Reference Document: FAMILY FARMING; ACCESS TO MARKETS AND VOLATILITY OF AGRICULTURAL MARKETS

Co-ordinator: WORLD RURAL FORUM EXECUTIVE SECRETARIAT.

CONTENTS
1. - General introduction ............................................................................................................... 1 2. - Developing the topic ............................................................................................................... 3 3. - General conclusions ............................................................................................................... 7 4. - Action proposals ..................................................................................................................... 8 5. - Bibliography .......................................................................................................................... 10

1- General introduction
The prices of farming products are increasingly sensitive to price variations in other economic sectors (for example the energy sector) and this growing volatility in the prices of raw materials and farming products endangers food security in villages. Access to the markets becomes a bottleneck for poor families in rural and urban areas. We have to unblock this bottleneck in order, on the one hand, to facilitate access to food and, on the other, to make sure that family farmers can make their work profitable.

Food security, agriculture and markets

It is said that "Food security exists when everyone has physical and economic access at all times to sufficient harmless and nutritional food to satisfy their food needs and their preferences for food to be able to carry out an active and healthy life." (World Food Summit 1996).

This commonly accepted definition highlights the following dimensions of food security: Availability of food: The existence of sufficient quantities of good quality food, supplied through the country's own production or by importing (including food aid). Access to food: Access for people to appropriate resources (resources that they have the right to) to get suitable food and a nutritional diet. These rights are defined as the set of all the product groups which a person might control by virtue of legal, political, economic and social agreements from the community where they live (including traditional rights, such as access to collective resources). Use: Biological use of food through the right diet, drinking water, health and medical care giving a nutritional welfare state satisfying all physiological needs. This concept highlights the importance of the non food consumables in food security. Stability: To have food security, a population, a home or a person should have access to the right food at all times. The concept of stability refers both to the dimension of availability and that of access to food security. On occasions, there are temporary food security alerts due to disasters or sudden price or climatic crises. However, millions of people live with constantly endangered food security.

World Food Crisis of 2008 and its consequences

The world food crisis that took place in the 2007-2008 campaign was characterised by price rises for most foods and fundamentally basic crops and it seems clear that how the markets work provided one of the main triggers of the crisis. The food market underwent an unprecedented period of price volatility due to, among other causes, prohibiting grain exports in some key countries and the rise in prices for fossil fuels mainly (Slayton 2009). These measures caused great uncertainty in the markets that were closed causing significant price rises for most foods. This clearly demonstrated the vulnerability of many countries, particularly developing countries that are strongly dependent on the import market for food supplies. This crisis triggered a change in political discourse that returned to farming and farming development as strategic lines for all countries' national security. Specifically, the World Development Report 2008 of the World Bank raised interest while focusing its attention on the importance of Agriculture for Development. Concerning this matter, and more particularly regarding the issue of markets, the report refers to the importance of expanding access to markets, establish efficient value chains, improve the competitiveness of small farmers and facilitate their entry into the markets (World Bank 2007).

Since the food crisis in 2008, everything has seemed to indicate that world prices for farming products are going to remain above the average prices recorded to date. Access to food is going to mark the future of national and international policies in terms of food security. On this point, farming production and the correct operation of the farming markets are going to be essential for development and to reduce hunger and poverty in the world.

2. - Developing the topic

Situation of family farmers regarding access to markets
The market has existed since the beginning of time; it is a basic activity that links up producers of a specific product with its potential consumers. The majority of rural homes are, to a greater or lesser extent, connected to the market although their level of integration varies considerably depending on their level of production and development. Several countries that chose to open their economies through international trade have experienced a relatively successful economic growth. However, there are still many negative examples of external dependency on supplies for commodity proliferation at regional and bilateral level. There is no doubt that protectionism and subsidies for their agricultural sectors by developed countries have undermined the potential of developing countries regarding their productive and commercial development. In summary, it should be noted that the international trade model developed to date has encouraged agricultural intensification and in many countries has contributed that local agriculture remains a marginal activity. Family farming and trade in agriculture and livestock products are crucial to stimulate local and national economies. A study commissioned by the Ministry of Agrarian Development in Brazil revealed that small scale agriculture generates greater income per surface unit, has greater capacity to generate employment and contributes enormously to the production of basic food (Brazilian Ministry of Agrarian Development 2005). Despite such statements, we can say that family farming is undervalued globally; it is marginalised as an economic activity despite what it represents in terms of global development. Backing family farming can be seen as a commitment to development as a whole as it is an activity that, when it works properly, requires a whole other series of goods and services. This leads to a more equal distribution of economic opportunities and so this stimulates the local economy as a whole. As opposed to what happens with the industrial models, governed by

merely economic criteria, family farming requires specific services and aims to remain active by distributing the positive impact throughout the entire community.

Main restrictions for market access

For poor rural producers, trading presents a series of restrictions that include difficulties to access the markets (a micro problem) and complications associated with sustainability in the markets (a micro and macro problem). On the one hand, one of the main challenges which small agrarian producers have to face is derived from their own productive model. 70 to 90% of agrarian farms in Africa cover less than two hectares of land and produce basic food. In South Africa, 18,000 commercial farmers produce 90% of the total grain production, whilst the remaining 10% is generated by three million small producers (FAO 2009). The majority of small farmers work on small portions of land with low productivity, they use low yield seeds, they lack access to water for irrigation, they live far from the markets, etc. All these factors increase their vulnerability to climate change and the volatility of the markets (Fan 2010). On the other hand, export markets tend to exclude small farmers from among their suppliers, given their low capacity to meet increasingly demanding quality and supply standards. As stated in the Oxfam Philippines report: "Small producers are not in a position to be able to supply export markets. Some have actually chosen this possibility but very few and they are highly vulnerable to any changes occurring in the markets." (Fraser 2009).

The role of food distribution and supermarkets

The distribution chains have undergone so much development in the last few years that we can see that the global food market today involves a small number of international operators including firms such as Wall Mart, the biggest retail company in the world, or the French company Carrefour that dominate the distribution of food worldwide. In the case of Spain, Mercadona leads the distribution sector with a share of 20.2%, maintained by sales with a total of 75,458.61 million Euros (INDISA 2011). The distribution chain phenomenon is not limited to northern countries and is becoming more significant in southern countries as well. For example, in Latin America the value of local food sold by supermarkets was 2 and a half times more the value of exports from the region to the rest of the world (Fraser 2009). In India, Reliance leads the food product distribution market that turns over more than 200,000 million dollars a year and it is now streets ahead of its competitors.

Supermarkets, along with large scale food processing companies, have drastically transformed agrofood markets throughout the world. Many of these changes represent major challenges (including exclusion) for small farmers and processing and distribution companies whilst also restricting potential for great opportunities. However, making the most of these opportunities involves overcoming a series of obstacles and/or technical glitches that have meant that, in principle, purchasing contracts are not public-oriented. A study carried out in Thailand found that supermarkets' market share had risen from 5% in 1988 to 53.2% in 2001 (Tokrisna 2002). This trend has spread throughout Asia and demonstrates changes in consumption habits and the area's growing urbanisation bringing about significant changes in the Agrarian Sector. One fundamental requirement to turn this situation around lies in consolidating producer associations, making them large enough to meet supply demands imposed by distributors effectively and, to this extent, improving their capacity for negotiation. African farmers who sell the excess of their harvest only receive between 10 and 20% of the price for their products. The rest of the value of the product is lost as a consequence of transaction costs and post-harvest losses. In this respect, strengthening associations, joining the chain of value, improving the infrastructure and applying process and storage technologies are key elements to be developed.

Farming organisations and access to markets

It seems clear that collective action, organising producers, is a key tool for facilitating or improving, when appropriate, small producers' access to the markets. One example that we are aware of, and that seems to be giving positive results in terms of association and access to markets, involves setting up farming cooperatives. On the one hand, they facilitate the stock of productive consumables, allow sufficient quantities of product to be stored away to be able to exert some negotiating power over purchasing operators, provide technical, lending, insurance services, etc. Obviously, this system has required important public and economic support to start up but nowadays it is one of the most successful formulas in the primary sector in many regions of the world. And this leads us to think that forming groups of producers is the way that the small farmers can remain active within a context of globalised markets. Producers' organisations can perform and facilitate, among others, the following functions: The producers set up a platform to stand up for their rights before political authorities, purchasing agents, etc. Improving and participating in making decisions that affect the production sector.

Concentrating the offer improves negotiating positions against the purchasing agents whilst improving the market's supply. Post-harvest costs are lowered thereby improving market prices. Access to agrarian services is improved (loans, seeds, training, technology, information, etc.) It is easier to get the product into the so-called chain of value. Whenever producers decide to put their product into the chain of value, a whole series of parallel activities are triggered along with opportunities involving the overall improvement of the environment's situation.

Local and regional market channels.

In addition, there are clear possibilities for small farmers to incorporate themselves into other marketing channels. It is necessary to identify those marketing channels more adequate for them to access. It is necessary to identify costs and benefits, and to set the steps to respond successfully. Only the regional market of staple foods in Africa is worth in 150,000 million dollars and it is expected that by 2020 food demand could double (AGRA 2009). It is a fact that African farmers will have enough local demand to substantially improve their incomes. It is important to facilitate their access to their own markets by improving the obstacles that have been identified. It seems clear the relationship between markets and the availability of food. What is important to note, and therefore our focus on family farmers-small farmers is that food security can not focus as much on international trade, but in local, national and regional. And this statement is based on the grounds that need only 25 some of the world agricultural production is traded globally (Lamy 2011).

Political actions regarding family agriculture and agrarian markets

"The time has come to change things. Poverty and hunger won't disappear from our countries until our products and our markets receive the right support and protection measures from our governments." (ROPPA 2005) The importance of trade for many countries is reflected in the policies and the general development outlines. Some countries that chose to open their economies through international trade have undergone relatively successful economic growth. However, many are still negative examples of external

dependency regarding the supply of basic products, proliferation of regional or bilateral agreements, etc. There can be no doubt that the protectionism and subsidies that developed countries have set aside for their agrarian sectors have undermined the potential of developing countries both in terms of production and sales. In summary, it can be stated that the international trade model developed to date has favoured agrarian intensification and in many countries it has contributed to local agriculture remaining a marginal activity. Family Farming, and promoting access for small producers to their nearby markets, is key to both eradicate hunger and supply food to the population and create a solid socioeconomic fabric on which to base the development of many nations. This requires political support from governments in order to promote specific measures that reduce uncertainty on the markets, encourage development of infrastructures and promote investment in agriculture.

3. Conclusions
World food security and the economic development of thousands of millions of persons can be based on family farming production. Although we cannot reduce the importance of international trade, it is important to pay appropriate attention to the internal production of food and raw material. The demand for plant-origin fuels, the increase in urban population, the economic improvement of emerging countries, etc. paint a picture in which small farming producers must find a place for themselves and consequently they require ideas and measures that encourage inclusion of these family productions within national and regional food networks. Just the Africa region market for basic food is valued at 150,000 million dollars and it is hoped that the demand for food could double by 2020 (AGRA 2009). It is a fact that African farmers are going to have sufficient local demand to substantially improve their income. It is important to make it easier for them to access their own markets by improving the obstacles that have been identified. In addition, it is appropriate to take a fresh look at the commercial system that until now has been focussed on exports by prioritising the local and national markets and also promoting regional markets.

It therefore seems clear that the priority has to involve supporting local farming systems rather than depending on international trade to ensure food supplies. In this way, there is less vulnerability in terms of sudden changes in international markets and development of local economies is promoted. In this context, it is important to encourage inclusion of small farmers in the markets, reducing risks associated with the market and encouraging their inclusion in the chains of value. Below, we will show some proposals intended precisely to make it easier for small producers to access the markets.

4. - Proposals for action

Specific measures to improve and/or facilitate access to markets for family farmers Worldwide
1. Create and consolidate mechanisms that imprint greater efficiency and transparency to how the markets work. 2. Promote regional trade integration processes particularly in countries and/or regions with very little or no integration. 3. Intensify the work to break down barriers and improve the infrastructure to create and broaden sustainable internal and regional food markets. 4. External support from development institutions must have more of a business focus. So that providing technical and economic assistance for less developed countries to develop their own agro-industry consolidates relations with the primary sector. 5. Promoting ecological and/or sustainable production of food in order to reduce the vulnerability and the impacts derived from excessive use of fossil fuels.

Nationally
1. Establishing, when necessary, the due proportional customs protection, to avoid dumping or importing subsidised products that unduly damages local productions. 2. Institutional support with more competitive and/or business focus, facilitating a legal framework that strengthens the consolidation of countryside associations of producers. 3. Offering farmers opportune access to affordable public and private consumables and loans, plus public and private insurance instruments. 4. Encourage public/private collaboration to consolidate strong, competitive local markets. 5. Using specific policies to facilitate the proliferation of specific contracts that link Agroindustry to Family Farming.

6. Develop support systems for small producers so that they can obtain the greatest profit from their crops by reducing pre and post harvest losses as much as possible. Support work intended to improve food quality and safety and reduce waste throughout the entire food chain by improving food handling, analysing food, the processing equipment, techniques for storage, cooling chain systems and the transport infrastructure. 7. Facilitating the implantation of services in the rural environment that permit optimum development of the Agrarian Sector. 8. Promoting short commercialisation circuits. The sensitivity of many consumers to the food that they consume is one way to promote the implantation of short commercialisation circuits. These circuits encourage both food security (nutritional, quality), reduce the ecological impact (derived from reducing the use of fuels) and they are an effective means of maintaining levels of demand for farming products and therefore for maintaining producers whilst they analyse and set up new strategies. (Rural-Urban) 9. National programmes to promote products from Family Farming such as the Government of Brazil's programme to supply public canteens (schools, hospitals, etc.). In this respect, public-private collaboration is crucial. 10. Association Boost. From the institutions, training has to be promoted for groups of producers and other agents involved in the farming and rural sector. Promoting spaces for civil society - government dialogue.

In terms of producers' organisations

1. Strengthening their capability to organise themselves is essential so that they can take part in the decision-making processes and participate actively and efficiently in the markets. 2. Access to the right training permitting, on the one hand, improvements in their competitiveness and their negotiation capability whilst also being able to identify complementary and competitive activities to capitalise on the real advantages of small producers (efficiency, sustainability, etc.). 3. Encourage setting up processes to increase the quantity and quality of production for small farmers and to generate added value to local production. 4. Increase the support, coming from all sources, to improve market infrastructure and commercial information systems, including setting up and strengthening ties between the countryside and the city; effective use of information and communication technologies. 5. Facilitating the provision of infrastructures, particularly for transport, plus access to other technologies (communication) that can reduce costs and reduce uncertainty regarding the markets. Precise information on how the markets are working in real time reduces uncertainty and helps them to act appropriately.

5. - Bibliography
AGRA (2009): Early accomplishments, foundations for growth. Alliance for a Green Revolution in Africa: Windhoek. BIENABE, Estelle; SAUTIER, Denis (2005): The role of small scale producers organizations to address market access, CIRAD-TERA: Montpellier. BRAZILIAN MINISTRY OF AGRARIAN DEVELOPMENT 2005. BROWN, M. E.; HINTERMANN, B. ; HIGGINS, N.. (2009): Markets, Climate Change and Food Security in West Africa. Environmental Science and Technology 43 (21), 2009. WORLD FOOD SUMMIT (1996): Rome Declaration Declaracin on World Food Security, 13-17 November, FAO: Rome. DALLE MULLE, Emmanuel; RUPPANNER, Violette (2010): Exploring the Global Food Supply Chain. Markets, companies, systems. 3D: Geneva. DELMAS, Patrick; LOTHOR, Anne (ed.) (2009): Market Access and Agricultural Product Marketing. Promoting Farmer Initiatives, Inter-Rseaux: Paris. ECHENIQUE, M. (2009): Innovaciones institucionales y tecnolgicas para sistemas productivos basados en agricultura familiar, IICA: San Jos. FAN, Shenggen (2011): G20 Ministers of Agriculture Must Focus on Smallholder Farmers to Achieve Food Security and Prevent Food Price Volatility, IFPRI press statement, June 15, 2011. FAN, Shenggen (2010): Halving hunger. Meeting the first Millennium Goal through business as unusual, IFPRI: New Delhi. FAO (2011): Informe sobre volatilidad de precios, Grupo de Alto Nivel de Expertos en Seguridad Alimentaria y Nutricin, FAO: Rome. FAO (2010): Perspectivas Econmicas y Sociales, Informes de Poltica N 12, FAO: Rome. FAO (2009): Pathways to success. Success stories in agricultural production and food security, FAO: Rome. FAO (2009): El estado de los mercados de productos bsicos agrcolas. Los precios altos de los alimentos y la crisis alimentaria: experiencias y lecciones aprendidas, FAO: Rome. FAO (2006). Informe de polticas, Junio de 2006, N 2, FAO: Rome. FRASER, Arabella (2009): Harnessing Agriculture for Development, Oxfam International Report. HAZELL, Peter et al. (2007): The Future of Small Farms for Poverty Reduction and Growth, 2020 Discussion Paper 42, May 2007, IFPRI: Washington D.C. INDISA (2011): Informacin y Distribucin Anual, S.L. Anuario de Distribucin 2011/2012, INDISA: Madrid. IO (2009): Invertir en la pequea agricultura es rentable. Cmo dirigir la inversin en agricultura. Informe de Intermon Oxfam n129.

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LAMY, Pascal (2011): El comercio internacional como componente vital de la seguridad alimentaria. Discurso inaugural en el XIII Congreso de la Asociacin Europea de Economistas Agrcolas, 30 August 2011. ONGWEN, Oduor y WRIGHT, Sarah (2007): Small Farmers and the Future of Sustainable Agriculture. ECOFAIR Trade Dialogue Discussion Papers N 7, March 2007, Heinrich-Bll-Foundation/MISEREOR/Wuppertal Institute for Climate, Environment and Energy: Berlin/Aachen/Wuppertal. ROPPA (2005): Declaration of Ouagadougou, July 2005. SLAYTON, Tom (2009): Rice Crisis Forensics. How Asian governments carelessly set the world rice market on fire, Working Paper N 163, March 2009. SMALE, Melinda, COHEN, Marc J., y NAGARIAN, Latha (2009): Local markets, local varieties. Rising Food Prices and Small Farmers Access to Seed, IFPRI Issue Brief 59, February 2009. TOKRISNA, R. (2002): Thailand changing retail food sector: Consequences for consumers, producers, and trade, Kasetsart University: Bangkok. TORERO, Maximo (2011): A framework for Linking Small Farmers to Markets. Conference on New Directions for Smallholder Agriculture 24-25 January 2011, IFAD: Rome. WORLD BANK (2007): World Development Report 2008. Agriculture for Development, World Bank: Washington D.C.

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