 "Dr Ulac Demirag")
At the G-20 agriculture ministers' meeting this year, the outcome document included a commitment to "strengthen resilience and inclusivity in agriculture and food value chains." This recognition comes at a critical moment when global food supply chains are significantly disrupted. Globally, climate change is causing erratic yields of staple crops such as rice and wheat, adding to food shortages and price spikes caused by the conflict in Ukraine.
About one-third of the world's food is produced by small-scale farmers – mostly family farmers with less than 2 hectares of land. In India, 85 per cent of farms are less than 2 hectares, and 80 per cent of India's poor live in rural areas. Small-scale farmers are most vulnerable to the adverse factors affecting food production and availability. Their low input/output production systems lock them into subsistence livelihoods, unable to benefit from markets. Their limited access to markets, finance, and technologies results in low productivity of land and labour – productivity that can decrease due to natural resource degradation. Thus, they are highly vulnerable to hunger.
The challenge is to enhance food systems so that consumers have secure access to a variety of quality, nutritious, safe, and healthy foods; farmers have sustainable, resilient, and prosperous livelihoods; and production is protected against negative environmental impacts. How can policies and public investment promote value chains that can withstand disruptions and shocks, where farmers are incentivised to produce and compete in markets that supply consumers with quality, affordable and nutritious food?
The key to achieving these outcomes starts with investment in the capacity of the farmers to effectively participate in value chains. The requisite knowledge of market requirements (timing, standards, quantities), understanding of transparent procedures for price setting, ability to access reliable credit, access to a timely supply of inputs and services, and the application of techniques to enhance productivity of labour and land all require further investment in capacity.
Experience shows that value chains that are inclusive of small-scale farmers help reduce rural poverty and produce higher, more stable incomes. As in any trusted business relationships, it is crucial to ensure regular and effective communication between all parties, specifically including farmers' representatives.
Investment in robust agricultural value chains, linking small-scale producers to suppliers of inputs, farm services, microfinance, and trusted market entities, can help farmers reduce their costs of getting their product to market. This also provides opportunities for adding value to their products along the line, leading to significant long-term benefits for all in the value chain.
Previously, little attention has been paid to making value chains truly inclusive. Small-scale farmers, women, youth, tribal communities, persons with disability and other underrepresented groups, and micro-, small- and medium enterprises (MSMEs) can play a crucial role in making agriculture value chains resilient and sustainable.
The establishment of multi-stakeholder platforms is a mechanism that can ensure inclusivity in value chains. These should include value chain financing to deliver financial services that support value chain development for previously "unbanked" target groups. India's JAM trinity – the confluence of Jan Dhan Yojana, Aadhaar, and mobiles – was a landmark step in this regard.
Effective value chains require efficiency, largely driven by optimising scale. For small-scale producers, investing in member-based farmers' organisations is key to enable them to purchase inputs, access services, and sell their products at an efficient scale and low transaction cost. Engagement with farmer organisations through the 4Ps (public-private-producer partnerships) approach brings the private and public sectors into negotiated partnerships with producers' organisations to improve market access and equitable outcomes.
For example, the Tejaswini project in Madhya Pradesh helped rural people, mainly women, convert traditional subsistence millet crops into viable cash crops, protected the environment, and contributed to healthier diets. The project established women's collectives that operated as a social enterprise.
The government helped the collective to add value through post-harvest processing and establishing a product brand, while the private microfinance institutions enabled access to microcredit. Household incomes grew five times between 2014 and 2019, and many more farmers have started growing, selling and consuming these crops.
Inclusive rural value chains have enormous potential to promote farmers' welfare and sustainable development, achieve food security by providing improved incomes and nutritious food, improving nutrition and health, creating decent jobs, and reducing poverty.
Their promotion can empower the most deprived and vulnerable to prosper, to contribute to their economies, and build sustainable, inclusive, healthy, and resilient food systems.
The writer is India country director, the International Fund for Agricultural Development
Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of www.business-standard.com or the Business Standard newspaper
