Scaling up- scaling up: food security, smallholder farmers & markets

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October 16^th 2014 is World Food Day, and in line with this years International Year of Family Farming, the theme of this World Food Day is “Family Farming: Feeding the world, caring for the earth” aiming to raise the profile of family farming and smallholder farmers. Across Africa, smallholders account for 80% of Africa’s farmland and produce 80% of the food in Asia and Sub Saharan Africa. However due to a lack of suitable infrastructure, access to inputs, technology and storage, the majority of smallholders farmers are not well connected to markets.

After a warm welcome and opening remarks from our very own Katrin Glatzel, and introductions from H.E. Ambassador Neil Briscoe, the UK Permanent Representative to the Rome-based Agencies the panellists shared some of their experiences, successes and challenges from their diverse fields of work.

We heard first from Sharada Keats from the Overseas Development Institute as she provided a comprehensive overview of the key findings and recommendations of the 2013 Leaping & Learning report, sharing that there is no silver bullet for scaling up. Attempts to scale up often do not reach the poorest and most vulnerable and social safety nets must be put in place to ensure that those most in need are adequately supported during the uptake of the project. Thom Sprenger from HarvestPlus supported that reaching the farmers and consumers most affected by micronutrient deficiencies  is a barrier to scaling up and that there is a need to mitigate risks associated with the adoption of a new crop – through credit, insurance, input incentives, and market connections.

Constraints to smallholder commercialisation

In the wake of the 2008 food price crisis, which exacerbated food insecurity and increased smallholder farmers’ vulnerability to shocks and stresses, recognition of the barriers smallholders face in becoming more productive and developing their farms as commercial businesses has been growing. In 2010, the UN Food and Agriculture Organisation implemented the Multidisciplinary Fund (MDF) project to help develop policies supportive of smallholder commercialisation in Africa, in particular identifying the heterogeneity amongst smallholders in terms of their attitudes to commercialisation.

A new report, Understanding smallholder farmer attitudes to commercialisation – the case of maize in Kenya, by the FAO, focuses on maize producers and rural youth in Kenya by investigating “attitudes, strategies and opportunities related to maize commercialisation” in Meru and Bungoma regions in the country. The report is based on key informant interview, focus group, farmer survey and stakeholder workshop data.

At present farm management is not undertaken with commercial prospects in mind for a variety of reasons – continued reliance on maize production for household consumption and a level of mistrust in markets; production and marketing activities remaining distinct from one another; reactive rather than planned production decision-making processes; poor storage facilities; and low maize quality. That is not to say that there aren’t farmers who do think more commercially but in particular farmers are more likely to require direct payments immediately to meet their household needs rather than selling at times or to traders that might allow them to obtain higher payments for their maize. Net buyers of maize, numbering some 45% of the smallholder farmers surveyed, are found to make more objective business decisions, again likely related to the level of urgent cash needs of poorer households and net buyers of maize. One of the main concerns in finding an outlet to sell maize are the transaction costs and the risks associated with the transaction, most farmers aiming to minimise costs and risks. Those smallholders engaged in more commercial practices, in particular selling maize to more distant traders or modern market channels, were more likely to experience a lack of nearby market opportunities, to specialise in maize, to have access to better price information and to have benefited from government input support programmes.

Given the relatively small amounts of maize sold by most farmers, collective marketing whereby maize is pooled and sold in bulk (and inputs can be bought in bulk) could be beneficial but it was found to be unlikely that net buyers would become net sellers of maize purely through collective marketing. Greater institutional support to partner these collective marketing approaches and a business oriented approach may aid their effectiveness.

DFID’s Agriculture and Growth evidence paper series

The UK Department for International Development has recently released a series of evidence synthesis papers on agriculture and economic growth, which aim to inform decision makers. While they do not represent DFID’s policy position they summarise the evidence underpinning debates related to several topics – agriculture and growth, agriculture and poverty, agriculture and the private sector, agriculture and women, and food prices and poverty.

Agriculture is an important sector for many developing countries both now and for their future development, contributing both to economic growth and reducing rural poverty. From the evidence assessed it appears that agriculture can have a positive effect on the economic growth of a country but this effect is contingent on many context-specific factors such as the current stage of economic development and resource endowments. Strong political commitment and an understanding of the local economy are key to maximising agriculture’s contribution to economic transformation. During early stages of a country’s development evidence shows that increasing agricultural productivity and incomes from farming drive demand for non-farm sectors and wider economic growth. At later stages the commercialisation of agriculture drives demand for agro-processing industries. Throughout this process and for sustained economic growth, countries are likely to have to shift resources from agriculture to other sectors as agriculture’s share in the national economy declines.

Agriculture can have a significant role to play in reducing poverty. Since agriculture is predominantly a rural activity, where the majority of the poor live, agricultural growth can stimulate greater rural labour opportunities. DFID found that poverty reduction from growth in agriculture is on average 2 to 4 times greater than from equivalent growth in other sectors. Again context matters and policies are needed to target poverty reduction alongside agricultural development. For many people in poverty increasing agricultural productivity may be a challenge particularly where the costs of doing so are prohibitive. In such cases agricultural growth which stimulates the rural non-farm economy may be more important for reducing poverty. Evidence suggests agriculture can be one part of a broader solution to tackle poverty and DFID identify several conditions whereby agricultural development can reduce poverty:

• The domestic market is less well integrated into global trade.
• A higher proportion of increased income is likely to be spent locally and on locally-produced goods and services.
• There is an enabling environment and capacity in the local non-farm economy to increase production in response to increased demand.
• Where small-holders have capability and capacity to either increase either the scale of production or the value of the produce.

2014 Africa Progress Report

Released today, the 2014 Africa Progress Report, Grain, fish, money. Financing Africa’s green and blue revolutions, discusses agriculture, fisheries and finance, outlining reasons for optimism but also some of the priorities and barriers to Africa’s development.

The Africa Progress Panel (APP), chaired by Kofi Annan, former Secretary-General of the United Nations and Nobel laureate, consists of ten individuals across the public and private sectors who advocate for equitable and sustainable development for Africa. The annual Africa Progress Report, published every year in May, utilises the best research and analysis available on Africa to make viable, policy recommendations for African policy makers, international partners and civil society organisations.

Many African countries have seen significant economic development and transformation in the last few decades and incomes are set to double in the next 22 years. Senegal, for example, has gone from a debt crisis to selling sovereign debt on eurobond markets in ten years. But this economic growth is slow to trickle down to the many rural-dwelling Africans whose livelihoods are still precarious. In west Senegal, ongoing illegal, unreported and unregulated fishing by commercial fleets from other countries has left fish stocks dwindling, affecting tens of thousands of artisanal fishermen. As the report states this is just one example of the growing divide between the few who can benefit from Africa’s rising economic prosperity and the large number of people chronically poor and hungry.

On the one hand, the report states, the political and economic landscape of Africa is changing: exports and foreign investment are increasing while dependence on aid is declining. Democracy, transparency and accountability are entering into the language of policymakers more and more. But poverty and hunger are still enormous challenges and progress in making economic growth both wide-ranging and sustainable has, so far, fallen short. For Africa, as the report states, “the time has come to set a course towards more inclusive growth and fairer societies.”

In order to translate some of the economic growth to improving people’s wellbeing and livelihoods, Africa’s policymakers must focus on developing the continents farming and fishing industries, those economic sectors employing and supporting the majority of the Africa population. Smallholder farmers receive relatively little support from the government. As the report states, “Agriculture remains the Achilles’ heel of Africa’s development success story.” Subject to conflicting and sometimes damaging development initiatives, African farmers have some of the lowest levels of access to productive resources, markets and technologies in the world. As such agricultural productivity is very low. As has been seen in many developed and emerging economies an agricultural revolution is essential to overall growth and poverty eradication. Africa, as the report goes on to say, needs its own Green Revolution, one designed for the African continent. In particular increasing access to technologies such as drought-resistant varieties and tackling policy and market failures, which prevent farmers from increasing their productivity and incomes.

Agribusiness for Africa

The role of big business in African agriculture often divides opinion. Some seeing it as an opportunity for sustainable economic growth in the sector, some as a new form of colonialism with richer countries exploiting Africa’s food growing conditions and spare land to supply their own countries. Whether a positive development step or a risk to food security, agribusiness on the continent looks set to grow.

Agriculture, particularly the development of agribusiness and agro-industry sectors, has been the driver of economic growth in countries across the globe. In Africa, agribusiness and agro-industries account for more than 30% of national incomes as well as the bulk of export revenues and employment. Given its links to smallholder farming, development of agribusiness could be used to help tackle poverty and hunger in rural communities.

Colonial systems of governance were designed to extract resources from Africa for use elsewhere rather than processing and adding value within the continent. Agribusiness could develop the value addition arm of the agricultural industry and help reduce Africa’s dependence on unprocessed commodities where the bulk of the average retail price is retained by the countries in which the commodity is consumed. The introduction of new players in the agricultural sector could also help diversify sources of growth and exports to reduce reliance on a limited number of export commodities.

Kenya since the 1990s have invested in products, internal systems, and supply chains to supply fresh vegetables to British supermarkets. Considered a success, Kenya’s experience shows that a well-organized industry in a low income country through collaboration between the public and private sectors and the strengthening of links between businesses and educational institutes, can use standards for competitive gain.

The United Nations Industrial Development Organisation (UNIDO) book, Agribusiness for Africa’s Prosperity, outlines the current status of agribusiness and agro-industrial activities in Africa, and situates them in historical and global context. It analyses the opportunities for diversified growth, and assesses the existing and potential sources of demand growth for agribusiness development in Africa.

With the advent of agribusiness, the whole agricultural sector could benefit through improved infrastructure, access to technology and better functioning markets. Indeed for companies to invest in African agriculture, an enabling business climate must be developed through government and international partnership, action that may enable farmers to capitalise on market opportunities coming from better trade links and growing urban populations. An emerging, productive and modern agricultural sector may also act to engage youth in the agricultural sector (youth unemployment is a growing concern on the continent).

The 2013 World Bank report, Growing Africa. Unlocking the potential of agribusiness, documents the potential of the agribusiness sector in Africa through examples and highlights the important of good policies, a conducive business environment, and strategic support from governments. Agribusiness in general being seen as needed to build global competitiveness and as an opportunity for growth employment and food security.

The Global Youth Wellbeing Index

Half of the world’s population is under 25. 1.8 billion people are between the ages of 10 and 24, the largest youth population the world has ever seen, 85% of which live in developing and emerging economies. In Uganda for example, 50% of the population is under the age of 15. While on the one hand such a large youth population is viewed as a challenge, of employment, of education and of population growth, this group also has significant potential to innovate and change the world for the better.

The first ever Youth Wellbeing Index, developed by the Center for Strategic and International Studies (CSIS) and the International Youth Foundation (IYF), compares how youths are faring across six key areas: citizen participation, economic opportunity, education, health, ICT and safety and security. For each area, indicators around the enabling environment in which youth live and participate, youth outcomes, and youths’ outlook and satisfaction with their own wellbeing are combined. The overall score is a combination of the six individual scores. Thirty countries representing around 70% of this youth group (generally aged 12-25 years) were ranked from high wellbeing to low.

The report finds the majority of the world’s youth living in countries at or near the bottom of the wellbeing ranking. In some countries such as Indonesia, youth are optimistic about their future in spite of the developmental challenges the country faces while in some developed countries such as Russia, youth can have more negative outlooks. Overall youth in rich countries tend to have higher levels of wellbeing than those in poorer nations. But money is not the key to everything. Spain has relatively high levels of wellbeing, ranking eighth, but faces high and increasing levels of youth unemployment. In the US, youth health is a significant problem. This shows that countries ranking high overall may score low in specific areas and vice versa. Across all countries youth are strongest in health and weakest in economic opportunity.

Jose Graziano Da Silva, Director General of the UN Food and Agriculture Organisation, at the FAO’s Regional Conference for Africa, discussed the role of youth in African farming, highlighting their potential to innovate in the sector. Making agriculture more appealing and economically beneficial to younger generations is a significant challenge. Africa is the world’s youngest region, where more than half of the population are under 25 years of age. Agriculture in many African countries is a significant and fast growing economic sector but this growth has not resulted in widespread employment and attractive incomes for young people. Salaries are generally low, risks are high and there is often little help from governments should farming businesses struggle. The FAO is calling for “greater public and private investment in agribusiness, agro-industry and market-related services to attract and keep young workers, fuel job creation, and spur new development in the agricultural sector”.

The Global Youth Wellbeing Index emphasises that now is the time to invest in programmes and policies that engage youth and equip them to be productive. The key message is that if this generation of youth thrives so do we all.

Farmers as Entrepreneurs: the African Smallholder Farmers Group

The African Smallholder Farmers Group, a network of international organisations that share a common commitment to working with and learning from smallholder farmers in Africa, has recently developed a framework that sets out the range of “policies, laws, regulations and practices that can support Africa’s smallholder farmers in becoming market ready and help them sustain their market participation”. Given that smallholder farmers comprise the “backbone of economic activity” in Africa, understanding the policies and practices that enable the development of their farms and links to markets can help guide policymakers and practitioners in their work.

Smallholder farmers produce up to 80% of the food consumed around the world and yet they face a myriad of challenges not least limited access to markets, land, financial services, infrastructure and extension. Given their size, smallholder farmers may find it difficult to compete in changing and increasingly global markets, particularly when faced with the threats of climate change and resource scarcity.

Traditionally support to such farmers has been in the form of assistance in commercialising with a view to supplying often niche export markets, markets which only a small proportion of smallholders can serve. It is crucial therefore to investigate other forms of market participation that can benefit all smallholders, including those often marginalised.

The framework, developed through a literature review, case studies and survey, outlines the foundations of a supportive rural policy environment around three key themes: rural infrastructure, rural public services and the rural investment climate. For each theme, questions have been devised to indicate whether national, regional or global systems of governance are providing an enabling policy environment for smallholder farmers.

Realising Africa’s potential

Africa is sometimes thought of as the last frontier to undergo an agricultural revolution. In a new edition of This is Africa produced in partnership with the Rockefeller Foundation, entitled Agriculture. Realising Africa’s Potential, contributors such as Jane Karuku, President of the Alliance for a Green Revolution in Africa, Judith Rodin, President of the Rockefeller Foundation and Dr Akinwumi Adesina, Nigeria’s agriculture minister discuss interventions and innovations that have the potential to transform the African agricultural sector.

Calestous Juma has argued that, “Neglect of agriculture has been a defining feature of Africa’s economic policy over the last four decades.” But the situation is changing and there exists a lot of potential for African agriculture to develop, as indicated by the magazine’s infographic. There is renewed interest in agriculture by both the public and private sectors, in part because of the proven impact agriculture can have on poverty and hunger. The World Bank calculates that investments in agricultural growth are twice as effective at reducing poverty as investments in any other sector.

Currently lacking are investments in research and development relevant to the continent, in infrastructure and in education. In the opening article, authors discuss five key areas where innovations can spur significant progress:

• Crop management, such as improved varieties and management techniques like the rice nucleus model pioneered by Olam Nigeria.
• Confronting catastrophes, such as the West Africa Seed Programme, which provides farmers with access to seeds bred to be more resilient under extreme weather conditions, or Oxfam and the World Food Programme’s R4 Rural Resilience Initiative in Senegal and Ethiopia, which helps rural communities to improve their management of climate-related risks to crops and livestock.
• Mobilising solutions from a tech revolution, such as mobile phones, which are now used to access financial services, insurance and market and technical information.
• Market movements, such as the Dutch Agricultural Development & Trading Company’s Autonomous Mobile Processing Unit (Ampu), which is a cassava processor that can be transported from place to place. Farmers whose fresh cassava crop could rot in one day can now process their harvest into cassava cake which can last up to 6 months, allowing them to wait to sell until prices are high.
• Going to scale. Innovations alone will not be enough. They must be combined and scaled, which will require political buy-in.

This edition looks at several innovations in more depth, most notably local agricultural processing, commodity exchanges and financial products designed for the agricultural sector. As many of the authors point out though more must be done to reach smallholder farmers and to increase the reach of existing and new innovations.

Transforming smallholder agriculture

Many of the posts on this blog talk about smallholder farmers, commonly characterised as farmers who own or farm plots of land smaller than two hectares. Four-fifths of the developing world’s food is a product of small-sized farms, as estimated by the UN Food and Agriculture Organization (FAO), and yet some 50% of the world’s hungry are smallholders. Because of the size of their landholdings and thus resource base, smallholder farmers are often disproportionately affected by shocks and stresses such as food price volatility, poor health and climate change. They often live in rural areas where links to markets, financial services and information is poor. But given access to such services, smallholder farmers have a great deal of potential to feed themselves, their households and the rest of the world.

Smallholder farmers, however, are not a homogenous group. Some may be largely subsistence while others have the potential to become thriving commercial businesses.  The International Food Policy Research Institute have produced a new briefing paper, From Subsistence to Profit: Transforming Smallholder Farms, which lays out the development pathways for different types of smallholder farmers whether it be through off-farm employment or commercial opportunity.

The paper characterises smallholder farmers into three groups: subsistence farmers without profit potential, subsistence farmers with profit potential and commercial smallholder farms. The paper makes the point that for some the opportunity to increase their income may lay outside of agriculture. For those farmers with profit potential, helping them to overcome the main barriers to commercial success should be the primary goal.

The paper recommends that transforming smallholder farming will only be possible in a policy and investment climate that:

• promotes context-specific farm size;
• supports supportive social-safety nets;
• improves risk mitigation and adaptation strategies;
• links agriculture, nutrition and health;
• promotes pro-smallholder value chains; and
• increases smallholder-friendly financing and investment.

A focus on smallholders is crucial if we are to not only increase food production in the future but increase the production of and access to nutritious food for the most vulnerable. To read more about these recommendations click here.

Helping Smallholder Farmers Succeed

Author: TechnoServe

Photo credit: Nile Sprague/TechnoServe

A new UN report stresses the need to recognize diversity among smallholder farmers and adopt more targeted approaches for linking farmers to markets.

Small-scale farmers like Janise Gitonga, shown here tending a passion fruit vine on her farm in Kenya, are crucial to global food security. After all, smallholder agriculture is the main source of both food and income for millions of families in the developing world. A new report from the Food and Agriculture Organization of the United Nations (FAO) calls for better integration of smallholder farmers into markets in order to alleviate hunger and poverty.

The report emphasizes the need for more nuanced strategies and policy-making to boost smallholder farm output. “Smallholders and small family farms are not homogeneous and face different sets of constraints to participation in markets,” the report states. Therefore, approaches for enhancing farmers’ integration and participation in markets should reflect this diversity.

TechnoServe has been working to help smallholder farmers participate in markets and improve their livelihoods for more than four decades. Programs like Project Nurture — a partnership with The Coca-Cola Company and the Bill & Melinda Gates Foundation that aims to help more than 50,000 small-scale fruit farmers in East Africa double their incomes — utilize key strategies identified by the FAO, including supporting inclusive market development, strengthening farmer organizations and fostering private-sector investment. We understand that confronting the challenge of rural poverty requires thoughtful, market-based solutions.

Read the full FAO report.

For more information about TechnoServe’s work connecting smallholder farmers to markets download “8 Views for the G8: Business Solutions for African Smallholder farmers to Address Food Security and Nutrition”, a joint publication with Agriculture for Impact.