27 January 2011 LUCID research can clearly make its mark

The Centre is led by LUCID Director Professor Christopher Gan Deputy Director and Associate Professor, Dr Michael Lyne and Theme leader and Associate Professor, Dr Sandra Martin. It focuses on the management of natural resources in developing and emerging economies, with the aim of reducing poverty and food insecurity through encouraging sustainable growth of the rural economy.

Linking small farmers to markets is a central theme of the research undertaken by LUCID to achieve its aim. Dr Martin says there are two parts to this.

“The first requirement to effectively link farmers to markets is to encourage smallholders in developing countries to pool their products and share marketing costs, to make the deal attractive to buyers.”

To be successful, this pooling process requires organisational arrangements that promote investment and compliance with contracts. “Farmers must be encouraged to finance and manage shared resources, comply with standards, add value and jointly contract with agents in the chain,” says Dr Lyne, Deputy Director of LUCID.

He recently completed work on an action-research project funded by the Ford Foundation with colleagues from the University of Kwa-Zulu-Natal, to investigate and improve the organisational and contractual arrangements adopted by a group of South African organic smallholders.

The study explained why the smallholders were reluctant to invest in value-added improvements and why they withheld their best quality produce from the organic market. 
Dr Martin explains that the second part of linking farmers to markets focuses on vertical coordination.

“Vertical coordination is primarily about creating value along the chain in order to meet the needs of consumers of the product,” she says. “Associated with this is how to manage logistics and quality control and the transmission of information along the chain.

“A very important aspect of vertical coordination is how chains can be configured and relationships managed to enhance value creation, to ensure all parties gain sufficient margins to encourage them to remain part of it,” she says.

Dr Martin’s recently completed work, in conjunction with colleagues from the University of Hue, on a study of agricultural supply chains in the Central Provinces of Vietnam. The project, funded by AUSAID, uncovered evidence of very entrepreneurial and adaptive behaviour by both farmers and traders which has the potential to improve the livelihoods of farmers within this chain.

Dr Martin says LUCID’s work is very important from an international perspective since the United Nations has agreed to make a concerted effort to help impoverished nations through its Millennium Development Goals.

“All 192 member states of the United Nations have agreed to try to eradicate extreme poverty and hunger,” she says. “In 2000, the United Nations set the goal of halving the number of hungry people from 840 to 420 million by 2015.

“Instead, the number of hungry people increased to more than one billion in 2009, a record high, following the food price crisis of 2008. An important lesson from this crisis was that very few of the world’s 1.5 billion poor smallholders benefited from high producer prices because they lacked access to markets. This problem is worsening as small farmers struggle to meet the costs of complying with higher standards for safe food,” she says.

In linking farmers to markets, LUCID takes an institutional perspective, which means it focuses on the formal and informal organisational and contractual arrangements that link small farmers to markets. Dr Martin says it is these systems that create the incentives which influence decisions to participate and invest in value chains.

“The LUCID teaching and research programmes draw on Lincoln University’s strength in International Rural Development that is focused on land-based issues,” says Dr Lyne. “As a University we are recognised as having a niche position in this area within New Zealand and international student interest is strong and growing.”

Research students from a number of developing and emerging economies, including Vietnam, Papua New Guinea, Nepal, Indonesia and Sri Lanka, are undertaking research on aspects of both horizontal and vertical coordination. Their work includes study on the performance of small farmer-owned companies and cooperatives, product labelling and returns to smallholders from Fair Trade chains, and the role of women in informal supply chains.

Researchers: Dr Sandra Martin, Dr Michael Lyne
Postgraduates: Wayne Powae, Jetori Mauro, Ludia Wambraugh, Rohitha Rosairo, Mahendra Khanel, Salil Bhattarai, Huy Trieu Hoang, Hieu Chi Troung, Nguyen 
Tri Trung.
Overseas Research Linkages: Faculty of Economics and Development Studies, University of Hue, Vietnam. African Centre for Food Security, School of Agricultural Sciences and Agribusiness, University of KwaZulu-Natal, South Africa. PNG University of Natural Resources and Environment, Rabaul, East New Britain, Papua New Guinea.
Funding: AUSAID, Asian Development Bank, The Ford Foundation, The South African National Agricultural Marketing Council.