How Formal Rules Can Enable Inclusive, Resilient Agricultural Market Systems
Formal rules are a key element within the enabling environment for achieving competitive, inclusive, and resilient agricultural market systems. Policies, laws, and regulations are intended to proscribe undesirable market actor practices that lead to negative system-wide impacts (e.g., anti-competitive behavior, public health risks, corrupt practices, etc.), and incentivize those which lead to positive impacts (e.g., investments in productivity improvements; broad-based access to services; business models that contribute to positive human, environmental, plant/animal health, etc.).
Appropriate policies can make agricultural markets both more efficient and nutrition-sensitive, as in the case of harmonizing food safety regulations to promote mutually beneficial cross-border trade. Overly restrictive policies on the other hand, such as ad hoc trade restrictions, can raise the cost of doing business, limit access to input and output markets, reduce incentives for market actors to invest at all levels, and ultimately weaken agricultural market performance. And rules adapted to the local context, such as those which enable moveable collateral to be securitized, can improve inclusivity by expanding access to services for broader segments of the population.
During July 2018’s Enabling Environment for Agricultural Market Systems month, the Feed the Future Enabling Environment for Food Security (EEFS) project teamed up with contributors across USAID and implementing partners to explore the implications of formal rules within the enabling environment, resulting in 30 original technical posts.
These articles remain crucially relevant and can be accessed in full at Agrilinks’ Enabling Environment for Agricultural Market Systems collection. In celebration of this year’s policy month on Agrilinks, EEFS is highlighting six of the top articles below. Read on!
Lack of Regulations Affects Market Entry: an Example From Rwanda – Food Security Policy Innovation Lab
The Food Security Policy Innovation Lab describes how enabling environment conditions can disincentivize a new technology’s market entry. In Rwanda, a lack of regulations on bacteria count limits in milk hindered the launch of a low-cost solution for famers to test their cows’ milk for signs of harmful bacteria. Without such incentives from the regulatory environment, business models for food safety technologies are less viable.
Making the Rules Work for Private Sector Agricultural Growth – Feed the Future Enabling Environment for Food Security
EEFS delivers a high-level overview of several key formal rules within the enabling environment, such as property rights and contract enforcement, and how they can facilitate or hamper the development of agricultural market systems. As EEFS notes, there is a distinction between supportive rules and regulations, such as contracts, and those that are overly burdensome, such as high compliance costs for inputs like fertilizer, which negatively impacts productivity.
USAID Hub Supports Revised Grain Standards for Improved Trade – USAID East Africa Trade Hub
USAID’s East Africa Trade Hub describes how it partnered with the Eastern Africa Grain Council to support the harmonization of standards for staple foods in East Africa. Harmonization is an important form of regulatory cooperation to facilitate trade in safe foods, as calibrating quality standards and lowers the cost of cross-border transactions.
Using Political Economy Analysis to Understand the Enabling Environment – USAID's Center of Excellence on Democracy, Human Rights, and Governance (DRG)
To complement the consideration of formal rules, USAID/DRG examines the informal side of the enabling environment: norms and social dynamics. Noting that laws and policies are not the only constraints directing behavior in a market system, the authors describe how political economy analysis can capture the informal norms at work, strengthen practitioners’ understanding of deep seated contextual issues, and develop strategies to achieve systemic change.
The Role Variety Identification Numbering Systems Play in Harmonized Seed Trade – Agri-Experience, Ltd and USAID Bureau for Food Security Office of Market and Partnership Innovations (co-authors)
Increasing the availability of high-quality seed of improved modern crop varieties stands to boost agricultural productivity in sub-Saharan Africa. This post describes how reforms to regional regulatory processes at the seed variety listing stage can accelerate their release for commercialization.
Enhancing the Enabling Environment for Investment in Climate-Smart Agriculture – Catalytic Sustainable Agribusiness Investment Project (CSAI)
Facilitating a shift to climate-sensitive agricultural market systems will require a broad-based shift from traditional agricultural practices to climate-smart practices. Realigning incentives and mobilizing private capital will be crucial in facilitating this large-scale change. Drawing on insights from Kenya, CSAI outlines several policy interventions to improve the enabling environment for investment in climate-smart agriculture.