2 CHAPTER 1
larly true with regard to smallholders who cultivate food staples—crops that constitute the bulk of agricultural production in Africa, employ the majority of people, and therefore hold the greatest potential for poverty reduction on the continent (Omamo et al. 2006; World Bank 2008). Commercialization of food staples—particularly cereal crops—in the region is particularly low (Table 1.1).
Low commercialization of cereals in Sub-Saharan Africa stems from the unique and challenging nature of cereals, including their generally low return to producers, nondifferentiability in local markets, susceptibility to urban- biased price controls, and vulnerability to the competing price effects of food aid and food imports (see, for example, Gabre-Madhin 2001; Barrett 2008). Without appropriate institutional mechanisms to improve the market incen- tives for cereal production, it is unlikely that smallholders throughout the region will realize the benefits of commercialization any time soon. Over the past decade, rural producer organizations (RPOs) have re-emerged as one such mechanism. Farmers’ organizations, producers’ associations, and rural cooperatives have returned to the policy agenda after a 25-year hiatus as a means of promoting equitable growth and poverty reduction (see, for example, Collion and Rondot 1998; World Bank 2003, 2008). By leveraging the power of collective action, RPOs are expected to assist smallholders in aggre- gating their surplus output, realizing scale economies in marketing, and bar- gaining for better terms of trade in the marketplace. RPOs are also expected to serve as a means of identifying the rural poor, securing grassroots partners for state and nonstate development programs, and representing the voice of the rural poor in local governance systems. In short, RPOs are viewed as a key institutional mechanism to improve rural livelihoods.
This renewed interest in RPOs is of importance to Sub-Saharan Africa, where agriculture is the mainstay of the region’s economy and where agricul- tural growth and development are decidedly smallholder-based.2 However, without empirical evidence on exactly how RPOs contribute to growth and development in smallholder-based agriculture, it is unclear how much this newfound interest can contribute. Thus, this study aims to better identify the conditions under which RPOs specifically engaged in cereal marketing are successfully promoting smallholder commercialization and how the benefits are distributed, using illustrations from cooperatives in Ethiopia.
2 Agriculture is the primary source of livelihood for about 65 percent of all people living in Sub-Saharan Africa, and it accounts for up to 40 percent of the region’s gross domestic product (GDP) and around 60 percent of the region’s exports. And more than 90 percent of agricultural production is attributable to small-scale farming (Resnick 2004).
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