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.