human wants (or toproduce a product).

Super BrandA product that has world renowned reputation,for providing customer satisfaction and delight,e.g., the soft drink Coca-Cola, the Nike sportsshoe.

TariffAn instrument of terms of access normally theimposition of a single or multiple excise rate ona imported good.

TraceabilitySystem by which a product is tagged, such thatit can be traced from source of origin to finaluser. This process may become mandatory informalised food markets.

TrademarkLegally recognised name, symbol or title, whichcan only be used for marketing purposes by theoriginating or owning company.

TransactionA trade between two parties that involves atleast two things of value, agreed uponconditions, a time agreement and a place ofagreement.

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Glossary

Transaction costsTransaction costs relate to the non-price costsof making a commercial exchange. These areexpenses incurred in finding someone to tradewith, time spent negotiating a deal and thecosts involved in ensuring that contracts arehonoured, all fall under the general category oftransaction cost.

ValueThe consumer’s assessment of the product’soverall capacity to satisfy his or her needs.

Value addedThe contribution to final produce value by eachstage in the production, delivery and marketingprocess. Also, includes transformationprocessing of goods from primary to final stateoffered to a consumer.

Vertical integrationThe linkage of firms (enterprises) in differentstages of producing and/or marketing underthe ownership of a single firm.

WholesalerA channel institution which purchases andsells in bulk from either original suppliers and/or other channel intermediaries, charging amargin for its services.

BLANCA 128

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Biblography

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a market facilitator's guide to participatory agroenterprise development

Documents

market research

market drivers

market facilitation

market participants

types of market

marketing functions

marketing context

marketing mix