THE COMMERCIAL CONTEXT

The commercial context in which smallholders operate is an important factor affecting their use of inputs. The following issues affect the commercial context in which smallholders use inputs:

• The expectation to obtain a profitable income from the sale of crops will affect smallholders' willingness to use inputs
• Where debt amnesties or subsidized credit schemes are common it will often be difficult to overcome a tendency to avoid loan repayment i.e., 'strategic default' and therefore operate commercially viable credit schemes (The Cotton Company of Zimbabwe).
• Commercial outlets for agricultural inputs are very limited and so affect smallholders' ability to use them.

Action: Exporting companies can address each of these issues by setting up local branches and entering into formal agreements with smallholders (designing buyer-seller contracts).

More information on providing inputs: affordability; availability; access to information, uncertainty and risk.