ABSTRACT

This chapter explores the challenges and opportunities of rural trade.

Often, poverty affects the quality and volume of production, and remoteness raises the costs of transport to all but the most local buyers. In most cases, whatever poor and remote people offer for sale is therefore relatively unappealing, and the prices they fetch are low. Poor and remote people are unattractive customers as well, as they are hard to reach and don’t have much to spend. This negatively affects the availability, affordability, and quality of products, except those produced locally. Poor people also lack negotiation power and access to mechanisms that mitigate risks like price volatility and produce perishability.

When selling locally, transport, storage, and access are easy, but demand is undiversified and prices are low. Cooperatives and marketing boards give access to larger markets and better prices. They often enjoy sustained success but also often fail because of disappointing trade volumes, inefficiencies, and corruption.

Local markets and cooperatives may serve as the start of complex global value chains. In rural economies dependent on such chains, the preferences and priorities of international companies shape livelihoods, and so do international trade arrangements. Their effects differ across countries and regions. They may strengthen rural economies but may also reinforce grinding poverty. In response to the latter effects, fair trade and ‘making markets work for poor’ (M4P) programmes seek to improve the levels, stability, and predictability of the income of poor farmers and rural workers. Results vary. There are successes, but problems – even very serious issues such as forced labour – are still common.