On Thursday, July 3, I had the opportunity to attend a panel discussion on rural development held by ECOSOC on the topic of small scale farmers, agriculture, and poverty reduction in the face of recent increases in food prices.

Small scale farmers, also referred to here as “small producers” or “small holders” are generally farmers who own small commercial farms supporting a single family, especially in rural areas of developing countries, where agriculture is the main source of income. Small holders make up 3/4 of the world's poor in rural areas, and almost 1/3 of the world population depends on small holder farming. Furthermore, agricultural growth is at least twice as effective in reducing poverty as non-agricultural growth. Thus, some very effective poverty-alleviating strategies focus on helping small holders by encouraging their agricultural growth and productivity.

The current food crisis is due to recent increases in food prices; higher food prices reduce the real wages of many workers, as they get less food for the same cost as before. The conventional wisdom thus states that higher food prices increase poverty levels by decreasing the amount of food the average household can afford.

On the other hand, panelist Sandra Polaski, Senior Associate and Director from the Carnegie Endowment for International Peace, stated that the impact of rising food prices on poverty is not as uniform as conventional wisdom holds. She said that

1. food prices have historically been extremely volatile, and we have no way of knowing if the current high food prices will persist, and
2. there is a differing impact of rising food prices on poverty on different households, and in different countries.

The impact is not uniform because it varies based on the household’s source of income and on expenditures. For some countries, high food prices are good – but for others, they increase poverty levels. She cited India and China as examples. India is the single largest reservoir of poverty in the world, with 8 million people living on just $1 a day. In India, rising rice prices were poverty alleviating; people found more jobs and agricultural exports increased. Moreover, when prices increase, the “change in real income is most for the poorest rural people and the most for disadvantaged classes, like scheduled tribes and castes.” In urban areas, this impact is much smaller.

Second, China is “the 2nd largest reservoir of poverty in the world.” Historically, decreases in poverty have had to do with increases in food prices. Since China and India make up 54% of all the poverty in the world, “we must consider the impact on each country in order to come up with appropriate policy responses.” According to Polaski, the poorest of the poor - at least in India and China - actually benefit from higher food prices - and this must be acknowledged by policymakers. Policy must also allow for very volatile prices in the future. Policy cannot be “one size fits all” but must take into account these various factors.

Robert Watson, Chief Scientific Adviser at the Department of Environment, Food and Rural Affairs of the United Kingdom spoke about how to make small scale farming more profitable. “Food production is growing faster than population since the 1960s, but the successes are uneven,” he said. “Agriculture can no longer be viewed as production alone – we need to increase production without increasing emissions...without land and water degradations,” he continued. Here are certain specific suggestions he put forward:

• Innovate. Make agriculture science specific. Scientific organizations must explicitly support the needs of small scale farmers.
• Improve water management
• Target small-scale - not just medium or big - farmers
• Empower women (Small holder agrisystems are increasingly managed by women). Women must be involved in decision making. Women need education. Also, explicitly provide support to women’s organizations.
• Access to credit for small scale farmers
• Stimulate private sector investments – good governance is necessary.
• Double agricultural production in the next few years
• Most 1st generation biofuels are not economically, socially, or environmentally sustainable; need to invest in 2nd and 3rd generation biofuels instead. (Biofuels are derived from plants, and examples of 1st generation biofuels include those made from sugar, starch, vegetable oil, or animal fats. These have been criticized for taking food away from humans and thus increasing food shortages. 2nd generation biofuels are made from non-food crops, while 3rd generation biofuels come from algae.)

Overall, Watson emphasized that “small scale farming can be highly productive and environmentally sustainable.” Agriculture must thus be multi-functional, emphasizing the role of the small-scale farmer, empowering women, and increasing investment in research & development.

The next speaker was Steven Schonberger, Lead Operations Officer in Agriculture and Rural Development at the World Bank. His speech also focused on helping small holders. His key message was that high food prices have provided new opportunities for producers. He stated that small holders have limited access to finance, which is one of the constraints on increasing production. He emphasized the need to get investment back in agriculture and rural development. He also emphasized a new role for the state in helping small holders:

New role for the state:

• regulate input markets
• make sure farmers are getting what they paid for
• demand socially responsible products

Finally, James Borel, Group Vice-President responsible for DuPont Crop Protection and Pioneer Hi-Bred, offered some concrete suggestions to help small holders increase production, especially focusing on scientific research. He stated the importance of “having access to best inputs, such as seeds and salinity.” He also emphasized the need for aggressive farmer education, and the need to empower farmers with modern technology and information. Moreover, many farmers must have better access to markets.

He gave a very good example of using scientific research to improve prospects for small producers. In India, the mustard seed crop is generally planted in September and harvested in December. However, about 30% die from frost in the winter, since they are harvested so late. Through research, scientists decreased the maturation time of the seeds, so that farmers were able to harvest the plants earlier. Thus, less crop died from frost. Farmers also benefited from an increased price for their crops because they were able to sell them earlier than the regular crop in January – there was less competition. Thus, there is great potential for such scientific research and development strategies to be applied elsewhere and to greatly increase production.

“This issue is not only about food production, but income production,” he said. “Agriculture must be higher on our agenda.”


Credit: World Development Report 2008: Agriculture for Development

Figure 4 credit: May 2008 Report: Rising Food Prices, Poverty, and the Doha Round by Sandra Polaski from the Carnegie Endowment for International Peace.