Why smallholders are key in an urbanizing world

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Why smallholders are key in an urbanizing world

The divide between rural and urban areas is smaller than ever before

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Over half the world's population now live in urban areas. Urban and rural areas are becoming ever more interconnected and interdependent, driven by improvements in transport and communications technologies. This transforming landscape is expected to continue with an estimated 2.5 billion more people living in urban areas by 2050.

When we think about urbanisation our first thought is of big cities or megacities. In fact, most urbanisation happening now is taking place in intermediate towns of less than 500,000 inhabitants. These small towns represent the largest share of the global urban population, and are predicted to be where the majority of projected urban growth takes place. Many of these are ex-rural settlements that have expanded and transformed, retaining many of their rural characteristics, such as a reliance on agriculture and related activities.

Urbanization brings new opportunities for smallholders

Intermediate towns play an important role in enabling rural people to access markets, services and employment. These towns also potentially provide urban consumers with easier access to rural products, especially food produced by local smallholder farmers. This creates greater opportunities for commercial production within food systems, in turn attracting new sources of investment in smallholder farms. Higher incomes enable smallholders to invest in their farming and non-farming enterprises, finance travel to nearby towns and contribute to increased spending power in local economies.

But not everyone is set to benefit

Emerging rural-urban dynamics could lead to gains across the Sustainable Development Goals (SDGs), especially in eradicating poverty and achieving zero hunger. However, this is not inevitable and not all people and communities are set to benefit.

For example, residents of the most remote rural settlements are more likely to be excluded from new opportunities. There is an increasing reliance on the private sector to fund large-scale infrastructure projects, with investments skewed towards areas with higher population densities and proximity to markets. This leaves these remote communities in a vulnerable position.

Many groups may not be well-placed to benefit. These include smallholders with relatively low capacity, assets and capital, women-headed farming households, informal landless workers, and rural youth, who often have limited access to land and finance.

Perceived productivity benefits associated with large-scale models of farming undermine smallholders' prospects of benefiting from rural-urban transformations. This is a lost opportunity - especially considering the local knock-on socio-economic benefits that arise from smallholder-driven growth. Studies suggest that production per unit of land is higher on smallholder farms, mainly as a result of family management, the use of family labour and local knowledge.

Supporting the role of small-scale actors across food systems

Smallholders need to take advantage of new markets and opportunities, but often lack access to finance and resources. Responding to urban food preferences and eating habits can have numerous costs. Special packaging, adding nutritional facts to labels, organic certification and developing new products can be prohibitively expensive. Finance and guidance for minimum quality requirements to access markets may be lacking.

Supporting and enabling local food systems means ensuring services are available for smallholders. In particular, working with intermediate towns to link service providers, food processors and vendors. Farmers markets can provide an outlet for people to taste locally produced products that are not available elsewhere. In places where there is a rapid inflow of youth into labour markets, investments and policy frameworks need to focus on enabling them to access land, employment and entrepreneurship-related services, particularly training, apprenticeships and finance. Regulations on food safety and quality should reflect the reality of the nutrition benefits of diverse local diets, rather than biased towards industrially produced processed food.

New ways of working to leave no one behind

Policies and investment must be coordinated to reflect the interdependence of people's living situations from urban to rural. Prioritizing integrated approaches to development, such as territorial models of governance, will be needed to ensure everyone can participate in development processes.

As the world continues to urbanise, development challenges will be concentrated in cities. New ways of working and new partnerships are needed to protect those at risk of being excluded from these opportunities. In particular, smallholders and rural people in lower-middle-income countries, who have traditionally been among the last to benefit from development.

These will be some of the issues IFAD will take to the World Urban Forum in Kuala Lumpur, 7-13 February 2018 and IFAD side event: Bridging the gap – Integrated strategies for inclusive rural-urban linkages.

For a more detailed analysis, see the Policy Brief Promoting integrated and inclusive rural-urban dynamics and food systems.