Small-scale farmers – who produce the majority of food in the developing world – need to be better integrated into markets to reduce global hunger and poverty, the United Nations food and agricultural agency reported urging more nuanced policymaking for smallholder farmers.
“Policy interventions that aim at encouraging greater levels of smallholder production for sale in markets need to take better account of the heterogeneity of smallholder households,” said David Hallam, Director of the UN Food and Agriculture Organization’s (FAO) Trade and Markets Division.
In the foreword to the report, Smallholder Integration in Changing Food Markets, Hallam added that just as smallholders are a heterogeneous group, the markets in which they participate are also diverse in terms of their size, geographic location, connectivity to other markets, power relations between market players, and institutional setting.
The report notes that with greater market integration and more inclusive value chains, small farmers are more likely to adopt new technologies required to achieve productivity growth.
Stressing that there is no one-size-fits-all solution, the two main ways to link farmers with markets is to provide them with better access to credit and insurance, and to strengthen the links between farmers and buyers.
Farmers will not expend more time, money and energy in producing more, if any surplus will likely go to waste because there is no storage, no transport or, possibly, no market within a reasonable distance, Hallam said.
“The risk that any money spent to produce more will be lost is too great a risk for poor farmers to run,” he added.
The report also notes a paradox of high food prices. Seen by some policymakers as an opportunity for farmers to produce more and earn more, the response by many farmers has been muted.
“High levels of price, production risks and uncertainty, and limited access to tools to manage them deter investment in more productive new technologies that would enable smallholders to produce surpluses for sale in markets,” according to the report.
It also highlights the negative consequence of inadequate infrastructure, high costs of storage and transportation, and non-competitive markets.
In addition to more tailored policies, the report also highlights the role of the public sectors and international development partners to promote better policies for small farmers.