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Smallholder Commercialisation
Insights from 5 countries
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SIX KEY FINDINGS
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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
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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
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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
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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
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5. Returns good, Incomes rising …
Tef Wheat Chickpeas Lentils Onion Tomato Green pepper
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Lume, Gross Margin, US$/ha
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Kenyan gross margins
Tomatoes, virgin land
Tomatoes, old land
Cabbages, high season
Cabbages, off season
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
US$
per
ha
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Farm incomes, by commercialisation
Ethiopia Ghana Malawi Tanzania0
100
200
300
400
500
600
700
800
900
Low CI Mid CI Upper CI
US$
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Crop income, by index commercialisation Ghana, Ethiopia & Malawi
- 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.90 -
100
200
300
400
500
600
700
800
900
Commercialisation Index
US$
Med
ian
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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.
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POLICY POINTERS
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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
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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?
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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
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Riddle of Rural Finance
Lack of K limits Investment, further gains
Improve rural financial systems • But with care! • Promise: M-pesa, Equity Bank
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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
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Thinking on … Futures for SFStrengths 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
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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