FARMING AND SUPPLY CHAINS

Akila Wijerathna believes smallholders should be supported for better results

The global agro-food industry relies on smallholder farms, which constitute the dominant agricultural system in developing regions. These farms are typically family owned enterprises operating on a few hectares and number an estimated 525 million the world over.

However, many smallholder farmers who produce food for global supply chains live in poverty. Their low incomes are fundamental to understanding how best to improve their overall economic health and resilience.

Moreover, the inability to earn a living income has led them to underinvest in their farms or decrease production to focus on other activities. Many youth are leaving farming altogether.

The obstacles that farmers face are multifaceted, and include risks and volatility, insufficient bargaining power within supply chains and unfavourable public policies. As a result, the long-term ability to earn an increased income is influenced not only by action taken on their farms but also by social, economic and political dynamics at community and national levels.

In addition, reliance on traditional cultivation methods, limited access to markets, largely unorganised farming skills, informal landholding, low access to credit, not very fertile soil, inadequate water resources, changing weather patterns, poor literacy and numeracy skills, and an ageing population also impact their income.

Smallholder suppliers may lack knowledge on how to mitigate social and environmental impacts. Poor farm management skills and the lack of aggregation reduce their ability to achieve scale.

Better transparency and traceability measures are needed along the supply chain to address food safety and sustainability. Certification programmes have difficulty evaluating the sustainability of farming practices due to the layers of collectors and middlemen.

Since effective agriculture underpins poverty reduction, food security and stability, farmers – particularly smallholder growers – need to adopt agriculture technology. Many smallholder farmers are older and the adoption of new technology is challenging. The lack of internet infrastructure in rural areas is also a potential barrier in some countries.

Smallholders work and live within old style support and power structures but increased access to information is changing how they organise and interact with markets. They typically sell their crops through tradi­tional supply chains that begin with village collectors and continue through aggregators.

Because smallholder farming is predominantly a household business, domestic dynamics affect farm decision making. Men often make the major decisions about farming and crop marketing – especially when cash crops are involved. Women often manage their plots, particularly food crops.

The number of women heading farms is increasing however, particularly in Asia, and account for more than 20 percent of smallholdings in some areas.

Inefficient input use is a significant concern not only for input businesses but also the agriculture industry. As the global demand for food rises, more effective input use will allow for the intensification of production on marginal lands. Due to climate change, farmers will need to adopt fresh crop varieties that can adapt to new and intensified weather patterns.

Farm management skills improve their capacity to invest in inputs, adopt improved agricultural practices and strengthen finances. The increase of women’s participation in supply chains can significantly improve crop productivity and quality, plus environmental and social sustainability.

Female farmers also deepen a business’ supplier networks in catchment areas. By understanding the role of gender in supply chain, entities can increase the cost effectiveness of smallholder engagement strategies.

Making agricultural technology and precision tools easily available to smallholder farmers will ensure greater financial resilience, prevent hunger and eliminate food waste.

Furthermore, it’s essential to create public-private partnerships (PPP) that involve collaboration between government agencies and the private sector to finance, build and deliver a public asset or service.

These combine the strength of the government’s mandate to deliver public services with the private sector that’s responsible for investment, technology, products and distribution systems.

Despite all the challenges that smallholders face, they respond positively to opportunities that enable them to join global supply chains and contribute to food security, poverty reduction and economic growth.

They represent an opportunity to expand market share and secure a sustainable supply of key agricultural commodities. Sourcing directly from them can expand a farm’s supply base, reduce margins paid to middlemen, and facilitate quality and productivity improvements.

Smallholders also represent a potential customer base for marketing inputs, information and financial services organisations.