5 reasons supporting smallholders is vital to the world’s food systems
The theme for this year’s World Food Day, which takes place each year on 16 October, is ‘leave no one behind’. It’s a message that resonates with smallholder farmers and everyone who works with them, because they often struggle to build secure livelihoods despite the crucial role they play in feeding their families and communities.
According to the World Bank around 80% of the world’s poorest people live in rural areas, many of whom work in agriculture. That’s why we’re committed to supporting smallholders, through our investments in commodity businesses, to tackle hunger and provide greater economic opportunity. We want to help remodel food systems locally so that smallholders are able to benefit fairly from them. Here are five reasons why.
Embedding a fairer deal for 84% of the world’s farmers
It’s hard to put an exact figure on how much of the world’s food smallholder farmers produce. But recent research by the Food and Agriculture Organization of the United Nations (FAO) found that globally five out of six farms (around 84%) are under two hectares in size and collectively they produce roughly 35% of the world’s food.
Although this figure varies significantly from country to country, across low-income nations it increases to 44%. The smallholders who grow this food often operate in the hardest to reach areas, providing vital nutrition to remote communities. They are a crucial part of local food chains, but they have little access to wider markets that could enable them to grow their customer base and their businesses.
Reducing agriculture’s environmental impact
Think of smallholders as custodians of their land. It is the key to their prosperity and an asset they may hope to pass on to other family members. That is why they are often faster than large industrial farms to adopt more sustainable production patterns and practices that maintain the quality of the land they rely on. This includes methods such as crop diversity that promotes healthier soil and resilience to extreme weather events, and agroforestry that protects local biodiversity while farming within it.
Many of the commodity businesses we invest in run programmes that train smallholders to farm sustainably. For example, our investment in Philippines-based Kennemer Foods International has supported a reforestation project with 2,000 smallholders that is enabling them to grow cocoa in a sustainable way while opening up an additional revenue stream by linking planting trees to the carbon credits market.
Increasing local food security
The multiple challenges facing the world, from the pandemic to climate change and the war in Ukraine, have highlighted the weaknesses of global food supply chains and the dangers of price volatility.
When supply chains are disrupted it can leave the poorest regions, that often suffer from an overreliance on imports, vulnerable to shortages and unaffordable price rises. Strengthening the smallholder supply chain is one way to counter this. For example, adding value to farmers’ products enables them to access wider regional markets, stimulating local growth and ensuring there are reliable suppliers on the doorstep, whatever is happening in the wider world.
It’s something that Kenyan grain processing business Shalem is putting into practise. With the support of CFC investment, the company built a factory to manufacture locally-processed brands using locally-sourced crops, such as a fortified flour aimed at low income consumers. This has created certainty for smallholders and put an affordable product on the shelves.
Wider economic opportunity
The benefits of economic security and climate resilience go beyond the farms smallholders work on. As their revenues increase and their businesses grow it creates employment opportunities for others in the area.
This extra spending power has a knock-on effect on the rural economy, creating growth and helping the economy to diversify, as well as boosting the educational attainment of children whose school fees can be paid for longer. Played out on a large scale it can support significant poverty reduction.
It takes a combination of factors to get to this point, including strong public-private partnerships and long-term commitment from all parties. These elements have come together in the Senegal River Valley, where we work with rice processor Coumba Nor Thiam (CNT).
CNT has benefitted from the government’s vision of rice self-sufficiency, which has led to investment in vital infrastructure such as irrigation. In turn it is enabling rice farmers to grow their incomes by providing processing capabilities. The result is a regional rise in incomes and a lowering of emigration.
Empowering rural women
The FAO says that women account for 43% of the agricultural labour force in developing countries. But they do not have the same access as their male counterparts to the productive resources that drive up incomes. The FAO estimates if women did, they could increase the yields on their farms by 20-30%, building the economic security we’ve mentioned above.
This is an opportunity we’re seeking to grasp. 63% of the 228,165 smallholders who will benefit from the 11 investments we approved in 2021 will be women. This includes those working with Exotic EPZ, a macadamia nuts exporter in Kenya led by three women and supported by USD 0.6 million of CFC funding.
As part of its business model Exotic helps women smallholders to become financially independent, by providing training in growing techniques and links to digital tools such as mobile payments, traceability apps and health insurance.
Smallholders have a critical role to play in food systems across the globe, yet they are often left behind struggling to earn a decent livelihood. When they thrive the positive ripple effects in the communities around them are transformative. Indeed, they have the potential to lift the prosperity of the poorest regions and contribute to the key sustainable development goals of eradicating poverty, achieving zero hunger, addressing inequality and achieving sustainable production. With the right support and by rebalancing value chains in the favour of smallholders, we know it’s possible.