Partnering to facilitate smallholder inclusion in value chains: Verena Bitzer, Jeroen van Wijk, A. H. J. (Bert) Helmsing and Victor van der Linden
Agriculture is of critical importance to the livelihoods of millions of poor people in rural areas. Poverty-alleviating growth, therefore, depends to a large extent on access to lucrative consumer markets for poor producers. Historically, research has emphasized the resource and asset constraints faced by smallholder farmers as impediments to agricultural growth (e.g. Nelson 1956). Over the last two decades, this has been complemented with insights on the relevance of institutions for economic and agricultural development (North 1990; Harriss et al. 1995; Dorward et al. 2003). Access to assets is a necessary but not sufficient condition for escaping poverty, if smallholder farmers additionally face institutional constraints that prevent them from taking advantage of market opportunities (De Janvry and Sadulet 2001). A lack of information on prices and technologies, few or no connections to market actors, underdeveloped financial markets and scale diseconomies make it difficult for smallholders to reach out to international markets or to emerging domestic ones. Thus, new institutional arrangements are needed to fill the gap between current local practices or institutions and the institutions required to enable farmers to participate in value chains. In response thereof, partnerships between businesses, NGOs, farmers and public agencies have emerged to facilitate the inclusion of smallholders in value chains. Inclusion indicates that smallholders have sustained and voluntary access to a specific value chain, but it does not necessarily denote any differences in welfare outcomes between those included and those not (Riisgaard et al. 2008; Berdegué et al. 2008). Partnerships are defined as voluntary and collaborative arrangements between actors from two or more societal sectors, i.e. state, market and civil society, which have an institutionalized, yet non-hierarchic structure and strive for a sustainability goal (Glasbergen 2007). The rise of partnerships is mainly associated with the complementarities among participating actors, which, in theory, allow for the inclusion of smallholders by improving the division of labour along the value chain. Extending Hall and Soskice’s (2001) concept of institutional complementarity to partnerships, actors can be said to be complementary if the presence (or efficiency) of one actor increases the returns to (or efficiency of) the others. Thus, roles that were traditionally played by one
actor can benefit from being shared with, or transferred to, other actors (Narrod et al. 2009). As such, collaborative advantages are created based on differences in participants’ comparative advantages. The increasing recognition of complementarity reflects, among others, failures within each societal sphere, i.e. state failure, market failure and civil society failure, which make single actor solutions insufficient. By building on the expertise of each member, partnerships seek to simultaneously fulfil development goals and private business interests. While partnerships have made a remarkable breakthrough in the development discourse, little is known about the partnership set-up and characteristics required to advance the inclusion of smallholders in value chains. It is not clear to what extent partnerships deal with the institutional constraints faced by smallholders and how the outputs of partnerships relate to their input-oriented aspects. Yet, if partnerships are defined in terms of the tasks they are to perform, one would expect a relationship between partnership characteristics and the institutional challenges addressed by partnerships directed at smallholder inclusion. This chapter explores this expectation and analyses the relationship between the institutional changes required for smallholder inclusion and the types of partnerships that have been set up to achieve this goal. Thirteen case studies from previous research are drawn upon to identify key areas in which partnerships differ and to suggest aspects that are required to achieve inclusive institutional change. The overall aim is to contribute to an integrative theory on partnerships for smallholder inclusion in value chains. The chapter proceeds as follows. It first elucidates the institutional constraints faced by smallholder farmers in developing countries and sketches the tasks of partnerships for smallholder inclusion (section 11.2). It then constructs a conceptual framework based on a review of the literature on partnerships and collaboration in order to identify the input factors by which partnerships are commonly classified (section 11.3). This framework is also used to formulate a set of propositions connecting the output dimension of smallholder inclusion to the input dimension of partnerships. This is followed by the operationalization of the propositions (section 11.4) and a description of the research methodology (section 11.5). Section 11.6 presents the main results of the research. The final section reflects on the findings to lay the groundwork for an integrative theory on partnerships.