Aquaculture farmer organizations and cluster management: concepts and experiences

5.3.2 Mobilizing and coordinating support activities 
NGOs and donors can also play a critical role in mobilizing and coordinating the 
necessary support from specialist support agencies, government agencies and other 
actors and can use their position and contacts to leverage financial support from 
financial institutions and other sources.

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Aquaculture farmer organizations and cluster management – Concepts and experiences
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5.3.3 Facilitating chain coordination 
As mentioned above, market coordination of market chain actors is very important for 
FO development. NGOs and donor organizations can act as catalysts to bring together 
different players in the chain, build trust and facilitate dialogue and negotiation between 
FOs, suppliers and buyers as a basis for improved coordination.
5.3.4 Advocacy 
NGOs can play a crucial role advocating with and on behalf of FOs to bring about 
critical changes in the policy and institutional environment outlined in Section 5.1. 
5.4
THE ROLE OF THE PRIVATE SECTOR
Private-sector market actors do not usually have specific objectives as they relate to 
the success of FOs. However, as noted in previous sections, partnerships with FOs can 
be beneficial for input suppliers, traders and buyers owing to the reduced transaction 
costs associated with them, for example, buyers can obtain reliable volumes of high-
quality and traceable products. It is important for the success of FOs that private-
sector actors are open to doing business with them and are flexible in negotiating 
contracts and mutually beneficial partnership arrangements. More specifically, the 
private sector plays an important role in providing technical and marketing services 
for small-scale aquaculture producers, information services, microfinance and financial 
services, insurance services and input packaging and delivery for small-scale farmers. 
Phillips 
et al.
, (2007) also suggest there is a strong business case for investment in the
small-scale sector. In India, for example, an investment of USD 80 000 in technical 
servicing in 2006 led to crop improvements worth USD 2 million. Given that approximately 
80 percent of aquaculture producers in Asia are small-scale producers, an investment in 
servicing the small-scale sector could therefore be a potentially profitable one.
“Corporate social responsibility” (CSR) also has a role to play in small-scale 
farming, particularly the larger retailers that are becoming increasingly powerful. These 
businesses should be encouraged to adopt more CSR initiatives in the aquaculture 
sector, such as facilitating market access for small-scale aquaculture producers, 
providing technical and financial assistance to small-scale producers to comply with 
market requirements, and developing brands and marketing methods favourable to 
aquaculture products from smaller producers.
Certification and quality assurance schemes that are relevant and practical for small- 
scale aquaculture producers are also needed. Certification could focus on the advantages 
of small-scale producers with regard to their role in providing both environmental and 
social benefits. Development of a small-scale certification scheme oriented towards 
“Fairtrade” could also be explored.
As the success of FOs depends upon their ability to operate successfully as 
commercial enterprises, it is important for them to understand which types of business 
relationships and partnerships are likely to be most conducive towards their success 
given the contexts in which they operate and the types of products they produce. 
Contract farming schemes (where processors or traders provide farmers with services 
such as inputs, extension advice and output marketing in exchange for commitment 
by farmers to supply them with some or all of their output) are an important type 
of contractual relationship between farmers and the private sector. Where farmers 
negotiate these contracts as part of an FO, they increase their bargaining power. 
Processors or traders benefit from economies of scale in service delivery and from a 
reduction in lending risk that may result if FOs accept joint liability for the credit of 
their members. Both parties benefit from lower transaction costs than would be the 
case if agribusiness negotiated a separate contract with each farmer.

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