The purpose of this chapter is to compare formal and farmer seed systems, to describe the role of quality seed and to present the context in which small and medium-sized enterprises work in Africa, with a particular emphasis on the challenges of farmer seed enterprises. The demand for seed varies widely with the type of crop planted, and this influences which types of seed farmers want to buy. One of the most important reasons to buy formal seed is to acquire a new variety. The formal sector often ignores these reasons, and complains of how little seed farmers buy, especially smallholders in Africa and elsewhere in the tropics. Yet farmers can often obtain quite good seed from markets, their neighbours or their own farms. The formal seed system is actually a marriage between the government and the private sector, a marriage where communication and collaboration happen some of the time, but not always. While some have proposed encouraging groups of smallholders to produce formal seed for others, this has not been a success. Smallholder seed producer groups find it even more difficult than private seed companies to collaborate with the public sector for source seed supply and certification services. In light of these problems, the cases of functional African seed enterprises described in Chapters 3 to 11 seem even more remarkable. 2.1 Formal and Informal Systems Farmers get seed from 'formal' or 'informal' systems (Sperling et al., 1996; Sperling and Cooper, 2003). Formal systems are purposively composed of separate activities to provide new varieties, maintain their purity, certify the seeds and distribute them to farmers, usually through officially recognized seed outlets. De Schutter (2009) labels the formal sector the 'commercial seed system', which is not quite accurate, since there is much public sector involvement in it as well. An 'informal', 'traditional' or 'farmer' seed system lacks public sector regulation (Thiele, 1999). Farmers frequently exchange seeds among themselves, often for sale