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Four myths about smallholders
The case against smallholder farms often relies on four key misconceptions, born of a lack of familiarity with the lives of poor farmers.
1. Low productivity
Apparently striking data shows that average yields for cereals on small farms in Africa are less than two tonnes per hectare, compared with a world average which is twice as high.143 But smallholder farms often have low yields precisely because they use the factors of production more sparingly.144 Small farms in Africa use tiny amounts of fertilizer – about one-eighteenth of those in India, for example.145 They use labour rather than capital, and less than five per cent of the cultivated area is irrigated.146 Furthermore, small farmers can only dream of the lavish subsidies showered upon many large-scale farms.
Accounting for these other factors in the productivity calculation massively narrows the gap. Put another way: if small farmers had the inputs, irrigation, and subsidies enjoyed by large farms, things would look very different. This is why surveys often find that, when the focus is shifted from yields to total productivity, small farms are found to be more efficient.
Oxfam sees this time and again in its work with small farmers all over the world, such as a recent project in Mnembo, Malawi that transformed the lives of 400 families.
Where increasingly erratic rainfall had sent their maize yields into terminal decline, now, thanks to irrigation, new seeds, and fertilizers, production has increased significantly and they have diversified into wheat, rice, and tomatoes.
2. Aversion to technology and innovation
‘Big is beautiful’ adherents maintain large farms are quicker to adopt new technologies, forgetting perhaps that the Green Revolution in India was led not only by large commercial farms, but also by small-scale producers. Farmers living in poverty do not grind out their existence using primitive technologies and outdated practices as a preferred option, rather because appropriate technologies for small producers have not been a priority for government or the private sector. For example, genetically engineered crop varieties developed overwhelmingly for large-scale industrial farms have failed to deliver for poor farmers, and have failed to make a significant contribution to tackling hunger, poverty or development.
Sub-Saharan Africa has seen countless examples of technological success stories at the forefront of innovation: smallholders have adopted improved maize and rice varieties and cassava resistant to pests.147 In the Dadeldhura and Dailek districts of Nepal, Oxfam helped 15 communities of women and men planting new drought-resistant seed varieties, building and managing new irrigation systems, and adopting new farming practices.
3. Aversion to risk
Some argue that small producers are insufficiently entrepreneurial and unwilling to take risks. Of course, surviving on less than $1.20 a day, without recourse to savings or insurance, narrows the scope for taking risk – on a new, unproven crop or seed variety, for example. Survival, not profit maximization, is the overwhelming priority. The solution is to help poor farmers to better manage risks: by providing better weather information and data, storage infrastructure, or access to insurance. Such interventions can help spur innovation and unlock productive potential – especially as climate change rapidly multiplies the risks poor farmers face.
4. Aversion to markets
A final myth about smallholders is that they do not respond to market opportunities. This is nonsense. While their priority is feeding their families, this does not mean poor farmers are unwilling to produce and market surpluses. Oxfam has worked with producer organizations and with the private sector on countless occasions to bring poor farmers into markets with astounding results. For example, Oxfam is helping the Sri Lankan company Plenty Foods integrate 1,500 farmers into its supply chain. Plenty Foods estimates that sourcing from small farmers has contributed to an annual growth of 30 per cent over the past four years, while farmers have seen improved access to land, credit, technical support, and markets, and a corresponding rise in their incomes.
Of course, some small producers survive on the absolute margins, working depleted soils using primitve techniques. The nature of their existence makes them unlikely to pursue market opportunities; or for that matter be pursued by market actors. But these are the exceptions, not the rule.
These four arguments do not constitute a case against investing in smallholder agriculture. They are not evidence of inherent failings or inevitabilities. The real problem is that smallholder farmers have never been given the support or been provided with the policy environment they need to flourish. They are efficient on a total-factor basis, but yields are low because of under-investment and a lack of access to resources. Technology uptake is slow because of a lack of appropriate research and development and extension services. Risk-taking is low because of a lack of supports to build resilience and climate adaptation. Engagement with markets is low because of poor infrastructure and reluctance on the part of private sector actors to accommodate them in value chains.
These are not reasons to not invest. They are reasons to invest.