Linking smallholder farmers to commercial markets: Evidence from nongovernmental organization training in Nicaragua

Ebata, Ayako · Hernandez, Manuel A.

Jul 2016 · IFPRI Discussion Paper Kitabu cha 1 · Intl Food Policy Res Inst

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Access to modern commercialization channels is key for smallholder farmers to be able to move away from subsistence farming and overcome poverty. However, achieving that goal is challenging for smallholders given their lack of appropriate managerial practices, production technology and infrastructure. This paper examines the effect of receiving training in two different entrepreneurial practices designed to link farmers to commercial markets: one direct aimed at the individual and farmer-association level and another indirect focused at the community level. We exploit an extensive panel dataset of staple bean farmers in Nicaragua who participated in a program run by a nongovernmental organization between 2007–2012. We find that the two market-linkage training activities had opposite effects on the commercialization of beans, especially on the intensive margin or volume of sales. While receiving direct training on entrepreneurial practices is positively associated with sales in commercial markets, training on municipality engagement (ME) activities is negatively associated. The market-linkage activities mainly affected entrant farmers as opposed to those already participating in commercial markets. We further find varying effects of the ME activities by plot size and leadership position. Additional results show that training activities that appear to work for bean producers do not necessarily work for other crop producers, and vice versa.