400 million smallholders a ‘vital global asset’

The International Fund for Agricultural Development (IFAD), a specialised UN agency, and a member organisation of the Global Donor Platform for Rural Development, works to eradicate rural poverty in 115 countries. Its 2008 operating programme of work of $650 million is devoted to a programme of loans and grants currently totalling some 200 projects, especially in remote, drought-prone rural areas like Sub-Saharan Africa. In the face of a worsening worldwide food-price crisis, IFAD President Lennart Båge is leading a campaign to convince governments and donors that developing country small farmers are now essential to ensure food security, spur economic growth and help mitigate climate change. He spoke to Timothy Nater at IFAD headquarters in Rome.

Nater: What is your take on the global food price crisis?

Båge: It’s refocusing attention on agriculture and food for obvious reasons: dramatic price rises, rioting, and a severe impact on poor families, food security and country budgets. But behind the immediate causes like the rise in oil prices, the use of grain for biofuels and climate change lies the fact that agriculture investment, especially in developing countries, is very much a 30-year legacy of neglect.

Senior African officials used to tell me that, for many years, it was cheaper to buy food on international markets than to invest in growing it at home. Dumping and export subsidies by exporting countries had made for very low global prices, so why use precious resources on agricultural investment, they used to ask, when cheap food is out there in abundance?

The result was an inelastic, distorted agricultural system and the crisis that is now unfolding before our eyes. The real problems haven't been taken seriously enough by governments, by many aid donors and most of the development community. The figures tell the story: 20% of ODA went to agriculture in the early 1980s, but that was down to 2.9% by 2006.

We have to invest in a global system that is strong, resilient and can absorb the sort of shocks we’re seeing today. It's in the interest not only of human dignity, nutrition and food security at national level, but also of global stability and international security. In countries where 50-60 % of most people's money goes on food, if food prices go up 50% or 100%, that's not only a slide back into poverty and malnutrition, that’s the destruction of decades of progress in development.

What’s to be done?

The immediate response, and rightly so, is to feed hungry people. The most urgent call has been to restore the purchasing power of the World Food Programme so they can feed the 17 million-plus people in their care.

The world has heard that call, hasn’t it?

The rapid, high-supply response will likely come from big commercial agricultural producers in Europe, North America and Latin America. There's a tremendous new boost of planting in OECD and other advanced agricultural producing countries, so, sooner or later, the supply response at the global level will ease the crisis.

But while all of that is sorely needed, of course, I see a risk, from a global perspective. If we forget the 400 million smallholders and their potential, we actually may get a situation where, while meeting the world’s immediate supply targets, we wind up with an even greater imbalance in the global supply system. Yes, we must gear up an emergency response to feed people and provide input support to ensure higher productive output for the coming harvests, but we must not forget medium- and long-term investment in policies, institutions, productivity, irrigation and soil fertility. If you look only at the immediate emergency, you undermine the long-term solution – and you get more food aid dependency.

So the neglect could continue?

It’s absolutely vital to ensure medium- and long-term investment in a sustainable, climate-proofed agricultural sector in developing countries, focussing on smallholders. At IFAD, while our immediate job is to ensure that the next growing seasons yield more production, we will keep up our fight to strengthen whole smallholder-based agricultural systems, especially in Africa and parts of Asia.

There’s an opportunity here: smallholder farmers number 80 million in Africa and about 400 million globally. Together with their families, that’s some 2 billion people, about one-third of humanity, most of them living on less than $2 a day. Until recently, they were seen as a poverty problem. In fact, smallholder farmers are a vital global asset, a key factor for increased food production, economic growth and development, and mitigating climate change. The 2 billion people in rural areas in the developing world can be tremendously more productive. They can be part of the supply response, feeding the world, and also very much a part of the climate change agenda, both in terms of adaptation and mitigation.

How so?

Much of the earth’s land mass is inhabited by these 2 billion smallholders and their families. Agriculture and the forestry industry account for almost half of the world's greenhouse gas emissions. How smallholders manage natural resources, vegetation, forests and farming practices will either worsen climate change, or, as we're rapidly learning through conservation farming, will actually store greenhouse gases. The way smallholders manage our common resources, which are very often their private resources, concerns every one of us.

Several countries have grown rapidly partly because of success in the smallholder agricultural sector. This is not a utopian vision. You can build strong economic growth on the agricultural sector and thereby greatly reduce poverty. Vietnam, for example, has gone from being a very strongly food-deficit country to a major food exporter, mainly thanks to development of the smallholder farming sector.

Vietnam has sufficient rainfall and fertile soils. Africa is not as well-favoured, of course.

A lot of the increased agricultural production we've seen in Africa has come about through the expansion of food-growing areas. At the same time, productivity in African smallholding is lower than in most parts of the world. We also know that, in the farming community, the gap between the highest and lowest productivity is huge. So there is strong potential there. The evidence is there, like the cassava revolution in West Africa, for example, and many other enclaves of success, both in productivity and in market access.

In theory, rising food prices should trigger rising food production. Smallholders should benefit, shouldn’t they?

What we at IFAD are seeing from our data is that the first thing that hits many of the smallholder farmers, who could be part of the solution in their own markets by producing more, is the rising price of inputs like seed, fertiliser and transport. So, in many cases, they're actually planting less, not more. And even if they have access to credit, smallholders may not use it. They’re familiar with spikes and collapses in farm prices, and fear that if they take on debt in order to produce more, they might wind up in a hole if food prices fall again by harvest time. So even though we know that the development potential of smallholder farmers will help the world reach the MDGs, it’s not easy to exploit it.

What would you call for to keep the prices of inputs reasonable?

We have the Malawi model, of course, but you can't take a blueprint and apply it equally everywhere. Local conditions are key. You have either strong or weak government institutions, strong or weak farmers’ organisations, strong or weak NGOs and private sector. The point is to rapidly create local and national groups and roundtables where you bring together WFP, FAO, IFAD, the World Bank, the African Development Bank, AGRA, the key stakeholders that have resources and the complementarity to come together with the government, farmers organisations and other stakeholders, quickly map the situation and produce the appropriate type of input support, like affordable seed and fertiliser, to boost productivity.

In the medium term, you need to work on feeder roads, agricultural research, small-scale irrigation, linkages to the market, and other items on the development agenda. We know very much what to do — the good news is that we don't have to invent new approaches to make smallholder agriculture more productive. But the development agenda needs more resources.

Does Africa have the absorptive capacity?

Africa’s alleged lack of absorptive capacity is often used as an excuse for inaction. The Malawi example shows that you can boost production. According to the figures, an investment of about $70 million in around 2 million farmers, or about $35 per farmer, yielded an additional harvest output of about $160 million, which isn't a bad rate of return. You can't take that as a blueprint for universal application, but if you make a quick calculation, and figure $35 input per farmer for the 80 million farmers in Africa, that makes about 2.8 billion dollars, and we're not even close to that.

Do you expect the food-price crisis to go away?

This crisis won’t go away overnight, and two issues will remain to make the situation more long-term, more difficult to deal with and more unpredictable than before. One is biofuels, in that there is now a direct linkage between the food system and the energy supply, and the other is climate change.

Whenever I travel, whenever I ask ministers how things are, they all say the same three things, almost without exception: First, they are seeing floods like they’ve never seen before. The statistics show that the number and severity of floods have gone up almost exponentially over the last few decades — exactly what the climate change model predicts. Second, they’re saying droughts are becoming much more severe. For example, is Australia’s drought an isolated event, like the Dust Bowl in the US in the 1930s? Or is it something longer-term? Third is the unpredictability: apart from floods and droughts, you have rains coming at times of the year when they haven't come before, making for a much bigger challenge to the sustainability of the agricultural system.

When we talk about climate proofing, it's not just about having a more resilient agriculture that can withstand droughts and floods and shorter growing periods and new pests and diseases that come with increasing average temperatures, it also has to mean greater reserves on a global scale. We have to have a cushion, a stronger, more resilient system not only in growing, but also in storage.

How much of a budget increase is IFAD asking donors for in the current replenishment round?

Together with the co-financing we hope to attract, we're aiming for a $6 billion programme of investments for the three-year period, from 2010 through 2012. What we need to look at together with the international community immediately is, how we can adapt existing IFAD programmes and those just coming on stream in 2008 and 2009 to the unfolding crisis situation of today, and to support emergency measures to produce more food in the next planting season. For that, it's too early to give a figure, but we have been mapping the situation, and we can say the situation is grave. Many developing country farmers are not planting more, but less, due to higher input prices, and, if we don't persist in our efforts, we might actually undermine the potential for local smallholders to become part of the solution.

Are donors sufficiently aware of the need to do something coordinated and quickly?

There’s a new opportunity for the world community to invest in a productive, strong agricultural system in developing countries. Many of them have a comparative advantage that isn't being exploited, and we must start tapping that, not just for those countries’ sakes, but for the world’s. With the right interventions, support, policies and priorities, the opportunity before us is to have a tremendous boost to development. All the smallholder farmers are needed, and can produce much more than now.

What should the Global Donor Platform for Rural Development be doing?

We have to gear up our advocacy and our approaches to capture this moment of opportunity for the global village, and see that the supply response, the production agenda and the climate change agenda are not three separate things but very much parts of the same challenge. This is a new situation: farmers weren't perceived to be needed in the past, when there was overproduction of food in the world, but they are sorely needed now.

Now is the time to come together, for all us working in agriculture and development, to pool our resources, not only for advocacy but also to build up a profound base of knowledge and fresh approaches. We need a policy dialogue about how agriculture and rural development and those of us that work in it can come together and offer solutions, new approaches, be a partner to the rest of the development community in re-engaging in a key sector that's been neglected for the last 30 years.

How should donors deal with new actors in rural development and agriculture, like the Alliance for a Green Revolution in Africa?

I very much welcome AGRA and the interest by the Gates Foundation and other foundations to be engaging in agricultural development, and their call for a much more ambitious funding of agricultural development in Africa. It's important to be open to new approaches and bring in new resources, building, of course, on the experiences that we have.

We have worked with both spectacular success and spectacular failure with agriculture in Africa over the last 30-40 years, so there's a wealth of experience of what works and what doesn't work. That's the hard-earned basis we stand on, but we should always be open to new ideas and work together in a coordinated fashion. I welcome and strongly endorse the recognition of the need for a step-change in the funding of agriculture in Africa and it will be up to Member States and donors to decide the modalities and mechanism for how this is to be done. IFAD stands ready to do much more. We are prepared to host any mechanism established to channel additional resources for agriculture in Africa.

From your position as leader of IFAD, what do you say to donor rivalry?

We’ve had an increase, in some areas, an explosion, a proliferation of institutions. That’s why we have the call for harmonisation, for coordination and coherence. That’s why the Global Donor Platform is so important because it’s a way of bringing us together. We all have different mandates, roles and funding, but we all work for the same goal, which is to develop agriculture in developing countries.

The spirit and the practice has to be peer learning, working together, finding common approaches and solutions, and seeing to it that, though we are many, we avoid a fragmented approach where we trip each other up. Instead, through the Global Donor Platform and the Paris agenda and, of course, the CAADP framework in Africa, we must find an approach that adds value and in which the synergies can be teased out. That doesn’t come easily but that's what I’m committed to.

Timothy Nater. 7 May 2008