Spotlight on smallholder farming
PRESIDENT Jacob Zuma brought smallholder farmers back into the spotlight in his State of the Nation Address last month when he talked about implementing a commercialisation support programme for them.
He said he had received a memorandum from the African Farmers Association of South Africa, which said this year needed to be the year of the commercialisation of black smallholder farmers. The government, he said, would implement a commercialisation support programme for 450 black smallholder farmers.
They went through a difficult period last year because of the drought, he said. “To date, an estimated R 2.5 billion was made available for the provision of livestock feed, water infrastructure, drilling, equipping and refurbishment of boreholes, auction sales and other interventions.” But this was still not enough to bridge the gap between the smallholder and commercial farmer.
President of the International Fund for Agricultural Development (Ifad) Kanayo Nwanze said at a conference in Rome recently – attended by The Mercury and titled “Investing in inclusive rural transformation: innovative approaches to financing” – 3.4 billion people, or half the world’s population, lived in rural areas.
“The majority of these people depend on agriculture on small farms, and produce 80% of food in the developing world. These same people barely have enough for themselves.”
Investing in agriculture, as they had done for the past 40 years, contributed to job creation and economic growth.
“When they are properly organised and supplied with good infrastructure, facilities and the right policies, rural areas can be transformed into vibrant places.”
But, he said, all this took money. “The global landscape is changing. There are new and competing demands: climate change and natural disasters and massive migration which are diverting attention because they require immediate solutions and support.”
These emergencies, he said, diverted funds from long-term sustainable development.
In its annual meeting of African Science Academies Poverty Reduction report – compiled by the Academy of Science of South Africa and the Department of Science and Technology and released last week – Joseph Coompson of the African Development Bank said agriculture was a major source of income in Africa.
Persistent poverty
“However, untapped agricultural potential has contributed to persistent poverty and deteriorating food security.
“Currently 49% of Africans or 420 million people live under the poverty line of US$1.25 (R15.90) per day.”
This would rise to 550 million by 2025.
“This can be addressed by job creation and providing sustainable livelihoods. Currently 33% of African children live in chronic hunger; 40 million children under the age of five are stunted.”
Director of the Global Engagement, Knowledge and Strategy division at IFAD Ashwani Muthoo said that while government investment was important, public funds were not going to be sufficient to meet the objectives of Agenda 2030 (the Sustainable Development Goals).
In Africa, only a small percentage of commercial lending was destined for the agricultural sector.
“This is largely due to the high risks prevalent in the sector, which are exacerbated in rural areas. These risks deprive the sector of much needed finance to boost production, processing and marketing of small producers.”
Transaction costs were higher in rural areas than in urban ones due to a more dispersed population with weaker infrastructure.
“Risk factors in agriculture often inhibit financial institutions from lending. These include production risks linked to natural hazards (such as droughts, floods and pests), smallholder farmers’ inability often to provide collateral for loan guarantees due to lack of proof of land ownership, and price volatility.”
They said the underdeveloped financial sector in low-income countries might mean the availability and innovation of sector-specific financial instruments and services was low.
“Further, although financial services may be available, they may not be suitable for all types of agricultural activities, particularly smallholder farmers.”