Smallholders Play Fundamental Role as Business Partners in Feeding the World

By Kanayo F. Nwanze (this blogpost was originally posted on the World Economic Forum blog)

What do the heads of multibillion-dollar companies and those working in development have in common with millions of small farmers? They all know that agriculture can transform economies and lives, allowing people to move out of poverty.

Nearly one billion people go hungry every day. Most live in the rural areas of developing countries. With food prices once again soaring, clearly more needs to be done so that all people have enough to eat. But if we focus only on feeding people today, we will be doing nothing to prevent hunger in the future. 

We must create the conditions for poor rural people to move permanently out of subsistence and into the marketplace.  GDP growth generated by agriculture is at least twice as effective in reducing poverty as growth in other sectors. And experience repeatedly shows – in China, Ghana, Viet Nam and elsewhere – that smallholders can lead agricultural growth.   

The New Vision for Agriculture, to be unveiled this week in Davos, recognizes the fundamental role of smallholders as business partners in feeding the world, protecting our planet and creating prosperity.
 
Ensuring global food security will require the collective will to create an enabling environment for smallholders,  while addressing the weaknesses in global food and agricultural markets. Only then will we be able to create a business-oriented agriculture sector in developing countries and, in so doing, sow the seeds for a more nutritionally secure world. I am looking forward to the discussions in Davos and hope that this year’s meeting will spur leaders not just to listen and debate, but to take action.

For the most up-to-date, comprehensive assessment of rural poverty, see IFAD’s Rural Poverty Report 2011.

Change Africa from Within

by Kanayo F. Nwanze, IFAD President

ROME – A severe food crisis currently threatens southern Sudan. In East Africa, where millions of people already are dependent on food aid, a sharp rise in the cost of staple crops looms.

These are just the latest sources of concern in a turbulent period that began two years ago when food shortages hit many countries in Africa and Asia due to a worldwide spike in prices. Higher food prices meant that poor people, already struggling to meet basic human needs, were pushed deeper into poverty. On its heels came the global financial crisis, which also hit the poorest the hardest.

Agriculture is the main employer, job creator, and export in most developing countries. Historically, agriculture has driven economic performance in many countries, generating growth that has been shown to be at least twice as effective in reducing poverty as growth in other sectors. Investment in agricultural and rural development is therefore vital to food security and sustainable economic development.

Indeed, the vast majority of today’s developed countries grew from strong agricultural foundations, where surplus production generated wealth and prosperity. This is what is happening today in Vietnam, and it is the path that China and India took on their way to becoming engines of economic growth.

Poverty is predominantly rural. Globally, three-quarters of people living in extreme poverty are in rural areas and depend on agriculture and related activities for their livelihoods. About 380 million women, children, and men in sub-Saharan Africa live on less than $1.25 a day.

Many are malnourished or hungry. But, with some 80 million small farms in sub-Saharan Africa producing 80% of agricultural goods, smallholder farmers have a key role to play in resolving the financial and food crises and unleashing Africa’s potential to feed itself.

In order to lift people out of poverty and ensure food security, a sustained effort is needed to develop Africa’s agriculture and the associated infrastructure – notably roads, telecommunication, and energy – needed to unleash agricultural potential. Strengthening agriculture is one of the best investments any African country can make.

Members of the African Union recognized this in 2003 in Maputo, Mozambique, pledging to increase spending on agriculture to at least 10% of national budgets. Although eight countries have met or surpassed that target, the continent as a whole has not.

But reaching this target is not enough. Governments must create the right policy environment to allow for appropriate investments in research and development to enhance productivity and increase production.

Investment in agriculture in Africa must focus on creating a dynamic smallholder sector. A vibrant rural sector generates local demand for locally produced goods and services. In turn, this can spur sustainable non-farm employment growth in services, agro-processing, and small-scale manufacturing. This is crucial for rural employment, without which poor rural young people will be driven away from their communities in search of work in the cities.

Agriculture, predominantly on a small scale, accounts for about 30% of sub-Saharan Africa’s GDP and at least 40% of export value. In a number of small countries in Africa, agriculture plays an even greater role, representing 80% or more of export earnings.

The potential in these numbers will remain untapped unless African countries put the right policies in place to help agriculture to develop and flourish. But transformation of African agriculture will not happen until the private sector is fully engaged in agricultural production, processing, and marketing. Governments must become more investor-friendly to attract greater private-sector interest.

More broadly, African countries need to put their political and economic houses in order. They must continue to deepen the foundations of democracy and ensure the political stability that is so critical to economic growth. It is also crucial that they continue to improve their systems to create an enabling environment for dynamic rural growth to transform subsistence farmers into entrepreneurs.

Given their central role not only as mothers and caregivers, but also as farmers, rural women hold the key to food security. That is why any nation that does not provide opportunities for women will not reach its full potential. Significant progress must be made in Africa to advance both women’s empowerment and their status in society – particularly with regard to land and credit.

Finally, although investment in development assistance is key to supporting Africa’s advancement, nations will ultimately have to take responsibility for their own development. No nation, no people, ever experienced growth that sprang solely from external support.

So Africa’s development must be made in Africa, by Africans, for Africans. Every tree, every plant, must be fully rooted in its own soil to flourish. Change cannot be imposed from outside, it must be cultivated from within.

Opinion editorial also published on:

• Project Syndicate
• World Economic Forum Ning site
  

Rebuilding Haiti From Davos

When the captains of business and industry meet in Davos for the World Economic Forum this month, the devastation caused by the recent earthquake in Haiti will be near the top of their agenda. It should be, for there is much they can do to help.

Haiti was in dire straits even before the earthquake struck. Rapid population growth, coupled with political and social turmoil, helped make Haiti the poorest nation in the Western hemisphere. Right now, the international relief efforts in Haiti are rightly focused on the country’s urban areas, which suffered most in the earthquake. But when rebuilding starts, rural areas must not be overlooked.

In fact, many of those who have lost their homes and jobs in Port-au-Prince and other Haitian cities will likely return to rural communities where they have family. This will put pressure on the rural economy and place more strain on areas already grappling with meager resources.

Agriculture plays a vital role in Haiti’s economy, yet the country does not produce enough food to feed its people. Some 60% of the food Haitians need, and as much as 80% of the rice they eat, is imported. Sustainable agricultural development is essential to improving the country’s prospects for long-term economic and food security.

The International Fund for Agricultural Development (IFAD) has seen first-hand how investing in agriculture can help people recover from natural disasters. Our experience in developing countries tells us that investments in agriculture can be twice as effective in reducing poverty as similar investments in other sectors.

Less than two years ago, Haiti was devastated by a hurricane that caused about $220 million in damage to food crops – at a time when the population was also struggling to feed itself because of high world food prices. IFAD funded a program to kick-start food production. The 2008 winter planting yielded $5 million in bean crops, helping to improve food security and the incomes of poor farmers.

While the crisis in Haiti is a major setback in achieving increased food production, it should not be a stop sign on the path to long-term development. The challenge is to ensure that earlier efforts are not lost, and that recovery includes a push toward sustainable agricultural production systems for Haiti.

One group now rising from the rubble is Fonkoze, a microfinance organization operating predominantly in rural Haiti. With assistance from IFAD’s multi-donor Financing Facility for Remittances, Fonkoze purchased satellite phones and diesel generators in 2007, and began delivering remittance services in rural areas where basic infrastructure is often weak or lacking.

Only today is the true value of that investment coming to light. Fonkoze was back in operation only days after the earthquake. Remittances transferred through Fonkoze are free, giving recipient families in Haiti vital resources to meet short-term needs while also encouraging long-term development.

More than $1.9 billion was sent to Haiti in 2008 through remittances, more than official development assistance and foreign direct investment combined, with more than half of these funds going directly into the hands of families in rural areas.

When I am in Davos, I will highlight for the CEOs and business leaders the mutual benefits of forming partnerships with small producers. Much-needed capital investment can enable smallholder farmers to provide the private sector with a sustainable supply of high-quality agricultural produce.

Indeed, smallholder farmers are often extremely efficient producers per hectare, and can contribute to a country’s economic growth and food security. For example, Vietnam transformed itself from a food-deficit country to the second-largest rice exporter in the world by developing its smallholder farming sector. As a result, poverty fell from 58% in 1979 to below 15% today.

In Haiti, and in developing countries around the world, smallholder farmers can contribute to food security and economic growth just as they did in Vietnam. But they cannot do so without secure access to land and water – as well as to rural financial services to pay for seed, tools, and fertilizer. They also need roads and transportation to get their products to market, and technology to receive and share the latest market information on prices. Above all, they need a long-term commitment to agriculture from their own governments, the international community, and the private sector, backed up by greater investment.

The productive capacity of Haiti’s small farmers will be crucial in helping the country to overcome this crisis and avert severe food shortages. That is why Haiti needs the private sector now more than ever – to help rebuild both the country and the livelihoods of poor rural people.

Indeed, the private sector has a pivotal role to play in rural development, not just in Haiti but throughout the developing world. But public- private partnerships must be backed up with the right policies and support for rural communities, so that poor rural people can increase food production, improve their lives, and contribute to greater food security for all.

Organizations like IFAD can help link the private sector and smallholder farmers. We can support investments that expand the productive potential of the smallholder sector in the developing world by helping investors reduce their risks, and by assisting smallholder farmers in accessing new financing and markets through private-sector partnerships.

Klaus Schwab, the founder and chairman of the World Economic Forum, has said that this year’s Davos meeting should be used to “solicit commitments in practical help for relief of the continued pain of Haiti’s people, and particularly for the reconstruction of Haiti.” In Davos, I will work to ensure that the interests of the world’s smallholder farmers – in Haiti and in developing countries around the world – are represented.

Kanayo F. Nwanze, is President of the International Fund for Agricultural Development (IFAD), an international financial institution and a specialized agency of the United Nations.