Responsible Business and Sustainable Food: Smallholders in the Globalising World

By Darya Hirsch

2014 is the International Year of Family Farming and Smallholder Farming. Smallholders help to provide food for the growing world population with an increasing demand of food, feed and renewable energies, to create and preserve jobs in rural areas, to stem the rural exodus and show a strong resilience to external shocks. Smallholder farmers cultivate only 10% of the agricultural land worldwide, yet they produce up to 20% of the global food supply and play even the major part of the low-income economies.

Smallholders esp. in developing countries are facing a lot of difficulties such as limited access to markets and capital, lack of power due to their fragmentation and insufficient available infrastructure. Smallholders need to find a balance between economic performance, sustainable development and finding their role on local, regional and globalized markets. In this sense the panel experts in different areas such as research out of Europe, Asia and Africa, agribusiness, food politics, and certification, discussed the following questions

  • Are smallholders per se sustainable?
  • How/under which conditions can small and family farms reach a “balance” between economic, environmental and social sustainability?
  • What kind of governmental support and institutional framework do they need?
  • Can cooperatives of poor farmers independently and completely manage the sophisticated technical, financial and trade issues which are the dominant elements of the globalized trade system? How can they compete against large scaled companies?

Smallholders in the globalizing word are characterized by a framework of structural transformation of agriculture due to trends of the urbanization, rural worlds which consist of better off smallholders, smallholders with the access to land and landless or very poor smallholders (living in and from agriculture) as well as policy choices far beyond agriculture focused on national food security or national stability and security. Additionally features of small farms are low productivity, high costs of production and to meet requirements for export markets.

To be more adapted to the globalizing world smallholdership needs (1) adequate information support systems; (2) small loans/credits for investments and (3) strategic support for purchasing and marketing. Governmental support is essential addressing access to inputs, infrastructure and markets. The special role of domestic policy in transformation of agricultural sector e.g. in certification suitable for local needs (KeyGAP), lobbying of smallholders as well as options for surplus production are essential.

Responsible business of smallholders does not include only issues of economic benefit of farmers and the way of their agriculture practices (organic food production and environmental and social friendly agriculture); it is also question of survival that farmers do not produce in order to buy their food. There examples that smallholders and processing companies are strongly dependent on each other; processing companies are looking for sufficient good raw materials. However, more and better production means for smallholders also more labour intensity without additional increase in the income considering also available land use such as cocoa farms in Cote d’ Ivoire and Ghana with an average of 1-3 ha land (to compare, in Latin America – 100 ha). Also organization of smallholders in cooperatives is not always a success promising. Often smallholders change their production pattern towards more profitable crop (e.g. cocoa farmers went for rubber production in Cote d’Ivore).  A trend in the industry is that the supply chains become more efficient and effective to reduce the risk of contamination and transport losses and ensure supply.

There are different mechanisms to secure livelihood of smallholders. For example, a GLOBAL G.A.P. baseline of good agricultural practice gives the common standards for producers and retailors and translates what consumers are expecting from farmers to produce. However, certification is only one tool towards sustainable development. Important is also a concrete business to organise smallholders around, maybe with one leading company.

The panel was closed with the following conclusions: (1) Appropriate institutional settings, incl. certification and standards need to be developed (2) National government plays an important role in policies for sustainability (“No optimal policy exists, look for a good enough policy”); (2) Best practices of successful farming/farm organisations (cooperatives or around one common business) should be shared and exchanged; (3) Universities and schools can play a crucial rule with education, training and research; (4)There is no one solution; locally adopted solutions are needed.

Dr. Darya Hirsch is a Research Fellow at the International Centre for Sustainable Development at the University of Applied Sciences Bonn-Rhein-Sieg.