eDialogue: What Future for Small-Scale Farming? Policy Options

By Jim Woodhill, Ken Giller and John Thompson

The final eDialogue in our five-part series on the ‘What Future for Small-Scale Farming?’ finished off by exploring policy implications for the inclusive transformation of small-scale agriculture in challenging times.

A stellar panel of experts from five continents brought a rich and insightful set of perspectives to the table.

We asked: “Is a fundamental shift in incentives and policies needed to tackle the ongoing issues of poverty and malnutrition facing rural-households who farm, and to align small-scale agriculture with the goals of a transformed food system? If so, how might such shifts be brought about?”

Rhetorical questions perhaps, but it was enlightening to hear from a group of highly knowledgeable panellists that profound shifts in policy are needed and that such change is possible, despite the difficulties. The need for new visions of policy goals, that take a much more integrated approach to food systems was a clear message.

It was also clear that policy does matter. Current incentive structures and market externalities are often driving food systems and the conditions for small-scale farming in the wrong direction. Past policy settings may have been appropriate for a staple crop-oriented approach to food security, prior to times of resource scarcity, climate change, the growing nutrition crisis, and more complex rural-urban interlinkages. Today, however, emerging challenges and future risks require a substantial policy rethink.

Against a backdrop of ‘progress’, too many people are being left behind: Given a set of mega-trends, we were encouraged to be optimistic about the future. Taking Africa for example, wage rates, education levels, health status, financial inclusion, access to mobile phones, and off-farm employment rates have all improved dramatically and appear to be heading in the right direction. However, this does not mean that specific groups aren’t being left behind or that there aren’t fundamental challenges in the food and farming sectors related to livelihood security, health and nutrition and the environment. These are very real challenges that affect large numbers of the most vulnerable male and female farmers, and farm workers, and they require substantial policy innovation. This wider positive development trajectory does though give hope for change. However, linking back to the theme of ‘recognising diversity’, what is possible is profoundly shaped by a country’s specific economic status and its particular political economic dynamics.

Recognising good public benefits: It was observed by the panel that farming and food is a largely a private sector activity. Yet, depending on the way food systems are functioning, the outcome can lead to huge public good benefits or costs. Basic, public investments in agricultural research and development, and in ensuring rural infrastructures such as roads and communication along with the right incentive mix for good health and environmental protection are foundations for society to reap benefits rather than costs from the ways we produce and consume food. Deeper discussions about public costs and benefits, both in the short and longer-term and how they link to market failures and incentive structures is a critical starting point, for the transformations that are increasingly recognised as necessary.

Working backwards from a new vision for food systems and rural economies: Arguably, policies related to small-scale farming have focused too narrowly on immediate issues rather than longer-term visions for change. The food systems agenda creates an opportunity to rethink small-scale farming within a wider context of creating visions and transformation pathways for food systems that are oriented towards improved livelihoods, good nutrition, environmental sustainability, and that are economically inclusive. This ties into utilising what will be substantial growth in the value of both domestic and regional food markets to help drive wider rural economic development. But all this requires longer-term and more integrated and dynamic policy thinking that works back from these visions of possible ‘food futures’ to the policies, practices and programmes that are needed to guide the transformation. At the same time, the risk and uncertainty of such complex and dynamic socio-technical systems must be recognised. Linear management and control approaches to policy are increasingly ineffective. Framed by a risk-based approach, our institutions and policies are often poorly equipped for our uncertain world.

An enabling pathway for ‘small food system entrepreneurs’: An underlying message was that the future for many small-scale producers will most likely not be as farmers, but rather as ‘small-scale food system entrepreneurs’, generating income and employment opportunities from diversified sources both on and off the farm. Policies are needed to support this entrepreneurial transition and capture the value from food markets to help drive wider rural economic development.

Responding to vulnerability: Future policies must prepare for and be able to effectively respond to the increasingly complex, intersecting social, economic, and environmental vulnerabilities faced by farmers and farm workers. COVID-19 has well illustrated the devastating impact of the pandemic on household incomes and their ability to purchase sufficient healthy food. The climate crisis is likely to dramatically increase the risks of droughts, natural disasters, disease outbreaks and even conflicts, all of which disproportionately impact on small-scale producers. This uncertain context with its overlapping short- and long-term shocks and stresses, presents a complex set of challenges for food and farming policy, demanding more adaptive, experimental, reflexive forms of governance and institutional arrangements.  This call for much more innovative forms of affordable insurance schemes and risk-oriented social protection.

Territorial innovation: Forget the notion of large cities and rural areas. Increasingly populations are spread across a vast number of towns and small- and medium-sized cities, creating vast peri-urban areas and stronger rural-urban connections. This creates tremendous opportunities for small-scale farmers, both in terms of new market linkages and value addition, but also in terms of off-farm employment opportunities that can complement farm income. However, at national and sub-national scales, tailored policies are needed to support such territorial development and the often unique conditions of different locales.

Land reform and inequality: Equitable land access and rights that balance the needs and interests of small-scale farmers with small-holder commercialisation and the development of larger-scale farming remains one of the most critical aspects of policy. Land policies have a profound influence on gender equality and empowerment, the rights and livelihoods and vulnerable groups, and investment by both small-scale farmers and larger operators. The world is seeing an increasing polarisation between consolidated large-scale agri-food sector investments and small-scale family farming which risks growing inequalities and difficulties in creating a more economically inclusive food system. Policymakers need to come to terms with the sort of land and investment policies that can better balance food system outcomes of health, equitable livelihood opportunities and environmental sustainability.

Cultural identity: Farming and rural lives are about peoples cultural identities. Policies need to be careful of instrumental approaches that ignore the cultural connections with land and the role that food plays in culture and identity. These factors also have a significant role to play in the decisions farmers take and the importance of land beyond pure economic returns. Empowering rural groups to express and strengthen cultural identities that help maintain social cohesion solidarity should not be overlooked.

Access to capital: Although access to land matters, equally important for many households is credit and longer-term investment funds. For all the talk of rural banks and micro-finance, most small farmers simply cannot get working capital. They rely on whatever they have as ready cash which often must be spent on pressing priorities, such as school fees, medical bills, and household consumption. Thus, many small farmers struggle to buy quality inputs or hire labour when they need it the most, and in the process forego yields they can ill-afford to miss.

Fundamentally perverse incentives: Our panellists left no doubt that past policy decisions that have resulted in a set of deeply perverse incentives, at both the global and domestic scales. Too often existing public expenditures drive towards the production of calorie-rich rather than nutrient-dense foods and put ‘band-aids’ on poverty rather than enabling the conditions for rural economic development. Current subsidies drive unsustainable use of natural resources or distort trade to the disadvantage of small-scale farmers. The extent to which small-scale farmers receive public support varies enormously among continents and countries. In South Asia, where public support to rural households is multi-layered, a wider view of how policies impact on food prices makes it clear that small-scale farmers are often ‘net taxpayers’. Essentially, they subsidise cheap food for consumers and value extraction by more powerful enterprises further along the food value chain.

Beyond “subsidies” to investing for the public good: Panellists stressed the point that the right kind of targeted subsidies can make a difference to agricultural productivity and livelihood security. While the pros and cons of input and price subsidies have been hotly debated over the past decade, a rethink around the language of subsidies is needed. Given market externalities, the huge public costs and risks of a failing food system, widespread rural poverty and inequality corrective public good investments are essential. These include for example creating incentive mechanisms to drive the demand for and production of a diversity of more nutritious food, incentives for good environmental practices, ensuring rural infrastructure, or improving social protection schemes, particularly in relation to risk. The challenge is to design so-called ‘smart’ subsidy programmes that have a significant impact on the availability of food and the improvement of household incomes in the short run while stimulating growth and rural development and increasing (or at least not suppressing) effective demand for and commercial distribution of inputs in the long run.

Political realities: No one should be naive about the political imperative of keeping food prices low and ensuring national food security. For a majority of people in low- and middle-income countries food is a large proportion of their expenditure and even slight rises in food prices can easily push them into a food deficient situation and dramatically impact on their ability to pay for other life needs. As was well seen in the 2008 food prices crisis, this has significant implications for social and political stability, something of which most governments are acutely aware. Further, many poor farming households are net purchasers of food. Consequently, governments are often very risk-averse in terms of changing policies that relate to food prices and food security. Further, the existing regimes of input and price subsidies have significant benefits for some, often influential, interest groups who bring their influence to bear in maintaining the status quo.

Practical realities: As one panellist highlighted, even with strong political will to reform food systems, incentive structures and how these impact on small-scale farmers, there are significant practical challenges. In general, more effective use of public investment requires effective targeting to the needs of specific communities and households in specific locations, often involving direct cash payments. However, many of those who need such support do not have bank accounts. There are huge data gaps in knowing who to target in what sort of ways and significant administrative challenges. This is one of the reasons more broad-based approaches are often used, despite the challenges of a distorting influence, poor targeting, and leakage of resources.

Mobilising political commitment for change: There is a tendency for people (and governments) to overplay the risks of doing something differently and underplay the risks of the status quo. Consequently, policy innovation and reform to drive the transformation of small-scale farming within a broader vision sustainable and socially-just food systems require four things: One, a clear perspective of the negative consequences of ‘business as usual’ that is understood not just by a small network of informed researchers and activists, but by political leaders of all stripes and wider society (after all, we are all consumers of the goods and services provided by our food system). Two, evidence that alternative pathways can work, based on sound research and detailed case studies documenting the emergence and persistence of ‘islands of innovation’ to provide ideas and inspiration for future policy and practice. Three, practical transition strategies to bring about change and which can balance out the interests of the ‘winners’ and ‘losers’ and ensure ‘no one is left behind’. Finally, sufficiently strong international and national coalitions for change from across government, business, civil society, and science are required. Global public goods need to be invested in helping to generate the data and evidence, and the informed processes of dialogue and coalition-building necessary for change. Such processes are needed from local to global in ways that help to link understanding of how issues connect across scales. Of critical importance is building national and local level capability for generating and synthesising data and supporting stakeholder and policy dialogue with foresight and scenario analysis.   

Farmers voices: The fundamental importance of engaging farmers themselves, with all their diversity, in policy dialogue was underscored. This is vital for understanding what farmers are actually experiencing, hearing their ambitions and ensuring they are able to protect their interests. Inclusive processes of policy dialogue from local to global levels need support and investment.

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Acknowledgement: This blog drew in particular from the comments and inputs of the panellists of the fifth session of the eDialogue and we are very thankful for their rich contribution to the discussion. The blog is the authors’ interpretation of the session and may not necessarily represent the overall perspective or specific opinions of the individual panellists.

Panellists: David Nabarro, Meike van Ginneken, Thomas Jayne, Elena Lazos Chavero, Rebbie Harawa, Ángela Panegos, and Avinash Kishore