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Statement by IFAD President to the IFAD-Netherlands private sector event

The Missing Middle: a golden opportunity for all

Minister Ploumen,
Distinguished guests,
Ladies and gentlemen,

I would like to thank each and every one of you for making today's seminar such a success. In particular, I would like to thank our host country, the Netherlands, for its support of this event, second for its support of IFAD and third – and of course most important for us – for its championship of food security and environmental protection, and its promotion of working with the private sector to find solutions to poverty.

It's not always that people work with the private sector to find solutions to poverty, but that is the case here today.

The very close alignment of our goals and priorities for rural development explains why the partnership between IFAD and the Netherlands grows stronger and stronger every year. It is a partnership that reaches all the way down to the roots of IFAD – when IFAD was created and the Netherlands was a founding member – and continues today with the Netherlands being one of IFAD's major contributing members. 

I was particularly pleased to hear Director- General. Swartbol say in his opening statement, that almost everything that happens along the world's food supply chain involves the private sector --  and that of course starts with the farmer.

When we think about the private sector we tend to think about banks, of small, medium and large enterprises, and of course international corporations. Of the type of businesses that so many of you in this room today represent.

But for us at IFAD every smallholder farmer is a member of the private sector. And smallholder farmers, as a group, actually they make up the single biggest source of on-farm investment in agriculture in the developing world.

We believe that there is considerable potential to increase the productivity of smallholder agriculture simply by ensuring that smallholders are operating under conditions that would allow their businesses to thrive and prosper.

It is true that many of the farms in developing countries are small – over 400 million are smaller than 2 hectares. Unfortunately, small farmers earn as little as US$1.25 a day. Imagine feeding your family and running a business on less than $1.25 a day.

And yet, the needs of smallholder farmers in developing countries are not so very different from the needs of large farmers in developed countries. They need access to inputs and financial services, and paved roads to get their goods to market, and processing and storage facilities for what they don't sell immediately after harvest. 

They need capacity building in livestock and crop management, and to develop their capacity to build their farms. And, of course, they need secure access to the land they farm, and to other resources.

Today, only about 10 per cent of poor rural people in developing countries have access to even the most basic financial services from formal institutions – not to mention insurances.

But as you will have seen from the numerous examples presented today by my colleagues about the work in Egypt, Indonesia, Rwanda and many other countries – and in the discussion of our partnership with Unilever -- pro-poor market-led partnerships make it possible for small rural producers to produce and thrive.

At IFAD, we believe the best way to achieve global food security is to transform smallholder agriculture into profitable rural businesses that generate surpluses, have access to agri-industry, supply local and national markets, and that offer a pathway out of poverty and hunger.

Let us not forget that even in this age of growing cities, a full 76 per cent of the world's poorest people live in the rural areas of developing countries – and this will remain so for many decades to come, irrespective of the rural-urban migration. Reach them, enable them to invest in and grow their businesses, and we can address the root causes of hunger and poverty simultaneously. 

And this is not just a matter of ethics or charity. It is a matter of economics. We need our rural areas to grow food, and to maintain the healthy ecosystems that contribute to the clean water and air to the urban areas. And we know that you cannot have healthy cities without healthy rural areas. You can not feed your urban areas without successful and productive rural areas.

We also need successful rural economies so that there is a flow of goods, services and money between rural and urban areas. Without this, the migration of poor rural people searching for work in cities will continue, with all the unwanted social consequences.

Gradually the world is recognizing that Urbanization does not necessarily equal affluence. We do not need bigger cities with bigger slums – not wealthy slums. We need a world where populations, employment, services and opportunities are more evenly distributed.

 In the years ahead, IFAD intends to strengthen our ability to leverage public-private-producer partnerships – the 4 P's. I hope that what you have heard in this seminar today will convince some of you to further explore what you can do to contribute to partnerships for rural development.

This is an exciting approach and it will transform our work with 4 P's.

I will now hand the floor to Minister Ploumen.

Thank you.

The Hague, 30 September 2014