From market-based development to value chain transformation: What markets can (not) do for rural poverty alleviation?

Abstract

Market reforms are considered as an important strategy to support poverty reduction amongst small-scale agrifood producers in developing and emerging economies. Most attention is commonly focused on voluntary initiatives that provide a guaranteed minimum price to farmers and improve services for rural communities, supplemented by good agricultural practices for higher productivity, environmental quality and to support living incomes. Whereas alternative trade movements have become ‘mainstream’ their market shares are stagnating. Since agrifood markets have changed substantially and trade networks are restructured, smallholders are increasingly controlled by midstream agents (traders and processors) and captured into contract farming arrangements. This article outlines a new discourse around value chain transformation that supports local processing for income and employment generation and favours better integrated supply chains based on circularity and trust. It identifies new alliances between producers and traders that change market governance beyond simple adjustments in exchange relationships. Combining public investments (market infrastructure) with civic-driven organization (cooperation and contracts) and private networks (for profit redistribution along the value chain) offers interesting opportunities for linking sustainable business practices with value-driven trade arrangements.

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