'53 USAID FSII Policy Synthesis No. 43
U.S. Agency for
International
Development
► encourage expansion of cash crop
outgrower schemes that facilitate
vertical coordination of marketing,
credit and extension services with
positive spillovers for other crops and
household incomes
► facilitate collaboration between farmer
associations, NGOs, and for-profit
firms to reduce marketing, extension
and credit costs.
5. Risks: We know something about how
risk affects both farmers’ and input
suppliers’ decisions, but much less about
cost-effective ways to diminish its negative
impacts. As technologies requiring high
levels of external input use are extended to
more marginal production environments
and poorer farmers, risk management will
become more important. Among the key
issues to examine here are:
► What mix of crops and improved
technologies—including alternative
soil fertility-enhancing technologies
such as green manuring, minimum
tillage, improved fallows—is
financially and economically viable in
riskier environments? Purchased
inputs may not be appropriate for all
farmers.
► What complementary institutions and
organizations are necessary to spread
risk more evenly among farmers and
input suppliers, thereby encouraging
reliable use and repayment of inputs
credit? How can such institutions and
organizations be designed and
operated in a cost-effective way?
* Funding for much of this research was provided by the Food Security
and Productivity Unit of the Productive Sector Growth and
Environment Division, Office of Sustainable Development, Africa
Bureau, USAID (AFR/SD/PSGE/FSP). The research was conducted
under the Food Security II Cooperative Agreement between AID/Global
Bureau, Office of Agriculture and Food Security, and the Department
of Agricultural Economics at Michigan State University. The views
expressed in this document are exclusively those of the authors.
The authors are all associated with the Department of Agricultural
Economics at Michigan State University.
Page 6
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