Article

Making Markets Work for Smallholder Farmers

2013-10-21 · By Kato Lambrechts, Senior Advocacy and Policy Officer, Christian Aid

John Ngari farms a seven acre plot in Mbere Kenya. In a recent conversation he remarked that ‘It is an eye opener for us that farming can be a business. My sons can enter farming as a business just like any other. What I am looking for is to have my own, small-scale industry so I can value add my own produce. Then I will leave a legacy…’

His reflections are representative of a growing aspiration among small landholders in rural areas to transform their subsistence livelihood into a viable business.

‘People used to think agriculture was a poor man’s job. A lot of people were running away from it. Now they see people are getting a lot of money from it, people are coming back from the towns. You will have urban to rural migration now’

These are the observations of Ezekial Samking, who works with the Methodist Church in Sierra Leone’s Bonthe district to help farmers lobby for and access agricultural business centres to process and market their produce.

Smallholders contribute to over 90% of Africa’s agricultural production and more than two-thirds of Africans depend on small or micro-scale farming as their primary source of livelihood and in sub-Saharan Africa.

Commercially viable smallholder agriculture can radically transform the social and economic fabric of much of rural Africa – yet very few governments are pro-actively developing or implementing policies and regulations that aim to enable potentially viable smallholder producers, the majority of farmers, to participate in formal markets. Some, like the Angolan government, are only interested in promoting industrial-scale agricultural operations while others, like the Rwandan and Ethiopian governments, do proclaim a strong rhetorical commitment to helping smallholder farmers become more market oriented, but they lack policies or practices that are crucial to this transformation.

In the past, traditional market development approaches have focused mainly on integrating smallholder farmers into market chains as suppliers of primary goods. However, this approach has failed to address all aspects of the market system, particularly government policies, regulations and practices that might facilitate or block the development of a particular market. So for example, even if they did find a reliable buyer, lack of government competition policy could lock smallholder farmers into low prices, high interest rates could prevent them from accessing credit needed to improve the quality of their produce. Complex bureaucratic regulations could hamper their ability to set up a producer organisation to bulk, store and process their output.

It was in response to these realities that the UK-based African Smallholder Group (ASFG) commissioned a literature review to find out what government policies and practices are most likely to enable African smallholders that want to become commercially viable and enter and participate in markets. This framework identifies a range of possible indicators for assessing whether government policies and practices enable smallholder market participation. The framework arranges the indicators into:

Foundations: the necessary but not sufficient conditions for smallholders to increase production and access markets, which are equally important to other parts of the rural economy i.e. basic rural infrastructure and services
Pillars: which specifically support smallholder farmers i.e. access to land and water, inputs and credit, markets, extension services and research, and collective action
Cross-cutting issues: which have wider relevance beyond i.e .gender equity, sustainability, and power relations/farmer voice

There are clearly obstacles and challenges that smallholder farmers share with other business sectors. Their experiences of poor infrastructure, public services and challenging gender norms, for example, support the ASFG finding that smallholder specific policy must be joined up with policies that tackle ‘foundational’ and ‘cross cutting’ issues more broadly.

An important voice in the framework is our African partners’ perspectives, those who actually see and experience the effects of a ‘disabling environment’ for smallholders.

We conducted a survey of 31 ASFG and partner organisation staff members, who work directly with smallholder farmers across a number of African countries. The survey found that the regulations and policies that would transform small farms into viable businesses would included an end to import taxes on inputs such as agricultural equipment and small irrigation equipment; lower interest rates to lower the price of credit for small-scale farmers; greater investment in rural feeder roads; an increase reach and quality of extension services and support farmer organisations through appropriate regulation.