Getting
a Handle on High-Value Agriculture
 Like
young adults whose tastebuds have finallyawakened, world consumers
have become daring in theirdaily diet. They hunger for novel
foods, partial substitutesfor traditional low-cost staples
like rice, wheat, andcassava. For those with cash to spare,
paying a premiumfor a specialty coffee, aromatic honey, organic
greens, orperhaps a fruit punch flavored with Andean blackberries
isno deterrent.
Globalization is driving this trend, and consolidatedsupermarket
chains, always looking for economies of scale,are the delivery
vehicle. With staple commodity prices inlong-term decline,
these niche markets are an attractiveway for tropical farmers
to diversify their production andearn a fair living. But the
strategy is as risky as it isnecessary for survival in the
global economy.
This publication, CIAT in Focus (formerly CIAT
inPerspective), is the 2004-2005 annual report of theInternational
Center for Tropical Agriculture (CIAT). In thefollowing pages,
we examine the obstacles to, and rewardsof, diversifying into
higher value crops or growingtraditional commodities that
have been transformed intomoney earners through value adding
or sales to nichemarkets. We also present examples of CIAT
research tohelp small farmers make the difficult transition
to thesealternative crops, production technologies, and markets.
Helping Small Farmers
Cash in on the Global Appetite for High-Value Products
Director General’s
Message
With their neatly organized shelves of drygoods, beverages,
vegetables, bread,fruits, meat, fish, and dairy products,today’s
supermarkets offer consumers inboth the industrial and developing
countries anamazing range of fresh, frozen, and processedproducts.
The choice—all in one location too—issomething
their grandparents never dreamed of. Therevolution in global
food sourcing and retailing thatsupermarket chains embody
is largely driven byconsumer demand, in turn influenced by
risingincomes and changing lifestyles.
Apart from a wider selection of products, whatexactly do
consumers want and what are thecoordinated food supply chains
doing to satisfy thoseappetites? Most important from CIAT’s
perspective,what room is there for small farmers in developingcountries
to tap into those supply chains to boost theirfamily incomes?
Ham and sausage versus pigs
Demand boils down to a few key factors: taste,appearance,
safety, nutrition, ease of preparation,packaging and shelf
life, and consistency of supply.For these traits, often guaranteed
by a brand name,consumers will pay a premium over the price
of moreconventional “nondifferentiated” foods.
In short, there is a huge and growing global marketfor high-value
products, particularly niche crops, suchas fruits, specialty
coffees, flowers, medicinal plants,and nontimber forest resources
whose production orharvest can’t be mechanized. We’re
also talking aboutmore conventional crops (cassava, for example)
andlivestock, to which value has been added along themarket
chain—through inspection, grading,processing, or perhaps
packaging. As a Filipino friendand former colleague of mine
often tells the indigenousfarmers with whom he works: “Don’t
sell your pigs forcash. Sell ham and sausage.”
As for the role of food supply chains in meetingdemand, procurement
specialists make suppliers jumpthrough many hoops. These include
minimum weightor volume of supply, timing and frequency of
delivery,product traits like color and shape, sanitary measures,and
packaging and traceability. And when it comes toquality and
safety, today’s private industry standardsare typically
more onerous than public ones.
One-stop supermarket shopping has, of course,been a fixture
of economic life in the richer countriesfor more than half
a century. But the forces ofglobalization are now accelerating
the integration offood procurement and retailing in the vastly
largermarkets of the populous tropics.
The downside of economic globalization for small-scale farmers
has mostly to do with their dwindlingcompetitiveness in cultivating
conventional staples likerice, maize, wheat, barley, potato,
and soybean. Thesame applies to milk production. More liberalizedtrading
regimes and better international transport andcommunications
have made it exceedingly difficult forsmallholders to continue
making a living from suchtraditional commodities.
Clearly, the growing demand for high-valueproducts—in
step with what one US economist hasdubbed the “supermarketization”
trend—can serve as acounterbalance to the livelihood
dilemma facing small-scale farmers due to foreign competition
on traditionalcommodities. Recognizing the great potential
of high-value products as an antidote to rural poverty, theScience
Council of the Consultative Group onInternational Agricultural
Research (CGIAR) explicitlycovered this topic under two of
its five recently statedpriority research areas for the next
decade.
Three lessons
Since its creation, CIAT has devoted great effort toimproving
production and protection of our fourmandate crops—beans,
cassava, forages, and rice—aswell as to the management
of soils needed for theirproduction. But in recent years we
have alsorecognized the urgent need to help poor farmers addvalue
to their conventional crops and to diversify intohigher value
products, such as fruits and livestock.
In working with our clients on diversification, CIATemphasizes
three lessons or guidelines. First, inselecting new crops
or products, small farmers shouldfocus on those requiring
specialized labor rather than oncapital-intensive crops. An
example of this is naranjillo(Solanum quitoense). Known as
lulo in Colombia, it is apopular crop among the country’s
hillside communities,some of which are currently working with
CIAT andprivate industry to exploit the fruit commercially.
Lulo isa high-value semiperennial well suited to small-scaleproduction
for the fruit juice market. The economicreturn doesn’t
come from heavy capital investment.Rather it accrues from
the farm family’s “tender lovingcare”—in
staking and pruning the plants and in selectiveharvesting.
The second guideline can be summed up in threewords: organize,
organize, organize. While any new cropor product must of course
suit on-farm resources andagroecological conditions, farmers
also must worktogether to master the technological, regulatory,
andmarketing aspects. This is an area to which CIAT hasdevoted
significant resources, particularly through itsprojects on
participatory research and agroenterprisedevelopment.
Finally, a key factor to be considered by developingcountry
farmers, and by the R&D organizationssupporting them,
is their overall comparative advantage.Producers should regularly
step back and analyze whereand how they fit into the global
agricultural picture. Oneof the watchwords here is “tropical.”
There are numerouscrops—mangoes and cassava, to name
just two—forwhich tropical locations are especially
advantageous tocommercial production. In this sense, climate
can beseen as a resource. Software tools such as CIAT’sHomologue,
which uses climate and soil data toassociate crops with locations
where they might growwell, is designed to help tropical farmers
exploit theircompetitive advantages.
When food commerce is left solely to market forces, itis
nearly always the large players who win. For smallfarmers
in developing countries to benefit fromdiversifying into high-value
products, they need to besupported by good organization, information,
andpolicies. If donors, research organizations, anddevelopment
agencies can help small producersparticipate competitively
in market chains, then we willhave helped them find new escape
routes from poverty.As our annual report for 2004-2005 demonstrates,
thisis a fundamental social investment to which CIAT isdevoting
significant research effort.
Joachim
Voss
Director General, CIAT
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