Growth of the food marketing sector offers new opportunities for smallholder farmers by broadening their choice of input suppliers and of outlets for produce, as well as increasing their access to credit and training^{48, 49}. However, access to both input and output markets has proved problematic for many smallholders, who remain at the margins of the new agricultural economy^50-53.

How smallholders fit into a specific agricultural value chain depends largely on the underlying cost structures of the chain and of their farm production processes⁵⁴. The primary cost advantage of smallholders is their ability to supply low-cost labour for labour intensive crops. When smallholders have no apparent comparative advantage, agribusinesses may seek alternative structures for organizing production, such as vertical integration or buying directly from large holders. In those cases, the challenge is to create comparative advantages for smallholders or to reduce the transaction costs associated with purchasing from large numbers of farmers producing small quantities. To forge links to high-value markets, small farmers need to be organized in institutions that reduce transaction costs, and given access to information on market requirements^{48, 49, 54, 55}.

Contract farming provides mechanisms of vertical coordination between farmers and buyers, which allows for an evident degree of assurance in some of the main negotiation parameters: price, quality, quantity and time of delivery⁵⁶. While farmers have benefited from contractual agreements, substantial evidence suggests that the smallest farmers are often unable to enter formal arrangements⁵⁵. Improving the legal and institutional framework of contracts would dramatically reduce transaction costs^{55, 57}. However, farm consolidation, resulting from increased off-farm rural employment or migration to urban areas, appears inevitable.

Small farmer access to markets can also be improved through better organization and greater cooperation, which may involve not only farmers but also a larger number of stakeholders, including agricultural support service providers, NGOs, researchers, universities, local government and international donors. One example is the Plataforma de concertación in Ecuador, which has helped farmers to achieve higher yields and gross margins, while reducing the use of toxic pesticides. Nevertheless, its self-financing capability has still to be verified⁵⁴.