Research, education, and extension investments, while usually necessary, are often insuffi cient alone to bring knowledge, technologies, and services that enable farmers and entrepreneurs to innovate. Efforts to strengthen research systems and increase the availability of knowledge have not increased innovation or the use of knowledge in agriculture at the pace or the scale required by the intensifying and proliferating challenges confronting agriculture. Agricultural Innovation Systems: An Investment Sourcebook contributes to the identifi cation, design, and implementation of the investments, approaches, and complementary interventions most likely to strengthen agricultural innovation systems (AIS) and to promote innovation and equitable growth. The Sourcebook provides a menu of tools and operational guidance, as well as good practice lessons, to illustrate approaches to designing, investing in, and improving these systems.

Market liberalization, globalization, rapid urbanization, rising incomes and changing diets… they are all changing agriculture at an unprecedented speed and in diverse ways. Th ey are creating new markets, stimulating demand for high-value products, and making it possible for farmers to produce food and other products for the market. Th ese developments off er opportunities for farmers, but they also produce challenges and risks. Th e majority of farmers – particularly smallholders – need to expand their understanding of markets and economic opportunities if they are to achieve success in running their farms as sustainable and profi table businesses. To create a viable livelihood from farming, they need to move from a sole focus on production for home consumption and occasional marketing of surpluses to producing also for the market, responding to the continuously changing market demands.

Can small-scale farmers become entrepreneurs? Yes. Small-scale farmers all over the world have shown a remarkable ability to adapt. They look for better ways to organise their farms. They try new crops and cultivars, better animals, and alternative technologies to increase productivity, diversify production, reduce risk – and to increase profits. They have become more marketoriented and have learned to take calculated risks to open or create new markets for their products. Many small-scale farmers have many of the qualities of an entrepreneur.

Extension and advisory services are integral to the

AIS, where now more than ever they play a brokering

role, linking key actors such as producer organizations,

research services, and higher education. This module looks at the history and current status of extension and advisory services and examines important topics such as pluralism, new roles for extension, new kinds of service providers, ICTs, and agribusiness. For strong extension and advisory services, it is important to have coordination and linkage within pluralistic, multistakeholder AIS. Less traditional actors such as farmer organizations and agrodealers are important extension and advisory service providers who are vital to include in the design of investments and programs. Extension and advisory services must be ever-adapting to the needs of clients, and they must monitor and evaluate their services.

This paper presents findings of a review of over thirty case studies of field level experience in promoting market orientation in agricultural advisory services. This study was carried out by the Neuchâtel Initiative (www.neuchatelinitiative.net) , an informal network that has been working with advisory service policy reform for the past twelve years. Advisory services are starting to respond more effectively to the needs of farmers and other value chain actors as they adapt to market demands. Despite significant progress in analysing and understanding how to respond to markets, sustainable enhancement of the capacities of the rural poor to benefit from markets will require a more focused and consistent approach. It is particularly important to critically monitor the outcomes of current pilot efforts in providing quality services and in reaching different rural clients.