Specialty products, rural livelihoods and agricultural marketing reforms in China

Purpose - The purpose of this paper is to apply a market efficiency theoretical framework to analyse and postulate solutions to the challenges confronting China in engaging smallholders in higher value, specialty, agricultural product markets. A marketing experiment/trial to test these ideas is evaluated. Design/methodology/approach - The case of fine-wool marketing is used to illustrate issues associated with specialty product marketing. The market efficiency approach highlights the difficulties involved in relaying accurate product prices and values (exchange efficiency) while aligning the logistical requirements of higher value market segments with the small, dispersed and locationally remote smallholders (operational efficiency). The marketing experiment/trial was conducted in three fine-wool-growing counties in Western China in 2008. Findings - The fine-wool case study highlights that modernization of the marketing system is required not only so that smallholders can access the premium prices potentially available but also to improve international competitiveness. Originality/value - Engaging smallholders in specialty agricultural product markets poses significant challenges for China. The market efficiency approach (exchange efficiency versus operational efficiency) provides a new perspective on these challenges and offers new insights about appropriate policy settings both at a macro- and micro-level.