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A development policy opting exclusively for value chain development and the integration of producers in modern markets overlooks the reality for the majority of smallholders, our author maintains. Policy should pay greater attention to addressing the area most small-scale producers are active in: the informal sector.

Rural development is full of dilemmas, no more so than the position of small-scale farmers in emerging and globalising markets. What makes the situation so hotly debated is the fact that there are two contradictory forces at work. One is the process of modernisation of food manufacturing, distribution and retailing in emerging markets, ushered in by globalisation, foreign and domestic investment, a rising middle class and the drive for improved food safety and quality.

Another is the resilience – and in many countries, growth – of informal markets, driven by producer and consumer poverty, poor employment prospects in formal sectors (themselves a possible effect of globalisation), and regulations that punish formalisation.

Both of these forces can make their mark on rural areas and influence farmers’ choices of markets. The outcome has huge implications for social cohesion and food security of emerging economies.

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