IFAD Asset Request Portlet

Asset Publisher

Opening ceremony remarks by Gilbert F. Houngbo, President of IFAD: The value partnerships bring to sustainable agricultural development

Location: Geneva, Switzerland

Ladies and gentlemen,

Let me first thank the ITC Executive Director, Arancha Gonzalez, for giving me this opportunity to speak to this gathering today. As you said, coming from IFAD, I am going to focus much more on agriculture, as you can very well guess.

Starting by recalling that 2.5 billion people depend on small farms. These farms are responsible for up to 80 per cent of food production in sub-Saharan Africa and many parts of Asia. But too often small farmers, ironically, go hungry themselves. In fact, three quarters of the world’s poorest and hungry people live in rural areas.

These rural people depend overwhelmingly on agriculture for their livelihoods. And their countries depend on them for national food security systems. So the need could not be clearer. Our aim should be to help them grow more, better connect to markets where they can sell their surplus, and thereby earn more and build better lives for themselves, their families and societies in general.

In short, if you care about poverty, if you care about hunger, if you care about the environment, and building a stable and sustainable world, then you have to care about rural areas.

To achieve the transformation of rural areas requires multisectoral, coordinated action. First, Governments have the role of setting an enabling policy environment (including regulation and standards), and providing the public goods and services that respond to the needs of the different players. In terms of sustainability, smallholder farmers are not only suppliers of produce but also managers and guardians of the natural resource base. The private sector is a source of finance and technology, a market for smallholder farmers, and a processor and retailer.

If we want to bring about inclusive and sustainable development of smallholder agriculture, all of these actors need to be coordinated—and that includes rural people themselves. Hence partnerships are integral to the  process of sustainable and inclusive rural transformation. But they have to be the right kind of partnerships, ones that are sustainable, ones that are inclusive, and ones that are pro-poor.

What does that actually mean in practice, on the ground?

Rural people often lack infrastructure, reliable energy supply, technology, access to rural finance, secure rights to land and other resources. They also lack information and training, and obviously access to markets, be it local, national or international markets. No single entity has the reach, the resources, knowledge and skills to address all of these needs at the same time.

Therefore partnerships are not just an asset; they are essential.

The projects that IFAD and its partners support help smallholder farmers to become market-ready, by increasing their productivity, improving the quality of their production and their reliability as suppliers, and helping build strong producer organizations. They work to enable private sector operators to reach out to these farmers, and reduce the risks and transaction costs they face in doing so. And they obviously help governments not only on the policy side, but also to create trust and broker partnerships.

Strong farmer organizations are essential for several reasons. They enable farmers of small operations to aggregate their produce so that they can connect with private sector companies. At the same time, they empower small producers in their business relations and increase their voice in policy processes and ability to advocate for themselves.

The cost of achieving SDGs 1 and 2, the elimination of extreme poverty and hunger, zero hunger, has been estimated at an additional US$265 billion per year until 2030. Clearly we must not only increase our individual efforts, but we must work together to coordinate the delivery of resources, knowledge and policies that must be part of a multi-pronged effort.

A key aspect of unlocking the potential of modern value chains to drive progress on SDGs 1 and 2 is de-risking investment in rural areas. A global survey in 2014, three years ago, found that more than 70 per cent of young farmers said that access to finance was the main obstacle they faced.

Many financial institutions see rural investment as a risky venture to begin with, and women and youth are particularly disadvantaged. Private players in general may be reluctant, or lack the knowledge and relationships, to do business with poor rural people.

On the other side, how do you help the smallholder who has been living a subsistence existence to be able to operate on a commercial scale? True, without finance to invest in scaling up and moving up the value chain in their activities, they are stuck in a poverty trap.

A good example of an effort to address these multiple challenges is our partnership with the Mars company in Indonesia. Only last week I signed a memorandum of understanding with Mars, so that we can expand our work together to improve the livelihoods of thousands of farmers in other developing countries who supply Mars with cocoa, mint, rice and other raw materials.

In Indonesia, the Cocoa Development Center has not only provided the farmers with new and affordable technology. The training has also helped to instill a new mindset, to enable farmers to transition from survival mode to seeing their productive enterprises as commercial entities. And the project has connected them to a modern value chain and provided an incentive to increase productivity.

Partnerships for sustainable agriculture are to be considered at all levels of the value chain: from the necessity to increase productivity, to better resilience to climate change, to storage facilities, feeder roads, investments in different stages of transformation, as well as creating conducive environment for access to markets at all levels.

We have seen the model work in various contexts and with various value chains. In Uganda for example, we are working with the Government and a large private-sector partner to develop a smallholder-based model for production of palm oil. The IFAD-supported project has helped 1,800 smallholder farmers develop 4,700 hectares for cultivation. Another 3,000 people have indirectly benefited through the creation of jobs, demonstrating the multiplier effect that such projects can have on local economies.

In Egypt, a project has connected 300 farmers in West Noubaria with the Heinz company. These farmers supply Heinz with 6,000 tons of tomatoes a year, in an arrangement that enhances farm incomes and helps the company source reliable production.

To reach the SDGs, we will not only have to work together, but we have also got to be innovative. We will need inclusive, pro-poor partnerships that deliver results.

Setting up a project and building a genuine partnership are not necessarily the same thing. Let me describe some of the ingredients, in our perspective, for successful partnerships of this kind.

First of all, we have to make sure that there is a trust between the partners. This has to be built on long-term commitment and transparency on all sides. You need transparency in agreeing pricing to farmers, and also a forum for discussing issues that – inevitably – arise in an unpredictable world.

Second, we need to help farmers organize and articulate their views. Thirdly, you need a private sector partner that is committed to long-term results, that is committed to sustainable practices, and whose reputation is obviously on the line.

 

Ladies and Gentlemen,

Partnerships alone cannot cure global poverty and hunger. But they can make a significant contribution by unlocking potentials. Smallholder agriculture is the backbone of rural economies in the developing world. Global demand for food is expected to rise by 60 per cent between now and 2050. With the agri-food sector currently totaling $5 trillion, the potential to reduce poverty by connecting rural people to value chains is very clear. In Africa, we know for example, that the food import bill is currently around $35 billion a year, and if nothing changes, this could grow to $100 billion by 2025.  This being said, we know that a solution to this challenge will not just happen by itself. 

However, we can build the partnerships that will allow us to amplify the results that any of us can achieve on our own. Indeed we must do this if we want to reach the SDGs. By pooling not only resources but knowledge and expertise, and backing it up with long-term commitment, we can build a sustainable future in which we all benefit.

Thank you so much.