1 Linking Farmers to Markets: The Case of Zero Star Uni Pessoal ∗ V.P. Correia and M.F. Rola-Rubzen Curtin University of Technology Perth Western Australia Keywords: horticulture, East Timor, value chain, partnerships Abstract This paper presents a case study of how linkages between horticulture farmers and markets are being developed in Timor Leste, focussing on the case of Zero Star Uni Pessoal. As an approach to poverty alleviation, an international aid agency initiated a private sector development program. Apart from helping farmers increase agricultural production, private sector involvement was encouraged. By strengthening the linkages between Zero Star and farmers, farmers benefited in terms of increasing incomes. Buyers also benefitted in terms of improvements in quantity and quality of the product, and therefore higher returns from trading. INTRODUCTION It is well known that commercialization of small-scale, resource poor farmers can lead to higher productivity, greater specialization and higher incomes (Bernard and Spielman 2009). These, in turn, can lead to improvements in household food security, poverty reduction, agricultural development and economy-wide growth (Timmer 1997). However, with imperfect markets and high transaction costs, many small-scale farmers are unable to exploit the advantages from commercialization (de-Janvry et al.1991; Goetz 1992; Key et al.2000; Jayne et al.2006). Linking farmers to markets is one of the approaches to help small-scale farmers participate effectively in the market place and assist poor producers increase their output. Improved marketing will likely contribute to increasing farmers’ income and reducing poverty particularly in rural areas. As pointed by IFAD (2003), improved market access is of crucial and immediate importance to small-scale famers and rural poor households. It is also evident that they are important for enhancing agricultural-based economic growth and increasing rural incomes. According to Shepherd (2006), farmers need to be linked to markets firstly, because the production push focus alone is no longer viable; secondly, ad hoc sales of small surpluses are not a realistic long-term approach and farmers need to respond to market demand. In this context, what farmers produce needs to be based on what the market demands. As stated by Shepherd (2007), there is now an increasing understanding that production support activities must be linked to market demand. Long term business partnerships also offer the greatest scope for increasing earnings. For instance, a case study of vegetable farmers from Madagascar showed that given the right incentives and contracting systems, small farmers can participate successfully in emerging value chains (Bernard and Spielman 2009). The same study argued that thousands of small farmers benefited because of a combination of effects such as improved access to inputs, credit, extension services, technology adoption, as well as from productivity spillover effects on other crops and enhanced income stability.