A Business Approach to Smallholder Agriculture

* By Andrea Sabelli There are an estimated 500 million smallholder farmers across the globe that produce food for over 2 billion people. These farmers work on plots of land that are under 2 hectares. The vast majority are poor and undernourished. Yet, the future role of smallholders in the food supply chain and as land stewards will be essential. By 2050, the global population is expected to grow by 2 billion. To meet food demand growth, FAO estimates that 90% of the increase in food demand will need to come from higher yields on existing farms, of which smallholders play a crucial role. Thanks to an example in Haiti, a business approach to smallholder agriculture may be what it takes for us to efficiently address demand.

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DATE

DECEMBER 02 2014

A Business Approach to Smallholder Agriculture

There is a need to ensure proper investments in these farmers to enhance their livelihoods and increase the productivity of their fields. Coupled with that, the impacts of climate change will likely alter production. It is critical that land-use practices are sustainable to ensure that ecosystems remain resilient, avoiding deforestation and degradation.

A recent report estimates smallholders' demand for finance is $300 billion (excluding China), of which just 2% is being met by social lenders or smallholder service agents. Smallholder service agents act as the middlemen between the smallholder farmers and the market. The objective of smallholder service agents is to enhance productivity and the livelihoods of the farmers. They often provide several services including:

1. improved seed, fertilizer and tools;

2. training to improve agricultural techniques;

3. financing in the form of credit, loans or purchase guarantees;

4. access to new markets for farm output; and

5. environmental protection standards

The Smallholders Farmers Alliance (SFA) in Haiti has added three additional services to this model, creating a community-scale business model combined with agroforestry production systems. The three additional services are:

6. training for farmers to become new smallholder service agents through a hybrid cooperative model that is self-financed and self-managed;

7. financial support, e.g. micro-credit, for women farmers; and

8. leadership development for farmers to foster community development.

SFA applied this approach to the SFA Gonaives Cooperative, which consists of 2,000 farmers. The farmers have all experienced a 40-50% increase in crop yields. Net farm income has increased by an average of 30%. Together the farmers are planting one million trees a year, contributing to the much-needed reforestation of the country. The key to success is based on two principles: (i) establishing an exit strategy, meaning that the cooperative will become self-sustaining without the need for future support from SFA and (ii) putting farmers first in all stages of project development and implementation. This model can prove to be revolutionary if replicated in other parts of the country, the region and globally.

The IDB’s CSR Program provided support to SFA to plant 20,000 trees. On October 24, 2014, 27 IDB employees from the Haiti Country Office visited the farming cooperative in Gonaives to participate in the tree-planting event putting #FarmersFirst.

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