Roads not handouts for farmers

by Kanayo F. Nwanze, IFAD President

Smallholder farmers need roads and financial services not handouts.

If words and good intentions could feed people, there would be no hungry children in the world. But as those working in development know all too well, malnutrition, hunger and poverty are bound tightly together in a Gordian knot that requires collective action to cut.

The June G8 and G20 meetings in Canada focused on children's and women's health. World leaders must take care not to fall into the trap of seeing these things as a single resolvable issue. You cannot guarantee good health without a nutritious diet, you cannot ensure a nutritious diet without freedom from poverty, and you cannot free most of the world’s poorest people from poverty without taking a systemic approach to improving the lot of small farmers. Most of the world’s 1.4 billion extremely poor people live in the rural areas of developing countries and depend on agriculture for their livelihoods.

Helping developing countries to address food security and to become major food producers is the key focus of a public-private partnership meeting in Accra, Ghana, on 2-4 September. The African Green Revolution Forum is trying to build a consensus to grapple with agricultural deficiencies in Africa.

Feed children, feed their minds

The land farmed by poor people in developing countries is rarely bountiful. Less than 2ha of productive land is the norm for farms in Asia and most of Africa. In rural areas, many poor people do not produce enough food to feed themselves and their families. Instead, they are net buyers of food. With incomes of less than $1.25 a day, they cannot afford to buy much.

It is one of life’s ironies that three-quarters of Africa’s malnourished children live on small farms. In Asia and Latin America, farm children also often go hungry. Children who suffer from malnutrition early in life are forever deprived of their full physical, mental and social development potential.

Think small

But what if households could boost their productivity, gain access to new markets and ensure the kind of financial returns that would have demonstrable impact on development?

To break the link between malnutrition, hunger and poverty, rich and poor countries must support the poorest smallholders, creating the conditions for the transition from subsistence to commercial farming.

Numerous studies show that GDP growth generated by agriculture is at least twice as effective in reducing poverty as growth in other sectors. Experience repeatedly shows – in China, Thailand, Vietnam, India, Ghana, Burkina Faso and elsewhere – that smallholders can lead agricultural growth.

Small farms are often more productive, per hectare, than large farms, when agro-ecological conditions and access to technology are similar. Small farmers have a strong incentive to get the most from their land and their own labour. Indeed, there is ample research to show that there are few economies of scale in the production end of farming. Family farms have very low management costs and are labour intensive, while large farms are either heavily mechanised – offering few employment opportunities – or have high costs for managing the workforce.

Creating a green revolution also means not treating poor rural people paternalistically by doling out handouts. Smallholders need financial services to pay for seeds, tools and fertiliser. They need the protection of insurance. They need secure access to land, water, roads and transportation to get their products to market. They also need agricultural research and technology to improve their resilience to rapid economic and environmental changes. These are all things that governments and the donor community, with the support of the private sector, can put into place for small farmers.

Don’t stop now

A public policy environment that appeals to investors, combined with new commitment from the private sector, will lay the ground for a better agricultural sector for Africans and a route away from poverty.

Creating the conditions for rural poor people to develop profitable businesses, by reducing the cost of finance and by fostering their entrepreneurial spirit, will help to establish a vibrant rural sector across the value chain.

A dynamic rural sector will generate demand for locally produced goods and services. This will spur sustainable non-farm employment in services, agro-processing and small-scale manufacturing. With better access to higher quality food in childhood, young people will be able to contribute more to their societies. And with a greater range of rural employment options, rural youth will have an incentive to become the farmers of tomorrow instead of looking for work in the cities.

In recognition of agriculture’s power to improve developing economies and the need to grow enough food to feed the 9.1bn people who will be living on the planet 40 years from now, G8 leaders pledged around $20bn towards food programmes and sustainable agricultural development at the L’Aquila summit last year.

At a time when budgets are tight, countries may mistakenly think it prudent to cut back on investments in sectors such as agriculture and development. This would lead to greater world food insecurity and slower economic growth.

Progress at the African Green Revolution Forum in Ghana could set a good example for other regions. If the leaders of nations in Africa, Asia and Latin America take the necessary steps to create vibrant rural economies and the international community assists those countries that are making real efforts to help develop, they will be able to cut the ties that bind malnutrition, hunger and poverty.