Linking Smallholder Rural Producers to High-Value Markets: The Role of Technical Assistance and Credit

Abstract

Smallholder rural producers face many challenges in supplying their products to high-value markets. While these markets usually off er higher prices compared to the traditional market, they also set stricter requirements in terms of quality, volume, delivery, and packaging. For farmers to meet these standards and to achieve a higher income, they need to improve production practices and achieve a higher level of effi ciency, not only in production but also in marketing. However, these changes require signifi cant capital investments. Th is paper examines the role of technical assistance and credit in developing high-value chains that involve smallholder producers. Two cases are presented to illustrate the importance of both credit and technical assistance in linking smallholder producers to modern value chains. Technical assistance and credit are important but need not be directed to the production node of the chain to be eff ective. Marketing intermediaries can also be fi nanced to develop linkages and to facilitate market access. It is clear, however, that credit and technical assistance will be most eff ective when directed towards meeting the requirements of the market. It is therefore critical that any assistance in credit, production, or marketing is treated as an investment to meet market demand.