Globally connected: Are small-scale farmers receiving a better price for their products?

By and
20 March 2011

The UN’s Food and Agriculture Organization has reported that world food prices are at a new historic peak. The Food Price Index, an international indicator of the wholesale price of basic foods, has risen for seven consecutive months. In January, the Index registered strong increases for all the commodity groups it monitors, except for meat. Does this mean that small-scale farmers, or those who produce these products in general, are receiving a better price? Our partners from Kenya, China and Brazil shared their opinions on the situation in their countries.

Paulo Petersen: “No benefits go to farmers”

farmers must find other ways to access markets, preferably through short chains

Over the past decade, Brazil has become one of the world leaders in agricultural production and trade, satisfying the country’s needs in almost all sectors while exporting approximately 25 percent of its produce. Paulo Petersen, Director of our partner organisation AS-PTA, points out that, in spite of the large quantities of foodstuffs produced, neither policy makers nor farmers have any influence on the prices paid. ‘‘International markets define the price of food. It is influenced by global issues, and is not regulated by individual countries. What farmers are paid depends basically on the international market prices.”

This is because most farmers, even those in the remote rural areas of Brazil, are part of an international value chain. The biggest problem is that these chains include many intermediaries. “They are the ones who appropriate the riches produced by agriculture in Brazil. Although prices may fluctuate and farmers lose out when they fall, they also lose out when they rise.” Farmers must therefore try to find other ways to access markets, preferably through short chains. This means paying attention to local markets. Selling in local markets helps reduce the number of intermediaries, which means that a larger percentage of the price paid by the consumer goes to the producer. Local markets also provide opportunities for commercialising a wider diversity of products. Additional benefits can also be found by lowering costs. “This is not impossible: lowering costs while maintaining or increasing production levels is one of the many advantages of an agro-ecological approach”.

Anthony Mugo: “A burden on rural taxpayers”

farmers face numerous barriers when trying to access the market

Countries like Kenya import much of the food the population consumes, particularly grains and edible oil, and are even more reliant on imports when the rains are insufficient or other factors affect production. Higher global food prices mean that more money is spent on importing food, resulting in a higher burden on Kenyan taxpayers, most of whom (approximately 70 percent) live in rural areas. Ideally, higher food prices should also mean a better income for poor farmers in rural areas, but unfortunately this is rarely the case. Farmers face numerous barriers when trying to access the market: poor infrastructure and a general lack of market information leaves them vulnerable to exploitation by middlemen, or by those who have the means to transport food to urban areas.

According to Anthony Mugo, Programme Director of the Arid Lands Information Network (ALIN), ICTs offer a possible solution. ALIN is promoting an online market access portal known as Sokopepe (the virtual marketplace –, which can link farmers with the national market via mobile phones and the internet. This can help to better inform farmers about where and when to sell their produce.

Qian Jie: “The intermediaries benefit”

even when consumers pay more for their products, the farmers still do not benefit

Over the past few years, China has become increasingly involved in the trade of agricultural products, both as exporter and importer. But these growing linkages with international markets are not necessarily beneficial for the country’s smallscale farmers.

The Director of CBIK, Qian Jie, says that when food prices rise, the costs increase – something that also happens when prices fall in the international markets. “Rising food prices also mean that the inputs which farmers need are more expensive. So when prices rise, the farmers’ net income is smaller”.

As part of their efforts to tackle the current financial crisis, the Chinese government is providing subsidies to consumer groups in the cities, some of which are known as the “Fair Price Vegetable Groups”. These subsidies help urban consumers buy more expensive products, yet the benefits of these transactions never reach the producers: “Even when consumers pay more for their products, the farmers still do not benefit.” As in many other countries, the presence of many intermediaries plays a very important role in this as they are able to overcome the transport and information barriers that face rural farmers. Helping such farmers access the market is increasingly recognised as the best way to increase their profits, but this will mean implementing specific support policies.