Volatility in agricultural commodity markets continues to be a concern , but an important message from the Commodities Forum was the progress being made in stabilizing the impact of price volatility – on smallholder farmers in particular, but also on global trade generally. One such stabilizing initiative is the Agricultural Market Information System that was endorsed by the G20 Cannes Summit and has since been implemented under the auspices of the FAO. AMIS provides monthly market assessments along with a statistical database and assistance on capacity development, governance plus indicators and market monitoring for four major staples – wheat, maize, rice and soybeans. We also heard presentations that were more directly focused on improving smallholder farmers’ efficiency. Cargill, for example, has projects to enable and support smallholder farmer productivity improvements in such diverse agricultural products as palm oil, cocoa, cotton and grains. We heard a lot about projects oriented to improving access to financing for smallholders through collaborative programs but also to risk management schemes in localized commodity exchanges.
Although we did hear from one expert who insisted that subsistence farmers don’t need any help with efficiency measures because they are mostly responsive to existing market signals, we were quite taken by the impressive outreach being done by the transformation of information flows for smallholder farmers as in the Ghana-based “Esoko”, a mobile phone service using the Swahili for “market” in its trade name. The key point, perhaps, is that smallholder farmers do make decisions based on the market conditions they face and that the main priority should then be directed to improving those market conditions as a way to stimulate their willingness to risk increasing investments in inputs for higher productivity outcomes. Overall, we heard many instructive messages on how smallholder farmers should and could strengthen their bargaining capacity and pooling of risk in agricultural supply chains outside of their immediate local communities and on how governments should pursue policies to encourage local entrepreneurs to move up the value chain by converting more primary commodities into processed or finished products.
From the CMBD News 25 March 2013