ong>Towardsong> a ong>Globalong> ong>Programmeong> on Market Access
Report of the Pilot Phase
Special thanks to the IFAD professional and general service staff who kindly shared their
experiences and supported the development of this pilot exercise.
In particular: S. Abdoulhadi, J.P. Audinet, A. Benhammouche, N. Brett, J.J. Gariglio, P. Glikman, F.
Grassi, R. Haudry, E. Heinemann, S. Jatta, E. Murguia, M. Kerallah, S. Khadka, D. Kingsbury, M.
Manssouri, S. Marzin, F. Nakai, M. Nourallah, R. Omar, H. Pedersen, R. Peňa-Montenegro, L. Rubio;
R. Samii, C. Sparacino, G. Thapa, R. Vargas-Lundius, J. Yayock, U. Wieland.
Our gratitude goes also to our partners from IFAT: R. Dalvai, C. Wills, H. Thorndike; and from
Traidcraft: L. Charrington, L. Kempton, D. Atkinson and all the team, for their inputs and valuable
suggestions. FIDAMERICA and PROMER played a fruitful role in the development of this initiative.
Many thanks to G. Le Breton, S. Hamilton, V. Leproux, M. Maccari and H. Perrett. E. Canigiani led
the preparation of the stock taking exercise and gave valuable overall support. The Latin America
and Caribbean Division provided a positive environment for the implementation of the exercise.
The project was coordinated by R. Hopkins.
The front cover was designed by C. Giorgi.
ong>Towardsong> a ong>Globalong> ong>Programmeong> on Market Access
Report of the Pilot Phase
Initiative for Mainstreaming Innovation (IMI)
First draft 30 August 2004
This version 6 October 2004
TABLE OF CONTENTS
I. RATIONALE 1
II. OBJECTIVES 1
III. BACKGROUND AND PARTICIPANTS 2
IV. THE PRODUCTS 3
1. A Virtual Library 3
2. ’Ínto the Market’ – A Manual for Market Access 6
3. Participation in Trade Fairs – A Toolkit 7
4. Business Development Services – The Experience of CIEN 8
5. E-Commerce for Rural Producers 13
6. Taking Stock of IFAD Experience 20
V. LESSONS LEARNT 25
Table 1: Current Status of Products 3
Table 2: E-commerce in developing countries 2002-2003 (million of US$) 15
Table 3: Taking stock of IFAD Experience on market 22
Figure 1: E-readiness score in developing countries 15
The process of globalization is creating challenges and opportunities for small rural
producers. Lower communication and transaction costs have intensified the competition from
foreign suppliers, as have the subsidies granted by industrialized countries. At the same
time, however, globalisation is offering small producers new opportunities to access dynamic
national and international niche markets in which they have, at least potentially, a
There has been much international criticism of the unfair rules that dominate the trade arena.
Paradoxically, little has been done in a systematic and consistent way to reduce the
obstacles producers face in terms of information requirements, training, capacity building
and the development of managerial skills, which restrict their participation in local and
international markets. This project is founded on the proposition that there is ample scope for
action to improve market access for small producers, and that IFAD, together with other
organizations, from the private and public sector, can and should take an active role in this
The purpose of this project has been to design and implement, on a pilot basis, a number of
tools to help small producers access markets at both national and international level. This is
consistent with IFAD’s mandate to enable the rural poor to overcome poverty and the Fund’s
strategic objective of helping producers to access markets as a way of achieving the
Millennium Development Goals. Six products have been developed with this aim in mind.
(i) A virtual library on market access
This is a virtual space where people and organisations working on market access can find
information and documentary resources in English and Spanish. Topics and available
resources are selected according to their relevance and utility to the users, and will
subsequently be linked to the IFAD Portal on Rural Poverty. The pilot version of the library
includes training materials; support services; publications and documents; regional
resources; and other links of interest. The Spanish version was prepared by FIDAMERICA,
an IFAD regional network in Latin America and the Caribbean. The English version is the
fruit of a joint effort between IFAT, IFAD and external consultants.
(ii) ‘Into the Market’ – A manual for market access
This manual is intended to assist small producers in understanding key principles of
accessing markets (local, regional and international). It covers the following basic steps: (i)
identifying opportunities: how to find realistic business and market opportunities; (ii) building
a sustainable business: simple analysis of marketing, operations and financial performance,
strategic planning and issues of sustainability, including stakeholder analysis; (iii) getting the
product right: how to produce the right product for the chosen niche; and (iv) linking with the
market: how to identify potential buyers, use the right sales promotion techniques and
provide good customer service. The manual was prepared jointly by the Traidcraft Market
Access Centre and IFAD.
Participating in Trade Fairs: a toolkit
This is a “how to” guide designed to equip small producers to participate successfully in
national and international trade fairs. The guide shows producers step by step how to
organize an exhibit, providing guidelines on four key aspects: i) strategy: determining when
participation in trade fairs can help to increase sales and selecting the most appropriate
trade fair for the business objectives; ii) planning: scheduling the tasks to be carried out and
the deadlines to be set in preparing for a trade fair; iii) participation: targeting and attracting
the right buyers and making the most of trade fairs to gather market information; iv)
following up on contacts made with buyers and establishing long-term relationships with
them. The guide includes a toolkit, available on CD-ROM, with relevant template forms such
as a planning checklist, product feedback forms and product information sheets.
(iv) Business Development Centres tailored for rural producers
Business Development Centres are advisory institutions that play a key role in providing
support to Rural Micro/Small Enterprises. However, they are often poorly adapted to the
needs of rural producers. This case-study summarises the experience of CIEN (Centros de
Impulso Empresarial), a model developed by PROMER (an IFAD regional programme for
the support of rural micro-enterprises in Latin America and the Caribbean), and discusses
the possibility of up-scaling this experience.
(v) E-commerce for rural producers: lessons and opportunities
The purpose of this guide is to summarise developments in the field of e-commerce that may
be of relevance to rural producers. It first introduces the notion of e-commerce, providing an
overview of the current state of progress and its relevance to developing countries. It then
discusses lessons to be drawn from the experience gained to date, the results obtained and
the barriers that have emerged. It goes on to make some practical recommendations for
those interested in starting an e-commerce activity. This is underpinned by the presentation
of four case studies. Annexes contain a summary of available resources, classified by
continent, and a basic glossary of e-commerce terminology.
Taking stock of IFAD experience
The document pinpoints areas of common interest across divisions in order to help decide
upon priorities and identify possible synergies within the institution. The final section
discusses how innovation applies to market access interventions and how IFAD could
provide better and more effective support.
Equally important in this project has been its methodology. The project has been guided by
two related principles: (i) working and interacting with leading practitioners in the market
access field; and (ii) promoting a process of sharing and learning among IFAD Divisions and
a positive interaction with IFAD regional programmes.
The project has been implemented in partnership with IFAT, the International Fair Trade
Association. IFAT is one of the leading international organisations in the fair trade
movement, operating as a global network in 59 countries. The project has also developed
an intensive process of in-house discussions to examine IFAD activities on market access
and to highlight some of the main problems and needs that the Fund is presently facing in
implementing market access projects.
The activities carried out during the pilot phase and the fruitful interaction with practitioners in
this field (including an internal seminar and the presentation of some of the materials at an
IFAT international workshop) suggest that there is an opportunity to launch an international
initiative that would build on previous steps taken by IFAD in this field. Several donors have
expressed interest in supporting initiatives in this area.
The process of globalisation has created challenges and opportunities in developing
countries. Small rural producers face difficulties in accessing markets despite their potential
comparative advantage in the production of certain commodities. In this context, a
coordinated effort is essential, at both policy and operational levels, to help rural producers
benefit from the new opportunities brought about by the process of globalisation, and to
reduce their vulnerability to changes in the international trade environment.
Recent discussions in the media and in the development literature have emphasised the
importance of a change in the trade policies of industrialised countries, focussing mainly on
international trade distortions (such as those highlighted in the Oxfam Report (Oxfam 2002).
A number of studies have also been conducted regarding the effects of trade on
development. Less attention has been given to the processes and policies at the micro level
that could enhance the successful participation of small producers in markets. While there is
an abundant literature on macro level interventions that could create a favourable
environment for market access, little has been written on how to empower small holders and
grassroots organisations to participate actively in markets that are relevant to them. This
project is based on the proposition that there are complementarities and externalities among
the various trade participants that have not yet been fully exploited. It therefore sets out to
find ways of remedying of this shortcoming.
A full process of market liberalisation will not necessarily increase the participation of small
producers to a significant extent unless specific support measures are taken and they move
to a higher value added products. There are a number of “invisible”, yet critical, barriers to
trade that must be overcome (such as the lack of awareness of market opportunities and of
familiarity with standards, limited scale of operations and specific skills, among others).
This project is directly related to IFAD’s mandate and to one of the three objectives
described in the Fund’s Strategic Framework (“Increasing Access to Financial Services and
Markets”). Small rural producers require greater support in market access and market
development, and IFAD projects are becoming more involved in addressing these issues
(see chapter IV.6 below), while other IFAD units such as the Policy Division and the
Resource Mobilisation Division are increasingly interested in this area. Governments and
several major donors are also taking a growing interest.
This project is a follow-up to several studies promoted by IFAD in this field (Zilveti, 2002 and
Page, 2003) 1 and to the discussions that took place on this topic at IFAD’s Governing
Council (IFAD 2002 and 2003).
The purpose of this project was to develop, in a pilot way, innovative tools and best practices
in order to help small producers take advantage of new market opportunities. Specific
to produce a set of market access tools to be made available to IFAD staff and
projects, IFAT members and rural producers. Some of these tools are completely
new, derived from the output of this project; others are based on existing work done
1 A shorter version of this paper is found in Page and Slater (2003), published in the Development Policy Review
(see References below). Chapter 5 of IFAD Rural Poverty Report (“Markets for the Rural Poor”) discusses some
of the challenges faced by small producers.
by IFAT, IFAD projects and regional programmes, and updated in light of the learning
generated by this initiative.
to set up an effective institutional mechanism that would facilitate a learning process
across IFAD projects, IFAT members and, in general, organisations working on
market access issues.
to forge new partnerships between leading practitioners in market access and market
development. This partnership would promote links between IFAD’s regional
initiatives on market access (e.g. PROMER in Latin America), IFAT members and
other trading organisations.
to expand and improve the quality and content of information and communication
technologies on market access and market development available to small rural
producers and their organisations.
The project would specifically promote the improvement of the IFAD and IFAT web-sites,
and include a special window on market development where users could access the latest
tools and materials on this topic. This would link into IFAD’s Portal on Rural Poverty,
enhancing the quality of the information provided on market development and market
III. BACKGROUND AND PARTICIPANTS
The origin of this proposal lies in the activities on market access carried out by IFAD
together with the International Fair Trade Association (IFAT) and Traidcraft, a member of
IFAT specialising in matters of market access and market development. IFAT is one of the
leading international organisations in the fair trade movement, operating as a global network
of over 220 organisations in 59 countries. IFAT’s objectives are twofold: to improve the
livelihoods of disadvantaged people in developing countries; and to change unfair structures
of international trade. It also provides a forum for information exchange to help member
organisations improve their market access conditions at local, regional and international
Since 2000 the Latin American and Caribbean Division has been working with IFAT on the
development of standards for fair trade organisations and market access activities. Market
access was one of the main topics discussed at their 2002 meetings in Africa (Ghana), Asia
(Indonesia) and Latin America (Cuba). In December 2002 and February 2003, IFAD
organised, jointly with the Overseas Development Institute, ODI, and in collaboration with
IFAT, a study exploring opportunities to increase market access at a global level to benefit
the rural poor. Two workshops were organised, involving NGOs, the private sector, donors
and academics, all with vast experience in market access promotion for small rural
producers. This proposal is a follow-up to the report prepared for IFAD by the consultant who
led the study (Page 2003).
This proposal was prepared in consultation with Traidcraft. Traidcraft plc sells products
through its network of 4000 Fair Trader representatives. It is one of four investors in
Cafedirect, the UK’s leading branded fair trade consumer product. The Traidcraft Market
Access Centre was formed in April 2002 with the aim of assisting poor producers to
overcome the barriers they face in accessing markets.
IFAD has taken the overall responsibility for the coordination of the project. The development
of this initiative is expected to promote greater communication and coordination between
IFAD staff working in areas related to market access, IFAD projects and IFAD regional
Two of IFAD’s regional programmes have been involved in the implementation of this
initiative, namely, FIDAMERICA (www.fidamerica.org) and PROMER (www.promer.org).
FIDAMERICA is an information network entrusted with the task of improving the efficiency
and effectiveness of the projects supported by IFAD in Latin America and the Caribbean, by
stimulating and facilitating communication, learning and knowledge management processes.
The aim of PROMER is to support the development of rural micro-enterprises.
Table 1 summarises the division of labour among the participating institutions and the
current status of each product.
Table 1: Current Status of Products
PRODUCT INSTITUTION INVOLVED STATUS
1. Virtual Library
FIDAMERICA, IFAT, IFAD staff
Draft, pending final revision
2. Manual for market access Traidcraft and IFAD consultants Final draft
3. Toolkit on Trade Fairs Traidcraft and IFAD consultants Completed
4. Business Development
PROMER and IFAD consultants
Draft, pending final revision
5. E-commerce IFAT and IFAD consultants Final draft
6. Taking stock of IFAD
IFAD consultant and IFAD staff
1. A Virtual Library
IV. THE PRODUCTS
This is a virtual space where people and organisations working on market access can find
resources and tools in terms of information and documents. The selection of topics and
available resources give priority to their relevance and utility to the users. They have been
developed in English and Spanish, and will be linked to the IFAD Portal on Rural Poverty. It
is expected to expand this pilot version of the library in the main phase of the IMI project.
There is a substantial and ever-increasing amount of internet resources that can be useful to
people and organizations working in the area of market access. These resources are free
but scattered across a large number of websites. This shortcoming points to the importance
of developing a virtual library that gathers all the relevant resources into one site.
The design and structure of the library gives priority to:
• Relevance and utility to the users;
• Clarity of presentation;
• Contents (organised according to main topics and areas of interest); and
• Links (including regional programmes and IFAD’s Rural Poverty Portal).
The virtual library is addressed to all operators and institutions interested in market access.
It is specifically tailored for those who directly need these information and tools to perform
their work such as producers, decision makers in small businesses, trading associations,
public and private institutions and organisations.
The English version is the fruit of a joint effort between IFAT, IFAD staff and consultants.
The information is structured into the following categories:
• Training: websites of private and public organisations that provide training and capacity
• Research: research centres, institutes and networks that focus on agricultural trade
globally and regionally;
• Market reports: agricultural and trade news portals, market report websites and market
information databases. This also includes a section of papers and studies related to
• Support services: international and national networks, governmental and private sectors
providing support services (for example import promotion, marketing assistance,
• Regional resources available in Africa, Asia, Latin America and Europe;
• Financial services: organisations that provide financial services to promote market
• ong>Globalong> issues: information related to trade regulations. A section providing statistical
information is yet to be developed.
The Spanish version of the Virtual Library was put together by FIDAMERICA. For the
purposes of this virtual library, this network gathered all its existing resources in relation to
market access into one portal http://www.fidamerica.org/seccion.php?seccion=385. It
consists of the following sections:
• Manuals and guidelines;
• Systematizations and good practices;
• Electronic conferences;
• Publication and general documents;
• Statistical information;
• Regional actors;
• Other sources of information.
The section “Publication and general documents” is in turn divided into eight sections:
Organic agriculture-sustainable agriculture; International trade; Competitiveness; Market
access strategies; ong>Globalong>ization; Rural microenterprises; Organizational aspects involved in
the commercialization process; Trade agreements; and Other documents.
Every two years, FIDAMERICA organises a conference on knowledge management for the
eradication of rural poverty, in which innovative experiences are shared and discussed. One
of the topics in this conference is market access.
In addition a Fair Trade market access portal was put together by IFAT. This portal is
organised according to the following classification: (i) structure of the Fair Trade Movement:
websites of Fair Trade organisations at international and regional levels as well as investors,
campaigns and labelling issues; (ii) studies: papers on fair trade in specific markets and
regions and general research findings; (iii) E-commerce: information related to the practice
and relevance of e-commerce in developing countries; (iv) capacity building services; and (v)
manuals and guidelines
Virtual Library for Market Access: opportunities ahead
With the realization that information is fundamental in enabling rural producers to access and
compete on markets effectively, development organizations are increasingly assimilating the
latest web technology to maximize ways of sharing and exchanging information successfully
with those producers. It is becoming common practice to broadcast live events through
webcasts, include web video and photo galleries and run electronic discussions and
consultations through e-forums. The following areas of latest web technology could serve the
purposes of the virtual library (to be developed in the following phase of the market access
Broadcasting training sessions, seminars, workshops, consultancies, interviews and
other events related to market access through webcasts over the internet, which
extend the potential audience to whoever has internet access and only requires the
free downloading of suitable software for viewing (e.g. Real Player, Media Player or
Quicktime). These broadcasts can be viewed live and subsequently archived as
video files in a section of the virtual library.
Setting up a (or several) mobile tools that are circulated among rural producers and
their associations, offering them the opportunity to shoot their own web videos. A
typical video would describe experiences and impressions (focusing, for example, on
a recent switch to producing a different crop in order to enter a newly discovered
market; on the process of locating new markets with the assistance of a development
agency; on the implementation of newly introduced agricultural technology). The idea
is to maintain authenticity by minimizing the ‘tailoring’ effect of editing and directing.
Cutting out glitches, shaky camera shots or misspeaks is beside the point. It is now
possible to produce a video piece with just a digital camera and a microphone. From
a film-making stance, less technical and directing knowledge can lead to more
transparency. This encourages learning from authentic accounts by those who have
to cope with market access difficulties.
Running video marketing tours that take producers ‘virtually’ to locations of interest
and relevance, e.g. an organic farm-produce fair in Paris, a handicrafts fair in
Bangkok, a fashionable clothes market in London. This can be extended to other
types of tours covering customs procedures or trade regulations.
By cultivating this array of information channels, the virtual library will be optimizing its
potential of providing useful information and business opportunities to its target audience.
2. ’Ínto the Market’ – A Manual for Market Access
This manual is a joint initiative by the Traidcraft Market Access Centre 2 and IFAD. The goal
is to provide practical tools to support market access for small producers in rural areas. This
is a pilot manual for those seeking a grounding in market access. It can be used as part of a
training package or for self-learning. Follow-up products, with more of a geographic and/or
sectoral focus are planned for later development. All examples are based on real life
experiences of IFAD or Traidcraft clients and partners.
This Manual is intended to assist small producers to understand the key principles of
accessing markets (local, regional and international). It consists of the following building
blocks: (i) identifying opportunities: how to identify realistic business and market
opportunities; (ii) building a sustainable business: simple analysis of marketing, operations
and financial performance, strategic planning and issues of sustainability, including
stakeholders analysis; (iii) getting the product right: how to produce the right product for the
chosen opportunity; and (iv) linking with the market: how to identify potential buyers, use the
right sales promotion techniques and provide good customer service. It has been prepared
jointly by the Traidcraft Market Access Centre and IFAD.
CHAPTER 1: FRAMEWORK FOR MARKET ACCESS
What are the components of successful market access?
CHAPTER 2: IDENTIFYING OPPORTUNITIES
What is a good business opportunity?
How do I identify good business opportunities?
How do I research the market?
What else do I need to think about before going ahead?
CHAPTER 3: BUILDING A SUSTAINABLE BUSINESS
How do I assess where I am now?
Where do I want to go?
How am I going to get there?
What is meant by sustainability?
CHAPTER 4: GETTING THE PRODUCT RIGHT
What makes a strong product offer?
How can I consistently deliver products that my buyers want?
I have a trial order – what do I do now?
CHAPTER 5: LINKING WITH THE MARKET
Who should I promote my products to?
How do I promote my products to them?
How can I improve my selling and negotiating skills to deal
more effectively with buyers?
How do I make sure that buyers will continue to buy my products
and not those of my competitors’?
3. Participation in Trade Fairs – A Toolkit
This tooolkit is a joint initiative by the Traidcraft Market Access Centre and IFAD, under the
project on market access included in the IFAD initiative for mainstreaming information
‘Partnering for Market Access and Market Development’. The objective is to provide
practical tools to support market access for small producers in rural areas. This toolkit can
be used for self-learning or as part of a training package. The Traidcraft Market Access
Centre also offers a training programme in successful trade fair participation.
This is a “how to” guide designed to equip small producers to participate successfully in
national and international trade fairs. The guide will help the producers in organizing their
exhibition step-by-step, providing guidelines around four key issues: (i) Strategy: understand
when trade fairs participation can help to increase sales and select the most appropriate
trade fair for the business objectives;(ii) Planning: preparations tasks and deadlines that a
business should undertake to prepare for a trade fair; (iii) Participation: how to target and
attract the right buyers and how to use trade fairs to gather market information; (iv) Followup:
how to follow-up on contacts made with buyers and establish long-term relationships with
them. The guide includes a toolkit, available on CD Rom, with relevant template forms such
as planning checklist, product feedback forms and products information sheets.
CHAPTER 1: STRATEGY
Are trade fairs the right sales promotion channel for my business?
How do I choose the right trade fair to participate in?
CHAPTER 2: PLANNING
Can I afford to participate in a trade fair?
What is involved when planning for a trade fair?
When do I need to start planning?
What is involved in stand design?
What promotional techniques can I use?
CHAPTER 3: PARTICIPATION
How do I attract buyers so that they stop at my stand?
How I deal with buyers on my stand?
What other activities should I carry out at the trade fair?
How can I effectively manage this busy period?
CHAPTER 4: FOLLOW UP AND EVALUATION
How do I follow up effectively with buyers?
Why do I need to follow up internally within my business?
Why is it important to review my progress?
CHAPTER 5: TOOLS
Business information form
Product feedback form
Product specification form
Product information sheet
Buyer contact form
4. Business Development Services – The Experience of CIEN
The growth of small and medium-sized enterprises (SMEs) in developing countries has been
pivotal for the achievement of broader development objectives, including the reduction of
poverty in rural areas. Governments and international agencies are trying to tackle the main
constraints faced by SMEs by promoting a series of interventions to enhance their efficiency
and competitiveness, with a strong participation of the private sector.
For many years, the dominant model was to provide services to micro-enterprises with
substantial government subsidies. However, a number of flaws became evident in this
approach, besides the fact that many developing countries governments usually can not
afford to subsidize on such a scale. Moreover, donors can only make temporary
interventions, so long-term needs for training, information and consultancy - the so called
Business Development Services (BDS) - cannot be met in this way.
PROMER, ong>Programmeong> for the Support of Rural Micro Enterprises in Latin America and the
Caribbean, is one of IFAD’s regional programmes working in the area of assistance to
RSMEs. Created in 1999 with the mandate to support rural micro entrepreneurs and small
producers in the LAC Region, it has developed a series of innovative approaches and
methodologies to reach its target population. This case study discusses one of these
approaches: the establishment of the Entrepreneurial Promotion Centres, CIEN, with
particular reference to the experience in Honduras. The purpose is to introduce and assess
CIEN’s characteristics and compare them with other BDS models to determine CIEN’s
specific features and possibilities for up scaling.
Origins and structure
The CIEN (Centros de Impulsos Empresariales y de Negocios – Entrepreneurial Promotion
Centres) initiative was launched during the 2001 meeting of IFAD’s project coordinator in
Nicaragua. In 2002, PROMER carried out a feasibility study to analyse the possibility of
establishing CIEN in Honduras, a region where three IFAD projects were in operation. The
study concentrated on the feasibility of establishing CIEN in the District of Danlí, Honduras,
an area in which the PRODERCO project was working at the time. The study focused on
various aspects and included interviews and contacts with producers associations, trade
chambers, municipalities, telecommunication enterprises and agencies of the Ministry of
Agriculture. The CIEN initiative was promoted among several possible partners, ranging
from the ARSAGRO (Asociación de Servicios Agropecuarios de Oriente – Eastern
Association for Agricultural Services), the Municipality of Danlì, the Trade Chamber, to the
representatives of enterprises in Danlì. CIEN emanated from this consultation process and
was founded in February 2003.
CIEN is by law a non profit organization funded by two charter members: ARSAGRO
(Asociación de Servicios Agropecuarios de Oriente) and the Municipality of Danlì.
ARSAGRO is a regional association representing more than 1600 small rural producers in
the eastern area of Honduras. It plays a key role in ensuring and stimulating the direct
participation of the rural SMEs in the structure. ARSAGRO provided CIEN with a location
and equipment and promotes CIEN services among its members. The Municipality of Danlì
has an important role both in guaranteeing the “institutional side” of the structure and in
supporting technical interventions that contribute to local economic development. Other
organizations supporting CIEN are: the Technical Governmental Secretariat for International
Cooperation (SETCO); the Secretariat for Agriculture and Farming (SAG) and AGROPYME,
an organization managed by Swisscontact and financed by COSUDE, the Swiss
Cooperation for Development. CIEN started its activities in August 2003 and counted 17
affiliated SMEs in July 2004, with another 40 in the process of becoming members.
Objectives and services provided
CIEN was founded in order to improve the capacities of the rural micro enterprises and to
strengthen their comparative advantages, ultimately contributing to sustainable development
and poverty reduction in local communities. CIEN is a centre dedicated to the organization,
coordination and delivery of business development services specifically tailored for rural
producers. CIEN’s target groups are heterogeneous: small rural agricultural producers willing
to diversify their production; small rural entrepreneurs offering services in the rural areas;
and rural workers interested in creating their own micro-enterprises. Since these groups all
have very specific needs, services are delivered through a demand-led approach. All the
activities are aimed at increasing the human and social capital of the rural micro-enterprises
to convert small producers into small entrepreneurs.
Business development services are offered by CIEN on a fee basis. The fee is relatively low,
due to the fact that micro-enterprises pay an annual membership fee to use CIEN services.
Higher fees are applied to other potential customers such as larger companies and other
BDS centres. It is important to note that CIEN’s services are also entirely available for
representatives and staff from other institutions. This is in line with its market development
approach to support the creation of a prosperous private environment for business
The services delivered by CIEN can be divided into two main areas: a) business promotion;
and b) entrepreneurial support services. Each of these include specific sub-areas that CIEN
covers through different methodologies and tools. Business promotion services include four
(i) Technical Assistance (TA)
TA services are carried out through an extension methodology that guarantees the continuity
of the services based on a minimum of two monthly visits to rural micro-enterprises. The
core activities are: support in business planning for micro-entrepreneurs; market studies for
existing or potential new products; design and product development tailored for small
processing enterprises; support in product quality improvement and packaging of agricultural
products; technology transfer of equipment and development of productive infrastructures;
legal assistance (e.g. legal advice, insurance advice, assistance with licensing and
registration procedures for health standards, brand registers, and bar-code systems);
promotion of new organizational models for rural micro-enterprises and support to
strengthen small rural producers associations and networks.
(ii) Access to markets
The specific goal of this area is to increase the market access and market share of products
and services offered by rural micro enterprises. To achieve it, CIEN provides courses,
consultancy services and other interventions aimed at improving the skills of small rural and
urban producers and micro-entrepreneurs. The skill areas are: management, administration
and finance; commercial and marketing techniques and business planning. The identification
of new business opportunities for micro-enterprises is carried out through different
methodologies: organization of business meetings with producers and buyers; creation of
direct commercial linkages within micro enterprises, buyers and clients; product promotion
through the media (e.g. radio and advertising in fairs); organization of trade fairs and guided
visits to other producers businesses and developed market areas; and support for the
creation of networks producing the same products (clusters).
(iii) Information and communication
CIEN aims at enabling rural micro-enterprises to have access to updated and selected
information that could help them in developing their capacities. The centres’ library in Danlì
is a valuable source of information where several databases are accessible. The available
information covers different areas of expertise: agricultural products prices in the main
markets; information on wholesalers (e.g. products of interest, address and contacts);
financing opportunities; training opportunities (e.g. seminars, courses and how to apply) and
information on raw material and machinery purchasers. Information about other BDS
providers is also available as well as a roster of accredited specialists. CIEN seeks to
improve information access for as many rural micro-enterprises as possible. To do so, it is
taking advantage of the development of information and communication technologies (ICT):
CIEN’s web-site (www.cnegocios.cl) is designed to provide all the necessary information
and, at a later stage, to enable SMEs to conduct their business on-line. CIEN is also trying to
attenuate the digital divide that excludes illiterate and remote rural people by running specific
training modules in computer literacy and by providing free-computer-access in its offices.
The training and education activities offered by CIEN aim to improve the entrepreneurial
capacities of SMEs and strengthen their competitiveness to boost their access to markets.
The courses are organized according to the specific demands coming from micro
enterprises and follow a double methodology: (i) a “vertical training” provided by experts in
the SMEs priority areas; and (ii) a “horizontal training” provided by selected and
consolidated micro-enterprises transferring their knowledge to other micro enterprises. The
main thematic areas of these courses and modules are: management; administration;
finance; business planning and marketing. Other subjects are: quality of products; feasibility
and market analysis; rural tourism and innovation.
CIEN guarantees the micro-enterprises access to a series of specific services and tools,
which are directly provided at the centre. They are basic operational instruments aiming to
strengthen the human capital of the rural micro-enterprises. The main services are computer
literacy courses, secretarial assistance and access to the library. Other services include free
access to computers and to the internet, as well as the availability of printers, a scanner, a
digital camera and a fax.
Innovative Aspects of CIEN
Promising elements with regard to the organisation’s effectiveness have already emerged.
Many aspects of CIEN’s structure seem to fit with IFAD’s IMI recommendations (IFAD 2003)
on IFAD’s style of innovation, like “poverty impact oriented”; “developed closely with the
poor and recognizes their capabilities” and “demand-driven”.
In its first year of activity (August 2003 to June 2004), CIEN achieved promising results by
delivering an array of services: 4 training courses in business planning for 97 technicians of
BDS providers; 3 courses on product quality for 3 micro-enterprises; approximately 20
courses in computer literacy for 111 small rural producers; legal health registration for 4
SMEs and the production of informational material. 17 new rural micro-enterprises became
affiliated with CIEN and about 40 are in the process of becoming members. Several contacts
were developed in the area of product commercialisation and in niche markets such as the
organic coffee market. These initial results helped CIEN in strengthening its role and in
promoting its services among new possible clients. There are four areas in which CIEN’s
performance seems to be particularly outstanding:
(i) Structure and types of services
The structure of CIEN, as described in the previous sections, presents many parallels to the
models described in the BDS literature. CIEN developed its structure in an innovative way,
by combining the application of the most recent theories on BDS modelling with an approach
based on demonstrated capacities of adaptability and flexibility. By comparing it with the
models described in the latest BDS studies, it appears that CIEN has managed to integrate
all the recommended services and key BDS principles in its structure. CIEN therefore
qualifies as model of the Market Development Approach without being a conventional BDS.
CIEN offers a high degree of flexibility and adaptability to provide the best-tailored services
for rural producers..
(ii) Capacity to tailor services for rural micro-enterprises
CIEN operates in rural areas characterised by a modest BDS market, both on the demand
and the supply side. CIEN has made a sustained effort to design interventions that could
best fit the rural environment and to address the specific rural restrictions that have emerged
since the establishment phase. Some of these restrictions are:
• The difficulties in promoting BDS interventions among rural micro-enterprises. They are
usually unaware of market opportunities: CIEN is working to raise their awareness of the
importance of the service provided by BDS in developing their businesses.
• The promotion of CIEN services: CIEN is promoting its services by contacting new
potential client rural microenterprises. ARSAGRO, one of CIEN’s charter member,
constantly promotes CIEN services among its members.
• The difficulties related to the absence of infrastructure (rural roads) that cramps the
access to marginalized groups: for this reason, CIEN will be acquiring a vehicle to enable
its personnel to reach marginal areas.
• The absence of infrastructure also increases the costs of delivering services and is
obviously a major constraint for the rural SMEs’ negotiation capacities.
(iii) Flexibility: provider and facilitator at the same time
Provider or facilitator? CIEN acts mostly as a facilitator by promoting the creation of a
collaborative environment with other BDS, but it is also involved in direct service delivery.
This dual function reveals some interesting aspects. An organization like CIEN, according to
its mandate, can act as a facilitator, provider, or a combination of both at different stages of
the program. A weak BDS market, like the one in Honduras requires CIEN to play this dual
role. Deciding what role to play is made internally and based on CIEN’s overall objectives,
policies and abilities, as well as considering other existing players, opportunities and gaps in
the market. Before anything, CIEN tried to ensure that its efforts do not distort, but facilitate,
market development. It also follows a pragmatic approach depending on the presence of
BDS in the chosen market. In general, acting as a provider is regarded only as a temporary
measure. Finally, this dual function allows CIEN to act with a high degree of flexibility and,
most of all, to have a direct and constant contact with potential clients. This pinpoints CIEN’s
strength in cultivating direct and proactive relations with rural SMEs.
(iv) Participation in decision making
An efficient provision of BDS requires the involvement of local groups with international
expertise in order to ensure that local needs are met and new technical skills provided.
CIEN, as demonstrated by its membership list, has reached this goal of harmonizing the
participation of different stakeholders. The involvement of local groups in the early stage of
planning activities is essential in creating greater ownership and long-term sustainability.
Since its foundation, CIEN has proven to be responsive and interested in developing strong
linkages with local groups and specifically with small rural producers and micro- enterprises.
Rural micro-enterprises actively participated in the definition of CIEN’s program, making
proposals such as that to create other smaller centres in the villages. This positive partnering
with a group of active and enterprising clients emerged as a pivotal point upon which to build
a successful demand-led service strategy. SMEs collaborating with CIEN also proved to be
innovative producers in their own right, able to formulate their own ideas about their
business requirements and playing a key role in the design and development of new BDS
solutions. From this perspective, client SMEs could definitely be considered as active codevelopers
of CIEN’s new strategies and services.
Is it possible to upscale CIEN?
Up-scaling refers to a process of replication and dissemination, improvement in skills,
designing new products based on the knowledge of final customers, employing new
technologies and taking on new functions and actions that lead to greater competitiveness.
CIEN is committed to elaborating a programme for the development of services over a
longer period of time, which focuses on several challenging areas. It intends to take on
innovative and sustainable approaches in these areas to meet the demands coming from its
clients in an improved way.
One area relates to widening the range of interventions. CIEN wants to deliver new and
better tailored services in the areas of training and technical assistance in order to provide
rural SMEs with a complete range of business support services. Regarding the area of
market access, CIEN is trying to identify and develop new niche market opportunities by
providing rural SMEs with punctual market information.
CIEN also wants to widen the issues covered by its services. An issue of priority is that of
gender. In this field, CIEN could get valuable support from PROMER, which has gathered
notable experience in gender related issues in the past few years, partly through its
collaboration with PROGENDER, the Regional ong>Programmeong> to Consolidate Gender-
Mainstreaming Strategies in IFAD-Financed Projects of Latin America and the Caribbean.
Another challenging area for the next phases of CIEN is the one related to the use of
subsidies. The operational costs involved in the implementation of business support services
in rural areas, especially isolated areas, are initially subsidized, but an exit strategy, implying
the withdrawal of subsidies, has to be elaborated. The challenge for BDS centers like CIEN
is to develop low-cost service “products” and delivery mechanisms that meet the needs and
willingness-to-pay of small-scale clients, while ensuring that the financial sustainability of the
structure does not become entirely dependent on subsidies. CIEN is actively working to
determine -and eventually adopt- instruments and methodologies that could guarantee a
sustainable and effective cost strategy. This could also include the possibility of
distinguishing “free services” from “free services (and the price scale applicable to the latter)
according to the size of the enterprise and the scale of its operations.
5. E-Commerce for Rural Producers
Since the beginning of the ‘dotcom’ boom in the late 1990’s, thousand of traders around the
world have embraced the opportunities offered by the potential of e-commerce. The internet
emerged as a tool that could attract and enhance trading activities, motivating many
businesses large and small to develop online retail and wholesale websites.
It was, and still is, an enticing business model and expectations from investing in such a
venture remain high. During the initial boom phase, e-commerce was seen as a possible
solution to the market access difficulties traditionally faced by rural producers and small and
medium rural enterprises in the developing world. As an accessible communications tool, the
internet was, and still is, expected to facilitate the access to regional and international
markets, creating a business interface free of intermediaries and other agents on an
The potential that e-commerce offers in assisting rural earners directly relates to the
mandates of IFAD and IFAT -the international Fair Trade Association-. IFAD’s Latin America
and Caribbean Division has already developed an e-commerce portal, linked to its Regional
ong>Programmeong> for the Support of Rural Micro Enterprises (PROMER), to facilitate links between
producers and buyers.
In this context, this case study sets out to highlight the lessons learnt from e-commerce
practice in developing countries, and to look at the opportunities that have arisen. Its aim is
to reflect on the potential of e-commerce models and strategies and to examine their
relevance to small scale producers in developing countries.
It first introduces the notion of e-commerce and discusses the advantages that e-commerce
can bring to rural producers. This is followed by a discussion on the lessons to be drawn
from the experience gained to date and the barriers that have emerged. It finally makes
some practical recommendations for those interested in starting an e-commerce activity.
Annexes contain a summary of available resources, classified by continent, and a basic
glossary of e-commerce terminology.
What is E-commerce?
The term e-commerce encompasses the production, distribution, marketing, sale or delivery
of goods and services by electronic means, mainly through the internet. Three main stages
constitute a commercial transaction: the advertising and searching stage, the ordering and
payment stage and the delivery stage.
E-commerce can be divided into two main categories:
• Business to consumer (B2C): enterprises sell directly to final consumer. In this way it is
often possible to cut out wholesalers or retail outlets. This is the most commonly known
type of Internet business.
• Business to business (B2B): enterprises use the internet and ICT (Information and
Communication Technology) to enhance the whole series of business to business
activities. This implies procurement of supplies, communication with contractors and
sales channels, servicing customers, integrated data management and so on.
E-trade can be conducted directly by producers but often requires intermediaries. We can
divide these intermediaries into four categories:
• Classified ads and directory services providers: they can facilitate the search for goods,
as they often specialize in product categories
• Match makers: they attempt to connect buyers and sellers of specific goods. These are
much more information-intensive than directories and exploit the internet’s capacity for
• Market place providers: electronic markets allow buyers and sellers to exchange
information about products and prices
• Auctioneers: these are market places where prices are negotiated publicly according to
E-commerce and rural producers from developing countries: expectations
The assimilation of e-commerce in the agricultural sector of industrialised countries,
particularly in the United States of America, triggered a great deal of optimism regarding the
potential of this technological ‘equaliser’ (Humphrey 2003) to facilitate market access for
small rural producers in developing countries.
Agriculture usually represents a significant, often dominant, share of total export earnings
and Gross Domestic Product in developing countries. Expectations from introducing this
technology to this fundamental economic activity in developing countries have commonly
been that e-commerce would improve the capacity to export to industrialized countries, by
• Lower transaction cost related to distance
• Better information and transparency about prices, markets and agricultural trade-related
• Less dependence on middlemen and intermediaries
These changes can be beneficial to low-income producers who typically participate in
fragmented and spatially dispersed agricultural markets, and may be able to by-pass this
handicap by trading in e-marketplaces. Up until now, these producers have usually been at
the starting point of a market chain involving several intermediaries, with the market power
largely concentrated at the buyer’s end .
E-commerce in practice: lesson and opportunities
Official statistics regarding e-commerce transactions are relatively scarce, especially for
developing countries. According to the forecast cited in UNCTAD’s E-commerce and
Development Report (UNCTAD 2003), the value of e-commerce in 2003 was estimated to
range between $1,408 billion and $3,878 billion, and the most optimistic scenario expects
the value of $12,837 billion for 2006. The share of business-to-business transactions is
commonly around 95%, consequently business-to-consumer transactions account for less
Table 2: E-commerce in developing countries 2002-2003 (million of US$)
B2B B2B B2C B2C
2002 2003 2002 2003
ASIA-PACIFIC* 120.000 200.000 15.000 26.000
AFRICA 500 900 4 71
LATIN AMERICA 6.500 12.500 2.300 4.500
TOTAL 129.002 215.403 19.306 32.574
Source: UNCTAD (2003)
It is estimated that over 95% of the world’s e-commerce takes place in developed countries.
Africa and Latin America account for about 1%, and developing Asian countries for the
Within the developing world, the Asia-Pacific region is the more dynamic region, where the
adoption of e-commerce is increasingly perceived by enterprises as the natural business
future. Governments in the region tend to prioritise the improvement of infrastructure and
upgrading of skills that are necessary to participate effectively in the digital economy. B2C
levels in the Asia-Pacific region remain modest in comparison to B2B transactions, despite
accounting for about 10 per cent of global B2C online sales, but vast majority of these
volumes were generated by Japan, Australia and the Republic of Korea. The ever-increasing
amount of internet users in China remain resistant to buying online.
In Latin America, the volume of B2B e-commerce is driven essentially by developments in
Brazil, Argentina and Mexico. Brazil has achieved higher development as an internet market
and accounts for between 50 and 60 per cent of all Latin American online retail sales. In
contrast to Brazil, Argentinian and Mexican internet activities have remained more confined
to the higher socio-economic strata. In many developing countries, the lack of trust is the
predominant reason for not buying online, followed by the lack of direct contact with the
seller, higher costs, and delivery difficulties.
Figure 1: E-readiness score in developing countries
Source: EIU “The 2004 E-readiness report”
The Economist Intelligence Unit (EIU 2004) calculates an annual e-readiness ranking. It is
essentially a measure that indicates how amenable a market is to internet based
opportunities. The EIU e-readiness index is the result of the combination of nearly 100
criteria, qualitative and quantitative, organised in six categories: connectivity and technology
infrastructure, business environment, consumer and business adoption, legal and policy
environment, social and cultural environment and supporting e-services. It clearly appears
that Asian economies are far ahead in e-readiness, especially the first and second
generations of NICs. Positive signs have been registered in Latin America: governments are
increasingly supportive of e-commerce activities and the internet is becoming less of an
exclusive access. Few of the African and Middle Eastern countries are included, but South
Africa clearly appears as the most e-ready country.
The Reality of E-commerce in the rural sector of developing countries
One consistent research finding to date is that the expected business-to-consumer linkages
between businesses in developing countries and end-consumers in the northern hemisphere
have not materialised. However, business-to-business opportunities in e-commerce have
arisen for small producers in developing countries. There has been an increase in their
participation in e-markets and on-line auctions for the marketing of agricultural exports. E-
commerce has not triggered a new business model, but has improved effectiveness and
efficiency at different stages of the existing supply chain, by strengthening the relationships
between existing trading partners.
It appears that e-markets for agricultural products from developing countries have not been
able, until now, to attract enough stakeholders, buyers and sellers, in order to demonstrate a
satisfactory level of effectiveness. This is due to a lack of information about the market
efficiency that is generated through e-markets, and because of the common adversity to risk,
meaning that buyers and sellers prefer to maintain their long established offline business
relations to ensure transactions on the basis of agreed quality and sales conditions. For
trading purposes, the internet is predominantly used as a source of information on prices
and products. Some interesting results were however achieved, as is the case of online
coffee auctions organized in Brazil. This experience proves that an appropriately designed
and implemented new technology can influence the structure of a commodity market
The internet’s role as a trading tool has remained secondary to its role of influencing
purchases carried out in the offline markets. The website is rapidly becoming the gateway to
a company’s brand, products and services, even if it does not sell online. It increasingly acts
as an online businesscard, crucial to any business’ success, and Small or Medium
Enterprise (SME) in the developing world must embrace the reality that the future of trade,
and especially of marketing, is digital. SMEs must strive to realise their potential as
professional and sophisticated business portals backed up by sound infrastructure in order
to attract and maintain mainstream attention.
In order to benefit from e-commerce, sound marketing strategies need to be implemented;
websites enhanced; customer service improved; internal capacities strengthened;
relationships with the end-consumer made relevant; brand confidence built; and product
quality well monitored. But first of all, it is imperative to understand how the producer firms
integrate in the supply chain and to assess the types of transactions they are involved in
before applying ICT to their sector-based strength. Focussing solely on the potential of the
most sophisticated ICTs is inadequate. Improving the weak telecom and internet
infrastructures often found in developing countries to address the ‘digital divide’ is not in itself
a sufficient policy for a successful assimilation of e-commerce.
Local organisations, regional networks and E-commerce
Commercially oriented organisations of small producers (groups, producer associations,
cooperatives) are essential to enable producers to pool their input requirements as well as
their outputs (IFAD 2003: 19). Organisations working at a regional level can support and
facilitate this process taking advantage of the available information technologies. Regional
networks in developing countries may aim towards B2C markets more successfully via e-
commerce platforms. Resources offered by regional organisations can provide strengthened
infrastructure and better focussed marketing strategies. Regional networks may enhance
grassroots capacity building in the form of training at field level. They can also provide an
opportunity to share information, experiences, resources and expertise. In theory, they can
act as sound base for building trust and co-operation at field level in order to achieve
maximum market impact. They can also reinforce the members of a particular region as they
come together under one umbrella to do business.
The B2C domain is typified by many small orders that require expert packing processes,
immediate availability of stock, logistics, dispatching and delivery, as well as secure credit
card encashment and reliable software and systems. This scale of operations is out of
proportion to the management resources of SMEs in developing countries.
E-commerce solutions in developed countries
Another option for farmers and craftspeople is to continue with capacity building activities at
local levels and increase their participation in regional networks, while letting portals in
countries of their targeted markets make the sales. The challenge is to recreate this
business model guaranteeing a fair price to the organisations engaged at grassroots level.
E-commerce sites offered by networks or organisations in the target market country bring the
consumers closer to the producers, have more experience in online sales and are logistically
simpler. This is the case of Novica, a stylish US-based website that sells globally-source
craft products to a well-targeted section of the US market. The CatGen website is another
example: a business portal that promotes fairly trade good from marginalised groups and
acts as a catalogue in which producers are responsible for updating their share and
In Europe, for example, the UK Fair Traders network could be used as a base to create a
model as currently proposed by one of its members, Ethical Shopper
(www.ethicalshopper.net), providing a centralised point of sale for fairly traded groceries and
non-food items on display on the website, complimenting a valuable opportunity in that 20%
of UK households now have internet access. The model being promoted is based upon the
convention that existing Fair Trade wholesalers in the UK would supply to various retail
outlets around the country. An order is processed via a centralised e-commerce site holding
the product and producer information. It is then passed onto partners organisations, these
being the existing network of around seventy independent Fair Trade shops in the UK (each
making a financial contribution for being part of the ‘co-operative group’) closer to the
geographical location of the customer to make the delivery. Aside from delivery, the retail
partners would add and maintain information about stock levels, content and other business
information (including the best selling products) onto one shared, centralised application. A
sound centralised marketing and PR campaign would compliment the process. In theory, this
model could be replicated in any target market location.
While the usual challenges in terms of capacity and funding certainly exist, with the right
resources and business planning this proposal may be an interesting and effective solution
to help those at the bottom end of the supply chain find new markets. However, to
completely emulate the Novica model would require professional infrastructures and
business interfaces directly with the country of production, hence eliminating the traditional
import/wholesale function. The important issue, however, is that the model proposed by
Ethical Shopper would still be closer to the consumer in the country of consumption. Here,
the links to the target market are invariably stronger, enabling the mainstream consumer to
explore and enjoy to the concept of Fair Trade within their ‘comfort zone’ through the
message that is diffused to them by an effective, appealing, well-promoted website.
Barriers to E-commerce
Infrastructure for telecommunication:A preliminary barrier to e-commerce for rural producers
is the availability of reliable and affordable internet access.. There are hopes that developing
countries can skip both copper-based and fibre-based land line infrastructures by using
wireless technologies, but wireless networks are unlikely to become reliable and reasonably
affordable for some time. For small rural producers, the establishment of public tele-centres
with internet facilities can provide an initial access. The development of an effective e-
commerce facility however requires a well functioning transport infrastructure for fast delivery
services. Rural producers in developing countries lag far behind developed countries in their
access to the technical pre-requisites for conducting electronic trade, and
telecommunications services are often unreliable, expensive or both. There are also
enormous differences in access to telecommunications between and within developing
countries. For instance, while a considerable proportion and sometimes a majority of the
population live in rural areas in developing countries, over 80 per cent of the main telephone
lines are located in urban areas.
Regulation: Private sector participation in the telecommunications markets is essential for
generating the required investment and for providing affordable internet access. A level
playing field for enterprises investing in this sector can lead to major price reductions for user
firms. In addition, the involvement of competent public regulators with discretionary powers
is needed to encourage competition and to ensure an equilibrium between highly profitable
provision in the main urban centres and less profitable outreach to distant communities.
Education and training: The providers and users of internet-based services require
adaptable skills. Frequently changing hardware and software make e-commerce a learningintensive
form of trade. Public agencies can help by offering tax incentives to encourage
investment in internet resources among producers’ organisations, companies, schools and
vocational training centres.
Consumers expect high service standards: Consumers expect high standards of service
from retailers (such as next day delivery or customer service). This can present a barrier to
artisans in developing countries hoping to sell direct to individual consumers from developed
Trusting the company/brand: Customers are wary of ordering from companies or shops
unknown to them, since it can be hard to determine a company’s efficiency from its web site
Financial security: Consumers also have legitimate concerns about using their credit/debit
cards to make on-line payments, especially internationally.
E-trading: practical recommendations
Developing effective web sites and e-commerce facilities can be done through a series of
useful steps. For many producers, their first usage of the internet for the sale of their
products is likely to be by email; and this can be followed by creating a few web pages to
exhibit a small selection of goods. In time, producers may go on to register their domain
name, create and manage their own web space, and perhaps finally add facilities to process
financial transactions and manage the dispatch of their product.s. But first of all, producers
must make a realistic self-assessment of their capabilities of maintaining and updating their
websites. Key factors to consider when creating a web site are (Batchelor 2002):
• Define the target and strategy: before starting to think about web site content, design and
navigation, be clear about the audience and strategy. The target audiences will
determine the approach and the information about the products and the
• Develop a customer service: This means organising the resources to handle
email/telephone enquiries, and deal with sales, deliveries and complaints online.
• Register with search engines and optimise ranking: The search engine is the main form
of on-line search. There are some simple steps to maximise listing and ranking in search
engines: register the site, and re-register new pages and content according to how
people are expected to search for pages/content.
• Build web-links: One of the most effective ways of promoting a site is to link it to related
business websites (by sector, by country, by type of product).
• Off-line promotion: use the existing literature (such as letterheads, business cards,
advertisements) and promotions of the organisation to promote the website.
• Start an email newsletter: use email to promote your business and web site. Begin with a
short (one-page) newsletter by email, to inform your contacts and clients about new
products or other news. Provide links to your web site in the email, so readers have
access to more information on items of particular interest.
The main outcome of internet access for the rural producers who took on this new
technology has been one of enhancing their traditional economic linkages: the internet
revolution did not open up as many markets for rural products as was initially expected.
Some positive examples however indicate that the internet can provide a window of
opportunity, especially in relation to improving the marketing of agricultural goods in
developing countries. Governments, international organizations and donors may play a
crucial role in providing not only funds, but also in building up the trust factor. The lack of
trust represented one of the main sources of failure in different initiatives. With access to the
right kind information and to institutional support, significant benefits can be generated for
small rural producers. The role of an international organisation like IFAD may be critical in
facilitating the use of E-commerce among small producers, by providing information and
Local and regional networks that can build the capacity of grassroots agricultural and craft
producers must be assisted and strengthened. In the case of craft products and commodities
in business-to-consumer markets, e-commerce platforms (or e-markets) in developed
countries may represent easier solutions, acting as new types of internet-based
intermediaries. A stronger collaboration between international organizations and alternative
trade organizations (at local, national and international levels) will create important
opportunities for craft and agricultural producers in developing countries to access and trade
on electronic markets.
6. Taking Stock of IFAD Experience
As part of the activities of the pilot project, a preliminary stock taking exercise on IFAD
experience in market access was carried out. The purpose was to assess the organisation’s
relevant field experiences in enabling small rural producers to access local, national and
international markets. The exercise did not aspire to be an exhaustive inventory, nor an
evaluation of market access interventions in IFAD projects, but an initial step, promoting
institutional learning in the area and a preliminary attempt to provide a platform for enhanced
dialogue across PMD Divisions.
The resulting document (Canigiani 2004) brings forward issues of common interest across
Divisions, which were selected on the basis of the outcomes of the stock taking exercise.
These issues call for further discussion to improve the groundwork for the development of
IFAD’s market access strategy.
The document starts with a discussion on the current challenges faced by IFAD in
supporting the access to markets of low-income producers in rural areas. This is followed by
a section that looks at the approach of each Division to market access, the description of
main activities at country level, and the identification of the problems and needs. Areas of
common interest across Divisions are also emphasised to determine priority fields of
intervention and to locate possible synergies within the institution. In the examination of their
respective market access projects, the Divisions considered the following aspects:
background, approach, main problems, type of projects, areas for improvement and relevant
The projects’ inventory was drawn from a series of interviews with CPMs and other IFAD
professionals. We are grateful for their openness in sharing their experiences in market
access with us. In addition to this, a review of all the relevant material available on market
access within the institution was carried out. Particular attention was given to the market
access and trade papers discussed at the Governing Council (IFAD 2003 and 2004).
One of IFAD’s greatest assets is its field experience. Paradoxically, valuable information at
the project level remains scattered and under-utilised. This impedes the potential for learning
and developing tools and policies. Relevant experiences cannot be built upon because they
remain in the consultants’ hands or are not fully reported. This frail knowledge management
at the institutional level hinders the learning process and an efficient allocation of resources.
Table 1 provides an overview of the main outcomes of the exercise by listing the relevant
experiences examined in the study, the main features of market access interventions in
IFAD projects and the areas of interest that emanated from the interviews. A list compiling
the studies and research papers available in the various Divisions is also included.
There is a large number of projects that include market access activities. However, many of
them consist of multi-functional projects with main components focussed infrastructure
building, promoting rural enterprise development, building up market linkages with the
private sector to training. In most IFAD projects, market access represents a small
component in relative terms.
The approach to market access differs across regions, sometimes in a remarkable way. The
Eastern and Western Africa Division, for example, has defined its approach within the wider
framework of its regional strategy. The Division is managing two different types of projects
with market access as their main objective: those establishing the prerequisites for trade and
those addressing specific aspects of the value chain. In the Latin America and Caribbean
Division priority has been given to the development of a regional program that provides
services to support IFAD projects in the area of market access. Differences are also be
related to specific contexts. For example, a number of countries in the Asia and Pacific
Division faces severe infrastructure and communication shortages that cramp its market
access assistance. This directly results from having prioritised the mountainous areas where
a substantial proportion of the rural poor live. In the case of the Near East and Northern
Africa Division and the Western and Central Africa Division, recent market liberalisation
measures brought about ongoing changes leading to a shift from increasing production to
improving access to markets. This variety of contexts, creates a rich environment for
institutional learning across Divisions.
It is important to recognize the relatively small importance of market access activities in IFAD
projects (at least in quantitative terms). Generally speaking, market access is only a small
component of a project or a set of activities included in other components. Sometimes it
even overlaps with them (the case, for example, of projects including rural roads building). In
such circumstances, when market access activities, and the resources allocated to them, are
not distinct from other project components, it becomes difficult to assess their effectiveness.
Another key area of interest is the relation between project financing and Technical
Assistance Grants (TAGs). So far, TAGs are relatively independent from the financing of
core project activities. They have played the role of financing riskier activities. Taking risks is
fundamental in testing innovations and acquiring practical experience to detect problems and
determine how to cope with them effectively. However, improved marketing for specific
products does not happen overnight. It is the result of a complex and longstanding process
of enabling the environment and developing the best product for the market. All these
processes need to be financed on a regular basis to reach completion. Some interesting and
very original initiatives in market access have been financed by TAGs. It would be interesting
to examine the possibility for creating a stronger link between TAGs and market access
projects in order to ensure the continuity and sustainability of these activities.
It is very difficult to generalize and make overall statements about the main obstacles that
rural producers face to access markets. However, some requirements have recurred
strongly in different contexts: the need for information, for technical assistance in product
development and for training to improve entrepreneurial and managerial skills. This is where
IFAD’s new challenge lies. Up until now, the Fund has mainly concentrated on providing
infrastructure. Service provision is far more complex. It demands a selection of the most
appropriate services for the specific area/sector/product. It also requires the identification of
potential partners and/or service providers able to deliver effectively and efficiently. Given its
distance from this type of assistance, this is not an easy task for IFAD and “best practices”
for partnership building still have to be found.
Areas for improvement
In several projects, the market access strategy needs to be strengthened and additional
effort is required in order to develop a set of consistent and coherent instruments to support
field operations. Market research is generally conducted during the implementation phase
rather than during the formulation phase. The lack of a systematic approach in targeting the
main problems and in identifying the sectors/products in need of assistance impedes the
coherence and accuracy of the activities as well as an efficient allocation of resources.
Problems during the implementation phase usually result from basic flaws in the
identification of intervention priorities, the planning of activities and implementation
modalities. Initiatives are sometimes undertaken in an ad-hoc manner, which hinders the
possibility for replication and scaling up of successful initiatives. This also limits the
and areas of
- PROMER - Regional
ong>Programmeong> for the Support
of Rural Micro Enterprises
- National ong>Programmeong> for
Rural Development in the
Eastern and Central
- PRODECOP -
Development Project for
Rural Communities and
Small Producers (Chile)
- Puno-Cuzco Corredor
- Sustainable Development
Project for Agrarian Reform
Settlements in the Semi-
Arid North-East (Brazil)
- New market opportunities
(i.e. organic, fair trade) and
marketing channels (i.e.
- Leverage products’ identity
- Supporting farmers’
- Use of IT as a tool for
- Promotion of economic
- Esperiencia de
Comercialization en los
Proyectos del FIDA en
- The Adoption of Organic
Production among Small
Farmers in Latin America:
Table 3: Taking stock of IFAD Experience on market
- Rural Development Project
for the Mountain Zones in
the North of the Wilaya of
- Rural Development Project
in the Mountain Zones of
- Relief and Development
ong>Programmeong> for Gaza and
Jericho (RDP I)
- Smallholder Livestock
- ong>Programmeong> of Action to
Reach Rural Women in the
- Capacity building to support
development also through
- Strong gender focus in the
marketing activities and
successful results in their
- Opening of new marketing
supermarkets) and building
linkages with them
- Support to set up importexport
- AFSP - Agricultural
- Mountain Area
- Target the activities
to specific commodity
- Use specific tools for
mapping the supply
chain and identify
- Strong focus on
partnering with the
Thematic Study on
in the CEN Region –
Phase I (2004) –
Phase II (ongoing)
PF PA PI
Projects Establishing the Pre-conditions
- PAMA Support Project (Mozambique)
- SHEMP - Smallholders Enterprise and
Marketing ong>Programmeong> (Zambia)
- Agricultural Marketing System
Development ong>Programmeong> (Tanzania)
- REAP - Rural Enterprise and
Agribusiness Promotion ong>Programmeong>
(Kenya, Mozambique and Zambia)
Projects Addressing to Specific Value
- Smallholder Cash and Export Crops
Development Project (Rwanda)
- Vegetable Oil Development Project
- Market access as project focus
- Extensive use of specialized NGOs as
- Ad-hoc based implementation
- Two-fold approach: enabling
environment and supply chain
- Cross-cutting studies among the
different countries (i.e. gender
mainstreaming into marketing
operations, marketing and credit
- Gender and Poverty Targeting in
Market Linkages Operations (2002)
- Agricultural Marketing Companies as
Sources of Smallholders Credit –
Experience, Insight and Potential
Donor Role (2003)
- Ex-post Review of the Rural Enterprise
and Agribusiness Promotion
- RITP - Roots And
ong>Programmeong> Phase II
- PROMER - ong>Programmeong>
for Rural Micro
- Establishing a Private
Sector Partnership for
(Sao Tome and
- Convert production
oriented projects into
market oriented ones
- Find new product uses
and add value to meet
- Explore new market
organic, fair trade) and
build up market linkages
Accès aux Marché,
Compétitivité et Pauvrété
rurale en Afrique de
- Matale Regional
Project (Sri Lanka)
- Western Upland
Project for the
provision as a
- Build up linkages
with the private
- Use of IT as a tool
Rural Enterprise and
Poverty Reduction in
Asia and the Pacific
consolidation of partnership arrangements with service providers, which could be
very helpful in performing specific tasks at field level.
Weak project management is often another problem. It can be due to the lack of
project experience at the “micro” level as well as to the resistance in applying
“business” principles and modalities to development projects. The outsourcing of
activities is still mainly done through NGOs and governmental agencies, which in
many cases do not have the adequate abilities to handle business management and
market related activities and usually offer a restricted range of relevant services. It is
also a problem of human resources. More needs to be done with the private sector
and with the help of experienced professionals able to combine development
knowledge with business management skills.
It is difficult to assess the cost-effectiveness of market access interventions. These
activities are scattered and isolated or included in broader components, and their
costs are not always distinct from those of the other activities. It is also hard to
develop indicators, making impact and efficiency difficult to measure.
Innovation is clearly present and plays an important role in IFAD activities.
Nonetheless, a problem that IFAD faces all too often is that innovative experiences
are not fully documented nor integrated into a learning process to facilitate replication
and/or scaling up. There are a number of initiatives that are highly innovative and
could provide a model in the design of future interventions. Some examples are:
• Small-scale initiatives focused on strengthening linkages with the private sector in
order to facilitate marketing and trade of agricultural products e.g. PhytoTrade
(PF); and the organic/aromatic cocoa trade from San tome and Principe (PA);
• Thematic regional studies, e.g. the “Market access, agriculture competitiveness
and rural poverty in West Africa (PA) and the Thematic Study on Comparative
Advantage and Agricultural Marketing in the CEN region (PN)
• Regional ong>Programmeong>s such as PROMER, the Latin America and Caribbean
Regional Network for Rural Micro-Enterprise Development (PL)
• Large-scale projects aimed at promoting the involvement of the private sector in
project management and implementation e.g. Matale Regional Economic
Advancement Project in Sri Lanka (PI).
Among these, small scale initiatives such as Phytotrade and Sao Tome are proving
to be very effective. Their peculiarity, bearing in mind their small scale if compared to
standard IFAD projects, is that they are very focused (the first one is to provide
services to improve the marketing of natural products in South East Africa; the
second one to establish an agreement with a private company in order to sell organic
cocoa from Sao Tome) and have no intermediaries (IFAD is directly financing the
companies as a non profit enterprise in the case of PhytoTrade, or as a consultancy
in the case of Sao Tome). This facilitates the development of indicators that can
measure the project’s impact (i.e. sales volume, return on investment, among
others). It also favours the ability to manage the project activities and promotes better
communication through continuous feedbacks on the project developments. These
projects provide precious information on demand, trends, prices and best practices in
both technical and commercial issues and cultivate direct links with key actors in the
Other innovation include: (i) examples of partnership arrangements with financing
private companies, rather than NGOs; (ii) examples of new implementation
modalities through the establishment of a private company for the project
management rather than through a government unit (i.e. Sri Lanka and Uganda);
(iii) examples of engagement in policy dialogue to enable the environment for
implementing activities and attracting private sector investments (Uganda); (iv)
example of testing new tools to study market environment (i.e. India, Albania) and
micro enterprise development (PROMER in Latin America). However, all these
innovations are still scattered, casual and often difficult to detect, just like market
access activities themselves. As a result, it is difficult to take advantage of them for
replication or scaling up.
The number and variety of initiatives show that these innovations have a great
potential despite their early stage. The innovative country projects engaged in similar
activities could also benefit considerably from exchanging the knowledge gathered
from respective experiences (for example the Matale Project in Sri Lanka and the Oil
Development Project in Uganda ran into very similar problems in setting up a private
company for the project management). In this context, it is a pity to observe that
interaction between Divisions is still very limited.
The challenge of mainstreaming innovation – some suggestions
A clear market access framework would be helpful in order to promote and
mainstream innovative market access initiatives into IFAD projects and programs.
This would give rise to a more systematic approach to the design and management
of market access projects, and would favour a “learning loop” through which to
identify and assess the potential of innovations. The Traidcraft-IFAD market access
manual could be regarded as a step in this direction.
A market access strategy could be introduced at the COSOP stage and then the
framework adapted to the different phases of the project cycle. For example:
(i) Inception: market/marketing study; (ii) Formulation: marketing plan; (iii) Appraisal:
networking through partners identification and selection (with relevant stakeholders
depending on the needs outlined in the marketing plan); (iv) Implementation:
partnership arrangements/agreements; (v) Evaluation: development of specific
indicators to evaluate the impact of market access activities e.g. internal rate of
return, sales, export, employment, salary, among others).
There are other possibilities for mainstreaming innovation into IFAD field level
operations and culture, such as:
Partnering with leading practitioners. IFAD’s role in promoting innovation would be
that of a facilitator, mediator and enabler. This requires the capacity to identify and
select the best partners among the leading practitioners that actively support access
to markets for the rural poor and among other service providers that can assist
operations at the field level (i.e. in many projects, NGOs have proved to be good
partners for capacity building but inadequate in providing business services).
Collaborating with specialised agencies. Market access has a lot to do with having
the relevant information at the right time. It is crucial to develop collaboration
mechanisms with existing networks and institutions that are experts in that area. For
example, trade commissions in developed countries could provide information,
services, and field support (through their country branches).
Supporting regional trading networks. While the general principles for market access
are often the same, strategies and operation modalities vary from product to product
and from market to market. A thorough knowledge of the local products and markets
can only be obtained through a close interaction with field practice.
V. LESSONS LEARNT
The Initiative for Mainstreaming Innovation has crossed the Divisional boundaries by
promoting a fruitful process of sharing and learning across divisions. One of IFAD’s
strength lies in its well-defined structure related to the project cycle, but this
sometimes cramps a healthy process of interaction between different units. A positive
attitude concerning a genuine process of learning and sharing is evident among staff.
IFAD and IMI in particular could capitalize on this
At the same time, there is ample scope for a productive collaboration between
diverse organisations such as IFAD, an international development organisation, and
IFAT, an international association of producers. The potential of this partnership lies
in the organisations’ complementarities. IFAT has acquired credibility and leadership
in the fair trade movement over the years, and now functions as a highly efficient
international network. IFAD should also continue exploring and developing
partnerships with specialised NGOs working on market access (such as Traidcraft
and other regional organisations) and private sector companies working in this field.
There is a substantial and increasing amount of internet resources than can be useful
to people and organisations working in the area of market access. These resources
are free but scattered across a large number of websites. This shortcoming points to
the importance of developing a Virtual Library that would gather all the relevant
resources into one site.
E-commerce can provide a window of opportunity, especially in relation to improving
the marketing of agricultural goods in developing countries. Governments,
international organisations and donors can play a crucial role in supporting this
development. The role of an international organisation like IFAD may be critical in
facilitating the use of E-commerce among small producers, by providing information
and practical tools.
Batchelor and Webb (2002), E-commerce options for Third World craft producers.
Canigiani, Eleonora (2004), “Taking stock of IFAD Experience”. Report produced for
Economist Intelligence Unit (2004) “The 2004 e-readiness rankings” London.
Hopkins, Raul (2000), “Impact Assess Study of Oxfam Fair Trade”. Oxford.
Humphrey, Mansell, Pare and Schmitz (2003), The reality of e-commerce with
IFAD (2001), Rural Poverty Report, The Challenge of Ending Rural Poverty. Oxford
IFAD (2003), Information Note: IFAD Initiative for Mainstreaming Innovation. EB
IFAD (2003), Promoting Market Access for the Rural Poor in Order to Achieve the
Millennium Development Goals. GC25.
IFAD (2004), Trade and Rural Development: Opportunities and Challenges for the
Rural Poor. GC27.
Maccari, Michele (2004), “Business Development Services – the Experience of
CIEN”. Report produced for IFAD
Oxfam (2002), The Trade Report: Rigged Rules and Double Standards. Available in
Oxfam web-site. http://www.oxfam.org/
Page, Sheila (2003), “ong>Towardsong> a ong>Globalong> ong>Programmeong> on Market Access:
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Zilveti, Veruschka (2002), “Experiencia de comercialización en los proyectos FIDA en
Centroamérica”. Informe realizado para el FIDA