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Agricultural Commercialisations – A Level Playing Field for Smallholders?

By Jennifer Leavy and Colin Poulton

Accelerated growth in agriculture is seen by many as critical to meeting MDGs in Africa. Many national governments and international development agencies see intensification and commercialisation of smallholder agriculture playing a central role in achieving poverty reduction. The potential benefits of commercialisation are well documented. According to this thinking, smallholder agriculture is uniquely positioned to deliver broad-based growth in rural areas, where the vast majority of the world’s poor people still live.

Factors Influencing Smallholder Commercial Farming in Malawi: A Case of NASFAM Commercialisation

Full title: Factors Influencing Smallholder Commercial Farming in Malawi: A Case of NASFAM Commercialisation Initiatives

Policy Brief 51by Ephraim Chirwa and Miriam Matita

Most of smallholder farming in Malawi focuses on producing food staples such as maize and rice for own consumption. The dominance of subsistence farming with traditional farming systems in the smallholder sector is one of the concerns in achieving agricultural productivity. The smallholder agriculture sector in Malawi remains unprofitable and is characterised by low uptake of improved farm inputs, weak links to markets, high transport costs, few farmer organizations, poor quality control and lack of information on markets and prices.

There are several initiatives by state and non-state actors that aim at promoting intensification and commercialisation of smallholder farming. One of the organisations spearheading the commercialisation of smallholder farming is the National Smallholder Farmers’ Association of Malawi (NASFAM), a farmer –based organisation.

Intensification of Smallholder Agriculture in Ethiopia
By Samuel GebreselassieJanuary 2006

The prevailing orthodoxy is to see the problem of smallholder agriculture in Ethiopia strictly as a technical and resource related problem. This view identifies the low level of agricultural productivity as the key problem. In response, the government of Ethiopia has since the mid-1990s, implemented a high-profile, national technology-led extension programme. But has this worked, and what are the limitations of such a strategy

Small farm commercialisation in Africa: A guide to issues and policies

Policy Brief 50by Steve Wiggins

Small farmers in Africa have long been engaged with markets — for produce, inputs such as fertiliser, credit, labour, land and information. Opportunities to do so are increasing with urbanisation and better roads linking villages to cities, making questions that arise about smallholder commercialisation all the more important. Expectations about process and outcomes differ considerably.

What does the evidence show? How do small farms commercialise? What are the outcomes? Are the fears of undesirable outcomes justified? And what should policy-makers be doing to encourage better outcomes? This briefing reports the highlights of an extensive review of the literature on commercialisation of small farms in Africa.

Smallholder Coffee Commercialisation in Malawi
By Ephraim Chirwa, Andrew Dorward and Jonathan KyddFebruary 2008

 

Coffee cultivation in Malawi is dominated by a small number of large-scale commercial estates, located mainly in the Southern region. In the Northern and Central regions, however, coffee is grown predominantly by large numbers of smallholder farmers on customary land, concentrated in the districts of Chitipa, Rumphi, Mzimba and Nkhata-Bay.
Supporting small farmers to commercialise

CAADP Policy Brief 11

Accelerating growth in the agricultural sector by raising the capacities of private entrepreneurs – smallholder and commercial farmers – to meet the increasingly complex requirements of domestic, regional and international markets, is the central aim of CAADP Pillar II.

Commercialisation is about increasing engagement with markets. Smallholder farmers have long been engaged with markets for produce, inputs and information. Urbanisation, better communications and globalisation make understanding smallholder commercialisation all the more important. This policy brief draws on recent research by Future Agricultures and asks:

How do small farmers commercialise? What have been the outcomes of small farmer commercialisation? How can policies support smallholder commercialisation and encourage good outcomes?
The Struggle over the Commons: Annual Savanna Fires and Transnational Mango Outgrower Schemes

Full title:The Struggle over the Commons: Annual Savanna Fires and Transnational Mango Outgrower Schemes in Northern Ghana

FAC Policy Brief 62by Joseph A. Yaro and Dzodzi TsikataJuly 2013

Northern Ghana is characterised by rain fed agriculture, poor infrastructure, food crop production and poor export-oriented agriculture. Large-scale agriculture producing export crops has been one of the many suggestions made to reduce poverty in the region. However, annual savanna fires destroy investments in commercial and food crop agriculture due to a misunderstanding of the nature and purpose of these fires. The underlying causes of fires and their control cannot merely be attributed to overt reasons; they result from socio-political causes such as dissatisfaction with processes of disenfranchisement and social exclusion. This raises many questions regarding the plausibility and efficacy of introducing a modern export-oriented organic mango farming project in improving the local economy of northern Ghana.

This brief examines the Integrated Tamale Fruit Company (ITFC) outgrower farm model, which fits well into the government’s value chain approach to agricultural commercialisation with an export focus. Savanna fires are not necessarily destructive as the current policy formulations prescribe, but an understanding of the varied uses of these fires, the timings and a negotiated management of natural resources including land, is important in regulating the use of fires in ways beneficial to all land users.

Can the smallholder model deliver poverty reduction and food security

By Steve Wiggins July 2009

Despite the achievements of smallholders in Asia during the green revolution, there is scepticism that Africa’s smallholders — who dominate the farm area in most countries — can imitate this model and deliver agricultural growth. This paper assesses whether such pessimism is justified.

Given the high transactions costs of hiring labour of farms, diseconomies of scale can be expected when labour is relatively cheap and abundant compared to other factors of production: which may explain the survey evidence that small farms often produce more per hectare than larger farms. In conditions of low development with relatively cheap labour, small units may have advantages over larger ones.

Cautious commercialisation. Findings from village studies in Ethiopia, Ghana, Kenya, Malawi and...

Full title: Cautious commercialisation. Findings from village studies in Ethiopia, Ghana, Kenya, Malawi & Tanzania

Working Paper 82 Steve Wiggins, Gem Argwings-Kodhek, Samuel Gebreselassie, Samuel Asuming-Brempong, Ephraim Chirwa, Mirriam Muhome Matita, Ntengua Mode & Khamaldin Mutabazi

Commercialisation can be central to agricultural development, with the promise of contributing to economic growth, with the reduction of poverty and hunger. Africa has seen many episodes of more commercial smallholder farming, from the export crop booms in West Africa of the late nineteenth century to more recent spurts in production of food for domestic markets. Unfortunately such episodes have not been more widespread, nor in some cases have they been sustained.

This paper looks at experience of commercialisation in selected parts of Africa in the late 2000s, to shed light on key questions asked about the process, including:

How do farmers commercialise, which small farmers commercialise and to what extent, and what are the drivers of change? What are the benefits of commercialisation, both directly to farmers, as well as indirectly to those who may benefit from linkages in the rural economy that create additional jobs? Are there drawbacks? For example, in reduced food security as cash crops replace food production, increased inequality, further disadvantage to female farmers, higher risks to vulnerable smallholders or harm to the environment? What policies and programmes lead to commercialisation with desirable outcomes? What should be the role of governments, donors who assist them, private enterprise and civil society in promoting favourable commercialisation?
Commercialisation of African Smallholder Farming. The Case of Smallholder Farmers in C. Tanzania

Future Agricultures Working Paper 72Khamaldin Mutabazi, Steve Wiggins & Ntengua MdoeAugust 2013

African agriculture is predominantly carried out on small-scale family farms. The big question about such family farms is whether they can be successfully commercialised within their current structures, or whether they should give way to commercial medium and large-scale farm enterprises. In more detail, the following questions arise about the experience of commercialisation of small farms in Africa and their prospects. Under what conditions, and with what encouragement from policy, may small farms be commercialised? Does commercialisation benefit smallholding households? Does commercialisation increase social differences? Does commercialisation raise risks in the markets to unacceptable levels?

This study addresses primarily the first two questions about the nature of commercialisation, its benefits and impacts on food security. Four villages in Tanzania that produce commercial crops for sale, mainly onions, were studied.

Commercialisations in Agriculture
Jennifer Leavy and Colin Poulton September 2007

According to this thinking, smallholder agriculture is uniquely positioned to deliver broad-based growth in rural areas (where the vast majority of the world?s poor still live). However, others fear that strategies for commercialising agriculture will not bring benefits to the majority of rural households, either directly or (in the view of some) at all. Instead, they fear that efforts to promote a more commercial agriculture will benefit primarily large-scale farms. At best, the top minority of smallholders will be able to benefit.

Accelerated growth in agriculture is seen by many as critical if the MDGs are to be met in Africa. Although there are debates about the future viability of small farms (Hazell et al. 2007), the official policies of many national governments and international development agencies accord a central role to the intensification and commercialisation of smallholder agriculture as a means of achieving poverty reduction.
Creating New Markets via Smallholder Irrigation: The Case of Irrigation-led Smallholder...

Creating New Markets via Smallholder Irrigation: The Case of Irrigation-led Smallholder Commercialization in Lume District, Ethiopia

By Samuel Gebreselassie June 2010

Following the 2008 global food crises, the agricultural development agenda has gained renewed international attention. Though this observed price instability reflects largely short-term disequilibria between supply and demand, many - especially major food importing countries - consider it an indicator of a new era that is characterised by much more unstable food prices on the international markets (Galtier, 2009). Consequently, investors from these countries were encouraged to lease farm lands in relatively land and water abundant countries in Africa and other parts of the developing world.

Does Rapid Agricultural Growth Require a System of Innovation? Evidence from Ghana & Burkina Faso
John Baptist D. Jatoe, Damien G. Lankoandé and James SumbergMay 2013

This paper tests the ‘systems of innovation’ hypothesis for a selection of crops in Ghana and Burkina Faso that have shown significant growth in production over an approximately 20-year period. The question is whether such growth can only occur if supported by a system of innovation. Using two indicators (a common understanding on objectives and priorities, and a high level of interactivity) we find little evidence for the existence of anything that might be considered a high functioning system of innovation.

L’Économie Politique du Succès de la Filière Coton au Burkina Faso: Entre Paradoxes et Incertitudes

FAC document de travail no. 41par Augustin Loada

Le présent article porte sur l’économie politique de la filière coton au Burkina Faso. Si l’histoire du succès économique de cette filière est bien connue, il n’en va pas de même pour le rôle de l’économie politique jusque là peu étudié.

Pays sahélien enclavé confronté à des conditions climatiques et écologiques peu propices au développement de l’agriculture, le Burkina Faso est pourtant cité comme un exemple de réussite dans la filière coton. Introduite en Afrique l’Ouest sous l’ère coloniale dans les années 20, la culture du coton connaît un succès qui n’est pas seulement dû aux innovations techniques apportées de l’extérieur mais aussi à la capacité d’innovation des producteurs (Thomas J. Basset, 2002). Mais la filière ne prendra son envol qu’au lendemain de l’indépendance en 1960, sous l’impulsion de la Compagnie française pour le développement des fibres textiles (CFDT), une société publique dont le champ d’intervention s’étendait dans la sous-région francophone.

Private Equity Investments and Agricultural Development in Africa: Opportunities and Challenges

Future Agricultures Working Paper 62Laura Silici and Anna LockeJune 2013

Private equity (PE) and venture capital are forms of investment that bring together specialised fund managers and investors to provide equity investments into private (i.e. non-publicly listed) companies. Compared to other emerging markets, the PE industry in Africa is still at an early stage of development but several circumstances suggest that its growth is proceeding at a sustained pace.

The agribusiness sector in Africa has become an increasingly important destination for investments, and investment in this sector is projected to grow further in future. PE may represent an additional, important source of capital for agriculture. However, due to lack of publicly available data, very little is known about PE deals concluded in Africa, where they stand within the panorama of agribusiness investments and the impact they have on local economies.

This study seeks to shed some light on the volume and the characteristics of PE investments in agribusiness in Africa, with the objective of assessing whether, and how, these could contribute to developing the sector.

This paper was produced under the Future Agricultures Early Career Fellowship Programme

The role of the state and foreign capital in agricultural commercialisation: the case of sugarcane..

Full title: The role of the state and foreign capital in agricultural commercialisation: The case of sugarcane outgrowers in Kilombero District, Tanzania

Working Paper 106 Rebecca Smalley, Emmanuel Sulle and Lameck Malale

Since the launch of the Kilimo Kwanza (‘Agriculture First’) slogan in 2009, the Tanzanian government has been part of efforts to inject foreign capital into its country’s agricultural sector. A range of domestic and international players have developed plans to facilitate private acquisition of farmland; increase investment in irrigation and value addition; deepen the penetration of agribusiness; and bring more of Tanzania’s small-scale farmers into commercial agriculture, particularly through outgrower arrangements. The plans include the Southern Agricultural Growth Corridor project (SAGCOT), a public–private partnership focused on Tanzania’s south-central region, and Big Results Now, which aims at achieving rapid progress in commercialisation and other agricultural policies in priority crops (Cooksey 2013). Sugar is a target sector.

One of the areas of Tanzania in which development is planned, the Kilombero Valley, already has a nucleus– outgrower sugarcane business. This working paper presents findings from a study of the sugarcane business in Kilombero. We argue that a dramatic but poorly planned expansion of the outgrower sector, combined with farmer services being transferred or reduced, has created wealth but also systemic weaknesses that are linked to falling returns for many outgrowers and a wider problem of land scarcity. The solution to these problems lies with the state, the company and associations of cane growers, as well as sugar industry regulatory institutions.

Commercialisation of Smallholder Agriculture in Selected Tef-growing Areas of Ethiopia
By Samuel Gebreselassie and Kay Sharp

The poverty-reduction strategy adopted by Ethiopia seeks to achieve growth through the commercialisation of smallholder agriculture. The Plan for Accelerated and Sustainable Development to End Poverty (PASDEP), Ethiopia?s strategic framework for 2005/06 – 2009/10, relies on a massive push to accelerate growth. This is to be achieved by efforts in two directions: commercialisation of agriculture, based on supporting the intensification of marketable farm products (both for domestic and export markets, and by both small and large farmers); and promoting much more rapid non-farm private sector growth (MoFED, 2005). This study aims to contribute to this plan by identifying factors that can deepen and expand the scope of market participation of smallholders.

Intensification of Smallholder Agriculture in Ethiopia
By Samuel GebreselassieMarch 2006

Ethiopia’s inability to feed its population and thus its continued dependence on foreign donations of food to sustain millions of its citizens is a dilemma that triggers a broad economic and sociological debate. The problem of Ethiopian agriculture cannot be primarily explained by natural endowments. By any measure, Ethiopia is well endowed at least in part with a fertile soil, abundant water resources and good climatic conditions until recently. What needs careful analysis is why Ethiopian farmers continue to practice essentially the same farming methods with very little technical or management improvement for so long.

Agricultural Commercialisation in Coffee Growing Areas of Ethiopia
Samuel Gebreselassie and Eva LudiMarch 2008

The coffee sub-sector is very important to the Ethiopian economy. In 2005, coffee exports generated 41% of foreign exchange earnings and provides income for approximately 8 million smallholder households. Policy attention to the sector was always considerable, and its importance has been renewed in the latest Poverty Reduction Strategy, the Plan for Accelerated and Sustained Development to End Poverty (PASDEP). PASDEP puts forward a development strategy based on accelerated economic growth, part of which is hoped to be achieved via increased smallholder commercialisation and market integration.

Aider les petits exploitants à commercialiser leur production

Point info CAADP 11

Accélérer la croissance dans le secteur agricole en améliorant les capacités des entrepreneurs privés (producteurs commerciaux et petits exploitants) pour répondre aux exigences toujours plus complexes des marchés intérieurs, régionaux et mondiaux – tel est l’objectif central du Pilier II du PDDAA. La commercialisation fait référence à une participation accrue aux marchés. Les petits exploitants sont depuis longtemps associés aux marchés, pour la vente de leur production, l’achat d’intrants ou l’information. Dans le contexte de l’urbanisation, de l’amélioration des moyens de communication et de la mondialisation, la commercialisation paysanne prend toute son importance. Ce Point Info s’appuie sur une récente étude de Future Agricultures et pose les questions suivantes:

Comment les petits exploitants commercialisent- ils leur production? Avec quels résultats à ce jour? Comment les politiques peuvent-elles soutenir la commercialisation agricole à petite échelle et améliorer les résultats?