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Supporting smallholders is crucial to food security

By Lennart Båge as published in the G8 Summit special report of the Financial Times
July 7 2008

Leaders meeting for the G8 summit in Japan have a unique opportunity to start undoing the damage wrought by decades of neglect of agriculture.

It is increasingly clear that the most pressing issues of our time - food security, climate change, energy, and poverty reduction - are interdependent. It is right that agriculture has been chosen as a central theme of this year's G8 meeting.

Higher food and energy prices are already driving millions of poor people in developing countries deeper into poverty and raising the spectre of the world running low on food.

Food production will need to rise 50 per cent by 2030 in order to meet growing demand. Who produces this food is crucially important. Much of the production will come from commercial farms; indeed many are already responding to higher prices by increasing their output. But decisions taken now - including by the G8 - will determine whether the supply response also involves the 2bn people who live and work on smallholder farms. Most are poor, struggling to survive on less than $2-a-day. Supporting them would not only contribute to world food security, but would make a significant dent in poverty. Leaving them out of the equation will push many into greater poverty and hunger.

The world's 450 million smallholder farms, of two hectares or less, are often efficient producers on a yield-per-hectare basis. They have the potential to be even more productive.

Viet Nam has risen from being a food-deficit country to the world's second-largest rice exporter, largely as a result of the development of its smallholder farming sector. The proportion of people living in absolute poverty has declined from 58 per cent to 14 per cent.

To realise their potential, smallholder farmers need help. Many are net buyers of food. The cost of fertilisers and other important inputs has risen, but higher food prices do not always filter down to the farm gate, where many poor farmers must sell. To increase their yields, they need access to microfinance to pay for fertiliser, seeds, and tools. They need access to technology to boost productivity. Many depend on land to which they do not have clear title. Now, with the value of that land growing, they need secure land tenure. They also need access to water, roads, and market information to get the best prices for what they sell. All this requires investment.

The good news is that higher food prices will mean a higher return on that investment, enabling farmers and their families to flourish on their land rather than migrating in desperation to urban slums.

Sustainable agricultural development can guarantee long-term food security, contribute to climate change adaptation and mitigation, and dramatically reduce poverty. But action is urgently needed.

There are over 850 million hungry people in the world today. High food prices are expected to push about 100m more into poverty, nearly 30m of them in Africa. Climate change is likely to put an extra 50m at risk of hunger by 2020.

What can the G8 do to help?

First, it can accelerate progress on the commitments to increase overseas aid made at Gleneagles in 2005, including to double aid to Africa by 2010.

Second, it can direct much of this additional aid to agriculture and rural development. Investment in agriculture is a powerful tool for improving food security and reducing poverty. Studies show that growth generated by agriculture is up to four times more effective in reducing poverty than growth in other sectors. Yet the proportion of official development assistance to agriculture has fallen to less than 3 per cent from 18 per cent of all aid in 1979.

The UN Secretary-General has referred to the need to invest up to $20 billion a year in agriculture, at least half of which will need to come from aid. Currently G8 countries spend 2 to 6 per cent of their total aid on agriculture, according to Organisation for Economic Co-operation and Development statistics. This should rise towards 10 per cent, which can be achieved by directing to agriculture a significant part of the extra aid pledged at Gleneagles.

Third, G8 leaders can push for support for small farmers both to adapt the way they farm in response to the impact of the climate and to access carbon markets. They are among the least responsible for climate change, but are among the most vulnerable to its impact.

Fourth, G8 countries can place the interests of smallhold farmers in poor countries much higher up their list of priorities as they consider how to unblock the Doha trade talks. Farmers in poor countries need to be able to market their food at home and abroad at a fair price.

Fifth, G8 leaders can support the UN Secretary- General's efforts to develop a framework for action to ensure the international effort to address the crisis is well planned and well co-ordinated.

None of this will cost more than the pledges already made. But these measures can help turn a problem into an opportunity rather than letting it fester into a tragedy.