Farmer participation in agricultural markets is of major importance for rural economic growth and poverty alleviation in developing countries. This paper discusses market failures and constraints in agriculture in low-income countries, focusing on how these failures and constraints affect small farmers, input sellers and output buyers. It then explores innovative models implemented to address these challenges, including: out-grower schemes; input bundling programmes; decommodification through quality product differentiation; information and communication technologies; distributed ledger technologies; and direct purchasing models. Finally, the paper reviews the existing evidence surrounding these innovative approaches and highlights evidentiary gaps.
Published by: FAO
Authored by: Michelson, H.
Journal Name: Background paper for The State of Agricultural Commodity Markets (SOCO) 2020
Publication Date: Oct 1st, 2020