Abstract
SUMMARYThe paper describes value chain actors and institutional arrangements along value chains, and identifies major determinants of farmers’ decision making to work with middlemen/traders ‘jabbans’ (or cheese makers), and based on those identify short implications for research, development and policy processes. We hypothesize that small-scale sheep producers are more dependent on middlemen for market and loans than larger holders, leading to welfare losses. Our empirical findings based on a Heckman model applied for 120 farming households conducted in Khanasser region (Syria) show that despite unequal benefits, local arrangements are more blessing than curse for the poor. Small-scale sheep producers and middlemen developed intricate institutional arrangements that are mutually beneficial. Producers act collectively to pool sufficient quantity of milk to be attractive to traders (jabban) while gaining access to market and cash loans mainly for feed. This provides the middlemen needed supplies with reduced transaction costs. This suggests that development organizations should support local capacity of producing organizations to work together, small-scale producers to organize, develop small scale dairy processing workshops for pooling and possibly processing milk, support training for direct market access and facilitate access to loans. Finally, supporting organizations such as rural financial services and micro-finance need to ensure up-to-date market information is available to ensure fair prices are paid. They should also be able to negotiate favourable conditions for loans and reach out to these resource-poor rural populations where formal credit systems are absent.
Highlights
SUMMA RY The paper describes value chain actors and institutional arrangements along value chains, and identifies major determinants of farmers’ decision making to work with middlemen/traders ‘jabbans’, and based on those identify short implications for research, development and policy processes
The nominal interest rates charged by most Micro Finance Institutions (MFIs) in Asia and the Pacific region range from 30 to 70% per year; they are high because micro lending remains a high-cost operation (Fernando, 2006)
Driven by a need to understand more in order to better intervene and formulate recommendations, local institutional arrangements of collective action, market and financing interdependence and its implications are analysed in this paper
Summary
SUMMA RY The paper describes value chain actors and institutional arrangements along value chains, and identifies major determinants of farmers’ decision making to work with middlemen/traders ‘jabbans’ (or cheese makers), and based on those identify short implications for research, development and policy processes. Producers act collectively to pool sufficient quantity of milk to be attractive to traders (jabban) while gaining access to market and cash loans mainly for feed This provides the middlemen needed supplies with reduced transaction costs. This suggests that development organizations should support local capacity of producing organizations to work together, small-scale producers to organize, develop small scale dairy processing workshops for pooling and possibly processing milk, support training for direct market access and facilitate access to loans. Supporting organizations such as rural financial services and micro-finance need to ensure up-to-date market information is available to ensure fair prices are paid. This is to test the potential determinants of this interdependent relationship guaranteed by trust and by the milk production potential at these resource-poor villages
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