Smallholder integration in changing food markets

Smallholder integration in changing food markets
By Pedro Arias, David Hallam, Ekaterina Krivonos, Jamie Morrison

Food and Agriculture Organization of the United Nations
Rome, 2013

48 pages

3 July 2013, Rome - In a new report, FAO is calling for more nuanced policy-making to boost smallholder farm output, requiring better knowledge of individual farm households and the constraints they face, to be able to target investments and policy support where they are needed to ensure that they can sell surpluses from their harvests.

According to the report, the public sector, together with international development partners, should have a strong role as moderator among different public, private and civil society actors, promoting what is in the best interests of the smallholder agricultural sector while encouraging development of markets.

Given the limitations of the public sector in many developing countries and reductions in foreign development aid, foreign direct investment (FDI) is also seen as a potential source of funding.

This sort of investment can take many forms -- not just controversial land acquisitions -- and should ensure sustainable and equitable use of land while strengthening food security for indigenous populations.

1. Part 1 examines the characteristics of smallholder farming from a market perspective, explaining that different categories of smallholder producer face widely different sets of issues and constraints to market participation, stressing the mutual reinforcement of productivity growth and market integration, and setting this in a dynamic context of the constrained choices facing different producers. It then sets up the policy challenges facing governments in attempting to alleviate the constraints facing these producers.
2. Part 2 considers the determinants of smallholder participation in rapidly evolving agricultural markets, considering the categories of constraints and risks faced in increasing levels of production for sale in different market outlets and the mechanisms through which the choices made by different market participants shape smallholders’ integration into markets.
3. Part 3 introduces examples of the types of solutions that may be required to facilitate the participation of smallholders in markets at different levels of formalization, considering arrangements such as producer organizations in aggregating smallholder production to market, and then the potential of mechanisms, or support services, such as market-based risk management instruments, market information systems and extension.
4. Part 4 then turns to examine how such arrangements and mechanisms might best be delivered to the smallholder sector, with prominence given to the role of the public sector, broadly defined to include government, donors and civil society

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