Market-oriented advisory services in Asia

111 Pages·2011·2.05 MB·English

RAP PUBLICATION 2011/10
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RAP PUBLICATION 2011/10

Market-oriented advisory services
in Asia – a review and lessons
learned
RAP PUBLICATION 2011/10

Market-oriented advisory services
in Asia – a review and lessons learned

by

David Kahan

FOOD AND AGRICULTURE ORGANIZATION OF THE UNITED NATIONS
REGIONAL OFFICE FOR ASIA AND THE PACIFIC
Bangkok, 2011
The designations employed and the presentation of material in this
information product do not imply the expression of any opinion whatsoever
on the part of the Food and Agriculture Organization of the United Nations
(FAO) concerning the legal or development status of any country, territory, city
or area or of its authorities, or concerning the delimitation of its frontiers or
boundaries. The mention of specific companies or products of manufacturers,
whether or not these have been patented, does not imply that these have
been endorsed or recommended by FAO in preference to others of a similar
nature that are not mentioned.

The views expressed in this information product are those of the author(s) and
do not necessarily reflect the views of FAO.

ISBN 978-92-5-106919-6

All rights reserved. FAO encourages reproduction and dissemination of
material in this information product. Non-commercial uses will be authorized
free of charge, upon request. Reproduction for resale or other commercial
purposes, including educational purposes, may incur fees. Applications for
permission to reproduce or disseminate FAO copyright materials, and all
queries concerning rights and licences, should be addressed by e-mail to
[email protected] or to the Chief, Publishing Policy and Support Branch,
Office of Knowledge Exchange, Research and Extension, FAO,
Viale delle Terme di Caracalla, 00153 Rome, Italy.

© FAO 2011

FOREWORD

The agricultural environment is changing at unprecedented speed and in very diverse ways due to
market liberalization and globalization. The urban population in the region is increasing dramatically,
accompanied by higher incomes and changing nutritional diets that create greater demand for high-
value products. This is juxtaposed by declining public investment in agricultural development,
particularly in extension services. The future for many small farmers is bleak unless they can adapt
their farming systems to these changes. In order to survive and prosper farming needs to become
competitive and profitable.

Agricultural extension plays a key role in raising productivity by offering technical advice on new
technologies, helping farmers to identify problems and opportunities and sharing information. This
publication presents the findings of a regional study in Asia on the design and delivery of Market-
oriented Advisory Services (MOAS) to farmers and rural entrepreneurs. MOAS covers non-traditional
extension services that are mainly delivered at the postproduction stage. They are assumed to be
provided by both public and private organizations and are targeted not only at farmers but also at other
stakeholders along product value chains. Contained within the broad concept are services such as
extension, training, group organization of farmers and rural entrepreneurs, producer group
development, market and business linkages and the provision of market-oriented information. The
term MOAS includes not only those services provided for a developmental purpose, but also private
sector-led initiatives providing business services to farmers and rural entrepreneurs.

This publication presents findings from case studies and examples of „successful cases‟ found through
Internet searches, field studies and literature review. Some of these experiences, however, are quite
new and insufficient time has elapsed for them to be tested and proven. It may be too early to draw
conclusions about what may or may not work. The main purpose of the publication is to highlight
some of the perceived „good practices‟ that can be found in the region. It is intended mainly to provide
insight into MOAS at the local level, reviewing the range of advisory services offered and discussing
their performance. The publication also addresses some discussion points and identifies outstanding
issues and recommendations.

The publication is directed at those institutions involved in extension, value chain/market linkages and
business development – i.e. donors, government institutions, civil society and the private sector. Some
chapters should also be of interest to support service institutions and policy-makers engaged in
supporting service delivery. The examples, together with the recommendations provided, should
provide practical advice to all those who are seeking to help farmers improve their livelihoods. We
hope that readers will find the issues raised and the practical implications for advisory service
providers useful in advancing broader discussion of the role and development of agricultural extension
services in linking farmers to markets, enhancing farm income and ultimately contributing to rural
poverty alleviation in Asia.

Hiroyuki Konuma
Assistant Director-General and Regional Representative
FAO Regional Office for Asia and the Pacific
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ACKNOWLEDGEMENTS

Some of the case study materials were selected and collected by experts attending a regional
conference on market-oriented advisory services in May 2010. The workshop was attended by over 30
participants from 15 countries in Asia. Additional contributions were received from Rob Erskine-
Smith (Bhutan), Ranny Chaidirsyah (Indonesia), Nurul Islam (Bangladesh), Krishnan Singh (India),
Badri P. Bastakoti (Nepal), Nipon Jayamangkala (Thailand), Saliya De Silva, (Sri Lanka), (Kit Chan,
Malaysia) and Joan Uy (the Philippines). Their contribution to completing detailed case study
questionnaires is very much appreciated. Additional thanks go to Robin Leslie for editing the
publication.

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OVERVIEW

Chapter 1 provides an overview of the changes which have occurred and are taking place in the rural
environment – on both the demand and supply side of MOAS delivery – that have led to new
opportunities for farmers to participate in the globalized economy. It makes reference to market
liberalization, demographic changes, urbanization and the environmental risks and threats facing
farmers and other stakeholders. It also describes the shift in extension service delivery from a purely
public sector initiative towards a more pluralistic approach that also engages the private sector and
civil society.

Chapter 2 explains the notion of MOAS in some detail and describes the type of services provided by
MOAS, the main service delivery systems and the stakeholders demanding these services. It includes a
section on MOAS and economic theory and develops a conceptual framework for MOAS – as part of
an innovation system. It concludes by addressing the issue of cost recovery describing various models
that can be found in the region.

Chapter 3 addresses some issues for discussion. A number of questions have been posed relating to
MOAS. What should be the role of the public sector in providing MOAS? How can the public sector
be revitalized? How effective have NGOs been in MOAS? How can private service markets be
strengthened? How can the public sector better collaborate with the private sector? How can public
sector support be provided without undermining the market? Should MOAS be subsidized? How can
the capacity of the weak be built up optimally?

Chapter 4 points out some of the lessons learned from the study with a particular focus on „good
practices‟ and success factors. The chapter uses both the case studies and a review of the broader
literature to focus upon key success factors that seem to be important – and in some cases absolutely
essential – for the promotion of successful and sustainable MOAS provision. The findings cover both
the good and bad experiences of selected topics that include the enabling environment, Information,
Communication, Technology (ICT) innovations, private sector service providers, producer
organizations, clusters, contract farming, commodity associations and networking arrangements.

Chapter 5 equips policy-makers and programme managers with a set of recommendations relating to
MOAS. The chapter provides a set of strategies, principles and practical guidelines that should be
taken into consideration in developing the MOAS framework more extensively. The chapter stands
back from the individual cases in order to consider the implications for policy-makers and programme
managers in current thinking and practice.

Chapter 6 contains a final word on the study summarizing the main issues and suggesting areas of
future focus to strengthen and develop MOAS in Asia.

The annex provides short descriptions of some of the case study evidence. It is divided into two parts –
public sector-driven and private sector-led interventions. The presentation of the cases includes a short
background description, the major objectives and details of the overall programme and the broad
approach and experience in providing MOAS.

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CONTENTS
FOREWORD………………………………………………………………………………………….iii

ACKNOWLEDGEMENTS………………………………………………………………………… v

1. INTRODUCTION ............................................................................................................................. 1
Demand-side changes ......................................................................................................................... 1
Supply-side changes ............................................................................................................................ 2

2. MARKET-ORIENTED ADVISORY SERVICES (MOAS) ......................................................... 5
What is MOAS? .................................................................................................................................. 5
MOAS as an innovation system .......................................................................................................... 6
MOAS and economic theory............................................................................................................. 10
Demand for services ......................................................................................................................... 12
Provision of services ......................................................................................................................... 14
Scope of services ............................................................................................................................... 17
Cost recovery .................................................................................................................................... 24
The dynamics of cost recovery ......................................................................................................... 27

3. DISCUSSION ISSUES .................................................................................................................... 29
What should be the role of the public sector in providing MOAS? .................................................. 29
How can the public sector be revitalized?......................................................................................... 29
How effective has the private sector been in MOAS? ...................................................................... 30
How effective have NGOs been in providing MOAS? ..................................................................... 31
How can private service markets be strengthened? .......................................................................... 32
How can the public sector better collaborate with the private sector? .............................................. 32
How can public sector support be provided without undermining the market? ................................ 34
Should MOAS be subsidized? .......................................................................................................... 35
How can the capacity of the weak be best built up? ......................................................................... 35

4. LESSONS LEARNED AND SUCCESS FACTORS .................................................................... 38
The enabling environment for business ............................................................................................ 38
Public sector practices ....................................................................................................................... 38
Public-private sector collaboration ................................................................................................... 39
Multistakeholder coordination .......................................................................................................... 41
ICT innovations ................................................................................................................................ 42
Support to private sector service providers ....................................................................................... 46
Producer organizations and clusters .................................................................................................. 50
Producer companies .......................................................................................................................... 53
Contract farming ............................................................................................................................... 53
Commodity associations ................................................................................................................... 55
Networking, partnerships and stakeholder involvement ................................................................... 55
Capacity building: a holistic approach .............................................................................................. 57

5. RECOMMENDATIONS ................................................................................................................ 59
A systems approach to MOAS .......................................................................................................... 59
Understanding the enabling environment for MOAS ....................................................................... 60
Reinvigorate the public sector ........................................................................................................... 61
Providing effective services and information ................................................................................... 63
Design „smart incentives‟.................................................................................................................. 69
Develop capacity ............................................................................................................................... 70
Promote public-private partnerships ................................................................................................. 71

6. FINAL WORD……………………………………………………………………………………. 73

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