Breakout session 2: ASIA AND THE PACIFIC

Paper "Smallholder farming in Asia and the Pacific: challenges and opportunities " by Ganesh Thapa, IFAD, Raghav Gaiha, Delhi University and Javed Hussain, ADB

Chair’s remarks and key points:  Mahabub Hossain, BRAC

• A new context of high-value agriculture has emerged in Asia; fast income growth and rapid urbanization is resulting in a transformation of dietary habits. The transformation is not universal, however, as deep inequality persists across the region. Institutional processes are also changing, such as contract farming which is playing a more significant role in smallholder agriculture. 

• The major challenges faced by small farmers in Asia are declining productivity, risks associated with diversification to high value crops, environmental constraints including those arising out of climate change and idiosyncratic risks like floods and droughts.

• The implication of high food prices is important for smallholder farmers in Asia who are largely net food buyers, yet high food prices can trigger more investments in food production and thus positively affect yields and output.

• Lessons from China highlight the crucially important role of public policy and government intervention for smallholder agriculture: heavy investments in marketing infrastructure since the eighties have effectively linked smallholders to the value-chain, and have stimulated vast growth in Chinese agriculture. In contrast, public investment in the region has been declining in real terms over recent years.

• Feminization of agriculture is occurring rapidly in Asia, hastened by the migration of male members of the household to urban areas and non-farm employment. This has important implications for public policy as more credit, knowledge and technology for small farming needs to be targeted to women who are traditionally engaged in unpaid family work.

• The definition of smallholder agriculture for targeting purposes needs to extend beyond land-size to capture the use of family labour, whether upland or lowland, regional production conditions, etc. 

Synthesis of discussion

Following the experience of the Green Revolution, smallholder farmers in Asia exist in a new context of high-value agriculture which stems from fast income growth and rapid urbanization, and has led to changing dietary habits. Asia’s historically low level of urbanization accentuates the fast pace of this transformation. However, the issue of whether diet diversification in the region was universal for all segments of the population became a point of contention. The example of India was provided, where grain consumption has not been increasing as incomes rise. This begs the question, how broad-based is the process of diet diversification? Furthermore, in this changing context, institutional processes such as contract farming are playing a more significant role in smallholder agriculture. 

The study from India revealed that greater efficiency or higher productivity of small farms did not hold equally strongly across food groups - the negative farm-size-productivity relationship was weaker in case of cereals and oilseeds. Moreover, the analysis of responsiveness of crop output to market prices showed mixed results across food groups. While the responsiveness was higher for cereals, it was very low for vegetables. This result highlights the importance of cross-price elasticity, as prices of competing crops are taken into account by smallholders in determining output and marketed surplus. The use of average prices to analyze the price-responsive of marketed surplus also creates an internal bias since seasonal patterns of marketing vary across small and large farmers with the latter better positioned to take advantage of higher market prices.

The major challenges faced by small farmers in Asia are declining productivity, risks associated with diversification to high value crops, environmental constraints including those arising out of climate change and idiosyncratic risks like floods and droughts. Tenure insecurity was recognized as another major constraint for smallholders, many of whom often do not own the land they till, which adversely affects their capacity to undertake small or large investments necessary for improving farming practices.

It was noted that smallholder farmers have been exceptionally resilient in the presence of multiple risks. However, the term ‘resilience’ deserved elaboration. Noting that resiliency does not imply viability, smallholder farmers often remain in agriculture due to a shortage of employment opportunities in non-farm activities or urban areas and a lack of required skills for a shift in occupation.

Rising food prices holds potentially adverse implications for smallholder farmers in Asia, with the majority being net food buyers. Although, the net effect of high food prices will depend on the actual pattern of differentiation among small-scale farmers in terms of their productivity. . On the other hand, it was noted that higher food prices can trigger investments needed by smallholders to positively affect yields and output.

Not only has public investment throughout the region been declining in recent years in real terms, major policy interventions have often bypassed the large number of vulnerable small farms. The exceptional case of China highlights the crucially important role of public policy and government interventions for smallholder agriculture. Heavy investments in marketing infrastructure since the eighties have effectively linked smallholders to the value-chain, stimulating rich growth in Chinese agriculture and providing important lessons for the region. 

An important structural change in agriculture in Asia is the feminization of small-scale farming. Women in rural Asia, traditionally engaged in unpaid family work, are fast becoming the managers of small farms. This process is hastened by the migration of male members of the household to urban areas and non-farm employment. This requires a public policy response as more credit, knowledge and technology for smallholder farming needs to be targeted to women.

The issue of the definition of smallholder agriculture was discussed at length and several definitions other than land-size were pointed out. For instance, consideration of the use of family labour and the nature of land, whether upland or lowland. It was felt that the definition of smallholders must reflect the variation in regional production conditions.