Market Oriented Extension Service Berhanu Gebremedhin, Scientist, ILRI

Three key elements in market oriented agriculture Improved technology and practices Information/Knowledge Skills

Commercial transformation of smallholder agriculture Commercial transformation of agriculture in Ethiopia Market oriented agriculture? – Market orientation in production planning – Market participation in output markets Why commercial transformation? – Better income and wealth accumulation

Commercial transformation Commercial transformation requires extension service include: – Promotion of improved technologies and practices – Advising and supporting farmers to produce profitable market oriented commodities – Facilitating market linkages – Provision of market information – Building marketing and agribusiness capacity of farmers – Facilitating organization of farmers to conduct collective marketing

The production-oriented extension Historical emphasis on food security through own production Extension: technology and production oriented Lack of awareness about market-oriented extension Lack of capacity to provide market-oriented extension (MOE) Training of DAs and SMSs oriented towards production technologies and productivi ty – Marketing, agribusiness, farm planning and management, market oriented extension methods mainly missing. – Mid career program good star t

From Production-oriented to Market-oriented extension Shift towards commercialization implies attention to: – market-oriented production planning – Input and output marketing support services Hence, commercial transformation requires expanded mandate of the extension service – aim is to support to rural households and their enterprises to earn better income – Need to combine technology promotion and productivity enhancement with market support

Promoting Market Oriented extension Raise awareness about the importance of MOE and Build the capacity to provide MOE service Enhance understanding of front-line workers about market-oriented production, agricultural marketing and value chains Equip extension agents with tools and methods of market-oriented extension

What is market-oriented extension? Total effort of extension service to: – Advise and support farmers to plan and produce profitable commodities using appropriate technologies and practices – Build marketing capacity of producers – Collect and communicate market-related information – Identify profitable markets and buyers – Link farmers to buyers – Facilitate and support collective marketing

Key Principles of market-oriented extension Business principle Commodity development approach Based on value chain framework Bottom-up and participatory

Roles of the market-oriented extension agent Facilitator of identification of profitable commodities Promoter of agricultural technologies Supporter and advisor of business plan development Facilitator of linkages with input suppliers, credit providers, transporters, processors, and output buyers

Role (2) Builder of marketing capacity Collector, processor and disseminator of market information Repository of technical and market related information Facilitator and supporter of collective marketing Facilitator of market infrastructure development and market service development

Facilitating the supply of market information Market information: – All the information about the buying and selling of agricultural products – More than just information on prices and quantities Market information service: – The function of collecting and processing market data systematically and continuously, and of making it available to market participants in a form relevant to their decision-making. Market information becomes more important in distant markets and as market orientation of farmers increases

Identifying market opportunities Fundamental considerations: – Current and future size of the market – Current and predicted profitability of the market

Types of market opportunities Exiting products, existing markets Existing products, new markets New products, existing market New products, new markets Niche marketing Organic marketing Diversifying export markets Brand promotion Encouraging local consumption Adding value

Facilitating collective marketing Common marketing problems faced by smallholders – Low volume of supply and high per unit marketing cost – Quality and standard problem – Storage problem – Transportation problem – Low marketing skills – Little prior contact with buyers – Low bargaining power – Inadequate market information

Advantages of collective marketing Economies of scale Maintaining product supply Improving product quality Maintain existing markets Develop new markets

Activities in collective marketing Identification of markets Identification of quality attributes Ensuring produce quality standards Developing market infrastructure Perform marketing functions

Organizing farmers for collective marketing Formal collective marketing Informal collective marketing

Key considerations to avoid collective marketing failure Right to supply Quality assurance Side-selling Profit sharing arrangements

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