Introduction

1. Agriculture is back in the spotlight after decades of neglect, driven in part by mounting concern about food security in the wake of three successive food price crises between 2007 and 2011. Climate change is expected to have a bigger effect on food supply than any other factor, and agriculture in developing countries will be affected more than any other sector by climate change (Conway 2012). Agriculture is also intricately linked to the global problem of persistent hunger and malnutrition, which affects an estimated 870 million people (FAO 2012a); and it is critical to sustainable natural resource management, of land and water in particular.

2. Another driver is agriculture’s role in development and poverty reduction: although agriculture contributes only 4% to global GDP (Lybbert & Sumner 2010 in Conway 2012), evidence suggests that agricultural growth consistently has a greater impact on poverty than non-agricultural growth, due to its strong linkages back to the rural economy in particular (Irz et al 2001). In Rwanda and Kenya, the poverty-reducing impact of agricultural growth has recently been found to be as much as three to four times greater than growth generated in other sectors (IFPRI 2012).

3. Smallholder farmers are central to this renewed emphasis on agricultural growth. There are an estimated 500 million smallholder farms in the world; in Asia and sub-Saharan Africa smallholder farmers produce up to 80% of the food consumed and support up to two billion people (IFAD 2010). Of the two-thirds of sub-Saharan Africa’s population that resides in the rural areas, the majority can be considered as smallholder farmers (Dixon et al 2004). As a group, smallholder farmers are among the most disadvantaged and vulnerable in the developing world: half of the world’s undernourished people, three-quarters of Africa’s malnourished children, and the majority of people living in absolute poverty can be found on small farms (IFPRI 2007). Smallholders have a key role to play not only in achieving food security, but also in generating poverty-reducing agricultural growth. They are also stewards of increasingly scarce natural resources and on the frontline of dealing with the impacts of climate change.

4. Although there are many ways to define smallholder farmers, the FAO’s criterion of plot size is widely used, with ‘smallholder farmers’ being farmers who farm plots of 2 hectares or less. While this definition covers mainly crop growers producing both cereal and horticultural crops, for purposes of this report the term will also be taken to include small-scale, family-run livestock farms as well as pastoralists, fisher folk and forest dwellers.

5. Within this group there is significant variation, with smallholders falling into three broad groups^[1]:

Farmers who own other assets in addition to their land, such as livestock or machinery; and who have sufficient access to inputs, services and knowledge to enable them to be active in markets to a greater or lesser extent. They are typically better connected, both physically and socially/commercially, and are often involved in producing for export, niche/high value added markets or integrated rural value chains.
Farmers with only a little land to farm (one hectare or less) and few other assets; who lack access to high-quality inputs, credit, services and equipment; who may be cut off from markets due to geographic isolation, poor infrastructure, lack of information or a combination of these; whose rights to land and other resources may be weak; and who have not, as yet, managed to access markets in a way which can increase their productivity and lift them out of poverty.
Finally, those subsistence farmers who are unable to survive on farm income alone, but who rely substantially, or even entirely, on off-farm work, remittances and/or social subsidies. This group includes the poorest and most vulnerable farmers, including a high number of women-headed households; and a growing number of farmers who no longer own any land at all.

6. These three categories of farmers require different forms of support to optimise their engagement with markets. Evidence presented in this report suggests many of the opportunities and benefits relating to new markets and increased agricultural investment currently observed in Africa reach only the wealthier and better-connected smallholder farmers, i.e. those in the first group, representing a small minority of the overall smallholder population.

7. However, members of the African Smallholder Farmers Group (ASFG) have extensive experience of successfully supporting smallholder farmers in Africa in becoming more entrepreneurial, particularly those poorer farmers who were previously excluded from markets, including women farmers (the second group). Multiple case studies confirm that, given the right support, these farmers are able to increase their productivity and competiveness and participate in traditional, restructured or new markets (see, for example, the case studies discussed in ASFG 2010). The challenge is to facilitate this process on a larger scale.

Box 1: Who is the framework for?

This framework is aimed at those who own or have user rights to land, even a small area. Many of the policy areas highlighted in the framework will be less relevant to subsistence farmers with very little or no land and other assets. The poorest of the rural poor require a separate set of measures to protect their interests, including

incentivising off-farm job creation, in agribusiness and elsewhere;
fair labour practices and protection of workers’ rights;
social protection and productive safety nets; and
voice and representation in policy decisions.

Nevertheless, strengthening the “Foundations” underpinning agricultural investment (rural infrastructure, rural public goods and the investment climate, as set out in Chapter 3) will certainly improve the prospects of subsistence farmers and the very poorest as well.

On the question of how many farmers will benefit from investment in agricultural development, Wiggins (2011) reviews research conducted in 12 Latin American countries, which found that out of nearly 19.5 million households surveyed, no more than one-third had a reasonable prospect of leaving poverty as full-time farming households; the remaining two-thirds needed options to complement their income from farming (Berdegue and Fuentealba 2011, cited in Wiggins 2011). This implies that a multiplier of 2.1 would be required from family labour of farms to jobs for others; and if this is not achieved the result would be either large-scale migration away from farms or a large pool of rural unemployed, living in dire poverty.

8. The renewed focus within the international development community on agriculture is evident in initiatives such as the World Bank’s Doing Business in Agriculture (DBA) project, which aims to develop a set of indicators that would help incentivise governments to make the necessary reforms to promote increased investment in agriculture. This follows on the Bank’s recently completed Agribusiness Indicators project, which developed an approach for assessing the ease of doing agribusiness in seven pilot countries in Africa over 3 years.

9. However, early indications are that the DBA might encourage inclusive agribusiness investment which could potentially benefit mainly those smallholder farmers with enough assets and access to participate in new markets. There are fears among members of the ASFG that the DBA will not make adequate provision for – or could even actively damage the interests of – those smaller producers who may require a different set of policy measures to enable them to overcome the obstacles currently preventing their integration into markets.

10. The purpose of this framework is to identify what those policy measures could be. It suggests a range of indicators focused on the policies, practices, laws and regulations that can help create an enabling business environment for farmers and specifically support those smallholder farmers that are not yet market-ready but who have the potential to be active market participants. The intention is for this framework to be used as a basis for advocacy on policy reform aimed at increasing the number of poorer farmers that benefit from investment in agricultural development. The framework does not purport to suggest solutions for the poorest farmers, who will benefit more from a different set of policy interventions as set out in Box 1.

Box 2: Obstacles to smallholder farmers’ market access

A range of factors conspire to prevent smallholder farmers in Africa from scaling up their participation in markets. Many farmers do not have secure rights to the land, forests, fishing waters or other resources they depend on for their livelihood. Women farmers’ rights are particularly insecure. This discourages investment in productivity-enhancing assets and increases farmers’ vulnerability. Competition for land and water is increasing due to global food security concerns, demand for biofuels and climate change impacts. This poses a threat to those farmers whose rights to resources are insecure. Climate change is increasing the frequency and severity of the extreme weather events such as droughts and floods that can have a devastating impact on smallholder output.

Many smallholders farm on poor, fragile or degraded soils, and lack access to affordable and appropriate inputs including quality seeds, fertiliser and pest control measures which leaves them with very low yields. A lack of accessible storage and warehousing facilities means farmers often have to travel long distances to markets, while poor infrastructure in many rural areas result in very high transport costs. As a result of decades of under-investment in agriculture, smallholders do not have adequate access to research or extension services, and often lack information about prices which, combined with their weak bargaining position, often result in them not achieving optimal prices for their output. Smallholder farmers are typically poorly served by finance providers, with little access to credit or savings and insurance instruments. Small-scale producers tend to have little say in decisions that affect them and no scope for influencing research or policy agendas. Finally, despite growing demand in domestic and global markets for agricultural produce, these markets are undergoing rapid and dramatic changes that make them increasingly inaccessible to many small-scale producers.

The remainder of this section discusses these obstacles in more detail.

Sources include Van Schalkwyk et al (2012), IFAD (2010), Jaffee (2011), ASFG (2010), Vorley et al (2012)

11. Development of the framework was based on a literature review that focused on obstacles standing in the way of smallholder farmers’ market access, and recommendations on how to overcome them. Findings from the literature are enhanced with case studies drawn from the collective in-country experience of ASFG members. Indicators are wide-ranging but this is by no means an exhaustive list.

12. It should be noted that this report is an internal document intended for reference only. It is not a position paper setting out the collective views of the ASFG, and does not purport to be representative of individual ASFG views.

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[1] The OECD uses a 5-level classification of ‘rural worlds’: Large commercial farms, smallholders who produce commercially, smaller farms mainly devoted to subsistence, landless labourers, and the poorest households that need social assistance (OECD 2006). The 3 categories described here would correspond to the middle 3 OECD rural worlds. See Dorward (2009) on the three strategies available to these different groups to escape poverty: ‘stepping up’, ‘stepping out’ and ‘hanging in’. Vorley et al for Oxfam (2012) combines these 2 classifications in the definition of their Rural World 1,2 and 3.