Increasing urbanization and the opening of access to world markets under globalization raise the demand for storage, quality, convenience, and safety characteristics of food products that are exported or consumed in the growing formal food sector of cities. Urban consumers increasingly are willing to pay for consistency, quality, and safety of purchased foods. Compliance with conditions set under the sanitary and phyto-sanitary (SPS) agreements that accompany WTO negotiations will be critical for the continued participation of both developing countries and small-scale farmers in the expanding markets of the developed countries. Many of the required safety and quality characteristics are largely determined by the handling and treatment of commodities after they leave the farm gate. Meeting these new demands not only requires that the products meet the characteristics, but also that they can be verifiably certified as such, which involves better organization of the supply chain from producer to consumer.

To participate in growing formal urban and export markets, producers need access to well-organized post-harvest chains that can handle the processing and marketing requirements. Agricultural processors and traders, on the other hand, face increasing pressures to certify the safety of production practices (such as to avoid pesticide residues in the final product), exact quality attributes, and on-time deliveries. They also must rely on a large number of independent small farmers to supply these attributes in a reliable and timely manner. Vertical integration, contract farming, and traders' associations can address these problems by reducing the moral hazard of non-compliance by any one farmer, which can compromise a much larger marketing chain. Informed policies and a conducive regulatory environment increase the incentives for agro-processors to use the produce of small-scale farmers as inputs, and improve their capacity to meet the product attributes required in a rapidly modernizing agricultural marketplace.

Ultimately, to stay in business small-scale farmers in developing countries will need to become more integrated with upstream processing of their produce. This multi-country project (MP) examines how best to integrate small-scale farmers with formal urban and export markets by focusing on the post-farm aspects of the supply chain and the constraints imposed upon processors by changing urban and international markets.

• To characterize post-harvest rural agro-industrial systems and agricultural supply chains for developing countries
• To identify and analyze alternatives for enhancing the contribution to income, food security, and employment of the rural poor from improved post-harvest activities and rural agro-industry;
• To identify constraints to the development of post-harvest activities and rural agro-industry, such as credit, infrastructure, institutions for product certification, and access to different kinds of markets and inputs;
• To identify strategies for developing countries to improve their access for selling processed crop, livestock and fish products in global markets, with special emphasis on policies that improve quality attributes and certifiability of processed products;
• To analyze and gain better insights into the process and role of developing countries in on-going international negotiations of the SPS and WTO as they impact processing requirements for crop, livestock, and fishery items.
• To strengthen the local capacity of policy analysts and program managers to design and develop post-harvest systems for poverty reduction.
• To communicate the strategies and policy options derived from the research at the national and international levels.

This project, which began in August 1999, seeks to ascertain the potential for post-harvesting of fruits and vegetables in Vietnam by assessing the current state of food processing and by recommending policies and strategies to promote its development. It will identify product groups for in-depth study and constraints to their development; characterize household and community management of post-harvest activity; identify institutional mechanisms to lower the transaction costs that farm households and small firms face; and empirically analyze alternative strategies for development.

The project objectives will be implemented through the following integrated sets of research and outreach activities:

• Preliminary assessment of post harvest constraints and selection of product groups for in-depth study;
• Identification and characterization of household and community management of post harvest operations and agro-food based rural industrialization;
• Identification and characterization of market structure, marketing, and processing enterprises involved in post harvest operations and agro-food based rural industrialization;
• Identification and characterization of institutional mechanisms involved in lowering the transactions costs and increase the access of rural household to information, markets, and assets;
• Empirical analysis of economic behavior, adoption of technology and institutional mechanisms;
• Analysis of impact alternative policies and strategies at the rural household level, at the market level, and at the institutional level; and
• Intensive dissemination of results at the national and international levels.

The opening of the international commerce in fruits and vegetables through WTO negotiations offers enormous potential for enhancing the incomes of small farmers, processors, and exporters as well as for increasing foreign exchange earnings for the nation as a whole.

The agricultural sector in developing countries has moved slowly but steadily away from a subsistence economy to a market-oriented economy. Today, most of the developing country farmers participate to some degree in the market. Moreover, about half of the world's people now live in urban areas and must be provisioned with an adequate and safe diet by those who remain on the farm.

To address these issues, IFPRI has initiated a joint project with Michigan State University with the following four objectives: · To facilitate agribusiness partnerships and linkages between retailers/processor in industrialized nations and producers/exporters in developing nations to expand the size and range of products, to reduce transaction costs and risks, and to respond to requirements of retailers with respect to quality, safety, timing, varieties, and volumes. · To provide training and technical support to firms, farms, associations, and governments of developing nations to better meet international, national, and private sector standards with respect to quality, safety, environment and labor will include training entrepreneurs and farmers in standards, finding technology, packaging, logistics and storage solutions. · To increase smallholder participation in production for the market, and expand employment to raise incomes. · To improve the quality and safety of fruits and vegetables for consumers by building more effective supply chains and educating all participants on the importance of safety standards.

Initially, the project will focus on horticultural development in Kenya, South Africa, Bangladesh, and Guatemala, though the project has the flexibility to expand to other countries.

Through a field survey and modeling activity, this project sought to provide an overview of starch industry development in Viet Nam, which is an important area of rural diversification. The study showed the sector's high potential for strong growth, poverty reduction, and income diversification, especially in less-favored areas, through the development of small and medium rural enterprises.