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DEVELOPMENT: ‘Small is Significant’

Jan 27 2010

BY IDN GLOBAL CORRESPONDENT

IDN-InDepth NewsAnalysis

(IDN) – About 500 million smallholder farms provide for 20 percent of world food production and almost 2 billion people comprising one third of humanity depend on what these smallholder farms produce. The farm households are living on less than two dollars a day.

But there are signs that they are being increasingly recognised as part of the solution to the food insecurity and poverty challenges, says Kanayo F. Nwanze, President of the International Fund for Agricultural Development (IFAD), the United Nations rural poverty agency.

A Nigerian national, and the first African to head IFAD, Nwanze brings to the job nearly 30 years of experience across three continents in poverty reduction through agriculture, rural development and research.

Smallholder farms, says Nwanze, are often very efficient in terms of production per hectare, and they have tremendous potential for growth. Experience shows that helping smallholder farmers can contribute to a country’s economic growth and food security.

“We believe that the voice of smallholder farmer must be heard because we have empirical evidence how agriculture, how economies have been transformed in China, in India, in Brazil, in Vietnam and today even in Ghana,” Nwanze said in a telephone interview with IDN.

Indeed. Vietnam has gone from being a food-deficit country to a major food exporter, and it is now the second largest rice exporter in the world. It achieved this largely through development of its smallholder farming sector.

In 2007 the poverty rate fell below 15 per cent, compared with 58 per cent in 1979. Seventy-three per cent of Vietnam’s population live in rural areas, and agriculture is their main source of income.

Smallholder farmers can contribute to greater food supply for the world. But, first, they need secure access to land and water – as well as to rural financial services to pay for seed, tools and fertilizer.

They also need roads and transportation to get their products to market, and technology to receive and share the latest market information on prices. And they need stronger organizations, so they can have greater bargaining power in the marketplace and can influence national, regional and global policies related to agriculture.

With this in view, “IFAD will continue to be the voice of smallholder farmers because they are fundamental to transforming the agricultural system and bringing about economic growth”, Nwanze said.

DAVOS FORUM

IFAD has been invited to the prestigious World Economic Forum’s annual meeting for the first time. It is also the first time that global food security and rural development are drawing the focus of business, government and private sector leaders from around the world gathered in the Swiss town of Davos to “rethink, redesign, rebuild” the world.

Nwanze’s message to the chief executives of the world’s large agro-businesses attending the Davos Forum is that “linking smallholder farmers to the private sector is key to build the economy of developing countries.”

“Irrespective of the size of the farm, agriculture generates business. And every entrepreneur, whether it is a smallholder farmer or a large commercial farmer, needs or wants to make money. We have the responsibility to transform smallholder agriculture into smallholder businesses,” Nwanze said.

The development of the agricultural sector requires long-term investment. This has to be through the entire agricultural value chain, from producers to consumers. This means providing the necessary infrastructure like roads, inputs, market linkages and information, and capacity building, explains the IFAD president.

In fact, IFAD’s experience shows that a healthy agricultural sector acts as a multiplier in local economies, leading eventually to higher income and access to more vibrant markets where smallholder farmers can buy and sell their produce.

Last year, some 50 per cent of IFAD projects and programmes had a value chain component involving the private sector.

Smallholder farmers also have a lot to offer the private sector: a sustainable supply of high quality agricultural produce. The challenge is to help build the capacity of smallholder farmers and their organizations so that they can deliver what large businesses require and encourage businesses to adapt their models to be inclusive and supportive of small-scale agricultural producers.

It is also critical that governments create an enabling environment to involve the private sector along the entire value chain and attract investment by improving the regulatory conditions to remove barriers to entry and key constraints such as rural access roads.

Priority areas slated for investment and for public-private partnerships are:

Agricultural research in the specific crops and conditions of importance to poor rural farmers, including drought, pest and salinity resistant varieties — for example, the New Rice for Africa (Nerica) is an interspecific cultivar of rice developed by the West Africa Rice Development Association (WARDA) to improve the yield of African rice varieties.

Its importance lies in the fact that although 240 million people in West Africa rely on rice as the primary source of food energy and protein in their diet, the majority of this rice is imported, at a cost of 1 billion dollars. Self-sufficiency in rice production would improve food security and aid economic development in West Africa.

Rural financial services are crucial because fewer than 10 per cent of poor rural households have access to the most basic financial services. With approximately 18 per cent of its overall portfolio of loans and grants focused on rural financial services, IFAD is one of the top four microfinance funders in the world.

Agro-processing to add value to primary products and to reduce post-harvest losses and improve quality; market linkages as well as better access to market information, including on prices.

IFAD works with poor rural people to enable them to grow and sell more food, increase their incomes and determine the direction of their own lives. Since 1978, IFAD has invested over 11 billion U.S. dollars in grants and low-interest loans to developing countries, empowering some 350 million people to break out of poverty.

IFAD is a unique partnership of 165 members from the Organization of the Petroleum Exporting Countries (OPEC), other developing countries and the Organisation for Economic Co-operation and Development (OECD). (IDN-InDepthNews/27.01.2010)

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