FSG Work Highlighted in Blog Post by Chief Economist of USAID
Chief Economist of USAID Dr. Louise Fox has highlighted FSG work by FSG's Thom Jayne and Milu Muyanga in her most recent blog post:
Subject Heading: Smallholder farmers: a good bet for USAID?
Subject Author: Louise Fox
In this blog, the Chief Economist discusses recent research on the complementary role that smallholder and medium scale farmers play in rural transformation.
In a recent EconNet economists' call, an animated discussion arose regarding a key part of the Agency's strategy to improve rural incomes through agriculture-led growth: the focus on improving productivity for smallholder farmers (SHF). Some participants argued that in Africa, where rain-fed agriculture is a dicey proposition in many regions, only larger farmers, who can mobilize capital, can really develop and improve productivity. In this blog, I want to discuss some of the arguments against this position, drawing on the research of Thom Jayne and his colleagues at MSU - research that was primarily financed by USAID through BFS. Links are provided below to some of this research.
In favor of the arguments for supporting medium scale farmers is the evidence that medium-sized farms (MSF, 5-20 hectares) in Africa are indeed the early adopters of productivity innovations - better inputs and mechanization, both of which increase productivity. The prevalence of these farms has grown a lot in the past ten years. The owners are both rural families (successful SHF households that have expanded their land holdings) and urban investors. Their incomes are higher than SHF, and they have accounted for a large share, if not the majority, of the increased agricultural output in the last 10 years in Eastern and Southern Africa. Jayne and his co-authors' research shows that growth from MSF has brought large traders and suppliers into the rural areas, increasing upstream and downstream value-added. These farms have led the ongoing rural transformation in Africa.
But Jayne's research shows that this is not the end of the story. SHF have benefited a lot from the growth of larger-scale farms. When large scale commercial traders enter an area, all farmers benefit from a more efficient value chain. When larger scale farms adopt innovations, SHF notice - and try to copy. Higher quality input supplies benefit everybody. SHF also benefit from tractor-rental services for land preparation and harvesting brought about by the growth in MSF.
Not all SHF farmers are able to capitalize on the opportunities that are coming their way through the channel of the larger farmers. That is why it is important for USAID to remain engaged with SHF. Rural transformation needs to be equitable so that the shift in labor resources toward off-farm and non-farm activities is a pull toward higher incomes, not a push towards landlessness and slums in neighboring cities.
Is USAID always effective in balancing its multiple goals of agriculture-led growth in rural areas and reducing hunger and food insecurity, the latter primarily affecting SHF? Probably not always - USAID is an organization of humans after all. But let's not create artificial tradeoffs when they may not be there.