Regional Markets

2 Inclusion of smallholder farmers
or costly-to-copy resources or competences so that it outperforms its competitors
in particular market segments? Examples of unique resources include raw materials,
skills, competences, procedures, networks, market opportunities and brands. Examples
of costly-to-copy resources are capabilities leading to innovation, insights in positional
advantages in market segments, skills how to cope with imperfect market information,
special organisational learning capabilities or unique brands.
Governance in the value chain
Supply or value chain analysis deals with the degree of vertical coordination required in
marketing channels to adequately connect supply and demand (e.g., Bucklin 1970; Stern
et al. 1996; Ruben et al. 2007; Van Tilburg et al. 2007). The discussion on this dimension
of marketing started in earnest in the late 1990s and combined the thinking regarding
the organisation of the business and the business partners in a chain, on the one hand,
and the location of certain activities within the chain in developing and developed areas,
on the other. Even though this line of theoretical thinking was developed in an industrial
setting (Western companies outsourcing production to the South, for instance), it
also proved useful as an analytical framework in the agricultural setting. The adaptation
for the agricultural setting in the South included considering how primary producers
could become more powerful by organising themselves, for instance in cooperatives.
The value chain in relation to its environment
Market institutions in general tend to be relatively weak in less developed countries.
Trade and marketing characteristics differ considerably between value chains operating
in a weak or strong institutional environment (e.g., Fafchamps 2004). Prevalent differences
in the institutional environment between less and more developed countries
are most notable in the level of purchasing power, the degree of market transparency,
transaction costs and the degree of access to both resources and markets by actors in the
value chain. In order to be beneficial, transactions in a weak institutional environment
need to be embedded in trust relationships based on reputation, participation in business
or personal networks, family relationships, a common location of origin, a common
ethnicity or religion (e.g., hadji traders or marabouts in Senegal).
Marketing and finance are closely related, as the credit relationships in trade illustrate.
Assembly traders in developing countries may be pre-financed by wholesalers, in order
to be able to provide smallholder farmers credit during the lean season. The condition
is that the farmers sell their harvested crops to these specific traders, usually at a lower
price (e.g.,Van Tilburg and Hamming 1999). This phenomenon is known in the literature
as ‘locked-in transactions’ or ‘interlocked product and credit markets’.
We have decided to use an adapted version of the framework developed by Gereffi et
al. (2005) to categorise the cases presented in chapter 3, to uncover the most important
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