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The importance of markets

The importance of markets. Interaction with local markets is a crucial element in the livelihood strategies of most rural households. For many of the poorest, lack of access to markets is a determinant of their poverty.

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The importance of markets

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  1. The importance of markets • Interaction with local markets is a crucial element in the livelihood strategies of most rural households. • For many of the poorest, lack of access to markets is a determinant of their poverty. • Improving the access of rural poor people to local, national and international markets is thus fundamental to any strategy to enhance food security, increase rural incomes and promote economic growth.

  2. The changing market context At the national level • Adjustment reforms have limited/eliminated the role of parastatal agencies in agricultural marketing. • Emergence of the private sector is slow, uneven. • Policy environment is not consistently supportive of private market development. At the international level • Agricultural export earnings are crucial for developing countries. • Market environment is largely unfavourable: prices of most commodities are declining, market access is constrained. • Yet globalization has also created new market opportunities and has led to new responses.

  3. What all this means for poor farmers Poor farmers face a new and uncertain environment: new opportunities for some, major problems for many. • difficult physical access to markets • inequitable market structure and relations • producers’ lack of information, skills, organization

  4. IFAD’s experience, current focus • Early focus on marketing declined with liberalization • From mid-1990s new focus on market access, new approaches, learning from others • IFAD’s strategic framework: increasing rural poor people’s access to markets - one of the three operational pillars • Today, IFAD-financed programmes/projects aim to: • enhance rate of market development • facilitate and broaden market access • establish more equitable market relations

  5. IFAD-supported projects In all regions, programme/project activities typically focus on four areas: • helping producers to understand markets, develop skills and organize for improved access • supporting market intermediaries • assisting buyers and sellers in coming together • assisting governments in generating appropriate policy, institutional and legal framework

  6. The way ahead Field operations • Continued focus on the objectives and four areas of activity - emphasis on reducing cost of doing business • Market access activities to be complemented by support for rural financial services and microenterprise development • Development and promotion of new market opportunities for rural poor producers cont...

  7. The way ahead (cont.) Development and sharing of knowledge • Need to learn from programme implementation experience • Strengthening of partnerships - governments, donors, NGOs, private sector Policy advocacy • Need for reform of subsidy systems in developed countries: delinking of subsidy payments from production • Increased levels of aid to be targeted at economic empowerment of rural poor - assisting them in accessing markets and engaging in them on a more equal footing

  8. Some issues to focus our discussion • What should be done by IFAD and others to enable poor producers to access markets more effectively and participate in them on better terms? • How should IFAD work with others to this end, and what sort of partnerships are needed? • What can be done at national, regional, global levels to improve the rules of trade in favour of poor producers?

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