Here - Natural Resources Institute
Transcription
Here - Natural Resources Institute
Millet, Myrrh and Manchester United: Markets for Development, Lessons from Practice Wednesday 10 June 2015 Professor Ben Bennett Inaugural Professorial Lecture Series MILLET, MYRRH, AND MANCHESTER UNITED: MARKETS FOR DEVELOPMENT, LESSONS FROM PRACTICE by Ben Bennett Natural Resources Institute, University of Greenwich An Inaugural Professorial Lecture delivered at the University of Greenwich Wednesday 10 June 2015 © University of Greenwich 2015 All rights reserved. Except as permitted under current legislation, no part of this work may be photocopied, stored in a retrieval system, published, adapted, transmitted, recorded or reproduced in any form or by any means, without the prior permission of the copyright owner. Enquiries should be addressed to the University of Greenwich. Cover image: Dave Cole University of Greenwich, a charity and company limited by guarantee, registered in England (reg. no. 986729). Registered Office: Old Royal Naval College, Park Row, Greenwich, London SE10 9LS FOREWARD “My greatest challenge is not what’s happening at the moment, my greatest challenge was knocking Liverpool right off their perch.” Sir Alex Ferguson Manchester United has, on more than one occasion, saved my bacon. Football is a nearly universal language. It shuns elitism (unless you are a player). From the most remote island to the tiniest outpost of agriculture I have managed to find a ‘Man U’ fan (or at least somebody who wants an argument with one). They say that there are more Manchester United fans in London than Manchester – well, there are certainly more in Nigeria than both put together! What this illustrates is the universality and influence of brands, the richness of sports allegiances and the power of individuals to set global aspirations. And aspirations are what markets are all about. The poorest 10% of the world’s population aspire to be like David Beckham, or at least to be as healthy as he is. The job of a marketing economist is to oil the wheels between those that produce and aspire to have a reasonable life, and those that consume and want their needs fulfilled. When you pick up those French Beans in a supermarket or look at the label of your chocolate bar, consider this: there is a chain of actors, actions and consequences that has ended in that product; real people with real lives whose future depends upon a fraction of that value having returned to them. The security and scale of that value is increasingly important in a world of free trade and open competition. The consequence of your decision to buy or not to buy is probably much more important than you think; even more important than Manchester United. SHORTCOMINGS “That lad must have been born offside.” Sir Alex Ferguson on Italian footballer Filippo Inzaghi Reviewing my work for this lecture over the past 25 years I was astonished by its range and scope. Tropical commodities are many and you can do a lot of different things with them. For example, I have done a lot of work on marketing of coconuts and fish in South East Asia. In the rural Philippines, my efforts to develop Market Information Systems and ‘Marketing Farmer Field Schools’ are not included. Other absences are work on integrated local market development schemes, efforts to develop food oil processing sectors in Tanzania and Indonesia, and, more recently, mobile phone applications for marketing. I have also been privileged to support a number of efforts to support the use of intellectual property as a means to upgrade value chains, particularly for natural products, and this work is omitted. Inevitably, any ‘expert’ in my field, is called upon to judge the work of others through evaluation, and I have done a lot of this and seen some wonderful work. This is not covered here. The nature of research at the Natural Resources Institute is that it is collaborative, so other scientists or social scientists led the projects I was asked to work on. The advantage was that this diversity provided me with ideas and inspiration. Notwithstanding, any errors, omissions, opinions and quirks in what follows are my responsibility alone. CONTENTS Introduction 2 Practical problems with markets: their measurement and resolution 12 Quality control, management and food safety 19 Bringing economics to bear: matching science with social science for greater development impact 21 Marketing the impossible – some things are simply hard to sell 24 Is international market access the solution to driving demand in developing countries: lessons from trade negotiation? 27 Natural product value chains, embedded value and value chain governance – millet, myrrh and innovation systems for market development 29 Issues for the future of agriculture and trade 38 And what of Manchester United? What lessons are there for agricultural market development and practitioners in developing countries? 39 Acknowledgements 41 References 42 2 Millet, Myrrh, and Manchester United: Markets For development, Lessons from Practice INTRODUCTION “I’m going to tell you the story about the geese which fly 5,000 miles from Canada to France. They fly in V-formation but the second ones don’t fly. They’re the subs for the first ones. And then the second ones take over - so it’s teamwork.” Sir Alex Ferguson explaining teamwork to goal keeper Fabian Bartez In 1987, as young economist working at the Overseas Development Administration (now the Department for International Development, DFID) I was invited to join the Economist Cadre in a meeting with Robert Chambers whose seminal work on new and more participatory ways of understanding rural economies (Chambers R, 1983, 1997) was just coming out. I had lived in rural Northern Nigeria in the early 1980s and I found Chambers’ inversion of the way the world was viewed by donors inspiring. He took a map of the world, pasted it on the wall of the Minister’s Board Room upside down and asked the small audience of Senior Economist “what’s wrong with this”? He was, of course, making a rather trite point about perception which he would follow up with a scathing attack on the audience for ‘not leaving their Landovers’ and ‘not seeing beyond the roads when understanding the problems of the rural poor’. The Chief Economist had obviously partaken of a liquid lunch and did not enjoy being patronised: he lambasted Chambers. But it left a lasting impression on me and made me reconsider my worldview. Two years later, I was at the Natural Resources Institute and trying to persuade scientists that there was a different way of seeing their work: from the perspective of the invisible rural poor, through the lens of business economics and as innovations driven by market actors, like traders and brokers, who had hitherto also been unseen. This story then, is about a range of approaches and methods, applied to an assortment of commodities, that have become, over the past 25 years, central to development thinking and practice to the point where understanding markets and basic business economics is the normal starting point of development interventions and not an adjunct used to explain why things did not work. In this paper I want to review how these changes to practice have come about. We will consider the application of tools to understand markets and their actors; micro businesses and their dynamics, commodities and their market drivers; and we will look at these issues through a great many worked example from the weird and wonderful world of tropical commodities that kept me enthralled all this time. OUTLINE AND SCOPE The methods and approach to understanding agricultural markets and natural resources businesses in developing countries have, broadly, been through three phases of development during the past 25 years. Firstly, emerging from the postcolonial, Fordist, neo-Marxist development economics of the 1960s and 1970s many countries had agricultural policies aimed at moving towards an industrialised economy. To achieve this, policies of import substitution, heavy state intervention and ‘market management’ were implemented almost universally. Countries adopted grain marketing boards, paid pan-territorial prices and ignored any concept of comparative advantage. 1 The World Bank and International Monetary Fund Professor Ben Bennett 3 Secondly, in the 1980s, this approach was failing and countries were being forced to accept a new, reality where the Bretton Woods institutions1 forced the withering away of state. For marketing economists working in development, this was a period where the giant agro-processing plants and massive grain silos fell into disuse. The problem with the Washington Consensus2 and its aftermath for rural farmers was that it left a vacuum which was not filled by the private sector until much later when urban markets started to evolve at scale (Williamson, 1990). The fault lines of geopolitics (a method of studying foreign policy to understand, explain and predict international political behaviour through geographical variables) were beginning to have a profound impact on the global agricultural economy. With the collapse of communism and with it any passing semblance of faith in the ability of states to ‘manage’ rural economies, new possibilities emerged driven by free trade and market access. It had become clear that wrong policies resulted in market failure3 and this was now the focus of our attention. Development economists were armed with participatory and ‘bottom-up’ approaches (Chambers, ibid.) and were sent forth to somehow match the desires of the rural sociology departments of Western Universities (i.e. various livelihoods approaches) with the post-Green Revolution emphasis on new agricultural productivity paradigms. Thirdly, a new realisation that productivity without growth, market access and, crucially, market intermediaries, would not achieve the ambitious aims the world had set itself (i.e., the Millennium Development Goals). It is hard to believe from a modern perspective that middlemen (for example traders who buy from producers and sell to retailers or consumers) were universally blamed for market failure until fairly recently. Agricultural projects in the 1980s all spoke of by-passing middlemen. Speaking to fish farmers in Romania in the month after the Revolution of 1989, I found that their primary fear for the future was that middlemen would emerge who would steal all their profits. This remains a common misconception even today (Oguoma, 2010). The result of this intellectual journey and evolution of practice is Global Value Chain Analysis (Kaplinsky, 2000, Gibbon and Ponte, 2005). Actually, as we shall see, those of us working in markets in rural developing economies have been doing value chain analysis for decades, but now we have a name for it and it has become the norm. The important point about different value chain approaches is that they map the actors, relationships and values along and across chains or ‘filières’. As a result, we now have a method that allows us to reveal the detail of markets, shows us where new possibilities for increasing income might lie and gives us a tool to measure how our efforts have done. Value chain analysis spoke to the narrative of a globalised world economy where growth was driven by trade. As we now understand, this new world trade order was built on a house of cards. Financial markets had not fundamentally changed, regulation and state governance were not part of the global financial settlement allowing individual states and corporations to shy away from the 2 T his refers to the set of 10 specific economic policies identified by John Williamson in 1989 that form the standard ‘package’ of reforms used by the World Bank and the International Monetary Fund to reform the economies of developing countries. 3 T he sub-optimal allocation of goods and services caused by imperfections in the market mechanism (Bannock, 1992). 4 Millet, Myrrh, and Manchester United: Markets For development, Lessons from Practice democratic deepening necessary to prevent the most recent global crash. As the World Bank economist Dani Rodrik has said, “if you want more and better markets, you have to have more (and better) governance” (2011:xviii)4. Recent thought has focussed on the high costs of global inequality and information asymmetry and we have seen a heartening return to calls from more radical reforms based on not more, but better and fairer intervention (Stiglitz, 2012). These latest insights have important implications for the way we view value chains in the future: they will certainly become more diffuse and complex and require new methods for their understanding. To illustrate these phases of practice in the understanding of markets and trade and what they might mean for future work in the field, I want to explain the challenges faced by the rural poor in developing countries in the context of where we are now. I will then describe a number of different examples from my own practice in the field. These examples look at the evolution of our approach to agricultural markets in developing economies through the lens of a series of development challenges and key development questions that are typically addressed by marketing economists. WHAT ARE THE MARKETING CHALLENGES FACED BY POOR RURAL FARMERS AND FISHERS? In the late 1980s the FAO (Abbott and Makenham, 1990) described a world of tropical agricultural markets where domestic wages were insufficient for consumers to buy simple value added goods like milk and where the mainstay of most developing economies were basic commodities exported unprocessed to lead buyers, largely in the Western developed economies. Authors talked about agricultural market failure and the dependency inherent in the structure of agricultural economies with a limited range of exports (Robbins, 2003), despite efforts to win greater income with fair trade (Daviron and Ponte, 2005). By the last 1990’s and into the crisis of the 2000’s authors were trying to explain why the hidden hand of neo-classical economics had failed, either because we had given economists too much power (Kay, 2003), or not enough. Even the grand thought leaders of that time seemed to focus on the supply side5 and ignore markets. A new, more nuanced, and frankly, more alarming, view on the future of agricultural production and marketing was emerging6 . This view postulates a world where populations continue to escalate, resources such water becomes more scarce, cities grow and consumption switches to higher energy foods like meat and vegetable oils (Searchinger et al, 2013). Such a world, expected to be populated by 9.6 billion people by 2050 (UNPD, 2014), will, without radical changes in policy, be increasingly polarised and large proportions of it will be malnourished and without a voice. We can describe the future challenges by looking in more detail at population projections, food price projections, urbanisation and land prices and changes in food habits. These need to be considered in the context of climate change and the rush for biofuels, water and hunger and malnourishment. 4 For an understanding of the role of governance in global value chains see Gereffi et al (2005). 5 Sach (2005:283) for example in his rightly lauded seminal work on poverty describes the silver bullet for agriculture as being seed varieties, water and soil management techniques. 6 See for example Lin (2012) who argues for a more interventionist role for governments in markets. Professor Ben Bennett 5 POPULATION PROJECTIONS Estimation of the future population of the world, the effective number of mouths we will have to feed, varies substantially (see figure 1). Constant fertility projected from today growth rates gives us an unthinkable 27 billion. Most analysts foresee a levelling off of fertility, based largely on evidence that there is an inverse relationship between income and fertility. Women with better education, for example, elect to have smaller families. Children from small families have better nutritional outcomes (Schultz, 2005). Figure 1: World population projections showing different fertility rates, 1950-2100 Source: UN (2014a) PRICE PROJECTIONS The long-term trend for food prices is upwards (see Figure 2) and the biggest element of this increase is the cost of fuel. URBANISATION AND CHANGING LAND USE By 2050 the world’s rural population will be static (and old). Most people will live in cities and depend on a smaller area for farms and fewer people to feed them (see Figure 3). 6 Millet, Myrrh, and Manchester United: Markets For development, Lessons from Practice Figure 2: Global Food Prices 1960 – 2012 Source: Baffes and Denis, 2013 Figure 3: Historic and projected urban and rural population of the world 1950 - 2050 Source: UN (2014b) RISING INCOMES, CHANGING EATING HABITS – THE MOVE TO MEAT The evidence shows that increased income will result in a move away from traditional foods towards a more Westernised diet based on meat protein (see Figure 4). CLIMATE CHANGE Changes in global weather patterns may impact negatively on crop yields (see Figure 5). Professor Ben Bennett 7 Figure 4: The relationship between per capita income and meat consumption in different counties Source: Delgado et al, 1999. Figure 5: Frequency distribution of the projected mean yield change for Africa and South Asia to 2100 Source: Knox et al, 2012 Knox et al (2012) show that, in Africa, the crops with significant projected yield reductions include wheat (−17%), maize (−5%), sorghum (−15%) and millet (−10%). However, in S. Asia, of the crops reported, only maize (−16%) and sorghum (−11%) are projected to have significant yield reductions. It is notable that cassava yield variation was considered not statistically significant suggesting a degree of useful resilience. 8 Millet, Myrrh, and Manchester United: Markets For development, Lessons from Practice THE RUSH TO BIOFUELS As farmers convert their land to the production of feedstock for carbon neutral biofuels food availability may decrease and prices rise (see Figure 6). Aggressive biofuel growth scenario without technology improvements Feedstock crop 2010 2020 Cellulosic biofuel scenario Aggressive biofuel growth scenario with productivity change as well as cellulosic conversion 2020 2020 Cassava 33 135 89 54 Maize 20 41 29 23 Oilseeds 26 76 45 43 Sugar beats 7 25 14 19 Sugarcane 26 66 49 43 Wheat 11 30 21 16 Figure 6: Percentage changes in world prices of feedstock crops under different technology and growth scenarios to 2020, compared with baseline of 2010 Source: IFPRI, 2006 quoted in von Braun and Pachauri (2006:8) WATER – EVEN MORE SCARCE? Oh yes – and we are running out of water too….(see Figure 7). Figure 7: Global Water Demand: projected water use by different user sectors and economic regions in 2050 compared with a baseline of 2000 Source: OECD (2012:25) NB: This does not include rain-fed agriculture! Professor Ben Bennett 9 Water demand is growing but the productivity of that water in terms of food produced is not keeping pace (Rosegrant, 2002:106). HUNGER AND UNDERNOURISHMENT We are doing surprisingly well on undernourishment (see Figure 8). Figure 8: Prevalence of undernourishment, world and developing countries, 1990-92 to 2012-14 Source: FAO SOFI quoted in Maletta (2014:7). Mainly because extreme poverty is declining (see Figure 9). Figure 9: Prevalence of extreme poverty in developing countries, 1980-2015 Source: Ravallion (2013), quoted in Maletta H (2014:3). But this welcomed trend hides pockets of stubborn resistance in declining extreme poverty, particularly Africa (see Figure 10). 10 Millet, Myrrh, and Manchester United: Markets For development, Lessons from Practice Figure 10: Estimated trends of prevalence of stunting in children under five (MGRS standard), in developing countries (all, and three regions), 1980-2020 Where: LAC = Latin America Countries Source: Maletta H, (2014: 13) Solutions to these challenges, however, are within our grasp. With the application of new technologies, particularly improved genetic material, we can grow more food and with a greater nutritional impact with the same land. Education can make us eat more healthily and temper demand. Food that is produced and never reaches mouths can be recovered. Food being drawn-off for energy can be replaced with new energy sources. Farmers, particularly women farmers, instead of being marginalised by society, can be brought centre stage (Conway, 2012). Given this narrative then about the state of the world and its agricultural economy, what role do agricultural markets have to play? The truth is that much of the success in recent years that gives heart for the future is due to big changes going on in the rural economies of developing countries. Recent years have seen important growth in some key economies with large populations, such as India. A lot of this growth has been driven by a heady mixture of improving agricultural terms of trade, rising farm prices for key strategic commodities after a long period of relative decline, the emergence of an urban middle class with spare cash for food and refrigerators to keep it in, and, a very large decline in global tariffs and reduction of non-tariff barriers, especially for Least Developed Countries. New markets have opened: notably India and China. LDCs’ exports to developing countries had expanded more than sevenfold to account for 52 per cent of their total exports in 2011 (WTO, 2012)7. If we are to have enough food, farmers need to produce a surplus. This is an opportunity for food-insecure rural households, but only if they produce the right food, at the right price and get it safely to the consumer in a nutritious state. Markets and trade, then, matter. 7 On a cautionary note, whilst agricultural trade from LDCs to Developed countries has grown, the lion’s share of this trade gain has been in fuels and minerals. Professor Ben Bennett 11 MARKET FAILURE Despite all the evidence pointing towards under-supply in global food markets, the persistent question I have received from farmers through many years is: “if we grow too much who will buy it”? Farmers that have been encouraged to grow surplus food or to move from subsistence into a cash economy naturally want to address the massive risk that they have to take that they will not have enough food to feed themselves and their dependents in the future. You still find farmers respond to the question of what their problems are with the solution “why doesn’t the government buy all my surplus”. Economic theory suggests that supply and demand is intermediated by price. However, this presupposes all parties have perfect knowledge of the market. In the context of rural Africa this is never the case for a range of reasons including: isolation and the absence of transparency8 (the market access issue), the absence of scale economies and excessive transaction costs. Traditionally, market intermediaries or middlemen, get the blame for the failure of markets to deliver sufficient incentives to producers. Here lies the fundamental paradox of agricultural trade: markets do not work properly; this is called market failure. Its causes and solutions are the core of NRI’s work and have been the central theme of my work on agricultural marketing in the developing world. How do we get more money for existing products? How do we help to find markets and help organise farmers to meet the new demand? Can more of the final consumer level value be captured by farmers (up-grading)? What does the existing value chain look like and how can it be optimised (governance)? How do we manage over and under supply and the consequent price fluctuations? In this inaugural lecture I will review some of the work I have done to explore these questions. I will use a few of the examples of commodities, countries and approaches applied by me in the past years to illustrate the key challenges faced by those trying to market the produce of small scale producers in developing economies. In doing this I will try to show some of the key methodologies that have framed the field in the past thirty years and highlight hard won lessons. Firstly, I will look at some of the practical problems with agricultural markets and the application of science to these that I have addressed and the approaches that worked and failed. Secondly, I will draw on selected examples from practice to illustrate the challenges faced by a trade and marketing economist and the range of commodity possibilities with which one can be faced. Thirdly, I will consider the interface between agricultural markets in developing countries and those in developed economies through the lens of trade negotiation with the aim of illustrating the power of global market access to unlock domestic agricultural value chains to the benefit of the poorest. Fourthly, I shall consider the unique challenges of marketing products that are novel or under-valued, such as traditional foods and the wild harvested. Finally, I will reflect on what the future holds for the marketing economist and value chain specialist. 8 Often referred to as information asymmetry. 12 Millet, Myrrh, and Manchester United: Markets For development, Lessons from Practice 1.PRACTICAL PROBLEMS WITH MARKETS: THEIR MEASUREMENT AND RESOLUTION “When the seagulls follow the trawler, it’s because they think sardines will be thrown into the sea.” Eric Cantona In this section we shall look at examples of research into markets and practical applications that support some of the development economics theories, models and proposed paradigms in the past twenty to thirty years. POSTHARVEST LOSSES – IT’S NOT LOST, WE JUST CAN’T FIND IT NRI’s has a global reputation for research into post-harvest losses (Hodges, Busby and Bennett, 2011, Hodges, Bernard and Bennett, 2013). It is notable that, in 25 years of working on this issue, we are still debating how to define what postharvest losses are9. A recent resurgence in interest in this issue, to some extent driven by NRI (World Bank, 2011, Hodges and Bennett, 2011) has returned us to the challenges of complexity that we revealed in the early 1990s (Ward and Jeffries, 2000). Huge market inefficiencies brought about by centralised pricing allied to poor infrastructure and, so some extent, corruption, brought about grain losses that came to the attention of the world’s press10. The famine in the Horn of Africa in the early 1980’s that led to live aid, revealed that subsistence farming did not work, food supply systems based on Marxist maxims could not prevent starvation and, that farmers were actually better at storing their grain safely than government (Compton et al, 1993). Governments tried to build clever models based on intervention stock which, with the data management tools of the age, simply did not work and resulted in a shift of in-chain costs to the consumer in the form of higher prices (Simatupang and Timmer, 2008). This large scale and very visible loss of durables (i.e., food grains) led to a burst of interest in postharvest losses. It was at this time that the infamous 30% of all food is lost postharvest statement was delivered by the FAO and endorsed by no lesser global figure than Kissinger in his ground breaking speech to the World Food Congress in 1974 (Kissinger, 1974:821). This figure persists to this day and is commonly but incorrectly repeated in policy documents. It is not that simple, unfortunately. Firstly, there is a crucial distinction between losses (something that has no inherent latent value) and waste (something that has a value with another use. Distinguishing between physical loss (i.e., the moisture that grain loses during storage) and economic losses (i.e., the opportunity cost between the highest possible value attainable at any stage in the value chain and its next best value) helps us understand and locate postharvest losses, but the task of aggregating losses at scale in a way that properly promotes their mitigation and encourages relevant policy interventions remains out of reach. 9 See for example the Food Loss & Waste Protocol being developed by the World Resource Institute with help from NRI www.wri.org 10 Summarised in de Waal, 1997. Professor Ben Bennett 13 The challenge of measuring postharvest losses is thrown into particular relief when perishables are considered. Fresh vegetables, fish products, flowers, meat and cassava measure their decline in quality and value by hours rather than days or weeks. EXAMPLES OF POSTHARVEST LOSSES RESEARCH a.Fisheries In the early 1990s I worked as post-harvest fisheries economist on a series of DFID and FAO projects in Bangladesh, India, Thailand, Sri Lanka and Indonesia aimed at trying to address the abject poverty of fisherfolk around the Bay of Bengal. A ‘proto’ value chain approach involving interviews across and along chains of fresh, frozen, dried and smoked fish delivery showed just how precarious the life of very small scale fish traders were and how previously unknown groups of intermediaries, often women, populate elements of the value chain and deliver essential services (Bennett and Rogers, 1992). In West Africa, for example, middle women, commonly referred to as ‘market mammies’ were trading marine capture fish across borders apparently closed to trade and between groups without a common language using a remarkable system of stone tallies as currency (Bennett and Ames, 1994). The experience we gained from these many instances culminated in a ground-breaking piece of research in Tanzania that attempted to measure postharvest losses in the fisheries (Ward and Jeffries, 2000). The results indicated that absolute loss, while substantial, was less than believed and this was to become a common theme of later losses work. It also showed the high degree of differentiation in value chains for perishables and the risks of crowding out actors inherent in the process of technical upgrading. In the West Coast if India, for example, we found that women fish traders were excluded from transport on buses with baskets of fish because of complaints from other customers. An innovative new, light, spun aluminium ‘patel’ gave these women access to transport and a huge increase in their marketing range. Today we would be lauding the potential nutritional impacts of such an innovation. On a recent mission to the region I was delighted to note that the aluminium ‘basket’ is still commonly used by tens of thousands of fish traders. In Sri Lanka, a chance encounter with a man on a bicycle with a wooden box of rotting fish tied precariously to his cycle-rack, led to the introduction of a new fish cool box specifically designed for a bicycle. This dramatically increases the number of hours a trader could spend seeking higher value markets (Clucas and Bennett, 1991). b.Grains It is probable that the greatest investment by governments and donors in developing world agriculture has been in the grain sector. The fundamental importance of this staple crop to food security and, indeed, social cohesion in most countries has resulted in it being the focus of attention. Outbreaks of inappropriate policy (i.e. expensive European style grain silos and failed government grain buying schemes) seemed to have pervaded the recent agrarian history. The outbreak of the Larger Grain Borer (LGB) in sub-Saharan Africa in the 1980s and 1990s, said to have been transferred from food aid shipments, led to a burst of interest into research on the economic impact of mitigation measures. The burst of interest in food aid and 14 Millet, Myrrh, and Manchester United: Markets For development, Lessons from Practice its misuse following the great famine of the mid 1980’s resulted in much research on the economically optimum intervention stock (Maxwell, 1986) and experimentation by countries with bulk storage, much of which was very ill-advised (Coulter, 1994). A review of government intervention in grain storage in Southern Africa in showed the damage to livelihoods and enterprise that this had caused (Tyler and Bennett, 1993), but also revealed the resilience of sound traditional practice. Farmers, it seemed, were prepared to risk all by only planting High Yielding Varieties promoted by donors, but in reality were hedging with traditional varieties that had better storage qualities (a bit like blending home-grown players with bought-in talent in a top football team). In Namibia in 2005, research commissioned on traditional grain storage practices for millet and sorghum revealed an extraordinary tradition of long-term storage against the likelihood of very prolonged drought. Millet in store for more than eight years was common practice (Hodges, 2005). c.Fruit The opening up of global markets to counter-seasonal fruit as a result of cheaper air travel and greatly reduced tariff barriers has given fantastic opportunities for small farmers to make good returns. Probably the best example are the Kenyan highlands, where more than 40,000 of small farmers are now able to educate their children with money made from selling green beans and cut flowers to Europe (English and Jaffe, 2004). Research on postharvest losses in the Kenyan avocado sector revealed a dramatic story of how one generation of farmers had been propelled out of poverty by the combination of hybrid avocado varieties and the safe application of pesticides (Bennett et al, 2010). The heart-warming story of the farmer able to pay for his wife’s cataract operation because of avocados formed the central theme of a paper promoting the social benefits of pesticide. In the Philippines, postharvest losses in the mango sector were purely economic: the loss of market access for the delicious Guimaras ‘Carabou’ mango to competitors in the USA because of a fruit fly outbreak meant that, instead of selling fresh mangos to the USA, Japan and Korea for premium prices, instead farmers were selling to local mango drying firms for a fraction of the potential value. Work on the economics of this difference showed that investment in trapping and regulation of the fruit fly on the island would be quickly repaid and today Guimaras mangos can, once again, be found in the best Californian restaurants. This ‘foot in the door’ approach to market access can be successful – the USA has recently given access to other Philippine Islands 11 12. 11 See GMA News, (2014), “US to accept fresh PHL mangoes grown outside Guimaras Island – Agri Dept.” GMA News online, April 29th 2014, http://www.gmanetwork.com/news/story/358860/ economy/agricultureandmining/us-to-accept-fresh-phl-mangoes-grown-outside-guimaras-islandagri-dept 12 This research was supported by the European Union Professor Ben Bennett 15 d.Livestock Research into postharvest losses in the livestock sector in developing countries is largely set in the context of trade and the impact of transboundary disease (Naziri et al, 2015)13. Much less is known and understood about losses of quality and value, particularly at the level of small-scale farmers with limited livestock. Research on small stock value chains reveals important pockets of absolute loss where crises occur (Bennett, 2007), but tends to under-play the enormous effort that can be involved for individual livestock keepers to reach optimum value at point of sale (Bennett, 1998 and Hodges & Bennett, 2009). New research is needed to provide a viable means of measuring postharvest losses in the meat sectors of developing countries (Bennett and van Zjipp, 2012). e. Cassava and yam, Nigeria and Ghana Recent work on postharvest losses in the root and tuber sector has shown that the location of the loss in the chain makes a really important difference to the overall economics of loss (Naziri et al, 2014). In Ghana, for example, where cassava is largely purchased fresh for home consumption, the absolute economic loss from spoilage is substantially larger than in Nigeria where widespread processing of cassava occurs to make gari (Quaye et al, forthcoming). Having got a product to the point of consumption, then throwing it away, means that all the stored up value from the chain is then wasted. Looking at similar chains for cassava in Thailand and Vietnam showed much lower economic losses because the main loss occurs in the farmer’s field (Thao et al, 2013). Recently completed research on a series of innovations in the cassava and yams value chain show the scale of benefits available from innovation in reduced postharvest losses14. In Ghana and Nigeria, simply improving drying and reducing storage rots leads to €20 million worth of additional value (and food). Innovative starch extraction from waste in Thailand gives benefits at a suitably industrial scale of €173 million a year (Bennett et al, 2015:2). The potential converting highly perishable products like cassava into high value import replacing foods such as High Quality Cassava Flour (HQCF) opens exciting possibilities of new market niches, for example the gluten free sector (Bennett, 2014). Lessons from this body of work on postharvest losses. The figures for postharvest losses can very quickly become quite large. In our paper for the World Bank (2009) we estimated a starting annual figure of US$ 48.12 billion (see Figure 11 on page 16). 13 This research was funded by the UK Department for International Development 14 This work was funded under the European Union Seventh Framework Programme, see www.fp7-gratitude.eu 16 Figure 11: Millet, Myrrh, and Manchester United: Markets For development, Lessons from Practice NRI’s Postharvest Loss Estimate showing annual production and estimated postharvest losses in Sub-Saharan Africa by value (US$) and volume (million tonnes) Source: www.postharvest.nri.org Generally, physical losses are lower than the research (or people’s beliefs) suggested. In our paper (Naziri et al, 2014) we see that losses for cassava are substantial, but lower than we have always believed (see Figures 12 and 13). This is probably due to value chain adaption to mitigate losses. Figure 12: Physical and economic losses in the cassava value chain – Ghana, Nigeria, Thailand and Vietnam Source: Naziri et al, (2014) post-‐harvest losses, in Thailand their relevance is minimal (less than 5%). Finally in Vietnam the worth of total post-‐harvest losses is estimated at about US$ 35 million. retail and consumption stage) where it is estimated that about 20% of roots reaching that stage spoil and are thrown away. Physical losses at this stage represent over three quarter In relative terms, the worth of post-‐harvest losses in Ghana represents about 22% of the of total losses (Figure 4). Other important losses are incurred at the gari and agbelima total potential retail value of cassava products (net of physical losses). In South West processing Nigeria, Vietnam and Thailand this is estimated at 7%, 4% and 2%, respectively (Figure 10). sites. 17 Professor Ben Bennett Figure 9: Estimated value of post-‐harvest losses Figure 3: Estimated volume of physical losses by stage of the value chain Figure 10: Estimated value of post-‐harvest losses as share of potential retail value Figure 13: Physical and economic losses in the cassava value chains of Ghana, South Figure 4: Relevance of physical losses by different stages of the value chain West Nigeria, Thailand and Vietnam, and their distribution within key actors in the value chain Source: Naziri et al, (2014) Losses that occur between field and farm tend not to be measured but are subsumed into the farm-gate price. This is a research opportunity. One persons’ loss is another persons’ opportunity. Women particularly have found a niche for some losses so changing the way that they are used could have unintended consequences (Abdulsalam-Saghir,2015). Recent research has shown that value of loss is key to its gender utilisation therefore changes in value through upgrading can bring about livelihood degradation. The definition of what is a loss and/or a 88 waste needs to match the relevant agricultural economy. Hodges, Busby and Bennett (2010) have shown that modernisation of agriculture changes the location of losses within the chain. In developed economies, we have seen losses largely removed from the farming system in favour of huge amounts of waste between retailer and consumer (Parry et al, 2015). Figure 14: Resurgence in postharvest loss research – some examples of recent global initiatives Interest in postharvest losses is returning with new research groups starting, investment by donors and applications of new methods and technologies to old problems. Key findings of our work on postharvest losses are that measurement if far more complicated that is normally thought. Solutions are available, but regulating the problem almost never works, particularly in countries with high transaction costs. Turning good postharvest loss information into good policies is rare, but our hope it that increased agricultural development and new, cheap technologies for information sharing, will lead to big forward strides in the near term. Our work on cassava has shown that when losses can be turned into products that are economically valuable, new enterprises are keen to make the most of the opportunity. 83 18 Millet, Myrrh, and Manchester United: Markets For development, Lessons from Practice 2. QUALITY CONTROL, MANAGEMENT AND FOOD SAFETY The food economies of developing countries are only beginning to wake up to the economic costs of quality loss and inadequate food safety. As we illustrated, food waste has fallen under the radar in the developing world and by donors because, in effect it does not exist (Hodges, Busby and Bennett, 2010), almost nothing going ‘into the bin’ as it does in developed economies. In the struggle to provide food of any kind, it was understandable that the quality of that food took secondary importance. Feeding dangerous food to the under-nourished or immune compromised is, however, something that would not be countenanced in our domestic food supply chains here in developed countries. In the absence of a consumer lobby and legal systems that favour the consumer (the power of the consumer is untapped in the absence of choice) the cost of unsafe food has been effectively a producer surplus in most developing country value chains (Henson and Traill, 2002). I am going to illustrate the issues of food safety and quality control using the example of aflatoxins. Aflatoxins, highly carcinogenic substances, secreted by the fungi (mycotoxins) called Aspergillus flavus and Aspergillus paraciticus are widely present in some tropical commodities. The combination of heat and moisture of the tropical production environment is perfect for them to thrive. NRI was among the institutions that identified this terrifying substance in the 1960s as government scientists rushed to tackle the baffling turkey death disease that was devastating turkey farms in the USA15. Responding to public fear, the European Union introduced strict limits on its presence in foods, particularly milk, to protect EU consumers. For producers of produce prone to mycotoxin attack in hot climates this represented the first real global food scare. Some developing countries completely lost their export markets. Senegal and Sudan, for example, struggled to meet the new aflatoxin targets for groundnuts and groundnut cake/meal. In an early example of scientists and economics working together to address a postharvest problem, NRI undertook a number of projects in the area. The key issues for food safety are: How do we find the problem? In the case of aflatoxin, the toxin is unevenly spread and so toxic that a very tiny amount can contaminate a massive shipment. A sampling method that can locate a pocket of mouldy copra meal the size of a tennis ball in a 20,000 tonne ship full of the stuff means that huge samples are needed to ensure compliance with international standards (20ppb in the EU). The economics of sampling start to come into play. How do we measure it cheaply? Having made a representative sample, the testers then have to tell whether the toxin is present (or not present). The equipment for doing this is really expensive. Even with recent advances the costs are prohibitive for small farmers. Efforts to find proxies for the presence of aflatoxin (e.g., using cheap moisture meters (Bennett, 1992) and fluorescence (see for example, Carlson et al, 2000) by NRI and others did not prove to be particularly satisfactory. 15 I am indebted to Linda Nicolaides of NRI for showing me the original scientific log-book where this was noted for the first time. Professor Ben Bennett 19 What, then, are the incentives to improve practices? The solution to the aflatoxin problem is fairly simple: if you dry your product quickly to a level of moisture below which the fungus is active then it will not occur. Simple, but frustratingly expensive. For copra producers in the Philippines and Indonesia, the cost of constructing copra dryers over and above using the sun proved too much, and their international markets were largely lost (Bennett, 1992). Recent work on the value chains for Bambara Groundnuts in East Africa (Hillocks and Bennett, 2012) shows that this promising legume is largely excluded from trade because safe drying is simply too expensive for harvesters who are largely poor rural women. It because clear from an early time in our work on aflatoxin that, if people were to dry adequately, they would need a financial incentive for the water, weight and value lost. It is always better to sell cheaper water than product. Developing incentive structures based on quality proved very hard. Visual scales used for mould cover of copra at first point of trade in the Philippines never really worked. Similar efforts with grains in sub-Saharan Africa either led to total rejections (i.e., a yes or no decision by traders) or were dropped as soon as either a glut or a shortage occurred. What this research revealed was that regulation of quality in commodity chains commonly led to rent seeking and, if badly done, almost always increased the power of the intermediary at the expense of the primary producer. The greatest challenge for food safety is probably at the micro-level. If consumers cannot see or taste the danger, then how do they know it is present? Managing the exclusion of risk for food is expensive, so producers look to recover this cost with a premium price. How do we prevent ‘free-loading’ (i.e., producers of substandard products benefiting from the higher price and undermining the market)? In a world where consumers are unorganised or unable to tell Figure 15:a simple visual scale of good the difference between a safe and and poor grain hazardous product and regulations Source: Bruno Tran simply never result in compliance, preventing unscrupulous actors from capturing the value of the safer/better product is very challenging. In a review of the quality and standards regime of Bangladesh we found that the consumer ‘lobby’ for the entire country was one person and the government inspectorate for counterfeit goods consisted of 5 inspectors, none of whom had ever issued a fine (Bennett and Loewe, 2009)! The wonder is that, in developed economies, ‘free-loading’ is not more widespread considering what a tiny proportion of the final on-shelf price of goods is committed to compliance and regulation. Over regulation is often seen as a trade barrier and source of consumer surplus (Thilmany and Barrett, 1997), I would also contend that the same could be said of under-regulation. The net result of underinvestment in regulation is a race to the bottom of the quality continuum with nobody incentivised to provide a safe product. Markets in developing countries typically become defined by the lowest quality over time without some kind of intervention. 20 Millet, Myrrh, and Manchester United: Markets For development, Lessons from Practice The key finding from NRI’s work on aflatoxin is that the solution to contamination lies largely on the farm. Mycotoxins come from the field. Stressed plants are more easily contaminated. Produce that is dried quickly and stored well is safe. So, to produce aflatoxin-free, farmers need to do more work and invest in simple improved drying methods. How they are to be compensated for this additional effort remains unanswered. A lot of research on trade and standards, quality measurement and metrology (SQAM) has shown that countries need a good standards, accreditation and regulatory system if they are to function competitively in the global economy and protect consumers (Bennett, 2009 and 2010). However, it is rarely explained which actors within the value chain are going to pay for this – and it can be quite heavy (see Figure 16). Traditionally, farmers and producers find themselves subsuming the additional costs of meeting standards and consumer expectations as supermarkets pass back their norms to suppliers on a take-it-or-leave-it basis. Where farmers are price takers, as with almost all commodity value chains in developing countries, all of these downstream costs are subsumed by the producer. What are the key lessons? Absence of food safety and quality management has a high cost, both for consumer and for farmer. In a world where nutrition and food security are synonymous much more could be done to make the benefits of quality more universal. As markets like the EU strive to protect their consumers and ring-fence their food economies with aggressive standards, the risk is that a two-tier world food structure will fix the poor into a world of unsafe food. National Measurement System Government National Standards Body (BSI) Regulatory bodies United Kingdom Accreditation Service UK Patent Office Conformity Assessment Bodies Trade Association Professional Bodies UK Business Consultants Informal Standards Developers Customers Figure 16:the UK national regulatory system showing the many actors and bodies involved Source: CQI (2015) 21 Professor Ben Bennett 3. BRINGING ECONOMICS TO BEAR: MATCHING SCIENCE WITH SOCIAL SCIENCE FOR GREATER DEVELOPMENT IMPACT. Reviewing research on agricultural economics and markets in developing economies in the past 30 years it seems that I have bridged two Green Revolutions. The first was Norman Borlaug’s initial advances in breeding that led to huge increases in yield through breeding and fertiliser application. For example, wheat yields in some countries are fivefold higher than the 1950s as a result of his approach to selective breeding to reduce lodging (see Figure 17). The next Green Revolution based on Norman Borlaug: advances in genetic technologies and things like data management we are now starting to see a second productivity • ‘burst’. Breeding to is the amazing A good example flood-tolerant rice which yields more reduce lodging even when it is submerged for a long • timeFer3lizer (Setter et al, 1996). Recent work by the Generation Challenge Programme that I have evaluated has applied these methods to the complex traits associated with drought tolerance, opening up the possibility of super foods that resist climate change. Figure 17: Developing country wheat yields, 1950 2004 However, despite these wonderful advances, I find that the disconnect between natural scientists and social scientist remains. In particular, the drive for yield continues to hold the scientific community in thrall despite the emergence of so much new value chain literature in the last decade. Three examples of well-meant agricultural research that missed the marketing ‘point’ and one example of a market led approach that has failed to support efforts to increase productivity on farm. Figure 18: IRRI flood tolerant rice showing the resilience of the new variety to flooding Source: Gates Foundation flickr https://www.flickr.com/photos/gatesfoundation/6749043007 22 Millet, Myrrh, and Manchester United: Markets For development, Lessons from Practice a. Sesame – you can have any colour as long as it is white. A review of the value chain for sesame in Mozambique and Tanzania revealed that the key market was Japan (Bennett, 2008, Bennett & Hillocks, 2008). For twenty years, Tanzania had been breeding varieties of sesame for whiteness because they were labouring under the illusion that white sesame had a higher value. The reality, revealed by talking to local and international sesame traders, is that the global sesame market is differentiated by end use. White sesame is used for ‘confectionary’ purposes, such as putting on burger buns. Other types of sesame are grown for their oil content or to be ground into food ingredients like Halva. The sesame in Tanzania and Mozambique was selling to traders who would then on-sell it to Japanese sesame oil millers. The key to the success for use as sesame oil is oil content of the seed and ‘boldness’ because it emerged that rounder seeds give a higher oil yield on crushing. So the breeding aims had been wrong all this time! In fact, this story has a happy ending. The newly released white varieties had a high oil content and were bold. Traders, therefore, were able to distinguish the white new high yielding varieties from the old brown ones and paid a premium price. This, combined with much higher yields per hectare has meant almost 90% uptake and hugely higher incomes from sesame production in Southern Tanzania, the country’s poorest region. b.GMO Maize – big heads are better than no heads (unless you are making tortillas of course) The Generation Challenge Programme, based at the International Maize and Wheat Improvement Center (CIMMYT)16 has done wonderful work breeding drought resistance into globally important crops like rice and maize. I have reviewed it twice now and am convinced that new technologies like marker-assisted breeding are likely to bring huge gains in food production (Bennett & Hillocks, 2008a, Paramjit et al, 2014)17. Early work on identifying drought tolerant high yielding maize varieties in Southern Mexico, the origin of maize, had developed a number of really promising lines. However, when they came to release these lines they found that farmers still kept their traditional, low yielding varieties in some fields. It emerged that the new GMO wonder varieties were no good for making tortillas, lacking the elasticity necessary for rolling and generating crisp bread. c. Goats – you simply can’t sell the brown ones Namibia is Africa’s largest exporter of live goats (over 100,000 a year). These goats go to South Africa. When I joined the Ministry of Agriculture, Water and Forestry in Namibia in 1998 I asked where all these goats were going and I was told ‘to Muslims in Durban’. This, it seems, had been the received wisdom for decades. Reviewing the commodities that Namibia could export, we decided to initiate a series of market studies to suggest investment and policy changes that could increase 16 See www.generationcp.org/ 17 In fact, I have long been a supporter of the safe uptake of genetic technologies; see for example Bennett (1999 and 2001). Professor Ben Bennett 23 demand and value. One of these was on goats. As know body seemed to know where all the goats were going we got the agreement of a trader to follow his truck 2,500 miles from Mariental in the Namib Dessert to just outside Durban and then track the goats to their consumers. The result was that we found that in Durban the goats were being sold to Zulu Priests who then sold them to worshipers with a need to make a ritual slaughter. The key finding was that Zulu’s believe that a white goat has more religious power than a goat of any other colour. The size of the goat was unimportant, so smaller goats are actually better because you can fit a lot more on a truck. Brown goats are associated with violent crime, and so largely unsaleable. This information supported a Boer Goat breeding programme and system of delivering vaccination against pasteralla, a disease casing losses to goats in transit (Bennett, 2007). What these examples illustrate is the power of fairly straightforward market research to overcome perceived wisdom and empower research efforts. In all these cases significant public funds had been expended on well-meaning research and extension efforts without fully understanding what was driving the markets for these products. The lesson we draw from is that multi-disciplinarity and the breaking-down of academic silos remains key to successful agricultural science development and uptake. d.Organising markets – the failure of cooperatives and emergence of agri-business Throughout the post-independence era policy makers and donors have sought ways to address the issue of usurious middlemen and high transactions costs for rural economies by promoting cooperatives. It has largely failed (Lele & Christiansen, 1989). Why? One of the most extreme examples of forced collectivisation in Africa was the Tanzanian Ujamaa Movement, Julius Nyerere’s experiment in cooperative economics (Ibhawoh and Dibua, 2003). These systems answer the challenge of high transaction costs for rural services by moving everybody into giant ‘villages’ and forcing them to sell everything through community cooperatives. The net result was resource capture on a mammoth scale by the people running the cooperatives, massive postharvest losses due to system inefficiency and, to this day, a health distrust of cooperatives in Tanzania. Despite this bad experience, the cooperative as a means of rationing inputs and benefits for communities persists. As recently as 2007 (Bennett) the Lindi Cooperative managed to lose more than a million US dollars18 on sesame trading but was bankrolled by the Government of Tanzania for political reasons. I have collaborated a lot with marketing cooperatives in the developing world and it is a sad indictment of the approach that, even when they are run as businesses, they always seem to flounder. In more recent years, I have worked extensively with harvester associations (in Namibia these are called Producer and Processor Organisations – PPOs). This approach to collective natural resource management through sustainable harvesting, processing and marketing of natural products like seeds and tubers is successful (as we shall see below). However, it opened up a new and unintended issue. 18 Nobody really knows how much – but shocking from a Cooperative that has no assets. 24 Millet, Myrrh, and Manchester United: Markets For development, Lessons from Practice By supporting PPOs who were paying harvesters a ‘fair’ proportion of the on-sale price, these projects crowded private sector initiatives. In one dramatic case, a small scale cosmetic oil processor who had actually won the national business woman of the year contest and had been sent to New York, found that she was unable to compete on price with the PPOs being supported by donors and complained bitterly to the Minister for protection. This illustrated a conundrum that has still to be resolved and continues to be a challenge for future development interventions: we want producers to work collectively, but it is seldom the most competitive approach (Marshall, 2003). The lesson here is that there are no prescriptive or correct solutions to the question what is the right institutional model for doing business in developing economies. 4.MARKETING THE IMPOSSIBLE – SOME THINGS ARE SIMPLY HARD TO SELL The role of the marketing economist is often misunderstood. It is a common belief that what we do is magically link buyers and sellers, and that after that everything else goes smoothly. That this is not the common outcome is not surprising. What is more surprising is how persistent this view has been over many years. a. Some examples of hard to market products Balut – half grown duck eggs from the Philippines. There is, it emerges when you look at the comprehensive value chain for ducks, no part of a duck you cannot eat. Notably, in East Asia, a niche for the partly rotten egg emerged at some point in antiquity as the ‘100 year old egg’. Duck and chicken feet are considered a delicacy in Indonesia and the Philippines, sold as crispy barbequed snacks like hot dogs at a football match – and delightfully marketed as ‘Adidas’ in the central Visayas. Duck bills are used in duck bill soup and come in two varieties, yellow and orange. However, the nastiest duck related food is the half grown chick in egg called a balut in Tagalog and usually in a purple painted egg – though not always! A delicacy in many places – unsaleable in others. Amber gris – whale vomit in Sri Lanka. Since pre-history women have been using Amber gris as a perfume fixative, but its value chain is fascinating because it has no fixed entry point. The material itself can wash up anywhere in the world with a coast. With a value of something like USD26,000/kg people are keen to turn it into cash, but there is nobody obvious to sell it to. As I found when trying to work out how the Amber gris chain worked in Sri Lanka, one quickly moves from impoverished fisherman into a world of shady dealers in exotic animal and plant material in a world where price determination is impossible, even with access to the internet. Kraal worms – Namibia. Across the world, farmers eat insects. Certain types of worms, however, are a particular delicacy. Mopane worms in the Kalahari are both a high protein crunch snack and an increasingly important medicine, so much so that they are now overharvested in much of their range. Kalahari silk comes from a work that produces thick, choking ‘nexts’ of thread that in bumper seasons kill cattle, but which are prized for their yarn now used in scarves that sell in Harrods. The unbelievable range of different worms and their commercial potential came home to me when I spent a week unpacking the non-traditional value of ‘veld’ for field products with farmers in Northern Namibia. They had many different useful works, Professor Ben Bennett 25 but the most highly prized was the Krall or cattle bower worm that grown massively fat and juicy in cattle manure and can be sliced and fried like the fat ring on a rump steak. ‘Crap in tomato sauce’ – carp fish in brine from Rumania. Probably the hardest marketing challenge I have had is when presented with a range of fish products in post-communist Rumania. Carp, it emerges, is ‘crap’ in much of Eastern Europe. My term of reference was to develop a marketing programme for Romanian Crap (see Figure 19). Figure 19: An example of tinned Romanian Crap [sic] Source: https://www.flickr.com/photos/75397038@N00/2650403949 b. Some examples of easy to market products For every challenging product there have been those that, whilst novel, were simply ready and waiting to reach their market potential. Kiskh Sa-eedi – Egypt. Throughout the Middle East milk and wheat are fermented to make a dried cereal snack called ‘kiskh’. This snack is used for making a nutritious instant drink or blended into a range of novel dishes as an alternative to rice and bread. In the Upper Nile region of Egypt a unique version of Kiskh is made, called Kiskh Sa-eedi. When we unpacked the value chain for this pharaonic food, we found many unique properties tie it to a location and a way of life thousands of years old (Bennett et al, 2012). Kiskh Sa-eedi is made from a special type of wheat. It is fermented using seer milk from an indigenous type of cow in a special clay pot unique to the area. Crucially, it contains starter cultures that work at very high temperatures. A marketing plan, developed by the project from market research in Europe, suggested that gourmands were crying out for this product and that it could be a starting point for a whole range of “Pharaoh Foods” to come. Similar market research on a dried and fermented fish product in Benin showed that, whilst the product was considered repulsive by many European consumers, re-branded as a condiment, it suddenly worked and could attain astonishingly high prices ‘per piece’. The same lateral insight into the market turned millet bread in Senegal from a unloved, heavy, gritty and hard to eat product, into a product that flew off the shelves simply be renaming it ‘Power Bread’. Sometimes the magic of marketing is in the matching of product with unexpected need through the science (or art) of re-branding. 26 Millet, Myrrh, and Manchester United: Markets For development, Lessons from Practice c. And, some that had potential, but simply did not work (or have not worked yet). Hoodia sp. Hoodia, a species of succulent flowering plant indigenous to the Kalahari desert, has the amazing property of reducing the appetite (Marloth, 1932). This property was discovered by humans as they hunted and gathered the region eons ago. It was rediscovered by Joseph Decainse in 1844 (Candolle) and re-found again in the 1960’s by the Centre for Scientific and Industrial Research (CSIR) in South Africa. Having isolated the active ingredient, CSIR formed an alliance with a UK pharma startup, Phytopharm PLC. CSIR, it emerged, had ‘discovered’ Hoodia during plant collecting during the apartheid years when they had been seeking commercial opportunities from combining plant collecting with traditional knowledge of local people. CSIR developed a patent on the active ingredient, P57 and, along with Phytopharm, convinced the global food giant Unilever to invest (Maharaj, 2008). I came into this story when it became apparent that a commercial success using P57 in Unilever’s premium sliming brand ‘Slimfast’ might be a possibility and cultivation trials outside the species range had proven disappointing. Much effort was put into developing a regional plan to share the opportunity between commercial growers and small-scale producers. Sadly, the opportunity evaporated when it was found that consumers could not be trusted to self-regulate their Hoodia intake and evidence of toxicity from over-use started to emerge. Somehow Hoodia offered the panacea of a plant that only grew in the most hostile environments amongst some of the poorest, with a property of tackling obesity among some of the richest (Wynberg, 2010). It was not to be. Bambara groundnut. This little known legume is commonly grown throughout sub-Saharan Africa. It is used as a highly nutritious food security standby because it is drought tolerant. Research shows that it is particularly important for women, not least because, in many societies, there are strong taboos and beliefs that discourage its production by men (Forsythe, 2015). As a fresh, soya bean like, vegetable, it is delicious, however, it takes a very long time to cook and consumers complain that it gives them wind (Bennett, 2010a)! In recent work funded by the McKnight Foundation we have defined value chains and located exciting new market spaces (Coote, 2014), but still failed to stimulate production. The release of new, high yielding varieties in East Africa to seed cooperatives in 2015 should break this negative supply/demand cycle by ensuring surpluses and marrying these to new market opportunities. I strongly believe in the future of Bambara. What’s the plan? Lessons from this list of weird products For all of these products, the common element of success, or at least of averting failure, has been the marketing plan and its associated business plan. There is no substitute for fully understanding the working parts of your business and the way that your market operates. Simple as it may seem, the application of basic business economics, combined with understanding the value chain and, crucially, defining the qualities of your market (Bennett, 2002), remain the most fundamental weapons in the war for a sustainable and profitable business. To this day, very few agro-businessmen or cooperative managers in the developing world have business or marketing plans. At the level of individual harvesters or farmers there is almost no formal understanding of how a farming business operates. Persistently high level of illiteracy and innumeracy across the developing world, especially among women, continues to condemn millions of rural businesses to fundamental inefficiency. Professor Ben Bennett 27 5.IS INTERNATIONAL MARKET ACCESS THE SOLUTION TO DRIVING DEMAND IN DEVELOPING COUNTRIES: LESSONS FROM TRADE NEGOTIATION? The past 30 years has seen a revolution in global trade post the Uruguay Round of trade negotiations under the auspices of the World Trade Organisation (WTO). A fairly substantial element of my work has been associated with helping developing countries get the most out these negotiations and then encouraging them to use the trade rules to their advantage. I want to illustrate this point with four examples of trade interventions with disproportionately large impacts. a. Infant industries – why not? In the 1990s and early 2000s I supported the countries of Southern Africa to re-negotiate the Southern African Customs Union, the oldest Customs Union in the world (SACU, 2002). Originally an instrument of apartheid, the Customs Union had become dated and irrelevant in a modern trading context. One clause, promoted heavily by the Government of South Africa, got my attention. This was the infant industry protection clause19. Originally, this clause was designed to allow government to protect new industries from outside competition for a period of years by increasing the tariff on imports of that industries produce. Nobody member of SACU had ever invoked it, so we decided to use this clause to protect a new pasta factory and a broiler plant in Namibia for eight years while they paid off their loans to the International Finance Corporation (IFC). The South African Government was horrified and complained vociferously, even citing the existence of another pasta plant in Namibia to prove that the industry was not ‘infant’. This plant, it emerged, had been towed to Northern Namibia by the South African Army to feed to occupying troops. When this fact was shared in the negotiations by Namibia’s chief negotiator, the South African Government dropped their objections! What this showed to the countries of Southern Africa was that trade rules need to be properly understood and that often, they can be used as policy leverage. b. Selective protection – government intervention can be benign A second example of the positive use of trade rules to promote the emergence of domestic industries is the application of selective import protection to the Namibian domestic horticulture sector. In recent years, South African supermarket chains have become ubiquitous in major African cities. In the front line states, these companies had got into the habit of importing 100% of their fresh vegetables from South Africa and procuring nothing locally. As part of a horticulture development plan in Namibia, we decided to aggressively pursue horticultural market share for Namibian farmers. Initial market and production research showed that Namibia could be self-sufficient in certain crops for particular periods of the year. Onions, for example, were being exported from Northern Namibia 3,500km to Cape Town and 2,500 back up to Windhoek! Secondly, when we tested imported fruit and vegetables from South Africa we found that a) they were dumping substandard produce – for example tiny apples; and, b) much of the produce was unsafe to eat – huge Escherichia coli loads were found. 19 Article 26. 28 Millet, Myrrh, and Manchester United: Markets For development, Lessons from Practice Putting this research together with a systematic plan for investment in irrigation gave us some targets for local production. Using the trade rules available, we told the South African importers that they could only import from South Africa when they could prove that the harvest from Namibia was fully take up. In 2000, Namibia met 2% of its annual horticulture needs from domestic production. Fifteen years later in 2015, Namibia now meets 25% and this continues to rise year on year. c. Weaponising food aid – the Namibian intervention in the debate Many African countries find themselves food deficient during periods of drought. Crops fail, farmers eat their seeds and consume their remaining livestock and are then destitute or dependent on relatives. Working in Namibia I became heavily engaged in this debate from the perspective of the recipient. Food aid has its own category in trade law20. In the post World War II era it has become a convenient opportunity for disposing of unwanted intervention stocks in Europe and the Americas. In 2002 it became the centre of a huge and heated trade debate as America offered free maize to countries in Africa at the height of the ‘Frankenstein Food’ Genetically Modified Organism (GMO) debate. US State Department Officials and even the US President implored Africans to accept the free food and to accept GMO technology. Whilst I am a supporter of new plant breeding technologies, I was amazed how aggressively US Government officials took up the fight for market access for GMOs on behalf of the massive US seed corporations. The countries of Southern Africa, found themselves as the battleground between competing US and European agricultural trade interests. The Government of Zambia decided to refuse the US Food Aid and as a result was pilloried in the international press for ‘starving its people’ (Carroll, 2002). In Namibia we decided to take a different stance. Namibia accepted the Food Aid offered under the Agricultural Act of 1949, Section 416(b), had the $2million worth of grain shipped to South Africa, sold it on the local market, where it made little different to domestic grain prices in such a large grain economy, and put the money into two trust funds: one for anti-retroviral drugs and the other to start a donkey training programme to mechanise agriculture. The first saved thousands of lives. The second started a process of development that has led to the widespread adoption of donkey power for ploughing and weeding in the sandy soils of Northern Namibia. The second element of action Namibia took was to try and change the definition of Food Aid in the WTO. This was a daunting prospect. Namibia had never even spoken in a WTO debate. We argued in Geneva that Food Aid should only be offered in cash so that it could be used to buy grain locally to stimulate demand, unless the country specified otherwise. This stopped food aid dumping by in-kind donations – a small but significant change to trade law that was adopted in the Doha Round (WTO, 2001). Lessons from trade negotiation? The really important lesson from my practice with negotiating agricultural trade agreements is that the process can favour the weakest countries. The system is designed so that each country has only one vote, so the smallest member state has equal weight to the largest. This power asymmetry is useful, but is not well used. 20 World Trade Organization (1994), Agreement on Agriculture, Articles 9 & 10. Professor Ben Bennett 29 The second key take-home is that the text of trade agreements often contains the tools to deviate from the norm: you can, if you are less developed, claim a derogation in most circumstances. Most countries simply do not realise this and rarely dig deep enough into the text of the agreements to find the spaces for manoeuvre. 6.NATURAL PRODUCT VALUE CHAINS, EMBEDDED VALUE AND VALUE CHAIN GOVERNANCE – MILLET, MYRRH AND INNOVATION SYSTEMS FOR MARKET DEVELOPMENT “I wanted to build right from the bottom. That was in order to create fluency and a continuity of supply to the first team.” Sir Alex Ferguson on the player ‘pipeline’ at Old Trafford (Elberse, 2013) A lot of my work on developing country markets has been associated with products that are harvested in the wild, not least fisheries. Scoping markets for unvalued opportunities has been a common theme and has resulted many exciting new value chains emerging. For example, in the Philippines we developed markets for processed indigenous fruit, handicrafts from forest products and novel coconut by-products. More recently, in Namibia and Southern Africa, my novel product value chain work has concentrated on wild harvested natural products. In countries with limited resources, huge transaction costs due to distance from market and low rainfall, like Namibia, agricultural marketing based on comparative advantage of traditional commodities simply will not work. We had to look for new and unique products with value and for products with unique qualities embedded in them that consumers were prepared to pay more for. A number of core strategies emerged as a result of widespread stakeholder consultation and the development of national innovation platforms (Hommann-Kee Tui, 2013). I will focus on two here to illustrate this: the strategy to grow demand for traditional foods, which focussed on pearl millet; and, the Namibian effort to commercially develop its indigenous plant resources. a. Feed the beat – falling back in love with millet Pearl millet (Pennisetum glaucum) grows on 45 million hectares globally and is particularly important in arid regions of Africa and Asia. Its ability to grow quickly on poor soils with little moisture makes it a life-saver for millions. It is also nutritious, with 9-13% protein and a higher energy content than wheat21. People grow it because it will give some sort of crop under almost all rain and pest conditions, because it is very resistant to storage pests and so can be kept for a very long time (see above). In Namibia, it is the stable crop of the majority of the population, and is particularly important for the approximately 30% of subsistence farmers who have no livestock and therefore no recourse when crops fail. Research, funded by the European Union, into the grain sector in Namibia revealed a number of important changes in the post-independence period. Firstly, the people had switched to maize production and consumption, often stimulated by subsidised seed and rural electrification making small-scale milling of maize more available. Secondly, the millet sector had been left behind. It was not included in 21 See http://www.cgiar.org/our-research/crop-factsheets/millets/ 30 Millet, Myrrh, and Manchester United: Markets For development, Lessons from Practice government seed improvement efforts. Neither was it part of any government tender preference, and so not on the menus of any institutions – even prisons. Market research conducted with rural and urban consumers (NASSP, 2003) revealed that something more structural was underway; a decline in consumer demand for millet and its products, particularly among the young. Several important initiatives emerged from this strategic research that has bolstered demand for millet in Namibia. The Mahangu and Sorghum Task Team worked on ensuring availability and distribution of improved millet seeds. Research on millet storage had shown that farmers were using fewer traditional basket stores, but had no alternatives to these stores so were being forced to sell during glut periods. A key break on productivity, it was found, was access to animal traction, so a programme of donkey training was initiated. Donkeys, it emerged, were ideal for weeding and field preparation in Namibia’s sandy soils. More strategically, we realised that millet was simply becoming associated with a non-fashionable, traditional, way of life. An annual millet fair was organised associated with a national millet day. A National Best Millet Farmer prize has been awarded (most to women) for the past 10 years (see Figure 20). Working with the Namibian grain milling industry, a number of consumer products were developed based on millet, including flours and drinks. Caterers supplying government tenders were given a significant preference is they guaranteed to use millet in their ‘plates’ and this gave a big impetus to demand. To bring millet into the commercial realm we needed standards so that contracts Figure 20: Overall National Grand Mahangu Champion for 2014, Pinehas Nambani Source: Informanté, 11th September 2014 could be awarded. This resulted in the promulgation of the Namibian Millet Standard (Hoffmann, 2005). To overcome the challenges of market discovery, we developed a Millet Marketing Information Unit in Northern Namibia that collected information about pockets of supply and linked buyers and sellers. All of this was coordinated by the Millet and Sorghum Task Team, a stakeholder platform consisting of farmers, government officials, non-government bodies, researchers and commercial users. Professor Ben Bennett 31 Finally, and probably most radical, we hired an advertising company to make millet ‘cool’ for the young consumer. The “Feed the Beat” Campaign was launched with a jingle, a rap and a sitcom on radio where the cool, millet eating boy wins the heart of the girl. Figure 21: promotional material for pearl millet Source: Ben Bennett b. Indigenous fruit – how Namibia became a world leader in developing natural products Local people are well aware of the qualities and properties of plants. In Namibia, Harpagophytum sp., or Devil’s Claw has been wild harvested for its side-tubers for over 100 years because early German settlers found that local people used its active ingredients as a remedy for arthritis and rheumatism (Von Koenen, 2001). The fruit of the Marula tree (Sclerocarya birrea) is a source of a beverage and as a cosmetic oil can be extracted from the kernel meal. Similarly, the intrinsically sticky qualities of the Ximenia fruit and its kernel oil have been used to beautify hair for as long an anyone can remember, and the ground paste made from Commiphora wildii mixed with ochre to make a perfume paste typical of the Himba people and much enjoyed by young Himba men. No surprise then that Devil’s Claw tablets can be found in pharmacies around the world, marula oil is one of the Body Shops most successful community produced ingredients, Ximenia is now a face cream for L’oreal and Myrrh oil from Commiphora is used is some of the world’s most exclusive bespoke perfumes22. The steps in getting from open access wild harvested plant with interesting properties to sustainably harvested high quality commercial ingredient that benefits local people, however, are many and complex. 22 Marula - http://www.thebodyshop.com/values/ingredient_marula.aspx Ximenia – Vermaak et al, 2011. Commiphora wildii - http://frazer.quicksites.co.za/shop/namibia/ 32 Millet, Myrrh, and Manchester United: Markets For development, Lessons from Practice Figure 22:Examples of Namibian Indigenous Natural Product (INP) raw materials, Devil’s Claw, Ximenia, Marula and Mopane. Source and photo credit: Drying Devil’s Claw tubers, Julian Fennessey; Ximenia kernels, Michel Mallet; pressing Marula for juice, CRIAA SA-DC; and, Mopane seed oil , Dave Cole. 33 Professor Ben Bennett Figure 23: the Namibian Indigenous Natural Product pipeline Source: NRI (2012) p37. Product Raw material Count ry(s) Supply chain fully functional, supply capacity properly understood Gowe Sorghum Benin Local supply chain understood Competitive ness of reengineered product not clear Done Known Well understood in Africa. Partly in EU Partially understood Yes – reengineered product Yes Not yet No Maize Production process competitive, cost of production properly understood Product fully characterised with specification Regulatory compliance complete Unique Selling Propositions (USPs) properly understood and supported by technical information and consumer research Market potential understood (size, location, value, norms, actors) Consumer products developed, formulations/ specifications established IP analysis and freedom to operate established. Customers/processors/ traders ready to commit to making and marketing final product Market and Business plan possible Akpan Maize Benin Local supply chain understood Competitive ness of reengineered product not clear Done Known Well understood in Africa. Partly in EU Partially understood Partially – reengineered product not particularly clear Yes – though functional IP still needs protection Not yet No Lanhoui n Fish and salt Benin Local supply chain understood Competitive ness of reengineered product not clear Done Known Well understood in Africa and EU Partially understood – more work needed Yes – more work needed for EU market Yes Not yet No Baobab Seed pulp and nectar Seneg al Local supply chain understood Reengineered product vs existing not clear Done Known Well understood in Africa and EU Well understood in Africa and EU Yes – but not all in AFTER Yes Yes Possible Hibiscus Calyx based jam and beverag e Seneg al Local supply chain understood Reengineered product vs existing not clear Done known Understood – but re-engineered needs more work Well understood in Africa and EU Yes Yes – but protection may be needed for reengineered Not yet Possible Kong Catfish and salt Seneg al Local supply chain understood Reengineered product competitive for diaspora Done Known Understood Understood in France Yes Yes Yes Yes Ziziphus (Jaabi) Seed pulp Came roon Local supply chain understood Not particularly clear Done Known Partially understood Understood in Cameroon Yes – in Cameroon Partially – some proprietary IP on functional properties Not yet Not yet Kenkey Maize Ghan a Local supply chain understood Reengineered product vs existing not clear Done Known Partially understood Understood in Ghana Yes – in Ghana Yes Not yet No Kiskh Sa’eedi Milk Egypt Local supply chain understood Reengineered product vs existing not clear Done Known Partially understood Partially understood Yes – in Egypt Yes – but not fully protected Not yet No Mada gasca r Local supply chain understood Reengineered product vs existing not clear Done Known Partially understood Partially understood Yes – in Madagascar Yes – but not fully protected Not yet No Wheat Salt Kitoza Red meat Salt Figure 24: A product development ‘dashboard’ example Source: Bennett and Diouf (2014) 34 Millet, Myrrh, and Manchester United: Markets For development, Lessons from Practice As a way to manage this complexity we developed an approach and a tool. The approach was a pipeline of products (du Plessis, 2003) and the tool was the Natural Products Development Dashboard23 (Bennett, 2010). This approach and tool allowed limited investments from public and private sources to be focussed through the means of a national innovation platform (the Namibian Indigenous Plants Task Team). Markets for novel products are unpredictable. Market access is far from assured and demand can swing from overwhelming to a product just being dropped by a buyer. Many technical problems have to be overcome. For this reason, we needed a way to switch resources from one pipeline of activities with one promising natural product to another when that line got stuck. This was the producers can manage the risks and are better assured of a more regular income. The natural products ‘dashboard’ allowed us to manage the complexity of safely and sustainably moving from limited wild harvesting to a business based on widespread wild harvesting. The elements, developed from practice and experience over the past 20+ years in Namibia include: • Supply capacity fully understood and supply chain functional: do we know how much of the natural product is available sustainably and can it be extracted at a reasonable price? • Costs of production known and competitive with alternatives: do we know how much it will cost to bring the natural product to the point of first sale and is this cheaper than its competing products? • Product fully characterised. Are we completely clear what the product is and what it does? • Compliance with regulatory environment assured. Will the product be allowable in trade (not all are)? • Technical information fully supports unique selling propositions. If we have a special property, do we have the scientific evidence that supports it? • Market potential understood and competitors assessed. Is there sufficient demand to warrant an investment in the natural product supply chain development? • Freedom to operate established. Does somebody else own any of the intellectual property? • Customer commitment to the product – contract and business plan. Is the buyer of the natural product demonstrably committed to developing its value chain? The results have been impressive with 10,000 harvesters and their households lives improved over five years, 67 Producer and Processor Organisations developed and four business clusters rejuvenated or opened up based around different indigenous species (Figure 25). The benefits have been particularly apparent for women (Figure 26) and in isolated areas of the country (Figures 27). 23 With due recognition to the original concept developed by Pierre du Plessis and improved by Cyril Lombard. 35 Professor Ben Bennett Figure 25: Sales Growth for Indigenous Natural Products in Namibia Source: NRI (2014b) Figure 26: Women and engagement in Namibian natural product production and trade 2009 to 2014 Source: NRI (2014b) What lessons can be drawn from developing natural product value chains, and particularly from the Namibian experience over the past 20 years? The model developed in Namibia, with its strong stakeholder element (often called an Innovation Platform see above) through the Indigenous Natural Products Task Team, combined with the pipe-line approach, meant that the limited funds available could be used with maximum efficiency while minimising the risks. As markets opened and changes, and as technical challenges emerged, these problems could be resolved and resources switched to where they were most needed. Flexibility and a step-wise, incremental approach were key to success. Despite numerous attempts to diversify markets over many years, the role of lead market actors as champions for new product development is still essential. For some products, like Marula, a long term commitment by an important and credible market actor was essential. The challenge, of course, is how to repay that loyalty and vision fairly. Some lead actors, 36 Millet, Myrrh, and Manchester United: Markets For development, Lessons from Practice Figures 27:Namibian indigenous natural product producer organisations geographical distribution Source: NRI, (2013) such as the Body Shop, have invested without expectation of payback, but have been rewarded with success, albeit after a very long-term investment. The length of time between identifying a product with potential and having a sustainable and secure market is much longer than a normal development project - think 20 years. Building a successful supply chain of a new wild harvested product, developing local processing capacity in a country without an industrial base and persuading end uses to accept a new ingredient all take time. We found in Namibia that limiting the business plan to one market outlet was also unwise. In particular, with such a small domestic population, the local market was always going to be a challenge. One of the surprising successes of recent times was a challenge fund to promote local industrial inclusion of natural products. This showed that you should not ignore local markets, Professor Ben Bennett 37 Figure 28: Leadership of a new Ximenia harvesting business, Epembe, Namibia, 2014 Source: Julian Fennesey particularly as these economies are changing so quickly and hence new niche market local opportunities will emerge. We have also learned through the Namibian example that, whilst novelty is exciting and a good back-story to help a product sell, it still needs to meet international standards and codes of practice for that product group. Investment in quality is hard when you already have to invest in everything else at the same time. It is important to remember that markets are dynamic and tastes change, so prices cannot remain static. This in turn means that, to maintain market share for INPs productivity has to constantly improve alongside quality, and this requires investment in technical innovation. The final lesson I think we have struggled to learn is that a model for efficient and sustainable harvesting based on harvester ownership is difficult to achieve, takes time and requires the dedication and commitment of support agents like local non-government organisation over many years. All experience supports the notion that small businesses owned and run by individual entrepreneurs tend to do better than those owned collectively. However, where land and biological resources are community owned, a new business ownership norm is needed to prevent fundamentally changing the economic relationship between secure resource management and local livelihood opportunity. 38 Millet, Myrrh, and Manchester United: Markets For development, Lessons from Practice 7. ISSUES FOR THE FUTURE OF AGRICULTURE AND TRADE Having explored a number of issues around the important of market for agricultural development, we now need to ask ourselves what does the future hold for agricultural marketing and trade? My thesis has been that this work falls at the fulcrum between future productivity and consumption. If we assume that science will give us the tools to generate more yield on less land with less labour and lower inputs, we will need to match this with similar progress in marketing systems to meet the challenges of feeding 9 billion mouths by 2050. Great efficiency gains will be needed in global value chains. Where will these advances come from and what will be the big challenges to be addressed? The following are my thoughts as to what these challenges are: The full engagement of women in rural economies. Even Conway (2014) seems to have left out the role that women can play in rural economies from his list of solutions to the conundrum of feeding the world’s future population. Reducing the productive possibilities of 50% of the agricultural population by limiting their role and power in the business of economics makes little sense. Policies that release the latent economic value of people equally will bring a huge windfall, particularly in countries where hitherto this has been limited by belief, culture, policy and habit. Breeding new crops for markets will become the norm. New genetic technology and the power to use vast amounts of genetic data will release the inherent potential in genetic diversity. Combined with a new market driven approach to trait selection this will substantially boost agricultural production and efficiency. Agricultural policies need to balance competition with social and environmental protection. The risk of rent capture and resource inefficiency means that there is still a role for governance and regulation. More nuanced and smarter policies that balance incentive and competition with selective market management, and behavioural change, can encourage new value chains to emerge and release hitherto unattainable efficiencies. Transaction costs remain far too high in developing economies. Connectedness, market transparency and new computer technologies point to a future world where every farmer knows the price and where farmer management and business decisions are made rationally, based on full information and in real time. Zero postharvest losses are probably impossible, but there is huge scope for quick gains in terms reduced physical and economic losses using smart financial tools, existing technologies and new techniques that are cheap at scale. Quality management and market regulation will be revolutionised by new technologies. Traceability will become normal for all agricultural commodities, locating produce in real time and informing the owner about quality. Smart labelling, cheap testing, new sensors can all contribute to reduced losses, greater value chain efficiency and even safer food. Market regulation and legal systems that favours the consumer will become even more critical. Less globalisation and more local markets: the rise of the urban middle class as a source of demand. We have seen a shift in loci of demand for agricultural commodities in recent times with emergence of new global market players like China and India. As domestic markets grow, regional economic giants like Nigeria and Kenya, represent the new frontiers of demand. Countries need to stop exporting 39 Professor Ben Bennett agricultural raw materials and develop domestic food manufacturing. The emergence of a new urban middle class in most countries and the value chains needed to supply more and better foods will drive more local investment in the food sectors of emerging economies. A new type of poverty will emerge: food safety poverty caused by the high cost of maintaining food safety. We need to guard against creating a two-tier global food safety system. Finally, we will have to embrace the even greater complexity of future value chains. New types of local and transnational value chains will emerge with new forms of value chain governance, financial management models and technical efficiencies. 8.AND WHAT OF MANCHESTER UNITED? WHAT LESSONS ARE THERE FOR AGRICULTURAL MARKET DEVELOPMENT AND PRACTITIONERS IN DEVELOPING COUNTRIES? “Football, bloody hell” Alex Ferguson, after United’s dramatic Champions League victory over Bayern Munich in 1999 I have been teaching value chain analysis, market research and business assessment methods to economists and scientists in developing countries for some years. For some, the theory is hard to grasp: it falls outside their normal day-to-day practice, requires an approach to research that is less prescriptive than that taught to most scientists, and, in any case, is usually learned in a second language. One method I have used with some success has been to draw an analogy between a successful agricultural enterprise, its products and the key tools of business analysis using Manchester United as a topical example. Hence the Manchester United Figure 29: Manchester United 2011/12 season SWOT Source: Ben Bennett 40 Millet, Myrrh, and Manchester United: Markets For development, Lessons from Practice Strength Weakness Opportunity and Threat (SWOT) analysis (see Figure 29). Ferguson himself has, with a little help from Harvard Business School, identified eight leadership lessons encompassing issues like building a new team, setting standards, keeping control, giving feedback, practice good habits, observe closely, and keep adapting (Elbarse, 2013). A few more issues I have used in explaining how markets work to economists in developing countries include using brands, picking the right players, seeking star quality, building momentum from one victory to the next and hiring the best leaders. The importance of a brand is hugely underestimated in agricultural marketing. Very few small scale producers bother to give their products an identity, and when they do, it tends to be hard to grasp and vague. Good brands have clarity and strong, positive, emotional connection with the consumer (see Figure 30). Star players. I was once wisely told that you can tell a good leader by the quality of the people he or she hires. The mixture of home developed and bought-in talent, and the ruthless culling of the weak and lazy are nowhere better illustrated by the successive construction and reconstruction of teams under the Ferguson regime. Style, panache, the spark of brilliance, and, a little luck. We all need a bit of Cantona, Giggs and Beckham to make us rise above the ordinary. Many of my successes in agricultural marketing Figure 30:the role of a brand in market development have been as a result of serendipity Source: www.manutd.com and happenstance. It should not be underestimated. Turning investment into results. There is no point in building the right team and a strong brand if it does not win something (see Table 1). The lesson is, build from small successes to big one. Table 1: Manchester United - evidence of success Title Number won Rank Football league/Premier League (since 1888) 20 1 FA cup (since 1872) 11 1 (joint with Arsenal) Source: Wikipedia – correct as of 2013/14 season. Professor Ben Bennett 41 Finally, leadership and vision – every good team needs a ruthless Scotsman in charge - Sir Alex Ferguson factor. Barros (2006) has shown statistically that sporting success, financial management, and size of fan base are the keys to maximum economic efficiency in the modern era of the Premier League. They also conclude that Management to some extent explains behaviour. Whatever the empirical evidence, it is the passion for the brand that is all pervasive and which still sees aspiration match needs in markets big and small. It is this magical link in economics that drives growth and may, eventually, give livelihoods and delight to a wealthier, happier world (unless you support Manchester City of course) (Figure 31). Figure 31: Rice mill Man U fan, Bida, Nigeria, 2015 Source: Ben Bennett ACKNOWLEDGEMENTS “I remember the first time I saw him. He was 13 and just floated over the ground like a cocker spaniel chasing a piece of paper in the wind” Sir Alex Ferguson on Ryan Giggs Notwithstanding the years of pleasure I have had from being a Manchester United supporter….. There are too many people to thanks and to whom I am indebted. I would like to recognise the support and friendship of colleagues, here at NRI and the many counterparts and collaborators around the world. Some important ones have passed, including my counterpart in the Philippines, Pepa Dumon, and various co-authors. I have been very lucky with the guidance and support I have received from a long list of bosses, starting at DFID with Mark Lowcock, and here at NRI and overseas with Rodney Must, Martin Fowler, Jonathan Coulter, John Orchard and Andrew Westby. I know that my parents would have been very proud of their son and I grateful to my brothers and their partners and my parents in law, who have all provided me with support during my career. Finally, the job of being a Marketing Economist in developing countries is enjoyable and rewarding but requires sacrifices and my family have accepted my long absences from home and have given me support without question. To Shiona, Stella, Lachlan and Rhiannon I offer my love and heartfelt thanks. 42 Millet, Myrrh, and Manchester United: Markets For development, Lessons from Practice REFERENCES Abbot J C and Makeham J P, (1990), “Agricultural Economics and Marketing in the Tropics”, Longman, UK. Abdulsalam-Saghir P, Bennett B, Quaye W, Tu V, Sanni L, and Martin A, (2015 – forthcoming), “Gender analysis of households’ decision making to reduce postharvest losses of cassava peels in Ghana, Nigeria and Vietnam”. Baffes J and Dennis A, (2013), “Long-term Drivers of Food Prices”, Policy Research Working Paper 6455, World Bank, Washington DC. Bannock G, Baxter R and Davis E, (1992), “The Penguin Dictionary of Economics”, Fifth Edition, Penguin, London. Barros C and Leach S, (2006), “Analyzing the Performance of the English F.A. Premier League With an Econometric Frontier Model”, Economic Modelling, Volume 25, Issue 5, pp 994-1002. Bennett B, (1992), “Report on a mission to the Philippines to provide socio-economic inputs into the UK/RP Copra Quality Project”, NRI Report R 1796 (R), Chatham, Kent. Bennett B, (1998), “A Long Term Policy for Development of the SACU Red Meat Sector”, SACU Sector Policy Document. Bennett B, (1999), “GMO’s in Animal Feeds: the Potential Impacts on Regional Trade”, discussion paper delivered to the SACU Ad Hoc Sub-Committee on Agriculture, Lesotho, March 1999. Bennett B, (2001), “The Implications of GMO Cotton for Namibia”, Issues in Agricultural Marketing, MAWRD Discussion Paper No.8. Ministry of Agriculture, Water and Forestry, Windhoek, Namibia. Bennett B (2002), “Market scoping: methods to help people understand their marketing environment”, PLA Notes Journal 45. Bennett B (2007), “Namibia: selected agricultural and natural resources issues”, Paper prepared for the World Bank Namibia Country Review, 2008. Bennett B (2007), “Sesame Marketing in Tanzania and Mozambique”, Final Report of the SADC ICART project “Linking the production and marketing chain for the development of smallholder agricultural commodities using sesame in Mozambique and Tanzania as a model”, EC, Brussels see http://www.sadc.int/fanr/agricresearch/ icart Bennett B, (2008), “Adapting to new marketing realities: value chain analysis of sesame in Tanzania”, SADC SACO, Gaborone. Bennett B, (2009), “Market Rules and Standards”, paper presented to the Expert Group Meeting: Developing and Value Chain Diagnostic Tool for Common Practice at UNIDO, 23-25 September 2009, Vienna. Bennett B, (2010a), “Bambara: what is the chance of developing an international value chain: Report on Bambara export market opportunities”, McKnight Foundation, Collaborative Crop Research Programme, Minneapolis. Bennett B, (2010b), “Producers and Processors Organisation Sub-Activity: Inception Report”, Millennium Challenge Account – Namibia. Professor Ben Bennett 43 Bennett B et al, (2012), “Report on Marketing and Regulatory Opportunities for the European Union for Group 1”, African Food Tradition Revisited by Research Report D5.1.1.1, Framework 7, EU, Brussels www.after-fp7.eu Bennett B, (2014a), “The Global Gluten-Free Market and High Quality Cassava Flour” in Sergeant, A, et al, “Development of methods for scaling-up production as commercial enterprises”, Grains from Losses of Root and Tuber Crops, Deliverable 4.7, EU Seventh Framework Programme, Brussels. Bennett B & Ames G (1994), “Multinationals and Market Mammies: a case study of sectoral privatisation and structural adjustment in Ghana” in Jaffe S and Morton J (1994), “Marketing Africa’s High-Value Foods: Comparative Experiences of an Emergent Private Sector”, Dubuque, Iowa. Bennett B, Cooper J and H Dobson (2010), “We know where the shoe pinches: a case study-based analysis of the social benefits of pesticides”, Outlook on Agriculture, Volume 39, Number 2, June 2010. Bennett B and Diouf D, (2014), “Intellectual Property and Market Access for New Products”, presented to the Conference on the African Food Tradition Revisited by Research, Dakar, Senegal, November 10-11. Bennett B and Hillocks R, (2008a), “Using value chain analysis to developing new market opportunities for smallholder commodities: the example of sesame seed in southern Tanzania and northern Mozambique”, EC, Brussels. Bennett B and Bennett B and Hillocks R, (2008b), “Evaluation of the Generation Challenge Programme”, EC, Brussels. Bennett B, Keller D and Loewe P, (2010), “Thematic Evaluation of UNIUDO activities in the area of Standards, Metrology, Testing and Quality (SMTQ)”, UNIDO, Vienna. Bennett B and Loewe P, (2009), Independent Evaluation Bangladesh, Bhutan, Maldives, Nepal, Strengthening Institutional and National Capacities Related to Standards, Metrology, Testing and Quality (SMTQ), UNIDO, Vienna. Bennett B et al, (2015), “Benchmarking of approaches to reduce postharvest losses and value addition to waste”, Gains from Losses of Root and Tuber Crops Deliverable Report D1.5, European Union Framework 7. Bennett B and Rogers J F, (1992), “A day in the life of Upali Viranjana, bicycle fish trader”, Bay of Bengal News, July 1992. Bennett B and van Zjipp A, (2012), “Evaluation of small ruminant and innovation platform research by ICRISAT and ILRI, IFAD/EC”. Candolle, A de (ed) (1844), Prodromus Systematis Naturalis Regni Vegetablilis 8:661, Missouri Botanical Gardens, retrieved 2nd May 2015. Carlson M, et al, (2000), “An automated, handheld biosensor for aflatoxin”, Biosensors and Bioelectronics, Vol 14, Issues 10-11, PP 841-848. Carroll R, (2002), “Zambians starve as food aid lies rejected”, The Guardian, 17 October 2002. Chambers R, (1983), “Rural Development: Putting the Last First”, Longman, UK. Chambers R, (1997), “Whose Reality Counts” Putting the First Last”, ITDG Publishing, Rugby. 44 Millet, Myrrh, and Manchester United: Markets For development, Lessons from Practice Clucas I J and Bennett B, (1991), “Report on a visit to Sri Lanka to study technical and socio-economic aspects of the BOBP Post-harvest Fisheries Programme”, NRI Report R 1654 (R), Chatham, Kent. Compton J, Tyler P, Hindmarsh P, Golob P, Boxall R and Haines C, (1993), “Reducing losses in small farm grain stores in the tropics”, Tropical Science, 33: 283-318. Conway G, (2012), “One Billion Hungry: can we feed the world”, Cornell University Press, London. Coote H, (2014), “Market Study on Demand for Bambara and Other Pulses in South Africa”, McKnight Foundation, Collaborative Crop Research Programme, Minneapolis. Coulter J, (1994), “Liberization of Cereals Marketing in sub-Saharan Africa: Lessons from Experience”, NRI Marketing Series, Chatham. CQI, (2015), “The Quality Infrastructure – roles of the different bodies”, Chartered Quality Institute, http://www.thecqi.org accessed 25th April 2015. Daviron B, and Ponte S, (2005), “The Coffee Paradox: Global Markets, Commodity Trade and the Elusive Promise of Development”, Zed Books, London. Delgado C, Rosegrant M, Steinfeld H, Ehui S and Courbois C, (1999), “Livestock to 2020: the Next Food Revolutions”, Food, Agriculture, and the Environment Discussion Paper 28, International Food and Agriculture Policy Research Institute, Washington DC. Du Plessis P, (2003), “Indigenous Plant development Strategy Review”, NASSP Report 4/2003, Ministry of Agriculture, Water and Rural Development, Windhoek, Namibia. De Waal (1997), “Famine Crimes: Politics and the Disaster Relief Industry in Africa”, James Currey. 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