Future Dynamics for Small-Scale Agriculture

 

This section explores the key dynamics of change that will shape the opportunities and constraints for small-scale farmers. We start with (1) the political economic context, both globally and domestically and then look at (2) the rapid restructuring of food markets, driven by demographic trends and how this is shaping (3) investments. This leads into a closer look at (4) the livelihood options for small-scale farmers, in a context of changing labour patterns and migration and the implications for (5) women and youth. We then turn to issues of (6) infrastructure and technology before finally looking at (7) climate and environment.

Embedded and cutting across these seven dynamics are six themes that we will emphasise and return to later in the portal:

  • Market revolution: the rapid restructuring of markets to meet urban food demand and changing diets
  • Emergent farmers: a new class a small to medium scale investor farmers entering farming to pick up the opportunities from the market revolution.
  • Living income gap: the vast gap between the living income a family needs for basic food, shelter, health and education and the low incomes from very small farms
  • Income diversification: a substantial increase in employment and income diversification for small-scale farm family members meaning less reliance of only farm income
  • Changing farm characteristics: the dynamics for small-scale agriculture means on increasing diversification of farm characteristics, such as farm size, age and gender of farmers, access to resources, and vulnerability (a key message of this report that speaking of SCF as a homogenous group is problematic.
  • Increasing risks: market transformations, climate variability, natural disasters, disease risks and uncertainty in trade relations all create high degrees of risk for farmers and agricultural investors dramatically influencing incentives.
Political Economic Context
Small-scale farmers face a changing political economic environment, with significant implications for the food and agriculture policies that affect them (Birner and Resnick 2010; World Bank 2008; AGRA, 2018). The globalisation of trade, free markets, the power of emerging economies and their growing domestic markets, the declining proportion of agricultural GDP in most countries, urbanisation and emerging populist politics are all factors shaping the response of governments to the challenges of small-scale farmers. In considering future directions for the small-scale sector, it is critical to understand this changing context. The dynamics now are very different from the beginning of the green revolution and the subsequent period of late 20-century agricultural transformation in Asia (Birner and Resnick, 2010), and the coming decades will see further fundamental shifts.

There are four main factors to consider – free markets, public investment, domestic food security and domestic politics. For governments, there are policy and political trade-offs across these areas that also often lead to policy incoherence and limited political will to drive agricultural transformation (AGRA, 2018). By and large, the world has moved in the direction of freer markets. This means greater pressure on farmers to be competitive in a global market and a move away from government-run marketing systems and reduced-price support and import tariffs (Birner and Resnick 2010). Agriculture remains one of the most complex and difficult areas of trade. In reality, it is far from “free” with plenty of scope for questioning the fairness of how farmers in richer and poorer countries end up being treated. However, most development economists will clearly argue that in general poorer countries benefit much more from open than closed markets. For overall, economic development and tackling poverty and hunger lower food prices are generally more desirable than having a protected and inefficient agriculture sector with higher prices. However, the free market story is far from straight forward, with compounding factors as discussed below. There remains much controversy and opposing view over the right policy balance between free vs protected markets for agriculture relative to the stages of a countries economic development. The bottom line is that the transformation of small-scale farming should largely be premised on more open markets where farmers and sectors have to be regionally and globally competitive.

The days of large public support programmes for agricultural research, development, extension and infrastructure appear to be largely over. Perversely, this is particularly so in lower income countries that still depend heavily on agriculture for GDP and employment. In Africa, most countries are failing to reach CAADP target of 10% of national budget investment in agriculture (AGRA 2018). This contrasts, for example, with countries in South East Asia that invested heavily in agriculture during their economic transformation period of the 1980’s and 90’s (Laborde et al. 2018).

Despite this overall declining protection and support for agriculture, countries do remain concerned about their food security because of the implications for domestic social stability and politics. The focus is generally on ensuring sufficient availability and price stability of countries core staple commodities. This gives rise to forms of market protection and input subsidies that often have perverse effects on overall agricultural development with questionable efficiency in targeting the poorest and most vulnerable.

Food prices for urban and rural consumers and the income levels of large numbers of farmers are hugely political issues for any government, which also plays out in political elections. There is always a tension between the political benefits of low food prices and higher farmer incomes. The most common way of tackling this tension is to provide agricultural input subsidies and/or the direct handing out of inputs (de la O Campos et al. 2018). While this is a short-term political fix, it is costly and inefficient, often not well targeted to those most in need, and open to corruption.

Implications

So what is the bottom line of these political economic realities for small-scale agriculture? First, by and large small-scale agriculture is going to have to be commercially viable in a relatively open and competitive market place.  Second, despite the recurrent calls for greater investment into small-scale agriculture any substantial shift in current patterns would seem unlikely.

Globalisation, the rise of emerging economies and domestic markets, changing trade regimes and the emergence of popular more nationalist politics are all shaping the context in which policy decisions that affect small-scale farmers are being made. This is critical to understand, and the context today is very different from what it was at the beginning of the green revolution and the period of Asian agricultural transformation of the late 20th century. The coming decades will see further fundamental shifts. Flowing from the changing political economic context is the question of how important agriculture still is to tackle poverty and driving economic development.

This also means that small-commercial farmers and emergent farmers who have access to private assets and finance are likely to dominate in capturing future market opportunities at the expense of small-scale farmers who require a “leg up” to become commercially viable.

Markets
The need for improving the competitiveness of potentially viable small-scale farms has been emphasised in existing work on small-scale agriculture (Brooks 2010; Diaz-Bonilla, Orden, and Kwiecinski 2014). Developing their potential necessitates sustainable access to markets. However, due to a variety of constraints, significant proportions of small-scale farmers in developing countries are not linked to markets. While recognizing the heterogeneity of small-scale farmers, their market connectivity can be examined through their access to productive assets, connectivity to diverse markets, and the functionality of those markets (FAO 2013a).

The scale of change in food markets in developing economies and globally over the last 20-30 years has been profound. This transformation is set to continue apace over coming decades.   For example, rural-urban supply chains have developed rapidly. Haggblade, Hazell, and Reardon (2011) estimates this growth at 600–800% over three decades for Africa while Reardon and Timmer (2014) have it at roughly 1000% in Southeast Asia in the same period. These market changes are underpinned by deep structural shifts in procurement, retailing, value chain coordination, ownership and power. It also needs to recognised that these changes are highly context specific both between and within countries and hugely influenced by infrastructure.

These massive changes and growth in markets contrasts paradoxically with the continued economic plight of a majority of small-scale farmers. Clearly, small-scale farmers en-masse are not benefiting from these structural changes to the degree that might be expected.  This is for two reasons 1) demand being met by smaller numbers of the better-endowed small-scale farmers, along with domestic medium and larger scale producers or imports and 2) commodity prices that at low levels of production are insufficient to lift households out of poverty.

Realism about the future opportunities and risks for different types of small-scale farmers requires a clear perspective on how markets are changing.  Four interacting types of markets are important – (1) domestic food markets, (2) global (and regional) food markets, (3) input markets, and (4) factor markets (labour, land, finance).

In terms of domestic food markets, as outlined in Section 3, changes are being driven by the combination population growth, urbanisation and dietary change linked to a growing middle class. However, even in rural areas, diets are changing and even poor households purchase increasing amounts of food.

Overall the dynamics involve:

  • Rapid rise in consumption of animal (and fish) protein
  • Changes in grain production to meet animal feed demands
  • Rise in demand for fresh fruit and vegetables
  • Increased production and consumption of low nutrient value processed foods
  • Significant shifts in types of carbohydrate consumed

According to Reardon and Timmer (2014) the structural change in agri-food markets involves a dynamic between the demand side of dietary change and urbanisation, and supply side changes in terms of a supply chain and retail revolution, agricultural transformation (diversification, commercialisation and scale) and development of integrated factor markets (labour, land and finance).

Structural change in markets moves from “traditional” to “transitional” to “modern” (Reardon et al 2019).  Traditional markets are highly localised, informal (no contracts) spot markets (cash based immediate transaction), with few if any formal standards in place.  In transitional markets there is elongation as food is transported from rural to urban areas, a more complex set of intermediaries may develop, there is a mix of labour and capital intensive technologies in use some quality standards start to implement how most transactions are still based on spot market relations. Modern markets are epitomised by the supermarket model. Markets becomes spatially long, there is often consolidation and concentration in the supply chain (e.g. limited number of retailers who purchase directly from large scale suppliers/producers), spot markets shift to contracts and futures markets, private and public standards become common place and there is a high degree of capital intensification.

Since the early 2000s there has been much attention for a “supermarket” revolution in developing and emerging economies.  While this has certainly happened by far the largest transformation has been from traditional to transitional markets, what Reardon et al (2019) refer to as the quiet revolution. While there are significant variations between countries, overall, transitional markets are currently the main supplier of food for the majority of consumers in LMIC urban areas and are likely to be so for the foreseeable future. This is particularly so for fresh foodstuffs.  In most developing countries it is mainly the very upper echelons of society who purchase the food from modern supermarkets.

Much attention has also been given to the globalisation of food systems. This is critical to properly understand in terms of implications for small-scale farmers. The bottom line is that only about 20% of food consumed globally is internationally traded. Particularly in developing economies by far the bulk consumption is met by local production. However, for particular commodities such as soy, coffee or cocoa there is a very different story. What is critical to understand is that increased liberalisation of markets has meant that local producers have to be globally competitive and that domestic prices are heavily influenced by global markets, despite the relatively small volume of international trade. The large volume of imported frozen chicken into Ghana from Brazil is a good illustration of the issue of global competitiveness.

Implications

It is critical to recognise is how much markets have already changed over recent years, driven by urbanisation. The future will see increased demand for fresh fruit and vegetables, animal protein (meat, fish milk) and associated animal feed, as well as staples. For the medium-term transitional markets are likely to dominate in most places with gradual increases in supermarket penetration.  Prices seem unlikely to change dramatically at least in the medium term with agriculture continuing to experience a tightening in terms of trade (increases in costs relative to prices). There will be growing concern for food quality and safety with increasing demand for traceability even in transitional markets. While there is much discussion of the need to connect small-scale farmers to markets it needs to be recognised that this is already happening on a very large scale. Markets have grown and changed the demand has largely been met. This raises a fundamental question about the scope for much larger numbers of very small and marginal farmers to participate in these markets.

Investments

The headline story on investment in agriculture is that substantially increased investment will be needed if the sector is to deliver the economic and social returns that are hoped for, particularly in South Asia and Sub-Saharan Africa. Investment is needed to meet the pressures food systems will face, particularly the growing demand for food, changes in diets and what is consumed, and the associated pressures on natural resources.

When considering future investment needs it is vital to grasp that domestic investors (private and public) are, and will continue to be, the largest investors in agriculture, dwarfing foreign investments. Of these most are private investors, especially farmers themselves, the majority of which are small and medium-scale.

Domestic Private Investment: Aggregate data on investment is not plentiful but the FAO has estimated that domestic private investment out-strips government investment by a magnitude four times (FAO 2012). Farmers in LMICs are the largest group of investors by far with their on-farm investments in excess of three times that other investors, both public and private (World Bank Group 2018). This has big implications for the strategies and policies for all types of investment into agriculture in these countries. What is not well understood is who is making this investment and for which scale of farming. The evidence of emergent investor farmers suggests that much of this investment is from larger scale small-scale farmers and medium to larger scale farmers often funded by off-farm incomes and wealth.

For a large majority of small-scale farmers, poor returns creates a downward spiral with less investment than is required for increased production which could achieve living incomes for farmers and affordable food for urban consumers. A study in 2015 funded by the Gates Foundation found that medium-scale farms are the fastest growing segment of the family farm sector in Sub-Saharan Africa, controlling more land than large-scale farms. The study expects this group to continue to grow, assuming existing land policies, and notes that surplus farmland is a diminishing resource in most countries in the region.

Despite the fact that domestic private investors dwarf all other investors, what the other investors do is highly relevant to the overall landscape of agricultural investment, particularly public investors. Domestic private investors in agriculture needs governments to invest in ways that are strategic, catalytic and enabling.

Domestic Public Investment by Governments: Much attention has been given to the amount governments invest in agriculture. Of the 43 African governments who signed up to the Malabo Declaration in 2014, committing to ‘enhance investment finance in agriculture’, only 7 have achieved the target of allocating 10% of budget (DREA 2018). While private investments are crucial, the enabling environments and political environments at the time determine the quality of the investment (Jayne, Meyer, and Traub 2014). Secondly, the overall amount is important, at least as important is how governments spend investment finance. Stimulating more on-farm investment and better returns to small and medium farmers means that governments would need to ensure that:

  • Their investments are directed towards infrastructure that will support agriculture, and rural areas, such as roads, irrigation, ICTs and energy provision.
  • This longer term investment in infrastructure is prioritised over short term spending on production subsidies (typically for cereals) that have largely been unsuccessful and can keep farmers poor (Mellor 2017).
  • The substantial ‘opportunity cost’ of production subsidies is recognised and resources are re-directed into longer-term investments to underpin agriculture.
  • Corruption is addressed since it can dramatically reduce the rate of return on public investment, even to the point of those investments not being economic. Mellor (2017) cites the cost per mile for comparable highways from port to capital costing twice as much in Kenya as in Ethiopia, due to differences in corruption levels.
  • Investments in better education and health provision are made, which would have many benefits for agriculture. If farmers were released from the heavy financial burden for household’s health and education they would have more resources for investment (Vorley; Interview March 2018).
  • Finance providers are encouraged to address smallholder constraints to saving and investing and are enabled to offer suitable products and services.
  • A positive enabling environment for private investment is created, such as secure land tenure, whilst ensuring that any larger-scale investments adhere to socially and environmentally responsible principles, protecting the rights of the most vulnerable.
  • Allocate sufficient budget resources.

If governments fail to address this then the implications for the majority of farmers is that the investment they make in their farms will continue to under-perform, with implications for not only their livelihoods and food security, but in aggregate for domestic food production and labour opportunities.

Foreign Direct Investment: Data on FDI in agriculture is hard to find. Global FDI overall (not just agriculture) has declined in line with the global downturn and is seen as part of a longer-term negative cycle, which is caused partly by a decline in rates of return on FDI (UNCTAD World Investment Report 2018).

Whilst FDI for agriculture is relatively small compared to domestic private and public investment there has been a dramatic increase over the past two decades, since countries made it easier for foreign investors by liberalising their finance markets. Previous to this most FDI in agriculture was focused on large-scale production initiatives such as plantations (Reardon and Timmer, 2007). The more recent waves of FDI have been in response to the big opportunities in urban food markets and have focused on processing, retail and food services. FDI is now associated with processed food markets, stimulating demand and sales (FAO 2017d).

Where investment in agriculture production is taking place there can be risks that need to be mitigated. The Oxfam study of investment into Malaysia found that companies from China and Singapore were investing by obtaining land for plantations and developing contract-farming agreements with small- and medium-scale local farmers. Oxfam’s assessment was that both of these types of investments carry risks for smallholders and communities who rely on land and have unclear and insecure rights (Oxfam 2017). This is widely recognised and several principles-based standards have been developed to mitigate the environmental and social risks associated with large-scale, agriculture-based investments. The World Committee on Food Security (CFS) is clear that whilst “Eradicating hunger will require a significant increase in agricultural investment” it will, more importantly, “require improving the quality of investment so that it benefits those that need it most”. The CFS principles starting point for responsible investment in agriculture and food systems is the recognition and respect for human rights. The ten principles apply to all types and sizes of agricultural investment including fisheries, forests and livestock, across all stakeholders and stages of the value chain.

The numbers of small-scale farmers who may be impacted directly or indirectly by FDI is not clear. Whilst much has been written about opportunities for partnerships between smallholders and large companies in contract arrangements, the numbers of cases where this has been successful for either party are very small compared to smallholder investment overall. One study by IDS in 2018 found that in 61% of the cases the contract farmers had significantly larger landholdings or more assets than the average farmers.

Overseas Development Assistance (ODA): To achieve SDG 2 target to end poverty and hunger by 2030 development partners are looking to mobilize a great deal of additional investment, combining public investment in social protection with public and private investment in agriculture. The FAO 2015 Zero Hunger report estimates that an additional USD181 billion per year up to 2030 will be required for rural areas for investments in social protection and pro-poor production activities.  The report suggests this amount is well within the capacity of the international community to mobilize.

The World Bank’s 2018 Future of Food report is clear that despite private investment holding the lion’s share, ODA for agriculture will remain essential, particularly in the poorest countries who have less access to alternative sources of financing. The World Bank report makes the case for targeted ODA that has attributes other financing does not, such as stability and predictability, concessionality, availability for core public expenditures, and linkages with knowledge and experience of projects and programs that have been effective elsewhere. Over the past 15 years ODA for agriculture has risen to about USD13 billion per annum which is a significant increase but still falls short of the needs.

Implications: Significant investments are being made into agriculture and the ‘hidden’ sections of the food system to meet the growing food demands of urbanisation, with strong indications of substantial investments from new domestic “emergent investor farmers” (Reardon 2015). However, there is a significant lack of public investment to create the conditions that would enable a greater proportion of small-scale farmers to be drawn into emerging food market opportunities and to operate on a commercially viable basis. Over the long term this creates the risk of not realising the full potential of agriculture to tackle poverty and inequality.

Domestic investment is not heavily influenced by principles for responsible agricultural investment that have begun to have an influence on the practices of multi-national agri-food businesses.  Nor do they currently run the same degree of reputational risks for poor environmental or social practices that multi-national firms.  This combined with the semi-formal nature of emerging food markets create a potentially high risk for unfair purchasing and labour conditions, poor environmental practices, limited attention for nutritional outcomes and poor food safety.

There is a critical need for countries to develop more integrated investment strategies that take a food systems perspective.  These need longer-term perspective on desirable economic, social, nutritional and environmental food system outcomes and how trade-offs and synergies can be managed.  In particular, there is need to much better differentiate the different types of investments needed to support different types and scales of small-scale farming. Small-scale farmers need to be central to the design and implementation of effective investment  strategies (given their relative and absolute importance to on-farm investment) and protected from the negative impacts of foreign and domestic investments particularly around land rights and natural resource access and use.

Rural Infrastructure and Services

Rural infrastructure, including roads, electricity, irrigation, water, sewerage, market facilities, mobile phone and internet, along with public services in particular health and education are critical for the development of both small-scale agriculture and rural economies (Ulimwengu et al. 2009; IFPRI Discussion paper 944). Good rural urban linkages enable the production and distribution of higher value perishable products that have benefits for the income of producers and the nutrition of urban consumers (Global Food Policy Report, 2017).  For farmers and those working further down the food value chain, investments in cold storage, transportation, and energy infrastructure for processing help smooth income shocks from seasonality, market volatility, and weather variability.  In response, for example Ethiopia’s Plan for Accelerated and Sustained Development to End Poverty (2005-2009) prioritized improving access roads, telecoms, and market infrastructure. The progress indicated the importance of small and medium sized local market towns  (Global Food Policy Report 2017, Chp 2). However, the world is facing a $15 trillion gap in projected infrastructure investment by 2040 (Global Infrastructure Hub). With increasing pressure to meet the infrastructure needs of urbanising populations, rural areas, in particular more marginal areas, are increasingly left behind in terms of infrastructure and social services.

Implications

Limited investment in rural infrastructure remains a major constraint to the transformation of small-scale agriculture, particularly in poorer countries of Africa. On one hand this limits access to markets and on the other constrains rural economic development that could create off-farm employment opportunities.  Critically, transformation of small-scale agriculture requires a balanced infrastructure investment approach combines road, irrigation, energy, communication and market services.

Rural Infrastructure and Services

The structure of land distribution, tenure and use is changing rapidly alongside wider economic, social and political forces.  An up-to-date global understanding is extremely difficult due to poor data, huge differences in country situations and that much of what occurs with land happens through informal and customary processes that are not documented.  It is beyond the scope of this document to provide a detailed evidence base of the current situation.  Rather the intention is to point out a set of key trends and issues that impact on the transformation of small-scale agriculture, the dynamics of which need to be understood on a country by county basis.

Broadly the following trends are underway, though with very different characteristics in different countries:

  • Land fragmentation: due to population growth in many areas farm sizes have dropped, hence the very large number farms now under 1 ha.
  • Land consolidation: alongside fragmentation there is also consolidation through foreign and domestic larger scale acquisition and through local land markets as some people leave agriculture and rent or sell their land.
  • Foreign land acquisition: foreign investment into land in LMIC has been significant raising numerous concerns about “land grabbing” through corrupt and or inequitable processes. Major concerns emerged after the 2008 food price crisis, while it remains major concern, it has arguable not occurred on the scale that some initially feared.  There has also been significant global efforts to hold global corporations to responsible investment principles.
  • Domestic land acquisition: growing food markets have driven significant domestic investment in agriculture both in terms of larger and medium scale agriculture. As discussed above In some countries there has been strong investment by urban elites into medium scale farming enterprises. Domestic investment is considered to be larger than foreign investment but is much less influenced by responsible investment principles.
  • Improved land governance: significant efforts are being made at global and national levels to improve land governance in ways that improve the rights and tenure of traditional owners and vulnerable groups while also enabling mechanisms for effective and equitable land markets. Despite progress, this remains a major challenge for many countries with enormous difficulties in marrying customary land tenure systems with modern formalised systems.
  • Land as security: It was assumed that as people leave agriculture land would consolidate similar to the patterns of Western economies.  In reality it seems that people will often hold onto their land as security after migrating.  Sometimes that land is rented, sometimes left fallow and in others managed in a low intensity way.  In response some countries are enforcing mechanisms to ensure land is productively used.
  • Exploitation: Growing pressure on land and growing demand for agricultural products creates an inevitable context for exploitation of more vulnerable groups who do not have formalised land tenure, especially in situations of poor governance and corruption.

In terms of the transformation of small-scale agriculture, four issues are of particular importance. The first is gender equity, while women play a major role in farming, this is in no way matched by security of tenure over land, global only 15% of land is owned by women. This has major implications for decision making, the collateral needed for loans and the security of women headed households.  It is estimated that providing women with equal access to productive resources could increase the productivity of female operated farmers by 20-30%.  Second, secure tenure is critical to the incentives for farmers of either gender to invest in the productivity and sustainability of their land and in being able to access credit.

Third, demand for food, national economic growth, tackling poverty and overcoming food insecurity bring inevitable trade-offs.  Some consolidation of land is often necessary if small-scale farmers are to become economically viable, but this can threat the security of those who are depending on very small areas of land just to survive.  Agricultural development can be an important contributor to overall economic transformation that then provides the resources to provide better social protection for the poorest and most vulnerable. Balancing these trade-offs requires and overall vision for the future of food systems understands the linkages between the food system outcomes of social and economic wellbeing, food security and environment.

Fourth, the transformation of small-scale agriculture will ultimately depend on effective mechanisms to underpin equitable and secure land markets. For many countries there is a long way to go before this is realised.

Implications:

It is clear and well accepted that land tenure is fundamental to the productivity of small-scale agriculture, to equity and to protecting the rights of marginalised groups. Any strategy for the transformation of small-scale agriculture cannot be separated from a clear view on land governance and the creation of equitable and secure land markets. There will be difficult trade-offs to be made between both small-scale and larger scale commercialisation of agriculture, food security, poverty reduction and what land is used by who.  More sophisticated policy mechanisms will be needed that integrate land governance with social protection and employment generation to enable equitable transitions.

Livelihoods, Labour, and Migration

To explain the incentives that influence how small-scale farmers engage in agriculture and agricultural markets it is essential to understand their livelihood strategies and how these are changing. By livelihood we mean all the ways a farm family earns income and gains access to the resources needed for food and nutrition security, housing, health, education and other needs. Classically livelihoods have been analysed in terms of five capitals – natural, physical, human, financial and social. This recognises that having a viable and resilient livelihood depends on all these capitals and not just income.

Along with economic development and urbanisation the livelihood options for rural households have changed dramatically.  For many farm households their income sources have diversified with off-farm labour becoming significant. Large-scale migration of family members to find work other areas has also led to a growing significance of remittances. The significance of these livelihood changes varies substantially between countries and between areas within countries, nevertheless the overall trend is very clear and will continue. These shifts are changing the patterns of farm labour between women and men and younger and older generations, and in some areas creating farm labour shortages.

Linked to the “quiet revolution” of changing food markets, it is becoming increasingly important to look at employment options across the entire food system and not just at the farm level. There is a rapidly growing food processing and service sector associated with urbanisation and demands of more affluent populations. As explained by Reardon et al (2017), for many countries the food sector remains dominated by micro, small and medium sized enterprises with a high degree of informality. There are signs of increasing small-scale “vertical integration” between farming, processing and marketing activities.

Recognising the difficulties of making a living from small-scale agriculture, there is an emerging debate about what constitutes a “living income” i.e. how much income does a farm family need to pay for the basics of food, water, housing, healthcare, education, clothing, and emergency provisions. In part this has been driven by the concern global agribusinesses who have made commitments to including smallholders in their supply chains, but have then realised the incomes they earn are still not enabling them to escape poverty (AGRA 2017). This creates a reputational risk for companies who profile their business model around working with smallholders.

Alongside the implications for women and youth, which are discussed in the next section, there are four important implications from changing livelihood options. First is the incentive to engage in agriculture. If agricultural returns are low or risky relative to other income earning options households will choose not to engage in agriculture, or not to invest in productivity increasing management practices. Second, with diversified livelihood options it becomes more important to consider returns to labour from engaging in agricultural production rather than returns to area of land. It is very clear that many small-scale farmers now have areas of land from which it would be impossible to have a living income to maintain a family. The question is then whether such an area of land can give a competitive return for the labour invested relative to other employment options.  Third, for some farmers off-farm employment and/or remittances provides the access to finance and risk mitigation needed to invest in productivity increasing technologies and practices and in scaling up their farming enterprise. Fourth, it has to be recognised that while still important, this livelihood diversification, both within the wider food systems and other sectors means that agriculture alone become less important in terms of tackling poverty and food insecurity.

Implications:

In thinking about the future of small-scale agriculture it is important to recognise the diversifying ways in which farm families meet their livelihoods needs. How this plays out in different locations will be quite different. However, a number of factors are critically important.  One, Off-farm income means that would become important is not the total farm income, but the return to labour input and the degree to which farms can contribute directly to food security and nutrition. Two, earning off-farm income can change the incentives for adopting productivity increasing but more management intensive practices, especially if these carry risks or comparatively low returns. Three, migration changes the patterns of who farms with big implications for gender dynamics and in some location creates farm labour shortages. Four, strategies for tackling rural poverty and food insecurity must look beyond the farm.

Gender and Youth

Critical to any transformation of small-scale agriculture is the role for women and youth. That women’s economic empowerment is fundamental in tackling poverty and poor nutrition is undisputed. As farm labour patterns change due to migration and new opportunities emerge for the use of productivity enhancing technologies and for linking farm production to value adding and marketing, it is vital that women have the decision making power, education, access to finance, secure land tenure, and  freedom to safely engage in markets to capitalise on these opportunities. Optimising the opportunities for youth (half of whom are women) are equally important and depend on many of the same preconditions as supporting women’s role in the agri-food sector including access to education and finance. Being able to respond to the opportunities and challenges for women and youth requires a clear understanding of current trends and issues.

Gender: Whilst a large body of evidence exists on the critical role gender dynamics play in small-scale agriculture and rural poverty, there is a need to better understand how those dynamics are changing at farm level and under which food systems. And, to consider whether opportunities for women are likely to increase or decrease and what the assumptions are underlying those forecasts. Some common issues and underlying constraints affecting women’s effective participation in the agricultural sector are well known.Unequal access to land, finance, and inputs such as seeds, machinery, and technical advice, are often compounded by traditional and social norms impacting how women can use agricultural resources. Equally, the ‘solution’ is well understood – improved access to assets, resources, technologies, services and opportunities, and the promotion of gender-sensitive policy frameworks could generate significant gains in terms of agricultural productivity and rural peoples’ livelihoods (FAO SDG 2017) (See Doss et al. (2018) on an examination of myths around women in poverty, their role in producing the world’s food, land ownership, and environmental stewardship).

The scale of women’s role in agriculture can be challenging to quantify. A 2016 study (Slavchevska, Kaaria and Taivalmaa 2016) points to evidence that their role has become increasingly important over the past two decades, partly because men are leaving the sector. Multi-country studies looking at the agricultural labour force show that on average, women’s participation in agriculture in developing countries is around 40% (World Bank 2017, Christiaensen, Luc, and Lionel Demery 2018). The highest levels are in Sub-Saharan Africa where it is typically around 50% with some countries reporting levels above 60%. These differences, along with the fact that women may not classify their home-based food production activities as agricultural labour, means it can be unhelpful to generalise.

What is clear however is that their productivity is far lower than men’s. The EBA Gender report (2017) describes how dramatic the ‘gender productivity gap’ can be, as in Niger where it is estimated to be 66%. In most countries the gap is estimated to be around 20-30%. These differences have social and economic consequences for women farmers and they also impact significantly on the economy. In Tanzania, for example, the productivity gap (of around 23%) is estimated to cause annual losses of $105 million. If the gap was closed, the report suggests this could increase crop output up to 3.9% (World Bank 2015). Research conducted in Burkina Faso further suggests that, at the household level, reallocating some agricultural inputs, from the plots farmed by men to those farmed by women could lead to a 6% increase in output.  Some sources claim that equalizing this gap could boost agricultural output and decrease global undernourishment by up to 17 percent (FAO 2016, Oxfam 2017).

Women also encounter widespread inequalities in rural labour markets, forcing many to accept low-status, poorly paid jobs, without legal or social protection. (FAO SDG Session 2017). These inequalities are also seen in access to technological innovations. Women are 14% less likely to own mobile phones as compared to men. This lack of access results in lower support through phone-enabled services, access to financial systems, and interacting with markets (Hailu 2018). Considering the critical importance of access to technology and financial services in supporting and maintaining smallholder livelihoods, this inequality has significant implications for the future of small-scale agriculture (Christen and Anderson 2013).

Addressing resource inequality for the future means that international and national commitments need to ensure women in food systems get the resources they need to boost their farming and food enterprises, and get a better return for their labour. Governments and other stakeholders in agricultural systems will need to address the range of social, cultural, economic and institutional barriers preventing women accessing resources and inputs. Women’s exclusion in most governmental planning, budgeting, data collection and monitoring processes means progress has been and will continue to be slow. Research is one example where slow progress compounds a slow pace of change – in many countries the majority of agricultural research staff, managers and policy-makers are men, so the perspectives and needs of rural women are not always considered which can translate on to the farm in ways that compounds their access challenges (Beintema 2014).

Climate Change and Gender: 

  • Gender based differences in access to resources (assets, credit, time, access to markets and institutions) create significant barriers to opportunities for women
  • Women face significant challenges in accessing and influencing decision-making processes
  • Socio-cultural norms create vulnerabilities for women to respond to disasters (e.g. restrictions on mobility, access to information, limited range of activities)
  • Lack of sex-disaggregated data influences misrepresent women’s roles and contributions

Ensuring that agri-food and development projects are shaped by gendered considerations becomes vital when food system drivers such as climate change are considered. Gender inequalities interact strongly with the risks presented by climate change. Limited access to resources, representation in decision-making bodies, and restricted rights make them highly vulnerable to the shocks brought upon by climate change. As discussed above, climate change is having serious implications on freshwater resources, biodiversity, and the frequency and intensity of climate-related events such as cyclones, drought, and flooding. These effect those who are most dependent on climate-sensitive activities for livelihoods, such as small-scale farmers in developing countries. The diminished capacity of women small-scale farmers makes them even more vulnerable and emphasises the need for gender-sensitive strategies.

Youth: By 2030, young people aged 15-24 in Africa, Asia, and the Pacific will make up over 75% of the world’s youth labour (Jayne et al. 2017). These projections match with demographic trends and reveal that Africa will remain one of the youngest regions globally, with median age increasing from 21 in 2035, to 24 in 2050 (ADF 2014). This represents an increase in youth labour by 41.8 million globally. This ‘youth bulge’ in Africa alone constitutes about 55% of the region’s labour force, with 11 million Africans entering every year. Unfortunately, current estimates show that only 25% of these will find wage-based employment over the next ten years (Yeboah and Jayne 2016). However, employment alone does not solve issues of poverty among the youth, as demonstrated in the UN Youth Report (2018): 70% of employed youth in Sub-Saharan Africa suffer from poverty. Given demographic, employment, and technological trends, this creates significant challenges for the future of the global workforce and the future of global food systems.

In combination with an ageing farming population and increasing urbanization, there are concerns over integrating the youth labour into the agri-food sector when they might not have access to land and assets to present farming as a viable livelihood option. However, the rapid growth and development of the food sector on the whole presents new opportunities in agri-business, manufacturing and processing. A current challenge is to grow the number of jobs in these non-production sectors to attract youth labour and provide viable livelihoods options. While urbanization trends and investment in improving rural-urban linkages show promise in providing employment, it is unrealistic to think that the food system alone will absorb the numbers of youth entering the global work force. Recognizing this, interventions will need to examine alternative employment options, the social protections necessary to allow the transition, and potentially formalize existing informal livelihood methods.

Technology

Innovation in the technological realm is having a major impact on global food and nutrition security. From digital to mechanical to bio-based, technological innovations are having an impact on every aspect of the food system. In particular, block chain technology is set to have a major impact on traceability and transparency in value chains and potentially reduce food waste, genomic developments can help with developing crops that are more resilient to climate change and re-introduce neglected crop species. Mobile phones as a scaffolding technology in particular allow access to a range of different agricultural and food-based services such as extension services, weather forecasts and pest and disease identification. Advances in digital technology that are integrated into mobile technology help with creating networked value chains that help with increased productivity and facilitate access to markets (AGRA 2016).

Unfortunately, these technologies often do not reach recipients in the global South, and they still need structural changes and enabling policies and environments to benefit the various food system actors. This access will be critical, given the potential of such technologies in catalysing transformation in the food system in an inclusive and sustainable manner for key actors, particularly small-scale farmers (AGRA 2016).

Small-scale farmers have much to offer service providers and intermediate organizations involved in technology. Unfortunately, because they are often difficult to reach, many technological solutions are designed for larger and commercial farms. However, small-scale farmers have much to gain from technological and data-driven solutions particularly in terms of on-farm labour and improvements in operation. For these farmers to benefit from technological solutions, the tools need to designed to suit their capacities and needs, ensure that they are not exploited, and that they are able to benefit from the data-flows and outputs resulting from the application of the technology (Maru et al. 2018).

Technology offers a range of opportunities for small-scale farmers beyond the productivity aspect. ICTs, block chain, Internet of Things, data-driven agriculture, and system-level applications of technology can be used to create employment opportunities that attract the youth. They can make food value chains more transparent, equitable and inclusive, and expand the dialogue beyond a production-focused analysis of technology and food.

Despite these opportunities, adopting in emerging technologies is a risky endeavour for many small-scale farmers, partly because of the risks of investing in technologies where the benefits may not be immediately apparent or tangible, interoperability and operability of the technology, a lack of transparency about the process, and a lack of understanding about the farmers’ particular context on behalf of intermediaries who may be in charge of parsing data and processes related to the technology.

As technological development in food and agriculture proceeds at a rapid rate, it is necessary to note that small-scale farmers are often poorly connected by infrastructure such as roads, markets, internet and cell-phone access, and may have low capacities to manage and effectively use new technologies. They are going to be affected to a greater degree because of an inequitable division of information, unpredictability brought about by climate change, increased cost and increased scarcity of farm labor, productivity losses, and potentially exploitative market relationships. Such farmers may then also be competing in the market with medium or large-scale commercial farms with better application and integration of up-to-date technologies and processes. Therefore, given the various challenges in terms of technology immaturity, capacity of farmers, exclusion and ownership, technological development needs to shift to become more inclusive and accessible if the benefits are going to trickle down to the poorest of the poor.

Climate and Resources

Feeding the world without degrading natural resources and contributing to climate change, while protecting and enhancing the interests of those who produce our food is one of the greatest challenges of our times. The Green Revolution and increasing the proportion of land, water, and natural resources used has more than tripled the amount of agricultural production – but these gains have come at a significant environmental cost. One third of agricultural land is degraded; agricultural activities consume over 70% of freshwater resources, and the food sector overall accounts for 19-29% of GHG emissions (Vermeulen et al. 2012). Unsustainable practices are further threatening global biodiversity and the very ecosystem services that the food system depends on. For example, nearly 75 billion tonnes of soil are lost every year because of poor farming practices (ELD Initiative 2015), a loss that not only directly harms poor farmers, but also contributes to a global cost of USD 300 billion through land degradation (Nkonya, Mirzabaev, and Von Braun 2015).

Small-scale farmers have a significant role to play in managing resources while protecting and enhancing livelihoods and food and nutrition security. Targeted assistance through social protection, public services such as education and health programmes, financial services, and off-farm employment opportunities further develop rural communities and increase their resilience. Such measures are necessary in helping small-scale farmers adapt and respond to the direct impacts of climate change (Vignola et al. 2015). Solutions with multiple benefits such as climate-smart agriculture further provide opportunities to increase production, contribute to climate change remediation, and potentially access new markets.

While smallholders are a diverse set of households, they all share a common vulnerability to climate shocks. Predictable rainfall or other freshwater resources are particularly critical in areas dependent on rain-fed agriculture (see Box: Country Case Study – Zambia). Changes in weather patterns and temperatures necessitate changes in farming practices, which further strain natural resources and ecosystems by over-extraction of water, or inappropriate use of chemical inputs (IFAD 2013). This is most apparent in the loss of arable land, particularly in areas where at least 3 billion people depend on land productivity for their survival. It is estimated that 20% of the land in Sub-Saharan African drylands will be less suited for agricultural use by 2080 (FAO 2009), and that the world’s drylands on the whole are extremely vulnerable to climate change (Hoffman and Vogel 2008; Ward and Ringler 2014). Over 1.3 billion people are currently limited to degraded agricultural land, which is severely limiting their agricultural productivity and livelihoods (UNCCD 2017).

Loss and damage accrued by natural and climate-induced disasters (e.g. drought, extreme temperatures, wildfires, cyclones and hurricanes, floods, epidemics, infestations, and animal disease) is yet another area of concern for small-scale farmers and food systems overall. Such disasters disrupt production chains; destroy agricultural and infrastructural assets, trade routes and flows, and means of livelihood (FAO 2017). They can be disastrous in regions that depend on food production and market linkages for trade and livelihood. For example, between 2005 and 2014, floods alone caused 37% of the cumulative production losses in crops and livestock in developing countries (amounting to about USD 34 billion)  (FAO 2017b). Crops, livestock, forestry, aquaculture, and fisheries absorb 26% of all damage and losses resulting from climate-related disasters (FAO 2017b). This proportion is particularly critical for small-scale producers where loss and damage has far-reaching consequences on small-scale production based livelihoods.

The impact of climate change on food security is related to food quality, access, stability, and utilization, beyond production. Climatic changes are anticipated to influence the nutritional levels of crops (FAO 2015), incidence of disease, and reduce the availability of clean water in already water-stressed regions (WHO 2015). The IPCC estimates that changes in temperature and precipitation will affect food production and contribute to increased food prices (Porter et al. 2014). Considering that vulnerable populations will already be suffering from lower income because of reduced productivity and higher spending on inputs, higher food prices will further threaten food and nutrition security.

Implications:

Ecosystem stresses, decreased availability and increased competition for natural resources are a major concern particularly for small-scale farmers who depend the most on environmental stability. It is vital to note that most of the extreme poor who live in rural areas depend on access to these natural resources and ecosystem services to sustain their livelihoods (de la O Campos et al. 2018). Most of these small-scale farmers also reside in regions that are more vulnerable to climate shocks and resource scarcity. Crop failures, livestock losses, and overfished reserves not only cause economic losses, but also undermine food and nutrition security of rural people, encourage increased over-extraction of natural resources, and drive migration.

Smallholders residing in vulnerable regions such as the African drylands are at high risk of losing productive land to reduced fertility, drought, desertification (Ward and Ringler 2014). In combination with extreme poverty, barriers to accessing the appropriate resources and services, such farmers are in danger of losing their primary sources of livelihood and being forced to migrate unless opportunities to transition into alternative sources of livelihood are available. A critical re-orientation needed for the future of global food systems will be to shift from a ‘green revolution’ or productionist approach to a holistic, ecological, and livelihood focused approach to food production that recognizes and supports farmers as custodians and managers of natural resources beyond just food producers (UNCTAD 2013). This transition will need an extensive rethinking of policies and interventions.

The impact of climate change on health (e.g. increased incidence of water-borne diseases and reducing the body’s ability to absorb nutrients), crop productivity, resilience of infrastructure, and increased food prices will have an immediate and direct impact on small-scale farmer livelihoods and food and nutrition security (IFAD 2013). In combination with other demographic and economic changes, responding to climate and environment related disasters will be crucial in a food system transformation.

Risk

Small-scale agriculture faces increasing risks of multiple dimensions. These risks include market price variations, weather variations, disease risks, natural disasters, poor quality inputs that lead to low productivity, declining natural resources including soil quality, poor contract enforcement and exploitation by input suppliers, traders and money lenders.  Climate change is rapidly exacerbating climate, disease and natural disaster risks.  The nature of agricultural markets is that risk is often pushed down the value chain and onto the producers.

High levels of risk reduce the incentives for financial institutions to service the agriculture sector and make it hard for farmers to access credit.  Poorer farmers often find themselves falling back into poverty as a result of climate and market circumstances beyond their control.

Risk is a major barrier to the adoption of new technologies and management practices.

Implications:

Increasing risk and limited means for managing risk is a major factor influencing the transformation of small-scale agriculture.  Increasing risk is creating greater vulnerability for larger numbers of farmers.  It limits access to finance and constrains innovation and the willingness of farmers to experiment with new approaches.

A key element of transforming small-scale agriculture needs to be the development of policies and mechanisms to de-risk agriculture for both small-scale producers and the enterprises that support them.

 

 

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