Market Systems Development
The success of a value chain is determined by all the actors involved in the chain and by processes in the market. Actors are chain actors, such as producers and processors, but also (formal and informal) service providers, who bring in technical, business or financial services, such as Business Development Services or financial institutions. An efficient and effective collaboration between these actors is key to be able to respond to developments in the market.
Fair & Sustainable Consulting uses the Market Systems Development (MSD) approach, which focuses on the market system to make it more accessible, effective, sustainable and beneficial for small holder farmers. We believe that this systemic approach delivers the most durable results by addressing the underlying causes and constraints that hamper the development of a value chain. It provides small holder farmers with the opportunity to build their own capacities and enhance their lives.
F&S works with organisations and companies who (start to) use the MSD approach and supports them to translate this approach to programs and activities. We offer coaching, training, advice and evaluations.
MSD advice on STARS program – ICCO/Mastercard Foundation, 2015 -2021
Design of program, training and coaching of staff, strategy development and development of result chain based monitoring system, covering eight value chains in Rwanda, Ethiopia, Burkina Faso and Senegal.
MSD Training and Advice – RVO / Centre for the Promotion of Imports (CB), 2019-2020
Introductory training on the MSD approach to CBI staff and give advice on the implementation of the MSD in CBI programs.
MSD advise on Jege ni Jaba Project– SNC Lavalin / Dutch Embassy Mali, 2014-2024
Provide ongoing advice and monitoring on the implementation of the MSD approach and inclusion of women and youth during the implementation of a multi annual project to develop the onion and fish value chains in Mali
FARM program in DRC – Mercy Corps, 2017-2021
Backstopping Value Chain Assessments and VC Development programming, including PO and market advise, training and monitoring of three selected value chains.
Consultants: Victor van der Linden, André Vording, Somaya Moll, Bart de Bruyne
An example from the STARS project
The Strengthening African Rural Smallholders (STARS) project of Mastercard Foundation and ICCO Terrafina uses an MSD approach to improve access to finance and markets for more than 200,000 smallholder farmers in Ethiopia, Rwanda, Senegal and Burkina Faso. The project runs from 2016-2020 and plans to have an impact in the lives of more than 1 million people.
The Rice Value Chain in Rwanda
Constraint: post-harvest losses and insufficient rice quality
- Farmers used sticks to thresh the paddy rice, which caused high post-harvest losses and 25% broken rice that fetched lower market prices
- Producers Organizations (POs) did not have the capital to buy threshers and winnowers. Moreover, the minimum price for rice set by the Rwandan Government made producer organizations reluctant to invest in these machines
- Consequently, processors, who lacked supply of good paddy rice and have under capacity, had to sell a substantial share of their polished rice at low market prices
Rice value chain map in Rwanda
Project intervention: multi stakeholder meetings to address the issue
Four meetings with 6 POs, 1 processor, the processors forum and the Rwandese farmers’ federation were held in four months. The goal was to create trust between the stakeholders and to show them a business case of interventions that would decrease post-harvest loss and broken rice, and jointly design scenarios on how to increase rice quality.
Market trigger and uptake: processors advance costs for POs to buy the machines
Stakeholders agreed that processors advance the purchase costs of threshers and winnowers for POs. POs use the advance to buy these machines. This is an embedded financial service; the costs are subtracted from the sales of paddy rice over a period of two years.
Impact: more income for farmers and revenue for processors
- Post-harvest losses of rice went down from 25-30% to 2-3%
- 5560 farmers (2693 female) save time and have a higher income because of lower post-harvest losses and a better sales price, which is 5-10% above minimum price
- Processors sell a higher quality product at relatively low cost, and the advance for the machines is fully repaid. Close to 25% of the rice can be sold in a better market segment (it now becomes food instead of feed) and their revenue increases
- 4 other POs and 3 processors copied the business model, resulting in benefits for 4342 additional farmers (1660 female)