Farmers and food systems

WHAT FUTURE
FOR SMALL-SCALE
AGRICULTURE?
Jim Woodhill, Saher Hasnain and Alison Griffith
2 ACKNOWLEDGEMENTS

This report is based on material collated for the ‘Farmers and Food Systems’ project
implemented by the Food Systems Group of the Environmental Change Institute (ECI)
at the University of Oxford, and funded by the Open Society Foundations (OSF). The
report was researched and written by Jim Woodhill, Saher Hasnain and Alison Griffith
with support from Monika Zurek, John Ingram, and Roger Sykes. Joost Guijt from
Wageningen University and Research provided advice on structure and conclusions.

We wish to thank David Bright, Elvabeth Wilson, Diana Guerrero, and Michael Nkonu
of the Open Society Foundation (OSF) for their support of the project. The team is
also grateful to country teams in Zambia and Ghana who supported research and
convening workshops. In particular, to Isaac Mwaipopo (Centre for Trade Policy and
Development), Edward Musosa (Civil Society for Poverty Reduction), Brian Mwiinga
(Centre for Trade Policy and Development), Chenai Mukumba (Consumer Unity
Trust Society), Jane Zulu (Consumer Unity Trust Society), Charles Nyaaba (Peasant
Farmers Association of Ghana), Charles Abugre (Savannah Accelerated Development
Authority, Ghana), Henry Anim-Somuah (University of Ghana, Legon), and Richard
Asravor (University of Ghana, Legon).

The team is grateful for the insights provided by experts interviewed as part of the
This report should project: Avinash Kishore (IFPRI), Benjamin Davis (FAO), Bill Vorley (IIED), Camilla
be referenced as: Toulmin (IIED), Emmanuel Sulle (University of the Western Cape), Holger A. Kray
(World Bank), Ian Randall (Wasafiri Consulting), Jan-Kees Vis and Giulia Stellari
Woodhill, J.,
(Unilever), Jean-Philippe Audinet (IFAD), Julie Greene (Olam), Julio Berdegue (FAO),
Hasnain, S. and
Ken Giller (Wageningen University and Research), Lawrence Haddad (Global Alliance
Griffith, A. 2020.
for Improved Nutrition), Panagiotis Karfakis (FAO), Regina Birner (University of
Farmers and food
Hohenheim), Thomas Jayne (Michigan State University), and Rhiannon Pyburn (Royal
systems: What
Tropical Institute (KIT) and CGIAR Collaborative Platform for Gender Research).
future for small-
scale agriculture?
The analysis and conclusions presented in this report are solely those of the authors
Environmental
and do not necessarily reflect the views and positions of those who were interviewed
Change Institute,
or who contributed to the project.
University of Oxford,
Oxford.
This work was funded under the umbrella of Foresight4Food. However, the report
has not been endorsed, and does not necessarily reflect the views and positions, of
any members of the Foresight4Food network.
CONTENTS 3

Key messages 4

1 Introduction 7

2 Understanding small-scale agriculture 9

2.1 Definitions 10
2.2 Distribution of farm sizes 12
2.3 Conclusion 15

3 The context of changing food systems 16

3.1 Food systems, small-scale agriculture and rural poverty 23

4 Dynamics of small-scale agriculture transformation 24

4.1 Market revolution 25

4.2 Emergent investment 26
4.3 Livelihood realities 27
4.4 Geographic and political economic context 28
4.5 Farm characteristics 28
4.6 Risk 28

5 Future scenarios 29

6 Towards a transformation agenda 33

6.1 Food systems outcomes, small-scale agriculture and trade-offs 34

6.2 Interventions 38

7 Conclusion 45

8 References 47

9 Appendix 1: Detailed categorisation of interventions 53

4 KEY MESSAGES

IN A NUTSHELL
Transforming small-scale family farming is critical to long-term global food
and nutrition security, tackling rural poverty and hunger, and to achieving the
Sustainable Development Goals (SDGs). Commercial small-scale family farms
of 20 ha or less are and will remain critical to food supply in middle- and low-
income countries.

Although there is attention for the problems of small-scale agriculture in

domestic and global fora, oversimplified narratives are hampering sound policy
making and public investment.

A CRITICAL DUALISM
Of the 558 million farms with 20 ha or less land, 410 million or 72% are less
than 1 ha. A very large majority of the smallest farms are not commercial and
make only a marginal contribution to feeding growing urban populations.
This creates a dualism in small-scale agriculture between a smaller number
of commercial farmers who are above the poverty line and a large number of
semi-subsistence farmers who are mostly very poor. This dualism has profound
policy and development implications.

Transforming small-scale agriculture to be more commercially viable and to

tackle poverty and hunger requires:

• aandmuch more nuanced understanding of the diversity of small-scale farms

their farming contexts, and

• aandreassessment of the implications of the structural changes in food systems

the wider economy for the livelihoods of different categories of small-
scale farmers.
 5

DIFFERENT OPPORTUNITIES
Meeting growing food demand for urban populations is a significant
opportunity for commercial small-scale farmers (perhaps up to 30% of all
those under 20 ha), but not for the large numbers of very small-scale farmers.
Tackling rural and small-scale farmer poverty will require the development of
livelihood options not based solely on farming.

Commercial small-scale agriculture and food systems-led rural economic

development is critical to creating vibrant off-farm rural economies. These can
create alternative employment and livelihood options and stem rapid migration
to large cities.

More effective and differentiated policy mechanisms are needed to tackle the
dualism of small-scale agriculture. On one hand, investments are needed to
help optimise the efficiency, competitiveness and sustainability of commercial
small-scale agriculture. On the other, there must be targeted strategies to
support those trapped in rural poverty or who are transitioning to alternative
employment. Input and output subsidies, and price support schemes, are
generally blunt and ineffective ways for tackling the deeper and longer-term
structural challenges of transforming small-scale agriculture.

DRIVING TRANSFORMATION
Moving forward requires much better country-level analysis of the structure of
small-scale agriculture and rural poverty, coupled with long-term visions and
strategies for transformation set within a wider food systems framework.

Enhanced national level multi-stakeholder and cross-sector foresight and

scenario processes, underpinned by better data, are needed to develop such
visions and strategies

Ultimately, greater political commitment is required to bring about change. This

calls for stronger and more influential coalitions for change, and greater public
understanding and support.
6
1 INTRODUCTION 7

What does the future hold for the world’s 500 million small-scale farms as food
systems change? A significant transformation of small-scale agriculture is needed
to realise the SDGs, and to achieve healthier, more equitable and environmentally
sustainable food systems. This report argues that a much deeper, more nuanced and
up-to-date understanding of small-scale agriculture and family farming is urgently
needed to drive such a transformation.

Some 2 to 3 billion people still depend on small-scale agriculture for their livelihoods.
Amongst this group are the world’s poorest, most food insecure and most vulnerable
people, who are furthest from the goals of SDG 1 and SDG 2. However, small-scale
farmers are not a homogenous group. They have highly varied incomes, land sizes,
assets and gender dynamics, and they farm in profoundly different environmental
and market contexts. Yet all too often the narratives about small-scale agriculture do
not make these distinctions, which hampers sensible discussion about policy options
leading to misguided public investments.

Small-scale farmers in all their diversity are part of a wider food system that is
undergoing significant structural transformation. The opportunities and risks for
the future for small-scale agriculture need to be understood within this wider
food systems context. Changes in food systems are being driven by urbanisation,
changing diets, new patterns of agricultural and food sector investment, technology,
climate change, and resource depletion, along with changes in the wider contexts
of political economics, global trade and geopolitics. That food systems, over the last
half century, have met the huge increased demand for food has been an astonishing
achievement. However, we are now faced with the downsides as recognition grows
about how unhealthy, environmentally unsustainable and inequitable many of the
ways we produce, distribute and consume food have become.

New visions are needed for how food systems will operate into the future and the
place of small-scale agriculture and family farming in these systems. There are
undoubtedly opportunities for small-scale farmers, but certainly not for all. Policies will
have a big influence on how economically inclusive or exclusive food systems of the
future will be, with huge implications for the small-scale agriculture sector and rural
poverty.
 There is nothing inevitable about the future direction of our food systems. What
8
happens is a political choice – accepting the consequences of the status quo or
taking action to bring food systems into better alignment with health needs, planetary
boundaries and social equity. What unfolds will be the outcome of the incentives
put in place by policy decisions driven by the politics of trade-offs, interests and
influence.

This report contributes to creating informed and compelling narratives about

desirable futures for small-scale agriculture. Such narratives are necessary to sway
interests and generate political will for change. They need to be grounded in systems
thinking, supported by synthesis of research, and underpinned by alternative
scenarios to assess trade-offs and re-imagined policy options.

This report is driven by asking two different questions:

1. How important will small-scale agriculture be to the future of feeding an

increasingly urbanised world?

2. How important will small-scale agriculture be to tackling poverty, malnutrition

and inequality?

The report draws on recent data about small-scale agriculture to offer challenging
perspectives on these two questions. It highlights the linkages between changes
in food systems and the challenges for transforming small-scale agriculture. The
dynamics between the evolution of food markets, emerging patterns of investment,
and changes in how small-scale farmers make a livelihood are explored to offer
ideas about an agenda for transformation. The report also provides a synthesis of
recommendations on small-scale agriculture made in key reports and literature from
the last 10 years.

The objective of this work is to provide a set of conceptual framings that can help to
unpack the complex issues around small-scale agriculture, highlight where more data
and understanding is needed, and provide a reference point for debate.

The paper is based a longer report on the findings of the Farmers and Food Systems
project carried out by the Food Systems Transformation Group at the University
of Oxford’s Environmental Change Institute (ECI) and funded by the Open Society
Foundations (OSF).

Caveat: There is much literature on small-scale agriculture and agricultural led

economic development. Yet despite the analysis and insights of this work, the
challenges and barriers to transformation seem not to have shifted markedly over the
last 20 years. Consequently, it seems justified to re-emphasise, in an integrated way,
the issues and perspectives that have been raised by many others. In doing so, we
make a more explicit link between small-scale agriculture and the emerging global
agenda on food systems. Much of the analysis on small-scale agriculture, for example,
well synthesised in the recent works of Hazell and Rahman (2014) or Mellor (2017),
may not be particularly new to those familiar with the literature. There is, however, a
desperate need to keep projecting this deeper understanding into wider narratives,
policy debates, stakeholder dialogue, development thinking and decision-making.
2 UNDERSTANDING SMALL- 9

SCALE AGRICULTURE

The role of small-scale agriculture in feeding the world and tackling poverty and
hunger is a long-debated development issue. The advocates point to the large
number of people who still depend on small-scale agriculture for their livelihoods and
that much of the food consumed in low- and middle-income countries is produced
by small-scale agriculture (Wegner and Zwart 2011; Poole 2017). The critics point
to migration out of agriculture as economies develop and that poverty reduction
depends largely on jobs and economic development outside agriculture (Collier and
Dercon 2014). Investment in agriculture as a driver of development has waxed and
waned over the decades (FAO 2017a).

Existing data provides limited information on what sized farms are producing what,
where, and with what level of productivity and profitability. However, a few big picture
issues are clear. First, the livelihoods of 2 to 3 billion people depend on small-scale
agriculture. Second, while estimates and definitions vary, small-scale agriculture still
supplies a significant proportion of the food consumed in non-OECD countries (IFAD
2013). Third, many small-scale farmers live below or just above the poverty line and
small-scale farming is not a livelihood most aspire to or would wish on their children.

For decades, numerous national government and international development

programmes have sought to improve the lot of small-scale farmers, with mixed results
at best. Low commodity prices, poor infrastructure, weak extension systems, market
failures, poor financial services, corruption, and the politics of poverty and food, all
conspire to make the transformation of small-scale agriculture an uphill battle. While
huge strides have been made in tackling poverty and hunger on a wider scale, the
1 to 2 billion people being left behind at the very bottom of the economic pyramid,
often with very poor nutritional status, are predominantly rural people linked to
agriculture.
 Rethinking small-scale agriculture requires recognition of the complexity of ambitions
10
between commercialisation, tackling poverty, ensuring food and nutrition security,
safeguarding the rights of the vulnerable and protecting the environment. All too
often, agricultural policy becomes layered with perverse incentives driving market
failures that end up hampering both commercialisation and poverty alleviation
objectives (Mellor 2017). Breaking out of the small-scale agriculture impasse will
inevitably require a much better understanding of trade-offs between different
policy objectives and how downsides can be managed through alternative policy
mechanisms. The dynamics and trade-offs between commercialisation, food
and nutrition security, and social protection need to be part of how different
transformation pathways are explored.

The development sector has invested heavily over the last decade in promoting
market systems approaches, value-chain development, linking farmers to markets,
and commercialisation of small-scale agriculture, often in partnership with private
sector players (Woodhill et al. 2012; Woodhill 2016). While there are clear success
stories, there is so far little evidence that this is driving a wider-scale transformation
of the small-scale agriculture sector. Working with small-scale agriculture often
proves to be expensive and difficult for the private sector and the scale of return for
small-scale farmers is often insufficient to lift them up to a ‘living income’ (Gneiting
and Sonenshine 2018; Farmer Income Lab 2018). Understanding scale is critical to
the small-scale agriculture story. What scale of income is needed to support a farm
family? What scale of land area is needed to provide sufficient income given different
farming types? At what scale do farmers need to operate to be commercially viable?

2.1 Definitions
Small-scale or smallholder agriculture is a loosely used term (HLPE 2013; FAO and
IFAD 2019). In this report, we use the term small-scale farmer rather than smallholder:
small-scale refers to the economic scale or turnover and profit levels, while
smallholder refers to land holding size. The priority is to understand and respond
much better to the economic scale of a farming operation, rather than simply focus on
landholding size. Different crops on the same land area give very different returns.

Definitions of small-scale/smallholder agriculture also vary from country to country.

The most widely used definition of smallholder refers to farms of less than 2.0
hectares (HLPE 2013; IFAD 2013). Often, the term is used to refer to any farmer who
is not large scale and/or not very financially well off. As we will discuss, when it
comes to understanding who is contributing to the global food supply, distinguishing
between different scales and segments of “small-scale” becomes exceptionally
important (Christen and Anderson 2013).

A key distinction is between family farming and corporate farming. FAO defines
family farming as: “a means of organising agricultural, forestry, fisheries, pastoral
and aquaculture production which is managed and operated by a family and
predominantly reliant on family capital and labour, including both women’s and men’s.
The family and the farm are linked, co-evolve and combine economic, environmental,
social and cultural functions” (FAO 2013, p.2). As Zimmerer (2018, p.31) notes,
“smallholders are a large, persistent, and internally diverse group that defies overly
11
narrow definition and that overlaps but is not equivalent to the category of family
farmers”. Corporate farming is where the farm is owned by a larger business entity
and farm workers are employees of the business.

A variety of frameworks have been used to try and better characterise the diversity of
small-scale farming (Mangnus and Metz 2019). Berdegué and Escobar (2002) created
a two-dimensional matrix distinguishing between farm production environments
and farmer assets, giving rise to three groups – subsistence farmers, small investor
farmers, and large-scale farmers. Vorley (2002) distinguished between three rural
worlds; 1) globally competitive farmers embedded in commercial agribusiness; 2)
farmers engaged in local markets but struggling to make farming a viable livelihood;
and, 3) those with limited access to productive resources who survive on low-waged
labour and make minimal contribution to food production. The OECD identified five
rural worlds, adding further graduations in Vorley’s basic model (Brüntrup 2016).
Elbehri et al. (2013) identify four categories of smallholders: 1) those engaged in
subsistence farming and who therefore lack access to markets or choose not to
participate in them; 2) those with limited access to markets; 3) those with frequent
access to markets; and 4) those entirely dedicated to commercial farming. Dorward
et al. (2009) identified three strategies pursued by the rural poor, 1) stepping up,
2) hanging in, and 3) stepping out. This distinction was used by DFID in their 2015
Conceptual Approach to Agriculture. Hengsdijk et al. 2014 cluster smallholders by
levels of food self-sufficiency and earnings. In this report, we further Dorward et al.’s
(2009) framework and introduce a fourth category of “stepping in” to agriculture to
cover the emergence of new investment into smaller scale farming often by salaried
urban workers with rural roots. Table 1 integrates a number of the frameworks
introduced above.
 Disaggregating small-scale farmers according to the sort of conceptual frameworks
12
outlined above is clearly critical for understanding their role in food systems and
to developing appropriately targeted interventions. However, currently there is no
consistent use of such frameworks, nor sufficient data to provide this more nuanced
and disaggregated understanding.

2.2 Distribution of farm sizes

Currently the only disaggregated way to look at small-scale agriculture is in relation
to farm size. Lowder, Skoet, and Raney (2016) conducted a comprehensive review on
farm numbers and farm size distribution. They conclude the following:

• Globally there are at least 570 million farms;

• Of these, at least 500 million, approximately 90% are family farms;

• Approximately 475 million farms or 84% are less than 2 ha; and

• While family farms operate about 75% of agricultural land, the 475 million farms
of 2 ha or less only operate about 12% of agricultural land.

Table 1: Disaggregation of livelihood categories. Source: Woodhill 2019.

Farming and Description and poverty status Main rural Main

livelihood category worlds (OECD) strategies

Small-commercial Farmers < 20 ha well connected to domestic or international 1&2 Stepping in

value chains using productivity, increasing technologies and Stepping up
management practices. Farming is an economically viable
livelihood strategy enabling households to have an income
well above the poverty line and approaching or above a
living income. Farming is the dominant livelihood strategy.

Semi-commercial Farmers selling a significant surplus of production but 2&3 Stepping up

loosely connected to markets with less than optimal use Hanging in
of productivity, increasing technologies and management
Stepping out
practices. Mostly poor to very poor, may still be below
poverty line, and struggle to approach a living income. May
have diverse livelihood strategies.

Semi-/subsistence Farmers who sell none or only a small proportion of 3 Hanging in

surplus (usually to local markets) and who tend to have low Stepping out
productivity. Poor to very poor with many below poverty
line. Depend on production for own food. May have diverse
livelihood strategies.

Landless farm The landless poor who depend on low paid labour to 4 Hanging in
workers survive. Mostly very poor, below or just at poverty line. Stepping out

Chronically poor Extremely poor and marginalised groups landless or with 5 Hanging in
largely unproductive land, who are often food insecure and Stepping out
highly vulnerable. Well below poverty line.
During the 20th century, developed economies saw a dramatic consolidation of farms
13
and a decline of agriculture sector employment. This pattern is not repeating itself
on the scale that might have been expected as the economies of low- and middle-
income countries develop. Hazell (2015) refers to a “reverse transition” of increasing
numbers of increasingly small farms, but with diversifying off-farm incomes. In parallel,
there is a growth of larger small-scale and medium-scale farms, and an expansion of
corporate agriculture.

Drawing on the analysis of farm size distribution by Lowder, Skoet, and Raney (2016),
and food and nutrient supply by farm scales (Herrero et al 2017; Ricciardi et al. 2018),
we have summarised a global level categorisation of farms by land size and food
production (see Box 1). While the data comes from a partial sample of countries, it
illustrates key patterns discussed in the following sections.

Box 1: Disaggregating farm sizes, numbers, production and

commercialisation
Sources: based on data from Lowder, Skoet, and Raney (2016), Ricciardi et al.
(2018) and Herrero et al. (2017).

Food production %4 Type

Roots / tubers
Farm size (ha)

No. millions2

Sugar crops
Vegetables
Farm land3

Livestock
Oil crops

Average
% farms1

Cereals

Pulses
Scale

Fruit

>200 2 50 17 11 17 34 8 38 16 17 20
Large

50–200 11.4 10 22 18 17 15 15 24 18 23 19
Corporate (10%)

20–50 10 7 8 10 7 7 6 9 10 8
Medium

5–20 4 22.8 10
31 35 34 29 37 19 35 30 31
Family (90%)

2–5 10 57 8

1–2 12 68.4 12
Small

21 26 20 13 30 10 19 17 20
<1 72 410

1 Of 570 million farms in 161 countries, this farm size classification is from a subset of 460 million farms (classified from international
comparison tables of the 1990 & 2000 rounds of the WCA for farm sizes) by Lowder, Skoet, and Raney (2016).

2 Assuming farm size percentages represent farm sizes worldwide, Lowder, Skoet, and Raney (2016) estimate these numbers by
multiplying 570 million farms with the percentages.

3 Author estimates from Lowder, Skoet, and Raney (2016) – 106 country sample covering 450 million farms, representing 80% of
world farms, with 85% global population, and 60% of agricultural land worldwide (does not include the Russian Federation &
Australia).

4 Author estimates of production from global production of key food groups by weight from Herrero et al. 2017 (based on data from
161 countries, 41 crops, and 14 fish functional groups).
 Small-scale agriculture and food supply
14
An oft repeated part of the current narrative on small-scale agriculture is that small-
scale farmers produce 70% of the food consumed in low- and middle-income
countries. But is this really true? The data in Box 1, and detailed regional assessment
by Herrero et al (2017), points to a more nuanced analysis that has critical policy
implications. It needs to be recognised that 72% or 410 million farms are less than
1 ha. The data indicates that this very large group of <1ha small-scale farmers make
a marginal contribution to total food production (acknowledging significant country
differences). Meanwhile, farmers of 1–20 ha make a very substantial contribution.

So while it may be true that all small-scale farmers of less than 20 ha produce
70% food in in low- and middle-income countries, this hides the reality that this is
produced by a smaller group of small-scale farmers who mostly have land sizes of
1–20 ha. This suggests a fundamental dualism in small-scale agriculture between
large numbers of very small-scale farmers who do not produce a great deal of food
and a lower number of larger small-scale farmers who produce most of the food. The
food this larger group of very small-scale farmers produce is critical for their own
income, food and nutrition security, and for localised markets, but not so much for
meeting the growing demands of urban populations.

The extent of this dualism varies across regions, countries and commodities.
However, the policy implications are hugely important in terms of who will meet the
growing demand for food, and how to tackle rural poverty and food insecurity. If a
smaller group of farmers who have more substantial assets are already meeting the
bulk of food demand, the market opportunities for the very large numbers with much
more limited assets will be limited.

Poverty, hunger and livelihoods in small-scale agriculture

There are 736 million people, or 10% of the global population living in extreme
poverty (using the international poverty line) (FAO, 2018a). Eighty percent of the
extremely poor (<USD 1.90/day) and 76% of the moderately poor live in rural areas
(Castañeda et al 2016). There is a high correlation between extreme poverty and the
821 million people who in 2018 are still suffering from hunger (FAO, IFAD, UNICEF,
WFP, and WHO 2019).

Agriculture is the main employment sector for the poor, employing 76.3% of the
extreme and 60.7% of the moderate poor (Castañeda et al 2016). Most of this group
tend to be subsistence or semi-subsistence oriented and face significant barriers to
entering higher value agricultural activities.

Assuming a family size of five, the 410 million farms of <1 ha equates to a total
population of 2.05 billion people, the majority of whom, if not below the poverty
line, are certainly at the bottom of the economic pyramid. Taking all farms below 20
ha, this population jumps to 2.79 billion. Adding in landless farm workers takes the
number toward 3 billion or nearly 40% of the world’s population. In other words, the
livelihoods of 40% of the world’s population remain connected at least in part to
small-scale agriculture.
There are huge differences in the structure and dynamics of small-scale agriculture
15
and poverty between different regions and countries. China alone accounts for 35%
of all farms with an average farm size of 0.6 ha. India has 24% of farms with one-third
being 0.4 ha or less, while 8% of farms are in Sub-Saharan Africa (Lowder, Skoet
and Raney 2016). It is in China where the some of the biggest reductions in extreme
poverty have occurred. The last decades have seen the dominance of extreme
poverty shift from East Asia to Sub-Saharan Africa and South Asia. While the number
of extreme poor in East Asia has dropped from 987 million in 1990 to just 47 million in
2015, numbers in Sub-Saharan Africa have increased from 276 million in 1990 to 413
million in 2015 (World Bank 2019). In Africa, the population is expected to double over
the next decades but probably without the degree of economic growth experienced
in Asia. Consequently, the prospect for continued and growing extreme poverty in
rural Africa is high.

2.3 Conclusion
The emerging dualism of small-scale agriculture means that it is important not
to conflate the challenges of tackling the poverty and malnutrition of small-scale
farming families with the challenge of meeting growing food supply demands for
urban populations. There is no doubt that these two challenges overlap significantly.
However, differentiated policy mechanisms, and a sharper understanding of transition
options, are needed to optimise the role of small-scale agriculture in tackling poverty
and in contributing to urban food supplies.

While the macro-perspective is relatively clear, there are gaps in the data when it
comes to the specifics of particular countries, localities, and commodities. There
is also insufficient understanding of which categories of farmers under what policy
regimes will be able to respond to future food demands, earn a living income, or meet
their nutritional needs.
16 3 THE CONTEXT OF
CHANGING FOOD SYSTEMS

A food systems perspective provides a way to better understand the constraints and
opportunities for small-scale farmers. For example, what is the relationship between
economic well-being and food security for small-scale farmers? What is the influence
of new markets and technology on the viability of small-scale farmers? How do
increasing standards affect small-scale farmers? How should services be tailored
to different types of small-scale farmers and to what extent are necessary services
lacking?

Figure 1 illustrates the main elements of a “food system”. At its core is a set of
food system activities, undertaken by different actors, from primary production, to
processing, retailing and consuming along with storage and disposal. In reality, food
systems involve multiple interacting value chains. To function, these require a wide
set of supporting services including, physical and market infrastructure, transport,
financial services, information and technology. The incentives and operating
conditions for actors are influenced by the institutional environment of policies,
rules and regulations (e.g. food safety and quality, financial, taxation, environment
etc.), consumer preferences and social norms (see Woodhill 2008). Together these
institutions create the formal and informal “rules of the game”. The entire food system
is influenced by a set of external drivers and trends related to population, wealth,
consumption preferences, technological developments, markets, environmental
factors and politics. The outcomes of how food systems function influence three main
areas: economic and social well-being, food and nutrition security, and environmental
sustainability (Ericksen 2008; Ingram 2011).

Four food system mega-trends are abundantly clear. One, food demand is going
to dramatically increase and change over the coming decades, due to population
growth, urbanisation and the demands of a growing middle class (FAO 2017a) (see
Figure 2, below). Two, the world faces a health crisis from the “triple burden” of
undernutrition, micronutrient deficiencies and overnutrition (Scarborough et al. 2011;
FAO 2013) (Figure 4). The over-consumption of calorie-dense but nutritionally poor
food is causing an escalation of non-communicable diseases such as diabetes.
Globally, there is a very large mismatch between what we should be eating for a
healthy diet and what is being produced (Figure 5). Three, food system activities will
continue to contribute significantly to greenhouse gas emissions, with climate change
17
having negative impacts for food production and food security (Vermeulen et al. 2012;
Springmann et al. 2018) (Figure 6, below). Four, the way food is produced means we
are overshooting the earth’s capacity to sustainably meet the demand (Springmann et
al. 2018; Willet et al. 2019) (see Figure 7, below). For a comprehensive review of these
and other food system trends see also Serraj and Pingali (2019).

Changes in food systems have profound implications for small-scale producers with a
complex mix of opportunities, threats and risks. Box 2 and Table 2 below outline the
key trends associated with the food system drivers and likely implications for small-
scale agriculture.

Figure 1: Food systems framework. Source: Foresight4Food Initiative.1

SYSTEMS Natural systems

Human systems
Food system
DRIVERS FOOD
SUPPORTING SERVICES SYSTEM
e.g. logistics, finance, communication, research and OUTCOMES
technology, education
Demographics & Economic &
development social well-being

Consumption Food & nutrition

STORING security
Technology
Environmental
Markets sustainability
PRODUCING PROCESSING RETAILING CONSUMING
Climate &
environment

Policy &
geopolitics
DISPOSING CORE ACTIVITIES

INSTITUTIONAL ENVIRONMENT
e.g. laws and regulations, standards, norms, informal
rules, organisations

Feedback

1 This figure draws on insights from the FAO food system wheel, GECAFS food system model (Ingram
2011), Wageningen Economic Research (van Berkum, Dengerink and Ruben 2018), and the Making
Markets Work for the Poor (The Springfield Center 2015). The Foresight4Food diagram keeps the core
value chains at the heart of global food systems and focuses on the impacts of global drivers on the food
system activities, regulatory environment, and supportive activities, the resulting systemic outcomes, and
the feedback loops in the system.
18 Box 2: Key food system mega-trends

Urbanisation 7
World
6
Figure 2: Regional urbanisation
trends. 5

Billions of people
Population increase, urbanisation 4
Low- and
and a growing middle class in low- middle-income
3
countries
and middle-income countries will
2
drive food demand. Source: FAO
1
2017a. High-income countries
0
1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050

Food demand 25,000

Figure 3: The global food gap.

(trillion calories per year)

20,000
56%
Food demand is projected to grow 15,000 food gap
Crop production

by 56% with a 68% increase in

demand for resource intensive 10,000
13,100 20,500
animal products and substantial trillion trillion
5000 calories calories
increasing demand for fruit and
vegetables. Source: Searchinger 0
2010 (base year) 2050 (Baseline)
et al. 2019.

Nutritional status 0 25 50 75 100

Figure 4: Global malnutrition. Overweight 38.9%

The world faces a “triple burden” Obese 13.1%

Percentage of global adult population
of undernutrition, overweight /
obesity and micronutrient deficiency,
Undernourished 12%
with high economic costs. Source:
adapted from CCAFS 2019, Micronutrient deficient 29%
Development Initiatives 2018. Percentage of total world population

Balance of production and Global food production Recommended diets

(Harvard’s healthy eating plate model)
nutritional needs
3%
14%
Figure 5: Global production as 17%
27%
compared to recommended diets. 3%

3%
Globally there is a huge imbalance 11%
43%
between what is needed for a
healthy diet and what is being 11%
produced. For example, we produce
18% 50%
less than a quarter of the amount
of fruits and vegetables needed for
healthy diets. Data source: KC et al. Grains Oil & fat Milk
2018. Fruits & vegetables Protein Sugar
 19

Food and climate change

Figure 6: Changes in agricultural
production in 2050 (climate change
relative to baseline scenario).

Food production is a major

contributor to climate change while
also being negatively impacted.
On average, yields will decline,
compounding the challenge of
meeting future food demands.
Extreme weather events will create
great risk for food security. Impacts
will be worst for low and middle-
income countries. Source: FAO
Decrease Increase
2018a and 2018b.

Biosphere integrity Keeping within planetary

E/MSY boundaries
Climate Figure 7: Planetary boundaries.
BII change
(not yet
quantified) Food production is a major
contributor to natural resource
Novel entities
(not yet quantified) degradation and over exploitation.
Dramatic increases in resource use
Land system efficiency are needed to ensure
change “planetary boundaries” are not
Stratopheric
ozone depletion catastrophically exceeded. Source:
Lokrantz/Azote, based on Steffen
et al. 2015.
Freshwater use
Atmospheric
aerosol loading
(not yet quantified)

Ocean
acidification
P

N
Biogeochemical
flows

Below boundary (safe)

In zone of uncertainty (increasing risk)

Beyond zone of uncertainty (high risk)

20 Table 2: Summary of key food systems drivers, trends and implications for small-scale agriculture

Demographics and development

Key trends Likely implications for small-scale agriculture

• Global population to reach 9 billion by 2050, and • Increased overall demand for food with market
11.2 billion by 2100 (FAO 2017a). opportunities.
• Africa and South Asia will see a major increase in • Poor urban consumers will create social and
population (FAO 2017a). political pressures for low food prices.
• By 2050, more than 75% of the global population • Elongated rural-urban food supply chains with
will live in urban areas (FAO 2017a). increasing demands for bulk supply, and quality
• 700 million people still live in poverty with majority and safety standards.
of the extreme poor in South Asia and Africa (FAO • Economic development and urbanisation in rural
2017a). areas will create increased off-farm livelihood
• By 2050 global middle class will double to 6 billion options.
(Kharas 2017). • Small-scale farmers will be adversely influenced by
• Average incomes in LMICs will remain at a fraction increasing inequalities.
of those in HICs, and inequality will widen (FAO • Agriculture and the food sector will remain critical
2017a). employers and means for distributing wealth.

Consumption

Key trends Likely implications for small-scale agriculture

• The world will need approximately 60% more food • A significant proportion of small-scale farmers
by 2050. globally will continue to suffer from hunger and
• Substantial growth in demand for animal protein is malnutrition.
predicted. • The rise of middle classes will drive aspirational
• 800 million people (11% of the global population) diets and standards for food quality and safety,
still go hungry (FAO, IFAD and WFP, 2015) currently which can be difficult to meet.
this is slightly increasing, in Africa 27% suffer severe • Opportunities for small-scale farmers to tap into
food insecurity. niche and higher-quality markets, if appropriate
• In 2016, ~ 40% of adults were overweight and 13% incentives are available.
were obese (WHO 2018; Development Initiatives • Changes in staple and cereal markets as diets
2018). These rates are rapidly increasing. change and demands for animal feed increase.
• Food systems are currently not producing foods • Public health concerns may lead to increased
necessary to supply a healthy and sustainable diet demands for fruit and vegetables which could be
(KC et al. 2018). higher value markets for small-scale producers.
Technology and Infrastructure 21
Key trends Likely implications for small-scale agriculture

• New and potentially disruptive technologies • Technology offers opportunities for small-scale
– biotechnology, robots and drones, remote agriculture to cost-effectively access financial and
sensing, advanced modelling, artificial intelligence, advisory services.
blockchain, 3D printing, meat culturing, and • Technology use makes agricultural production
precision agriculture – are being developed and more capital than labour intensive, creating
adopted rapidly. barriers for small-scale producers.
• 90% of the world’s population is now covered by • Limited infrastructure investment and technological
mobile networks (ITU 2015). uptake in rural areas further marginalises small-
• Public agricultural R&D spending as a share of scale farmers.
agricultural GDP in LMICs is less than 1%, compared • Technology enables linking of producers to
to 3% in high-income countries (IFAD 2016). socially, nutritionally and environmentally
• LMICs are failing to meet infrastructure needs, conscious urban consumers.
with road, market and energy infrastructure being • Enabling inclusive use of technology that benefits
particularly lacking in rural and marginal areas. small-scale farmers will require focused public
policy and investment.

Markets

Key trends Likely implications for small-scale agriculture

• Massive growth of food demand in LMICs with • Substantial market opportunities for those
exports to OECD countries becoming less farmers who can operate at scale and adopt
significant. more sophisticated production technologies,
• Dramatic growth in rural urban trade (elongation management practices and marketing strategies.
of markets) dominated by transitional market • Most of the opportunities will be in more
structures (micro, small and medium sized productive agricultural areas with good physical
enterprises). infrastructure and coordinated value chain
• Changing patterns of staple consumption, and mechanisms that enable high levels of market
increased demand in non-staples. efficiency and competitiveness.

• Growth in global trade of agricultural goods with • The growth in non-staples and niche and luxury
significantly increasing food imports by Africa. food products offers opportunities for production
of higher value crops that can give better returns
• Increasing but variable penetration of supermarkets on small areas of land.
in LMICs but not eclipsing the domination of
transitional market structures (FAO 2017a). • New markets in emerging rural urban centres
reduce the infrastructure and access barriers.
• Growing demand for food quality and safety
standards particularly in modern and export • Increasing penetration of supermarkets and
markets but increasingly also in transitional modern market value chains create increasing
markets. market access barriers.

• Urbanisation in rural areas also creates new

markets closer to producers.
22 Climate and Environment

Key trends Likely implications for small-scale agriculture

• Climate change and environmental degradation • Yield drops associated with climate change are
significantly impacting agricultural production. projected to severely affect Africa and South Asia
• Most LMICs are likely to experience drops in with small-scale farmers in these regions being
average yield of 3%. more vulnerable and having limited adaptive
mechanisms.
• The food and agriculture sector produces 19-29%
of total greenhouse gas emissions (Vermeulen, • Loss of yields due to soil degradation.
Campbell and Ingram 2012). • Large numbers of small-scale farmers are highly
• Extreme weather events including floods, droughts, vulnerable to weather extremes and natural
storms and extreme temperatures are rising disasters with limited resources to cope.
significantly. • Access, costs and risk limit the uptake of
• Meeting future protein demands has significant more resource conserving and climate smart
resource implications. technologies.

• Agriculture accounts for 70% of all fresh • Changing demographics and socio-economic
water withdrawals and 80–90% in dryer areas profiles create more consumers who demand food
(Vermeulen, Campbell and Ingram 2012). produced in a sustainable manner. Viable small-
scale farmers with better market connectivity will
• 33% of all global soils are estimated to be degraded be able to tap into such niche markets.
(UNCCD 2017).
• Micro insurance schemes will become increasingly
• Climate-change related impacts may contribute to important.
an increase in global food prices (Porter et al. 2014).

Policy and Geopolitics

Key trends Likely implications for small-scale agriculture

• Liberalisation and globalisation of food markets • Agricultural policy is politically sensitive as

increase but with uncertainties and some increases governments try to balance the need for secure
in protectionism. and low priced food for urban populations with
• Limited regional food trade in populous and food tackling rural poverty. This can lead to policies that
insecure regions of West Africa and South Asia. are regressive for small-scale farmers.

• The global food price crises of 2007–08 and 2011 • As small-scale farmers are also net consumers of
triggered riots in more than 40 countries, (FAO, food they are significantly impacted by food price
IFAD, UNICEF, WFP and WHO 2017). rises.

• Countries seek to ensure food security through • “Land grabbing” through foreign investment into
domestic production in times of crisis. agriculture puts small-scale farmers at risk.

• 489 million of the 815 million undernourished • Small-scale farmers often have to compete in a
people and 122 million of the 155 million stunted global market place that has significant distortions.
children live in countries affected by conflict (FAO, • Domestic policies and attention for small-scale
IFAD, UNICEF, WFP and WHO 2017). agriculture will increasingly be set within a context
• Countries with high food demands and/or limited of geopolitical concerns related to trade, climate
additional agricultural land are investing in regions change, water scarcity and migration.
like Africa. • Particular attention is needed for the specifics
of supporting small-scale agriculture in areas of
conflict.
3.1 Food systems, small-scale agriculture and rural poverty 23
Figure 8 illustrates linkages between food systems, small-scale agriculture, rural
poverty and urbanisation. For both rural and urban populations, food systems need
to be optimised to ensure good nutrition and livelihoods. They also must provide
security/resilience in the face of shocks to the system from natural disasters, weather
extremes, disease or market anomalies. Food prices are a critical underlying factor.

The bottom of the diagram illustrates the importance of understanding nutrition,

livelihoods, security/resilience and food prices in relation to the different
characteristics and contexts of the rural poor. Off-farm and non-agricultural income
streams are increasingly prevalent for small-scale farming households which changes
the degree of direct dependency on agricultural production.

There is growing societal, policy and political concern over an emerging set of wider
food system issues. The response to these issues may have negative or positive
consequences for different groups of small-scale farmers and rural poor. For example,
implications of carbon financing, production of more nutritious foods, food safety
concerns, or land use controls.

Migration is a critical factor from multiple dimensions, again with potential positive
and negative consequences. For example, outmigration brings remittances to rural
areas, but may overcrowd urban areas and exacerbate urban poverty.

To be useful to the policy challenge of transforming small-scale agriculture, food

systems thinking must unpack these relationships between the food system and
different categories of farmers, and rural poor in different contexts.

Figure 8: Dynamics of food systems and rural poor. Source: Woodhill, 2019.

Characteristics & context of urban populations

Wealthy Middle classes Urban poor

Drivers

Nutrition Livelihoods Security/resilience Food prices

Emerging food Non-food Migration

Food Food systems system issues – systems
system health, climate, livelihood
drivers environment options

Nutrition Livelihoods Security/resilience Food prices

Drivers
Characteristics & context of small-scale farmers/rural poor

Small commercial Semi-commercial (Semi-)subsistence Landless Economically

farms farms farming workers inactive
Living Extreme
income poverty
Geographic & country context

Forms of off-farm income – remittances, wages, social protection, micro-enterprise

24 4 DYNAMICS OF
SMALL-SCALE AGRICULTURE
TRANSFORMATION

In this section, we explore the dynamics of small-scale agriculture transformation in

relation to structural changes in markets, livelihoods, investment, and risk (see Figure
9, below). The wider system drivers outlined above shape these dynamics. How these
dynamics play out for individual farmers is dependent on their specific characteristics
and their context.

In low- and middle-income countries, urbanisation, increasing wealth and changing

diets have driven a market revolution (1) in the flow of food from rural to urban areas.
This is linked with significant domestic “emergent” investment (2) in farming and
small- and medium-scale food sector enterprises. Livelihood realities (3) for small-
scale farmers are also changing. The prices farmers receive for their produce are
mostly well below what is needed to earn a living income off small areas of land.
At the same time there are increasing off-farm livelihood options. This is changing
livelihood strategies, the incentive structures for small-scale farmers to engage in
agriculture, and creating non-farming survival strategies and poverty alleviation
options.

The opportunities and constraints of small-scale farmers must also be understood

in terms of their farming context (4) and individual farm characteristics (5). As
discussed in Section 2, small-scale farmers operate in widely different situations
of natural resource quality, governance and market access, while their own
characteristics such as land size, assets, commodities produced, and family labour
dynamics also vary significantly.

Underlying these five is the sixth dynamic of risk (6), which is changing as markets
restructure, the climate changes, or natural resources degrade. The risk influences
the decisions and investments of all actors in the food system and dramatically
impacts the most vulnerable.
4.1 Market Revolution 25
Reardon et al (2019) refer to a “quiet revolution” of food markets that has occurred in
low- and middle-income countries. This includes a rapid growth of small- and medium-
scale enterprises operating in a transitional food markets.

The scale of change in food markets in developing economies and globally over the
last 2030 years has been profound. This transformation is set to continue apace over
coming decades. For example, rural-urban supply chains have developed rapidly.
Haggblade, Hazell, and Reardon (2011) estimate this growth at 600–800% over three
decades for Africa. Reardon and Timmer (2014) have it at roughly 1000% in Southeast
Asia in the same period. These market changes are underpinned by deep structural
shifts in procurement, retailing, value chain coordination, ownership and power.

Structural change in markets moves from “traditional” to “transitional” to “modern”

(Reardon et al 2019). Traditional markets are highly localised, informal (no contracts) spot
markets (cash based immediate transaction), with few if any formal standards in place.

Figure 9: Dynamics of small-scale agricultural transformation. Source: Woodhill 2019.

6. Risk

4. Farming context

Areas of Areas of poor Areas with Areas of

protracted resources and / or commercial & established
crisis & conflict connectivity market potential commercial Farmers making
operation a living income
through
commercial
1. Market revolution farming
Food system • Rural urban trade
drivers: • Value chain upgrading Farmers making
population
a living income
growth,
by
urbanisation,
complementing
environment
2. Emergent 3. Livelihood farming with
and diet
investment Dynamics of realities other activities
change
• Emergent farmers small-scale • Living income
• Food sector SMEs agriculture / nutrition gap Farmers in
transformation • Diversifying poverty and/or
incomes food insecurity

Off-farm
employment in
food systems

5. Farm characteristics

Land size Economic Assets Gender Farming Labour Resource

scale / age system tenure
 In transitional markets, there is elongation as food is transported from rural to urban
26
areas over significant distances. A more complex set of intermediaries develops, and
there is a mix of labour- and capital-intensive technologies. Quality standards start
to be implemented but most transactions are still based on spot market relations.
Modern markets are epitomised by the supermarket model. As markets become
spatially long, there is often consolidation and concentration in the supply chain
(e.g. limited number of retailers who purchase directly from large scale suppliers/
producers), spot markets shift to contracts and futures markets, private and public
standards become common place and there is a high degree of capital intensification.
Reardon et al’s (2019) key observation is that transitional markets dominate modern
markets by far in low- and middle-income countries and are likely to do so for the
foreseeable future.

The demand from this market revolution is being filled largely by a cohort of small-
scale family farmers. However, more understanding is required about which farmers
in what contexts are meeting this demand. Care is needed in making the assumption
that this market growth means opportunities for those with a different asset base or
sets of circumstances to those currently engaged. This substantial market change
has occurred through large-scale endogenous processes, and despite constraints
of transport, finance and market distortions. It has relatively little to do with market
development initiatives of donor funding. There is no doubt that much can be done
to upgrade and improve the efficiency and inclusiveness of these markets. However,
the notion that most small-scale farmers struggle to connect with markets is not borne
out by the evidence of this market revolution.

Small-scale farmer engagement in this market revolution rapidly drops off as one
moves further down the economic pyramid of small-farmers. The fundamental
development question is how far down the economic pyramid can one move
in creating commercially viable small-scale farmers, at what cost and in what
circumstances.

4.2 Emergent investment

On the back of this market revolution, low- and middle-income countries are
seeing very substantial domestic investments in the food and agriculture sector,
predominantly at a medium and small scale. These private domestic investments in
food and agriculture are far larger than those of foreign private investors, national
governments and development agencies (Lowder, Carisma, and Skoet 2012). There
is growing evidence of salaried urban elites making substantial investments back into
agriculture as “emergent farmers” (Jayne et al. 2016) and food sector entrepreneurs.
This investment offers both opportunities and risks. It enables countries to meet
growing urban food demand and drives growth of the agri-food sector. However,
so far there has been limited domestic application of principles of responsible
agriculture investment, such as the CFS-RAI. This brings the risk of domestic land
grabbing, poor environmental practices and poor labour conditions.
Jayne et al. (2019) show that medium-scale farms are the fastest growing segment of
27
the family farm sector in Sub-Saharan Africa, controlling more land than large-scale
farms. Much of this growth comes from investment by urban and rural “elites” (emergent
farmers) and not from existing small-scale farmers graduating to become larger and
commercially viable. This trend has profound implications for the transformation of
small-scale agriculture (Burke, Jayne, and Sitko 2019; Chamberlin and Jayne 2019).
If new market opportunities in agriculture are being taken up on a significant scale
by emergent investors, it potentially crowds out opportunities for existing small-scale
farmers and undermines the development narrative of tackling poverty by helping to
connect small-scale farmers to markets. The scale on which this emergent investment
is occurring and its impact on commercialisation of existing small-scale farmers is not
yet well understood. However, it is a trend that needs very careful attention in order to
understand the dynamics of transforming small-scale agriculture.

4.3 Livelihood realities

There are two key aspects to livelihood realities, living income and income
diversification.

A living income is needed to afford decent housing, nutrition, healthcare, education and
to cope with unforeseen or one-off expenses (Gneiting and Sonenshine 2018). Current
agricultural prices combined with small scales of production and low productivity mean
that few small-scale farmers earn a living income. Attention for living income has been
driven in part by global agribusiness firms who have recognised that despite efforts to
include small-scale farmers in their supply chains on fairer terms, their earnings still do
not approach a living income (see Farmer Income Lab and Living Income Community of
Practice). This is seen as a constraint to long-term continuity of supply as well as creating
corporate reputational risk.

Without dramatic changes to their terms of trade or other forms of income, many small-
scale producers will remain at the bottom of the economic pyramid – below or just
above the poverty line. Tackling this problem is not a matter of improving prices or yields
by 20, 30 or even 100%. Manifold increases in income would be needed for them to
approach a living income. For a significant majority of this group, under current food
pricing and policy conditions, graduating to commercially viable farming that provides a
living income is not a realistic trajectory.

For many small-scale farmers, livelihoods are diversifying through on and off-farm
employment, remittances, non-farm micro enterprises, trading and social protection
payments. This has three implications. First, families are no longer as dependent on
their farm productivity and income as they used to be, which is also reflected in the
high levels of food purchases by farming households. Second, what becomes important
is not the overall farm income but the return to labour from farming relative to other
employment options. Having a very small plot of land is not necessarily a problem if it
complements other sources of income (provided it gives competitive/worthwhile returns
to labour). Third, access to other forms of income may negatively shift the incentives
for farmers to fully or productively utilise their land. Across many farmers, this can shift
overall agricultural productivity for a country.
28 4.4 Geographic and political economic context
Farmers live in very different geographic and politically economic contexts. These
differences are critical in understanding what constraints and opportunities they
face, and which types of policies and interventions can be effective. Disaggregating
farming households in relation to their context is essential for understanding the
nature of the transformation challenge.

We propose four contexts: The first is areas of protracted crisis and conflict. The
second is marginal areas where there are constrained environmental conditions for
agriculture and/or poor connectivity and services such as roads, market facilities,
energy, extension and financial services. The third is areas where environmental
conditions and connectivity provide potential for commercially oriented small-scale
agriculture, but this potential has not been realised. The fourth context is where
there is already a substantial level of small-scale and larger commercial agriculture
with well-established market infrastructure and services. The context of areas of
protracted crises and conflict may overlap with the other three contexts.

4.5 Farm characteristics

Within any context, there is a wide range of characteristics of individual farming
households that affect their commercial potential and poverty status. These include
land size, scale of economic activity, human capacity, financial assets, gender and
age, family size, degree of family labour, resource tenure, and quality of their resource
base.

Strategies to support small-scale farmers need to take account of these

characteristics and the context in which they are farming.

4.6 Risk
Small-scale agriculture faces increasing risks of multiple dimensions. These risks
include market price variations, weather variations, disease risks, natural disasters,
poor quality inputs that lead to low productivity, declining soil quality, and poor
contract enforcement with exploitation by input suppliers, traders and money lenders.
Climate change is rapidly exacerbating extreme weather, disease and natural disaster
risks. The nature of agricultural markets is to push risk down the value chain and onto
producers.

High levels of risk reduce the incentives for financial institutions to service the
agriculture sector and make it hard for farmers to access credit. Poorer farmers
often find themselves falling back into poverty as a result of climate and market
circumstances beyond their control.

Risk is a major barrier to the adoption of new technologies and management

practices.
5 FUTURE SCENARIOS 29

The future for small-scale agriculture is uncertain in relation to markets, trade, climate
impacts, technology, socio-economic factors and politics. Current trends may be
substantially disrupted by any one of these uncertainties, with positive or negative
outcomes for small-scale producers. Consequently, it is necessary to consider the
transformation of small-scale agriculture in terms of possible future scenarios. This
has two dimensions. One is exploring different ways food systems may change and
the implications for small-scale agriculture. The second is exploring scenarios for how
the wellbeing and contribution of small-scale farmers can be optimised in different
possible futures.

Scenario thinking is a way of exploring how the future may unfold and what the
implications for different groups and interests would be. Scenarios can help to make
more explicit what would be desirable and undesirable futures, and to develop
intervention strategies that are robust in all possible scenarios. Scenario analysis
is part of the wider field of foresight and future studies. Undertaking informed
foresight and scenario analysis regarding the future of food systems and small-scale
agriculture, particularly at the national level, is, we argue, a critical element of creating
understanding and political will for change.

Recent food systems scenario analyses have been undertaken by the Food and
Agriculture Organization (FAO 2018), World Economic Forum (WEF) (2017), World
Resources Institute (WRI) (Searchinger et al. 2019) and the InterAgency Research
and Analysis Network (IARAN) (2019). Drawing on these and other sources, Table 3
summarises seven critical uncertainties that will likely shape the future of small-scale
agriculture.

A detailed analysis of different scenarios is beyond the scope of this paper. However,
three broad scenarios can be sketched that help to focus thinking around more
and less desirable futures. These are: 1) the consequences of business as usual; 2)
moving to more sustainable, equitable and healthy food systems; and 3) exacerbated
inequality as those with wealth and power seek insulate themselves from risks. The
FAO report on the Future of Food and Agriculture: Alternative Pathways to 2050
(2018) is constructed around these ideas referring to them as ‘Business as Usual’,
(BAU), ‘Towards Sustainability’ (TSS), and the ‘Stratified Societies’ (SSS) scenarios. The
key features of these scenarios and the implications for small-scale agriculture are:
 • Business as usual: The future develops along patterns that do not address
30
critical challenges of food access, availability, sustainability, and equity,
although efforts at achieving the SDGs continue in many countries. The
situation for small farmers improves marginally in terms of general food security
and access to new markets, but they are strongly affected by climate change,
unequal distribution of economic development, technological innovation, and
investments.

• Towards sustainability: Improvements in socio-economic and environmental

domains improve equitable and sustainable access to basic human services,
improve food security, and make significant progress towards resource-efficient
production and consumption. Small-scale farmers benefit from a reduction in
income inequality, poverty, and hunger, and gain equitable access to basic
services. Technological adoption is made easier with improved incentives, and
larger investments in sustainable practices and agricultural R&D. Small-scale
farmers make significant contributions towards meeting the changing food
demands of urban populations.

• Stratified societies: A highly divided global society presents greater challenges

to sustainability and inclusive development. Elite classes protect their self-
interest and direct their decision-making power to unsustainable development.
This gives rise to growing poverty and food insecurity, exacerbated resource
depletion, and increased regional and global fragmentation resulting from
protectionist policies.

Recent work done by the Farmers and Food Systems Project, GCRF-AFRICAP,
CCAFS, Food Secure and ACIAR-SDIP all illustrate the tremendous value of engaging
cross-sectoral stakeholder groups in processes of dialogue driven by scenario and
food systems analysis.

Table 3: Critical uncertainties shaping the future of small-scale agriculture

Uncertainty Dimensions

Economic Substantial Stagnant

developments
Economic development in MICs Due to stagnant economic
and LICs develops, creating development, small-scale
significant off-farm jobs and agriculture is a livelihood of “last
generating public revenues resort” for large numbers with
for investment in public goods increasing pressure on limited
creating viable livelihood natural resources with limited
alternatives for a small-scale or no public services and social
agriculture transition. protection.

Global Open Closed

connectivity
Cooperative global regime with Populism, nationalism, and loss of
open and fair-trade rules and faith in global institutions creates
concern for global equity creates barriers to trade with reduced
market opportunities for small- concern and investment in small-
scale farmers and a supportive scale agriculture.
development context.
Uncertainty Dimensions
31
Inclusiveness Equitable Inequitable
of economic
development Supported by international Constrained national finances and
models commitments, national policies elite capture drive policies that
invest in the services, support and exacerbate inequality with limited
social protection needed for an investment in and support for
equitable transformation of small- small-scale agriculture.
scale agriculture.

Climate Moderate Severe

impacts
Impacts of climate change on the Significant unmanageable
majority of small-scale farmers negative impacts of climate
are manageable as a result change on small-scale agriculture.
of mitigation and successful
investment in climate-smart
practices and resilience.

Technological Inclusive Elite

innovation
Technologies that can be adopted Technological innovations radically
by and benefit small-scale disrupt current food production
agriculture are developed and and distribution systems in ways
widely promoted and supported by that make it increasingly difficult
global and national commitments for small-scale agriculture to
to ensure equitable benefits from participate in a viable way.
technologies.

Dietary Healthy Unhealthy

change
Driven by consumer awareness, The current trajectory of unhealthy
public policy and food industry eating continues with over
innovation, there is a fundamental consumption of high calorific
shift toward more nutrient rich foods and low consumption of
and healthy diets creating new nutrient dense foods. Small-scale
opportunities for small-scale agriculture remains incentivised to
agriculture. produce staples at the expense of
a nutrient rich diversity of crops.

Resource use Efficient Intensive

efficiency
There is wide scale development Growing food demands are met
and adoption of natural resource over the short term by expansion
and energy saving technologies of agricultural land and continued
and practices. resources depletion with longer
term consequences.

Disease Contained Severe

outbreaks
Management and response Human, animal and plant disease
strategies are put in place to outcomes become more common
quickly and effectively respond due to climate change and
to disease outbreaks including intensive production techniques
support for small-scale agriculture. with small-scale farmers being
severely affected due to limited
coping strategies.
32
6 TOWARDS A 33

TRANSFORMATION AGENDA

Transforming small-scale agriculture over the coming decades must remain a

fundamental development objective. This is to ensure that a large group of people are
not left behind and to put food systems on a more sustainable and healthier trajectory.
However, new thinking, framing, and visions are desperately needed. Scenarios for
the future need to be constructed around a deeper understanding of the structural
changes underway in food systems and rural economies. A much more nuanced and
disaggregated understanding of different categories of farmers in different contexts is
essential.

Rural poverty and the difficult conditions for a majority of small-scale family
farms has become a “stuck” problem. Over the last decade, not a great deal has
changed in terms of the scale of rural poverty, despite the attention the issue has
received, significant development investments and numerous reports with similar
recommendations. In some ways this is paradoxical. Over the same period there
has been the profound change in the dynamics of food markets, discussed above,
which has managed to keep up with the demands of rapid population growth and
urbanisation.

Five interrelated reasons are behind this stagnation of progress in transforming small-
scale farming:

1. The un-nuanced understanding of the diversity of “small-scale farmers” and

their different circumstances and needs – the dualism of small-scale agriculture.

2. A lack of political will, at all levels, for creating the policies and making
the public investments needed to support an inclusive and sustainable
transformation of small-scale agriculture (Birner 2018).

3. Limited country-level guiding visions for the future of food systems and small-
scale agriculture that take a longer-term and systemic outlook.

4. Weak processes of interdisciplinary and systems analysis, dialogue and

engagement across government, business, civil society and research.

5. The limited market power and political influence of small-scale farmers.

 So, what is the way forward? Ultimately, the transformations of small-scale agriculture
34
can only be driven through deeper national and local understanding and alliances
for change that create political will for policy reform and public investment. Taking
a systems perspective, we argue that a desirable transformation of small-scale
agriculture requires three interrelated elements:

1. Clarifying the desired outcomes of small-scale agriculture transformation within

the context of a food system perspective and based on scenario thinking about
trade-offs, synergies and pathways;

2. Identifying the mix of interventions needed to realise desired outcomes and

assessing their utility against different future scenarios; and

3. Putting in place effective processes that integrate science with policy, politics
and public discourse through multi-stakeholder engagement and enable a
more systemic approach to change.

These elements require technical inputs, but largely they are about institutional and
political innovation (Woodhill 2010).

Thinking about the future transformation of small-scale agriculture must be set within
the context of the deep structural changes that are occurring within the food sector
and the wider economy. These changes, which were articulated in Section 3, are
dramatically influencing the opportunities, incentives and constraints for small-scale
agriculture in ways that were not the case even a decade ago.

6.1 Food systems outcomes, small-scale agriculture

and trade-offs
What outcomes does society want from its food systems, and what role can which
small-scale farmers play in delivering on these outcomes? What are desirable
outcomes for which groups of small-scale farmers? How does all this vary from
location to location and country to country? Which outcomes are in whose interests?
Where are the trade-offs and where are the synergies? Despite the overarching
goals, including the SDGs, clarity about longer-term desired outcomes that tackle
the difficult questions about trade-offs, and illustrate costs and benefits of different
pathways, are largely lacking. Without such detail it is hard to have sensible
integrated intervention strategies that make a difference.

It is notable for most of the literature on small-scale agriculture that relatively little
attention is given to trade-offs and the implications for bringing about change. These
trade-offs will mostly play out at national and local levels, and it is at these scales
that they need to be assessed in detail. Any substantial policy change to support the
transformation of small-scale agriculture is going to quickly bump into trade-offs that
have economy wide and deep political implications.
 35
Box 3: Desirable small-scale agriculture outcomes.

Economic and social wellbeing

• Small-scale farmers are part of an inclusive food system economy that
optimises fair employment for maximum numbers.

• Small-scale farmers are able to earn a living income.

• Vibrant rural economies provide off-farm employment opportunities.
• Afarmmanaged transition out of agriculture for those who no longer want to
and/or are unable to make a living.

• Women
tenure.
gain equitable decision-making power and access to resources/

• Agricultural marketing is inclusive and safe for women.

• Large outmigration of poor rural people that increases urban poverty is
avoided.

Food and nutrition security

• Farm households have healthy balanced diets.

• Small-scale agriculture contributes to urban consumers having a healthy
balanced diet.

• Household savings schemes, social protection and improved farming

systems create resilience to food shortages/price shocks due to market
fluctuations, climate change impacts and natural disasters.

• Informal and semi-formal supply chains are upgraded to improve food

quality and safety.

• An optimal balance between small-scale agriculture, larger scale farming

and imports in meeting national food and nutrition security.

Environmental sustainability

• Small-scale farmers adopt climate smart farming practices that reduce

emissions and create resilience to climate change impacts.

• Small-scale agriculture becomes part of sustainable landscape programmes

that integrate farming with biodiversity conservation and protection of
ecosystem services.

• Small-scale farmers adopt optimal soil and water conserving practices.

• Small-scale farmers minimally/optimally and safely use agro-chemicals.
• Small-scale farmers are able to minimise food loss.
 At the country level there is a need for clear visions about the future for small-scale
36
farmers. What numbers and types of small-scale farmers in which locations could
achieve commercial viability? At what scale would they need to operate to achieve a
living income and what would be the implications? How many small-scale farmers will
need to transition to alternative livelihoods over what periods, and how might this be
supported?

The food systems framework identifies three overarching food systems outcomes;
economic and social wellbeing, food and nutrition security, and environmental
sustainability. These provide a starting point for specifying desired outcomes, trade-
offs and synergies for the food system and small-scale agriculture. Currently, our food
systems are trading-off longer-term environmental sustainability and human health
against meeting shorter-term calorie needs, desire for increased animal protein
and food industry profits. These macro level trade-offs flow into many options for
the transformation of small-scale agriculture. Box 3 provides an indicative listing of
desirable food system outcomes related to small-scale agriculture.

Trade-offs can be thought about in three dimensions, issues, time and place. Issues
are the trade-offs between competing interests or system outcomes – eating meat
vs protecting the environment, for example. Time is the trade-off between short and
longer-term consequences, and place is the trade-off between impacts for different
localities. Transforming small-scale agriculture to be more profitable, sustainable, and
to produce a healthier diversity of food requires considering trade-offs from localised
technical issues to global policy issues. For example, what is the trade-off between
using crop residue to feed livestock vs using it to replenish soil organic matter? Or
what is the trade-off for economic and environmental outcomes from meeting food
demands from local food systems vs international trade? Box 4 provides an example
of ten key trade-offs to be considered in transforming small-scale agriculture.

Box 4: Trade-offs

Prices for consumers vs producers Number of producers vs size of

landholding
Implications: A difficult policy choice is Implications: In many areas, constrained
between creating greater income for farmers land resources means that to increase
and paying for environmental costs of food farm scale and become more viable, land
vs providing cheaper and readily affordable consolidation is needed. This raises difficult
food for consumers, especially those living trade-offs between large numbers having
in cities. The political difficulty of this trade- the security of very-small but marginal
off creates high subsidies for the agriculture areas of land vs a smaller number being
sector. economically viable farmers. The nature
of this trade-off very much depends on
alternative livelihood options.
Larger vs smaller scale agricultural Domestic or international food security 37
production
Implications: Countries can choose to
Implications: Larger vs smaller-scale ensure their food security through self-
production systems bring potential trade- sufficiency, engagement in international
offs between labour and capital, economic trade, or some combination. The trade-offs
efficiency vs economic inclusion, and farmer are between risks of high global prices
resilience vs vulnerability. and a breakdown of open trade, risks of
a country not being able to meet their
needs due to drought, natural disasters or
Off-farm vs on-farm livelihoods
disease. There are also trade-offs in terms
Implications: There are trade-offs between of the costs and implications for domestic
having large numbers of rural poor owning producers.
their own land and producing, even if
marginally, vs having large numbers of
Subsidies vs alternative public
people informally employed as farm
investments
labourers on very low and itinerant incomes.
Implications: In the short-term subsidies
for agricultural inputs or price support
Open trade vs protectionism
schemes can encourage production, helping
Implications: Open trade can increase food security and raising farmer incomes.
opportunities for markets, increase export However, this can also be a trade-off
income and improve prices for consumers. between investing in infrastructure and
It can also make it difficult or impossible services that create a more viable sector
for farmers to compete with imports and over the longer-term. In can also be a trade-
prevent sectors from developing. off with creating efficient agricultural market
systems.

Investment in agriculture vs other sectors

Formalised vs semi-formal value chains
Implications: There are trade-offs for
national governments between investing Implications: Western food markets are
limited public funds into agriculture vs other highly formalised, concentrated and employ
sectors. This comes back to fundamental relatively low numbers of people. Emerging
economic assumptions about the role of economy markets remain semi-formalised
agriculture in economic development. with large numbers of small-enterprises and
high levels of employment. The transition
between the two has trade-offs in terms
Calories vs nutrition
of opportunities for small-scale farmers,
Implications: There are huge differences inclusive economic development, food
in small-scale agriculture oriented towards quality and safety, foreign investment and
production of staple food crops to meet export opportunities.
basic calorie demands vs systems that
provide a range of nutrient diverse crops.
There are trade-offs in costs of developing
more nutrient beneficial systems vs the
costs of poor nutrition.
38 6.2 Interventions
The transformation of small-scale agriculture and food systems are systemic
problems. They require solutions that consider how entire systems interact. It is
impossible to control and engineer the behaviour of complex human and ecological
systems. However, with smart interventions that consider system relationships, it
is possible to nudge systems toward more desirable outcomes and dampen down
undesirable directions. This requires ongoing policy learning and adaptation.

Radical shifts are needed in the single sector, piecemeal, short-term and powerful
interest group driven approaches that often characterise public policy making. Not
to suggest that this is easy, however, bending away from the trajectory of a business
as usual scenario to something more desirable for all is going to require new and
different approaches.

The food systems framework provides a starting point for such systemic analysis. It
provides a basis for mapping out the relationships between key food system actors
and the incentives that drive their actions, be it at local level for a specific value
chain, or for a country’s overall food system. A deeper understanding of the core
activities of the food system and how these interact with supporting services and
the institutional environment is needed to better identify intervention points and
establish theories of change to guide transformation. Rapidly developing capabilities
in computer modelling and visualisation open up enormous potential for more
sophisticated analysis and hypothetical testing of what might work, and for exploring
this in collaboration with stakeholders.

As illustrated in Table 4 and Appendix 1, across some 30 reports and studies going
back over more than a decade, there is no shortage of general recommendations
about what needs to be done to improve small-scale agriculture. The menu of better
public services, access to financial services, improving the functioning of input and
output markets, research and development, infrastructure and effective producer
organisations is well established. What is lacking are country level and more localised
small-scale agriculture transformation strategies with clear outcomes, and integrated,
systemic pathways for change, targeted to the needs of different small-scale farmers.

Too often, recommendations and policy directions for improving small-scale

agriculture do not adequately differentiate between the needs of different categories
of small-scale farmers in different contexts (Vorley et al, 2012; Hazel and Rahman,
2014). Table 4 illustrates how differentiated policies might be targeted to different
categories of small-scale farmers based on the transition strategies listed in Table 1
of stepping-up, hanging-in, moving-out, and adding an additional level of stepping-in
(emergent/investor farmers).
Table 4: Categorisation of Interventions. See Appendix 1 for a detailed breakdown of 39
interventions with references.

Good governance and Building ownership, working towards responsible governance,

enabling business decentralising and devolving policy and operations, designing
environment and implementing medium and long term strategies,
implementing internal reforms, encouraging the creation of
enabling environments with built-in incentives for addressing
market failures.

Public services and Investing in public goods, services, and infrastructure in rural
infrastructure areas, increasing accessibility and affordability of smallholder
friendly technology, providing incentives for innovation.

Market failures Supporting access to markets and market information,

promoting smallholder diversification, targeting policy
interventions to correct market failures.

Financial services Improving access to innovative financial services, expanding

opportunities for risk planning for small-scale farmers, reforming
financial regulations.

Research, Improving and expanding data collection on farms, investing in

development, and setting up and upgrading agricultural research and financing for
advisory services technology and agricultural innovation.

Aggregation and Empowering farm organisations through training, developing

representation and modernising producer organisations through commercial
and technical skills.

Sector development Promoting pro-smallholder value chains, vertical and horizontal

and value chains integration, developing nascent processing sectors to increase
market opportunities.

Public private Establishing clear regulatory frameworks for linking farmers with
partnerships private institutions, innovating processes of partnerships and
facilitation.

Territorial/rural Developing policies for promoting and incentivising rural

development development, promoting non-farm employment, strengthening
rural-urban linkages, promoting context-specific policies.

Gender Improving access to knowledge, technology, assets, and

resources to improve opportunities for employment, reduce
drudgery, and empower through inclusive decision-making and
policy processes.

Social protection Establishing and maintaining social protections, supporting

training and competency development, coupling productivity
enhancing tools with social protection and social safety nets.

Land tenure and Creating flexible and clear arrangements for land transfer
property rights and tenure security, establishing land agrarian reforms with
security active support for small-scale farmers, establishing supportive
regulatory and legal frameworks for land acquisitions.
 As strongly emphasised by Hazell and Rahman (2014), Wiggins (2014) and Mellor
40
(2017), there are a core set of policies that benefit all categories of farmers and
the wider rural economy including infrastructure, enabling business environment,
education and health services, and access to finance. An endlessly repeated
message from economists is that, by and large, public resources should be invested
into these types of public goods and services, rather than into input subsidies and
price support schemes which often create market inefficiencies and are hard to target
to those most in need. Social protection mechanisms should then be used to target
the extreme poor and food insecure.

Over the last decade or so, much attention has been given to the needs of
commercialising small-scale agriculture and the linking of farmers to markets (see
Woodhill 2016). While unquestioningly necessary, this has arguably drawn attention
away from the needs of the very large group of (semi-)subsistence farmers who, while
often selling surplus into informal local markets, will never become commercial. For
this group, who are mostly poor to extremely poor, there is a need to optimise what
productive and income earning opportunities and capacities they do have while
also ensuring their food and nutrition security. This calls for creative thinking about
synergistically linking social protection, rural development and agricultural policies.

Figure 10: Living income: getting the policy mix right

Stepping in

Incentivising inclusive and responsible agri-food sector investment that

does not crowd out opportunities for existing small-scale farmers

Stepping up

Enabling a business environment and access to services and technologies for small-scale
farmers to scale-up, commercialise, be competitive and profitable and manage risk.

Hanging in

Optimising income and food security from farming while linking with productive
safety nets, improving access to off-farm income and enhancing resilience to shocks.

Moving out

Education for off-farm employment, safety nets that support transition, equitable transfer
and renting of land, rural economic development, enterprise development support.
Even with interventions that are needed for all categories of farmers, such as access
41
to finance, extension services, women’s empowerment or property rights, it remains
essential to tailor interventions to the specific needs of specific groups and contexts.

Processes

Systemic transformation of small-scale agriculture, as with tackling the many other

challenges for human and environmental wellbeing, will require new processes of
how stakeholders engage; science, policy and society connect; and decisions are
made. We know that our current systems of governance are often stuck and failing
to deliver on complex longer-term sustainability challenges. Governance is critical
in determining the robustness of a region’s transformation (Jayne, Meyer, and Traub
2014). It is well understood that data and scientific evidence alone does not sway
public opinion and policy thinking. Never-the-less, good data and science must still
be a foundation for sound policy and political decisions.

The point is to focus on the process of change itself. To bring about transformation of
small-scale agriculture, the technical and policy issues affecting the sector must be
coupled with innovation in governance and public decision making – a challenge for
the entire sustainable development agenda.
 Ultimately, what is it that will drive transformational change? It might be a major crisis;
42
it can be decisions by those who have sufficient power to impose their will; or it may
be the consequences (often unintended) of technological innovation. Alternatively,
change may be driven by sufficiently strong coalitions and alliances across
government, business and civil society. The transformation of small-scale agriculture
is a “slow burn” issue, there is unlikely to be a short-term crisis sufficiently severe to
radically change the status quo. No single group has the interests or power to upend
the current situation, and there are no “silver bullet” technological transformations.
This makes alliances for change the only real option for driving a transformation of
small-scale agriculture.

Alliances for change, in turn, hinge on being able to engage society and stakeholders
in informed and meaningful dialogue that connects with people’s hearts, minds,
values and interests. This requires convening multi-stakeholder forums where in open
and safe spaces people can explore issues. It also requires public awareness raising,
respected champions speaking out, advocacy campaigns and, in today’s world,
strong social media engagement. Alliances for change are not necessarily about
large-scale “agreement” but about creating enough profile around an issue that the
system begins to change and adapt.

The more that stakeholder engagement and dialogue can be well informed, the
better. This requires good research and data, synthesis science that makes system-
wide implications clear, and visually engaging communication of data and scientific
understanding.

Foresight and scenario analysis processes are ways of helping to connect these
elements. They bring people together into informed dialogue and help to create
alliances for change. Creative use of data, modelling and visualisation can help actors
explore future scenarios and the consequences of different courses of action.

Underpinning such processes of transformational change must be an appreciation

of the principles of how complex (human and ecological) systems change. A full
explanation of this is beyond our scope here, however, three ideas are important.
First, change happens because of the individual actions of many different actors, so
the question is how to create system wide incentives that nudge behaviour change
at scale. Second, systems adapt in response to feedback loops. Strengthening
feedback through informed cross-sector stakeholder engagement linked to wider
communication strategies is critical. Third, interventions to change systems need
to involve numerous adaptive experiments, where failure is expected but where
adaptation can be quick. This is very different to how most policy processes currently
function.

This might all sound difficult, complex and too idealistic. But what is the alternative?
Fortunately, we do see emerging examples of the type of transformation process
outlined here.
How to move forward? We make six suggestions:
43
1. Convene a global learning platform on small-scale agriculture
transformation. Global agenda setting on the future of small-scale agriculture
appears to have lost focus over recent years. There is a need for more
coordinated efforts across international agencies, donors, development
organisations, regional organisations and business to keep the understanding
of small-scale agriculture up-to-date, learn lessons from development
interventions and shape a future agenda that aligns with the emerging
attention on food systems.

2. Invest in research, data, and synthesis. Data on small-scale agriculture is

weak and fragmented and there has been insufficient meta-analysis and
synthesis of what individual pieces of research have concluded. There also
remains a meta-analysis gap about what scale of impact market-driven
approaches to small-scale agriculture transformation have had, both in terms of
numbers of farmer benefiting and the degree of improvement in livelihoods.

3. Undertake and collate case studies. Greater insight could be gained through
case studies that assess large-scale and autonomous changes, and examples
of positive deviance in small-scale agriculture. Such examples assessed
against a background of different contexts and policy settings could help to
drive greater evidence-based policy innovation.

4. Develop country level small-scale agriculture portraits. These would provide

a much clearer and more nuanced categorisation of small-scale farmers in
terms of their context and characteristics to enable tracking of trends and
targeting of interventions.

5. Public policy and investment options. While there is a long list of interventions
to improve small-scale agriculture as illustrated in Table 4 and the Appendix,
country specific options and scenarios need developing. Such frameworks
could help to drive greater policy innovation.

6. Develop national level small-scale agriculture transformation strategies

based on food systems foresight and scenario analysis. Ultimately,
countries will need to develop more integrated strategies to guide small-scale
transformation that enable appropriate interventions to be integrated across
sectors. These need to include realistic prospects for the numbers of farmers
achieving viable commercialisation, numbers leaving agriculture and numbers
who need to be supported in a transition phase
44
7 CONCLUSION 45

This report set out to explore what the future holds for small-scale farmers in
changing food systems. At the heart of our analysis is what we have called the small-
scale farmer dualism. The reality is that most of the food produced by small-scale
agriculture is produced by a small proportion of the 558.2 million farms of less than
20 ha. In orders of magnitude, using the latest available data, we estimate that 30%
of small-scale farms under 20 hectares produce 70% all food produced by small-
scale agriculture in middle- and low-income countries (acknowledging differences
across countries and different commodities). It is critical to recognise that 410 million
farms or 72% of all farms are less than one hectare. With urbanisation and changing
food markets, this dualism is likely to become more extreme, which has significant
implications for the transformation of small-scale agriculture.

The implication is that the large bulk of small-scale farmers are not as important
to feeding the world as is often claimed – but this does not mean that small-scale
agriculture is not important. Small-scale agriculture remains critical to the livelihoods
and food and nutrition security of some two to three billion people, a quarter to a
third of the world’s population. It is amongst this group along with the rural landless
that we find the highest levels of poverty, hunger and malnutrition.

Economic theory might predict a dramatic decline in the proportion of the workforce
employed in agriculture as economies develop. Yet, current trends show increasing
rather than decreasing absolute numbers of small-scale farmers. The existence
of very large numbers of marginal and poor farmers is going to be a reality for the
foreseeable future. From the perspectives of poverty, inequality, gender, food and
nutrition security, environmental sustainability, and social stability, tackling this reality
must be a development priority.

Over the last several decades, there has been a very strong donor/development
focus on the commercialisation of small-scale agriculture and value chain
development. This has been driven by a narrative around growth in demand for food,
that small-scale farmers provide 70% of food in lower- and middle-income countries,
and the potential of market driven approaches to development.
 There are two problems with this focus. First, by and large it does not help the bulk
46
of small-scale farmers who have marginal commercial opportunities at best. Second,
the trends of the “quiet” market revolution and emergent investment suggests that
where there are economic opportunities these are being exploited by endogenous
economic development processes that may have little to do with development
interventions.

A desirable transformation of small-scale agriculture that that can respond to the

wider challenges facing food systems and simultaneously tackle rural poverty and
malnutrition is going to require a more nuanced and sophisticated understanding
of small-scale agriculture, and more integrated and targeted public policies and
investments.

While food production, processing, distribution and retailing is a private sector

enterprise, there are huge market externalities related to health, the environment and
poverty. The longer-term public costs of not tackling the necessary transformation
of small-scale agriculture and food systems are huge. More thought is needed
about the balance of public and private responsibilities, and the role of public policy
and investment to tackle market externalities. The historical debate about whether
to tackle rural poverty through investment in agriculture or other sectors has lost
meaning. It is increasingly clear that a balanced mix of investments across agriculture,
food systems, rural development, and the wider economy is needed.

For many decades the focus for agricultural development was on increasing
productivity through technology. Then emerged a greater focus on brokering
market and private sector linkages. Both are important; however, the future requires
attention for a more progressive set of policies, incentive structures and supporting
institutions. This is politically challenging. It requires providing leaders and policy
makers with politically feasible options and/or working to change the political context
so that logically desirable directions for small-scale agriculture become feasible. This
hinges at least in part on well-informed multi-stakeholder dialogue and creating new
coalitions for change.
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9 APPENDIX: DETAILED 53

CATEGORISATION OF
INTERVENTIONS

Good governance and enabling business environment:

Governance challenges like political-economic instability, corruption, limited
accountability and transparency, and low capacity to intervene hamper progress
towards development. As national states are responsible for creating enabling
environments for development, good governance is essential before relevant policies
and partnerships can be put in place.

• Building ownership and working towards responsible governance by

international and regional organisations on issues like land titling and
environmental stewardship (The World Bank 2008; Wegner and Zwart 2011).

• Decentralising and devolving policy and operations to local/regional/provincial

levels and allocating resources by local needs and building human capacity
at decentralised levels (The World Bank 2008; Hazell et al. 2010; Wegner and
Zwart 2011; IFAD 2016; Poole 2017; Mellor 2017).

• Design and implement medium-and long-term strategies with accompanying

policies and budgets (HLPE 2013).

• Internal reforms of public administration to improve coordination,

accountability, and regulation (The World Bank 2008; AGRA 2018).

• Encourage the creation of enabling environments with incentives for

companies and public goods to address market failure and remunerate
smallholders (IFAD 2014; CFS 2016; AGRA 2017).
54 Public services & infrastructure:
A critical need for small-scale farmers is to have improved access to housing,
education, clean water, sanitation, and health services. These protect and improve
the quality and quantity of the family labour force to further participate in food
production and non-farm activities. Infrastructure in the form of roads, electrification,
telephone access, and technology is critical to rural social well-being, developing and
maintaining market linkages, and providing opportunities for off-farm income. Shifting
public spending to focus on infrastructure development and public services benefits
agricultural growth, and development in other sectors.

• Provide and invest in public goods and services to rural areas including roads,
health services, clean water, and schools; invest in agricultural research and
extension (The World Bank 2007; Hazell et al. 2010; Wiggins, Kirsten, and
Llambi 2010; HLPE 2013; CFS 2016; IFAD 2016; FAO 2017b).

• Investing in infrastructure (roads, electrification, cell-phone access, irrigation,

marketing and market spaces) in agriculturally responsive areas (The World
Bank 2008; Mellor 2017; AGRA 2017; AGRA 2018; IFAD 2016; Gneiting and
Sonenshine 2018) targeted at smallholders (CFS 2016).

• Promoting and developing accessible and affordable smallholder friendly

technology (The World Bank 2008; Wegner and Zwart 2011; CFS 2016; Poole
2017).

• Providing incentives for innovation through competitive funds for co-finance

and testing (The World Bank 2008; AGRA 2017).

Market failures:
The dominance of the private sector in providing inputs, financial services, and
technological innovations have worsened market failures. This is a greater problem
for small farmers because of increasing transaction costs of markets and needing to
find new ways of meeting the demands of value chains, and interacting effectively
with input and service suppliers. A key challenge is to improve the functioning of
markets in supplying these inputs and services.

• Support access to markets and market information (Fan et al. 2013; HLPE 2013;
CFS 2016; FAO 2017; Oxfam 2018).

• Private investment through ‘inclusive’ out-grower schemes can promote

smallholder diversification into high-value and export-market crops and support
productivity gains (Wegner and Zwart 2011).

• Targeted policy interventions to correct underlying market failures and reduce

barriers to market participation (Hazell et al. 2010; IFAD 2013; AGRA 2017;
Dillon and Barrett 2018).
Financial services: 55
Smallholders face significant costs of financial constraints. Inadequacies and
inequality of rural financial markets demonstrate real risks and barriers to food system
development.

• Improving access to innovative financial services (credit and savings products,

transfer services, insurance, etc.) will expand opportunities for smallholders
and allow for improved planning for risk (World Bank Group 2008; Wegner
and Zwart 2011; HLPE 2013; Fan et al. 2013; IFAD 2016; CFS 2016; AGRA 2017;
Mellor 2017; Poole 2017; Sheahan and Barrett 2018; Nikoloski, Christiaensen,
and Hill 2018) and create opportunities for new forms of commercialisation
(Collier and Dercon 2014).

• Reform financial regulations, public agricultural banks, improve financial

infrastructure, and formally define property and land-use rights to act as
collateral for loans to benefit small, high-risk, rural populations (HLPE 2013; Fan
et al. 2013; AGRA 2017; Poole 2017).

Research, development, and advisory services:

Agricultural research and development over the past few decades has been largely
reactive and focused on improving productivity gains. In combination with uneven
distribution of technological development, the gains from research and development
have been unequally distributed globally. Small-scale farmers need to have equitable
and transparent access to data, knowledge, services, and technology that can
improve their production in a sustainable and healthy manner.

• Improved and expanded data collection on farms, growth of farms, farming

households, progress of interventions to SDGs, rural entrepreneurship,
indigenous peoples, and natural resource management to inform policy
making (Wiggins, Kirsten, and Llambi 2010; IFAD 2016; CFS 2016; Jayne et al.
2016; Lowder, Skoet, and Raney 2016; Herrero et al. 2017; Ricciardi et al. 2018;
Nagler and Naude 2018).

• Investment in setting up, upgrading, and financing agricultural research and

extension and smallholder-friendly climate-smart technologies (Fan et al. 2013;
HLPE 2013; Poole 2017).

Aggregation and representation:

Concentration of buying power and vertical integration is being seen globally. Large-
scale buyers aim to purchase large amounts of commodities from fewer suppliers as
compared to large numbers of small producers.

• Empower farmers’ organisations through training and strengthening quality

and control of production (Wegner and Zwart 2011; HLPE 2013).

• Develop and modernise producer organisations with enhanced commercial

and technical skills (HLPE 2013; AGRA 2017).
56 Sector development and value chains:
Integrating small-scale producers into global value-chains and sectors dominated
by large agribusinesses and corporations will help in improving rural incomes and
reducing rural poverty. Increasing productivity and improving competitiveness will
improve engagement with these complex value-chains and contribute towards a
rebalancing of embedded power imbalances.

• Promote pro-smallholder value chains through an enabling and innovative

policy and investment environment (Fan et al. 2013; HLPE 2013; CFS 2016;
IFAD 2016; AGRA 2017).

• Vertical and horizontal integration and/or coordination to meet the safety,

quality, and quantity standards of commodities (Fan et al. 2013; AGRA 2017;
Gneiting and Sonenshine 2018).

• Developing nascent agricultural processing sectors (especially staple foods)

to provide more opportunities for farmers to enter or increase their market
participation (AGRA 2017).

Public Private Partnerships:

Given the role of government in providing public goods and services, and the role
of the private sector in developing value-chains and innovative R&D, public-private
partnerships are critical in sustaining agricultural growth and creating opportunities
for smallholders. Such partnerships are successful for multiple beneficiaries if
governments have provided an enabling operational environment.

• Establish clear regulatory framework for linking smallholders with private

institutions (Fan et al. 2013).

• Innovations In how private companies, ministries of agriculture, other public

agencies, and NGOs work jointly and take on new facilitating roles (Hazell et al.
2010).

Territorial/rural development:
Recognising spatial and social heterogeneities, rural and territorial development
approaches provide a more specific and realistic approach for targeting interventions
and policies, instead of a ‘one-size-fits-all’ value chain approach. The approaches
help policymakers respond to the realities of diverse livelihoods in different areas,
while still emphasising market linkages and the importance of rural institutions.

• Develop public policies to promote and incentivise agricultural and rural

development (FAO, IFAD, and WFP 2015; Cervantes-Godoy 2015).

• Promote rural non-farm employment in secondary towns and strengthening

rural-urban linkages, with investments in infrastructure, education, and skills
(World Bank 2008; Cervantes-Godoy2015).

• Promote context-specific policies and interventions (Fan et al. 2013; World

Bank 2008).
Social protection: 57
Small-scale farmers need targeted productive social protection policies to benefit
them in the short term, and viable strategies to exit agriculture, or transform into
viable and sustainable businesses. Such policies offer cushions against livelihood
shocks, improve households’ food and nutrition security, and provide opportunities to
diversify outputs, and to escape the poverty trap.

• Establish, maintain, and enforce vital protections for small-scale farmers and
provide incentives for sustainable and healthy food production (World Bank
2008; Fan et al. 2013; IFAD 2016; AGRA 2017; Herrero et al. 2017; Mellor 2017;
Oxfam 2018; Nagler and Naude 2018; Nikoloski, Christiaensen, and Hill 2018).

• Support in training, and competency and skill development (especially

for youth) (CFS 2016; Nagler and Naude 2018) and provide strategies and
protections to aid smallholders in transitioning out of agriculture (AGRA 2017).

• Coupling productivity-enhancing tools with social protection and social safety

nets such as conditional cash transfers tied to household participation in
schooling and health services (Fan et al. 2013).

Gender:
Women farmers make up a significant proportion of the global food system
workforce. The challenges facing small-scale farmers and the global food system are
set to exacerbate existing gender inequalities, particularly with climate change and
natural resource constraints. Policies and interventions need to be developed with
the intention of rectifying systemic inequalities creating an enabling environment that
provides equitable access to resources and assets for women.

• Develop and deliver strategies focused on developing technical, business, and

entrepreneurial skills and assets in off-farm activities (AGRA 2017).

• Improve access to land, rural labour markets, financial services, social capital,
and technology (World Bank 2008; FAO 2011; HLPE 2013; Fan et al. 2013;
AGRA 2017; Poole 2017).

• Collect sex-disaggregated data to gain more nuanced understandings of

women’s and men’s roles in food system activities (Slavcheska et al. 2016;
Doss et al. 2018).

• Investments in rural infrastructure and labour-saving technologies, to increase

productivity, improve participation in economic activities, reduce drudgery, and
provide access to decent employment opportunities (HLPE 2013; IFAD 2016;
Oxfam 2017).

• Fostering women’s participation and leadership in community and rural

organisations (IFAD 2016).

• Ensuring that gender-related policies across scales are implemented and

strengthened, with appropriate mechanisms for addressing structural inequality
(World Bank 2008; Slavcheska et al. 2016; IFAD 2016).
58 Land tenure and property rights security:
Access to land is critical for producing food in rural areas. Inequalities in the
distribution of productive land are key constraints in promoting rural development
and ensuring food and nutrition security. Given land’s economic, cultural and political
importance, issues of tenure security are critical to the development, livelihood, and
food security agenda.

• Flexible and clear arrangements for land transfer and tenure security (Wegner
and Zwart 2011; HLPE 2013; Fan et al. 2013).

• Establish redistributive land and agrarian reforms accompanied with active

support for small-scale farmers and active state and civil society interventions
(FAO 2015; IFAD 2016).

• Establish supportive policy, legal and regulatory frameworks to discipline land

acquisition and mitigate environmental externalities (Wegner and Zwart 2011;
IFAD 2013; Collier and Dercon 2014).
59
ABOUT FORESIGHT4FOOD

Foresight4Food is a collaborative global initiative of science institutions, international

agencies, platforms and coalitions, and development organisations working to
transform food systems. They all recognise the need to strengthen local, national and
global capabilities for food systems foresight and scenario analysis and the benefits
of working together to do so.

Get in touch
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