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Smallholder farming key to development in Latin America and the Caribbean

The impact of the international financial crisis on the Latin America and Caribbean (LAC) region has been acute and wide-ranging. Though national economic performances will vary, an overall downturn in regional GDP is expected; a drop of 1.5 per cent in 2009, following gains of 5.5 per cent and 4.3 per cent for the past two years. Commodity exporters are being hit by the decline in the terms of trade. Weaker revenues are leading to increased pressure on government budgets.

Remittances, which have been growing rapidly in the last fifteen years, have boosted wider economic wellbeing, particularly for rural families and communities. They represent more than 12 per cent of GDP in seven LAC countries. 2009 will see the first ever decline in this important life-line with the sharpest drops predicted in Central American countries, Mexico and the Dominican Republic.

While the region as a whole is still on track to meet the first Millennium Development Goal targets (MDG1) – that is halving  the proportion of people living in extreme poverty and hunger by 2015 -- some countries are likely to fall short, as the global financial crisis risks undoing the progress they have made in poverty reduction. The situation is particularly critical in rural areas, where more than half the people are poor.

Now more than ever before, investment in agriculture, particularly smallholder agriculture, is vital. Small family farms make a fundamental contribution to the economies and the food security of the countries in the region. They account for nearly 40 per cent of agricultural outputs in Brazil and Mexico, and more than 60 per cent in Central America.

Yet, small-scale farmers are still among the poorest people in Latin America because of lack of secure access to land, technologies, financial services and markets. Investment in smallholder farming is an effective way to ensure sustainable and inclusive growth.

Not only does it give a strong boost to agricultural productivity and production, thus contributing to food security and poverty reduction, it also supports rural communities which are the backbone of social stability and drives broader economic growth.

Family farming has long been a low priority in policymaking and redressing that imbalance is now more urgent than ever. The financial crisis demands short-term measures, accompanied by a long-term vision, to protect vulnerable rural households.

Four sets of interventions are urgently required:first, a step increase in investment in agriculture and rural development across all aspects of the production cycle. This includes infrastructure, technical assistance and rural financial services. Second, the strengthening of capacities, within each country, in terms of a policy framework for reducing rural poverty and promoting effective government institutions. Third, more private sector involvement in agricultural services, such as finance and marketing and the development of public-private partnerships. Fourth, the promotion of agricultural research to allow new and improved technologies to be developed and shared.

With a unique mandate to help rural poor people lift themselves out of poverty, IFAD has a deep engagement with governments and with family farmers across the region. IFAD has contributed to the development of the Commission of Family Farming MERCOSUR (REAF) as the regional platform of national family farmers organizations, which has become a model for policy dialogue and South-South cooperation. The Ministry of Agrarian Development of Brazil has given top priority to supporting family farming, setting an example for other countries in the region.

In the three decades since it was established, IFAD has invested more than US$1.5 billion in rural and agricultural development programmes in its 32 member countries in the region. These focused and targeted investments, catalysing other human and financial resources, have made a difference in the lives of many.  Some interventions have been scaled-up by other organizations, substantially increasing their overall impact. IFAD is currently preparing two rural development programmes in the states of Piauí and Paraiba.

There is immense untapped potential in the rural people who live in the mountains, valleys, hills and plains of Latin America and the Caribbean. Family farmers need inputs (fertilisers, seeds, agricultural equipment) financial resources, access to local and international markets and know-how. If national governments, donors, international organisations, civil society groups and farmers organizations can help provide those essentials, the region's farmers not only have the capacity to grow themselves out of the current recession, but also to contribute significantly to the recovery of national economies.

The author, Kanayo F. Nwanze is President of the International Fund for Agricultural Development (IFAD), an international financial institution and a specialised United Nations agency.