Cooperation with the private sector – “Driver of development for smallholder farms
To alleviate poverty and hunger in rural areas is a core political objective of the German Federal Ministry for Economic Cooperation and Development (BMZ). A key element of this task is the promotion of the farming and food sector. Because of its crucial importance to food security, our focus is on market-oriented familiy farms.
Unfavourable economic and political conditions are the cause of the continued prevalence of subsistence farming, with many small farmers remaining trapped in poverty and hunger. The resultant inability of families to invest in health, education, farm improvements and the sustainable use of their resources puts their entire socio-economic development at risk.
Agricultural entrepreneurship develops small family farms
Because each farmer is an independent operator (agripreneur), a critical step towards improving the family’s situation is to increase profitability. The main focus is on enhancing productivity and efficiency, and at the same time marketing products in a more lucrative manner. The small-scale farmer can decide for himself whether to sell his harvest through a middleman, on the market or under contract to a processing company. Development co-operation should empower the farmer to choose the right development model for himself or herself, without being coerced into retaining the status quo. Farmers must be able to take their own business decisions and make use of sustainable production systems which are suited to their local conditions. This enables them to secure not only their own food supply but also to contribute to regional food security.
In many developing countries the changing tastes of a growing middle class for processed, high-quality, safe foods can only be satisfied by imports. On the one hand there are few local processing options, and on the other high-quality food is not produced at the right time and in sufficient quantities – not to mention the lack of transport infrastructure and storage. It is imperative that this enormous potential for local and regional production and processing is tapped. But, apart from all the shortcomings in terms of expertise, market access and market data, the main stumbling block in many cases is inadequate funding. To this day, the formal financial system can satisfy only a fraction of the need that exists. For this reason many worthwhile and self-amortising investments are not being made.
Public and private investment is needed
What is needed is robust, broad-based agricultural finance which includes both public funding – for infrastructure, structural and regional policy for rural areas, agricultural policy, training and up-skilling programmes for farmers, investment incentive programmes, etc. – and private investment – from smallholder agriculture to major farming enterprises to co-operation with the national and international economy. Germany’s agriculture and food industry is a strong partner which stands for values far beyond purely commercial benefit, such as reliability, expertise, quality products, long-term partnerships and sustainability. For this reason the BMZ considers initiatives such as the German Food Partnership (GFP) a valuable addition to purely official development policy.
Taking account of the market potential and absorptive capacity on the ground, we would like – with the assistance of these partnerships – to provide farming families with new opportunities to improve their product marketing in the context of a value chain approach, and to gain better access to expertise, funding and reliable purchasers by means of fixed contracts. Experience gathered thus far is to be utilised and transferred: German development co-operation has successfully helped increase the incomes of several hundred thousand small farmers in Africa, primarily in cash crop projects such as cotton, cocoa and cashew nuts. We want to expand this success to staple foods. An initial major project is the Competitive African Rice Initiative (CARI) under the auspices of the German Food Partnership, which aims to increase the incomes of up to 120,000 poor rice farmers in Africa.
A concerted approach that involves the entire rural community is needed for the mammoth “One World – No Hunger” task we have set ourselves. Provided the primary focus of all activities remains firmly and consistently on the needs of local farmers and future generations, much of the alleged controversy will not be controversial at all.
Senior Adviser Special Unit “One World – No Hunger”
Federal Ministry for Economic Co-operation and Development - Bonn, Germany