Distinguished guests,

Ladies and gentlemen,

I am delighted to welcome you to IFAD’s New Directions for Smallholder Agriculture Conference. Some of you have travelled long distances to be with us. All of you have made time in very busy schedules to be here. Thank you for coming. I believe you will find the conference worthwhile.   

Higher food prices

As you know, in recent months the international community has become very worried about the rising prices of many food commodities – sugar, oils, and cereals – in global markets and in many developing countries.

We saw the impact of severe weather last summer in Russia and other large cereal producers on global prices. We also saw the impact of major floods, in some Asian countries, on rice production and prices. And we have begun the new year with news of severe weather events across the world – from Australia to Brazil to South Africa.

It is too early to tell exactly what these and similar events will mean for food prices, and what the ramifications for poor rural people – IFAD’s target group – will be. However, clearly there is plenty of reason for concern, particularly for those of us who are actively working towards the first Millennium Development Goal of halving the proportion of people living in poverty and hunger by 2015.

Unlike the 2007/08 food price hike, the recent one has not affected most low-income food deficit countries.  In many African countries, unusually bountiful harvests have actually resulted in more accessible prices for urban consumers, while also rewarding small farmers in poor rural areas.

However, this is far from being the case everywhere, and there are concerns that recent price hikes may be the harbingers of a repeat of the 2007/08 crisis, which had a major impact on many millions of poor people around the world.

Can we feed 9.1 billion by 2050?

Even in the absence of another major crisis, let us not forget that there are still over 900 million chronically hungry people in the world. Let us also not forget that the majority of these people are in rural areas, and that most of them are farmers and food producers, many of whom are net buyers of food.   

By the year 2050, the world population is expected to exceed nine billion people. To meet projected demand, global agriculture production must rise by 70 percent. Can this be achieved? The answer is ‘Yes’.  But only with the right policies and adequate levels of investment.

Of course, eliminating hunger isn’t just an issue of production or supply; it’s also an issue of demand – and effective demand.

The key questions then centre on how to ensure an effective demand for the supply. How can more food be accessible to those who are most at risk of being food insecure? How can 1 billion very poor rural people have the means to buy the food they need?

The role of smallholder farming

Ladies and gentlemen, those of us here today know that the answers lie in smallholder farming.

Smallholder farming can be an effective way to increase food production, both globally and in rural areas of developing countries. Smallholder agriculture is a way for poor rural people to feed themselves and their neighbours.  It is also a way of generating income and stimulating vibrant rural economies, creating new opportunities for young rural people so that the poor rural people of today can become the rural entrepreneurs of tomorrow.

Around the world, there are approximately 500 million smallholder farms. Most smallholders and their dependents – some two billion women, men and children – live in poverty.  In much of Africa and South Asia, small farms still account for the largest share of agricultural output. It is also estimated that small farms provide as much as 80 per cent of the food locally consumed in Asia and Sub-Saharan Africa.

Increasing constraints

Smallholders around the world face increasing constraints from climate change, natural resource degradation and scarcity – particularly of water and arable land. They are also affected by lower levels of public investment in agriculture, and in many places the withdrawal of state support to the development of the smallholder sector. Millions of farmers have also found it difficult to access the increasingly demanding global markets. These constraints are preventing smallholders from becoming the engine for growth that they could be.

New opportunities

But there have also been positive changes.  Many smallholders have new opportunities in domestic markets thanks to higher rates of growth in many developing countries combined with rapid urbanization.  And the fastest growth has come from markets for high value food products, such as meat, dairy and vegetables.  

We will be discussing all of this, and more, over the next two days, in plenary and break-out sessions on topics that range from Small-scale farming as a business to Creating off-farm opportunities.

Rural Poverty Report

We have chosen the discussion areas because they are some of the themes that emerged in the course of compiling IFAD’s 2011 Rural Poverty Report.

The report, released last month, provides a comprehensive and current assessment of worldwide rural poverty.

It offers a number of key findings that will inform our conversations today and tomorrow and, we hope, international efforts in food security.

The report acknowledges both the accomplishments and challenges in smallholder farming throughout the world.

On the one hand, this sunny image on the cover shows Lionie Marceline, her husband Jean Doris, and their two children in Madagascar. They are harvesting rice grown using System of Rice Intensification – SRI – techniques that increase yields while using fewer seeds and less water for irrigation.

The picture illustrates the hope, energy and vibrancy that IFAD wishes for all rural communities around the world. The case studies inside show how agricultural development has lifted millions of people, like Lionie and Jean, out of extreme poverty over the last decade.

On the other hand, the report also highlights the situation of people like Williams Novoa Lizardo of Peru, whose farming options have become so bleak that migration to an overcrowded city is fast becoming his only option.

But there is hope. There is always hope when people of creativity, commitment and good will – people like yourselves – come together to develop solutions to the world’s most pressing problems.

And there are good reasons for hope that rural poverty can be reduced substantially, if the risk environment is improved and new opportunities for rural growth are nurtured.

Risk

First, let’s look at risk.

Unless a farmer living on US$1.25 per day is able to take a risk – on planting a new, higher yielding seed, or on specializing rather than diversifying  – she or he cannot take advantage of opportunities that could help improve their incomes.

We must help reduce these risks, and at the same time strengthen the ability of small farmers to manage the risks inherent in farming.

Reducing risk means improving the overall environment in which small farmers produce their crops and do business. It means, for instance, investing in better infrastructure, better governance, and better market institutions.

And helping small farmers better manage risk requires helping them develop the skills and knowledge that they need to make their farm production systems more resilient to shocks. It also involves supporting community-level organizations, improving access to financial services, and investing in social protection programmes.

Creating opportunities for smallholders

Second, let us look at the opportunities. Markets are changing rapidly, offering a new environment for smallholders and the potential for greater profits.

Well-functioning agricultural markets can enable farming households to increase their incomes. For smallholders, however, the potential benefits are countered by higher entry costs and the risks of marginalization.

Policymakers, civil society organizations, NGOs and donors can play a key role in strengthening value chains where smallholder farmers can develop a comparative advantage.  We must improve the efficiency of those value chains, and reduce the risk and the transaction costs that all parties – but particularly the farmers themselves – face.  And finally, we must change the power relations within the value chains, to capture a greater share of the value at farm gate.  Getting this right is critical for the transformation of smallholder farming.

Sustainable agricultural intensification is also essential for rural growth.

Food production in developing countries will need to double by 2050 to meet projected demand. This will require more intensive land use and higher yields.   

However, there are concerns about the environmental impact of agricultural intensification based solely on the use of improved seeds and high levels of agrochemicals.

Instead, we must look to ensuring the environmental sustainability of agriculture. While this doesn’t necessarily reject the use of modern technology, it recognizes the importance of using agro-ecological processes; it focuses on better conservation and management of soils and water; and it strives to maximize synergies within the farm cycle.

The non-farm economy

Finally, nurturing rural growth requires creating opportunities in the non-farm economy. Agriculture remains a key driver of non-farm economic development, with each dollar of additional value added in agriculture generating another 30-to-80 cents in second-round income gains elsewhere in the economy.

A vibrant rural sector generates local demand for locally produced goods and services. This, in turn, can spur sustainable non-farm employment, services, agro-processing and small-scale manufacturing.

Strengthening the capability of poor rural people to take advantage of opportunities in the rural non-farm economy is essential for promoting broad-based rural growth. Education and skills training are particularly important if young people and adults are to have access to good employment opportunities, of if they are to start and run their own businesses.

Improving capabilities on all of these fronts requires various and often innovative forms of collaboration between governments, the private sector, NGOs and donors.

New recognition for agriculture

The good news in all of this is that there is a growing understanding of the value of agriculture as the major driver of economic growth and prosperity in developing countries. Agriculture generates growth that is at least twice as effective in reducing poverty as growth in other sectors.

History suggests that almost no country has managed to rise from poverty without increasing its agricultural productivity.

Indeed, the vast majority of today’s developed countries grew from strong agricultural foundations, where surplus production generated wealth and prosperity. This is the path that China and India took on their way to becoming engines of economic growth.  It is what is happening today in Viet Nam, and it’s what we’re just starting to see happen in a number of countries in Africa.

Because of this, the international community – both public and private – is focused on agricultural development like no time before.

Let us seize the current moment and demonstrate that smallholders are a part of the solution and that they can feed the world.

Thank you so much.

24 January 201, IFAD Headquarters Rome