is undercapitalized (Stiglitz, 2006). Nonetheless, STEs can potentially provide a useful counterbalance to the market power of global agribusiness thereby increasing competition. STEs may be only market for producers in remote areas of developing countries, and governments can insist that STEs provide this service, whereas they cannot demand it of private corporations (Murphy, 2006).

     Current WTO rules require that governments complete questionnaires about any STEs operating in their country, but no similar requirement applies to transnational agribusiness, although they may control a significant share of global trade in a particular commodity. This information generation requirement could be expanded to include any company-private or public-with, for example, more than a given percentage of the import or export market. This information could be gathered by the WTO or under the auspices of the UN Conference on Trade and Development which has a long-standing mandate to monitor restrictive business practices (Murphy, 2006).

7.2.5.3 Microfinance and microcredit

Almost all small-scale agricultural systems benefit significantly from rural credit; this credit will not flow from commercial sources, so policy action is needed (Najam et al., 2007). Microfinance and microcredit programs and banks present a key alternative strategy for many developing countries' agricultural market infrastructure.

      Because so much of the developing South's agricultural output is generated by small-scale farmers and other microentrepreneurs, microfinance (as the set of financial services whose scale matches the needs of micro and small producers) is the mechanism by which agricultural producers are able to expand their production, buy fertilizer and other inputs and technologies, smooth seasonal fluctuations in household and enterprise income, and introduce flexibility into small-farm/microproducer investment and asset building.

      Newer financial services and products, such as crop or rain insurance, are critical to reducing the risk associated with adopting new technology, transitioning to sustainable agricultural practices, and innovating production and marketing methods. Credit terms tailored to agricultural production and marketing, such as loan repayment terms that track with seasonal crop production, are vitally important to enabling agricultural producers to take advantage of economic opportunities.

7.2.5.4 Alternative trade channels: Fair Trade, certified organics, and mark of origin

As a means of developing pro-poor procurement, initiatives such as Fair Trade and environmentally linked production systems, such as organic and eco-friendly production, were introduced as alternatives to the mainstream commodity markets. While these models offer small-scale producers better terms of trade, the market share for these trading systems has been slow to grow and still only occupies a small percentage of global trade. Nevertheless, the principles were proven and a new generation of business models needs to be designed that can provide windows for the less endowed producers to enter mainstream markets through trading

platforms that promote greater stability of demand (Berdegue et al., 2005).

      There are now almost 600 Fair Trade producer groups across 54 Latin American, African and Asian countries selling 18 certified products (FLO, 2008). Over five million farmers, farm workers and their families currently benefit from Fair Trade with many more seeking to enter these markets (FLO, 2008). Sales of Fair Trade certified products increased 42% between 2005 and 2006 with a value of over US$2 billion in 2006 (FLO, 2007).

      Fair Trade is no longer a niche market with certified products now sold by large mainstream food processing corporations (such as Proctor and Gamble and Nestle), giant retailers (such as Carrefour, Costco, and Sam's Club), and fast food chains (such as McDonald's and Dunkin' Donuts) (Krier, 2005; Raynolds et al., 2007). (For a business perspective on this growth see Kroger, 2004; Roosevelt, 2004). Market research suggests that there is a very large pool of potential Fair Trade consumers. In the UK, the ethical food market is currently valued at US$3.2 billion per year (Cooperative Bank, 2003). In the US, 68 million consumers with purchases of US$230 billion per year are identified as "Lohas" (lifestyles of health and sustainability) shoppers (Cortese, 2003).

      Fair Trade is increasingly envisioned in Latin America as an avenue for bolstering small-scale production in domestic markets and for South-South trade, in addition to northern markets (Bisaillon et al., 2005). Mexico has already developed its own Fair Trade labeling organization (Comercio Justo Mexico) and certification agency (Certimex). This expanded vision of Fair Trade's future is encouraging efforts to expand Fair Trade to include basic food products, such as corn and beans.

      There are a number of policy options for promoting Fair Trade as a concrete vehicle for ameliorating poverty and hunger and bolstering environmental sustainability and rural livelihoods. These policies can foster Fair Trade by strengthening the involvement of Fair Trade organizations, producers, traders, and consumers. Governments and multilateral organizations could complement existing ethical business and civil society initiatives, and thus broaden Fair Trade's benefit streams, via a suite of policy options. These include: educating consumers, producers, and businesses about Fair Trade; supporting producer cooperatives and worker organizations to ensure that they have the capacity, information, contacts, and product quality to enter Fair Trade networks; committing to source Fair Trade items; and encouraging the creation of new Fair Trade networks, for example, for basic food stuffs to promote South-South trade.

      Similarly, certified organics can work as an effective policy instrument to promote broader rural development and environmental protection goals. Policy options exist to make institutional and policy environments more conducive to certified organic agriculture and less conducive to energy intense (net energy consuming) agriculture. A number of recent case studies confirm the benefits for small-scale farmers of participating in certified organic farming schemes (Eyhorn, 2007; FAO, 2007).

      With organic global sales now approaching US$40 billion, certified organic agriculture (COA) offers a chal