Distinguished Colleagues,
Ladies and Gentlemen,

Thank you for joining us.

Today we are going to start our discussion by looking at a project in the cocoa sector in Sao Tome and Principe.  This project has successfully linked small farmers to high-value global markets. As a result, farmers have increased their incomes and their food security. More than that, the project took a languishing sector that farmers were abandoning and turned it into a source of social empowerment, economic profits, and community renewal.   

However, this event is not simply an exercise in show-and-tell.  The key principles of successful value chain development and engagement between small farmers and global markets have much wider applications -- to other countries, to other agricultural products, and to other communities.

What we want to do today is to use this project as a starting point to help us focus on what sustainability really means, and how to develop the key building blocks of successful commercial relationships that yield benefits to business enterprises and small farmers alike.  

But this event is not just about IFAD. We are also going to hear from speakers representing small farmers, and from a representative of a large global foods company (PepsiCo), and from the FairTrade Foundation. All of them will have their own ideas about what sustainability means, and about how to create sustainable value chains in which small farmers play an active role. We look forward to hearing from them, and indeed from all of you here.

Private sector partnerships are crucial to agricultural growth and the reduction of both food insecurity and rural poverty. The private sector increasingly is the engine of growth in rural areas. And growth in the agricultural sector is twice as effective in reducing poverty as growth in other sectors.

For more than three decades, IFAD has been dedicated to helping poor rural people escape poverty. Increasingly we have done so by helping them improve their access to markets. In the period 1999 to 2008, the proportion of our projects with a value chain element grew from less than 2 per cent to 50 per cent.

The obstacles faced by small farmers in accessing markets are both spatial and functional. Consider that in sub-Saharan Africa, one-third of farmers live more than five hours from a market town. For many millions of households, the inaccessibility of markets is literally a roadblock to better food and nutrition security, and a better life for families and communities.

 

Poor rural communities are also cut off from market information and financial services, both of which are essential to make farming a viable business.  Virtually everywhere, value chains are becoming more integrated, with large processors or retailers who sometimes directly control activities all the way down to the farm level. If they are to participate in these value chains, small farmers need to be organized, and they must build their capacity to meet the quality and quantity required by these integrated chains.

Our experience has shown us that every farm, no matter how small, is a business. And that smallholder farmers are already part of the private sector. In Africa, for example, small farmers are the most important actors and investors in agriculture.

But to thrive in domestic and regional markets, smallholders need market linkages that only other private investors – domestic and foreign - can provide. When private investors work with smallholders to increase their productivity and incomes, and at the same time manage the natural resource base in a sustainable way, they can transform lives and economies.

We talk a lot about the problems facing smallholders. But small farms—500 million strong-- are not a problem; they are an opportunity. We believe that smallholder farmers are the key to future food security. Not only do we believe it; we have seen it in action.  The experience of the communities in Sao Tome and Principe that you will hear about today are good examples.

This project, and many others like it, are exciting because of the variety of partnerships at play. They have strong private sector partnerships, but also involve farmer organizations and government. And at the heart of them are strong business relations between productive, businesslike smallholder farmers and companies in modern agri-food value chains.

These sorts of relations can play a key role in promoting sustainable development. If managed right, they can produce economic growth and help millions of rural households increase their incomes and their food security. They can also provide the incentives and the resources that small farmers so desperately need if they are to manage and rebuild the natural resource base on which they depend. Successful private sector engagement, in fact, can yield benefits for all.
 
Thank you.

 Rio de Janeiro
18 June 2012