Summary
he commercialization of crops grown by small-scale, resource-poor farmers has the potential to increase household food security, reduce rural poverty, and contribute to agricultural development and econo- mywide growth. By encouraging the application of modern inputs and farming techniques, diversification out of low-yielding subsistence crops, and spe- cialization in more tradable crops, commercialization can increase farming incomes, enhance purchasing power, and reduce vulnerability among small- holders. If the positive output shocks resulting from large-scale technological changes are offset by short-term policies to manage the resulting negative price and income effects, this commercialization process can rapidly shift smallholders from low-productivity, low-income traps to higher-productivity, higher-income livelihood systems that are integrated into the wider modern economy.
T
However, in the face of imperfect markets, high transaction costs, and agro- climatic risks, few smallholders in Sub-Saharan Africa have been able to real- ize the potential gains from commercialization. This is particularly true with regard to smallholders who cultivate food staples. Such crops constitute the bulk of agricultural production in Africa and employ the majority of people, and therefore hold the greatest potential for poverty reduction on the conti- nent. Commercialization of food staples—especially cereal crops—in the region is very low due to their generally low returns to producers, nondifferentiabil- ity in local markets, susceptibility to urban-biased price controls, and vulner- ability to the competing price effects of food aid and food imports. Without appropriate institutional mechanisms to improve the market in- centives for cereal production, smallholders throughout the region are unlikely to realize the benefits of commercialization any time soon. Rural producer organizations (RPOs)—such as farmers’ organizations, producers’ associations, and rural cooperatives—represent one such mechanism. After a 25-year hiatus, RPOs have returned to the policy agenda as a means of promoting equitable growth and poverty reduction. By leveraging the power of collective action, RPOs are expected to help smallholders gain a footing in competitive markets, help development partners in reaching the poor, and provide a voice to under- represented communities and households in rural areas.
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