The dichotomy between the potential for agricultural productivity on the African continent and its dismal reality has long vexed governments, development
organizations, and businesses alike. The World Bank has noted that agricultural productivity in Sub-Saharan Africa is routinely less than half that of geographically comparable Latin American and Asian countries. While the average sub-Saharan Africa country has four times the amount of arable land of its typical global counterpart, most African countries are heavily dependent on imports for the provision of staple foods. And the vast majority of food that is grown on the continent comes from smallholder farmers – families working plots of land of up to 20 hectares.
Over the past several decades, development agencies have helped drive significant improvements in the African smallholder farmer’s competitiveness on global markets. Concepts such as value chain development and approaches that focus on the central role of markets and market incentives have gone a long towards improving results of development programs. Nevertheless, success in sustainably increasing agricultural productivity and helping smallholders graduate into successful agricultural entrepreneurs has been halting.
All this is now beginning to change. It is a move led by major regional and global agribusinesses that increasingly see smallholder farmers as valuable new customers and the drivers for staggering forecast growth in the agricultural sector on the continent. Companies have begun adapting some of their core practices and products to this new customer segment. Advertising budgets are now spent on demonstration plots in rural villages, not impressive billboards in cities. Some firms work with NGOs on farmer training programs and tap development finance institutions for credit guarantees that help lower the risk of financing for inputs such as improved seed, fertilizer, and equipment for farmers.
Yet, significant challenges remain. Chief among them is finding cost-effective ways to get quality, appropriate inputs (e.g., seeds, fertilizer, and equipment) to smallholder farmers at appropriate scale, in the right place, and at the right time. And even when farmers are able to use these products to substantially increasing their yields, another hurdle presents itself. Unless local markets are sufficiently efficient and connected to global supply chains and infrastructure to absorb this jump in supply, farmers risk being victims of their own success through a sudden collapse in prices.
Partnerships between smallholders, businesses, and government, as well as innovative approaches to spreading new farming technologies will be central to addressing these challenges.
- Increased collaboration between aligned businesses. By working together, complementary businesses, such as seed and fertilizer companies, equipment manufactures, banks, and commodities traders, can leverage each other’s respective strengths and networks, lowering the risk of working with smallholder farmers. For example in Nigeria, AfGri, a major South African agricultural services company, is working with smallholder farmers to ensure that the Dangote conglomerate has a steady of supply of tomatoes for a new tomato paste factory.
- Partnerships with the public sector to improve the business environment. By partnering with governments and donors to improve local infrastructure and lower trade barriers, businesses can ensure that the crops their farmer customers produce reach market before spoiling and, on the other hand, that their own products can reach farmers on time and at a competitive price. In West Africa, the USAID-supported Borderless Alliance is working with major transport companies in the region to track bribes, checkpoint delays, and other barriers to getting goods to market quickly and efficiently.
- Reducing risk and cost by working with smallholder associations and pre-negotiating contracts. By pre-negotiating purchase agreements with major, global food companies and providing support for the aggregation of crops from many small farms, businesses can be certain that farmers will have a ready market come harvest time. In Malawi, Mozambique, and Zambia, Cheetah Limited, a Dutch agro-trader and processor, has contracted 20,000 smallholder farmers to produce high-quality paprika.
These approaches provide promising examples of the type of innovative structures that can help to change the face of smallholder agriculture in Africa, turning it into an engine to feed the region and the world and working with farmers as customers and business partners, not aid recipients.
By Isaac Williams