Agricultural Markets and Trade
The global food crisis has underlined the critical need for open and transparent agricultural markets and trade. Attempts by crisis-stricken countries to hoard supplies, control prices or ban exports only exacerbate price and supply volatility and cause hardship to millions of producers and consumers. In developing countries, overall economic growth – including trade expansion, job creation and increased income-earning opportunities – depends on performance in agriculture. Robust and properly functioning markets:
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Women sort coffee beans at a USAID-assisted processing facility in Ethiopia, where USAID is working with local farmers to increase specialty coffee production and sales.
Credit: Christof Krackhardt |
- Increase returns to investment in agricultural productivity
- Give rural people the opportunity to specialize in fewer commodities, which increases productivity and affordability
- Help to match supply and demand between locations and across seasons, benefitting producers by increasing their sales outlets and benefitting consumers by improving food security, access and availability
- Bring down the real cost of food, the largest expenditure of the poor – according to the International Food Policy Research Institute, the poor spend 50 to 70% of their income on food
Performance improves when it is rewarded – when producers, processors and traders can make a profit from their work. Trade enables countries to access inputs, increase market shares, and make use of comparative advantages in the production of certain goods and services.
To be competitive in today’s global marketplace, farmers – especially small-scale farmers – need to be integrated into the full chain of production, from farm to fork. USAID facilitates this integration, enabling producers and rural industries to better connect with agricultural trade and market opportunities.
USAID’s approach
USAID supports policy analysis and institutional capacity-strengthening to stimulate greater production and processing of foods that consumers want, and promote more efficient delivery of products to end users. Specifically, USAID works with public and private sector market participants, governments, universities, agribusiness value chains, and civil society and farmer groups to:
- support the development of sound policy environments that enable open markets, private sector investment, and gender-equitable access to factors of production, products, and income
- promote effective institutions and services, such as rural extension and finance, to enable both women and men producers to acquire, protect, and use the assets they need to take advantage of emerging market and trade opportunities
- strengthen producer and other rural organizations to help them participate effectively in markets, reduce transaction costs, acquire productivity-enhancing technologies, and make use of information on domestic, regional, and international markets
- develop product standards and quality control to meet market demands for food safety, purity and quality, and to reach higher-value markets
- identify infrastructure development priorities to support efficient marketing and reduce high transport and storage costs that undercut the advantage of low production costs
- build food system value chains that connect small-holder agricultural producers to national, regional and global markets
- develop the public sector’s roles as provider of market-facilitating goods and services, regulator and referee, and monitor and analyst
Examples of USAID’s work and partnerships
Agribusiness Market and Support Activity (AMARTA)
A three year, $14.9 million project from 2006 to 2009 to assist the Government of Indonesia to promote a robust Indonesian agribusiness system that will significantly improve employment, growth, and prosperity.
Kenya Horticulture Development Program (KHDP)
A project that works to increase and sustain smallholder sales and incomes in Kenya from the production and marketing of high-value and added-value horticultural crops and products, and to increase incomes from employment within the wider horticultural industry.
Partnership for Food Industry Development – Fruits & Vegetables Program
A joint university and food industry technical assistance program that collaborates with public and private partners to increase the competitiveness of small and medium scale producers in local, regional, and international markets. Projects are in operation in Guatemala, Nicaragua, India, South Africa, and Ghana.
Partnership for Food Industry Development – Meats, Seafood & Poultry Program
A university based partnership that promotes awareness of food safety, food security and international regulatory compliance, enhancing the international market enhancement and improving food safety for consumers. The Partnership works in the former Soviet Republics, Nicaragua, and South Africa.
Partnership for Food Industry Development – Natural Products Program
A public-private partnership that works toward sustainable improvements to the livelihoods of rural producers in Sub-Saharan African communities through the development of the natural products and natural foods markets.
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