I can say that I am an evangelist of the Market Systems Development (MSD) approach since I am preaching and practising MSD as a methodology of private sector development that works. I sincerely believe that MSD in 10 years will be the prefered method for implementing donor-supported programmes in developing countries.
Market Systems Development (MSD), known also as M4P and inclusive market system, is a methodology that works in systems where there is the involvement of multiple stakeholders in the value chain (farmers, tourist workers, collectors and other market players). MSD seeks to change how markets work so that markets include all people in the benefits of growth and economic development. The aim is to tackle market failures and strengthen the private sector to create large-scale, lasting benefits for all stakeholders. The approach conceptualises systems as inclusive of core markets, supporting functions, and the formal and informal rules that affect how the system works. As such, the market systems approach analyses functions of private market actors, individuals, government organisations and social and cultural norms to understand how a system operates.
As a Green Economy sector manager of the first IME programme phase, I can witness firsthand the Market System Development impact. The whole process of understanding the market system has taken. There will be another post, regarding the unsuccessful interventions from international development, but here I want to mention a few ones, that even now, after 5-6 years, is producing results.
Organic buyers’ cooperative Nasha Dobra Zemja
In 2014, Skopje local fresh fruits and vegetable markets existed, but the organic products at these markets are only sporadically available and not well planned. One of the biggest bottle-necks of organic production development was that organic farmers do not see organic production as a secured income because of the lack of constant buyers.
The programme supported Organic buyers Cooperative “Nasha Dobra Zemja” (Our Good Earth) in developing a business model for operations to increase their target group of members and increase sales. As a result of this market development intervention, 47 farmers started to sell more than 150 organic products in 2015. The total value of increased sales for the buyer’s coop is over 35,600 CHF for a period of 8 months (May – December 2015) which reflected in the creation of 7,116 CHF net income for the cooperative. Until now, the cooperative increased the impact, reaching more than 100 members and more than 80 farmers using the opportunity for becoming a sustainable example of agricultural development.
Nasha Dobra Zemja is also an example of women’s economic empowerment because it was initiated, founded and lead by three women. The innovations in the agricultural market system were often led by women.
Although in 2015 there was an increased demand, the offer of organic products was limited, mainly based on the not secure market for organic products, but also due to the limited access to quality inputs and know-how for farmers interested to start organic production as supporting function. One reason for this was the absence of activity of quality advisory services in the sector.
With the aim to establish a sustainable model of advisory services available for the farmers on the local market, IME supported the development of a business model for Agrikom an organic input provider company. The business model for embedded advisory services included three different service packages: Improvement of soil, plant nutrition (fertilising) and plant protection training eight organic advisors (two female and three youth) on the organic production basics that served 70 farmers.
The impact on the quality and quantity of organic products has been immense due to access to quality input materials coupled with embedded advisory services. This impacted the value chain development and the resilience of the smallholder farmer. Due to its success, the organic farmers’ embedded advisory services model has been scaled up and adopted over by Organika Nova, resulting in 83 farmers being capacitated on organic production. Additionally, 17 advisors provided organic advisory services to 654 farmers.
The model was embedded in the sales strategy of Agricom and served the company in the last five years. EM Agricom, a successor of Agricom, is still using the same business model, providing advisory services for current and potential customers through the MSD approach and supporting the economic growth of the sector.
The Stakeholder analysis evaluation from the first phase revealed the existence of a large number of stakeholders. The most crucial buyer or actor, in general, is the cooperative of consumers of organic produce “Nasa Dobra Zemja”. When excluding the certification bodies, the impact assessment analysis for the business environment also revealed that most organic producers cooperate with Nasha Dobra Zemja (around 25%), followed by Agrikom (with 10%).
This shows that providing linkages through the program’s outreach has been seen as a signal that these activities affect building these farmers’ social capital and network of relations. It directly addresses one of the most critical bottlenecks of weak collaboration and interaction of actors in the organic agriculture system.
The most obvious impact is the growth is in the numbers. If we talk about the business models established in the value chain, most companies are functioning even now, with some evidence of copying and crowding-in. For example, Nasha Dobra Zemja reached more than 100 members last year, and they are targeting 200 members in 2021.
Those numbers are also translated into the total number of certified organic farmers on a national level. Yes, not all farmers are due to Nasha Dobra Zemja, but there is evidence that this systemic change is due to more distribution channels of organic products in the country.
Source: Annual report, 2019, Increasing Market Employability Programme
According to the Annual report from 2019, IME also positively impacted both production and sales of organic products in 2018. Regarding the programme’s impact, the general findings from 2019 showed that 43% of the sample farms cooperate with IME supported companies. Approximately half of the turnover and profit is reported by those farmers that are IME-related.
Nasha Dobra Zemja (NDZ) had made a considerable impact on the organic farming community. During the case study research, all of the cases interviewed confirmed that farmers are delighted with the approach, cooperation, and financial benefits of distributing products to NDZ. On average, they increased their profit margins by 15-25%, compared to previous sales. Nasha Dobra Zemja is an example of a successful social enterprise that survived even in a situation as COVID-19. They pivoted part of their business (increased the delivery part) and succeeded to reach 100 members in 2020.
Agricom (now known as EM Agricom) uses the advisory service as their unique main point of sales, reaching more and more farmers. The advisory service is base on an innovative approach to building new services and new products as MSD project.
Those are just two successful sustainable business models that continued to work after the support (2015/2016) and bring results in the past five years. My only regret is that we didn’t work more on the scaling up of the interventions.
Market System Development works in all economies in all sectors. It requires perseverance in the delivery of methodology and continuously focuses on the business models’ sustainability and financial inclusion of the poor people. Donors like SDC, SIDA, DFID and USAID should invest more in market systems programs for poverty reduction and food security. The MSD program
The Increasing Market Employability project’s overall lifespan in North Macedonia is 11 years (2014-2024), with a total budget of 15.5 million CHF funded by the Swiss Agency for Development and Cooperation. The first phase of the programme was executed by Swisscontact (2014-2019), and the second phase by Palladium (2019-2023).
Igor Mishevski was part of IME programme 2014-2019 as Green Economy facilitator and Green Economy Manager, and a founder of Impact Foundation. IMPACT FOUNDATION is a Private Sector Development Foundation for the continuous promotion of sustainable development through MSD.
The views and opinions expressed in this article are those of the authors. They do not necessarily reflect the official policy or position of the IME Programme, Swiss Agency for Development and Cooperation, Swiscontact or Palladium.