1THE FUTURE OF SMALL FARMS: SYNTHESISPAPER 1Peter Hazell2, Colin Poulton3, Steve Wiggins4 and Andrew Dorward3November, 2006(version 1) 1 This document is part of a series of contributions by Rimisp-Latin American Center for Rural Development(www.rimisp.org) to the preparation of the World Development Report 2008 “Agriculture for Development”. This work wascarried out with the aid of a grant from the International Development Research Centre, Ottawa, Canada (www.idrc.ca). Thecontents of this document are the exclusive responsibility of the authors.2 Corresponding author: Imperial College London, [email protected] Imperial College London4 Overseas Development Institute (ODI)Table of ContentsEXECUTIVE SUMMARYI. INTRODUCTIONII. THE ROLE OF AGRICULTUREContending ViewsImpact of GlobalizationIII. THE CASE FOR AND AGAINST SMALL FARMSAdvantages of Small FarmsChanges and Threats to Small FarmsIV. SRATEGIES FOR SMALL FARMSRoles for Small FarmsRole of Government InterventionsHow Should Policy Support for Small Farms Change Over Time?Government EffectivenessThe Politics of Assisting Small FarmsV. CONCLUSIONS1EXECUTIVE SUMMARYThis paper addresses the question: Do small farms have a future in the developing world? Thecase for rural development is easy to make: the large majority of the poor live in the ruralareas of the developing world. Even with urbanisation, this will not change for at least another20 years. Although some of the rural poor may be helped by transfers from cities, for mostany improvement in their incomes will depend on generating more and better jobs in ruralareas.Agriculture is likely to be central to rural development and rural poverty alleviation. Farminghas a high potential to create jobs, to increase returns to the assets that the poor possess —their labour and in some cases their land, and to push down the price of food staples —important when so many of the poor are net buyers of food. Historically, few countries haveindustrialised successfully without a prior development of their agriculture. Recentcomparisons made across countries show that increases in agricultural productivity are closelyrelated to poverty reduction. In most rural areas, moreover, there are few alternatives tofarming as a large-scale source of jobs. The opportunities for mining and tourism arerestricted to locations with mineral deposits or natural assets; while rural manufacturing findsit difficult to compete with urban factories.Nevertheless, some changes seen in the last quarter century make agricultural developmentmore difficult than before. The prices of most commodities have fallen on world markets. Thebetter opportunities for green revolution packages of improved seeds and fertiliser have beentaken up, while there are doubts about the ability of research to provide major technicaladvances. In some areas soil fertility has been lost, water tables are falling, and climatechange may mean increasingly adverse weather. Parts of Africa face significant impacts fromthe HIV/AIDS epidemic. Finally, current policy preferences prevent the state from taking asactive a role in fostering agricultural development as it did in the past.How much these changes hinder agricultural development varies by context. The paperconsiders different country situations, varying by the prospects for minerals, manufacturingand agriculture. In most cases, agriculture proves central to development efforts, either aleading sector or a supporter to other sectors.Should agricultural development efforts emphasise small or large farms? In terms ofefficiency, small farms typically make intensive use of land by using much labour — sincethe costs of supervision of household labour are low. Self-provisioning saves costs ofmarketing. Large farms, on the other hand, have lower costs when transacting with the outsideworld in procuring inputs, marketing produce, and accessing credit.As regards equity and poverty reduction, small farms are preferred to large. Smallholdings aretypically operated by poor people who use much labour, both from their own households andof their (equally or more) poor neighbours. Moreover, when small farm households spendtheir incomes, they tend to spend this on locally-produced goods and services, therebystimulating the rural non-farm economy and creating additional jobs.The changes reviewed above affect both small and large farms, and more or less equally. Butother developments may pose more severe challenges for smallholdings. Where newtechnologies require more capital inputs, mechanisation, or high levels of education, thesemay disadvantage smaller farms.More worrying are the implications of changes to marketing chains. Supermarket operatorsare becoming increasingly important in parts of the developing world. The supermarkets2require stricter standards for the quality, consistency, and timeliness of supply. They may alsorequire the ability to trace consignments back to source to confirm how they have beenproduced (credence). Supermarkets expect their suppliers to adjust rapidly to changingconsumer demands. Small-scale, under-capitalised and often under-educated farmers find itparticularly difficult to meet these requirements, especially those of traceability and credence,even if family labour is often well suited to delivering quality products.Will small farms be marginalised from the new supply chains? Much depends on whetherthey grow produce where credence matters, and whether the supermarkets can obtain theirsupplies from large farms. When the supermarkets can deal with a few large farms, they will:when credence is less important or there are no alternatives to small farms, then smallholdersare likely to become part of the evolving supply chains. Equally important is how quicklysupermarkets come to dominate food supply chains. Supermarkets thrive in growingeconomies, so that as their control of marketing increases and some small farmers areexcluded, the chances are that new jobs are being created for them in non-farm activities.What are the policy implications? Policy for smallholders needs to vary by context. In somecases, smallholder development promises both to drive or sustain growth as well as to deliverreasonably equitable development outcomes. In other cases, policy-makers need to considerwhether there are social reasons to support small farms. Where this is not the case the policyagenda becomes one of social safety nets for the poor, and facilitating good exits
View Full Document
Unlocking...