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Briefing 58; Hanna Saarinen:- Investing in inclusive agricultural trade that benefits farmers

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The Brussels Development Briefing n. 58 on “Africa’s Agriculture Trade in a changing environment” organised by CTA, the European Commission/EuropeAid, the ACP Secretariat, IFPRI, Concord and BMZ/GIZ was held on Wednesday 23 October 2019 (9h00-13h00) at Hotel Sofitel Brussels Europe, Place Jourdan 1, 1040 Brussels.

The briefing brought various perspectives and experiences around the new trends and opportunities in intra-Africa trade in the context of free trade agreements and regional integration. It also showed Africa trade within the broader global trade picture and with the EU as one of the main trade partners.

Experts presented trends and prospects of regional trade in Africa in the light of new policy developments as well as Africa’s recent performance in different markets. It also featured successes and innovative models in regional trade across regions in Africa and lessons learned for upscaling and expanding regional trade.

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Briefing 58; Hanna Saarinen:- Investing in inclusive agricultural trade that benefits farmers

  1. 1. INVESTING IN INCLUSIVE AGRICULTURAL TRADE AND VALUE CHAINS THAT BENEFIT SMALLHOLDERS CTA Brussels Briefing, 23th Oct 2019 Hanna Saarinen, Oxfam International
  2. 2. Context & Issues • Smallholders do not receive adequate recognition or support (cf. unmet Malabo commitments, insufficient ODA) • Public policy often biased towards large scale agriculture • Smallholders often do not receive fair prices for the goods they produce; incomes are insufficient for a decent standard of living (‘living income’) • Their market opportunities are curtailed and they face systemic marginalization in accessing (fair) markets • Smallholders face an imbalance between the risks that they shoulder in agriculture and their power to shape their own market participation Smallholders – the most important investors/private sector actors operating in agriculture: • Produce an estimated 70 % of the world’s food supply • Key role in rural poverty reduction • Protection and reproduction of biodiversity
  3. 3. Declining bargaining power of smallholders From 1980s global promotion of neoliberal ideology: • Many govts and donors pursue trade liberalization • Deregulation of agriculture and labour markets • Insufficient public investment in agriculture • Decreasing domestic support programs; leading to reduced income or price support for SSH (dismantling marketing boards, overhauling price floors, ….) • Cutting export subsidies and opening markets for food imports Ill-designed trade and investment liberalisation puts small-scale producers in competition with cheap imports and multinational companies.
  4. 4. Women smallholders face particularly high exposure to risks and lack of opportunities, which further reduce their access to and control over means of production and market opportunities.
  5. 5. Farmer incomes in food supply chains: Oxfam case studies Product Country Average income as % of living income Cocoa Cote d’Ivoire 81% Bananas Ecuador 77% Coffee Colombia 71% Orange juice Brazil 58% Rice Thailand 56% Green beans Kenya 53% Kenyan green beans producers are market leaders in exports to the EU.  2000-2015 consumer prices tripled  1997-2015 export prices halved  1997-2015 price paid for SSF dropped by a third  The SSF share of the end consumer price is 2,2%
  6. 6. Stabilize risks Price volatility and unpredictability Production input costs, availability, sustainability Climate risks Insecure land tenure Increase market power Income diversification activities Bargaining power (collective action) Access to (fair) markets Upgrading into higher value- added activities How to raise smallholder incomes
  7. 7. Private Sector Engagement Scorecard based on supermarkets’ public reported policies and actions in their food supply chains  Striking gap between current supermarket policies/practice and international standards
  8. 8. Entry points for change Tackling the underlying imbalances in risk and market power requires a change in the “rules of the game” that govern agricultural production and trade (incl. the operation of value chains, commodity sectors and public policy).
  9. 9. Entry points for change (ACP govts/EU) Bargaining power and Living income • Revisit agricultural & rural policies to enable smallholder access to productive assets, local, national & regional markets, training, research, technology and services • Invest in public goods that support smallholders to increase their income (rural roads, electrification, market spaces, extension services, …) • Enhance organization of smallholders to better enable them to integrate into the food value chains (co-operatives, FO) • Instead of only tackling productivity constraints (yield), adopt a holistic approach to address producer income (cf. production costs, other sources of income) • Introduce minimum producer prices & other support mechanisms (e.g. direct subsidies) targeted at smallholders to ensure prices cover cost of production • Support affordable mechanisms to access market & price info through ICT/market info systems, to enable informed decision making on what, when and where to produce and sell • Promote short food supply chains that enable smallholders to obtain a better income from their production
  10. 10. Entry points for change (ACP govts/EU) Gender • Repeal laws that discriminate against women’s economic equality and implement legislation to support women’s rights, incl. land • Increase public investment focused on needs of women (incl. extension services, access to finance, specific measure to support women-owned enterprises in the agri-food sector…) Finance • Strengthen smallholder access to a full range of financial services adapted to their needs (microfinance, start-up capital, insurance, ..) • Ensure that private sector cooperation, PPPs and blended finance do not undermine the use of public funding in support of inclusive agricultural transformation
  11. 11. Entry points for change (ACP govts/EU) Food systems and territorial markets • Support transition to sustainable food systems and alternative agri-food networks (AAFN) such as producer–consumer networks; collective producer shops; farmers’ markets and school/institutional feeding programmes • Recognize the importance of non-monetary exchanges of products and services, and the importance of local food systems for smallholders (cf. territorial markets)
  12. 12. Sources • Oxfam (2018): Ripe for Change. Ending human suffering in supermarket supply chains • Oxfam (2018): A living income for small-scale farmers • UN Committee on World Food Security (2016): Connecting Smallholders to Markets • UN Committee on World Food Security (2013): Investing in Smallholder Agriculture for Food Security and Nutrition
  13. 13. CONTACT Hanna Saarinen EU Policy Advisor Food, Agriculture, Land Oxfam International hanna.saarinen@oxfam.org

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