Here - Natural Resources Institute

Transcription

Here - Natural Resources Institute
Millet, Myrrh and Manchester
United: Markets for Development,
Lessons from Practice
Wednesday 10 June 2015
Professor Ben Bennett
Inaugural Professorial Lecture Series
MILLET, MYRRH, AND MANCHESTER UNITED:
MARKETS FOR DEVELOPMENT, LESSONS
FROM PRACTICE
by
Ben Bennett
Natural Resources Institute, University of Greenwich
An Inaugural Professorial Lecture
delivered at the University of Greenwich
Wednesday 10 June 2015
© University of Greenwich 2015
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Cover image: Dave Cole
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FOREWARD
“My greatest challenge is not what’s happening at the moment,
my greatest challenge was knocking Liverpool right off their perch.”
Sir Alex Ferguson
Manchester United has, on more than one occasion, saved
my bacon. Football is a nearly universal language. It shuns
elitism (unless you are a player). From the most remote island to
the tiniest outpost of agriculture I have managed to find a ‘Man
U’ fan (or at least somebody who wants an argument with one).
They say that there are more Manchester United fans in London
than Manchester – well, there are certainly more in Nigeria than both put together!
What this illustrates is the universality and influence of brands, the richness of sports
allegiances and the power of individuals to set global aspirations. And aspirations
are what markets are all about. The poorest 10% of the world’s population aspire to
be like David Beckham, or at least to be as healthy as he is. The job of a marketing
economist is to oil the wheels between those that produce and aspire to have a
reasonable life, and those that consume and want their needs fulfilled.
When you pick up those French Beans in a supermarket or look at the label
of your chocolate bar, consider this: there is a chain of actors, actions and
consequences that has ended in that product; real people with real lives whose future
depends upon a fraction of that value having returned to them. The security and scale
of that value is increasingly important in a world of free trade and open competition.
The consequence of your decision to buy or not to buy is probably much more
important than you think; even more important than Manchester United.
SHORTCOMINGS
“That lad must have been born offside.”
Sir Alex Ferguson on Italian footballer Filippo Inzaghi
Reviewing my work for this lecture over the past 25 years I was astonished by its
range and scope. Tropical commodities are many and you can do a lot of different
things with them. For example, I have done a lot of work on marketing of coconuts
and fish in South East Asia. In the rural Philippines, my efforts to develop Market
Information Systems and ‘Marketing Farmer Field Schools’ are not included. Other
absences are work on integrated local market development schemes, efforts to
develop food oil processing sectors in Tanzania and Indonesia, and, more recently,
mobile phone applications for marketing. I have also been privileged to support a
number of efforts to support the use of intellectual property as a means to upgrade
value chains, particularly for natural products, and this work is omitted. Inevitably,
any ‘expert’ in my field, is called upon to judge the work of others through
evaluation, and I have done a lot of this and seen some wonderful work. This is not
covered here.
The nature of research at the Natural Resources Institute is that it is
collaborative, so other scientists or social scientists led the projects I was asked
to work on. The advantage was that this diversity provided me with ideas and
inspiration.
Notwithstanding, any errors, omissions, opinions and quirks in what follows are
my responsibility alone.
CONTENTS
Introduction 2
Practical problems with markets: their measurement and resolution 12
Quality control, management and food safety 19
Bringing economics to bear: matching science
with social science for greater development impact 21
Marketing the impossible – some things are simply hard to sell 24
Is international market access the solution to driving demand
in developing countries: lessons from trade negotiation? 27
Natural product value chains, embedded value
and value chain governance – millet, myrrh
and innovation systems for market development 29
Issues for the future of agriculture and trade 38
And what of Manchester United?
What lessons are there for agricultural market development
and practitioners in developing countries? 39
Acknowledgements 41
References 42
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Millet, Myrrh, and Manchester United: Markets For development, Lessons from Practice
INTRODUCTION
“I’m going to tell you the story about the geese which fly 5,000 miles from Canada to
France. They fly in V-formation but the second ones don’t fly. They’re the subs for the first
ones. And then the second ones take over - so it’s teamwork.”
Sir Alex Ferguson explaining teamwork to goal keeper Fabian Bartez
In 1987, as young economist working at the Overseas Development Administration
(now the Department for International Development, DFID) I was invited to join the
Economist Cadre in a meeting with Robert Chambers whose seminal work on new
and more participatory ways of understanding rural economies (Chambers R, 1983,
1997) was just coming out. I had lived in rural Northern Nigeria in the early 1980s and
I found Chambers’ inversion of the way the world was viewed by donors inspiring. He
took a map of the world, pasted it on the wall of the Minister’s Board Room upside
down and asked the small audience of Senior Economist “what’s wrong with this”?
He was, of course, making a rather trite point about perception which he would follow
up with a scathing attack on the audience for ‘not leaving their Landovers’ and ‘not
seeing beyond the roads when understanding the problems of the rural poor’. The Chief
Economist had obviously partaken of a liquid lunch and did not enjoy being patronised:
he lambasted Chambers. But it left a lasting impression on me and made me reconsider
my worldview. Two years later, I was at the Natural Resources Institute and trying
to persuade scientists that there was a different way of seeing their work: from the
perspective of the invisible rural poor, through the lens of business economics and as
innovations driven by market actors, like traders and brokers, who had hitherto also
been unseen.
This story then, is about a range of approaches and methods, applied to an
assortment of commodities, that have become, over the past 25 years, central to
development thinking and practice to the point where understanding markets and basic
business economics is the normal starting point of development interventions and not
an adjunct used to explain why things did not work.
In this paper I want to review how these changes to practice have come about.
We will consider the application of tools to understand markets and their actors; micro
businesses and their dynamics, commodities and their market drivers; and we will look
at these issues through a great many worked example from the weird and wonderful
world of tropical commodities that kept me enthralled all this time.
OUTLINE AND SCOPE
The methods and approach to understanding agricultural markets and natural
resources businesses in developing countries have, broadly, been through three
phases of development during the past 25 years. Firstly, emerging from the postcolonial, Fordist, neo-Marxist development economics of the 1960s and 1970s many
countries had agricultural policies aimed at moving towards an industrialised economy.
To achieve this, policies of import substitution, heavy state intervention and ‘market
management’ were implemented almost universally. Countries adopted grain marketing
boards, paid pan-territorial prices and ignored any concept of comparative advantage.
1
The World Bank and International Monetary Fund
Professor Ben Bennett
3
Secondly, in the 1980s, this approach was failing and countries were being forced to
accept a new, reality where the Bretton Woods institutions1 forced the withering away
of state. For marketing economists working in development, this was a period where
the giant agro-processing plants and massive grain silos fell into disuse. The problem
with the Washington Consensus2 and its aftermath for rural farmers was that it left
a vacuum which was not filled by the private sector until much later when urban
markets started to evolve at scale (Williamson, 1990).
The fault lines of geopolitics (a method of studying foreign policy to understand,
explain and predict international political behaviour through geographical variables)
were beginning to have a profound impact on the global agricultural economy. With
the collapse of communism and with it any passing semblance of faith in the ability
of states to ‘manage’ rural economies, new possibilities emerged driven by free trade
and market access. It had become clear that wrong policies resulted in market failure3
and this was now the focus of our attention. Development economists were armed
with participatory and ‘bottom-up’ approaches (Chambers, ibid.) and were sent
forth to somehow match the desires of the rural sociology departments of Western
Universities (i.e. various livelihoods approaches) with the post-Green Revolution
emphasis on new agricultural productivity paradigms.
Thirdly, a new realisation that productivity without growth, market access and,
crucially, market intermediaries, would not achieve the ambitious aims the world had
set itself (i.e., the Millennium Development Goals). It is hard to believe from a modern
perspective that middlemen (for example traders who buy from producers and sell to
retailers or consumers) were universally blamed for market failure until fairly recently.
Agricultural projects in the 1980s all spoke of by-passing middlemen. Speaking to
fish farmers in Romania in the month after the Revolution of 1989, I found that their
primary fear for the future was that middlemen would emerge who would steal all their
profits. This remains a common misconception even today (Oguoma, 2010).
The result of this intellectual journey and evolution of practice is Global Value
Chain Analysis (Kaplinsky, 2000, Gibbon and Ponte, 2005). Actually, as we shall
see, those of us working in markets in rural developing economies have been doing
value chain analysis for decades, but now we have a name for it and it has become
the norm. The important point about different value chain approaches is that they
map the actors, relationships and values along and across chains or ‘filières’. As a
result, we now have a method that allows us to reveal the detail of markets, shows
us where new possibilities for increasing income might lie and gives us a tool to
measure how our efforts have done. Value chain analysis spoke to the narrative of a
globalised world economy where growth was driven by trade. As we now understand,
this new world trade order was built on a house of cards. Financial markets had not
fundamentally changed, regulation and state governance were not part of the global
financial settlement allowing individual states and corporations to shy away from the
2
T
his refers to the set of 10 specific economic policies identified by John Williamson in 1989 that form
the standard ‘package’ of reforms used by the World Bank and the International Monetary Fund to
reform the economies of developing countries.
3
T
he sub-optimal allocation of goods and services caused by imperfections in the market mechanism
(Bannock, 1992).
4
Millet, Myrrh, and Manchester United: Markets For development, Lessons from Practice
democratic deepening necessary to prevent the most recent global crash. As the
World Bank economist Dani Rodrik has said, “if you want more and better markets,
you have to have more (and better) governance” (2011:xviii)4. Recent thought has
focussed on the high costs of global inequality and information asymmetry and we
have seen a heartening return to calls from more radical reforms based on not more,
but better and fairer intervention (Stiglitz, 2012). These latest insights have important
implications for the way we view value chains in the future: they will certainly become
more diffuse and complex and require new methods for their understanding.
To illustrate these phases of practice in the understanding of markets and trade
and what they might mean for future work in the field, I want to explain the challenges
faced by the rural poor in developing countries in the context of where we are now. I
will then describe a number of different examples from my own practice in the field.
These examples look at the evolution of our approach to agricultural markets in
developing economies through the lens of a series of development challenges and
key development questions that are typically addressed by marketing economists.
WHAT ARE THE MARKETING CHALLENGES FACED BY POOR RURAL
FARMERS AND FISHERS?
In the late 1980s the FAO (Abbott and Makenham, 1990) described a world of
tropical agricultural markets where domestic wages were insufficient for consumers to
buy simple value added goods like milk and where the mainstay of most developing
economies were basic commodities exported unprocessed to lead buyers, largely in
the Western developed economies. Authors talked about agricultural market failure
and the dependency inherent in the structure of agricultural economies with a limited
range of exports (Robbins, 2003), despite efforts to win greater income with fair trade
(Daviron and Ponte, 2005). By the last 1990’s and into the crisis of the 2000’s authors
were trying to explain why the hidden hand of neo-classical economics had failed,
either because we had given economists too much power (Kay, 2003), or not enough.
Even the grand thought leaders of that time seemed to focus on the supply side5 and
ignore markets.
A new, more nuanced, and frankly, more alarming, view on the future of
agricultural production and marketing was emerging6 . This view postulates a world
where populations continue to escalate, resources such water becomes more scarce,
cities grow and consumption switches to higher energy foods like meat and vegetable
oils (Searchinger et al, 2013). Such a world, expected to be populated by 9.6 billion
people by 2050 (UNPD, 2014), will, without radical changes in policy, be increasingly
polarised and large proportions of it will be malnourished and without a voice.
We can describe the future challenges by looking in more detail at population
projections, food price projections, urbanisation and land prices and changes in food
habits. These need to be considered in the context of climate change and the rush for
biofuels, water and hunger and malnourishment.
4
For an understanding of the role of governance in global value chains see Gereffi et al (2005).
5
Sach (2005:283) for example in his rightly lauded seminal work on poverty describes the silver bullet
for agriculture as being seed varieties, water and soil management techniques.
6
See for example Lin (2012) who argues for a more interventionist role for governments in markets.
Professor Ben Bennett
5
POPULATION PROJECTIONS
Estimation of the future population of the world, the effective number of mouths
we will have to feed, varies substantially (see figure 1). Constant fertility projected
from today growth rates gives us an unthinkable 27 billion. Most analysts foresee a
levelling off of fertility, based largely on evidence that there is an inverse relationship
between income and fertility. Women with better education, for example, elect to
have smaller families. Children from small families have better nutritional outcomes
(Schultz, 2005).
Figure 1: World population projections showing different fertility rates, 1950-2100
Source: UN (2014a)
PRICE PROJECTIONS
The long-term trend for food prices is upwards (see Figure 2) and the biggest
element of this increase is the cost of fuel.
URBANISATION AND CHANGING LAND USE
By 2050 the world’s rural population will be static (and old). Most people will
live in cities and depend on a smaller area for farms and fewer people to feed them
(see Figure 3).
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Millet, Myrrh, and Manchester United: Markets For development, Lessons from Practice
Figure 2: Global Food Prices 1960 – 2012
Source: Baffes and Denis, 2013
Figure 3: Historic and projected urban and rural population of the world 1950 - 2050
Source: UN (2014b)
RISING INCOMES, CHANGING EATING HABITS – THE MOVE TO MEAT
The evidence shows that increased income will result in a move away from
traditional foods towards a more Westernised diet based on meat protein
(see Figure 4).
CLIMATE CHANGE
Changes in global weather patterns may impact negatively on crop yields
(see Figure 5).
Professor Ben Bennett
7
Figure 4: The relationship between per capita income and meat consumption in
different counties
Source: Delgado et al, 1999.
Figure 5: Frequency distribution of the projected mean yield change for Africa and
South Asia to 2100
Source: Knox et al, 2012
Knox et al (2012) show that, in Africa, the crops with significant projected yield
reductions include wheat (−17%), maize (−5%), sorghum (−15%) and millet (−10%).
However, in S. Asia, of the crops reported, only maize (−16%) and sorghum (−11%)
are projected to have significant yield reductions. It is notable that cassava yield
variation was considered not statistically significant suggesting a degree of useful
resilience.
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Millet, Myrrh, and Manchester United: Markets For development, Lessons from Practice
THE RUSH TO BIOFUELS
As farmers convert their land to the production of feedstock for carbon neutral
biofuels food availability may decrease and prices rise (see Figure 6).
Aggressive biofuel growth
scenario without technology
improvements
Feedstock
crop
2010
2020
Cellulosic
biofuel
scenario
Aggressive biofuel growth
scenario with productivity
change as well as cellulosic
conversion
2020
2020
Cassava
33
135
89
54
Maize
20
41
29
23
Oilseeds
26
76
45
43
Sugar beats
7
25
14
19
Sugarcane
26
66
49
43
Wheat
11
30
21
16
Figure 6: Percentage changes in world prices of feedstock crops under different
technology and growth scenarios to 2020, compared with baseline of 2010
Source: IFPRI, 2006 quoted in von Braun and Pachauri (2006:8)
WATER – EVEN MORE SCARCE?
Oh yes – and we are running out of water too….(see Figure 7).
Figure 7: Global Water Demand: projected water use by different user sectors and
economic regions in 2050 compared with a baseline of 2000
Source: OECD (2012:25)
NB: This does not include rain-fed agriculture!
Professor Ben Bennett
9
Water demand is growing but the productivity of that water in terms of food
produced is not keeping pace (Rosegrant, 2002:106).
HUNGER AND UNDERNOURISHMENT
We are doing surprisingly well on undernourishment (see Figure 8).
Figure 8: Prevalence of undernourishment, world and developing countries,
1990-92 to 2012-14
Source: FAO SOFI quoted in Maletta (2014:7).
Mainly because extreme poverty is declining (see Figure 9).
Figure 9: Prevalence of extreme poverty in developing countries, 1980-2015
Source: Ravallion (2013), quoted in Maletta H (2014:3).
But this welcomed trend hides pockets of stubborn resistance in declining
extreme poverty, particularly Africa (see Figure 10).
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Millet, Myrrh, and Manchester United: Markets For development, Lessons from Practice
Figure 10: Estimated trends of prevalence of stunting in children under five (MGRS
standard), in developing countries (all, and three regions), 1980-2020
Where: LAC = Latin America Countries
Source: Maletta H, (2014: 13)
Solutions to these challenges, however, are within our grasp. With the application
of new technologies, particularly improved genetic material, we can grow more food
and with a greater nutritional impact with the same land. Education can make us eat
more healthily and temper demand. Food that is produced and never reaches mouths
can be recovered. Food being drawn-off for energy can be replaced with new energy
sources. Farmers, particularly women farmers, instead of being marginalised by
society, can be brought centre stage (Conway, 2012).
Given this narrative then about the state of the world and its agricultural economy,
what role do agricultural markets have to play? The truth is that much of the success
in recent years that gives heart for the future is due to big changes going on in the
rural economies of developing countries. Recent years have seen important growth
in some key economies with large populations, such as India. A lot of this growth
has been driven by a heady mixture of improving agricultural terms of trade, rising
farm prices for key strategic commodities after a long period of relative decline, the
emergence of an urban middle class with spare cash for food and refrigerators to
keep it in, and, a very large decline in global tariffs and reduction of non-tariff barriers,
especially for Least Developed Countries. New markets have opened: notably India
and China. LDCs’ exports to developing countries had expanded more than sevenfold to account for 52 per cent of their total exports in 2011 (WTO, 2012)7.
If we are to have enough food, farmers need to produce a surplus. This is an
opportunity for food-insecure rural households, but only if they produce the right food,
at the right price and get it safely to the consumer in a nutritious state. Markets and
trade, then, matter.
7
On a cautionary note, whilst agricultural trade from LDCs to Developed countries has grown, the lion’s
share of this trade gain has been in fuels and minerals.
Professor Ben Bennett
11
MARKET FAILURE
Despite all the evidence pointing towards under-supply in global food markets,
the persistent question I have received from farmers through many years is: “if we
grow too much who will buy it”? Farmers that have been encouraged to grow surplus
food or to move from subsistence into a cash economy naturally want to address
the massive risk that they have to take that they will not have enough food to feed
themselves and their dependents in the future. You still find farmers respond to the
question of what their problems are with the solution “why doesn’t the government
buy all my surplus”.
Economic theory suggests that supply and demand is intermediated by price.
However, this presupposes all parties have perfect knowledge of the market. In the
context of rural Africa this is never the case for a range of reasons including: isolation
and the absence of transparency8 (the market access issue), the absence of scale
economies and excessive transaction costs. Traditionally, market intermediaries or
middlemen, get the blame for the failure of markets to deliver sufficient incentives to
producers.
Here lies the fundamental paradox of agricultural trade: markets do not work
properly; this is called market failure. Its causes and solutions are the core of NRI’s
work and have been the central theme of my work on agricultural marketing in the
developing world. How do we get more money for existing products? How do we
help to find markets and help organise farmers to meet the new demand? Can more
of the final consumer level value be captured by farmers (up-grading)? What does the
existing value chain look like and how can it be optimised (governance)? How do we
manage over and under supply and the consequent price fluctuations?
In this inaugural lecture I will review some of the work I have done to explore these
questions. I will use a few of the examples of commodities, countries and approaches
applied by me in the past years to illustrate the key challenges faced by those trying
to market the produce of small scale producers in developing economies. In doing
this I will try to show some of the key methodologies that have framed the field in the
past thirty years and highlight hard won lessons.
Firstly, I will look at some of the practical problems with agricultural markets
and the application of science to these that I have addressed and the approaches
that worked and failed. Secondly, I will draw on selected examples from practice to
illustrate the challenges faced by a trade and marketing economist and the range
of commodity possibilities with which one can be faced. Thirdly, I will consider the
interface between agricultural markets in developing countries and those in developed
economies through the lens of trade negotiation with the aim of illustrating the power
of global market access to unlock domestic agricultural value chains to the benefit
of the poorest. Fourthly, I shall consider the unique challenges of marketing products
that are novel or under-valued, such as traditional foods and the wild harvested.
Finally, I will reflect on what the future holds for the marketing economist and value
chain specialist.
8
Often referred to as information asymmetry.
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Millet, Myrrh, and Manchester United: Markets For development, Lessons from Practice
1.PRACTICAL PROBLEMS WITH MARKETS:
THEIR MEASUREMENT AND RESOLUTION
“When the seagulls follow the trawler, it’s because they think sardines will be thrown
into the sea.”
Eric Cantona
In this section we shall look at examples of research into markets and practical
applications that support some of the development economics theories, models and
proposed paradigms in the past twenty to thirty years.
POSTHARVEST LOSSES – IT’S NOT LOST, WE JUST CAN’T FIND IT
NRI’s has a global reputation for research into post-harvest losses (Hodges,
Busby and Bennett, 2011, Hodges, Bernard and Bennett, 2013). It is notable that, in
25 years of working on this issue, we are still debating how to define what postharvest
losses are9. A recent resurgence in interest in this issue, to some extent driven by NRI
(World Bank, 2011, Hodges and Bennett, 2011) has returned us to the challenges of
complexity that we revealed in the early 1990s (Ward and Jeffries, 2000).
Huge market inefficiencies brought about by centralised pricing allied to poor
infrastructure and, so some extent, corruption, brought about grain losses that came
to the attention of the world’s press10. The famine in the Horn of Africa in the early
1980’s that led to live aid, revealed that subsistence farming did not work, food supply
systems based on Marxist maxims could not prevent starvation and, that farmers
were actually better at storing their grain safely than government (Compton et al,
1993). Governments tried to build clever models based on intervention stock which,
with the data management tools of the age, simply did not work and resulted in a
shift of in-chain costs to the consumer in the form of higher prices (Simatupang and
Timmer, 2008).
This large scale and very visible loss of durables (i.e., food grains) led to a burst
of interest in postharvest losses. It was at this time that the infamous 30% of all
food is lost postharvest statement was delivered by the FAO and endorsed by
no lesser global figure than Kissinger in his ground breaking speech to the World
Food Congress in 1974 (Kissinger, 1974:821). This figure persists to this day and is
commonly but incorrectly repeated in policy documents.
It is not that simple, unfortunately. Firstly, there is a crucial distinction between
losses (something that has no inherent latent value) and waste (something that has a
value with another use. Distinguishing between physical loss (i.e., the moisture that
grain loses during storage) and economic losses (i.e., the opportunity cost between
the highest possible value attainable at any stage in the value chain and its next best
value) helps us understand and locate postharvest losses, but the task of aggregating
losses at scale in a way that properly promotes their mitigation and encourages
relevant policy interventions remains out of reach.
9
See for example the Food Loss & Waste Protocol being developed by the World Resource Institute
with help from NRI www.wri.org
10
Summarised in de Waal, 1997.
Professor Ben Bennett
13
The challenge of measuring postharvest losses is thrown into particular relief
when perishables are considered. Fresh vegetables, fish products, flowers, meat
and cassava measure their decline in quality and value by hours rather than days or
weeks.
EXAMPLES OF POSTHARVEST LOSSES RESEARCH
a.Fisheries
In the early 1990s I worked as post-harvest fisheries economist on a series of
DFID and FAO projects in Bangladesh, India, Thailand, Sri Lanka and Indonesia
aimed at trying to address the abject poverty of fisherfolk around the Bay of Bengal.
A ‘proto’ value chain approach involving interviews across and along chains of fresh,
frozen, dried and smoked fish delivery showed just how precarious the life of very
small scale fish traders were and how previously unknown groups of intermediaries,
often women, populate elements of the value chain and deliver essential services
(Bennett and Rogers, 1992). In West Africa, for example, middle women, commonly
referred to as ‘market mammies’ were trading marine capture fish across borders
apparently closed to trade and between groups without a common language using
a remarkable system of stone tallies as currency (Bennett and Ames, 1994). The
experience we gained from these many instances culminated in a ground-breaking
piece of research in Tanzania that attempted to measure postharvest losses in the
fisheries (Ward and Jeffries, 2000). The results indicated that absolute loss, while
substantial, was less than believed and this was to become a common theme of
later losses work. It also showed the high degree of differentiation in value chains for
perishables and the risks of crowding out actors inherent in the process of technical
upgrading. In the West Coast if India, for example, we found that women fish traders
were excluded from transport on buses with baskets of fish because of complaints
from other customers. An innovative new, light, spun aluminium ‘patel’ gave these
women access to transport and a huge increase in their marketing range. Today
we would be lauding the potential nutritional impacts of such an innovation. On a
recent mission to the region I was delighted to note that the aluminium ‘basket’ is still
commonly used by tens of thousands of fish traders. In Sri Lanka, a chance encounter
with a man on a bicycle with a wooden box of rotting fish tied precariously to his
cycle-rack, led to the introduction of a new fish cool box specifically designed for a
bicycle. This dramatically increases the number of hours a trader could spend seeking
higher value markets (Clucas and Bennett, 1991).
b.Grains
It is probable that the greatest investment by governments and donors in
developing world agriculture has been in the grain sector. The fundamental
importance of this staple crop to food security and, indeed, social cohesion in most
countries has resulted in it being the focus of attention. Outbreaks of inappropriate
policy (i.e. expensive European style grain silos and failed government grain buying
schemes) seemed to have pervaded the recent agrarian history. The outbreak of the
Larger Grain Borer (LGB) in sub-Saharan Africa in the 1980s and 1990s, said to have
been transferred from food aid shipments, led to a burst of interest into research on
the economic impact of mitigation measures. The burst of interest in food aid and
14
Millet, Myrrh, and Manchester United: Markets For development, Lessons from Practice
its misuse following the great famine of the mid 1980’s resulted in much research on
the economically optimum intervention stock (Maxwell, 1986) and experimentation
by countries with bulk storage, much of which was very ill-advised (Coulter, 1994). A
review of government intervention in grain storage in Southern Africa in showed the
damage to livelihoods and enterprise that this had caused (Tyler and Bennett, 1993),
but also revealed the resilience of sound traditional practice. Farmers, it seemed,
were prepared to risk all by only planting High Yielding Varieties promoted by donors,
but in reality were hedging with traditional varieties that had better storage qualities
(a bit like blending home-grown players with bought-in talent in a top football team).
In Namibia in 2005, research commissioned on traditional grain storage practices for
millet and sorghum revealed an extraordinary tradition of long-term storage against
the likelihood of very prolonged drought. Millet in store for more than eight years was
common practice (Hodges, 2005).
c.Fruit
The opening up of global markets to counter-seasonal fruit as a result of cheaper
air travel and greatly reduced tariff barriers has given fantastic opportunities for small
farmers to make good returns. Probably the best example are the Kenyan highlands,
where more than 40,000 of small farmers are now able to educate their children with
money made from selling green beans and cut flowers to Europe (English and Jaffe,
2004). Research on postharvest losses in the Kenyan avocado sector revealed a
dramatic story of how one generation of farmers had been propelled out of poverty
by the combination of hybrid avocado varieties and the safe application of pesticides
(Bennett et al, 2010). The heart-warming story of the farmer able to pay for his
wife’s cataract operation because of avocados formed the central theme of a paper
promoting the social benefits of pesticide.
In the Philippines, postharvest losses in the mango sector were purely economic:
the loss of market access for the delicious Guimaras ‘Carabou’ mango to competitors
in the USA because of a fruit fly outbreak meant that, instead of selling fresh mangos
to the USA, Japan and Korea for premium prices, instead farmers were selling to
local mango drying firms for a fraction of the potential value. Work on the economics
of this difference showed that investment in trapping and regulation of the fruit fly on
the island would be quickly repaid and today Guimaras mangos can, once again, be
found in the best Californian restaurants. This ‘foot in the door’ approach to market
access can be successful – the USA has recently given access to other Philippine
Islands 11 12.
11
See GMA News, (2014), “US to accept fresh PHL mangoes grown outside Guimaras Island – Agri
Dept.” GMA News online, April 29th 2014, http://www.gmanetwork.com/news/story/358860/
economy/agricultureandmining/us-to-accept-fresh-phl-mangoes-grown-outside-guimaras-islandagri-dept
12
This research was supported by the European Union
Professor Ben Bennett
15
d.Livestock
Research into postharvest losses in the livestock sector in developing countries
is largely set in the context of trade and the impact of transboundary disease (Naziri
et al, 2015)13. Much less is known and understood about losses of quality and value,
particularly at the level of small-scale farmers with limited livestock. Research on
small stock value chains reveals important pockets of absolute loss where crises
occur (Bennett, 2007), but tends to under-play the enormous effort that can be
involved for individual livestock keepers to reach optimum value at point of sale
(Bennett, 1998 and Hodges & Bennett, 2009). New research is needed to provide
a viable means of measuring postharvest losses in the meat sectors of developing
countries (Bennett and van Zjipp, 2012).
e. Cassava and yam, Nigeria and Ghana
Recent work on postharvest losses in the root and tuber sector has shown that
the location of the loss in the chain makes a really important difference to the overall
economics of loss (Naziri et al, 2014). In Ghana, for example, where cassava is largely
purchased fresh for home consumption, the absolute economic loss from spoilage
is substantially larger than in Nigeria where widespread processing of cassava
occurs to make gari (Quaye et al, forthcoming). Having got a product to the point of
consumption, then throwing it away, means that all the stored up value from the chain
is then wasted. Looking at similar chains for cassava in Thailand and Vietnam showed
much lower economic losses because the main loss occurs in the farmer’s field (Thao
et al, 2013).
Recently completed research on a series of innovations in the cassava and
yams value chain show the scale of benefits available from innovation in reduced
postharvest losses14. In Ghana and Nigeria, simply improving drying and reducing
storage rots leads to €20 million worth of additional value (and food). Innovative
starch extraction from waste in Thailand gives benefits at a suitably industrial scale of
€173 million a year (Bennett et al, 2015:2). The potential converting highly perishable
products like cassava into high value import replacing foods such as High Quality
Cassava Flour (HQCF) opens exciting possibilities of new market niches, for example
the gluten free sector (Bennett, 2014).
Lessons from this body of work on postharvest losses.
The figures for postharvest losses can very quickly become quite large. In our
paper for the World Bank (2009) we estimated a starting annual figure of US$ 48.12
billion (see Figure 11 on page 16).
13
This research was funded by the UK Department for International Development
14
This work was funded under the European Union Seventh Framework Programme,
see www.fp7-gratitude.eu
16
Figure 11:
Millet, Myrrh, and Manchester United: Markets For development, Lessons from Practice
NRI’s Postharvest Loss Estimate showing annual production and estimated
postharvest losses in Sub-Saharan Africa by value (US$) and volume
(million tonnes)
Source: www.postharvest.nri.org
Generally, physical losses are lower than the research (or people’s beliefs)
suggested. In our paper (Naziri et al, 2014) we see that losses for cassava are
substantial, but lower than we have always believed (see Figures 12 and 13).
This is probably due to value chain adaption to mitigate losses.
Figure 12:
Physical and economic losses in the cassava value chain
– Ghana, Nigeria, Thailand and Vietnam
Source: Naziri et al, (2014)
post-­‐harvest losses, in Thailand their relevance is minimal (less than 5%). Finally in Vietnam the worth of total post-­‐harvest losses is estimated at about US$ 35 million. retail and consumption stage) where it is estimated that about 20% of roots reaching that stage spoil and are thrown away. Physical losses at this stage represent over three quarter In relative terms, the worth of post-­‐harvest losses in Ghana represents about 22% of the of total losses (Figure 4). Other important losses are incurred at the gari and agbelima total potential retail value of cassava products (net of physical losses). In South West processing Nigeria, Vietnam and Thailand this is estimated at 7%, 4% and 2%, respectively (Figure 10). sites. 17
Professor Ben Bennett
Figure 9: Estimated value of post-­‐harvest losses Figure 3: Estimated volume of physical losses by stage of the value chain Figure 10: Estimated value of post-­‐harvest losses as share of potential retail value Figure 13: Physical and economic losses in the cassava value chains of Ghana, South
Figure 4: Relevance of physical losses by different stages of the value chain West Nigeria, Thailand and Vietnam,
and their distribution within key actors
in the value chain
Source: Naziri et al, (2014)
Losses that occur between field and farm tend not to be measured but are
subsumed into the farm-gate price. This is a research opportunity.
One persons’ loss is another persons’ opportunity. Women particularly have
found a niche for some losses so changing the way that they are used could have
unintended consequences (Abdulsalam-Saghir,2015). Recent research has shown that
value of loss is key to its gender utilisation therefore changes in value through upgrading can bring about livelihood degradation.
The definition of what is a loss and/or a 88 waste needs to match the relevant
agricultural economy. Hodges, Busby and Bennett (2010) have shown that
modernisation of agriculture changes the location of losses within the chain. In
developed economies, we have seen losses largely removed from the farming system
in favour of huge amounts of waste between
retailer and consumer (Parry et al, 2015).
Figure 14:
Resurgence in postharvest loss research
– some examples of recent global initiatives
Interest in postharvest losses is returning with new research groups starting, investment
by donors and applications of new methods and technologies to old problems.
Key findings of our work on postharvest losses are that measurement if far more
complicated that is normally thought. Solutions are available, but regulating the
problem almost never works, particularly in countries with high transaction costs.
Turning good postharvest loss information into good policies is rare, but our hope it
that increased agricultural development and new, cheap technologies for information
sharing, will lead to big forward strides in the near term. Our work on cassava has
shown that when losses can be turned into products that are economically valuable,
new enterprises are keen to make the most of the opportunity.
83 18
Millet, Myrrh, and Manchester United: Markets For development, Lessons from Practice
2. QUALITY CONTROL, MANAGEMENT AND FOOD SAFETY
The food economies of developing countries are only beginning to wake up to the
economic costs of quality loss and inadequate food safety. As we illustrated, food
waste has fallen under the radar in the developing world and by donors because, in
effect it does not exist (Hodges, Busby and Bennett, 2010), almost nothing going ‘into
the bin’ as it does in developed economies. In the struggle to provide food of any
kind, it was understandable that the quality of that food took secondary importance.
Feeding dangerous food to the under-nourished or immune compromised is, however,
something that would not be countenanced in our domestic food supply chains
here in developed countries. In the absence of a consumer lobby and legal systems
that favour the consumer (the power of the consumer is untapped in the absence
of choice) the cost of unsafe food has been effectively a producer surplus in most
developing country value chains (Henson and Traill, 2002).
I am going to illustrate the issues of food safety and quality control using the
example of aflatoxins.
Aflatoxins, highly carcinogenic substances, secreted by the fungi (mycotoxins)
called Aspergillus flavus and Aspergillus paraciticus are widely present in some
tropical commodities. The combination of heat and moisture of the tropical
production environment is perfect for them to thrive. NRI was among the institutions
that identified this terrifying substance in the 1960s as government scientists rushed
to tackle the baffling turkey death disease that was devastating turkey farms in the
USA15. Responding to public fear, the European Union introduced strict limits on
its presence in foods, particularly milk, to protect EU consumers. For producers of
produce prone to mycotoxin attack in hot climates this represented the first real
global food scare. Some developing countries completely lost their export markets.
Senegal and Sudan, for example, struggled to meet the new aflatoxin targets
for groundnuts and groundnut cake/meal. In an early example of scientists and
economics working together to address a postharvest problem, NRI undertook a
number of projects in the area.
The key issues for food safety are:
How do we find the problem? In the case of aflatoxin, the toxin is unevenly
spread and so toxic that a very tiny amount can contaminate a massive shipment. A
sampling method that can locate a pocket of mouldy copra meal the size of a tennis
ball in a 20,000 tonne ship full of the stuff means that huge samples are needed to
ensure compliance with international standards (20ppb in the EU). The economics of
sampling start to come into play.
How do we measure it cheaply? Having made a representative sample, the testers
then have to tell whether the toxin is present (or not present). The equipment for
doing this is really expensive. Even with recent advances the costs are prohibitive for
small farmers. Efforts to find proxies for the presence of aflatoxin (e.g., using cheap
moisture meters (Bennett, 1992) and fluorescence (see for example, Carlson et al,
2000) by NRI and others did not prove to be particularly satisfactory.
15
I am indebted to Linda Nicolaides of NRI for showing me the original scientific log-book where this
was noted for the first time.
Professor Ben Bennett
19
What, then, are the incentives to improve practices? The solution to the aflatoxin
problem is fairly simple: if you dry your product quickly to a level of moisture below
which the fungus is active then it will not occur. Simple, but frustratingly expensive.
For copra producers in the Philippines and Indonesia, the cost of constructing
copra dryers over and above using the sun proved too much, and their international
markets were largely lost (Bennett, 1992). Recent work on the value chains for
Bambara Groundnuts in East Africa (Hillocks and Bennett, 2012) shows that this
promising legume is largely excluded from trade because safe drying is simply too
expensive for harvesters who are largely poor rural women. It because clear from an
early time in our work on aflatoxin that, if people were to dry adequately, they would
need a financial incentive for the water, weight and value lost. It is always better to
sell cheaper water than product. Developing incentive structures based on quality
proved very hard. Visual scales used for mould cover of copra at first point of trade in
the Philippines never really worked. Similar efforts with grains in sub-Saharan Africa
either led to total rejections (i.e., a yes or no decision by traders) or were dropped as
soon as either a glut or a shortage occurred. What this research revealed was that
regulation of quality in commodity chains commonly led to rent seeking and, if badly
done, almost always increased the power of the intermediary at the expense of the
primary producer.
The greatest challenge for food
safety is probably at the micro-level.
If consumers cannot see or taste the
danger, then how do they know it is
present? Managing the exclusion of
risk for food is expensive, so producers
look to recover this cost with a
premium price. How do we prevent
‘free-loading’ (i.e., producers of substandard products benefiting from
the higher price and undermining the
market)? In a world where consumers
are unorganised or unable to tell
Figure 15:a simple visual scale of good
the difference between a safe and
and poor grain
hazardous product and regulations
Source: Bruno Tran
simply never result in compliance,
preventing unscrupulous actors from
capturing the value of the safer/better product is very challenging. In a review of the
quality and standards regime of Bangladesh we found that the consumer ‘lobby’ for
the entire country was one person and the government inspectorate for counterfeit
goods consisted of 5 inspectors, none of whom had ever issued a fine (Bennett and
Loewe, 2009)! The wonder is that, in developed economies, ‘free-loading’ is not more
widespread considering what a tiny proportion of the final on-shelf price of goods
is committed to compliance and regulation. Over regulation is often seen as a trade
barrier and source of consumer surplus (Thilmany and Barrett, 1997), I would also
contend that the same could be said of under-regulation. The net result of underinvestment in regulation is a race to the bottom of the quality continuum with nobody
incentivised to provide a safe product. Markets in developing countries typically
become defined by the lowest quality over time without some kind of intervention.
20
Millet, Myrrh, and Manchester United: Markets For development, Lessons from Practice
The key finding from NRI’s work on aflatoxin is that the solution to contamination
lies largely on the farm. Mycotoxins come from the field. Stressed plants are more
easily contaminated. Produce that is dried quickly and stored well is safe. So, to
produce aflatoxin-free, farmers need to do more work and invest in simple improved
drying methods. How they are to be compensated for this additional effort remains
unanswered.
A lot of research on trade and standards, quality measurement and metrology
(SQAM) has shown that countries need a good standards, accreditation and
regulatory system if they are to function competitively in the global economy and
protect consumers (Bennett, 2009 and 2010). However, it is rarely explained which
actors within the value chain are going to pay for this – and it can be quite heavy
(see Figure 16). Traditionally, farmers and producers find themselves subsuming the
additional costs of meeting standards and consumer expectations as supermarkets
pass back their norms to suppliers on a take-it-or-leave-it basis. Where farmers are
price takers, as with almost all commodity value chains in developing countries, all of
these downstream costs are subsumed by the producer.
What are the key lessons? Absence of food safety and quality management has
a high cost, both for consumer and for farmer. In a world where nutrition and food
security are synonymous much more could be done to make the benefits of quality
more universal.
As markets like the EU strive to protect their consumers and ring-fence their food
economies with aggressive standards, the risk is that a two-tier world food structure
will fix the poor into a world of unsafe food.
National
Measurement
System
Government
National
Standards
Body (BSI)
Regulatory
bodies
United Kingdom
Accreditation
Service
UK Patent
Office
Conformity
Assessment
Bodies
Trade
Association
Professional
Bodies
UK Business
Consultants
Informal
Standards
Developers
Customers
Figure 16:the UK national regulatory system showing the many actors
and bodies involved
Source: CQI (2015)
21
Professor Ben Bennett
3. BRINGING ECONOMICS TO BEAR: MATCHING SCIENCE WITH
SOCIAL SCIENCE FOR GREATER DEVELOPMENT IMPACT.
Reviewing research on agricultural economics and markets in developing
economies in the past 30 years it seems that I have bridged two Green Revolutions.
The first was Norman Borlaug’s initial advances in breeding that led to huge increases
in yield through breeding and fertiliser application. For example, wheat yields in some
countries are fivefold higher than the 1950s as a result of his approach to selective
breeding to reduce lodging (see Figure 17).
The next Green Revolution based on
Norman Borlaug: advances in genetic
technologies and
things like data management we are now
starting to see a second productivity
• ‘burst’.
Breeding to is the amazing
A good example
flood-tolerant
rice
which yields more
reduce lodging even when it is submerged for a long
• timeFer3lizer (Setter et al, 1996). Recent work by
the Generation Challenge Programme
that I have evaluated has applied these
methods to the complex traits associated
with drought tolerance, opening up the
possibility of super foods that resist
climate change.
Figure 17:
Developing country wheat yields, 1950 2004
However, despite these wonderful
advances, I find that the disconnect
between natural scientists and social
scientist remains. In particular, the
drive for yield continues to hold the
scientific community in thrall despite the
emergence of so much new value chain
literature in the last decade.
Three examples of well-meant
agricultural research that missed the
marketing ‘point’ and one example of a
market led approach that has failed to
support efforts to increase productivity
on farm.
Figure 18: IRRI flood tolerant rice showing the resilience of the new variety to flooding
Source: Gates Foundation flickr https://www.flickr.com/photos/gatesfoundation/6749043007
22
Millet, Myrrh, and Manchester United: Markets For development, Lessons from Practice
a. Sesame – you can have any colour as long as it is white.
A review of the value chain for sesame in Mozambique and Tanzania revealed
that the key market was Japan (Bennett, 2008, Bennett & Hillocks, 2008). For twenty
years, Tanzania had been breeding varieties of sesame for whiteness because they
were labouring under the illusion that white sesame had a higher value. The reality,
revealed by talking to local and international sesame traders, is that the global
sesame market is differentiated by end use. White sesame is used for ‘confectionary’
purposes, such as putting on burger buns. Other types of sesame are grown for their
oil content or to be ground into food ingredients like Halva. The sesame in Tanzania
and Mozambique was selling to traders who would then on-sell it to Japanese
sesame oil millers. The key to the success for use as sesame oil is oil content of the
seed and ‘boldness’ because it emerged that rounder seeds give a higher oil yield on
crushing. So the breeding aims had been wrong all this time!
In fact, this story has a happy ending. The newly released white varieties had a
high oil content and were bold. Traders, therefore, were able to distinguish the white
new high yielding varieties from the old brown ones and paid a premium price. This,
combined with much higher yields per hectare has meant almost 90% uptake and
hugely higher incomes from sesame production in Southern Tanzania, the country’s
poorest region.
b.GMO Maize – big heads are better than no heads
(unless you are making tortillas of course)
The Generation Challenge Programme, based at the International Maize and
Wheat Improvement Center (CIMMYT)16 has done wonderful work breeding drought
resistance into globally important crops like rice and maize. I have reviewed it twice
now and am convinced that new technologies like marker-assisted breeding are
likely to bring huge gains in food production (Bennett & Hillocks, 2008a, Paramjit et
al, 2014)17.
Early work on identifying drought tolerant high yielding maize varieties in Southern
Mexico, the origin of maize, had developed a number of really promising lines.
However, when they came to release these lines they found that farmers still kept their
traditional, low yielding varieties in some fields. It emerged that the new GMO wonder
varieties were no good for making tortillas, lacking the elasticity necessary for rolling
and generating crisp bread.
c. Goats – you simply can’t sell the brown ones
Namibia is Africa’s largest exporter of live goats (over 100,000 a year). These
goats go to South Africa. When I joined the Ministry of Agriculture, Water and
Forestry in Namibia in 1998 I asked where all these goats were going and I was told
‘to Muslims in Durban’. This, it seems, had been the received wisdom for decades.
Reviewing the commodities that Namibia could export, we decided to initiate a series
of market studies to suggest investment and policy changes that could increase
16
See www.generationcp.org/
17
In fact, I have long been a supporter of the safe uptake of genetic technologies; see for example
Bennett (1999 and 2001).
Professor Ben Bennett
23
demand and value. One of these was on goats. As know body seemed to know where
all the goats were going we got the agreement of a trader to follow his truck 2,500
miles from Mariental in the Namib Dessert to just outside Durban and then track the
goats to their consumers. The result was that we found that in Durban the goats were
being sold to Zulu Priests who then sold them to worshipers with a need to make a
ritual slaughter. The key finding was that Zulu’s believe that a white goat has more
religious power than a goat of any other colour. The size of the goat was unimportant,
so smaller goats are actually better because you can fit a lot more on a truck. Brown
goats are associated with violent crime, and so largely unsaleable. This information
supported a Boer Goat breeding programme and system of delivering vaccination
against pasteralla, a disease casing losses to goats in transit (Bennett, 2007).
What these examples illustrate is the power of fairly straightforward market
research to overcome perceived wisdom and empower research efforts. In all these
cases significant public funds had been expended on well-meaning research and
extension efforts without fully understanding what was driving the markets for these
products.
The lesson we draw from is that multi-disciplinarity and the breaking-down of
academic silos remains key to successful agricultural science development and
uptake.
d.Organising markets – the failure of cooperatives and emergence
of agri-business
Throughout the post-independence era policy makers and donors have sought
ways to address the issue of usurious middlemen and high transactions costs for rural
economies by promoting cooperatives. It has largely failed (Lele & Christiansen, 1989).
Why?
One of the most extreme examples of forced collectivisation in Africa was the
Tanzanian Ujamaa Movement, Julius Nyerere’s experiment in cooperative economics
(Ibhawoh and Dibua, 2003). These systems answer the challenge of high transaction
costs for rural services by moving everybody into giant ‘villages’ and forcing them to
sell everything through community cooperatives. The net result was resource capture
on a mammoth scale by the people running the cooperatives, massive postharvest
losses due to system inefficiency and, to this day, a health distrust of cooperatives
in Tanzania. Despite this bad experience, the cooperative as a means of rationing
inputs and benefits for communities persists. As recently as 2007 (Bennett) the Lindi
Cooperative managed to lose more than a million US dollars18 on sesame trading but
was bankrolled by the Government of Tanzania for political reasons.
I have collaborated a lot with marketing cooperatives in the developing world and
it is a sad indictment of the approach that, even when they are run as businesses,
they always seem to flounder.
In more recent years, I have worked extensively with harvester associations
(in Namibia these are called Producer and Processor Organisations – PPOs). This
approach to collective natural resource management through sustainable harvesting,
processing and marketing of natural products like seeds and tubers is successful
(as we shall see below). However, it opened up a new and unintended issue.
18
Nobody really knows how much – but shocking from a Cooperative that has no assets.
24
Millet, Myrrh, and Manchester United: Markets For development, Lessons from Practice
By supporting PPOs who were paying harvesters a ‘fair’ proportion of the on-sale
price, these projects crowded private sector initiatives. In one dramatic case, a small
scale cosmetic oil processor who had actually won the national business woman
of the year contest and had been sent to New York, found that she was unable to
compete on price with the PPOs being supported by donors and complained bitterly
to the Minister for protection.
This illustrated a conundrum that has still to be resolved and continues to
be a challenge for future development interventions: we want producers to work
collectively, but it is seldom the most competitive approach (Marshall, 2003).
The lesson here is that there are no prescriptive or correct solutions to the
question what is the right institutional model for doing business in developing
economies.
4.MARKETING THE IMPOSSIBLE – SOME THINGS ARE SIMPLY
HARD TO SELL
The role of the marketing economist is often misunderstood. It is a common belief
that what we do is magically link buyers and sellers, and that after that everything else
goes smoothly. That this is not the common outcome is not surprising. What is more
surprising is how persistent this view has been over many years.
a. Some examples of hard to market products
Balut – half grown duck eggs from the Philippines. There is, it emerges when
you look at the comprehensive value chain for ducks, no part of a duck you cannot
eat. Notably, in East Asia, a niche for the partly rotten egg emerged at some point in
antiquity as the ‘100 year old egg’. Duck and chicken feet are considered a delicacy
in Indonesia and the Philippines, sold as crispy barbequed snacks like hot dogs
at a football match – and delightfully marketed as ‘Adidas’ in the central Visayas.
Duck bills are used in duck bill soup and come in two varieties, yellow and orange.
However, the nastiest duck related food is the half grown chick in egg called a balut in
Tagalog and usually in a purple painted egg – though not always! A delicacy in many
places – unsaleable in others.
Amber gris – whale vomit in Sri Lanka. Since pre-history women have been using
Amber gris as a perfume fixative, but its value chain is fascinating because it has
no fixed entry point. The material itself can wash up anywhere in the world with a
coast. With a value of something like USD26,000/kg people are keen to turn it into
cash, but there is nobody obvious to sell it to. As I found when trying to work out
how the Amber gris chain worked in Sri Lanka, one quickly moves from impoverished
fisherman into a world of shady dealers in exotic animal and plant material in a world
where price determination is impossible, even with access to the internet.
Kraal worms – Namibia. Across the world, farmers eat insects. Certain types of
worms, however, are a particular delicacy. Mopane worms in the Kalahari are both
a high protein crunch snack and an increasingly important medicine, so much so
that they are now overharvested in much of their range. Kalahari silk comes from
a work that produces thick, choking ‘nexts’ of thread that in bumper seasons kill
cattle, but which are prized for their yarn now used in scarves that sell in Harrods.
The unbelievable range of different worms and their commercial potential came home
to me when I spent a week unpacking the non-traditional value of ‘veld’ for field
products with farmers in Northern Namibia. They had many different useful works,
Professor Ben Bennett
25
but the most highly prized was the
Krall or cattle bower worm that grown
massively fat and juicy in cattle
manure and can be sliced and fried
like the fat ring on a rump steak.
‘Crap in tomato sauce’ – carp fish
in brine from Rumania. Probably the
hardest marketing challenge I have
had is when presented with a range
of fish products in post-communist
Rumania. Carp, it emerges, is ‘crap’
in much of Eastern Europe. My
term of reference was to develop a
marketing programme for Romanian
Crap (see Figure 19).
Figure 19: An example of tinned Romanian Crap [sic]
Source: https://www.flickr.com/photos/75397038@N00/2650403949
b. Some examples of easy to market products
For every challenging product there have been those that, whilst novel, were
simply ready and waiting to reach their market potential.
Kiskh Sa-eedi – Egypt. Throughout the Middle East milk and wheat are fermented
to make a dried cereal snack called ‘kiskh’. This snack is used for making a nutritious
instant drink or blended into a range of novel dishes as an alternative to rice and
bread. In the Upper Nile region of Egypt a unique version of Kiskh is made, called
Kiskh Sa-eedi. When we unpacked the value chain for this pharaonic food, we
found many unique properties tie it to a location and a way of life thousands of years
old (Bennett et al, 2012). Kiskh Sa-eedi is made from a special type of wheat. It is
fermented using seer milk from an indigenous type of cow in a special clay pot unique
to the area. Crucially, it contains starter cultures that work at very high temperatures.
A marketing plan, developed by the project from market research in Europe,
suggested that gourmands were crying out for this product and that it could be a
starting point for a whole range of “Pharaoh Foods” to come.
Similar market research on a dried and fermented fish product in Benin showed
that, whilst the product was considered repulsive by many European consumers,
re-branded as a condiment, it suddenly worked and could attain astonishingly high
prices ‘per piece’.
The same lateral insight into the market turned millet bread in Senegal from a
unloved, heavy, gritty and hard to eat product, into a product that flew off the shelves
simply be renaming it ‘Power Bread’. Sometimes the magic of marketing is in the
matching of product with unexpected need through the science (or art) of re-branding.
26
Millet, Myrrh, and Manchester United: Markets For development, Lessons from Practice
c. And, some that had potential, but simply did not work
(or have not worked yet).
Hoodia sp. Hoodia, a species of succulent flowering plant indigenous to the
Kalahari desert, has the amazing property of reducing the appetite (Marloth, 1932).
This property was discovered by humans as they hunted and gathered the region eons
ago. It was rediscovered by Joseph Decainse in 1844 (Candolle) and re-found again in
the 1960’s by the Centre for Scientific and Industrial Research (CSIR) in South Africa.
Having isolated the active ingredient, CSIR formed an alliance with a UK pharma startup, Phytopharm PLC. CSIR, it emerged, had ‘discovered’ Hoodia during plant collecting
during the apartheid years when they had been seeking commercial opportunities from
combining plant collecting with traditional knowledge of local people. CSIR developed a
patent on the active ingredient, P57 and, along with Phytopharm, convinced the global
food giant Unilever to invest (Maharaj, 2008). I came into this story when it became
apparent that a commercial success using P57 in Unilever’s premium sliming brand
‘Slimfast’ might be a possibility and cultivation trials outside the species range had
proven disappointing. Much effort was put into developing a regional plan to share the
opportunity between commercial growers and small-scale producers.
Sadly, the opportunity evaporated when it was found that consumers could not
be trusted to self-regulate their Hoodia intake and evidence of toxicity from over-use
started to emerge. Somehow Hoodia offered the panacea of a plant that only grew in
the most hostile environments amongst some of the poorest, with a property of tackling
obesity among some of the richest (Wynberg, 2010). It was not to be.
Bambara groundnut. This little known legume is commonly grown throughout
sub-Saharan Africa. It is used as a highly nutritious food security standby because
it is drought tolerant. Research shows that it is particularly important for women, not
least because, in many societies, there are strong taboos and beliefs that discourage
its production by men (Forsythe, 2015). As a fresh, soya bean like, vegetable, it is
delicious, however, it takes a very long time to cook and consumers complain that it
gives them wind (Bennett, 2010a)! In recent work funded by the McKnight Foundation
we have defined value chains and located exciting new market spaces (Coote, 2014),
but still failed to stimulate production. The release of new, high yielding varieties in East
Africa to seed cooperatives in 2015 should break this negative supply/demand cycle by
ensuring surpluses and marrying these to new market opportunities. I strongly believe in
the future of Bambara.
What’s the plan? Lessons from this list of weird products
For all of these products, the common element of success, or at least of averting
failure, has been the marketing plan and its associated business plan. There is no
substitute for fully understanding the working parts of your business and the way
that your market operates. Simple as it may seem, the application of basic business
economics, combined with understanding the value chain and, crucially, defining the
qualities of your market (Bennett, 2002), remain the most fundamental weapons in the
war for a sustainable and profitable business. To this day, very few agro-businessmen or
cooperative managers in the developing world have business or marketing plans. At the
level of individual harvesters or farmers there is almost no formal understanding of how
a farming business operates. Persistently high level of illiteracy and innumeracy across
the developing world, especially among women, continues to condemn millions of rural
businesses to fundamental inefficiency. Professor Ben Bennett
27
5.IS INTERNATIONAL MARKET ACCESS THE SOLUTION TO
DRIVING DEMAND IN DEVELOPING COUNTRIES: LESSONS
FROM TRADE NEGOTIATION?
The past 30 years has seen a revolution in global trade post the Uruguay Round
of trade negotiations under the auspices of the World Trade Organisation (WTO). A
fairly substantial element of my work has been associated with helping developing
countries get the most out these negotiations and then encouraging them to use the
trade rules to their advantage. I want to illustrate this point with four examples of trade
interventions with disproportionately large impacts.
a. Infant industries – why not?
In the 1990s and early 2000s I supported the countries of Southern Africa to
re-negotiate the Southern African Customs Union, the oldest Customs Union in the
world (SACU, 2002). Originally an instrument of apartheid, the Customs Union had
become dated and irrelevant in a modern trading context. One clause, promoted
heavily by the Government of South Africa, got my attention. This was the infant
industry protection clause19. Originally, this clause was designed to allow government
to protect new industries from outside competition for a period of years by increasing
the tariff on imports of that industries produce. Nobody member of SACU had
ever invoked it, so we decided to use this clause to protect a new pasta factory
and a broiler plant in Namibia for eight years while they paid off their loans to the
International Finance Corporation (IFC). The South African Government was horrified
and complained vociferously, even citing the existence of another pasta plant in
Namibia to prove that the industry was not ‘infant’. This plant, it emerged, had been
towed to Northern Namibia by the South African Army to feed to occupying troops.
When this fact was shared in the negotiations by Namibia’s chief negotiator, the South
African Government dropped their objections!
What this showed to the countries of Southern Africa was that trade rules need to
be properly understood and that often, they can be used as policy leverage.
b. Selective protection – government intervention can be benign
A second example of the positive use of trade rules to promote the emergence of
domestic industries is the application of selective import protection to the Namibian
domestic horticulture sector. In recent years, South African supermarket chains have
become ubiquitous in major African cities. In the front line states, these companies
had got into the habit of importing 100% of their fresh vegetables from South Africa
and procuring nothing locally.
As part of a horticulture development plan in Namibia, we decided to aggressively
pursue horticultural market share for Namibian farmers. Initial market and production
research showed that Namibia could be self-sufficient in certain crops for particular
periods of the year. Onions, for example, were being exported from Northern Namibia
3,500km to Cape Town and 2,500 back up to Windhoek! Secondly, when we tested
imported fruit and vegetables from South Africa we found that a) they were dumping
substandard produce – for example tiny apples; and, b) much of the produce was
unsafe to eat – huge Escherichia coli loads were found.
19
Article 26.
28
Millet, Myrrh, and Manchester United: Markets For development, Lessons from Practice
Putting this research together with a systematic plan for investment in irrigation
gave us some targets for local production. Using the trade rules available, we told
the South African importers that they could only import from South Africa when they
could prove that the harvest from Namibia was fully take up. In 2000, Namibia met
2% of its annual horticulture needs from domestic production. Fifteen years later in
2015, Namibia now meets 25% and this continues to rise year on year.
c. Weaponising food aid – the Namibian intervention in the debate
Many African countries find themselves food deficient during periods of drought.
Crops fail, farmers eat their seeds and consume their remaining livestock and are then
destitute or dependent on relatives. Working in Namibia I became heavily engaged in
this debate from the perspective of the recipient.
Food aid has its own category in trade law20. In the post World War II era it has
become a convenient opportunity for disposing of unwanted intervention stocks
in Europe and the Americas. In 2002 it became the centre of a huge and heated
trade debate as America offered free maize to countries in Africa at the height of
the ‘Frankenstein Food’ Genetically Modified Organism (GMO) debate. US State
Department Officials and even the US President implored Africans to accept the free
food and to accept GMO technology. Whilst I am a supporter of new plant breeding
technologies, I was amazed how aggressively US Government officials took up the
fight for market access for GMOs on behalf of the massive US seed corporations.
The countries of Southern Africa, found themselves as the battleground between
competing US and European agricultural trade interests.
The Government of Zambia decided to refuse the US Food Aid and as a result
was pilloried in the international press for ‘starving its people’ (Carroll, 2002). In
Namibia we decided to take a different stance. Namibia accepted the Food Aid
offered under the Agricultural Act of 1949, Section 416(b), had the $2million worth of
grain shipped to South Africa, sold it on the local market, where it made little different
to domestic grain prices in such a large grain economy, and put the money into
two trust funds: one for anti-retroviral drugs and the other to start a donkey training
programme to mechanise agriculture. The first saved thousands of lives. The second
started a process of development that has led to the widespread adoption of donkey
power for ploughing and weeding in the sandy soils of Northern Namibia.
The second element of action Namibia took was to try and change the definition
of Food Aid in the WTO. This was a daunting prospect. Namibia had never even
spoken in a WTO debate. We argued in Geneva that Food Aid should only be offered
in cash so that it could be used to buy grain locally to stimulate demand, unless the
country specified otherwise. This stopped food aid dumping by in-kind donations – a
small but significant change to trade law that was adopted in the Doha Round
(WTO, 2001).
Lessons from trade negotiation?
The really important lesson from my practice with negotiating agricultural trade
agreements is that the process can favour the weakest countries. The system is
designed so that each country has only one vote, so the smallest member state has
equal weight to the largest. This power asymmetry is useful, but is not well used.
20
World Trade Organization (1994), Agreement on Agriculture, Articles 9 & 10.
Professor Ben Bennett
29
The second key take-home is that the text of trade agreements often contains the
tools to deviate from the norm: you can, if you are less developed, claim a derogation
in most circumstances. Most countries simply do not realise this and rarely dig deep
enough into the text of the agreements to find the spaces for manoeuvre.
6.NATURAL PRODUCT VALUE CHAINS, EMBEDDED VALUE
AND VALUE CHAIN GOVERNANCE – MILLET, MYRRH AND
INNOVATION SYSTEMS FOR MARKET DEVELOPMENT
“I wanted to build right from the bottom. That was in order to create fluency and a
continuity of supply to the first team.”
Sir Alex Ferguson on the player ‘pipeline’ at Old Trafford (Elberse, 2013)
A lot of my work on developing country markets has been associated with
products that are harvested in the wild, not least fisheries. Scoping markets for
unvalued opportunities has been a common theme and has resulted many exciting
new value chains emerging. For example, in the Philippines we developed markets
for processed indigenous fruit, handicrafts from forest products and novel coconut
by-products. More recently, in Namibia and Southern Africa, my novel product
value chain work has concentrated on wild harvested natural products. In countries
with limited resources, huge transaction costs due to distance from market and
low rainfall, like Namibia, agricultural marketing based on comparative advantage
of traditional commodities simply will not work. We had to look for new and unique
products with value and for products with unique qualities embedded in them that
consumers were prepared to pay more for. A number of core strategies emerged
as a result of widespread stakeholder consultation and the development of national
innovation platforms (Hommann-Kee Tui, 2013). I will focus on two here to illustrate
this: the strategy to grow demand for traditional foods, which focussed on pearl millet;
and, the Namibian effort to commercially develop its indigenous plant resources.
a. Feed the beat – falling back in love with millet
Pearl millet (Pennisetum glaucum) grows on 45 million hectares globally and is
particularly important in arid regions of Africa and Asia. Its ability to grow quickly on
poor soils with little moisture makes it a life-saver for millions. It is also nutritious, with
9-13% protein and a higher energy content than wheat21. People grow it because it
will give some sort of crop under almost all rain and pest conditions, because it is
very resistant to storage pests and so can be kept for a very long time (see above).
In Namibia, it is the stable crop of the majority of the population, and is particularly
important for the approximately 30% of subsistence farmers who have no livestock
and therefore no recourse when crops fail.
Research, funded by the European Union, into the grain sector in Namibia
revealed a number of important changes in the post-independence period. Firstly,
the people had switched to maize production and consumption, often stimulated by
subsidised seed and rural electrification making small-scale milling of maize more
available. Secondly, the millet sector had been left behind. It was not included in
21
See http://www.cgiar.org/our-research/crop-factsheets/millets/
30
Millet, Myrrh, and Manchester United: Markets For development, Lessons from Practice
government seed improvement efforts. Neither was it part of any government tender
preference, and so not on the menus of any institutions – even prisons. Market
research conducted with rural and urban consumers (NASSP, 2003) revealed that
something more structural was underway; a decline in consumer demand for millet
and its products, particularly among the young.
Several important initiatives emerged from this strategic research that has
bolstered demand for millet in Namibia. The Mahangu and Sorghum Task Team
worked on ensuring availability and distribution of improved millet seeds. Research
on millet storage had shown that farmers were using fewer traditional basket stores,
but had no alternatives to these stores so were being forced to sell during glut
periods. A key break on productivity, it was found, was access to animal traction, so
a programme of donkey training was initiated. Donkeys, it emerged, were ideal for
weeding and field preparation in Namibia’s sandy soils. More strategically, we realised
that millet was simply becoming associated with a non-fashionable, traditional, way
of life. An annual millet fair was organised associated with a national millet day. A
National Best Millet Farmer prize has been awarded (most to women) for the past
10 years (see Figure 20). Working with the Namibian grain milling industry, a number
of consumer products were developed based on millet, including flours and drinks.
Caterers supplying government tenders were given a significant preference is they
guaranteed to use millet in their ‘plates’ and this gave a big impetus to demand.
To bring millet into the commercial realm we needed standards so that contracts
Figure 20: Overall National Grand Mahangu Champion for 2014, Pinehas Nambani
Source: Informanté, 11th September 2014
could be awarded. This resulted in the promulgation of the Namibian Millet Standard
(Hoffmann, 2005). To overcome the challenges of market discovery, we developed
a Millet Marketing Information Unit in Northern Namibia that collected information
about pockets of supply and linked buyers and sellers. All of this was coordinated
by the Millet and Sorghum Task Team, a stakeholder platform consisting of farmers,
government officials, non-government bodies, researchers and commercial users.
Professor Ben Bennett
31
Finally, and probably most radical, we hired an advertising company to make millet
‘cool’ for the young consumer. The “Feed the Beat” Campaign was launched with a
jingle, a rap and a sitcom on radio where the cool, millet eating boy wins the heart of
the girl.
Figure 21: promotional material for pearl millet
Source: Ben Bennett
b. Indigenous fruit – how Namibia became a world leader in developing
natural products
Local people are well aware of the qualities and properties of plants. In Namibia,
Harpagophytum sp., or Devil’s Claw has been wild harvested for its side-tubers for
over 100 years because early German settlers found that local people used its active
ingredients as a remedy for arthritis and rheumatism (Von Koenen, 2001). The fruit of
the Marula tree (Sclerocarya birrea) is a source of a beverage and as a cosmetic oil
can be extracted from the kernel meal. Similarly, the intrinsically sticky qualities of the
Ximenia fruit and its kernel oil have been used to beautify hair for as long an anyone
can remember, and the ground paste made from Commiphora wildii mixed with ochre
to make a perfume paste typical of the Himba people and much enjoyed by young
Himba men. No surprise then that Devil’s Claw tablets can be found in pharmacies
around the world, marula oil is one of the Body Shops most successful community
produced ingredients, Ximenia is now a face cream for L’oreal and Myrrh oil from
Commiphora is used is some of the world’s most exclusive bespoke perfumes22. The
steps in getting from open access wild harvested plant with interesting properties to
sustainably harvested high quality commercial ingredient that benefits local people,
however, are many and complex.
22
Marula - http://www.thebodyshop.com/values/ingredient_marula.aspx
Ximenia – Vermaak et al, 2011.
Commiphora wildii - http://frazer.quicksites.co.za/shop/namibia/
32
Millet, Myrrh, and Manchester United: Markets For development, Lessons from Practice
Figure 22:Examples of Namibian Indigenous Natural Product (INP) raw materials,
Devil’s Claw, Ximenia, Marula and Mopane.
Source and photo credit:
Drying Devil’s Claw tubers, Julian Fennessey; Ximenia kernels, Michel Mallet;
pressing Marula for juice, CRIAA SA-DC; and, Mopane seed oil , Dave Cole.
33
Professor Ben Bennett
Figure 23:
the Namibian Indigenous Natural Product pipeline
Source: NRI (2012) p37.
Product
Raw
material
Count
ry(s)
Supply chain fully
functional,
supply capacity
properly
understood
Gowe
Sorghum
Benin
Local supply
chain
understood
Competitive
ness of reengineered
product not
clear
Done
Known
Well understood in
Africa. Partly in EU
Partially
understood
Yes – reengineered product
Yes
Not yet
No
Maize
Production
process
competitive,
cost of
production
properly
understood
Product fully
characterised
with
specification
Regulatory
compliance
complete
Unique Selling
Propositions (USPs)
properly understood
and supported by
technical information
and consumer
research
Market potential
understood (size,
location, value, norms,
actors)
Consumer products
developed,
formulations/
specifications
established
IP analysis and
freedom to operate
established.
Customers/processors/
traders ready to
commit to making and
marketing final product
Market and
Business plan
possible
Akpan
Maize
Benin
Local supply
chain
understood
Competitive
ness of reengineered
product not
clear
Done
Known
Well understood in
Africa. Partly in EU
Partially
understood
Partially – reengineered product
not particularly
clear
Yes – though
functional IP still
needs protection
Not yet
No
Lanhoui
n
Fish and
salt
Benin
Local supply
chain
understood
Competitive
ness of reengineered
product not
clear
Done
Known
Well understood in
Africa and EU
Partially
understood – more
work needed
Yes – more work
needed for EU
market
Yes
Not yet
No Baobab
Seed
pulp and
nectar
Seneg
al
Local supply
chain
understood
Reengineered
product vs
existing not
clear
Done
Known
Well understood in
Africa and EU
Well understood in
Africa and EU
Yes – but not all in
AFTER
Yes
Yes
Possible
Hibiscus
Calyx
based
jam and
beverag
e
Seneg
al
Local supply
chain
understood
Reengineered
product vs
existing not
clear
Done
known
Understood – but
re-engineered
needs more work
Well understood in
Africa and EU
Yes
Yes – but
protection may be
needed for reengineered
Not yet
Possible
Kong
Catfish
and salt
Seneg
al
Local supply
chain
understood
Reengineered
product
competitive
for diaspora
Done
Known
Understood
Understood in
France
Yes
Yes
Yes
Yes
Ziziphus
(Jaabi)
Seed
pulp
Came
roon
Local supply
chain
understood
Not
particularly
clear
Done
Known
Partially
understood
Understood in
Cameroon
Yes – in Cameroon
Partially – some
proprietary IP on
functional
properties
Not yet
Not yet
Kenkey
Maize
Ghan
a
Local supply
chain
understood
Reengineered
product vs
existing not
clear
Done
Known
Partially
understood
Understood in
Ghana
Yes – in Ghana
Yes
Not yet
No
Kiskh
Sa’eedi
Milk
Egypt
Local supply
chain
understood
Reengineered
product vs
existing not
clear
Done
Known
Partially
understood
Partially
understood
Yes – in Egypt
Yes – but not fully
protected
Not yet
No
Mada
gasca
r
Local supply
chain
understood
Reengineered
product vs
existing not
clear
Done
Known
Partially
understood
Partially
understood
Yes – in
Madagascar
Yes – but not fully
protected
Not yet
No
Wheat
Salt
Kitoza
Red
meat
Salt
Figure 24:
A product development ‘dashboard’ example
Source: Bennett and Diouf (2014)
34
Millet, Myrrh, and Manchester United: Markets For development, Lessons from Practice
As a way to manage this complexity we developed an approach and a tool. The
approach was a pipeline of products (du Plessis, 2003) and the tool was the Natural
Products Development Dashboard23 (Bennett, 2010).
This approach and tool allowed limited investments from public and private
sources to be focussed through the means of a national innovation platform
(the Namibian Indigenous Plants Task Team). Markets for novel products are
unpredictable. Market access is far from assured and demand can swing from
overwhelming to a product just being dropped by a buyer. Many technical problems
have to be overcome. For this reason, we needed a way to switch resources from one
pipeline of activities with one promising natural product to another when that line got
stuck. This was the producers can manage the risks and are better assured of a more
regular income.
The natural products ‘dashboard’ allowed us to manage the complexity of
safely and sustainably moving from limited wild harvesting to a business based on
widespread wild harvesting. The elements, developed from practice and experience
over the past 20+ years in Namibia include:
• Supply capacity fully understood and supply chain functional: do we know how
much of the natural product is available sustainably and can it be extracted at a
reasonable price?
• Costs of production known and competitive with alternatives: do we know how
much it will cost to bring the natural product to the point of first sale and is this
cheaper than its competing products?
• Product fully characterised. Are we completely clear what the product is and what
it does?
• Compliance with regulatory environment assured. Will the product be allowable in
trade (not all are)?
• Technical information fully supports unique selling propositions. If we have a
special property, do we have the scientific evidence that supports it?
• Market potential understood and competitors assessed. Is there sufficient demand
to warrant an investment in the natural product supply chain development?
• Freedom to operate established. Does somebody else own any of the intellectual
property?
• Customer commitment to the product – contract and business plan. Is the buyer of
the natural product demonstrably committed to developing its value chain?
The results have been impressive with 10,000 harvesters and their households
lives improved over five years, 67 Producer and Processor Organisations developed
and four business clusters rejuvenated or opened up based around different
indigenous species (Figure 25). The benefits have been particularly apparent for
women (Figure 26) and in isolated areas of the country (Figures 27).
23
With due recognition to the original concept developed by Pierre du Plessis
and improved by Cyril Lombard.
35
Professor Ben Bennett
Figure 25:
Sales Growth for Indigenous Natural Products in Namibia
Source: NRI (2014b)
Figure 26:
Women and engagement in Namibian natural product production and trade
2009 to 2014
Source: NRI (2014b)
What lessons can be drawn from developing natural product value chains, and
particularly from the Namibian experience over the past 20 years?
The model developed in Namibia, with its strong stakeholder element (often called
an Innovation Platform see above) through the Indigenous Natural Products Task
Team, combined with the pipe-line approach, meant that the limited funds available
could be used with maximum efficiency while minimising the risks. As markets
opened and changes, and as technical challenges emerged, these problems could
be resolved and resources switched to where they were most needed. Flexibility and
a step-wise, incremental approach were key to success. Despite numerous attempts
to diversify markets over many years, the role of lead market actors as champions
for new product development is still essential. For some products, like Marula, a
long term commitment by an important and credible market actor was essential. The
challenge, of course, is how to repay that loyalty and vision fairly. Some lead actors,
36
Millet, Myrrh, and Manchester United: Markets For development, Lessons from Practice
Figures 27:Namibian indigenous natural product producer organisations geographical distribution
Source: NRI, (2013)
such as the Body Shop, have invested without expectation of payback, but have
been rewarded with success, albeit after a very long-term investment. The length
of time between identifying a product with potential and having a sustainable and
secure market is much longer than a normal development project - think 20 years.
Building a successful supply chain of a new wild harvested product, developing
local processing capacity in a country without an industrial base and persuading end
uses to accept a new ingredient all take time. We found in Namibia that limiting the
business plan to one market outlet was also unwise. In particular, with such a small
domestic population, the local market was always going to be a challenge. One of the
surprising successes of recent times was a challenge fund to promote local industrial
inclusion of natural products. This showed that you should not ignore local markets,
Professor Ben Bennett
37
Figure 28: Leadership of a new Ximenia harvesting business, Epembe, Namibia, 2014
Source: Julian Fennesey
particularly as these economies are changing so quickly and hence new niche market
local opportunities will emerge. We have also learned through the Namibian example
that, whilst novelty is exciting and a good back-story to help a product sell, it still
needs to meet international standards and codes of practice for that product group.
Investment in quality is hard when you already have to invest in everything else at the
same time. It is important to remember that markets are dynamic and tastes change,
so prices cannot remain static. This in turn means that, to maintain market share
for INPs productivity has to constantly improve alongside quality, and this requires
investment in technical innovation.
The final lesson I think we have struggled to learn is that a model for efficient
and sustainable harvesting based on harvester ownership is difficult to achieve,
takes time and requires the dedication and commitment of support agents like
local non-government organisation over many years. All experience supports the
notion that small businesses owned and run by individual entrepreneurs tend
to do better than those owned collectively. However, where land and biological
resources are community owned, a new business ownership norm is needed to
prevent fundamentally changing the economic relationship between secure resource
management and local livelihood opportunity.
38
Millet, Myrrh, and Manchester United: Markets For development, Lessons from Practice
7. ISSUES FOR THE FUTURE OF AGRICULTURE AND TRADE
Having explored a number of issues around the important of market for
agricultural development, we now need to ask ourselves what does the future hold
for agricultural marketing and trade? My thesis has been that this work falls at the
fulcrum between future productivity and consumption. If we assume that science
will give us the tools to generate more yield on less land with less labour and lower
inputs, we will need to match this with similar progress in marketing systems to meet
the challenges of feeding 9 billion mouths by 2050. Great efficiency gains will be
needed in global value chains. Where will these advances come from and what will be
the big challenges to be addressed? The following are my thoughts as to what these
challenges are:
The full engagement of women in rural economies. Even Conway (2014) seems to
have left out the role that women can play in rural economies from his list of solutions
to the conundrum of feeding the world’s future population. Reducing the productive
possibilities of 50% of the agricultural population by limiting their role and power
in the business of economics makes little sense. Policies that release the latent
economic value of people equally will bring a huge windfall, particularly in countries
where hitherto this has been limited by belief, culture, policy and habit.
Breeding new crops for markets will become the norm. New genetic technology
and the power to use vast amounts of genetic data will release the inherent potential
in genetic diversity. Combined with a new market driven approach to trait selection
this will substantially boost agricultural production and efficiency.
Agricultural policies need to balance competition with social and environmental
protection. The risk of rent capture and resource inefficiency means that there is still
a role for governance and regulation. More nuanced and smarter policies that balance
incentive and competition with selective market management, and behavioural
change, can encourage new value chains to emerge and release hitherto unattainable
efficiencies.
Transaction costs remain far too high in developing economies. Connectedness,
market transparency and new computer technologies point to a future world where
every farmer knows the price and where farmer management and business decisions
are made rationally, based on full information and in real time.
Zero postharvest losses are probably impossible, but there is huge scope for quick
gains in terms reduced physical and economic losses using smart financial tools,
existing technologies and new techniques that are cheap at scale.
Quality management and market regulation will be revolutionised by new
technologies. Traceability will become normal for all agricultural commodities,
locating produce in real time and informing the owner about quality. Smart labelling,
cheap testing, new sensors can all contribute to reduced losses, greater value chain
efficiency and even safer food. Market regulation and legal systems that favours the
consumer will become even more critical.
Less globalisation and more local markets: the rise of the urban middle class
as a source of demand. We have seen a shift in loci of demand for agricultural
commodities in recent times with emergence of new global market players like China
and India. As domestic markets grow, regional economic giants like Nigeria and
Kenya, represent the new frontiers of demand. Countries need to stop exporting
39
Professor Ben Bennett
agricultural raw materials and develop domestic food manufacturing. The emergence
of a new urban middle class in most countries and the value chains needed to supply
more and better foods will drive more local investment in the food sectors of emerging
economies.
A new type of poverty will emerge: food safety poverty caused by the high cost
of maintaining food safety. We need to guard against creating a two-tier global food
safety system.
Finally, we will have to embrace the even greater complexity of future value
chains. New types of local and transnational value chains will emerge with new forms
of value chain governance, financial management models and technical efficiencies.
8.AND WHAT OF MANCHESTER UNITED? WHAT LESSONS ARE
THERE FOR AGRICULTURAL MARKET DEVELOPMENT AND
PRACTITIONERS IN DEVELOPING COUNTRIES?
“Football, bloody hell”
Alex Ferguson,
after United’s dramatic Champions League victory over Bayern Munich in 1999
I have been teaching value chain analysis, market research and business
assessment methods to economists and scientists in developing countries for some
years. For some, the theory is hard to grasp: it falls outside their normal day-to-day
practice, requires an approach to research that is less prescriptive than that taught
to most scientists, and, in any case, is usually learned in a second language. One
method I have used with some success has been to draw an analogy between a
successful agricultural enterprise, its products and the key tools of business analysis
using Manchester United as a topical example. Hence the Manchester United
Figure 29: Manchester United 2011/12 season SWOT
Source: Ben Bennett
40
Millet, Myrrh, and Manchester United: Markets For development, Lessons from Practice
Strength Weakness Opportunity and Threat (SWOT) analysis (see Figure 29).
Ferguson himself has, with a little help from Harvard Business School, identified
eight leadership lessons encompassing issues like building a new team, setting
standards, keeping control, giving feedback, practice good habits, observe closely,
and keep adapting (Elbarse, 2013). A few more issues I have used in explaining how
markets work to economists in developing countries include using brands, picking
the right players, seeking star quality, building momentum from one victory to the next
and hiring the best leaders.
The importance of a brand is hugely underestimated in agricultural marketing. Very
few small scale producers bother to give their products an identity, and when they do,
it tends to be hard to grasp and vague. Good brands have clarity and strong, positive,
emotional connection with the consumer
(see Figure 30).
Star players. I was once wisely told
that you can tell a good leader by the
quality of the people he or she hires.
The mixture of home developed and
bought-in talent, and the ruthless culling
of the weak and lazy are nowhere better
illustrated by the successive construction
and reconstruction of teams under the
Ferguson regime.
Style, panache, the spark of
brilliance, and, a little luck. We all need
a bit of Cantona, Giggs and Beckham to
make us rise above the ordinary. Many
of my successes in agricultural marketing Figure 30:the role of a brand in market
development
have been as a result of serendipity
Source: www.manutd.com
and happenstance. It should not be
underestimated.
Turning investment into results. There
is no point in building the right team and a
strong brand if it does not win something
(see Table 1). The lesson is, build from small successes to big one.
Table 1: Manchester United - evidence of success
Title
Number
won
Rank
Football league/Premier League
(since 1888)
20
1
FA cup (since 1872)
11
1 (joint with Arsenal)
Source: Wikipedia – correct as of 2013/14 season.
Professor Ben Bennett
41
Finally, leadership and vision – every
good team needs a ruthless Scotsman in
charge - Sir Alex Ferguson factor.
Barros (2006) has shown statistically
that sporting success, financial
management, and size of fan base
are the keys to maximum economic
efficiency in the modern era of the
Premier League. They also conclude that
Management to some extent explains
behaviour.
Whatever the empirical evidence, it
is the passion for the brand that is all
pervasive and which still sees aspiration
match needs in markets big and small.
It is this magical link in economics that
drives growth and may, eventually, give
livelihoods and delight to a wealthier,
happier world (unless you support
Manchester City of course) (Figure 31).
Figure 31:
Rice mill Man U fan, Bida,
Nigeria, 2015
Source: Ben Bennett
ACKNOWLEDGEMENTS
“I remember the first time I saw him. He was 13 and just floated over the ground like a
cocker spaniel chasing a piece of paper in the wind”
Sir Alex Ferguson on Ryan Giggs
Notwithstanding the years of pleasure I have had from being a Manchester United
supporter…..
There are too many people to thanks and to whom I am indebted. I would like
to recognise the support and friendship of colleagues, here at NRI and the many
counterparts and collaborators around the world. Some important ones have passed,
including my counterpart in the Philippines, Pepa Dumon, and various co-authors. I
have been very lucky with the guidance and support I have received from a long list
of bosses, starting at DFID with Mark Lowcock, and here at NRI and overseas with
Rodney Must, Martin Fowler, Jonathan Coulter, John Orchard and Andrew Westby.
I know that my parents would have been very proud of their son and I grateful to
my brothers and their partners and my parents in law, who have all provided me
with support during my career. Finally, the job of being a Marketing Economist in
developing countries is enjoyable and rewarding but requires sacrifices and my family
have accepted my long absences from home and have given me support without
question. To Shiona, Stella, Lachlan and Rhiannon I offer my love and heartfelt thanks.
42
Millet, Myrrh, and Manchester United: Markets For development, Lessons from Practice
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