Breakout Session 9: Creating the entrepreneur farmers needed today and tomorrow

Paper "Creating the enterpreneur farmers needed yesterday, today and tomorrow " by Xiaobing Wang and Jikun Huang, Chinese Academy of Social Science Presented by Xiaobing Wang

Chair’s remarks and key points:  Peter Hazell, SOAS/Imperial College

• Entrepreneurship needs a context of new growth opportunities, as in the dynamic growth environments of China and Uganda, including rural business opportunities in high-value agricultural and the non-farm rural economy.

• Encourage entrepreneurship across the market chain; in processing, providing credit, selling seeds and fertilizer, traders and retailers, and in exchanging technology.

• Training in business skills needs to be backed by innovative partnerships for investment and credit access, mechanisms for risk management and high enterprise failure rates, and leveraging the collective power of marketing and producer groups. Organizations are especially important for training and capacity-building, and for empowering women to engage in market forces.

• Markets should be supported and private sector activity encouraged. Government or donor interventions should be compliant with market forces, without distorting them or undercutting private players. Encouraging examples come from for-profit social enterprise.

• School curriculums are biased against agriculture, influencing youth to seek ‘greater aspirations’. The challenge lies in overcoming a cultural constraint, changing school curricula to fairly present the business opportunities in farming.

Synthesis of discussion

It is argued that smallholder farmers are certainly private sector operators or small-to-medium enterprises, and are already entrepreneurs in the sense that they seek out profitable opportunity, manage costs of production and marketing, and aspire to grow their business. Encouraging entrepreneur farmers to flourish in developing countries comes to down to managing incentives; rapidly changing agri-food systems and good domestic markets are fertile ground for business-minded farmers who envisage their market niche. Complex land ownership rights, on the other hand, are a persistent disincentive. More complex is a culture of youthful aspiration to move away from the farm. Whether it derives from familial or curricular influence, it is resulting in a generation of youth with incentive to avoid the “tale of drudgery” and who are not inspired to be enterprising farmers. Ultimately, agriculture is undergoing a transformation, particularly in Africa, which brings opportunity and potential for growth but also uncertainty and problems. In this context, entrepreneurs are critical for the spirit and creativity they bring, and they are best poised to realize the goals of rural economic development.

An entrepreneurial spirit is not endowed, however, which brought up the discussion of capacity building. Basic business skills training is required as a distinct element of farmer education. Furthermore, “safe” learning environments were recommended for farmers who likely have under-developed business capacity and thus require particular attention. It was noted that business skills don’t necessarily lead to entrepreneurial flair, the latter demanding a certain talent and audacity. Left unaddressed was the question of school curriculum, namely the concern that youth are not being adequately prepared for life in the agriculture sector. Is the combination of better educated youth and a gap in skill sets exacerbating the problem of non-farm aspirations? How can the cultural and curricular problem be addressed? 

Heterogeneity among farmers and their conditions means that those closer to the subsistence level navigate a more difficult path to entrepreneurship as compared to those on the cusp of commercialization. For development organizations, the issue of targeting becomes more nuanced with the age dimension. On the one hand, specific programs need to be targeted to youth – support young entrepreneurs and encourage them to see the vibrant business opportunity in smallholder farming. At the same time, an enabling environment for experienced farmers to be entrepreneurial and connect to value chains will permit them to set an example for youth. In terms of donor intervention, what is the typology for entrepreneurial farmers and what programs will have the best impact for each type? To the illustrate the complexity of the challenge, a question was posed about support for the African farmer who, upon retirement from a non-farm career, returns to inherited land and begins agricultural production at a later stage in life.

The reality is that entrepreneurship goes hand in hand with risk, often with unforgiving learning curves and high failure rates. The farmers who take the leap towards commercially-oriented production without success will need to bear the cost. What can be done to create an environment where farmers can learn from failure, then regain the confidence and the means to make a new attempt at enterprise? An interesting example from TransFarm Africa showed innovation in managing risk without requiring collateral, thus allowing the farmers’ asset base to remain intact in case of default, including the means to take the entrepreneurial leap again. 

Market intermediaries can play a significant role in stimulating entrepreneurship among smallholders. From the trader whose raw material is at risk if smallholders stop producing to the more complex relationships in contract farming, there is incentive all along the value chain to engage with smallholders. This incentive can translate into flows of inputs to production, technical assistance, credit, or even business training, and has been shown to be a catalyst for entrepreneurship among farmers. Innovative partnerships and business models are arising as well, such as with for-profit social enterprises and contract farming relationships. An important point was raised about governments being integral to value chain development; from attracting FDI or local investment, to setting quality standards, building capacity, developing infrastructure, etc. Value chains are often initiated at the national government level. 

For donors and development organizations, creating an environment of vibrant economic growth is vital for inspiring entrepreneurship along the value chain. It was suggested that there is little need for protectionist intervention. To preserve the balance of incentive and investment, government or donor interventions should be compliant with market forces and work through the private sector to avoid distorting markets or undercutting private players. As colourfully illustrated, a government program to provide free tractors will put the tractor supplier out of business. Markets should, therefore, be supported and private sector activity encouraged.