Smallholder Commercialisation

Insights from 5 countries

SIX KEY FINDINGS

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

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

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

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

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

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

Farm incomes, by commercialisation

Ethiopia Ghana Malawi Tanzania0

100

200

300

400

500

600

700

800

900

Low CI Mid CI Upper CI

US$

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

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.

POLICY POINTERS

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

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?

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

Riddle of Rural Finance

Lack of K limits Investment, further gains

Improve rural financial systems • But with care! • Promise: M-pesa, Equity Bank

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

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

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