The role of well-functioning markets for development is now widely recognised, but the challenge to make these markets benefit the poor and the environment remains. Increasing attention is being given to the potential role markets can play to conserve agrobiodiversity through product diversification and increasing competitiveness in niche and novelty markets.
The market chain for small-scale farmers’ fresh and processed products is full of obstacles. Firstly, farmers have limited access to physical and financial resources. This makes it more difficult for them to enhance their scale of production which would reduce costs, or to invest in efficiency-increasing and valueadding technologies. The issue of scale also means that it can be difficult to market a product effectively, in terms of transport and handling costs, and for fixed investments. In some cases a shortage of labour, which can often be solved by introducing a relatively simple technology, prevents farmers from embarking on otherwise attractive value-adding activities. Secondly, smallholders often have limited technical skills and no access to training on production and processing and information on market requirements. Lastly, individual farmers lack bargaining power and as a result any value added to their products by processing or packing may not benefit them directly, as it is often distributed unequally among all the actors in the marketing chain. This is especially the case for seasonal and highly perishable agricultural products because of sudden peaks in supply and a relatively short durability of the products. Economies of scale resulting from the formation of community-based organisations could address these problems. Through collective action, smallholders are able to pool their resources and market their products as a group, so overcoming transaction costs resulting from their small scale. Such organisations can help improve access to resources such as inputs, credit, training, transport and information, increase bargaining power, and facilitate certification and labelling.
Bioversity International (formerly known as the International Plant Genetic Resources Institute) has undertaken several studies that explore the use of market-based approaches to on-farm agrobiodiversity management and livelihood improvement. Case studies have been developed on a range of species, varieties and derived products, including underutilised species and commodities in several regions of the world. These have all shown the importance of collective action.