Tuesday, January 29, 2013

Is commercialized farming the cure for smallholders' ills?

In the period 1996 to 2011 I worked a lot with various efforts to link smallholder farmers to markets, mainly organic, in developed countries. The biggest engagement was in EPOPA:

"By 2008, 80,000 farmers contracted by EPOPA have sold organic products to exporters for approximately US$ 15 million per year. All farmers received higher prices due to the organic premium, which ranges from 10-25% over the conventional price. Taking into account the size of households, 600,000 people have benefited from the programme."
This is how the Export Promotion of Organic Products from Africa is presented as one of a limited number of case studies of "Evidence of Impact" on the joint donor web site. 

The cost of the programme for the Swedish taxpayers is one cup of coffee per taxpayer. You can read a whole book about this successful project here.

Overall EPOPA was a success. Today, linking farmers to markets is an overarching policy for almost all development agencies as well as governments. It also fits very well with a development model that assumes that more markets and more capitalism is the best path to development. Considering that small-scale farming is a main component of the livelihood of something like a third of the worlds population, and most of the worlds very poor it is only natural that there is a huge interest in how to improve livelihood of them. While I do think it works quite well, it has, unfortunately, been oversold.

A recent report from Hivos, Small Producer Agency in the Globalized Market, looks deeper into if and how smallholders can benefit from globalized markets. In short the answer is that a few of them will - and they will soon not be smallholders as the recipe for success is to grow, mechanize and buy up your neighbours farms. This should be no surprise, this is how the farm sector developed in other parts of the world. The report estimates that linking farmers into modern value chains (be they organic, fair trade or normal) may benefit only about 2-10 percent of the farms - and it will be those with the greatest assets.

The reality is that commercialization of farming is good for the economy and for a few so called progressive farms, but that most of the farms will not benefit from it. Some will become farm labourers at the farms of the more successful, or in huge agri-business plantations, other will only get a better life if there is some place for them to go. 

The report does a good job in demonstrating how diverse the group of small farmers is and therefore also their coping strategies:
"multifaceted livelihoods that use diversity of economic activities to hedge risks and make the most of scarce land, cash and other resources. Farmers may rent various plots and grow multiple crops; move in and out of different informal (and sometimes formal) markets; and combine farm income with off-farm jobs and remittances from migrant family members. With more rural people, especially youth, moving back and forth from farm to city, there are fluid frontiers between urban and rural markets, boosting the vibrancy of local economies."
The report recognise that the informal economy may actually be very important for most farmers and that the army of middlemen, often considered parasites, can play a positive role in markets for small-holders by offering easy market access and intensive competition for supply, rather than tying farmers into integrated value-chains. Those trade links are also the ones that supply the hordes of urban poor. In many parts of the world the informal economy is on the rise according to OECD reports.

The authors, Bill Vorley, Ethel del Pozo-Vergnes and Anna Barnett, concludes that
"we should not continue to expect multiple wins — on poverty reduction, food security, security of supply, ecosystem services and rural development — from the single-minded approach of including farmers and their organisations in value chains and ‘empowering’ them in markets as beneficiaries of external initiatives. to get the future right for the majority of small-scale producers who cannot readily participate in modern value chains, or for the many youth with aspirations out of farming, we must recognise other layers of the picture."

See a video from the launch of  Small Producer Agency in the Globalized Market

Other posts of relevance:
The road to food security: What works and what doesn’t?
Don't buy organic instead of changing the world - do it as part of changing the world
Traditions, Western Union, Churches and Taro
Will there be farmers?

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