It’s time to tackle the power imbalance between farmers and agribusiness buyers

Ashley Aarons Agriculture, Power Shifts, Private sector

System change programmes have had significant impacts on farmers and workers around the world. However, says Ashley Aarons, they have tended to ignore the existence and harm of power imbalances. Drawing on Oxfam´s work in Southeast Asia, he suggests new tactics and examples of how to address such imbalances.

Shrimp farmer groups supported by GRAISEA sell their produce in Cà Mau, Vietnam. (Picture: Nguyen Duc Hieu)

Since 2018, the Gender Transformative and Responsible Agribusiness Investments in Southeast Asia (GRAISEA) program has aimed to improve the livelihoods of smaller farmers through inclusive value chains and responsible business practices. It broadly takes a systems-change approach, focusing on enhancing the systems around farmers in order to benefit them at scale, rather than directly supporting them.

One difference to other programmes is that GRAISEA has tried at various points to address power imbalances as part of this approach, and this blog shares key takeaways here from a recent review. This is not to say our programme has always succeeded, and lessons are as much what we could have done – but I hope this blog can help to start a discussion and knowledge sharing in this area.

Why systems change programmes should care about power

In global food markets, the largest agribusinesses have most power and make the most money, while the farmers they buy from often live in poverty.

For instance, value distribution research by Oxfam on Pakistani rice sold to Swedish retailers, showed that while international retailers made 56% of the price on the shelf, smallholder farmers only made 5%, while dealing with the biggest price and climate risks (though note the methodological limitations mentioned in the report). Corporate consolidation is only making the problem worse.

As an illustration of agribusiness power, in GRAISEA, we worked with one international buyer to pay premium prices to farmer, with high farmer investment to reach their required standards. But then the buyer suddenly stopped buying. The contracts – which were just for annual purchases with no third-party mediation if there were any problems – provided farmers with little warning, recourse or support when the purchases suddenly stopped; while promises to keep on paying the premium were forgotten.

‘Rather than seeking a “win-win” based on profit for all, programmes should be ready to use new tools, such as evidence-based moral cases, going to the media, and influencing investors’

It is important to note that systems change programmes have improved the lives of hundreds of thousands of farmers. However, power dynamics are rarely considered. For instance, supporting buyers and suppliers of inputs such as fertilisers to buy from or sell to smallholder farmers helps increase incomes – yet it can also create farmer dependency on buyers and inputs sellers, where farmers have no power to push for better terms of trade, or recourse when there are unfair trade practices.

When programmes pursue scenarios that are “win-win” for farmer and buyer, they don’t break down who wins more: if a buyer makes 80% of the profit and a farmer group 20%, they don’t ask if 50-50 would work. They also overly focus on shorter-term profit over other incentives, such as reputation, right to operate and acting within general business norms. Drawing on our experiences in the GRAISEA programme, here are three broad areas to think about in addressing unequal power dynamics in value chains.

1. Consider empowerment across all system innovations

Systems change programmes focus on different types of changes as the context requires, such as system function growth or inclusivity. Similarly they should consider for each function if increasing the power of farmers and workers is valuable. This will not always be the case, but may offer more gains than expected.

For instance, GRAISEA has supported inclusive contract farming – where the buyer typically commits to purchase a defined quality and quantity of goods from farmers at a specific price and point in the future– to increase farmer incomes and reduce risks. However, examples of buyers abusing contracts, such as the rice buyer above, show the need to address power dynamics.

GRAISEA has addressed the risks for farmers by successfully making the case to some buyers for multi-year contracts rather than annual. It has also focused on production standards with many buyers, and ensured contract farming improves farmer productivity – for instance through buyers providing technical support. GRAISEA also supported third-party mediation, for instance, working in one country with the local government and provincial union of cooperatives to ensure that they review, witness and mediate contracts.

A key issue that GRAISEA and other NGOs largely ignore is the way the norm on price emerges, typically from other regions or from the last year, with no analysis of whether this price is fair. Programmes should challenge this norm, for instance by increasing transparency and farmer visibility of how prices develop and agribusinesses’ profit rates.

2. Farmer groups can help address power imbalances, but we need to understand if there are pathways to scale

There is often concern in programmes around supporting farmer groups, on the grounds of sustainability and low value for money as support goes to few. However, in countries where GRAISEA supported self-managed farmer groups, these did negotiate better terms of trade with buyers and input providers, as well as diversifying into new crops and taking on more value-adding activities.

However, in countries where GRAISEA supported buyers to develop their own forms of coordinating farmers into groups, these didn’t negotiate better prices or look for new buyers, though they did benefit in other ways such as more technical support, higher quality inputs and higher quality production.

We need more knowledge sharing about how to achieve scale here, and would love to hear from others. It likely involves better understanding the ecosystems around farmer groups – beyond just buyers and input sellers. Potentially that means working with relevant government ministries, cooperative unions, and microfinance institutions, among others, to enhance services for farmer groups. Early results of supporting wider organisations are encouraging. For instance, in one country, we increased the capacity of a provincial union of cooperatives, which, in turn, supported its 25 members (of whom 73% are women) to negotiate with businesses and comply with technical standards, and helped nine of its members adopt gender equality policies.

3. Add advocacy to the toolbox of interventions

Systems change programmes typically aim to influence businesses to improve services for farmers and workers. We have many examples of this at GRAISEA. However, it hasn’t seemed to significantly change farmer reliance on businesses.

So we have started exploring other ways to boost farmer power, including supporting trade unions; government implementation of labour laws; farmer ownership shares of agricultural businesses; international buyer procurement practices; influencing agricultural standards to include farmers in governance; and publishing cost-benefit analysis of the value of these standards to both male and female farmers. Research is needed on these and other areas to see the business case and scale potential.

However, it’s also become clear that in GRAISEA, many of the businesses we support are powerful and profitable, and well-positioned to make big changes by themselves. That includes not just international buyers but many leading businesses in South East Asia.

Here the idea of helping them increase profits may become less important than holding them publicly accountable for human rights abuses in their supply chains, which may involve loss-making changes. Rather than seeking a “win-win” based on profit for all, programmes should be ready to use new tools, such as evidence-based moral cases, going to the media, and influencing investors. A good starting point could be for the systems change sector to agree on a convincing methodology to analyse profit levels actors take across value chains, and make this a core part of our market assessments.


Ashley Aarons

Ashley Aarons is Team Lead of GRAISEA for Oxfam. He is a market system development and private sector engagement specialist with a particular focus on agricultural markets. He has extensive experience in managing global and multi-country programs and building donor relations.

GRAISEA (Gender Transformative and Responsible Agribusiness Investments in South East Asia) is a regional programme funded by the Embassy of Sweden in Bangkok