Making Markets Work for Smallholder Farmers

By Kato Lambrechts, Senior Advocacy and Policy Officer, Christian Aid

Making Markets Work for Smallholder Farmers

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:

  1. 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
  2. Pillars: which specifically support smallholder farmers i.e. access to land and water, inputs and credit, markets, extension services and research, and collective action
  3. 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.

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3 Responses

  1. Kato, great article highlighting the needs of small holder farmers. Hope to meet up with you soon.

  2. You might be aware that in Tanzania, we have a national resolve of ‘Kilimo Kwanza’ which literally means Transformation of Agriculture. Agriculture is the largest employer of labour and sustains the majority of the population through both cash income as well as substance production.  Kilimo Kwanza is meant to advocacy increase in crop production, improve livestock husbandry and undertaking fish farming. In crop production it aims at increasing the acreage under cultivation by using modern farm implements such as tractors and power tillers, improving knowledge and increasing acreage under irrigation, using improved seeds and fertilizer, control of pests and investing in large scale farming.

    However, this resolve has failed small scale farmers. Small scale farmers, who many reside in the rural areas cannot access farm implements and loan financing due to lack of capital and collateral and thus leaving only big investors who have resorted into land-grabbing. We currently have many land disputes whereby small scale farmers are being displaced to give way to large and multinational investors whose aim is to make profit.

    The farm implements, such as power tillers which were meant to improve the mode of farming hence increase production have proved to be ineffective. The tillers are delicate and cannot till the land so instead people use them for carrying bricks and fetch fire woods. On top of that, they are sold so high that only the rich can afford them thus defeating the intended purpose of exempted import taxes and lower interest rates.

    Despite of Pillar No. 9  of Kilimo Kwanza, no noticeable efforts are being made to source market for small scale farmers. I, for example, have a 50 acre farm which produces tomatoes, onions, vegetables and fruits. I have to daily compete  with other small scale farmers to sell produce in the Kariakoo market situated almost 120 kilometers and yet I do not sell all the produce. I have resorted into using the unsold vegetables to feed  pigs and chicken.

    I implore the government to vigorously look for export/access markets for smallholder farmers to increase production so that rural poverty is reduced. Alternatively, Business Fights Poverty can help through knowledge sharing.

  3. Evelyne Kusena highlights a number of reasons why it is so important to ensure that government policies, laws, and regulations, as well as their implementation, respond to the real needs of market-oriented smallholder farmers.  Many policy documents and visions across Africa do commit to transform the agriculture sector, especially spurred on by CAADP commitments. But often this remains at a rhetorical level. One of the reasons for this is the low capacity, political power and funding of agricultural departments and ministries, who should in theory be able to coordinate the various sectoral government institutions responsible for providing the necessary regulation, land rights protection and services that will enable smallholder like yourself to enter and sustain your participation in markets. 


    It would be useful if participants in this discussion can highlight examples of the types of government interventions or regulations have made a real difference to the market system. For example, the Brazilian government’s zero hunger campaign has created many local market opportunities for smallholders through procurement laws.  Do we have example of where strategic trade policies (for example through levying taxes on cheap substitute imports) have saved local producers – for example the attempts of the Senegalese and Ghanaian governments to protect the local rice and poultry sectors?  Or where lower import taxes on essential machinery or services have changed the market system? 


    The World Bank is trying to encourage policy and regulatory reforms, and their implementation, in countries where smallholders are facing similar difficulties through their Benchmarking Business in Agriculture project. To be successful, the policy and regulatory indicators will need to cover more than just business regulations, but will also need to cover the issues that matter to most smallholder farmers: quantity and quality of rural feeder roads, the quality and availability of extension services, in particular to help develop more research and skills on how to increase production and quality in an environmentally sustainable way, the quality and availability of seed, and so on. But we can also have these discussions directly with African governments, regional bodies and institutions tasked with transforming and commercialising the smallholder sector in Africa – for example through the CAADP non-state actor forum, and by strengthening or developing national processes that give a voice to smallholder farmers in policy-making. Given that they are the largest investors in agriculture, supported by data in a recent FAO report, it is crucial that they are involved in these discussions which are at present confined to high-level policy circles.  




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