Smallholder market participation and production specialization: Evolution of thinking, issues and policies

Type Working Paper
Language English
Series CAPSA Working Paper No. 107
Year of Publication 2013
Place of Publication
Organization CAPSA-ESCAP
Classification Num. 338.516.4 Wic s
Physical Description vii, 26 p.
Document Open


Transformation from subsistence to more specialized and market-oriented systems of agriculture is of significance for a large number of developing countries with a high degree of dependency on agriculture for livelihoods and national income. Such a transformation has enormous potential to promote inclusive growth and development, allowing millions of people to escape poverty and food insecurity. This would, however, require policies and strategies that pursue full exploitation of agriculture's potential allowing farm households to participate fully in local, national and international markets and to receive a fair return on the effort and resources invested by them. While the need to promote smallholders' market participation is widely accepted, there is limited agreement on appropriate policies and strategies to achieve this goal. Despite much advance in estimating farm supply and demand functions, there has been limited progress towards developing a cohesive theoretical foundation that provides guidance to policymaking on smallholder market participation. This paper attempts to fill this gap by (i) reviewing the evolution of thinking on agrarian economic transformation and the emergence of various production, consumption and marketing arrangements; and (ii) presenting an empirical framework capable of explaining smallholder market participation based on efficiency principles.