Ending Hunger: Not without the Smallholder Farmers!

Globalisation has many important benefits but there are some unintended externalities as well. Social media today is much more prevalent and communities are no longer living in isolation of each other. Many who perceived themselves as doing well within their own rural surroundings are no longer content because they see now the economic disparities between themselves and those living far away. Yet they do not have the means to bridge the gap which then fuels frustration and resentment. We see time and again that when people leave rural areas because they cannot make a living, this sense of destitution often embedded in extreme poverty and hunger manifests itself into social tensions and conflict whether it be in Syria, Central African Republic or South Sudan.

A hunger free world likely?

Despite our astounding economic progress, particularly over the last century, about 850 million people do not get enough to eat on a regular basis. Another two billion plus people suffer from micro-nutrient deficiencies costing the world about US$3.5 trillion or 5%  of GDP annually. Then there are issues of growing global population demanding more and better quality food to be produced on increasingly shrinking arable land with less water and under the constant threat of climate change. Estimates suggest that cereal production will have to rise by 50% and meat production by 85% if we are to feed nine billion people by 2050.

So the question is whether we can properly feed the world going forward and what will it take to get it done.

We believe that a hunger free world within the next decades is realistically possible but time is running out. We need to understand that, unlike in the past, food security is no longer an individual problem but a collective problem requiring coordinated public and private action. No single entity whether public or private, national or international has the wherewithal to go it alone.

The solution probably lies around the 500 million smallholder farms supporting about two billion people around the world. Currently most of these smallholder families are struggling to get themselves and their families out of poverty and hunger. Supporting them to sustainably produce marketable surplus food will go a long way in reducing global hunger while ignoring them will compound food security and nutrition problems pushing many more into poverty and hunger. The consequences will be even more conflict in the future from the convergence of food, water and energy insecurity.

The Zero Hunger Challenge launched by the United Nations Secretary-General to end hunger within our lifetimes speaks of the necessity of an effective supply side response by doubling smallholders’ productivity and incomes; implementing sustainable agricultural systems and eliminating food losses; if we are to make sure that everybody should have sustained physical and economic access to nutritious and healthy foods.

Strength in smallholder farmers

"The success of smallholder farmers as globally significant surplus food producers will first depend on whether there is national and international political will and commitment to agriculture and rural development backed by appropriate levels of investments" . Farmers need sustained access to land, water, financial services and extension services. Rural agricultural infrastructure, including appropriate storage and feeder roads connecting farmers to markets, needs to be developed and maintained. Strong farmers’ organisations must be encouraged to improve how farmers collectively negotiate markets and influence agricultural policies and trade regulations at the national and global level. In the absence of such measures, smallholder farmers will continue to struggle with higher transaction costs and remain less competitive than their counterparts in food exporting developed countries even when the market conditions are favourable.

The “Purchase for Progress” (P4P) initiative of the World Food Programme (WFP) has successfully demonstrated that "Working with smallholder farmers is an economically viable business model".  For instance, each year WFP purchases about US$1 billion worth of high quality food commodities at competitive prices from countries where WFP has active operations. Also, purchasing from smallholder farmers within these countries not only supports families and local economies but reduces transit times and transportation costs for WFP. This is particularly important for WFP as about half of the ninety plus million people assisted by WFP each year belong to the smallholder families. So it is only logical for WFP to design and implement initiatives like P4P which bring public and private stakeholders together to assist smallholder farmers become more productive and resilient. Besides, combining market demand with capacity development activities presents a promising opportunity for smallholder farmers to improve their national food security and contribute towards pro-poor rural economic development.

P4P has worked with more than 200 technical partners including the Food and Agriculture Organization and International Fund for Agricultural Development in 20 countries to train over half a million farmers in agricultural production, agribusiness management, agro processing, credit and financial literacy, farmers’ organisations management, post-harvest handling, and gender equity. These capacity development initiatives have made farmers organisations more reliable suppliers of high-quality food for a wide range of public and private sector buyers. By learning to meet WFP’s procurement requirements, farmers are also in a better position to compete for additional private and public sector demand through commercial marketing channels.

Paving the way for the private sector

The public sector in developing countries is gradually realising the importance of prioritising food security and the associated pay-offs from "investments in rural infrastructure and institutions. These investments are necessary conditions for the private sector to come and address some of the market failures that particularly impact smallholder farmers" . The private sector is also realising the huge potential of investing in smallholders as new suppliers to meet the rapidly expanding demand in coming decades. The smallholder farmers are quickly becoming an integral part of the private sector business strategy rather than a half-hearted afterthought only to satisfy corporate social responsibility. P4P in many countries serves as a catalyst for public and private sector partnerships bringing smallholder farmers and the private sector together by building confidence on both sides.

Still there is a long way to go but the approach of connecting smallholder farmers to commercial and public markets is the right one. Thus far WFP has contracted more than 450,000 metric tons of food worth more than US$165 million through pro-smallholder modalities, primarily from farmers’ organisations representing more than one million smallholder farming families. These organisations have also sold an estimated US$50 million worth of food to other buyers. This is a good start which will continue to pay dividends in the future if the current efforts of capacity development are brought to scale.

Strengthening the food value chain

There are growing pains and teething problems as smallholder farmers learn commercial behaviour and adjust to the domestic and international supply chain requirements including quantity and quality standards. Thus patience is necessary as strengthening the value chain will take time but enable smallholder farmers to become active participants in large and competitive markets in the long term.

WFP proposes to work with national and international private and public partners to develop a “procurement platform” that contributes towards overcoming capacity building needs of the smallholder farmers and market bottlenecks at scale. WFP is calling upon other buyers to join this platform to achieve the 100% increase in smallholder productivity and income target that WFP, national governments and the private sector have agreed to achieve under the United Nations Zero Hunger Challenge. Through combined demand from WFP, the private sector and national governments in 20 countries, WFP’s target for the procurement platform is about US$750 million, benefiting 1.5 million farmers by 2016.

Finally, as the smallholder farmers become more efficient and organised, many will have to look outside the traditional subsistence farming system for livelihoods. These individuals and their families will require conditional and unconditional assistance through social safety net programmes until they find new income opportunities. Emphasis must be on growing rural economies by providing appropriate agricultural and rural development opportunities to people, particularly youth, who would otherwise migrate to urban areas out of pure economic desperation.

Arif Husain is Chief Economist at the World Food Programme.

This article was published in GREAT Insights Volume 3, Issue 6 (June 2014).