Towards a food-secure world: The role and importance of smallholder farmers in developing countries

Firstly, I would like to thank Chatham House for organizing this conference on the important topic of food security.  Although the food crisis of 2007 and 2008 may be fading from our collective memories, it is important that the international community does not lose sight of this critical challenge. Indeed, we must recognize that the global food security crisis is far from over.

International food prices have, for sure, come down from their historic peaks of a year ago, but we need to remember that they still remain high. For example: Cereal prices are still 66 per cent higher than in 2005.

In more than three quarters of developing countries around the world, domestic prices are higher than a year ago, severely affecting the capacity of poor people to feed themselves and their families.

Indeed, as the FAO reminded us just a few months back, the number of hungry people in the world has, for the first time, risen above 1 billion. The failure of the rains in much of the Horn of Africa and parts of Kenya are currently putting millions more at risk. On top of this, the drought in India and the typhoons in the Philippines that damaged large tracts of rice paddies are threatening to upset fragile regional and global food markets.

Before we discuss what measures should be taken to tackle the food security challenge at both international and national levels, I believe it is important that we draw the right lessons from the recent food crisis and its underlying causes.

Lessons from the 2008 food crisis

As you will all recall, the world experienced a sharp contraction in food supplies in 2007 and 2008.

This led to food price spikes the likes of which had not been seen since the end of the Second World War – threatening the affordability of basic staples for millions of consumers. The actions of some governments to ensure domestic supply by banning food exports in turn endangered the very availability of staple foods for food-importing countries.

The food crisis also triggered riots in more than 40 countries and brought down the government in Haiti.  It was a stark reminder, if one was needed, of the direct and immediate link between food security and national security.

I believe the food crisis brought to the fore three critical lessons.

First: The world can ill afford to under-invest in agriculture, as had happened in the last two decades. While the food crisis of 2007/2008 was exacerbated by short-term developments – such as crop failures in major cereal-producing countries and increased fertilizer and transport costs – fundamentally it was a reflection of the failure of world food supply to keep pace with growing demand. Years of disinvestment in agriculture had resulted in declining or stagnant agricultural productivity in developing countries, which in turn meant that food production could not keep up with increasing demand.

Let me cite a few figures that illustrate the degree of neglect of the agricultural sector and the impact of that neglect on productivity.

• The share of developing countries’ spending on agricultural declined significantly from 15 per cent of national budgets in the 1980s to 3 per cent in recent years.
• Similarly, the share of ODA to agriculture declined from around 20 per cent in the early 1980s to 3 percent in recent years.
• It is therefore not surprising that while the demand for cereals rose 2 to 3 per cent per annum, growth in agricultural productivity in developing countries declined from 3 per cent per annum in the 1970s to 1-2 per cent in the 1990s.

Second: Agricultural productivity and production must urgently increase in developing countries as any negative global or regional shift could immediately translate into millions more people going hungry.  In today’s interconnected world, food crises are likely to have an immediate and massive impact on poor people in developing countries. In the immediate aftermath of last year’s high-price crisis, more than 100 million people are believed to have joined the ranks of the hungry.

Third: Food availability is not sufficient to achieve food security, it must also be affordable. The affordability of important staples is a critical issue for developing countries, as high prices put such staples out of the reach of poor and low-income consumers.  According to FAO, in 2008, prices of domestic food staples in developing countries increased by 48 per cent in real terms and continued to remain high at the beginning of 2009.

It is also important to note that future food crises could be more severe, given current projections for population growth and the resultant growth in the demand for food.

On current trends, the world’s population is projected to grow from 6.8 billion to 9.1 billion by 2050. Most of the growth, as can be expected, will take place in developing countries. Feeding 9.1 billion people will require that overall global food production grow by 70 per cent.

In the case of rice, the projected increase in demand would require that global production grows at a sustained rate of 1.2 per cent to 1.5 per cent a year to meet increasing demand from population growth. Currently, growth rates are falling to less than 1 per cent a year because of a variety of factors, including water constraints, more land planted for crops used to produce bio-fuels, climate change and high prices of fuel and fertilizer.

For developing countries, meeting the growing demand for food will require that production double by 2050. This will undoubtedly pose a major challenge, particularly as   farmers in developing countries have begun to reduce their use of fertilizers in response to escalating prices.

New initiatives toward food security

Given the prospects for global food security -- which, on current trends, are not promising -- has the international community responded adequately? And are developing countries addressing the issue, given its urgency?

Efforts by the international community

At the international level, I believe we have begun to take important steps to lay the groundwork to support low-income countries in boosting their agricultural productivity and increasing their agricultural production. 

At the height of the crisis in 2008, the United Nations Secretary General established the High-Level Task Force (HLTF) on food security to coordinate the work of the United Nations Agencies, including the Bretton Woods institutions. The Task Force has produced a Comprehensive Plan of Action and has also helped coordinate the responses of the many organizations taking part.

Other important initiatives that have been launched in the recent past include the European Union’s 1 billion Euro support to agricultural projects in developing countries, as well as the launch of the ‘African Agriculture Fund’ by France and the African Development Bank. The Fund aims to strengthen the management, modernization and organization of agricultural production on the continent by supporting agro-industrial companies and agricultural cooperatives. 

These steps culminated in the L’Aquila Food Security Initiative launched by the heads of 40 governments and agencies at the G8 Summit this year.The leaders pledged US$20 billion over the next three years to strengthen global food production and food security. The pledge, if fully realized, may begin to reverse the unfortunate decline in resources going towards agriculture that we have witnessed over the last three decades.

The L’Aquila Initiative recognizes that global food security crucially depends on agricultural development in developing countries, rather than relying on food aid. It also lays down a number of fundamental principles on which efforts at increasing agriculture production must necessarily rest. Above all, it has stated that all efforts must be country-owned and country-led.

While these first steps are promising, they must be followed through with action.  Despite, the financial crisis, the international community needs to ensure that the funds for investing in agriculture in developing countries are indeed made available. And based on the principles laid down at L’Aquila, the international community must also enter into a strong and sustained partnership with developing countries to support agriculture.

An essential element of this partnership should be the acceptance of mutual accountability to ensure that donor countries honour their pledges and developing countries put in place the necessary policy framework and action to promote agricultural development.

Efforts by National Governments

Clearly, the support of the international community must necessarily rely on national efforts if it is to have any impact. And in this regard, I am pleased that developing countries are beginning to take some essential steps to increase agricultural production and productivity.

In Africa, where governments and farmers face enormous challenges, countries have begun to take some encouraging measures. In 2003, governments pledged to raise investment in agriculture to at least 10 per cent of national budgets. And while most countries have yet to meet this target, a small number already have, despite the severe fiscal crisis most African countries face today.

Importantly, a number of countries have also begun to adopt the NEPAD Comprehensive Agricultural Development Programme (CADEP) as the basis for their own national programmes.

The role of smallholder farming in achieving food security

In both international and national efforts to achieve global food security, I believe it is essential that high priority is given to smallholder farming. Five hundred million smallholder farms worldwide currently support around 2 billion people, or one third of the world’s population. Increasing their productivity is therefore essential not only to secure the food and nutrition needs of these farmers, but also of the millions of people who depend on them.

For three decades, IFAD has provided support to smallholder farmers with the goal of raising their incomes and productivity. From this experience, we know what steps are required to increase smallholder production. 

The crisis has shown that smallholder farmers often find it difficult to respond to increases in demand and higher food prices in the absence of supporting institutions and appropriate infrastructure. Creating a dynamic smallholder agricultural sector requires that governments in developing countries take a value chain approach to investing in agriculture.  This entails building institutions all along the value chain from research, to dissemination of new technologies, to production, processing and marketing.  With the market and private sector increasingly driving agriculture, there is also a need to build effective private-public partnerships.

Let me take a few minutes to illustrate this approach from IFAD’s own experience, as it has succeeded in introducing successful innovations in low-income countries. These have included private-public partnerships in value chain development and in agricultural services, rural financial services and environmental management. Though limited in scale, IFAD projects demonstrate that these types of investments can significantly increase smallholder productivity and production, as well as improve food security.

Investment in agricultural research is fundamental to raise smallholder productivity. A very successful initiative in Africa has been the development of new varieties of rice such as the New Rice for Africa (NERICA), which has doubled rice yields. Widespread adoption of NERICA could mean more than just increased rice production and reduced imports; it would also mean increased food production at the household level, contributing to increased incomes and to greater food security and poverty reduction.

Similarly, in cassava production, IFAD has invested in research to develop more productive and virus-resistant varieties. Over 100 million people in Africa’s cassava belt have benefited and many African countries have become self-sufficient. This innovation has allowed Nigeria to become the largest cassava producer in the world.

Investments in key agricultural services such as extension are essential to ensure that the latest technologies that are developed are then disseminated to farmers. In India, the IFAD-supported North Eastern Region Community Resources Management Project for Upland Areas provided extension services and training in better and more sustainable farming techniques for soil and water conservation and crop diversification. These efforts resulted in improved productivity for close to a quarter of a million farmers. 

Raising production, as important as it is, is not sufficient. Smallholder farmers also need rural financial services, markets and linkages along the entire value chain to buy improved seeds and fertilizers and to profit from their increased productivity by gaining more control over when and where to sell their produce. Unless markets are made more efficient and the necessary infrastructure is developed, increased agricultural productivity and yields will not translate into improve incomes.

In Benin, Cameroon, Ghana and Nigeria, IFAD has invested over US$100 million in cassava value chains to contribute to improved efficiency of markets and better coordinated cassava chains. These efforts have focused on improving linkages between supply and demand, strengthening partnerships along the chain, increased value addition and opening up new market outlets for cassava derivates.

Investments in agro-processing are also an important mechanism for adding value to primary products and for reducing post-harvest losses.  Access to agro-processing not only increases farmers’ incomes and thereby their purchasing power, but it may also provide incentives for increased production. For example, an IFAD-funded project in Uganda has linked smallholder producers of palm and oil seeds with an agro-processor, who has invested over US$40 million in a processing plant. The farmers now have secure markets at good prices. And the agro-processor has assured supply – to the benefit of both. 

Finally, investment in local infrastructure – irrigation, communications, power and transport – are essential to enable smallholder farmers to take advantage of higher prices and increased production. In particular there is a need to invest in the “last mile” rural roads – to ensure that what is produced by poor rural people can actually be brought to market and fetch a good price. 

In Mali, the Zone Lacustre Development Project invested in an irrigation motor pump which allows farmers to water their plants and farm seven times more land.  The project also rehabilitated the main road linking the three northern regions and built a pontoon bridge over the Niger River, which gave farmers better access to markets.

All of these investments in agricultural production and productivity must necessarily be complemented by concrete steps towards effective natural resource management, as well as climate change adaptation and mitigation. The West Guanxi Poverty-Alleviation Project in China has shown that measures that mitigate climate change can also increase agricultural production. The IFAD-funded project provided 30,000 households with nearly 23,000 bio-digester tanks for biogas production in 3,100 villages, resulting in a significant drop in methane emissions, as well as increased productivity and incomes through the use of own-produced organic fertilizer.

In summary, we believe that in the current effort to increase international support to agriculture, the lessons learned from IFAD-supported projects can be immensely useful in the design of effective programmes and projects. Indeed, we believe that the projects we fund can, in many instances, be scaled up to significantly boost agricultural production.

Concluding remarks

Let me conclude by stressing that if the international community does indeed succeed in helping developing countries with comprehensive programmes that address their institutional building needs, then there is no reason why developing countries cannot raise their food production and enhance their food security. 

But developing countries themselves must lay the foundations for stability, good governance, transparency, and accountability. They must be committed and must invest the political will to create an enabling environment for agricultural and economic growth.

Countries such as Brazil, China, India and Viet Nam have clearly made important strides towards creating such an environment, modernizing their agriculture and assuring food security for their peoples. Indeed, they have become major food exporters. Similarly, in Africa, Ghana, Rwanda and Tanzania are moving in this direction.

In short, what is required to assure global food security is an effective and mutually accountable partnership between the international community and developing countries. Through such partnership, programmes and projects that have proved successful can be scaled up and new initiatives can be launched to boost agricultural production and productivity.

With the international community providing technical support and sustained resources that go beyond the initial three years of the L’Aquila Initiative, and with countries committed to improving their governance and investing in agriculture in the context of long-term comprehensive national plans, I believe the world can, in time, banish the spectre of hunger and food insecurity.

I thank you for your attention.

Chatham House – London - 2 November 2009