Small farmers in developing countries must modernise their farming methods, but poorly understood reforms could exacerbate poverty instead of alleviating it.
Dr. Pedro Morazán, born in Honduras, is an economist who has been working as a research assistant at SÜDWIND since 1992. During this time he has been in charge of numerous evaluations and partner consultations. He has also published various studies and expert reports for different organisations, including GIZ/BMZ.
Because of low rates of industrialisation, particularly in Africa, the agricultural sector remains the most important employer in many regions. At the same time, it’s smallholder farming that provides the basis for food security in many countries. It produces more than 80 per cent of the food in developing countries, and so makes an important contribution to poverty alleviation. However, this contribution is under threat from the increasing fragmentation of small properties, the expansion of agribusiness, insufficient funding for investment, climate change and a disregard for international cooperation.
A further threat to small-scale agricultural production is the notion, currently prevalent even among some UN institutions, that food security is primarily a question of revenue and increased productivity. Funding for the Global Alliance for Improved Nutrition from the Bill & Melinda Gates Foundation aims is to combat hunger and malnutrition primarily by fortifying foods with added nutrients. For this, private businesses and multinational companies are incorporated into public-private partnerships (PPP).
Only a few smallholder businesses can withstand the pressure of competition generated by agribusiness
The Food and Agriculture Organization of the United Nations (FAO) has also developed a strategy for cooperation with the private sector. Along with the European Investment Bank (EIB), it wants to promote investment in agriculture, in the development of the private sector, and in value-added chains. The extent to which the interests of European agricultural corporations will take priority in this remains to be seen. Representatives of civil society and small producers have been concerned on seeing how much power multinational companies in the UN system have gained in recent years. Many institutions in civil society are advocating an alternative approach, through which the role of national and international markets and the integration of smallholder businesses into the value-added chains can be better clarified. Only a few smallholder businesses can withstand the pressure of competition generated by agribusiness. So inclusion in local value-added chains is still very important, but all too often the farming practices of small producers undermine the ecological foundations of the global food system.
Kenya - GIZ project Green Innovation Center - milking with modern equipment
Malawi, GIZ Project Green Innovation Centers, hand tractor training for small-scale farmers at the NRC. (c) Jörg Böthling
Overuse and degradation of the soil are major contributors to this. In such cases an ecologically sustainable transformation of the agricultural sector can provide the answer. Small producers need support to help them cope with market pressure and overcome other obstacles to sustainable land use. Furthermore, the creation of jobs through the establishment of a local value-added chain in the agricultural sector is very important.
At the G8 summit in 2012 in the USA the New Alliance for Food Security and Nutrition was formed. The plan was to lift as many as 50 million people out of poverty by 2022 with the help of investment from agribusiness and with the support of governments and development cooperation. The New Alliance for Food Security and Nutrition was aimed at ten African countries willing to undertake reform: Benin, Burkina Faso, Ethiopia, Ghana, Ivory Coast, Malawi, Mozambique, Nigeria, Senegal and Tanzania. Appropriate ‘reforms’ were to integrate agribusiness into agricultural production and thus modernise the agricultural sector.
However, a bias towards support for the industrial agricultural sector and the reforms that this entails also harbour a risk of exacerbating poverty.
The idea was to enable corporations to acquire land more easily in Africa – something that in the past had resulted in people being driven from their own land (land grabbing).
The practice of seed licensing can hinder farmers in the cultivation, storage and exchange of seeds.
Production relies on the use of chemical fertilisers and pesticides. For many smallholder families these are prohibitively expensive and also contribute to pollution and degradation of the soils.
Jobs that are created on the large plantations are often poorly paid and involve working in inhumane conditions that contravene labour laws.
Development cooperation also depends on companies, banks and financial investors to increase investment in the fight against poverty. Through the availability of public money from development cooperation, and special investment funds combining public and private money, it is anticipated that private sector investment will also be expanded through mega-projects in the agricultural sector. The responsibility for problematic investments is becoming increasingly unclear, due to complicated shareholdings, intricate financial influences, investor-focused monitoring mechanisms, and banking confidentiality or trade secrets. Profit-orientated institutions and companies are becoming key players in development policy, and the lines between government subsidies for one's own company and funding under development policy are becoming blurred.
In the unequal power relationship between developing countries and large corporations, there is a very real danger that the interests of poorer sections of the population will be traded off against the interests of making a profit.
In the unequal power relationship between developing countries and large corporations, there is a very real danger that the interests of poorer sections of the population will be traded off against the interests of making a profit.
In 2014 the Federal Ministry for Economic Cooperation and Development (BMZ) introduced the special initiative, ‘ONE WORLD – No Hunger’, which makes additional financial resources available every year for global food security. Under this initiative, it is anticipated that cooperation with agriculture and the food industry in so-called green innovation centres in 14 countries will be stepped up. This initiative could increase the potential for the structural change that is required, as long as it actually supports the structures of smallholdings as specified, reinforces their land rights and promotes the creation of value locally and higher incomes in rural areas. Support for small family businesses should also include the development of higher-quality products – for example, from horticulture or livestock farming – while also forging a link with small and medium-sized businesses in local value-added chains. In this way, smallholding businesses would be able to contribute to food security and sovereignty, economic growth and employment, poverty alleviation and a reduction in geographical and socio-economic inequality. This kind of strategy supports the attainment of a whole range of sustainable development goals at the same time.
Dr. Pedro Morazán, born in Honduras, is an economist who has been working as a research assistant at SÜDWIND since 1992. During this time he has been in charge of numerous evaluations and partner consultations. He has also published various studies and expert reports for different organisations, including GIZ/BMZ.
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