Commercialization of smallholders: The tale of a transforming family


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Presented by Berhanu Gebremedhin at the Market-Oriented Smallholder Development: IPMS Experience-Sharing Workshop, Addis Ababa, 2-3 June 2011.

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Commercialization of smallholders: The tale of a transforming family

  1. 1. Commercialization of Smallholders: The Tale of a Transforming Family<br />Berhanu Gebremedhin <br />Market-Oriented Smallholder Development: IPMS Experience-Sharing Workshop<br />ILRI, Addis Ababa, 2-3 June 2011<br />
  2. 2. Subsistence family and farm profile: 2000 <br />Farm Profile:<br />Family Profile: <br /><ul><li>1.5 hectares of land
  3. 3. A pair of oxen and farm </li></ul> implements<br /><ul><li>Two local cows and a calf
  4. 4. Ten sheep and goats
  5. 5. Some chicken
  6. 6. Thatched mud house </li></ul> and farm compound<br /><ul><li>AtoGebeyanehMirchaye, age 30
  7. 7. W/o MalefiaTirete, age 28
  8. 8. Two children
  9. 9. 3 extension agents working in the village </li></li></ul><li>Subsistence family farm planning, 2000<br />W/o Malefia: Oh!, Yes, it is time for planning. We should aim to produce the different types of food for the family; we will use our own seed and manure, and other inputs. why don’t you go ahead and prepare a plan. <br />AtoGebeyaneh: Malefia, the rainy season is approaching. We should talk about our farm plan. <br /><ul><li>Objective: food self sufficiency
  10. 10. Input sources: own
  11. 11. Cash income: secondary </li></ul>AtoGebeyaneh: Okay! Here is a plan:<br />W/o Malefia: It looks good. But, wait! We will need money for family expenses. Aha! don’t worry! We may be able to sell some of our produce if we can; sell some of the sheep or goats or some butter to generate cash for family expenses. In the last resort, you may try to work off-farm<br />This will ensure our household food needs.<br />
  12. 12. Subsistence family’s struggle for survival, 2005<br />AtoGebneyaheh: Malefia, the extension agents are trying to help us use better technologies and practices to produce more and feed ourselves. They are good people. But, we are still poor, and sometimes unable to feed ourselves for the year. What can we do? <br />W/o Malefia: My dear!, What else can we do? The DAs will just tell us to produce more. We just pray to God! We have no choice other than try to produce our food to feed ourselves!<br /><ul><li>Subsistence agriculture: sustainable way out of poverty and food insecurity?
  13. 13. Role of extension in subsistence agriculture: limited to technology and production!</li></ul>W/o Malefia: Oh! God bless you, my dear! You are right. The DAs get training every time. Maybe they will come up with some more useful ideas.<br />AtoGebeyaneh: No, Malefia! We can not proceed like this! I heard that our government has a new policy for agriculture. I do not know what it is. Maybe the DAs will lead us in a new direction.<br />
  14. 14. Role of the extension service, 2005<br />Extension agent: AtoGebeyaneh, I would like to talk to you about how you can improve your life. My service to you was limited only to technology and production. Now, I have come back from training on market oriented transformation of subsistence agriculture. Sustainable way out of poverty and food insecurity is through market oriented agriculture. <br />AtoGebeyaneh: What is market oriented agriculture my dear?<br /><ul><li>Commercialization has two aspects:</li></ul>-Market oriented production planning<br />-Market participation<br /><ul><li>Interventions needed at the two fronts
  15. 15. Introduction of new ideas can be difficult initially</li></ul>AtoGebeyaneh: <br />I always liked you. You are here to help us. But, what you are telling me today is difficult to understand. I should think about it and also talk to Malefia! <br />Extension Agent: You produce commodities that you can sell and get higher income. Then you can buy food in the market to feed your family. You can then save part of the income, thereby accumulate wealth. In this way, you will be rich and food secure!! Next time, we would like to talk to you and your wife together. <br />
  16. 16. Transformation can be gradual <br />AtoGebeyaneh: Malefia,the extension agents talked to me today. They were not themselves. They want me to be like a trader!! My parents never did this.<br />W/o Malefia: What did they say, my dear? <br /><ul><li>Commercial transformation can be gradual
  17. 17. Persistence in interventions and learning are required
  18. 18. Husband and wife training in extension very useful</li></ul>W/o Malefia: My God! In deed, they are not themselves. How can we feed our family if we do not produce our food? <br />AtoGebeyaneh: <br />They said we should produce to sell, get cash and buy food from the market. It is amazing, isn’t it Malefia? Also, they want to talk to us together.<br />
  19. 19. Concerns in transformation<br />Extension Agent: AtoGebeyaneh and W/o Malefia: Have you thought of what we told you? <br />AtoGebeyaneh: Yes! We have! We are concerned about markets! We have three major concerns:<br /><ul><li>Will we get buyers for our produce?
  20. 20. Will we get food to buy in the market?
  21. 21. What about if the prices collapse?
  22. 22. Input and output markets major concern to commercializing farmers
  23. 23. Interventions to improve markets critical
  24. 24. Policies to promote private sector critical</li></ul>Extension Agent: There are private and public solutions to all of these problems.<br /><ul><li>Government is working to improve the output markets.
  25. 25. Demand for the market oriented commodities is </li></ul> increasing due to rising income, urbanization, and <br /> population growth<br /><ul><li>Trading business is developing</li></ul>W/o Malefia: Okay! Let us think more about it and we will see you in a few days!! <br />
  26. 26. Concerns in transformation <br />AtoGebeyaneh: Sure!! How are you going to assist us? In the past you only helped us use better technologies and produce more. Now, we are going to produce for the market. Will you assist us in input marketing, market oriented production planning and output marketing? <br />Extension Agent: AtoGebeyaneh, and w/o Malefia, do you still have concerns?<br /><ul><li>Broader extension service required</li></ul>Extension agents: You have hit the nail on its head!! Now, we have got training in market oriented extension service. Our role now is to help you:<br /><ul><li>Plan market oriented production
  27. 27. Build your capacity to adopt and use technologies and</li></ul> practices for the market oriented commodities<br /><ul><li>Link you up with input suppliers, credit suppliers</li></ul> and output buyers<br /><ul><li>Provide you with market information
  28. 28. Are you satisfied, AtoGebeyaneh and W/o Malefia? </li></ul>W/o Malefia: It sounds good! But, perhaps, we should start it small. We should produce both food crops and the market oriented commodities. If it works for us, we may expand. <br />
  29. 29. Semi-commercial family (farm planning conversation), 2007<br />W/o Malefia:<br />Yes! Now, we should think of getting good cash income. But, we should not forget our food crops as well.<br />AtoGebeyaneh: Malefia, the rainy season is approaching. We should talk about our farm plan.<br /><ul><li>Objective: food production and cash income
  30. 30. Input sources: both own and purchased
  31. 31. Demand for inputs and technology increases</li></ul>AtoGebeyaneh: You are right, Malefia. We should also use purchased inputs in addition to our own inputs. <br />W/o Malefia: Do you also realize there is going to be a lot more work than before. We may consider hiring in labor. <br />
  32. 32. Semi-commercial family farm plan, 2007<br />Farm resource allocation: <br />Income:<br /><ul><li>Vegetables good source of income, fruits not yet producing
  33. 33. Dairy demand unable to be met
  34. 34. Fattened shoats fetching twice purchase price, good profit
  35. 35. One cross-bred lactating dairy cow bought using </li></ul> credit from micro-finance<br /><ul><li>Shoats fattening enterprise (4 shoats fattened for </li></ul> three months cycle)<br />
  36. 36. Semi-commercial family (life improved), 2008<br />W/o Malefia: I told you, my dear! We should hire in labor. We can get the money to pay for. Besides, we should buy farm machinery and better farm equipment, because our farm is profitable.<br />AtoGebeyaneh: Malefia, we are now better-off than when we were producing to eat. But, this is too much work. You and I are working a lot harder than we used to. What shall we do?<br /><ul><li>Need for specialization arises in the process
  37. 37. Demand for credit increases</li></ul>W/o Malefia: Oh! That is a good idea! I think we should focus on dairy and horticulture. We need to get more credit to buy few more improved dairy cows. We need to introduce drip irrigation to use water more efficiently. We should also rent in land from other farmers. This way, not only do we specialize, but we also expand. <br />AtoGebeyaneh: But, don’t you think that we should specialize in fewer enterprises? In that case, we can learn the job better and do it better. <br />
  38. 38. Extension agent revisits - 2009<br />W/o Malefia: Thank you very much! You are helping us very well. You have shown us how to plan market oriented production, adopt and use improved technologies.<br />Extension agent: AtoGebeyaneh and W/o Malefia, you see! your life has improved now! You have good income and your family is food secure. Are you happy with our service to you?<br /><ul><li>The value chain approach for extension service</li></ul>Extension Agent: W/o Malefia, don’t forget the other value chain aspects we are helping you with; Did you forget them? Market information, linkages with input suppliers, credit suppliers and output markets have been also critical for your success.<br />AtoGebeyaneh: My apologies, my dear! She forgot about them. Without these value chain aspects, we would have been dead meat!<br />
  39. 39. Commercial family farm planning, 2015 <br />AtoGebeyaneh: Malefia, It is that time of farm planning again. As you said, we should specialize in dairy and horticulture. We will also allocate some land for teff. <br />W/o Malefia: Sure! but, we need to reduce cost of production, and be better competitors in the market. Besides, we should increase our scale of production.<br /><ul><li>Objective: Cash income
  40. 40. Input source: External
  41. 41. Extension can be demand driven
  42. 42. Commercial farmers may not completely abandon food crops</li></ul>AtoGebeyaneh: You are right, Malefia! Efficiency and competitiveness are now our prime issues. We will also need to rent in land, buy more improved dairy cows. We can hire trained labor, because we will have the money to pay for.<br />W/o Malefia: The public extension agents are always with us, but we should also be able to pay for additional extension service as we need it. <br />
  43. 43. Commercial family (functional value chains established), 2015 <br />Resource allocation:<br />Inputs and credit:<br /><ul><li>Irrigation facility well established and frequency of harvest increased
  44. 44. Closer links with vegetable buyers, and dairy processors established.
  45. 45. Regular connection with input suppliers established.
  46. 46. Credit worthiness firmly established and securing credit easy
  47. 47. More than 150 person-days of labor hired </li></ul>Income and nutrition:<br /><ul><li>Vegetables and dairy good sources of income .
  48. 48. Cereals and pulses bought from market at</li></ul> harvest time and stocked. <br /><ul><li>W/o Malefia making sure adequate nutrition</li></ul> to the family, especially children.<br />
  49. 49. Broad Commercialization Options and Strategies for Smallholder Farmers<br /><ul><li>Assist them to become semi-commercial farmers through either surplus production of subsistence enterprises and/or introduction of market oriented production:
  50. 50. Low tech skills development (technology)
  51. 51. Entrepreneurial skills development
  52. 52. Linkages with input and output markets
  53. 53. Small-scale microfinance
  54. 54. Safety nets
  55. 55. Providing conducive environment for out migration.</li></ul>Subsistence Farmers<br /><ul><li>Assist them to become more market oriented and commercial farmers through intensification of staples and market oriented commodities:
  56. 56. Medium tech skills development (technology)
  57. 57. Entrepreneurial skills development
  58. 58. Linkages with input and output markets
  59. 59. Small-scale micro-finance and medium scale rural banks
  60. 60. Insurance
  61. 61. Providing conducive environment for outmigration.</li></ul>Semi – Commercialized Farmers<br />Commercialized Farmers<br /><ul><li>Assist them to be more efficient, competitive, and economically viable.
  62. 62. Facilitate consolidation to become medium to large scale farmers.
  63. 63. Insurance
  64. 64. Property rights, including land policy
  65. 65. Providing conducive environment for outmigration</li></li></ul><li>Thank you!<br />