This handbook provides practical guidance for firms looking to build sustainable supply chains by working effectively with smallholder farmers. It presents the business case for engaging with smallholders, offering a structured framework for decision-making, and recommending various tools and resources. This is especially valuable for operational managers responsible for integrating smallholder farmers into their value chains.
Key Insights
The Drivers for Working with Smallholder Farmers
Firms are increasingly working with smallholders to meet global food demand, respond to consumer demand for increased sustainability, and prevent contamination and food-borne illness.
The Challenges of Working with Smallholders
Despite the opportunities, sourcing from smallholders presents challenges such as low productivity and crop quality, lack of knowledge on social and environmental impacts, poor farm management skills, and difficulties in achieving transparency and traceability.
An Evidence-Based Approach to Program Design
Effective program design requires a thorough sector analysis, evaluation of smallholder needs, consideration of environmental and social risks, and identification of priority interventions and a realistic timeframe. The two major components of design include:
- Collect Information: Perform a sector analysis, segment farmers, and understand environmental and social risk
- Analyze and Design: Prioritize goals, analyze costs and benefits, and identify activities based on goals
Global Distribution of Smallholders
The majority of smallholder farms (388 million) are in Asia, with 44 million in Europe and the Russian Federation, 33 million in Africa, and five million in the Americas.
Approaches to Effective Training
Key approaches include face-to-face interactions, written materials, and information and communication technologies (ICTs) like radio, Internet kiosks, and cell phones. Effective strategies will likely use a combination of channels.
Standards and Certification
Standards and certification offer a way to frame agricultural, environmental, and social practices, increasing the impact and security of supply. Standards benefit firms sourcing from smallholders by:
- Identifying and managing social and environmental impacts
- Improving productivity, efficiency, and security of supply
- Expanding market access through certification
The Spectrum of Producer Organizations
Producer organizations vary in their capacity to manage information and resources. This handbook proposes three tiers:
- Class C: Farmer groups that have only basic capacity to manage information.
- Class B: Operate as small enterprises, collectively managing resources belonging to group members.
- Class A: Manage external resources, coordinate farmer members throughout the production process.
Key Statistics & Data
- The world’s 525 million smallholder farmers represent an opportunity to expand market share and secure a sustainable supply of key agricultural commodities.
- Globally, 1.5 billion hectares of land are used for crop production, and another 1.4 billion hectares are theoretically available for agricultural expansion.
- Only about 14 percent of Asian farmers, 7 percent of African farmers, and 19 percent of Latin American farmers are members of agricultural cooperatives.
- Contaminated foods cause about 1.5 billion illnesses and three million deaths per year worldwide.
- Fertilizer consumption varies widely: near zero in some African countries, while it exceeds 500 kg per hectare in China and Egypt.
Methodology
The handbook draws upon a combination of literature reviews, case studies, and expert opinions to provide practical guidance for firms working with smallholder farmers. Specific methodologies such as subsector analysis and supply chain diagnostics are also discussed.
Implications and Conclusions
This handbook provides valuable insights for firms seeking to engage with smallholder farmers to build sustainable supply chains. By addressing the challenges and opportunities associated with smallholder engagement, firms can improve productivity, enhance market access, and contribute to broader development goals. The recommendations and strategies outlined in this handbook can inform the design and implementation of effective programs that benefit both firms and smallholder communities.
Key Points
- Smallholder farmers represent a significant opportunity for firms to expand their market share and secure a sustainable supply of key agricultural commodities.
- Sourcing directly from smallholders can reduce margins paid to collectors and middlemen, and facilitate quality and productivity improvements.
- Effective training and communication strategies, including farmer field schools and the use of ICTs, are crucial for changing smallholder behavior and improving farming practices.
- Standards and certification can enhance market access and improve supply chain management by ensuring good agricultural and forestry practices.
- Outgrower programs, which involve partnerships between farmers, input suppliers, and financial institutions, can address barriers to input adoption and increase project success.
- Improving farm management skills, such as financial literacy and agronomic calculations, can empower smallholders to make informed decisions and increase productivity.
- Addressing gender-specific constraints and promoting women's participation in supply chains can lead to significant improvements in crop productivity, quality, and sustainability.