Lack of business and market knowledge prevents many farmers in developing countries from entering the marketplace on an equal footing with buyers and traders.
So even though their harvests are good, many farming families still cannot sell their produce at a high enough price to break free from poverty.
To address this challenge, World Vision partnered with the community of Flotim in Indonesia to pilot an innovative project model called Local Value Chain Development (LVCD). This project model provides local farmers with ways to improve their position in the marketplace and get better prices for their produce.
Results from a recent evaluation of this pilot showed that participating farmers realised increased prices for their produce. This led to increased incomes, which they used to cover household and healthcare needs and their children’s education costs.
Developing business skills essential
The project model promotes collective selling, increased market knowledge and improved product quality. Appointment of a skilled and experienced Market Facilitator, who can support farmers to improve their business skills, is the key to success.
The Market Facilitator helps farmers build long-term relationships with service providers, buyers and traders and provides training in skills including negotiation, market information gathering and relationship building.
Collective selling means more bargaining power
The project model encourages local farmers to join producer groups where they can consolidate their produce with other farmers. With increased volumes to sell, farmers gain greater negotiating power.
A government agriculture officer in one of the pilot project areas commented: “The collective marketing initiative being pioneered by World Vision is very interesting; it’s the first time in more than 30 years where I have seen that the farmer can become their own boss and they hold their own scales.”
An analysis of the sale price for products sold through collective selling in the project areas over a three-year period showed that prices increased significantly. In one example, the price achieved for cashew nuts sold collectively increased by 81 percent over the three-year period.
In addition to receiving training in business skills, local farmers also learn how to improve the quality of their products through improved processing practices, and better harvesting, transportation and storage techniques.
These initiatives are all informed by a strong understanding of the market system and this knowledge increases the likelihood of such activities producing a return on investment.
Interviews with produce collectors, buyers, government officials and community members in the pilot project areas confirmed that produce quality had improved and that this contributed to the increase in sale prices.
Children benefit from increased profits
During the evaluation of the pilot project, community members confirmed that most farmers used their additional earnings to cover their children’s education costs and to pay for better healthcare.
One woman said: “By having the collective market, we have been able to put our children to school. Before we would only have our children study till primary school. But now they are studying at least till high school.”
The majority of participating families were also able to cover their health expenses without any external support and they were no longer reliant on traditional medicine.
In addition, increased wealth in the communities helped to create job opportunities, as farmers could afford to pay for labour on their farms.
Importantly, along with these tangible financial benefits, participating communities also noted improved relations between community members and the emergence of a widespread sense of hope. In light of these positive outcomes, World Vision is seeking to partner with other communities around the world to implement the LVCD project model.