Markets for the Rural Poor

OPPORTUNITIES The economic environment of the rural poor comprises several interlocking markets: for agricultural produce and for agri-inputs; for production support (agricultural extension) or financial services; for information; for assets, including land and water; for labour; and for food and other consumer goods. The terms upon which the rural poor enter and participate in such markets are sometimes inequitable. Many of the poor are currently passive participants, often obliged to sell low (immediately after harvest) and buy high, with little choice of where they conduct transactions, with whom, and at what price. With the liberalization of domestic markets and the globalization of international markets, these markets have become more open, with more choices, but also complex and uncertain. Today more than ever before, enhancing the ability of the rural poor to reach these markets, and actively engage in them, is one of the most pressing development challenges. Rural people, especially the poor, often say that one reason they cannot improve their living standards is that they face difficulties of market access. Low population densities in rural areas, remoteness from centres and high transport costs present real physical barriers in accessing markets. The rural poor are constrained by lack of information about markets, lack of business and negotiating experience, and lack of a collective organization which can give them the power they require to interact on equal terms with other, generally larger and stronger, market intermediaries. Cultural and social distance, and discrimination, may also be factors that at least partly exclude the poor from markets. Farmers’ inability to market produce means lack of income for production inputs, consumer goods and immediate cash requirements, and prevents asset accumulation. Market access thus influences farmers’ production systems: those who live close to better roads and have more frequent and direct contact with the market are willing to produce more systematically for the market, while those with poor market access are forced to produce for domestic consumption. In such a situation food consumption is limited to what can be produced on-farm or within the community, in some cases resulting in poorly balanced diets.