Policy Instrument:
Definition
Inclusive access to agricultural markets refers to the ability of all agricultural producers, especially smallholders, women, youth, and marginalized groups, to participate effectively, equitably, and sustainably in agricultural markets as both sellers and buyers. This includes not only physical access to markets but also access to timely and reliable market information, fair pricing mechanisms, appropriate infrastructure, and institutional arrangements that enable meaningful engagement with market actors.
Rationale
Although agriculture is the primary source of livelihood for rural residents, greater agricultural production does not necessarily translate into greater income. Many smallholders are unable to sell their products or make a profit due to limited access to market information and minimal interaction with market actors. Therefore, it is crucial to promote "inclusive access to agricultural markets" to enable these smallholders to produce and sell agricultural products based on market demand.
Key interventions
There are a number of business models that can provide smallholders with inclusive access to markets. These inclusive business models generally include producer-driven, buyer-driven, and intermediary-driven models.
- Producer-driven models are led by producer organizations, such as associations and cooperatives, and are motivated by the objective of improving market access through collective action.
- Buyer-driven models involve private sector actors, including retailers, processors, and traders, that organize farmers into supply networks. These arrangements may include the provision of inputs and technical assistance aligned with buyers’ requirements and are commonly referred to as contract farming or out-grower schemes. For such models to be inclusive, relationships between firms and farmers must be governed by fair, transparent, and responsible contractual arrangements.
- Intermediary-driven models are typically led by local non-governmental organizations (NGOs) and focus on strengthening smallholders’ market linkages through the provision of technical assistance and capacity development. These organizations are often funded and guided by governments, donors, or agencies of the United Nations.
There are some approaches that include elements from the different inclusive business models. For example, the Smallholder Horticulture Empowerment and Promotion (SHEP) approach includes elements from the producer-driven model, and the intermediary-driven model. It offers a series of capacity development training courses to the target farmers in a way that the farmer's motivation is raised through supporting their psychological needs. In this regard, agricultural extension activities for farmers are implemented following a four-step sequence: 1). Share goals with farmers, 2). Raising farmers’ awareness, 3). Farmers make decisions, and 4). Farmers acquire skills.
Smallholder farmers and their families
Overview
A well-established body of evidence shows that inclusive access to agricultural markets plays an important role in improving food security, reducing poverty, and strengthening livelihoods among smallholder farmers. The evidence spans three inclusive business models: producer-driven models built on farmer collective action, buyer-driven models organized around contract farming and out-grower schemes, and intermediary-driven models led by NGOs and government extension services. Evidence from a systematic review by Magakwe & Olorunfemi (2024) indicates that producer organizations can facilitate access to markets through collective marketing, which can strengthen farmers’ bargaining position, reduce transaction costs and improve access to market opportunities and support services, thereby contributing to improved farm incomes and livelihoods. However, these benefits are not automatic: the inclusiveness and sustainability of farmer organizations depend heavily on their governance arrangements, member participation, organizational and financial capacity, and ability to balance economic objectives with their social and community-oriented functions (Chollet et al., 2026). A mixed-method systematic review by Ton et al. (2018) covering 26 empirical cases of contract farming (a buyer-driven model) across 13 developing countries found a pooled average income effect of around 38%, while also cautioning that publication and survivor bias mean null or negative results are systematically under-reported in the literature. Evidence on intermediary-led extension models, particularly the market-oriented Smallholder Horticulture Empowerment and Promotion (SHEP) approach provides evidence of positive income effects associated with market-oriented training and commercialization (Shimizutani et al., 2021; Fikadu et al., 2025).
Evidence from selected countries
Rwanda: Government-promoted agricultural cooperatives — producer-driven model
Since the mid-2000s, the Government of Rwanda has promoted agricultural cooperatives as a core delivery mechanism for its Economic Development and Poverty Reduction Strategy and Crop Intensification Programme. Cooperatives have been integrated into the country’s broader agricultural transformation strategy, including efforts to improve smallholder access to inputs, markets and productive services (Harrison, 2016; Verhofstadt & Maertens, 2014). Empirical evidence indicates that cooperative membership has generated positive effects on agricultural performance. Using nationally representative farm-household data, Verhofstadt and Maertens (2014) found that cooperative membership increased agricultural intensification, market orientation, farm revenue and income, although the magnitude of these effects varied according to the organizational characteristics of cooperatives. A subsequent propensity-score-matching analysis found that cooperative membership increased farm income and reduced the probability of poverty, with particularly strong effects among larger farms and households in more remote areas (Verhofstadt & Maertens, 2015). More recent evidence also indicates a positive association between cooperative participation and maize market participation among Rwandan smallholders, while highlighting the importance of complementary access to credit, extension and markets (Ng’ombe et al., 2026).
Ethiopia: Agricultural Marketing Cooperatives— producer-driven model
Following the Agricultural Cooperative Societies Proclamation No. 85/1994, the Government promoted agricultural cooperatives to strengthen smallholders’ access to inputs, services and markets. The number of primary agricultural cooperatives more than doubled, from 6,825 in 2008 to 15,568 in 2014 (Tefera et al., 2017). Evidence points to positive effects on farmers’ market returns, productivity and welfare: cooperative members obtained higher prices for cereal produce (Bernard et al., 2008), while membership increased household consumption expenditure by 17.6–26.5% in eastern Ethiopia (Ahmed & Mesfin, 2017). More recent panel evidence from major maize-producing regions shows that cooperative membership increased yields and household income while reducing both the incidence and depth of poverty; the probability of falling below the USD 1.90 poverty line declined by approximately 5.7 percentage points (Geffersa, 2024).
Kenya: Smallholder Horticulture Empowerment and Promotion (SHEP) — intermediary-driven model
The Smallholder Horticulture Empowerment and Promotion (SHEP) approach, developed through cooperation between the Government of Kenya and JICA from 2006, helps smallholder farmers shift from a “grow and sell” to a “grow to sell” approach. It combines market surveys and demand-based crop planning with technical training, business skills and gender-sensitive household decision-making. A two-year cluster-randomized controlled trial found that SHEP increased horticultural income by approximately 70% on average. The effects were particularly strong among more vulnerable households, including those headed by women, older people and individuals with lower levels of education. Importantly, the impact did not depend on farmers’ prior horticultural experience, suggesting that the approach can benefit a broad range of smallholder producers. The study also found positive contributions from the different training components, highlighting the value of combining market-oriented extension with technical and behavioral support (Shimizutani et al., 2021).
Ethiopia: Smallholder Horticulture Empowerment and Promotion (SHEP) — intermediary-driven model
Evidence from Ethiopia indicates that market-oriented intermediary-led extension can contribute to higher smallholder horticultural incomes. In a quasi-experimental study of 610 horticultural farmers in Jimma Zone, Fikadu et al. (2025) found that farmers participating in the Smallholder Horticulture Empowerment and Promotion (SHEP) programme had average horticultural income of approximately ETB 30,754 (USD 577), compared with ETB 17,842 (USD 335) among comparable control farmers—a difference of around 72%. SHEP farmers also recorded a higher horticultural commercialization index (0.823 versus 0.664). Importantly, the positive interaction between SHEP participation and commercialization was statistically significant at the 10th, 25th and 50th income quantiles, suggesting particularly strong benefits among lower- and middle-income horticultural farmers.
References
Harrison, G. (2016). Rwanda: An agrarian developmental state? Third World Quarterly, 37(2), 354–370.
It is important to note that, for the different business models to genuinely provide smallholders with inclusive access to markets, certain key conditions (prerequisites) must be in place. If these conditions are not met, the effectiveness of the business models may be significantly constrained, resulting in notable limitations (risks).
Key prerequisites
Producer-driven model: The ability of farmers to self-organize through collective action, supported by an enabling legal and policy environment that recognizes and strengthens producer organizations, is fundamental.
Buyer-driven model: It is fundamental to have clear, responsible, and enforceable contracts that are supported by effective legal institutions or credible informal enforcement mechanisms.
Intermediary-driven models: It is important that non-governmental organizations working closely with farmers are strongly embedded within local communities, as this enables them to build trust with smallholders and develop a deep understanding of local contexts.
In the case of the SHEP approach, it is essential to have local partners capable of providing agricultural extension services and trainings.
Potential risks
Producer-driven model: Poor governance may lead to failures such as elite capture, weak accountability, and free-riding among members.
Buyer-driven model: Power asymmetries may emerge, potentially resulting in unfavorable contract terms for farmers. In addition, side-selling by farmers may occur, particularly when spot market prices increase.
Intermediary-driven models: Financial sustainability may be limited if outcomes are heavily dependent on continued donor support.
SDG 5－Gender equality
- Target 5.5－Ensure women’s full and effective participation and equal opportunities for leadership at all levels of decision-making in political, economic and public life.
SDG 8－Decent work and economic growth
- Target 8.5－By 2030, achieve full and productive employment and decent work for all women and men, including for young people and persons with disabilities, and equal pay for work of equal value.
SDG 9－Industry, innovation and infrastructure
- Target 9.3－Increase the access of small-scale industrial and other enterprises, in particular in developing countries, to financial services, including affordable credit, and their integration into value chains and markets.
SDG 10－Reduced inequalities
- Target 10.1－By 2030, progressively achieve and sustain income growth of the bottom 40 per cent of the population at a rate higher than the national average
- Target 10.2－By 2030, empower and promote the social and economic inclusion of all, irrespective of age, sex, disability, race, ethnicity, origin, religion or economic status or other status.
SDG 12－Responsible consumption and production
- Target 12.3－By 2030, halve per capita global food waste at the retail and consumer levels and reduce food losses along production and supply chains, including post-harvest losses.
CFS Guidelines on Food Systems and Nutrition:
Food Security and Nutrition:
- CFS Policy Recommendations on Social Protection for Food Security and Nutrition
- Investing in Smallholder Agriculture for Food Security and Nutrition
Access to extension services and access to market, mainstream gender equality and women`s empowerment: