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Do small farms remain 'engines of growth' & central to national development?
Worldwide, agriculture is under pressure to change. But to what end and to whose benefit? In the industrialized countries small subsistence farms have long since been replaced by large commercial enterprises; certain efficiencies have resulted but so has a massive movement of labour off-farm. In Africa, Asia and Latin America small-scale agriculture remains the majority activity of the rural sector and the major source of rural employment but, confronted with changes in world trade and falling commodity prices, can small-scale agriculture remain viable and the 'engine for development', which has been suggested as its pivotal role in national development? And if not, what will be the economic and social consequences?
Smallscale farming as engine of economic growth
Agriculture still accounts for a quarter of GDP in sub-Saharan Africa, and thus remains one of the primary motors of growth and poverty reduction.
Contrary to some pessimistic beliefs, food production has increased in Africa - by over a quarter in the last two decades. This increase has not,
however, been as fast as in other regions, and has not been fast enough to prevent food imports rising and per capita food availability falling.
Stephen Devereux and Simon Maxwell in the introduction to Food security in sub-Saharan Africa (In Print
01-5)
With the right kind of policy and investments to help them compete, small-scale farmers can make valuable contributions to the growth of their
countries. In many cases they are the only engine of growth that's available. So it's imperative not only for dealing with rural poverty but for the
social aspects of the population at large.
Dr Peter Hazell, IFPRI, from interview with WRENmedia
Land productivity of small farms is at least twice that of the largest ones in Colombia, Brazil, India and Malaysia.
Caroline Ashley and Simon Maxwell quoting IFAD figures in Introduction to Rethinking Rural Development
Small farmers in sub-Saharan Africa are efficient, usually making good use of their resources and are certainly more efficient than many large
farmers. However, the vast majority of them are very poor. The challenges faced by small-scale farmers are first the decline in prices for major
export commodities (cocoa, coffee, cotton, palm oil, tea), which has been compounded by rising costs of farm inputs. Then there is the trend towards
globalization, which in theory should give small farmers access to lucrative markets, but is likely to spell death for many small farmers, who will
lose much of their urban markets to imported goods from other countries.
Dunstan Spencer, Sierra Leone
These people don't have alternative livelihoods to replace farming, and it's going to be a long time, even with favourable economic growth and
development within those countries ... before those economies can absorb all those people into productive jobs outside agriculture.
Dr Peter Hazell, IFPRI, from interview with WRENmedia
Agriculture in South Asia still engages about two-third of the work force and contributes roughly one-fourth to the gross domestic product of the
region. Therefore, what happens to small farmers in South Asia has significant ramifications, both at regional and global levels…small farmers
are certainly going to remain in South Asia, at least for the next two decades. However, they are going to face a number of challenges. They can
respond to these and even benefit from them under the right policy environment. But if the policymakers fail to create that environment, the gains
would go the big ones, whiles the pains would come to the small and marginal farmers.
Ashok Gulati, Director of Markets and Structural Studies Division, IFPRI
Changing patterns in rural sector
Rural populations continue to grow in absolute terms but shrink in relative terms, compared with the population as a whole. In economic terms, it
is noticeable that agriculture has declined sharply in relative terms, as an employer and as a contributor to exports and GDP.
Caroline Ashley and Simon Maxwell, Introduction to 'Rethinking Rural Development'
The arguments and data pulled together by Irz and his colleagues certainly make a convincing case. They identify twelve separate reasons why
agricultural growth might be expected to reduce poverty, at farm level, in the rural economy and nationally. The effects are direct and indirect,
short- and long-term, and of a partial and general equilibrium nature. They are not guaranteed, however. For example, agricultural growth may lower
food prices and thus provide cheaper wage goods which stimulate industrial growth: however, if the economy is open to international trade, prices
will not fall below international levels and the benefit may not materialize.
Irz et al. quoted by Caroline Ashley and Simon Maxwell, 'Rethinking Rural Development'
Datt and Ravallion established that in India rural growth reduces poverty both in rural and urban areas, but urban growth does not alleviate
poverty in rural areas. Similar results, emphasising the the importance of agricultural growth, are available for Bangladesh, Kenya the Philippines
and Bolivia…...increases in yield have the potential to lift a large number of individuals out of poverty. Specifically, a yield increase of
one-third might reduce the numbers in poverty by a quarter or more.
Quoted by Caroline Ashley and Simon Maxwell in Introduction to 'Rethinking Rural Development'
Impact of competition and policy changes on small farms
An important question regarding future agricultural development in Latin America is whether smallholders can enhance their productive efficiency
in order to compete with large-scale agriculture (Rosegrant et al.). Similar sentiments have been expressed regarding sub-Saharan Africa
(Spencer), and, with qualifications and more optimism, India (Gulati).
Caroline Ashley and Simon Maxwell, Introduction, 'Rethinking Rural Development'
The WTO is creating an environment where small farmers could actually benefit, if only their own governments put the right policies and
investments in place. You can't blame the WTO and globalization for lack of infrastructure in a country, or lack of marketing institutions. These
issues must be made by the countries themselves.
Dr Peter Hazell, IFPRI, from interview with WRENmedia
The case for small-scale agriculture has never been stronger. What's happening is the private sector has taken over much of agricultural research
and investment. But the private sector is not that interested in the poorest countries, it's not that interested in the poorest regions and it's not
that interested in the smaller scale farming. So the role for the public sector is important. But the public sector has responsibilities, it has to
refocus its efforts on the smallest farmers producing perhaps the least commercial crops.
Lawrence Haddad, Director, Food Consumption & Nutrition Division, IFPRI quoted from AGFAX interview, WRENmedia
Widespread labour-intensive rural non-farm growth appears to have been central to East and South East Asian success. We know that such growth is,
in its early stages, fastest where there is demand, especially for consumer goods, from a not-too-unequal, fast-growing local farm sector. Such rural
no-farm growth readily broadens to wider markets later. Hence the strategies of labour-intensive technical progress, and wide distribution of land
and human capital, not only reduce poverty in the short run, but also ease the transition from agriculture-based to more broad-based poverty
reduction.
IFAD Rural Poverty Report 2001 - The Challenge of Ending Rural Poverty
Two sets of prescriptions are commonly presented to governments in response to these core problems of agricultural productivity. The first is to
reduce agricultural subsidies in the North, currently costing an estimated $360 billion a year, and thereby create new markets and allow prices to
rise. There is some scope here, but not as much as sometimes thought. Stevens, for example, reports that a 30% reduction in protection (more than was
achieved in the Uruguay Round) would raise wheat prices by only 6%: this is equivalent to reversing about three years' worth of the secular decline
since 1970. The second solution is for the governments of developing countries to invest more in public goods for agriculture, and amounts to finding
a way to reduce costs and increase efficiency.
Caroline Ashley and Simon Maxwell, Introduction to 'Rethinking Rural Development'
Farmers in Africa have had trouble increasing their productivity mostly because of public goods deficits (internal peace, protections for
community property, adequate rural infrastructure) and sufficient investments in agricultural research. These missing public goods at the national
level are holding Africans back. Farmers in Africa hesitate to invest in more productive farming techniques so long as under-funded national
agricultural research and extension agencies are unable to demonstrate the promise of those techniques.
Robert Paarlberg, Associate at the Weatherhead Center for International Affairs, Havard University
Credit for small farmers has disappeared. They must have credit. They must have technologies. They must have market access. If we put these kind
of things in place then they'll beat the pants off the bigger farmer, and they'll compete in the market. But it's not a level playing field now and
it's getting less level for the small farm. So I'm pessimistic in the sense that one sees the dangers, one sees the complacency on the part of
decision makers, both government policy makers but even more so in the donor community. There's complacency, there's blindness to these threats. But
if we could get people mobilised to do the right things, the future could be very bright for small farmers, and they would be a major engine of
growth for many of these poorer countries.
Dr Peter Hazell, IFPRI, from interview with WRENmedia
Contract farming is an approach that can contribute to both increased income for farmers and higher profitability for sponsors. When efficiently
organized and managed, contract farming reduces risk and uncertainty for both parties. The approach would appear to have considerable potential in
countries where small-scale agriculture continues to be widespread. In many cases small-scale farmers can no longer be competitive without access to
the services provided by contract farming companies.
Contract Farming: partnerships for growth published by FAO (see In Print 01-5)
Levels of poverty are still high in South Asia, and high and increasing alarmingly in Africa. In our global family, one in five lives in extreme
poverty and more than 800 million are undernourished. That's why the focus of the World Bank and other development agencies is now swinging back to
poverty. The contribution of the farming systems approach is a framework that will help them set their priorities for investment in food security,
poverty reduction and economic growth. In other words: in broad-based agricultural development that reaches and benefits the poorest, and hungriest,
small-scale farming families.
John Dixon, co-author of 'Global farming systems study' commissioned by the World Bank, quoted in "Global Farming Systems" FAO
Agriculture 21 Spotlight article
I've seen examples in South Africa where farmers' associations get better extension services, they get a seat at the table in terms of these
poverty reduction strategy processes. Now farming in South Africa is a highly political issue but I think it could be a hot issue in many countries.
It has to be because if small-scale farming is not a vibrant issue there's going to be huge out-migration to urban areas. And it's not just people
that migrate its poverty that will migrate to urban areas. And it could even spill over into international migration and that causes all kinds of
tensions. So governments that don't invest in small-scale agriculture are selling themselves short for many reasons.
Lawrence Haddad, Director, Food Consumption & Nutrition Division, IFPRI quoted from AGFAX interview, WRENmedia
Rural non-farm economy
An alternative is to emphasize the rural non-farm economy (RNFE). As Start points out, recent surveys suggest that non-farm sources account for
40-45% of average rural household income in sub-Saharan Africa and Latin America and 30-40% in South Asia, with the majority coming from local rural
sources rather than urban migration. Much RNFE, however, is independent of agriculture, for example in Ghana (Canagarajah et al.).
Caroline Ashley and Simon Maxwell, 'Rethinking Rural development'
As Barrett et al. observe, it is difficult to imagine an effective rural poverty reduction strategy for Africa that does not aim to harness
the potential of the non-farm sector.
Caroline Ashley and Simon Maxwell, 'Rethinking Rural development'
