IFAP Development Seminar: Diversification & Product Development

   This document has been made available in electronic format  
            by the Committee for the Promotion and 
               Advancement of Cooperatives COPAC

            Diversification and Product Development

                      17th April 1996



1.   IFAP Development Seminar on "Diversification and Product
Development : Challenges for farmers' organizations" was held
under the chairmanship of Mr. Gary Magadzire (Zimbabwe) on 17th
of April, 1996 with the participation of 88 farm leaders from 29

2.   In the opening session, welcome speech on behalf of host
organizations was delivered by Mr. Jean-Claude Sabin,
Vice-President, Assemble Permanente des Chambres d'Agriculture
(APCA). Mr. Colin de Verdiere, Assistant Director of Economic
Development and Environment, French Ministry of Development
Cooperation stressed on the important role the French Government
accorded to farmers' organizations in the development process. 

3.   Seminar discussions began with the presentation of
Secretariat document analyzing the issues involved in the seminar
theme. Papers were presented Mr. Fouseyni Diallo (Mali), Mr.
David Hasluck (Zimbabwe) on present situation and issues for
farmers' organizations at national levels. Presentations from
international organizations were made by Mr. Bertil Byskov of the
International Trade Centre (ITC) on "Product / Market Development
and Transparency", and by Ms. Leonela Santana-Boado of the United
Nations Conference on Trade and Development (UNCTAD) on
"Financial Instruments". 

4.   A summary of background and current situation, policy
recommendations and plan of action arising from the discussions
are as follows :

Background and Current Situation

5.   The retreat of governments from their central role in
agriculture has implied important changes in the day-to-day
operations of farmers and farmers' organizations. 

6.   In the past, governments aimed to provide an environment of
relative certainty, by announcing and often guaranteeing farmgate
prices, by specifying conditions of the product they wanted to
buy from farmers, and sometimes by imposing crops on them. In
these circumstances, farmers' organizations depended on price and
policy negotiations with governments as the principal instrument
to increase farm incomes.

7.   Circumstances faced by farmers in a liberalized market
situation often imply the following : 

     i)   lack of reliable and timely information on prices and
     markets, which puts farmers in a weak bargaining situation
     vis-a-vis traders. 

     ii)  price fluctuations with full impact going directly to
     farmers, without any intermediate "cushioning" mechanism. 

     iii) relatively low farm incomes, in comparison to
     substantial profits made by private sector companies in the
     upstream and downstream of agricultural production ;
     necessity to extend operations beyond the farm gate,
     through farmer-owned business enterprises and cooperatives. 
     iv)  vacuum left behind by retreat of governments . As a
     result, many essential economic services, e.g. marketing,
     may be missing in small-scale farming areas with poor

     v)   difficulties of diversification as there may be no
     obvious alternatives to previous crops which may no longer
     be economically viable.

Policy Recommendations

8.   Market transparency and access to markets needs to be
achieved through :

     i)   establishment of systems enabling circulation of
     reliable, accurate, timely  market information, including
     briefing meetings, radio, newsletters, handbooks and
     electronic media by farmers' organizations themselves, 

     ii)  relevant, adequate and timely gathering of data by
     governments and their appropriate diffusion.

     iii) establishment of mechanisms which favour market
     transparency, e.g. commodity exchanges, 

     iv)  establishment of competition rules and procedures
     coupled with access to affordable legal, financial and
     training services, including legal instruments in case of
     a breach of contract. 

     v)   possibility of independent recourse to checking of
     quality and quantity standards. 

     vi)  establishment of coordination panels among potential
     competitors, e.g. with exporters

     vii) establishment of commodity-specific coordination
     panels, bringing together all the actors involved in the
     totality of the commodity chain.

9.   Relative protection of farmers from the full impact of price
fluctuations can be achieved by governments by assisting farmers'
organizations for devising systems of risk management while
promoting in a favourable macro-economic framework and stable
exchange rate policies.

10.  Farm revenue can be increased by capturing more of the
value-added beyond the farm gate through operations in the
upstream and downstream of production, through farmer-owned
business enterprises, such as farmers' cooperatives, farmers'
business enterprises or specialised bodies and institutions.
These activities and operations may include provision of
agricultural and financial services, marketing, processing
distribution and exports, at times in partnership and cooperation
with other sectors and institutions. 

11.  Whenever there is a vacuum, farmers and farmers'
organizations can act directly, by making best use of available
business opportunities both at the individual and organizational
levels, as farmer enterprises and cooperatives. Farmers can also
explore favourable financial arrangements which may enable the
undertaking of such business initiatives, through the creation
of their own banking institutions, better use of savings and
collateral in credit arrangements. 

12.  Whenever farmers need to diversify into other crops, market
and product development opportunities must be explored, including
development of products for niche markets. For this purpose,
farmers need competent institutions such as commodity promotion
boards working in an effective manner in close dialogue with
farmers' organizations. 

13.  Farmers need strong and viable organizations for economic
success in the present environment. For this purpose, the
following elements need to be taken into consideration :

     i)   team-building and cooperation among farmers'
     organizations at national, sub-regional, regional and
     international levels

     ii)  team-building and cooperation of farmers'
     organizations and with other organizations and sectors

     iii) training of farmers' organization representatives for
     representative and economic functions

     iv)  building and maintaining a good reputation in terms of
     quality of produce 

     v)   building and maintaining a good reputation in terms of
     democratic procedures and governance

     vi)  movement-to-movement exchange of experiences and

     vii) affordable legal, financial and training services for
     farmers and farmers' organizations
Plan of Action

14.  An IFAP-UNCTAD programme will be implemented on the possible
use of financial instruments by farmers' organizations including
risk management instruments and collaterals. 

15.  IFAP and ITC will look into the possibility of launching a
joint programme for the promotion of commodity exchanges, in line
with the initial outline of possible collaboration proposed by
ITC during the seminar.

16.  IFAP will encourage, and where possible facilitate, a
greater use by farmers' organizations of available information
and services of ITC, UNCTAD and other relevant international and
regional organizations.