Smallholder commercialisation - insights from 5 countries

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Presentation by Steve Wiggins at Leaping and Learning event, February 2013

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Smallholder commercialisation - insights from 5 countries

  1. 1. Smallholder Commercialisation Insights from 5 countries
  2. 2. SIX KEY FINDINGS
  3. 3. 1. Drivers of change often private & internal Often initiative from SF & traders Public — Gov’t & NGO — can help, but not always necessary Stimulus often from domestic markets, not exports • Domestic marketing demands less stringent
  4. 4. 2. Cautious Commercialisation • Small areas switched to crops for market • SF rarely sacrifice food crops • Double-edged sword! • SF intensify •  fertiliser,  (sometimes) improved seed & agro-chemicals •  hired labour • Biggest Step? Irrigation Gradual, marginal changes
  5. 5. 3. Active Labour, Land markets … •2010: 82 days •2012: 138 days Lume: > 90% households hired labour: days annual household: 2010 2012 % households renting in land 13% 45% US$ per hectare 200 340
  6. 6. 4. But sticky Capital Mkts • NOT: credit from Banks, advances from input dealers, traders or processors Working K from SF savings • BUT may • slow process • limit degree • restrict which households participate Lack of credit not a barrier
  7. 7. 5. Returns good, Incomes rising … 0 500 1,000 1,500 2,000 2,500 3,000 3,500 Tef Wheat Chickpeas Lentils Onion Tomato Green pepper Lume, Gross Margin, US$/ha
  8. 8. Kenyan gross margins - 2,000 4,000 6,000 8,000 10,000 12,000 14,000 Tomatoes, virgin landTomatoes, old landCabbages, high seasonCabbages, off season US$perha
  9. 9. Farm incomes, by commercialisation 0 100 200 300 400 500 600 700 800 900 Ethiopia Ghana Malawi Tanzania US$ Low CI Mid CI Upper CI
  10. 10. Crop income, by index commercialisation Ghana, Ethiopia & Malawi - 100 200 300 400 500 600 700 800 900 - 0.20 0.40 0.60 0.80 1.00 US$Median Commercialisation Index
  11. 11. 6. … But does it divide? Households w. more Land, Savings, Assets, (sometimes) better Education take up opps • Fewer assets than males Female farmers often disadvantaged • BUT commercial farming  D farm labour, so landless & poor can benefit Social differences may widen.
  12. 12. POLICY POINTERS
  13. 13. Paradox of Public Policy •Comprehensive direct action by state not necessary?! Not all cases result from programmes to commercialise • Encouragement to rural enterprise from painful reforms in 1980s & 90s has paid off Importance of private initiative
  14. 14. BUT: Public action critical: • Remember: Ghana late 1970s, Ethiopia under Derg, Tanzania late 1970s! Investment climate • Schools, health posts • Investment in Public Goods pays Roads vital … rural public goods No need for magic bullets?
  15. 15. Role for Min Agriculture • SS irrigation in Lume • Upgrading irrigation intakes in central Tanzania Strategic, limited support by Min Ag helps: • Commercial opps  need for Innovations & Tech support • Extension services most effective with comm SF? Technical challenges
  16. 16. Riddle of Rural Finance Lack of K limits Investment, further gains Improve rural financial systems • But with care! • Promise: M-pesa, Equity Bank
  17. 17. Correct Female Disadvantage Agricultural policy will not transform longstanding gender imbalances … BUT:Recognise & support women’s rights to land & water, Invest in drinking water … things that take women’s time Providing extension for female farmers
  18. 18. Thinking on … Futures for SF Strengths Weaknesses • Self-supervising, diligent labour • Knowledge of land and local conditions • Flexible production • Limited access to capital, inputs • Risks in production & marketing • Meeting standards of some supply chains Opportunities Threats • Urban growth • Asian markets • Much unused land: ‘sleeping giant’ • Technical advances, already known & others likely • Climate change • Land alienation • Policy biases • Demanding supply chains
  19. 19. Farm household surveys Ethiopia 160 Sep/Nov 2009 Ghana 300 Nov/Dec 2010 Kenya 200 Nov/Dec 2009 Malawi 300 Oct/Nov 2009 Tanzania 287 Aug/Dec 2009, Oct/Nov 2010

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