Jörg Wiegratz (University of Jörg Wiegratz (University of Sheffield) Sheffield)

Agrarian Change SeminarsAgrarian Change SeminarsSOAS, 22.10.2009SOAS, 22.10.2009

Issues in farmer-buyer Issues in farmer-buyer relationships and trade relationships and trade

practices in Ugandapractices in Uganda

Recent empirical findingsRecent empirical findings

Overview of the Overview of the presentationpresentation Findings from two studies, research period 2007-Findings from two studies, research period 2007-

99 Case studies of lead firm governance systems in the Case studies of lead firm governance systems in the

context of commercialization of smallholder context of commercialization of smallholder agriculture in Uganda (Wiegratz, Nyabuntu and agriculture in Uganda (Wiegratz, Nyabuntu and Omagor 2007)Omagor 2007) See also Wiegratz (2009)See also Wiegratz (2009)Uganda’s human resource Uganda’s human resource

challenge: Training, Business Culture and Economic challenge: Training, Business Culture and Economic DevelopmentDevelopment, Fountain Publishers: Kampala, Chapters 9 and , Fountain Publishers: Kampala, Chapters 9 and 10 10

The cultural political economy of embedding The cultural political economy of embedding neoliberalism in Uganda: an analysis of changes in neoliberalism in Uganda: an analysis of changes in moral norms and trade practices in the rural economy moral norms and trade practices in the rural economy since 1986 (PhD research 2007-10)since 1986 (PhD research 2007-10)

www.shef.ac.uk/politics/research/phd/jwiegratz.htmlwww.shef.ac.uk/politics/research/phd/jwiegratz.html2

Background study 1Background study 1 Five case studies of governance of value Five case studies of governance of value

chains between lead firm and supplying chains between lead firm and supplying farmersfarmers Bee Natural Products (honey)Bee Natural Products (honey) Sulmafoods (fruits/veg.)Sulmafoods (fruits/veg.) Outspan (sesame/chili)Outspan (sesame/chili) Ibero (coffee)Ibero (coffee) Jesa (dairy products)Jesa (dairy products)

Extra study (different funding): Sameer Extra study (different funding): Sameer and Paramount (dairy)and Paramount (dairy)

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Abbreviations Abbreviations Domestic Value chains (Domestic Value chains (DVCsDVCs)) Domestic Value Chain Development (Domestic Value Chain Development (DVCDDVCD)) Lead firms (Lead firms (LFsLFs)) Smallholder farmers (Smallholder farmers (SHFsSHFs)) Lead farmers (Lead farmers (LFAsLFAs)) Supervisors (Supervisors (SVsSVs)) Support institutions (Support institutions (SIsSIs)) Private Sector (Private Sector (PSPS)) Public Private Partnership (Public Private Partnership (PPPPPP)) For the lead firms: For the lead firms: BNP, SF, OS, IB, JE BNP, SF, OS, IB, JE

((PM, SEPM, SE))

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Research RationaleResearch Rationale Past studies: Past studies: deficits deficits in agro value chain governance in agro value chain governance

agro-sector regarding business practices and ethicsagro-sector regarding business practices and ethics Low level of: trust-basedLow level of: trust-based, , long term long term oriented economic oriented economic

relationsrelations Rather: Rather: short term oriented, on-off short term oriented, on-off relations, low mutual relations, low mutual

trust/mistrust, trust/mistrust, opportunistic behaviour, malpracticesopportunistic behaviour, malpractices Low trust atmosphere shapes expectations re action Low trust atmosphere shapes expectations re action

motivations and practicesmotivations and practices

Yet, Yet, relevance relevance of meaningful buyer-farmers interaction of meaningful buyer-farmers interaction for development of smallholder farmers (for development of smallholder farmers (in neoliberal in neoliberal settingsetting))

Thus, what are the Thus, what are the experiences experiences of buyers who engage of buyers who engage in direct and in direct and long term oriented long term oriented relations with farmers relations with farmers (‘developmental buyers’)?(‘developmental buyers’)?

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Key research questionsKey research questions How did the relationship How did the relationship startstart between SHFs and the LF? between SHFs and the LF? What is the What is the rationalerationale of the relationship? of the relationship? What were What were requirementsrequirements for SHFs to participate in the VC? for SHFs to participate in the VC? Did SHFs Did SHFs fulfillfulfill requirements from the beginning, or, if not, requirements from the beginning, or, if not,

did they receive did they receive assistanceassistance from LFs (others) to do so? from LFs (others) to do so?

What are What are different governance systemsdifferent governance systems of LFs? Rationale? of LFs? Rationale? What are the What are the rolesroles of the LFs and SHFs in a specific VC? of the LFs and SHFs in a specific VC? What are What are forms, reasons, resultsforms, reasons, results of LF-SHFs cooperation? of LF-SHFs cooperation? What are forms of What are forms of cooperationcooperation among SHSs? among SHSs?

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Key research questions, Key research questions, cont. (1)cont. (1)

What are What are challenges/opportunities challenges/opportunities of the of the relationshiprelationship? ?

What are particular challenges/opportunities of What are particular challenges/opportunities of SHFsSHFs? ?

Which are SHFs’ improvement (Which are SHFs’ improvement (upgradingupgrading) ) efforts? What are efforts? What are results results of upgrading?of upgrading?

What are overall What are overall benefits and costs benefits and costs for for SHFs/LFs of being in the business relationship?SHFs/LFs of being in the business relationship?

What are What are lessons learnt lessons learnt for LFs and SHFs?for LFs and SHFs?

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Key research questions, Key research questions, cont. (2)cont. (2)

How did How did support institutions support institutions help the help the LF-SHFs VC? LF-SHFs VC?

How did How did government policies government policies impact on impact on the relation between LFs and SHFs?the relation between LFs and SHFs?

How can How can Government (&donor) Government (&donor) programmes programmes and policies support the and policies support the VCs in VCs in futurefuture? ?

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Hypotheses of the studyHypotheses of the study

All pretty much the staff of All pretty much the staff of conventionalconventional value chain governance analysis!value chain governance analysis!

E.g., production and trade dynamics E.g., production and trade dynamics at level at level of of SHFsSHFs and and LFsLFs are are related to forms of related to forms of relationships relationships between VC actors; and thus to between VC actors; and thus to forms of VC governance.forms of VC governance.

Network Network relations with a LF offer better relations with a LF offer better earning and upgrading conditions for earning and upgrading conditions for SHFs than arms-length spot-market SHFs than arms-length spot-market relations. relations.

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Hypotheses of the study, Hypotheses of the study, cont. cont.

Different governance forms require Different governance forms require different degrees of farmers’ different degrees of farmers’ capabilitiescapabilities; ; integration into more relational integration into more relational governance modes requires a high degree governance modes requires a high degree of such capabilities of such capabilities

EnhancedEnhanced skillsskills and and collective actioncollective action of of SHFs reducesSHFs reduces governance costsgovernance costs and and risksrisks; ; so do enhanced opportunities to efficiently so do enhanced opportunities to efficiently transmit knowledge/info transmit knowledge/info between LF and between LF and SHFsSHFs

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Field researchField research

In-depth interviews with: LFs and SHFs. In-depth interviews with: LFs and SHFs. With the LFs: MDs, Farm Managers, SVs etc.With the LFs: MDs, Farm Managers, SVs etc. With 2-4 farmers groups per case studyWith 2-4 farmers groups per case study With 3-4 support institutions per case study.With 3-4 support institutions per case study.

Field research period: June-September 2007.Field research period: June-September 2007. Final document length: about 500pp.Final document length: about 500pp.

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Governance of VCsGovernance of VCs LFsLFs are in a particular are in a particular functional position functional position in the chain, in the chain,

e.g. powerful buyers/retailers, processorse.g. powerful buyers/retailers, processors

Way in which the LF (powerful buyers/retailers, Way in which the LF (powerful buyers/retailers, processors) of a specific VC processors) of a specific VC organizesorganizes, , coordinatescoordinates, , monitorsmonitors and and controlscontrols: :

1.1. Dispersed Dispersed activitiesactivities and and inputsinputs of the participating of the participating actors actors (to achieve certain functional division of labour (to achieve certain functional division of labour in the VC)in the VC)

2.2. BarriersBarriers of VC entry and of VC entry and spreadspread of skills, technology, of skills, technology, knowledge, information, advise, finance, profits along knowledge, information, advise, finance, profits along VC VC

Governance is typically required for specifications in Governance is typically required for specifications in terms ofterms of

productproduct (design, quality, standards) (design, quality, standards) production production processesprocesses and technology, and/or and technology, and/or logisticslogistics (quantity, delivery, scheduling) (quantity, delivery, scheduling)

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Aspects of VC governanceAspects of VC governance SettingSetting rules that define conditions of VC rules that define conditions of VC

participationparticipation

Incorporating/excludingIncorporating/excluding other VC actors other VC actors accordingly, and accordingly, and allocatingallocating to them value-adding to them value-adding activities that LFs do not wish to performactivities that LFs do not wish to perform

MonitoringMonitoring actors’ performance and rules’ actors’ performance and rules’ compliancecompliance

AssistingAssisting VC actors in meeting rules VC actors in meeting rules

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Governance: WHY and HOWGovernance: WHY and HOW Among Among main motivation for governancemain motivation for governance: :

Product definition:Product definition: Buyer’ product Buyer’ product differentiation strategy requires to provide differentiation strategy requires to provide suppliers with precise product specification suppliers with precise product specification + ensure that specifications are met+ ensure that specifications are met

Perceived risk of producer failure:Perceived risk of producer failure: Governance is supposed to reduce that riskGovernance is supposed to reduce that risk

In some VCs: major governance work In some VCs: major governance work not done not done by LF but fewby LF but few (1 (1stst tier) suppliers, buying tier) suppliers, buying agents, government actors, consulting firmsagents, government actors, consulting firms

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Different governance formsDifferent governance forms Varying coordination patterns: along a VC and between VCs: Varying coordination patterns: along a VC and between VCs:

Arm’s-length relationshipArm’s-length relationship (pure market relationships) (pure market relationships) Network-type relationships Network-type relationships (explicitly coordinated)(explicitly coordinated) Vertically integrated Vertically integrated firms (hierarchy, explicitly firms (hierarchy, explicitly

coordinated)coordinated)

Reasons for different governance types: Reasons for different governance types: ComplexityComplexity of transaction of transaction Ability to codify and transferAbility to codify and transfer information/knowledge information/knowledge CapabilitiesCapabilities of suppliers of suppliers Others: product or market features, technology, trade Others: product or market features, technology, trade

policies, social capital, trust, human resources, local policies, social capital, trust, human resources, local collective actioncollective action

Also: differences in terms of Also: differences in terms of high-trusthigh-trust and and low-trust VClow-trust VC

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Some implicationsSome implications Important to understand:Important to understand:

VC structure, functioning &VC structure, functioning & changechange of of governance modes governance modes along VC along VC

Ways in which Ways in which LFLF might intend to might intend to incorporateincorporate and supportand support SHFsSHFs and allocate and allocate new tasks to themnew tasks to them

Capability requirements Capability requirements for SHFs’ for SHFs’ integration and upgrading in VCsintegration and upgrading in VCs

Quality of relation with LF vital for SHFs:Quality of relation with LF vital for SHFs: LLL-approachLLL-approach: Local firms : Local firms linkinglinking with buyers, with buyers,

leveragingleveraging know-how, skills, technology from know-how, skills, technology from these relations (to upgrade), and invest in these relations (to upgrade), and invest in learninglearning

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……in context of farmers’ in context of farmers’ developmentdevelopment

Participating in VCs can be Participating in VCs can be fast-track fast-track strategy strategy for SHFs: for SHFs:

To gain access to markets (LF as a To gain access to markets (LF as a gatekeeper), marketing channels, credit, gatekeeper), marketing channels, credit, technologies, knowledge, skills of the LF technologies, knowledge, skills of the LF and and thus mobilizethus mobilize farmers’ potentialfarmers’ potential

LFs put LFs put pressurepressure and at the same time and at the same time provide provide assistanceassistance

Selected findingsSelected findings

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All LFs tried to link up and All LFs tried to link up and support SHFssupport SHFs

All LFs have undertaken efforts to build direct and All LFs have undertaken efforts to build direct and constant relations with farmers and build their constant relations with farmers and build their productive capacities and group organization. productive capacities and group organization.

There are various reasons for LFs to do this: There are various reasons for LFs to do this: Strive for sufficient product quantity and qualityStrive for sufficient product quantity and quality Control of diseases and pests in the production areaControl of diseases and pests in the production area Meeting standards (traceability etc.) of the target Meeting standards (traceability etc.) of the target

marketmarket Statutory regulationStatutory regulation Market dynamics such as enhanced competition Market dynamics such as enhanced competition

(quality) (quality) Interest in Interest in local development around the LF’s location local development around the LF’s location

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LF’ support relevant for SHFs’ LF’ support relevant for SHFs’ upgradingupgrading

Setting up a factory (or project office, ‘being visible’) in Setting up a factory (or project office, ‘being visible’) in an area helps the LF getting security from local an area helps the LF getting security from local ‘stakeholders’ (farmers etc.) allowing the factory not to ‘stakeholders’ (farmers etc.) allowing the factory not to be a ‘white elephant’ but to be protected (in broader be a ‘white elephant’ but to be protected (in broader sense) by stakeh.sense) by stakeh.

LFs offer significant benefits to SHFs; the results of the LFs offer significant benefits to SHFs; the results of the cooperation are usually significant (farmers’ cooperation are usually significant (farmers’ upgrading)upgrading)

Despite the upgrading efforts/results of LFs and SHFs, Despite the upgrading efforts/results of LFs and SHFs, some LFs face a some LFs face a supply supply problem, others a problem, others a market accessmarket access problemproblem

LFs still noted deficits among farmers in terms of: adoption LFs still noted deficits among farmers in terms of: adoption of improved agronomic practices, technology advancement, of improved agronomic practices, technology advancement, and risk taking behaviour, amongst othersand risk taking behaviour, amongst others

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Continuation!?Continuation!? LFs have to be ready to (continue to) invest in LFs have to be ready to (continue to) invest in

SHFs: innovation, inputs, training, advise, SHFs: innovation, inputs, training, advise, promotion of GAP (good agricultural practices), promotion of GAP (good agricultural practices), certification costs etc.certification costs etc.

Such efforts have a good chance to yield positive Such efforts have a good chance to yield positive returns in the long run (if loyalty & market returns in the long run (if loyalty & market challenges can be kept in control) challenges can be kept in control)

There are high expectations - among There are high expectations - among SHFs/stakeholders - that LFs further increase the SHFs/stakeholders - that LFs further increase the scopescope of their support of their support

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LFs positively different from LFs positively different from ‘other buyers’‘other buyers’

Farmers in all case studies appreciate the relation with Farmers in all case studies appreciate the relation with their LF; despite respective their LF; despite respective challengeschallenges Training, price, demand stability, increased business Training, price, demand stability, increased business

volume, technology & knowledge transfer, better volume, technology & knowledge transfer, better agro-practices, various kinds of assistance, more agro-practices, various kinds of assistance, more trust-based (and at times partnership-like) trust-based (and at times partnership-like) relationships, motivation, learning by repetition, relationships, motivation, learning by repetition, lower level of malpractices (if any) in particular lower level of malpractices (if any) in particular cases, joint business projectscases, joint business projects

Farmers: the LFs’ actions is different from other Farmers: the LFs’ actions is different from other buyers/agents in the area; others mostly just purchase buyers/agents in the area; others mostly just purchase the produce but do not develop farmers capacities; the produce but do not develop farmers capacities; they are often also less trustworthy than the LFs they are often also less trustworthy than the LFs studiedstudied

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Yet, LF face loyalty Yet, LF face loyalty problemsproblems

Yet, almost all LFs suffer from the loyalty-Yet, almost all LFs suffer from the loyalty-problem: Farmers who benefit from the LF’s problem: Farmers who benefit from the LF’s support sell to other buyers who have not support sell to other buyers who have not supported farmers in any way, but can pay a supported farmers in any way, but can pay a higher pricehigher price because they had not invested in because they had not invested in farmers’ capacities (in VCD in general). farmers’ capacities (in VCD in general).

LF’s LF’s initial assistanceinitial assistance resulted in a resulted in a loyalty loyalty boostboost; this initial effect fades out to some extent ; this initial effect fades out to some extent over time over time

LFs will have to find new ways of boosting (or ‘re-LFs will have to find new ways of boosting (or ‘re-freshening’) the farmers’ loyalty in later phases of freshening’) the farmers’ loyalty in later phases of the relationshipthe relationship

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State support for LFs?!State support for LFs?! GOU has to consider the contribution of those LFs who GOU has to consider the contribution of those LFs who

are are pioneerspioneers in developing a sub-sector in a particular in developing a sub-sector in a particular areaarea

Argument for special support (or protection) of the LFs Argument for special support (or protection) of the LFs efforts and investment into VCD in new sub-sectors to efforts and investment into VCD in new sub-sectors to arrive at a social optimum (increased level) of such arrive at a social optimum (increased level) of such efforts efforts

Without support (or protection from following buyers) in Without support (or protection from following buyers) in the early phase, the pioneer firm will invest less than the early phase, the pioneer firm will invest less than desired; knows the following buyers will benefit from desired; knows the following buyers will benefit from the capacity building of farmers and out-compete the the capacity building of farmers and out-compete the pioneer on price (scenario of BNP and honey production pioneer on price (scenario of BNP and honey production in West Nile region)in West Nile region)

Market failures - information (‘discovery’) and training Market failures - information (‘discovery’) and training externalities of LFs’ actions - to be addressed by policiesexternalities of LFs’ actions - to be addressed by policies

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Difficult enforceability of Difficult enforceability of contractscontracts

Some LFs face problem of enforceability of (Some LFs face problem of enforceability of (supply and supply and pay-back) pay-back) contracts/agreements; contracts/agreements; dealing with defaulting dealing with defaulting farmers farmers

Deficient re-payment behaviour of farmers (‘other needs’)Deficient re-payment behaviour of farmers (‘other needs’) Enforcement of contracts is not yet feasible with SHFs: Enforcement of contracts is not yet feasible with SHFs:

Limited staff capacity of the LF to enforce contractsLimited staff capacity of the LF to enforce contracts Fear to loose reputation among farmersFear to loose reputation among farmers Need for LF to keep farmers in the VC to ensure supply Need for LF to keep farmers in the VC to ensure supply Pressures from local politiciansPressures from local politicians

BNP approached NAADS (state agriculture programme) BNP approached NAADS (state agriculture programme) to help with to help with price negotiations/farmers’ loyaltyprice negotiations/farmers’ loyalty

Overall, highly relevant problem for VCD in Uganda Overall, highly relevant problem for VCD in Uganda (undermines & lowers LFs’ efforts)(undermines & lowers LFs’ efforts)

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The role of training and The role of training and lead farmers lead farmers

LFs stressed the high level of training efforts needed to LFs stressed the high level of training efforts needed to keep the farmers motivated, committed, keep the farmers motivated, committed, knowledgeable. knowledgeable.

LFs often designate successful farmers as ‘lead LFs often designate successful farmers as ‘lead farmers’ who act as role models and champions of any farmers’ who act as role models and champions of any innovations the LF would like to push through the innovations the LF would like to push through the group of SHFs. The use of LFA is effective for farmer-group of SHFs. The use of LFA is effective for farmer-to-farmer learning.to-farmer learning.

LF SVs reported that they had to learn how (i) to LF SVs reported that they had to learn how (i) to interact with farmers, (ii) communicate information, interact with farmers, (ii) communicate information, (iii) make joint decisions, and (iv) be patient with (iii) make joint decisions, and (iv) be patient with farmers.farmers.

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Staff workload vs. VCD Staff workload vs. VCD requirements requirements

Some LFS have problem to Some LFS have problem to expand their staff system expand their staff system adequately as their system adequately as their system with farmers expandswith farmers expands

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Group formation and Group formation and dynamics…dynamics…

……of farmer groups is a major issue in VCs. All of farmer groups is a major issue in VCs. All farmers interviewed were organized in groups. farmers interviewed were organized in groups. Often, the LF has initiated the group formation Often, the LF has initiated the group formation process.process.

The group arrangement has brought many The group arrangement has brought many advantages (input sharing etc.)advantages (input sharing etc.)

Due to group processes, the out put per SHF has Due to group processes, the out put per SHF has increased, knowledge of best practices is shared increased, knowledge of best practices is shared by members by members

However, weak group structures (generally However, weak group structures (generally institutions from grassroots to higher levels) institutions from grassroots to higher levels) remain a major challenge for most SHFs and remain a major challenge for most SHFs and respective LFs. respective LFs.

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……are key and need to be are key and need to be addressedaddressed

All LFs called for enhanced group organization. All LFs called for enhanced group organization. This issue should be of major concern for GOUThis issue should be of major concern for GOU

One LF: stated it would increase farm gate prices One LF: stated it would increase farm gate prices for farmers if there is a higher level of group for farmers if there is a higher level of group organization (thus reduced LF supervision costs)organization (thus reduced LF supervision costs)

LFs need to develop better LFs need to develop better group orientedgroup oriented incentivesincentives

Related challenge: to use farmers’ network which Related challenge: to use farmers’ network which is applied to certain areas (to help each other in is applied to certain areas (to help each other in production) also for cooperation in investment, production) also for cooperation in investment, financial and other business issuesfinancial and other business issues

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Bulking challenge: logistics & Bulking challenge: logistics & practicespractices

Bulking of produce (farmers’ collective Bulking of produce (farmers’ collective marketing) still faces challenges of: marketing) still faces challenges of: Lack of stores in villages where produce Lack of stores in villages where produce

can be bulked by SHFs as they wait fore can be bulked by SHFs as they wait fore the buyer to collect and pay for the the buyer to collect and pay for the produceproduce

SHFs wanting to be paid as soon as they SHFs wanting to be paid as soon as they deliver the produce to the store deliver the produce to the store

Requires a LF’ approach to foster Requires a LF’ approach to foster gradualgradual change in farmers’ practices change in farmers’ practices (trust) (trust)

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(Dis-)trust is another top (Dis-)trust is another top issue in VCsissue in VCs Many interviewees - farmers and LFs - refer to trust as Many interviewees - farmers and LFs - refer to trust as

the basis of a mutual beneficial business relationshipthe basis of a mutual beneficial business relationship LFs have usually a high awareness of the importance LFs have usually a high awareness of the importance

of trust and try to develop/deepen trust with SHFs; of trust and try to develop/deepen trust with SHFs; especially in absence of use of any/enforceable especially in absence of use of any/enforceable contractscontracts

LFs are not always successful in trust enhancement due toLFs are not always successful in trust enhancement due to High turn over, low job security/remuneration of SVsHigh turn over, low job security/remuneration of SVs Cheating of LF’s buying agents Cheating of LF’s buying agents Irregular payment of farmers Irregular payment of farmers Logistical challenges, thus delayed picking of produceLogistical challenges, thus delayed picking of produce De-campaigning of LF by other buyers and politicians De-campaigning of LF by other buyers and politicians ‘‘Interference’ of other buyers into the VC - try to Interference’ of other buyers into the VC - try to

capture produce after LF has developed farmers’ capture produce after LF has developed farmers’ capacities (price wars) capacities (price wars)

In one case, the LF and farmers call for intervention of In one case, the LF and farmers call for intervention of GOU in the price setting (BNP)GOU in the price setting (BNP)

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How lead firms build/deepen How lead firms build/deepen trusttrust

Farmers said the LF builds trust and relations with them by: Farmers said the LF builds trust and relations with them by:

Providing an assured market and taking all the farmers Providing an assured market and taking all the farmers produce, buying from and working with a group for longer produce, buying from and working with a group for longer (time factor)(time factor)

Paying a more than average (local) price, paying regularly, Paying a more than average (local) price, paying regularly, being flexible in terms of payment methods being flexible in terms of payment methods andand other matters other matters

Providing assistance (inputs, advise, visits, training, pre-Providing assistance (inputs, advise, visits, training, pre-finance) finance)

Fulfilling promises over longer period of time Fulfilling promises over longer period of time Being visible and approachable (factory shows commitment to Being visible and approachable (factory shows commitment to

the area), transparent and reliablethe area), transparent and reliable Being part of farmers’ social life (develop a more social Being part of farmers’ social life (develop a more social

relation)relation) Being concerned with SHFs’ development/well beingBeing concerned with SHFs’ development/well being Increasing farmers identity towards the LFs’ projectIncreasing farmers identity towards the LFs’ project Examples where trust has been improved by using an Examples where trust has been improved by using an

advanced machine for quality control/weightingadvanced machine for quality control/weighting

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And how lead firms loose it…And how lead firms loose it…Farmers: issues that undermine relations and trust Farmers: issues that undermine relations and trust

betweenbetweenthem and LF are them and LF are deficits of the LFdeficits of the LF in terms of: in terms of: Timely payment of farmers Timely payment of farmers Price levels and price negotiations with farmers Price levels and price negotiations with farmers Flexibility Flexibility Timely logistics arrangement to pick the produceTimely logistics arrangement to pick the produce Communication gapsCommunication gaps High field staff turnoverHigh field staff turnover

Standards (organic, fair trade, quality and others) which Standards (organic, fair trade, quality and others) which requirerequire

buyers and farmers to be in close contact - beyond merebuyers and farmers to be in close contact - beyond meretransaction mode - have fostered relations and transaction mode - have fostered relations and

cooperationcooperationbetween farmers and buyers between farmers and buyers

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MixedMixed state efforts/results in state efforts/results in supporting VCDsupporting VCD

Some cases where government programmes have helped Some cases where government programmes have helped the VC, LF and/or farmers in terms of training and the VC, LF and/or farmers in terms of training and equipmentequipment

BNP-NAADS cooperation most advanced BNP-NAADS cooperation most advanced

Other cases where government support in crucial issue Other cases where government support in crucial issue areas is largely absent which leaves the LF with a areas is largely absent which leaves the LF with a considerable burden regarding VCD and farmers’ considerable burden regarding VCD and farmers’ upgrading upgrading

Some LFs noted to have overstretch their activity areas Some LFs noted to have overstretch their activity areas beyond core functions (training SHFs basics only, buying beyond core functions (training SHFs basics only, buying produce) produce)

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LFs search for cooperation LFs search for cooperation with: support institutions with: support institutions

and industriesand industries Getting stakeholders involved in development of Getting stakeholders involved in development of

farmers - major strategy of all LFs to reduce their VCD farmers - major strategy of all LFs to reduce their VCD burden burden

VC partners: NGOs, donor/state inst., input suppliers VC partners: NGOs, donor/state inst., input suppliers

LFs take on a linking function for farmers LFs take on a linking function for farmers

There are a number of examples of good cooperation There are a number of examples of good cooperation between LF and input suppliers; which can benefit between LF and input suppliers; which can benefit SHFsSHFs

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Support Support institutions/industries: institutions/industries: ++

Impression: in terms of presence, more Impression: in terms of presence, more international than local support inst. are involved international than local support inst. are involved in VCD in cases studied in VCD in cases studied

Some support programmes/institutions outside the Some support programmes/institutions outside the government realm do useful interventions government realm do useful interventions

There are examples where two/more support inst. There are examples where two/more support inst. partner with a LF and the partners compliment partner with a LF and the partners compliment one another and improve the efficiency and one another and improve the efficiency and performance of the VCperformance of the VC

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Support Support institutions/industries: institutions/industries: --

Uncoordinated interventions from different Uncoordinated interventions from different development agencies (incl. NGOs) can lead to development agencies (incl. NGOs) can lead to ‘confusion of farmers ‘confusion of farmers Organic farmers (or farmers close to them) advised Organic farmers (or farmers close to them) advised

to use non-organic chemicals/treated seeds to use non-organic chemicals/treated seeds Organic VCs can loose certification/be sanctioned for Organic VCs can loose certification/be sanctioned for

yearsyears Design of programmes show poor awareness of Design of programmes show poor awareness of

prevailing VC issues: farmers are supported in prevailing VC issues: farmers are supported in processing to become more independent from LF processing to become more independent from LF and sell at better price to and sell at better price to anyany (non-developmental) (non-developmental) buyerbuyer

Different quality standards Different quality standards being promoted in an being promoted in an area by provision of quality equipment which has area by provision of quality equipment which has lower quality level than the one promoted by the LF lower quality level than the one promoted by the LF

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Support Support institutions/industries: institutions/industries: -, -,

cont.cont. Interventions that do not consider existing VC Interventions that do not consider existing VC context properly (e.g. strategies of LF/farmers) context properly (e.g. strategies of LF/farmers) can cause confusion in the VC and maybe leave can cause confusion in the VC and maybe leave farmers worse off:farmers worse off: Link with LF has been cut; training, advice, Link with LF has been cut; training, advice,

market access not offered anymore by LF, market access not offered anymore by LF, Low quality equipment brings poor result Low quality equipment brings poor result

(discouraged farmers)(discouraged farmers) Donors/support agencies: should be concerned Donors/support agencies: should be concerned

with promoting a more harmonized system of with promoting a more harmonized system of standards, knowledge, practices etc. in VCs in standards, knowledge, practices etc. in VCs in an areaan area

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Public Private Partnerships Public Private Partnerships for DVCDfor DVCD

GOU has to clarify about its conception of GOU has to clarify about its conception of PPP in DVCD, e.g. scope of support for LF PPP in DVCD, e.g. scope of support for LF governance systems, farmers etc. governance systems, farmers etc.

BNP-NAADS case shows: clarification BNP-NAADS case shows: clarification necessary to which extent GOU wishes to necessary to which extent GOU wishes to engage with LFs not only on matters of engage with LFs not only on matters of production (training and equipment for production (training and equipment for farmers) but also marketing (loyalty, farmers) but also marketing (loyalty, contracts, prices) contracts, prices)

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Indications that LFs have to Indications that LFs have to improve: improve:

The relation with lead farmers (regularly The relation with lead farmers (regularly getting their advice etc.)getting their advice etc.)

Improve communication (prices, strategies etc.)Improve communication (prices, strategies etc.)

Improve field management (adequate level and Improve field management (adequate level and remuneration of field staff)remuneration of field staff)

Work on loyalty challengeWork on loyalty challenge Enhance system of rewards and sanctions for Enhance system of rewards and sanctions for

farmers farmers

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Hypotheses confirmedHypotheses confirmed Production/trade dynamics at level of SHFs/LFs are Production/trade dynamics at level of SHFs/LFs are

related to forms of relations between VC actors related to forms of relations between VC actors (governance)(governance) Deficits in terms of loyalty/trust between SHFs and LF Deficits in terms of loyalty/trust between SHFs and LF

reduce produce that SHFs sell to LF, increase side reduce produce that SHFs sell to LF, increase side selling selling

Organic certification requirements foster LF and SHFs Organic certification requirements foster LF and SHFs to have a close & continuous relation which includes to have a close & continuous relation which includes joint harvesting, quality checks, training; LFs need to joint harvesting, quality checks, training; LFs need to build up field presence for that build up field presence for that

Training, advice, pre-finance offered by LFs Training, advice, pre-finance offered by LFs strengthens the skills and capacities and thus strengthens the skills and capacities and thus performance of SHFsperformance of SHFs

LFs link SHFs to SIs which again strengthens the SHFsLFs link SHFs to SIs which again strengthens the SHFs

Cooperation measures are result of advanced relations Cooperation measures are result of advanced relations that are that are different from purely transaction based approach different from purely transaction based approach common in Ugandacommon in Uganda

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Hypotheses confirmed, Hypotheses confirmed, cont. (1)cont. (1)

Network relations with LF offer better earning/upgrading Network relations with LF offer better earning/upgrading conditions for SHFs than arms-length spot-market conditions for SHFs than arms-length spot-market relationsrelations

Different governance forms require different degrees of Different governance forms require different degrees of farmers’ capabilities; network relations have requirement farmers’ capabilities; network relations have requirement for SHFs to enhance their skills in GAP, post harvest for SHFs to enhance their skills in GAP, post harvest handling, sorting, storage etc. handling, sorting, storage etc.

LFs offer assistance to raise the required skills, yet also LFs offer assistance to raise the required skills, yet also demand that SHFs improve their work practices over timedemand that SHFs improve their work practices over time

SHFs need skills for communication, trust building and SHFs need skills for communication, trust building and transparency vis-à-vis the LF; integration into relational transparency vis-à-vis the LF; integration into relational governance modes requires a high degree of such governance modes requires a high degree of such capabilitiescapabilities

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Hypotheses confirmed, Hypotheses confirmed, cont. (2)cont. (2)

Enhanced skills and collective action of SHFs Enhanced skills and collective action of SHFs reduces governance costs and risks for the LFreduces governance costs and risks for the LF Training provided to farmers reduce monitoring Training provided to farmers reduce monitoring

costs in later periods and increase business volumescosts in later periods and increase business volumes Enhanced farmer groups reduce coordination costs Enhanced farmer groups reduce coordination costs Governance costs are reduced by enhanced Governance costs are reduced by enhanced

opportunities to efficiently transmit knowledge/info opportunities to efficiently transmit knowledge/info between LFs and SHFs as a result of better group between LFs and SHFs as a result of better group formation (farmers acting increasingly as one voice), formation (farmers acting increasingly as one voice), improved communication practices of farmers and improved communication practices of farmers and the increasing mobile phone use the increasing mobile phone use

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Further research neededFurther research needed Role of LFAs as link between LF and farmer groups Role of LFAs as link between LF and farmer groups Role of SVs as links LF management - farmersRole of SVs as links LF management - farmers Trust links in VC, loyalty cyclesTrust links in VC, loyalty cycles Practices of ‘non-developmental’ buyersPractices of ‘non-developmental’ buyers How lead firms spent money from external state/aid agenciesHow lead firms spent money from external state/aid agencies Lead firm claims re results of invention (degree of propaganda)Lead firm claims re results of invention (degree of propaganda) Politics of cooperation (limiting farmers’ ambition re Politics of cooperation (limiting farmers’ ambition re

processing)processing) State/donor – lead firm connection (Sameer, sugar, palm oil, State/donor – lead firm connection (Sameer, sugar, palm oil,

cuts)cuts) Divide and rule strategies of lead firms Divide and rule strategies of lead firms Inter lead-firms fights over ‘our farmers’ (politics of out-grower Inter lead-firms fights over ‘our farmers’ (politics of out-grower

schemes in specific territories, in ‘liberal’ economy setting)schemes in specific territories, in ‘liberal’ economy setting) CONVENTIONAL VC APPROACH CANNOT HANDLE: CONVENTIONAL VC APPROACH CANNOT HANDLE:

(CULTURAL) POLITICAL ECONOMY, e.g. MORAL ECONOMY (CULTURAL) POLITICAL ECONOMY, e.g. MORAL ECONOMY

Study 2: Trade practices Study 2: Trade practices and moral norms in rural and moral norms in rural

marketsmarkets Research question: how have neoliberal reforms Research question: how have neoliberal reforms

reshaped the moral economy in rural marketsreshaped the moral economy in rural markets Market society (free-market, capitalist social Market society (free-market, capitalist social

relations; the hegemony of capital)relations; the hegemony of capital) Includes a corresponding set of moral norms of Includes a corresponding set of moral norms of

behaving and relating to each other behaving and relating to each other Homo economicus, self-interest, individualism including Homo economicus, self-interest, individualism including

individual gain-making and material success, utility individual gain-making and material success, utility maximizing behaviour, instrumental rationality, low other-maximizing behaviour, instrumental rationality, low other-regard and empathy, opportunism, transaction-based regard and empathy, opportunism, transaction-based relations, moneyrelations, money

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Neoliberal moral Neoliberal moral restructuringrestructuring Reforms, therefore, have to undermine, overwrite Reforms, therefore, have to undermine, overwrite

and displace pre-existing norms, values, orientations, and displace pre-existing norms, values, orientations, valuations and practices among the population. valuations and practices among the population.

Attempt to change, directly or indirectly, Attempt to change, directly or indirectly, moral moral normsnorms:: what is regarded as acceptable/unacceptable, what is regarded as acceptable/unacceptable, proper/improper, legitimate/illegitimate behaviour in proper/improper, legitimate/illegitimate behaviour in light of moral principles in the countrylight of moral principles in the country Moral norms: standards of interaction concerning Moral norms: standards of interaction concerning

others’ welfare, norms: socially constituted reasons for others’ welfare, norms: socially constituted reasons for actionsactions

Changing the criteria by which people evaluate each Changing the criteria by which people evaluate each other’s (and their own) actionsother’s (and their own) actions

Neoliberal moral code: unrestrained self-interest, Neoliberal moral code: unrestrained self-interest, maximise self interest best for society, micro-macromaximise self interest best for society, micro-macro

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Moral economyMoral economy All economic relations, practices & organisations All economic relations, practices & organisations

have moral dimensions, preconditions, have moral dimensions, preconditions, implicationsimplications

An economic organisation (local economy/market) An economic organisation (local economy/market) is shaped by people’s relationships, their statuses is shaped by people’s relationships, their statuses and positions in webs of kinship/community and positions in webs of kinship/community relations and their entitlements, claims, rights, relations and their entitlements, claims, rights, obligations and duties; different frames of obligations and duties; different frames of reference: age, sex, community membership, reference: age, sex, community membership, position in kinship/community structure position in kinship/community structure

Various moral (and other) principles (based on Various moral (and other) principles (based on e.g. religion, kinship, tradition) shape e.g. religion, kinship, tradition) shape motivation/actionmotivation/action

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Moral economy, cont.Moral economy, cont. Economic practices and the Economic practices and the All economies are moral economiesAll economies are moral economies All actors are moral actors All actors are moral actors

Identities, motives, relationships, actions have Identities, motives, relationships, actions have necessarily a moral connotationnecessarily a moral connotation

Actions are always ‘moral statements’Actions are always ‘moral statements’ Study of the moral economy: ‘a form of Study of the moral economy: ‘a form of

enquiry that examines how ordinary enquiry that examines how ordinary economic practices and relationships embody economic practices and relationships embody or affect moral dispositions, evaluations, or affect moral dispositions, evaluations, rules, values, customs and norms’ (Sanghera rules, values, customs and norms’ (Sanghera et al. 2009); but also political economy etc. et al. 2009); but also political economy etc. 48

MethodologyMethodology Around 50 elite interviews in Kampala (officials from state & Around 50 elite interviews in Kampala (officials from state &

donor agencies, NGOs & associations, journalists, donor agencies, NGOs & associations, journalists, academicians, religious leaders, elders, observers...)academicians, religious leaders, elders, observers...)

Around 100 interviews in Bugisu region in Eastern Uganda (in Around 100 interviews in Bugisu region in Eastern Uganda (in the town Mbale and surrounding districts of Mbale, Bududa, the town Mbale and surrounding districts of Mbale, Bududa, Manafa and Sironko) with smallholder farmers, traders and Manafa and Sironko) with smallholder farmers, traders and middlemen, elites; market practices were studiedmiddlemen, elites; market practices were studied

Across agricultural sectors (maize, coffee, tomatoes, grains, Across agricultural sectors (maize, coffee, tomatoes, grains, cotton)cotton)

Analysis of academic literature, newspapers, periodicals, songsAnalysis of academic literature, newspapers, periodicals, songs

Analysis offers an account of the Analysis offers an account of the dimensionsdimensions, , dynamicsdynamics, , driversdrivers, , reasonsreasons, , tensionstensions and and consequencesconsequences of some of the of some of the main characteristics of moral restructuring in rural main characteristics of moral restructuring in rural economy/community in neoliberal Ugandaeconomy/community in neoliberal Uganda

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Findings based on qualitative Findings based on qualitative researchresearch

Interviewees’ subjective views/perceptions, Interviewees’ subjective views/perceptions, their experiences, interpretations & sense their experiences, interpretations & sense making of trends in liberalised economy making of trends in liberalised economy

Moral truthsMoral truths

Some economists might dismiss this Some economists might dismiss this collection of peoples’ views as: ‘rumours collection of peoples’ views as: ‘rumours from the village’from the village’ prominent World Bank advisor about results of prominent World Bank advisor about results of

qualitative poverty research in Uganda, as recalled by qualitative poverty research in Uganda, as recalled by intervieweeinterviewee

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Findings: overviewFindings: overview Cultural (coupled with the political-economic) Cultural (coupled with the political-economic)

dimension of rapid neoliberal reform has negatively dimension of rapid neoliberal reform has negatively affected the relationships and trade practices between affected the relationships and trade practices between SHFs(peasants) and traders in rural marketsSHFs(peasants) and traders in rural markets

Higher levels of ‘malpractice’ and a change in their Higher levels of ‘malpractice’ and a change in their formform

These malpractices include: deception, intimidation, These malpractices include: deception, intimidation, theft, collusion, corruption, and various manipulations theft, collusion, corruption, and various manipulations regarding price (misinformation, intimidation etc.), regarding price (misinformation, intimidation etc.), quality (e.g. adulteration, incorrect assessment) and quality (e.g. adulteration, incorrect assessment) and quantity (weighted scales) quantity (weighted scales)

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MalpracticesMalpractices Traders (middlemen/brokers) appear to have Traders (middlemen/brokers) appear to have

been the origin of many of malpractices that been the origin of many of malpractices that people identifiedpeople identified

Some of the malpractices emerged, substantiated Some of the malpractices emerged, substantiated or mutated with an increase in product demandor mutated with an increase in product demand

Farmers estimated: about 7 to 10 out of 10 Farmers estimated: about 7 to 10 out of 10 traders engaged in malpractices (traders agreed) traders engaged in malpractices (traders agreed) Public officials/donors/NGOs: 2-3/10 traders Public officials/donors/NGOs: 2-3/10 traders

‘‘Chains of malpractices’ Chains of malpractices’ Rise of group of brokers with social powerRise of group of brokers with social power

Intensified cut-taking culture across the societyIntensified cut-taking culture across the society52

Many reasons for Many reasons for malpracticesmalpractices

No regulation of traders’ behaviour No regulation of traders’ behaviour Farmers’ Farmers’ decline in their bargaining power vis-à-vis decline in their bargaining power vis-à-vis

traders (individualized actors, cash needs), due to traders (individualized actors, cash needs), due to e.g. cooperatives destroyed, commercialised E&H, e.g. cooperatives destroyed, commercialised E&H, weakened public s.weakened public s.

Tit-for-tat rationaleTit-for-tat rationale Officials don’t want to regulate marketsOfficials don’t want to regulate markets Neoliberal ideology prohibits to critique tradersNeoliberal ideology prohibits to critique traders Drivers: wealth ambition and poverty Drivers: wealth ambition and poverty Negatives outcomes of neoliberal socio-economic Negatives outcomes of neoliberal socio-economic

reforms (poverty, unemployment, crime, insecurity, reforms (poverty, unemployment, crime, insecurity, rising costs of living, crisis of reproduction)rising costs of living, crisis of reproduction)

Inflation, endless corruption sagas since the 1990sInflation, endless corruption sagas since the 1990s53

Reasons, cont.: Neoliberal Reasons, cont.: Neoliberal moral economymoral economy

Elites: Elites engaged in their power and wealth Elites: Elites engaged in their power and wealth projects (accumulation by dispossession, political projects (accumulation by dispossession, political power); self-interest over national interest (new game power); self-interest over national interest (new game in town: making money in town: making money no matter howno matter how))

Era of increasingly unconstrained moneymaking, in Era of increasingly unconstrained moneymaking, in which those with social, economic and political power which those with social, economic and political power pursue their self-interest almost without regard for pursue their self-interest almost without regard for the costs to others the costs to others

Focus on quick profits with little regard for quality or Focus on quick profits with little regard for quality or for longer-term considerations. for longer-term considerations.

This self-interest is being rationalised, supported and This self-interest is being rationalised, supported and justified by a new set of neoliberal orientations, justified by a new set of neoliberal orientations, norms and discourses that increasingly govern norms and discourses that increasingly govern Ugandan economy and society (as they do other Ugandan economy and society (as they do other countries)countries) 54

Reasons, cont.Reasons, cont.

Destructive norms and practices in other sectors Destructive norms and practices in other sectors (education, health, general public (education, health, general public administration)administration)

Foreign cultural (political-economic) drivers: Foreign cultural (political-economic) drivers: DVDs, Premier League, Pentecostalism, AMONG DVDs, Premier League, Pentecostalism, AMONG OTHERSOTHERS

Event of competitive, multiparty democracyEvent of competitive, multiparty democracy Moral decay, moral degeneration, kiwaani (fake; Moral decay, moral degeneration, kiwaani (fake;

false/deceptive/’unreal’ behaviour & things)false/deceptive/’unreal’ behaviour & things) Moral authority of institutions diminished Moral authority of institutions diminished Pseudo-developmentPseudo-development

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Tough rural moral Tough rural moral economyeconomy

Often substantial levels of deceit and/or corruption Often substantial levels of deceit and/or corruption among those people who interact with farmers: those among those people who interact with farmers: those who buy farmers’ produce and sell them who buy farmers’ produce and sell them agricultural agricultural suppliessupplies, as well as shopkeepers, microfinance , as well as shopkeepers, microfinance institutions, councils, courts, police officers, institutions, councils, courts, police officers, bureaucrats (e.g. some of those responsible for bureaucrats (e.g. some of those responsible for agricultural supportagricultural support, NAADS, or regulation of , NAADS, or regulation of standards) and politiciansstandards) and politicians

Farmers: critical of realities of neoliberal rural Farmers: critical of realities of neoliberal rural economy; malpractice to make/keep them poor; economy; malpractice to make/keep them poor; govern & exploit with more ease govern & exploit with more ease Rural economy in part an open air prison yard?Rural economy in part an open air prison yard?

Revival of Bugisu Cooperative Union (despite Revival of Bugisu Cooperative Union (despite significant political pressure against it) significant political pressure against it) after years after years long strugglelong struggle 56

In sum, In sum, Embedding a neoliberal business culture Embedding a neoliberal business culture

changes not only the political economy changes not only the political economy but also the moral order of local markets, but also the moral order of local markets, communities and the country at large communities and the country at large

Hard to ‘reverse’ moral economy trends: Hard to ‘reverse’ moral economy trends: because of dynamics of moral because of dynamics of moral restructuring and distribution of restructuring and distribution of power/wealth in the country, power/wealth in the country, interests/projects of agents of new interests/projects of agents of new moralitymorality

Future research…. Future research…. 57

Finally...Finally... Thank you for listening to the Thank you for listening to the

presentation.presentation.

For comments and further For comments and further information, please email to: information, please email to: j.wiegratz@sheffield.ac.ukj.wiegratz@sheffield.ac.uk

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