Identifying Key Policy and Enabling Environment Constraints to Agricultural Growth
Q: Want to create market conditions for agricultural sector growth?
A: Build an enabling environment for agriculture.
Academic research and country experience demonstrate that the policies, laws, regulations, and institutions that govern the agricultural sector – which together form the agribusiness enabling environment – impact economic growth, poverty reduction, food security, and rural livelihoods.
The USAID Enabling Agricultural Trade (EAT) project supports USAID offices and missions by identifying key agribusiness enabling environment constraints to agricultural sector growth and encouraging reform. In partnership with leading research institutions, the EAT project has published a series of Policy Briefs that provide actionable recommendations for reform across the following topics:
- Women in Cross-Border Agricultural Trade: While much attention has been given to women as producers, the role of women in cross-border agricultural trade should not be overlooked. Security, mobility, and service delivery constraints can disproportionately limit women’s access to markets, thereby restricting their participation and the efficient functioning of markets. Policies must create a safe, transparent, and accessible trading environment for all women traders. Including women in the policy planning and development process is a key component of this process.
- Seed Policy: Farmers everywhere depend on access to high quality seed to enhance their productivity. Dialogue and collaboration between the public and private sector is crucial to developing inclusive seed policy. Better public sector support of the private sector can improve access to seed services at the local level and build capacity for third-party seed certification. This in turn enables small seed entrepreneurs to grow, certify, and sell seed, and increases access to improved seed varieties.
- Fertilizer Policy: The appropriate use of fertilizer is proven to increase yields and improve productivity. However, both supply-side and demand-side constraints limit fertilizer industry development. Policies that reduce trade and finance costs encourage the private sector to make long term investments in the sector. In addition, agricultural R&D and targeted extension services increase fertilizer demand and ensure a return on investment for farmers.
- Commodity Exchanges: Commodity exchanges provide a platform for traders to buy and sell agricultural commodities using contracts that specify a future delivery date. Commodity exchanges are an expansion and evolution of functioning spot markets (trading goods with immediate delivery). Commodities exchanges depend on functioning grades and standards, enforceable contracts, adequate storage facilities, and an open and efficient market environment.
The USAID-EAT project is currently developing briefing papers on contract farming and agricultural water management. Contract farming can increase access to inputs and connect smallholders to higher-value output markets when implemented under a fair and balanced regulatory framework that protects both smallholders and the businesses that serve them. In agricultural water management, there is no one-size-fits-all solution: policies must balance a national water strategy with local needs and resources. In these briefs, USAID-EAT will provide practical guidance to policymakers, donors, and development practitioners based on evidence from countries around the world.
Join the Conversation!
As part of our ongoing discussion, we want to hear your examples, stories, and experiences! Share your ideas on key focus areas in the comments section below. For example:
- What enabling environment issues have you identified or come up against that help or hinder agricultural growth?
- How have agricultural policies or regulations impacted your work?
- How can policies and laws be structured to enable agricultural growth and make smallholders more resilient and more profitable?