Smallholders critical to reigniting rural development in Asia #globaldev

By Thomas Rath, Country Programme Manager, Asia and the Pacific Division 

Rural poverty has declined throughout Asia and the overall economic performance has increased. Agricultural development has played a major role in these improvements with smallholder farmers in the lead. Around the world they already feed almost a third of the world’s population and produce 80 per ent of the food consumed in the developing world. But we need to take smallholder agriculture to the next level to make sure rural communities can play an important role in producing enough food for a growing population.

A good opportunity for Asian smallholders to boost their productivity and increase their incomes coincides with an important change in the Asian food retailing market. Supermarkets with global links have emerged, particularly in South East Asia, responding to changes in life styles, the liberalization of retail trade and the entry of foreign direct investment in Asia-Pacific countries. By 2015, supermarkets in China are expected to reach 62 per cent market share, while Malaysia is expected to reach 61 per cent, Thailand 48 per cent, and the Philippines 36 per cent.

Supermarket chains can offer farmers better deals – higher prices and greater certainty of selling the product than traditional supply chains. But in return farmers are obliged to meet stringent quality requirements and adhere to food safety standards. Also supermarkets usually prefer dealing with few large farmers rather than many small farmers.

Producers’ associations or cooperatives can help small producers gain a footing in international food retailing. Belonging to an organized group allows them to bulk produce, reduce costs through economies of scale and, perhaps most importantly, to strengthen their bargaining power with private-sector actors. Membership can also bring access to financial, processing and business service. All of which are key to empowering farmers to deal with the private sector on a more level playing field.

One of the most well-known producer organizations in Asia is the Indian dairy cooperative. It comprises 12 million members, including landless labourers and women, and produces 22 per cent of India’s milk supply. In China, a group of small scale growers, aided by the local government, formed the Ruoheng watermelon cooperative, which then sold directly to wholesalers, retailers and supermarkets. Due to its timely delivery, quality, and marketing success, the cooperative’s membership increased from 29 to 152, and its farmed area increased from 0.2 hectare in 1992 to thousands of hectares in 2005.

The ability of smallholder farmers to increase their production in a sustainable way is enormously important. Not only to further reducing rural poverty in Asia, but also to feeding the world’s growing population and resolving pressing environmental and climate challenges. Enabling smallholder farmers to benefit from the proliferation of supermarkets and export opportunities in the region can set the stage for new progress in overcoming rural poverty and hunger in Asia. Our focus should be on helping them develop the knowledge and the other tools they will need to do precisely that.

Originally posted on Business fights poverty blog

IFAD potential involvement in the Working Group on Environment in the Greater Mekong Region: scope and added value

On May 24-25, we attended the 17^th Annual Meeting of the Great Mekong Sub-region (GMS) Working Group on Environment (WGE) in Siem Reap, Cambodia, during which the Core Environment Program 2012-2016 for the Sub-region was discussed. While IFAD has been participating to the Working Group on Agriculture for several years, this was the first time that our organization has been invited to attend the Environment Working Group.

This was notable for at least two reasons. First, the recognition by the WGE of the strategic importance of the agricultural sector in achieving the objectives of the Core Environment Program, and - consequently - of the need to involve partners that do not ‘strictly’ belong to the ‘environmental constituency’ in the Group. Second, the implicit recognition of the increasing role that IFAD is playing in promoting sustainable agriculture and climate-resilient investments.

At the end of the two-day meeting, the following are the key points that define the scope for and the added value of IFAD’s possible involvement in the partnership:

(1)  IFAD ongoing portfolio in the sub-region includes a significant number of operations that already support, directly or indirectly, the strategic objectives of the Core Environment Program (e.g. the Sustainable Natural Resource Management and Productivity Enhancement project in Laos, or the Pro-Poor Partnership for Agroforestry Development in Vietnam), thus providing a potential for co-financing or parallel financing;

(2)  When IFAD existing or planned portfolio in the sub-region does not directly support the objectives of the Core Environment Program, it often provides a baseline upon which additional financing/co-financing can easily generate environmental benefits;

(3)  In a context in which most of the existing resources focus on supporting ‘soft’ activities, IFAD’s added value stands in the fact that its resources could be used to finance ‘hardware’ and on-the-ground activities.

Interviews with Participants of IFAD APD's APR 1-6 Nov 2010, Nanning, China

IFAD's Asia and the Pacific Division concluded their annual performance review last week in Nanning, China. On the 3rd day of the event, we interviewed a few participants to get their feedback about the event, which was designed first and foremost as a knowledge sharing and learning event. Some of those interviews have been woven into a video and presented during the event. We share it with you here.

Future of Smallholder Farming, seminar by Peter Hazell

What challenges do smallholder farmers face today? What are their viable options for growth and prosperity? What is their future? The Office of the Chief Development Strategist invited Peter Hazell, Visiting Professor at Imperial College London and formerly of the World Bank and IFPRI, to share his views on the changing context of smallholder farming. The discussion will help shape the concept of a proposed conference, to be held in November 2010 at IFAD.

Hazell started his lecture by observing that smallholder farming is not only persistent, but there are increasing numbers of smallholder farmers across the globe today . China, for example, has not yet reached a tipping point where the number of its smallholder farmers is decreasing. The trend exists because rural populations keep growing, yet in the face of this growth, many countries cannot create enough productive nonfarm jobs.

A minority of smallholder farmers have increased their incomes by specializing in high-value products, but most smallholders remain poor, face stagnation, and are partially diversifying into nonfarm employment to increase their income. Hazell made the point that this is a pathway of survival, not prosperity—most part-time nonfarm jobs undertaken by smallholder farmers require little skill and are very low wage.

Hazell challenged the audience by saying that an important question to ask when opening any discussion of smallholder farming is, what has changed? He argued that after all, smallholder farms have been present since the advent of settled agriculture. Presently there are several facets of change in smallholder farming.

• Firstly, small farms are becoming increasingly small.
• Secondly, new market chains have emerged that present opportunities for profit but which can also be difficult to join.
• Thirdly, globalization has introduced increased competition into both export and domestic markets.
• Fourthly, the growing privatization of agricultural research is leading to the neglect of problems specific to small farms.
• And lastly, climate change may create new problems for smallholder farmers.

Numerous conferences have been held on the state of smallholder farming and we understand the contours of the issues fairly well at this point. What is lacking is an understanding of the operational steps required in the near future. So the challenge is how can we enable smallholder farmers to capture new opportunities and prosper?

The prospects for smallholder farms becoming viable businesses will ultimately depend on their connection to the market. Market access is more important for business development than any other factor, including technology adoption. Smallholder farmers have shown themselves to be naturally entrepreneurial, however, there is an important role for training farmers in the acquisition of business skills. The reality of dealing with a variety of private sector agents such as input sellers, wholesalers, and sourcing agents requires skills and empowerment. Particular attention needs to be paid to vulnerable groups such as women and indigenous populations.

Difficulty lies ahead for the development community in targeting those farms that are potentially viable businesses. How many smallholder farmers can engage in business and how many will be left out? This necessarily excludes a segment of traditional beneficiaries of IFAD and other agencies, and the development approach for this group of people will become a critical issue.

Hazell pointed out that while agriculture is widely regarded as a main driver of economic growth, the debate over small versus large farms continues. There is not necessarily broad popular buy in for a small farm agenda in many countries and the likely solution will involve some mixture of big and small farms. This issue deserves further clarification.

Environmental sustainability will often be at odds with market-driven agricultural development. Consider the case in which the market demands a particular crop that contributes to soil degradation – market forces will dictate specializing in that crop but a cycle of environmental deterioration will ensue. The issue of sustainability and natural resource management will need particular attention within a business context.

Climate change will have a tremendous impact on smallholder farmers, who are already vulnerable due to limited access to technology and resources. However, outside of areas where deforesting is a problem, smallholder farmers are not among the major contributors to climate change and thus mitigation efforts may best be focused elsewhere. One interesting area for mitigation efforts is payments for environmental services, which could improve farmer livelihoods. Overall, smallholder farmers may be best served by adaptation strategies.

Off-farm opportunities are also important when considering smallholder farming and national economic development pathways. Rural-urban migration will have to play a bigger role in Latin America and Africa. In the Asian Green Revolution, agricultural development stimulated the growth of the nonfarm economy, which in turn provided employment opportunities for those moving out of agriculture. Today, however, the backward linkages to the rural economy are urban and industrial rather than agricultural. Backward linkages have been stagnant in Africa, where the nonfarm economy remains flat and exit opportunities are scarce.

New innovations include the rise of producer organizations as a means by which to connect smallholders to modern market chains. Much potential lies in this form of organization and it will be useful to look at which types of organizations have worked and what can be scaled up. Also, social enterprises will allow NGOs to engage on a commercial level while maintaining a development agenda. Innovative ways of supplying inputs and stimulating markets can be explored. Finally, there is a changing role for governments in coordinating investment and growth strategies, but too much involvement (such as in the Asian Green Revolution) is not desirable. The proper role for governments is that of stimulating partnerships. There is a need for innovative partnerships, include public-private and unions linking smallholders with medium and large-scale farms.

Hazell concluded his lecture by saying that with a renewed interest in agriculture at the international donor-community level, it is an exciting time to be involved in rural development. For guidance we need to look at the success stories: the organizations, programs, and interventions that have worked and could be scaled up. Of particular interest are cases that have involved private sector operators, social enterprises, and financial service providers. The challenge for IFAD will be to capture the knowledge that exists here, identify the gaps, and operationalize findings into development strategy.

Gender focal points from 16 countries in Asia meet to plan work for MDG3 torch

Partners and stakeholders pictured here from IFAD country programmes and projects in Afghanistan Bangladesh, Bhutan, Cambodia,China, India, Indonesia, Kygystan, Laos, Maldives, Mongolia, Philippines, Sri Lanka, Thailand and Viet Nam met last week in Cambodia to work together to uphold IFAD's commitment to the MDG3 Torch received late last year from the Government of Denmark.

Focal points collaborated in drafting their own plans for including one additional activity for gender equality and women's empowerment to their workplans for 2010. During the meeting, focal points received a copy of the Gender in Agriculture Sourcebook, published by IFAD, FAO and the World Bank. Together with Kyoko Kuskabe, Associate Professor of Gender and Development at the Asian Institute of Technology they studied how to draw on the reference material in the Sourcebook in the context of their own fieldwork.

The occasion also served to hold a Knowledge Market, share experiences and acquire new insights from one another using knowledge sharing methods learned during training provided earlier under the Knowledge Networking Programme for Rural Asia and the Pacific, a grant-fund regional programme cofinanced by IFAD and IDRC to support the development of the IFAD Asia and Pacific Regional Network.

Focal points, all members of the IFAD Asia and Pacific Gender Network that is just one part of the larger IFAD Asia and Pacific Regional Network, agreed to expand the gender network further by inviting colleagues from projects and programmes who could not attend the face-to-face meeting in Siem Reap.

They also committed to developping and sharing more sector-specific materials on how to make sure that project targetting and support to beneficiaries in technical fields like animal husbandry and microfinance can be improved.

A high point of the meeting was the technical competence and commitment to gender mainstreaming transmitted by The Chhun Hak, Chief of the Local Governance Unit at of the Ministry of Womens Affairs in Cambodia who explained in detail how his institution works with women and men in IFAD-funded village level investment activities to achieve MDG3 objectives.