The International Fund for Agricultural Development (IFAD) posted a link on its Twitter feed yesterday to a document entitled “Smallholders Can Feed the World.”
Upon closer inspection, it turns out that the document really is mostly a marketing brochure for IFAD’s activities, but the document is not completely devoid of interest. Indeed, it discusses how smallholders can actually feed the world when they are integrated in agricultural value chains. It gives the example of Ahmad Abdelmunem Al-Far, an Egyptian who
“[a]fter joining an IFAD-supported project, Ahmad received a plot of 2.1 hectares of newly reclaimed desert. The project introduced a credit fund, systems for sewage and refuse disposal, and drip irrigation. It also trained the farmers in crop and livestock production and in sustainable water and land management techniques.
Ahmad began cultivating fava beans, onions, green peppers, tomatoes and potatoes. He and his wife also bought cows for meat, cheese, butter, ghee, yogurt and fresh milk. And they planted oranges, which have become a cash crop. In 2008, they produced 40,000 tons.
The project helped the farmers develop direct links with exporters and major buyers in the domestic market. The 36,000 participating farmers now supply fresh oranges and authentic mozzarella cheese to the resorts of Egypt’s Sharm-el-Sheikh.”
The sheer number of hot topics being touched upon here is dizzying: Egypt, desertification, microcredit, water… Even gender issues get a nod when the document mention how “he and his wife” did all these wonderful things with the help of IFAD!
My Galbraithian skepticism of marketing aside, the document makes a good point when it discusses how, by integrating smallholders in agricultural value chains, there is considerable scope for improving their welfare:
“There are some 500 million smallholder farms worldwide; more than 2 billion people depend on them for their livelihoods. These small farms produce about 80 per cent of the food consumed in Asia and sub-Saharan Africa.
In my many years of working in agriculture and rural development, two things have become increasingly evident. The first is that farming at any scale is a business, and smallholders and producers must be treated as entrepreneurs. The second is that businesses need clear linkages along the value chain, from production to processing, marketing and, ultimately, to consumption. When these links are in place, wonderful things begin to happen.”
In a recent working paper, I show that smallholders taking part in agricultural value chains for different commodities (i.e., rice, tomatoes, cassava, maize, cotton, green beans, etc.) across six regions of Madagascar are actually better off than the smallholders in the same communities who do not participate in agricultural value chains. Those who participate in agricultural value chains enjoy incomes that are about 10 percent higher than others, they are more likely to receive a formal loan, they experience a shorter hungry season, and their incomes are less volatile.
Are agricultural value chains a silver bullet? Most definitely not. In fact — and at the risk of committing heresy — one should treat agricultural value chains that are successful (i.e., those in which nothing goes wrong and in which we observe the same firms and households participating year after year) as something of a minor miracle.
Indeed, because there are so many “moving parts” in an agricultural value chain, there are many things that can go wrong. The growers may decide to sell the crops they are growing under contract for the processing firm on the local market instead of to the processing firm. The growers may choose to divert the inputs they receive from the processing firm to their own non-contracted crops. The processing firm may decide not to honor the price at which it had told the growers it would buy the contracted crop. And so on.
In another recent working paper, my coauthors and I discuss agricultural value chains across three continents and discuss many of the things that can go wrong within the institution. So smallholders can certainly feed the world, but the contractual and legal environments have to be right, and the macroeconomic context must lend itself to it.
In the interest of full disclosure, I should note that I have interned at IFAD over the spring and summer of 2001, between finishing my M.Sc. at the Université de Montréal and starting my Ph.D. at Cornell.