2. MARKET
FACILITATION
What
is
it?
Is
an
ac4on
or
agent
that
s4mulates
the
market
system
to
develop
and
grow,
but
does
not
become
part
of
it
2
3. Facilita4on
Concepts
Why:
to
increase
the
compe00veness
of
the
whole
industry
over
0me
by:
o Fostering
systemic
shi<s
towards:
§ broader
and
deeper
commercially
grounded
rela0onships
§ ongoing
innova0on/upgrading
§ benefit
flows
that
drive
shi<s
in
rela0onships
and
innova0on
o Fostering
improvement
in
cri0cal
end
market
factors
–
product,
opera0ons,
branding
How
to:
o Appropriate
intensity
(i.e.
role
and
resources
of
project)
o Foster
local
rela0onships
–
buying
down
risks
o Self
selec0on
of
project
partners
-‐-‐
rolling
exit
to
test
rela0onships
and
ownership
3
4. WHY?
APPLIED
Problem
statement:
The
rice
value
chain
relies
on
smallholder
produc4on,
but
cannot
compete
because
of
the
low
produc4vity
of
par4cipa4ng
smallholders
Why
Ra4onale
Farmers
performance
is
due
to
lack
of
capacity
and
untrustworthy
private
sector
actors:
• Project
provides
output
and
input
services
directly
Ugly
Bad
Good
4
5. WHY?
APPLIED
5
Problem
statement:
The
rice
value
chain
relies
on
smallholder
produc4on,
but
cannot
compete
because
of
the
low
produc4vity
of
par4cipa4ng
smallholders
Why
Ra4onale
Farmer
performance
is
due
to
knowledge
and
capacity
gaps
that
result
in
limited
effec0ve
rela0onships
with
output
market
actors:
• Project
assists
in
building
output
rela0onships,
• Project
provides
direct
training
to
smallholders
• Project
provides
free
or
highly
subsidized
inputs
Ugly
Bad
Good
6. WHY?
APPLIED
6
Problem
statement:
The
rice
value
chain
relies
on
smallholder
produc4on,
but
cannot
compete
because
of
the
low
produc4vity
of
par4cipa4ng
smallholders
Why
Ra4onale
Farmer
performance
is
due
to
limited
and
ineffec0ve
rela0onships
on
the
output
and
input
sides
of
produc0on:
• Project
assists
output
firms
to
provide
market
requirements
maybe
through
improved
aggrega0on
services
• Project
assists
input
firms
to
extend
distribu0on
networks
to
the
smallholder
market
with
a
focus
on
solu0ons
(i.e.,
informa0on
and
services)
• Project
works
with
radio
and
local
fes0vals
to
improve
knowledge
flows
Ugly
Bad
Good
7. Facilita4on
Concepts
Why: to increase the competitiveness of the whole industry over time by:
o Fostering systemic shifts towards:
§ broader and deeper commercially grounded relationships
§ ongoing innovation/upgrading
§ benefit flows that drive shifts in relationships and innovation
o Fostering improvement in critical end market factors – product,
operations, branding
How to:
o Appropriate intensity (i.e., role and resources of project)
o Foster local relationships – buying down risks
o Self selection of project partners -- rolling exit to test
relationships and ownership
7
8. HOW? APPLIED
8
Why:
Farmer
performance
is
due
to
limited
and
ineffec0ve
rela0onships
on
the
output
and
input
sides
of
produc0on:
o Project
assists
output
firms
to
provide
market
requirements
maybe
through
improved
intermedia0on
services
o Project
assists
input
firms
to
extend
distribu0on
networks
to
the
smallholder
market
with
a
focus
on
solu0ons
(i.e.,
informa0on
and
services)
How
-‐-‐
Intensity
• Focus
leOng
value
chain
actors
take
the
lead
• Project
takes
a
very
low
profile
by
spreading
its
par0cipa0on
between
output,
input
and
to
a
lesser
extent
smallholders
• Resources
spread
between
actors
depending
on
the
responses/willingness
of
the
actors
to
take
on
certain
behaviors
and
drive
firm
and
industry
upgrading
Bad
Better
Even Better
9. HOW? APPLIED
Why:
Farmer
performance
is
due
to
limited
and
ineffec0ve
rela0onships
on
the
output
and
input
sides
of
produc0on:
o Project
assists
output
firms
to
provide
market
requirements
maybe
through
improved
intermedia0on
services
o Project
assists
input
firms
to
extend
distribu0on
networks
to
the
smallholder
market
with
a
focus
on
solu0ons
(i.e.,
informa0on
and
services)
How
-‐-‐
Intensity
Project
takes
a
very
high
profile
with
the
smallholder
and
targets
all
resources
on
direct
services
to
the
smallholder
Bad
Better
Even Better
9
10. HOW? APPLIED
10
Why:
Farmer
performance
is
due
to
limited
and
ineffec0ve
rela0onships
on
the
output
and
input
sides
of
produc0on:
o Project
assists
output
firms
to
provide
market
requirements
maybe
through
improved
intermedia0on
services
o Project
assists
input
firms
to
extend
distribu0on
networks
to
the
smallholder
market
with
a
focus
on
solu0ons
(i.e.,
informa0on
and
services)
How
-‐-‐
Intensity
Project
takes
a
lower
profile
with
smallholders
and
output
firms,
but
will
target
resources
on
smallholder
training
and
inputs
Bad
Better
Even Better
11. HOW? APPLIED
11
Why:
Farmer
performance
is
due
to
limited
and
ineffec0ve
rela0onships
on
the
output
and
input
sides
of
produc0on:
o Project
assists
output
firms
to
provide
market
requirements
maybe
through
improved
intermedia0on
services
o Project
assists
input
firms
to
extend
distribu0on
networks
to
the
smallholder
market
with
a
focus
on
solu0ons
(i.e.,
informa0on
and
services)
How
-‐-‐
Rela4onships
§ Project
facilitates
output
rela0onships
by
fostering
effec0ve
conduct
(transparent
and
longer
term)
of
those
rela0onships
§ Project
fosters
a
business
ra0onale
and
improved
capacity
within
output
firms
to
maintain
and
scale
up
those
rela0onships
§ Project
nego0ates,
some0mes
conducts
transac0ons
with
input,
and
delivers
products
to
smallholders
Bad
Better
Even Better
12. HOW?
APPLIED
Why:
Farmer
performance
is
due
to
limited
and
ineffec0ve
rela0onships
on
the
output
and
input
sides
of
produc0on:
o Project
assists
output
firms
to
provide
market
requirements
maybe
through
improved
intermedia0on
services
o Project
assists
input
firms
to
extend
distribu0on
networks
to
the
smallholder
market
with
a
focus
on
solu0ons
(i.e.,
informa0on
and
services)
How
-‐-‐
Rela4onships
§ Project
creates
strong
and
dependent
rela0onships
with
smallholders
to
protect
them
§ Project
nego0ates
and
conducts
transac0ons
on
behalf
of
farmers
with
output
and
input
actors
Bad
Better
Even Better
12
13. HOW?
APPLIED
13
Why:
Farmer
performance
is
due
to
limited
and
ineffec0ve
rela0onships
on
the
output
and
input
sides
of
produc0on:
o Project
assists
output
firms
to
provide
market
requirements
maybe
through
improved
intermedia0on
services
o Project
assists
input
firms
to
extend
distribu0on
networks
to
the
smallholder
market
with
a
focus
on
solu0ons
(i.e.,
informa0on
and
services)
How
-‐-‐
Rela4onships
§ Project
Facilitates
output
and
input
rela0onships
by
fostering
effec0ve
conduct
of
those
rela0onships.
§ Project
fosters
a
business
ra0onale
and
improved
capacity
in
output
and
input
firms
to
maintain
and
scale
up
those
rela0onships
§ Scans
for
opportuni0es
to
include
other
support
market
actors
Bad
Better
Even Better
14. HOW? APPLIED
Why:
Farmer
performance
is
due
to
limited
and
ineffec0ve
rela0onships
on
the
output
and
input
sides
of
produc0on:
o Project
assists
output
firms
to
provide
market
requirements
maybe
through
improved
intermedia0on
services
o Project
assists
input
firms
to
extend
distribu0on
networks
to
the
smallholder
market
with
a
focus
on
solu0ons
(i.e.,
informa0on
and
services)
How
-‐-‐
Ownership
§ Project
responsible
for
output
and
input
roles
limi0ng
the
need
for
smallholders
or
other
actors
to
change
or
own
the
process
of
behavior
change
Bad
Better
Even Better
14
15. HOW? APPLIED
15
Why:
Farmer
performance
is
due
to
limited
and
ineffec0ve
rela0onships
on
the
output
and
input
sides
of
produc0on:
o Project
assists
output
firms
to
provide
market
requirements
maybe
through
improved
intermedia0on
services
o Project
assists
input
firms
to
extend
distribu0on
networks
to
the
smallholder
market
with
a
focus
on
solu0ons
(i.e.,
informa0on
and
services)
How
-‐-‐
Ownership
§ Project
facilitates
output
firms
to
own
the
behavior
changes
needed
to
develop
effec0ve
rela0onships
with
smallholders,
§ Project
limits
role/interest
of
input
firm
by
providing
direct
training
and
subsidies
on
inputs.
Bad
Better
Even Better
16. HOW? APPLIED
16
Why:
Farmer
performance
is
due
to
limited
and
ineffec0ve
rela0onships
on
the
output
and
input
sides
of
produc0on:
o Project
assists
output
firms
to
provide
market
requirements
maybe
through
improved
intermedia0on
services
o Project
assists
input
firms
to
extend
distribu0on
networks
to
the
smallholder
market
with
a
focus
on
solu0ons
(i.e.,
informa0on
and
services)
How
-‐-‐
Ownership
§ Project
facilitates
using
tools
to
get
all
actors
to
take
on
key
behaviors
in
order
to
access
project
support.
§ Project
puts
condi0ons
on
support
dependent
on
buy-‐in
and
reac0on
to
ini0al
project
interven0ons.
§ Project
knowledge
management
efforts
track
closely
ownership
and
changing
behavior
to
determine
if
changes
are
needed
including
exi0ng
Bad
Better
Even Better
17. Facilita4on
Concepts
Fostering Relationships and Ownership:
o Buying Down Risks
§ Using project resources to reduce the risk of local
actors to engage in transactions/shifts in business
tactics that will lead to longer term commercial
relationships and drive upgrading
o Self
Selection
§ Requires value chain actors to perform and action in
order to access project resource – the action has to
lead to ownership of a behaviour change process
17
18. Fostering
Rela4onships
Buying Down Risk:
o Foster innovation in marketing and business
tactics
o Maintain local relationship focus
o Embed subsidy to mimic real life transactions
o Clarify exit in time and resources
18
19. Fostering
Rela4onships
Buying Down Risks – How:
o Promotional events (i.e., discounts,
Cost
share
training
and
opera0onal
costs
for
new
smallholder
manger
posi0on
transports, demos, etc.)
o Internal firm upgrading/expansion
(i.e., management training, staff Cost
share
training
of
skills/internships, etc)
mid-‐level
managers
with
Cost
share
with
buyer
large
promo0onal
event
to
explain/sell
market
opportunity
to
farmers
private
input
firms
to
promote
and
manage
rural
services
delivery
Internal
firm
upgrading
and
expansion
Promo0onal
events
Cost
share
promo0onal
discounts
and
demos
with
input
firm
to
get
farmers
to
tests
products
and
services
19
20. Fostering
Rela4onships
Buying Down Risks – How:
o Service delivery (i.e., certification
skills, equipment, research, etc.)
Assist
and
cost
share
with
input
firm
and
spraying
service
providers
a
cer0fica0on
process
for
individual
sprayers
Cost
share
research
with
ICT
firms/banks
mobile
banking
plaTorms
for
transfer
and
payment
services
Service
delivery
Cost
share
equipment
and
training
with
Rice
firm
for
service
providers
signing
exclusive
deals
for
discounts
to
their
suppliers
20
21. Fostering
Ownership
Self Selection:
o Ensuring ownership
o Setting hurdle to entrance
o Changing hurdle height as program evolves
o Using hurdles to manage rolling exits
21
22. Fostering
Ownership
Self
Selec4on
examples:
Rice
firms
has
to
has
agree
to
SH
management
and
iden0fy
specific
managers
to
ini0ate
the
program
Then
Project
assists
training
of
mid-‐
level
managers
on
new
supply
chain
management
skills
Rice
firms
must
conduct
internal
systems
review
to
iden0fy
inefficiencies
and
informa0on
gaps
Then
Project
cost
shares
upgrading
of
system
to
support
new
SH
management
strategy
22
23. FACILITATION
•
Intervening for relationships and ownership is
more art more than a science
§ Goal is to do just enough risk reduction to
foster interaction and trust investments
§ Value is really only determined when
someone demonstrates via investment/
behavior change
§ Rolling exit and wait and see are important
ways to use self selection
23
24.
Incen0ves
Buying
Down
Risk
Demonstra0on
Effect
Upgrading
Crowding
In
Exit
Strategy
25.
Incen0ves
• Understanding
and
building
on
the
drivers
(interests
and
mo0va0ons)
of
the
actors
to
take
on
a
new
behaviour
(take
on
or
par0cipate
in
a
new
ac0vity)
• May
be
social,
personal,
financial,
etc.
• Agrovet
and
3rd-‐party
support
services
want
to
grow
their
businesses
and
make
higher
profits,
by:
• developing
be]er
rela0onships
with
customers
(for
repeat
sales
from
farmers)
• reaching
new
customers
(by
selling
to
new
farmers
in
rural
areas)
• making
more
sales
(by
making
it
easier
to
order,
access
and
pay
for
their
products)
26.
Buy-‐down
risk
• To
demonstrate
the
benefits
of
new
market
behaviours,
a
project
might
decide
to
decrease
(“buy
down”)
the
risk
of
a
market
actor
trying
out
the
new
behaviour
-‐
using
strategic
“smart”
subsidies.
• It
may
seem
too
risky
for
the
market
actor
to
bear
the
cost
and
0me
of
taking
on
the
behaviour/ac0vity
on
their
own
for
the
first
0me
• A
cost
share
was
used
by
the
project
to
share
costs
for
the
open-‐air
market
day
promo0onal
stalls
as
a
demonstra0on
to
agrovet
that
this
would
indeed
bring
in
more
customers
and
sales.
• The
project
covered
a
rapidly
decreasing
%
of
the
cost
of
transport
for
the
first
10
open-‐
air
market
days
27.
Demonstra0on
Effect
• Effects
on
the
behaviour
of
individuals
or
firms
caused
by
observa0on
of
the
ac0ons
of
others
and
their
consequences
• Uses
early
behaviour
change
adopters
as
examples
/
models
• Goal:
deepen
ownership
of
behaviour
changes
in
the
value
chain
actors,
and
broaden
the
change
throughout
the
value
chain
so
that
it
becomes
a
“norm”
• Other
input
suppliers
(agrovets)
see
how
successful
the
agent
network
and
rural
market
day
promo0ons
are,
and
start
seOng
up
services
to
reach
poorer
farmers
in
rural
areas.
28.
Upgrading
Inves0ng
0me,
money
or
other
resources
into
improving
the
enterprise
-‐
-‐
-‐
Process
upgrading
(new
produc0on
techniques
or
improved
technology)
Product
upgrading
(improving
the
product
or
other
product
lines)
Func0onal
upgrading
(improving
skills)
• Invested
in
new
technology
to
improve
his
business
(M-‐PESA
payments,
cell
phone
customer
research
tool)
• Invested
in
bringing
in
new
partners
to
be
able
to
offer
a
more
sophis0cated
range
of
products
and
services
• Invested
in
improving
skills
and
buying
new
equipment
to
run
local
promo0onal
events
29.
Crowding-‐in
• Interven0ons
catalyze
or
bring
in
other
players
and
func0ons
into
the
market
system
so
that
it
works
be]er
for
the
poor.
Can
result
in:
• Expanded
breadth
(more
transac0ons
in
the
market)
• Expanded
depth
(suppor0ng
func0ons)
• Expanded
reach
(new
areas
or
markets)
• Increasing
number
of
agrovets
may
see
the
success
of
a
business
strategy
to
target
rural
farmers,
and
start
copying
or
adap0ng
the
ac0vi0es
of
the
agrovet
• Increasing
number
of
support
service
providers
are
seeing
the
benefit
of
partnering
with
agrovets
to
target
poorer
producers
(spraying,
soil
tes0ng,
…)
30.
Exit
Strategy
• Stopping
investments
in
a
certain
ac0vity
once
a
certain
level
of
uptake
or
behaviour
change
has
been
reached.
• “Rolling
exit
strategies”
stop
cost-‐sharing,
using
a
wait-‐and-‐
see
approach,
to
see
if
a
market
actor
self
selects
to
take
on
an
ac0vity
by
themselves,
showing
that
they
have
the
ownership
and
capacity
to
con0nue
without
the
project’s
support.
• The
project
stopped
cost-‐
sharing
open-‐air
market
day
stalls
as
the
agrovet
started
seeing
value
and
demonstrated
the
ownership,
capacity
and
means
to
take
on
the
ac0vity
• The
project
planted
the
idea
of
an
agent
network,
but
waited
to
see
if
the
agrovet
took
the
ini0al
steps
to
put
this
in
place
before
inves0ng
more
0me
and
money
into
strengthening
the
network.
31.
Incen0ves
Buying
Down
Risk
Demonstra0on
Effect
Upgrading
Crowding
In
Exit
Strategy
