Small Farmers Big Business

Origin:

Based on a shared vision and complementary expertise for sustainable approaches to poverty alleviation and food and nutrition insecurity, COLEACP (Europe-Africa-Caribbean-Pacific Liaison Committee), GIZ (Deutsche Gesellschaft für Internationale Zusammenarbeit), SNV (SNV Netherlands Development Organisation) and UNIDO (United Nations Industrial Development Organization) decided to establish the Small Farmers Big Business Partnership in 2012, with the aim to implement a joint approach that will more effectively tackle the barriers to inclusive agribusiness and growth in the developing world.   The partnership has showcased ideas and approaches from thought leaders and practitioners at The European Development Days since 2012.

Aims:

A key tenet of contemporary development thinking is the need to generate economic growth, and encourage investment in agriculture as route to alleviate poverty and food & nutrition insecurity. The new policy environment promotes development through private sector investment, and agricultural programmes are increasingly envisaged within a context of partnerships between donors, developing countries, and the private sector.  However, these new initiatives must remain focused food security and poverty alleviation, with smallscale farming and sustainability at the forefront. 

Rural economies are changing fundamentally. In a process of profound private sector transformation, value chains are becoming shorter with higher standards and stronger, vertical integration and information flows. This is driven by the increasing participation of developing country players in global value chains, as well as domestic private and government investment in the South.    

From a development policy perspective, inclusive business models are a promising tool for strengthening rural economic activity by improving income, jobs and food security. However, unless smallholder farmers are organised in order to capture benefits through collective action and can take advantage of existing technological or institutional innovations, they face a growing disadvantage. This problem is especially challenging for women farmers. If more smallholder farmers are to have a viable future, there is a need for a concerted effort by governments, NGOs, civil society, the private sector and the donor community to create an enabling environment for their development.  

In addition, globalisation has made the management of supply and product attributes inherently more complex. As a result, markets apply ever tighter supply chain and industry self regulation systems to ensure safe food and demonstrate responsible sourcing. While participation in formal markets offers important trade opportunities, SMEs in the South are often unable to enter formal local or global supply chains as they lack the know-how or the resources to meet these stringent and constantly evolving market demands. It is important for donors, the public sector, and private sector players to work together to help smallholders and SMEs gain access to profitable market opportunities, and be accepted as reliable suppliers.

Consideration needs to be given to inclusive business models between smallholders and agribusiness as well as on appropriate institutional and technological innovations that help to empower smallholder farmers as competitive suppliers in sustainable value chains. There are a growing number of practical examples where inclusive business models really work to:

  • Support small-scale farmers to better cope with risks and vulnerability;
  • Adequately share benefits and voices between business partners;
  • Empower small-scale farmers with the necessary capacity, finance, training and regulation to increase their productivity, production, and competitiveness, and in turn to contribute to food security; and
  • Make large investments pro-poor, by setting the right framework.

Promoting value chains thus has the potential to generate real benefits, but significant challenges and critical questions remain.

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