Benchmarking the Business of Agriculture
Smallholders have the potential to become the backbone of agricultural growth in Africa and to supply our growing demand for food. As Kato Lambrecht said in her blog yesterday, the policies and practices of governments can have a huge impact on whether or not they can realise that potential. The African Smallholder Farmers Group have recognised this by developing a framework to capture key policy decisions.
Similarly the World Bank is developing its Benchmarking the Business of Agriculture (BBA) index. The BBA aims to enable the emergence of a stronger commercial agricultural sector by identifying the regulatory and policy actions needed to promote it. This is being done with the support of the Gates Foundation, UK, US and Danish development agencies. It is one component of the Agricultural Transformation Index (ATI), launched by the G8 in 2012.
As Grahame Dixie, who is leading the development of the BBA in the World Bank, says the intended focus is the smallholder farmer:
“In most developing countries, smallholder farmers command the largest aggregate land area and produce significant marketable surpluses. World Bank projections show that the vast majority of the growth in food demand will be from cities in the developing world. The expanding numbers of urban poor will need food delivered at reasonable prices, and the better off will be demanding processed and higher quality products. In addition, soft data shows that much of African urban demand is increasingly being fed by imports. Hence the critical cash income food from the cities is increasingly leaking off-shore, and not being channelled through the rural economy.
The BBA's attention is therefore directed at “the ecosystems necessary to support the growth of a modern agriculture sector. The emphasis is on encouraging the emergence of a stronger commercial family farming sector, in particular medium and larger scale smallholder farmers, as well as those small, smallholder farmers who have the production skills and the appetite to develop their farm as a business.”
The BBA will have two main parts: Doing Business in Agriculture indicators, measuring the regulatory environment, and ‘deep dives’ that will examine a broader range of factors, beyond regulatory items that affect agricultural productivity, market access, and the policy environment.
The stated aim is to drive policy change by enabling policy makers to have a better understanding of how they compare with others. As such, it is very similar in intention to the ASFG's framework on the enabling environment for smallholder entrepreneuri... – though there are also marked differences in emphasis between the two tools, which will be explored in more detail in later blogs.
Draft indicators have been developed in six areas: inputs (seeds, fertilisers), finance, transport, communication, markets and land. A series of 'snapshots' of some of the potential indicators on those topics have been circulated. These six areas will be piloted later this year with water and energy being incorporated into subsequent phases of the project.
The ASFG has welcomed the BBA and feels that there is considerable overlap in the motivations that lie behind the BBA and its own framework. We have been actively engaging in a dialogue with Grahame and his colleagues on the details of the BBA – via the Advisory Council and many other means.
Self Help Africa has, for example, been pushing for greater recognition of the role of the informal seed sector, which is so important to smallholder farmers.
It is vital that the BBA is designed in such a way that means that it can live up to its stated aim of promoting a better environment for the millions of smallholders who are so important to future food production.
We don't feel it has achieved this yet – the current framework needs to give more attention to vital areas such as research and extension, sustainability, gender and producer organisations, currently largely missing from the indicators.
What do you think of the framework? What else does it need to include?
Hi Will, great post and I think an important area to address in the development world especially business in the third world. I wonder though if much of the view with which we present policy/programs primarily determines our outcome – in this case, if we are talking about agriculture, we should be talking WITH farmers, not just banks. I wrote about this is a recent post I did related to Agricultural Risks. I know that other folks like ScopeInsight also are working in this space.
It seems that much of the conversation is at a level that is not ultimately addressing the farmers needs – nor taking into consideration their situation on the ground and the complexity of their lives. For instance, much of the focus is on new ‘doctored’ seed, synthetic and toxic fertilizer, and more land – all inputs from a business perspective, whereas the behavioral aspects reached through education of alternative methods of running a farm seem never to be addressed – areas like soil structure, local organic fertilizers and teas, hedgerows and grasses for mulching, cover cropping, nitrogen fixing plants and trees, etc. It just seems like we are missing the boat if we continue to think through the lens of the financial institution and not incorporating the lens of the farmer. Even outside the farmer, there are the countless power brokers (including traders) who place further price pressures on the farmer but who also act rationally within this ‘system’…again ‘systems’, I believe, are how we should be looking at this and due to the scope of funding of any research we tend to filter out what appear to be the more important aspects of addressing agriculture issues and business.