Small farms, meaning farms with two ha of land or less, make up 80 percent of all farm holdings in Africa south of the Sahara (SSA). Such a large population clearly has the power to spur economic development in the region, and needs to be included in any economic discussion. But smallholders often find themselves confined to local markets or subsistence-level farming, leaving them trapped in poverty. What can be done to allow Africa's small farms to reach their full potential?

Dr. Maximo Torero, Director of IFPRI's Markets, Trade and Institutions Division, looks at how infrastructure and institutions can help break this poverty trap in a new article in This Is Africa. Small Can Be Beautiful: Overcoming Market Failures for Smallholders in Africa South of the Sahara argues that, due to modern advances in production measures and food safety standards, the lessons from Asia's Green Revolution are not applicable to today's smallholders in SSA. Instead, the emphasis must be placed on improving physical infrastructure, such as roads and bridges, and market coordination, such as contract arrangements.

Torero points out that these two facets - infrastructure and institutions - must go hand-in-hand in order to be truly effective. Improved infrastructure can connect formerly isolated rural farmers to larger markets, reduce their transportation costs, and increase regional trade if properly coordinated across borders. At the same time, reformed market institutions are needed to create an effective enabling environment that allows smallholders to take advantage of things like improved fertilizers, credit and insurance, and ICTs (information and communication technologies). This two-pronged approach is crucial to fully integrate smaller farms into national, regional, and global markets.

2 Comments
Re: Almost Right
Thu, 01/10/2013 - 13:18

You are absolutely right that smallholders need to be able to achieve the necessary economies of scale. Dr. Torero's article (http://allafrica.com/stories/201301081085.html) goes more in-depth, but contract farming can play an important role in helping small farmers organize, purchase inputs, and effectively access larger markets.

Thank you for your input and feedback!

Almost right
Tue, 01/08/2013 - 16:45

This statement doesn't go far enough: "At the same time, reformed market institutions are needed to create an effective enabling environment that allows smallholders to take advantage of things like improved fertilizers, credit and insurance, and ICTs"

What are 'market institutions' and what reform is suggested?

What will give farmers access to technical packages, credit and risk mitigation, (as well as better markets) will be the creation and strengthening of organizing associations. It is almost impossible for small scale farmers to operate independently to acquire all needed inputs/expenses and knowledge services to foster productivity and efficient and profitable post harvest handling and marketing. For the individual farmer of 2ha or less, the scale is too small; the production too little, the inputs too costly to acquire, the logistics too difficult, and the profits too small if they operate independently. By organizing into groups, franchises, coops, associations (whatever construct works on a local level) they will have appropriate scale of economy to make bulk purchase and delivery, group knowledge acquisition, group credit eligibility, shared liability and accountability, and market chain control.

Good access to markets is an important consideration for all farmers, but market forces alone can't be the entire answer nor the only solution to increasing productivity and lifting small scale farmers out of poverty. There are economies of (small) scale, that work against the lone small-holder. Resources and policies are need to organize and empower small holder farm associations that will give market systems the critical mass for efficient distribution.

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