Inclusive Governance: A Market Systems Prerequisite to Sustain Agrifood System Impacts
The blog provides an important discussion of the idea of market systems governance. While many perceive governance as only related to government, from systems thinking perspective governance is more about the wider set of actors that provide rules and accountability. As the blog points out, standards are often defined by private sector actors as a way to build and ensure customer confidence. The blog also provides a nice example of the various ways in which governance emerges in ways that makes market systems more inclusive, competitive and resilient.
Why is governance crucial for sustaining market system development impacts within agrifood systems? How does Market Systems Development (MSD) establish inclusive governance to achieve more sustainable impacts than traditional market development intervention approaches?
World Vision has significantly expanded the scope of MSD within our sustainable livelihoods models in line with our global commitment to fostering competitive and resilient agrifood systems. Inclusive governance has been crucial to transforming and sustaining progressive change in agrifood systems. Governance directly influences agrifood market systems' economic, cultural, and environmental impacts by directing the processes by which market activities are controlled and held accountable to sustain competitiveness and resilience.
Highly profitable and resilient agrifood systems always have strong governance. Inclusive governance involves authority, accountability, leadership, direction, and control to impose equitable and transparent participation that crosscuts entire market channels for most actors. Equitable, high-performing networks within agrifood market systems are achieved when sound and inclusive governance principles and practices are embedded across supply chains from production to the consumer. World Vision creates inclusivity within agrifood governance, applying its encompassing market systems approaches.
Increased consolidation of agrifood value chains creates more restrictions on market actors selling to fewer middle-handlers and end-buyers. Moreover, products and services become more commodified, creating less diversity and competition. This global market trend also negatively impacts nutrition outcomes as ultra-processed foods scale through consolidated global agrifood systems. As agrifood supply chains increase their capacity to supply goods and services globally to urban and remote fragile markets, more restrictive rules and laws have been applied to ensure and improve food safety and quality, quicken trade transactions, and sustain sound environmental resource management.
Agrifood governance is a top–down development orchestrated by those with higher levels of market influence. Though beneficial and needed, regulatory governance established by apex private and public market actors often impedes subsistence and small food producer participation. Therefore, the governance of agrifood systems is more critical than ever, determining who participates and who does not and what foods are accessible to the consumer. This is where project implementers use MSD tactics to go beyond value chain intervention to enable inclusive governance and upholding market standards while aiding marginalized agrifood actors in gaining the skills and finding the entry points to compete and scale. MSD does this by incorporating the activities of smallholder market actors through horizontal organizing and value chain vertical integration that then scales through MSD facilitation strategies, lifting market actors into higher-value and more resilient market networks.
Inclusive governance lifting marginalized market actors into higher-value networks has been a core activity of World Vision Cambodia’s MSD approach to improving the Cambodian Aquaculture Industry. World Vision Cambodia, in support of the American Soybean Association’s (ASA) program activities for the USDA-funded Commercialization of Aquaculture for Sustainable Trade (CAST) project, has aligned with government priorities and private sector vested interests aims to accelerate the growth and development of freshwater aquaculture industry in Cambodia. The achievements produced by CAST highlight how strategic MSD deployment can scale economic gains for individuals, firms, and industries while improving environmental quality—accomplishing goals desired by governments and multilateral organizations worldwide.
The CAST project achieved crosscutting transformation in the Cambodian aquaculture industry by implementing MSD tactics in coordination with leading private-sector aquaculture firms, financiers, wholesalers, buyers, input providers, and public-sector regulators. Regardless of how small or under-resourced a market actor is, inclusive governance is required to circumvent impediments causing poverty. Rarely is training and provision of inputs sufficient to resolve low-performer poverty. Paramount to strengthening traditional development impacts is the establishment of inclusive governance, creating agrifood market environments that enable most actors to participate and thrive beyond direct donor subsidies. MSD approaches are used to leverage economies of scale to shift market power toward historically marginalized groups. Leveraging economies within market systems has proven best done through professional associations. Across the globe, the rising power of agrifood associations is influencing market power. Agrifood governance, once dominated by national governments, has been shifting increasingly toward private sector influence. These market developments are no longer limited to high-value urban markets. They increasingly affect what was once considered distant, fragile market economies.
A mandate of CAST has been the development of an industry first, the Cambodian Aquaculture Association (CAA). As proven globally, agrifood associations have become powerful instruments for instituting and sustaining market actors, firms, and industry resilience. Through CAST’s MSD intervention strategies, the CAA has begun structuring stronger links between market sectors to enable the industry to grow inclusively through private sector-led memberships, including financiers, small and large producers, wholesalers, premium retailers, input suppliers, consumers, and government regulators.
Whether an agrifood market is remote and fragile or sophisticated, inclusive governance is necessary to disrupt embedded formal and non-formal market barriers in gender, class, education, caste, and ethnicity. Lifting subsistence and small agrifood producers out of poverty permanently requires them to become competitive actors in the higher-value networks of a market system. Emphasizing the need for inclusive and accountable governance as a core component of MSD tactics to ensure small and subsistence food producers can enter, compete, and sustain a presence in high value agrifood market systems.
As the CAST project ramped up into full intervention activities, the COVID-19 pandemic was in full force. As elsewhere, local, and national markets in Cambodia were severely stressed, and consumer sales declined. Through unprecedented market volatility, the integration of MSD PSE-led approaches enabled the CAST team to remain intimate and influential with its targeted market actors. Through continual diagnostics, implementers and benefactors could adapt to the changing market and social conditions. The active MSD approach of co-led integration of roles and activities created the rapport, trust, and sharing of risks between implementers and private sector actors that sustained achievements throughout COVID-19-led market disruptions. By doing so, the CAST team was able to marshal impressive impacts for a market-focused project during a devasting market shock. Key MSD-induced impacts achieved were:
Establishing the first Cambodian Aquaculture Association (CAA) becoming a hub for future governance activities to grow the industry.
Attracting and motivating innovative finance by providing first-of-its-kind lending instruments.
New finance coupled with more robust governance spawning innovation to scale and span market opportunities.
Governance standards and accountability to improve consumer food quality and safety while strengthening environmental management across the industry.
Improved governance, adaptive finance, and innovation has scaled female enterprise ownership and increased proportional representation as industry board members.
Product and systems certification processes and qualifications are boosting future industry opportunities to export.
Localization, another core component of MSD, was demonstrated by CAST’s intervention, working through local business support services to coordinate NGO and local private sector in guiding market linkage and branding activities across the aquaculture value chain. New skills learned and embedded in local business support service companies will lead to sustainable services to continue beyond project support. Through those efforts, small producers expanded market contacts with apex distributors and retail buyers and scaled into more than 100 premium markets across Cambodia. This coordinated market expansion, coupled with CAST structuring inclusive governance, lays the foundation for the Cambodian Aquaculture Industry (CAI) to compete in regional exports. Stronger brand awareness, combined with growing domestic and international sales, is projected to scale small rural producers and distributors into premium markets significantly.
CAST’s inclusive governance activities were acutely beneficial to women aquaculture entrepreneurs. Women increased significant presence across the CAI as processing, distribution, and retail business owners. CAST’s support led to critical appointments of women to the national board, as well as scaling sales and increasing small company brands in premium markets. These MSD activities will sustain small and female-owned enterprises to grow competitively beyond donor subsidies.
World Vision’s various MSD approaches integrate livelihoods models to improve subsistence agrifood producers and SMEs to enter, compete, and create comparative advantages to scale and sustain presence in higher value networks. Without the awareness of the importance of accountable, transparent, and inclusive governance to support subsistence and small producers to compete and scale, much of the work in development intervention is impermanent and diminishes when donor funding ends. The original impediments that block opportunities remain steadfast. Through strategically deployed MSD, inclusive agrifood market governance is developed and aligned to aid historically marginalized actors to sustain presence and scale in higher-value market networks. Doing so creates resilient producers, households, and communities that can exit poverty.
Authors: Kimthea Pich and Michael Brown