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Informal Economy and rural development: from subsistence agriculture to value chain.

Rural population depending on agricultural activities in remote areas are usually belonging to the informal sector because of the low level of formalization of the production means, absence of formal and legally recognized business entity, … This lack of formalization is also one of the causes of poverty because of the low level of the productivity and the absence of linkages with the market: as a result, this production comes down to a basic subsistence agriculture generating very poor incomes.

The project “Building the productive, organizational and commercial capacities of the agricultural sector in Arkhangai Aimag” implemented by Vétérinaires Sans Frontières and the International Cooperation centre for agricultural development, aimed at promoting an inclusive and empowered rural society facilitating the participation of the local non-state actors in poverty reduction and sustainable development strategies in Arkhangai, Mongolia. The specific objectives were to contribute to income generation and the creation of employment opportunities in agriculture, including both animal and horticultural sectors in rural areas, thus limiting rural exodus, and to build capacity of human resources in the agricultural sector in rural areas.

Within the implementation of the project, best practices related to informal economy and rural sector were identified as follow:

  • Focus of livestock producers ‘strategy on increasing their herd size
  • Specialization on higher income generating activities
  • Diversification of skills through vocational education
  • Identify potential value chain through market analysis and orient informal producer toward it
  • Create linkages along the value chain from producers to retailers.
  • While planning intervention in rural areas, it is important to delimitate the area of implementation and ideally choose smaller areas of intervention because of logistics difficulties to travel in some remote areas
  • Local government should be involved since the beginning of the project
  • Implement a collective natural resources management

More detailed information on this good practice is available at the page 70 of the volume 4.3 “Good Practices and Lessons Learned – Case studies of 15 EC-funded projects”

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Pierre Berman
16 April 2018

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