This is part one of a three-part post on agriculture economic development.
After the better part of a year working for Negros Women for Tomorrow Foundation (NWTF), a microfinance institution in the Philippines, I decided to head west again – specifically, to West Africa. In late 2010, I moved to Ghana to work with TechnoServe, a non-profit specializing in market-driven solutions to economic development. This is really just a fancy way of saying that TechnoServe recognizes the importance of competitive markets in creating jobs for people living on less than a few dollars a day.
My mandate was a bit nebulous at first (and for the bulk of my time in Ghana). I was seconded to another organization – ACDI/VOCA – on a $30 million USAID project called ADVANCE (an acronym standing for Enhancing the Agriculture Chain in Ghana, or something like that). The project was a bit dysfunctional, having undergone substantial personnel changes when I arrived (the Chief of Party and Technical Advisor – the equivalent of the CEO and COO – either quit or were fired after being significantly at odds with one another over the direction of the project.
The methodology of the project was something called “Market Facilitation,” a relatively new and trendy approach to catalyzing positive change in the agriculture sector. For a much more detailed overview of what it is, my good friend Mark Brown with Engineers Without Borders Canada has a great overview at his blog, Kulemela. But I will give the quick and dirty.
In the past, most projects were unsuccessful because they were both short-sighted and unsustainable. They were short-sighted because the interventions focused on supply rather than demand. In other words, development agencies would provide fertilizer and tractors and other implements to improve yields for smallholder farmers. Yet, without simultaneously improving the infrastructure and building the market for the higher product volume, increased crop yields actually had the adverse affect of driving down prices, as there was nowhere to sell the surplus except for the same markets as before, which now had greater leverage in negotiation. And it was unsustainable because, once the funding for the project was complete, the gravy train would grind to a halt, and the tractors would sit in a garage somewhere – if they were lucky – broken-down and rusting away into oblivion. And a butterfly flaps its wings.
The logical response to these failures was to focus not on the production side, but rather the markets. Work with the buyers to develop their capacity to handle greater volumes, and they, in turn, will invest in suppliers to handle increased demand. Assisting a maize aggregator (a term for the middleman buying and selling the product) to get a loan in order to purchase an tractor-mounted maize sheller (a device that removes the kernels from ears of corn) which not only create an alternative source of income for them, allowing them to buy more maize from more farmers, but it will also save time by eliminating manual shelling. This is an example of a win-win situation that benefits the entire market in a sustainable way.
Market facilitation, specifically, tries to catalyze these connections. For example, on one side, a Swedish jatropha company in the northern part of Ghana has 40 tractors that it uses only during the planting and harvesting season, leaving them idle for the remainder of the year. On the other, a group of aggregators buying maize and soyabeans from more than 1,000 farmers needs tractors to prepare the lands for planting. Connecting these two entities in a mutually-beneficial business relationship creates a sustainable partnership, where the jatropha company earns additional income from maximizing utilization of its equipment, while the aggregators solve their tractor problem. In another example, a large juice manufacturer needs a reliable source of pineapples, mangoes, and citrus to keep its factory running at full capacity, while groups of small- to medium-sized farmers have no market for their products, other than the local “market women” – the aggregators who purchase for domestic sale. By connecting the two groups, the juice manufacturer can establish lasting partnerships, supplying farmers with inputs in exchange for a guarantee of the final product at a fixed price.
It is an elegant idea that works well in theory, but less so in practice. For one thing, relationships between buyers and sellers in these agriculture markets are notoriously plagued by years of mistrust. On this blog, I put up a guest post from Mark of EWB detailing this problem. The juice manufacturer says it needs twenty tons of pineapples, and then, when it comes time to purchase, scales back due to capital constraints and only buys ten tons, leaving the farmers with the remainder rotting on their farms. And, because of poor management, the manufacturer fails to pay the farmers for three months, leaving the farmers in the lurch. On the other side of the coin, the manufacturer provides fertilizer, seeds, and equipment to the farmers on credit in exchange for a guarantee of their products. But, come harvest time, the farmers find a better deal elsewhere and sell their crops to someone else, leaving the manufacturer out thousands of dollars and without produce for its factories. These are the realities of dealing in these markets.
In the next post, I will explain my thoughts on market facilitation.
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The big news in West Africa (and the rest of the world) is the election crisis in Cote D’Ivoire, the next-door neighbor of Ghana. I have talked to a lot of people about what’s happening and have tried to learn as much as I can about the issue. Basically, Cote D’Ivoire recently held a presidential election. The incumbent, Laurent Gbagbo, is a former history professor who took became president in 2000 in a contested election. Despite losing the most recent election to Alassaine Ouattara, a technocrat and economist from the predominantly Muslim north, Gbagbo is refusing to step down. Both men have been sworn in as president, though Ouattara is holding court in a hotel surrounded by 700 UN peacekeepers. Meanwhile, the entire world has condemned Gbagbo and called for him to step down. Gbagbo, the consummate “
The big news in this part of the world (West Africa) is the recent democratic election in Cote D’Ivoire, which saw the anointing of not one but two presidents. The incumbent president, who has led the country for 10 years and is constitutionally barred from seeking a third term in office, is refusing to step down after a decisive 54-46 loss to Alassane Ouattara, an economist and technocrat who also happens to be both a Muslim and a leader of the rebel groups in the north. The international community has unanimously rallied behind Ouattara and called for Gbagbo to step aside. The World Bank has suspended aid to the country, and Ouattara has called for the Central Bank to stop releasing money as a way to “starve the beast,” and turn hungry soldiers against the incumbent president. Unfortunately, with 173 people killed so far in the post-election violence, analysts are 
Ghana is located on the West Coast of Africa, referred to as the Gold Coast due to its abundance of the precious metal. It is the second-largest producer of cocoa, with about 15% of the world market. Cocoa is dominated by Ghana’s next-door neighbor, Cote D’Ivoire, which has spent the last decade in disarray after a civil war and the ensuing post-war violence. Despite the fact that agriculture accounts for about 40% of GDP and more than half the workforce, Cocoa is the only commercial crop of economic significance. While other industrial crops, including cotton, rubber, and tobacco are grown, they are small potatoes compared to cocoa and other exports. (The major exports are timber, gold, diamond, bauxite, and manganese. It is difficult for African economies to be competitive in global agriculture markets due to agriculture subsidies in the U.S. and Europe, efficient farming practices in Brazil and Argentina, and the scale of rice production in Thailand and Vietnam. For a more complete explanation, see 
The main food crops grown in Ghana are maize, yams, cassava, and, to a lesser extent, sorghum, and millet. More recently, rice Cocoa is the only with a specific framework for facilitating trade. All cocoa grown for export must be sold to the Ghana Cocoa Board (COCOBOD), which aggregates the crop for sale in the international market. International demand and the presence of a single buyer to coordinate trade means the market for cocoa is guaranteed. COCOBOD has experimented over the last thirty years with various market liberalization tactics in order to make the industry more competitive, including privatizing more companies and investing in the development of the market. Technoserve currently runs the Cocoa Abrapopa project in Ghana, which has raised farmer incomes by a remarkable 270%. 
The term “value chain” refers to the pathway that crops take in their journey from the ground to your plate, or your wardrobe, or the tires of your car. The farmer plants the crops and tends to them sporadically throughout the growing season. With sugar in the Philippines, the growing season is nine months. During the first two months, the farmer spreads fertilizer, sprays the crop with pesticides and fungicide, and weeds the plot. He then lets it sit for six months before harvest time, which lasts one month. The amount of inputs (fertilizer, pesticides, etc.) and mechanization used by the producers depends on the location. Most farmers in sub-Saharan Africa (SSA) are smallholders, managing less than two hectares, on average. In contrast, the average farm size in the U.S., which is dominated by corporate giants like Archer Daniels Midland and Cargill, is 431 hectares. These economies of scale give American agribusiness a big advantage on the global market.
In less than two weeks, I’ll be moving to Ghana to work as a consultant with an organization called Technoserve. It is my first time to visit West Africa and am excited to learn about the region. Technoserve works to strengthen the economies of the countries it serves by making the industries more efficient and profitable. Founded in the 1970’s, Technoserve began in Sub-Saharan Africa and has since expanded to Latin America and India. Most projects involve agriculture, since the majority of the world’s poor are subsistence farmers, though some focus on tourism, energy, and other sectors. The CEO, Bruce McNamer, explains Technoserve’s approach to economic development in a