Capacities required

Compared with traditional financing systems, demand-led systems require substantial new capacity, both institutional and managerial.

Smallholder farmers’ capacity: Smallholder farmers and their FOs need to be able to develop and negotiate their priorities, to evaluate services, and to hold service providers accountable for quality and effectiveness.

Finance and administration systems: Because financing mechanisms must be transparent and some of the models are complex, there is a need for new skills in terms of developing and implementing innovative financing mechanisms, as well as raising, managing, and administering the related financing streams, grants, and other funds.

Local institutions’ ability to manage financing systems: Systems with decentralised funding of services often require long-term efforts to build local capacity to facilitate and provide demand-led AAS, for example in dealing with public procurement, contracts, and general financial management.

Advisers with the knowledge and skills that farmers require: A major challenge for AAS worldwide is adjusting to the rapid changes in the agricultural sector. It is essential for advisers to keep in tune with farmers’ needs. Advisers need to be able to deal with the ever-increasing flow of knowledge, structural changes in the sector, and new market developments, and to operate with the producers’ own food and growth strategies. Educational institutions with curricula that respond to these requirements are crucial.

Dealing with political changes and shifts in government priorities: This requires FOs that are empowered to analyse policies and legal channels for advocacy and to participate in policy and other decision-making processes. This is particularly important for AAS systems that rely primarily on public funding, and where government has a strong hand in governing the service agencies.

Costs

Costs related to financing systems for pluralistic, demand-led AAS systems are:

• management and administration within institutions
• developing capacity of demand-side institutions –
• strengthening FOs
• installing systematic demand mechanisms
• FOs managing and evaluating AAS
• supply of services with an emphasis on –
• developing capacities of service providers to advocate for their services and to respond to demands and changing needs
• back-up services involving institutional, organisational, and human capacity development.

The overall costs of management and supply of services are not different from conventional systems.