According to the Food and Agriculture Organization of the United Nations, farms smaller than 2 hectares account for 84% of all farms worldwide. Most of these are found in rural areas of the developing world and are owned and operated by families who have limited access to markets and services. This limited access combined with increasingly erratic weather patterns means yields across the globe are on the decline. Earlier this year in Kitui County, eastern Kenya, for example, peas, sorghum and other staples did not reach maturity because the rains arrived a month late.
Improved resilience to climate change and market-related threats could come in the form of partnerships between smallholders, large privately owned companies and national governments. These partnerships seek to increase yields, link farmers to markets and improve supply chain efficiencies. This type of collegiate approach could contribute to more sustainable agriculture on the continent.
For beverages company Diageo, the solution to increasing individual farmer yields lies in an allied approach. The company believes that large multinationals have the opportunity to partner with farmers to provide a direct market for their produce. Through such investments, companies can have some control over the production process, quality of yields and at the same time provide an income for the farmers.
Diageo sources agricultural products such as cereals, sugar, cream and grapes from about 150 first-tier suppliers, with whom they have direct relationships, and many thousands of second- and third-tier suppliers, with whom they have indirect relationships. These suppliers range from large agri-businesses to smallholder farmers.
This network of direct and indirect suppliers presents the company with opportunities to form partnerships based on ethical, social and environmental principles. Diageo says collaboration with its suppliers, other consumer goods companies, and industry associations is the most effective means of improving practice in supply chains and in the agriculture industry as a whole.
They are not alone in this. Coca-Cola has also struck partnerships with local farmers. Project Nurture, a joint project with the Bill & Melinda Gates Foundation, helped more than 50,000 small-scale mango and passion fruit farmers in Kenya and Uganda to double their fruit incomes. The project also aimed to help farmers identify new market opportunities, improve productivity and develop strong farmer business groups that will give them more bargaining power when dealing with large companies.
Brokering partnerships
In 2011, the African Union, the New Partnership for Africa’s Development and the World Economic Forum joined hands to form the Grow Africa partnership to increase private sector investment in agriculture, and accelerate the execution and impact of this investment.
The aim is to enable countries to realise the potential of the agriculture sector for economic growth and job creation, particularly among farmers, women and youth. Grow Africa brokers collaboration between governments, international and domestic agriculture companies, and smallholder farmers in order to lower the risk and cost of investing in agriculture, and improve the speed of return to all stakeholders.
“African governments recognise that meeting agricultural targets can only be achieved by private sector investment,” said executive director, Grow Africa, William Asiko. “What is clear is that effective collaboration between the public and private sectors, throughout the entire food system, from buyer to farmer, is critical to ensuring that private sector investments improve farmer incomes and build small-to-medium-sized African agri-businesses, which form the backbone of the agricultural economy.
“Development financiers, commercial lenders and the private sector can build financial instruments to unlock commercial lending, enabling buyers and farmers to build stable supply chains that lead to financial resilience of smallholders.”
The forging of these alliances has come at a time when the agriculture industry in Africa is not without its challenges. The preservation of natural resources, such as water, inadequate farm inputs, inaccessibility to financing, poor road infrastructure and skewed property rights all take away from the potential of the African farmer. Long-term, symbiotic goals between farmer and big business, however, can go some way in addressing these hurdles.
One Acre Fund, a nonprofit that supplies smallholders in east Africa with asset-based financing, is modelled around providing support through partnerships.
“One of our goals is to fuel the engine of agricultural productivity in east Africa with research, improved delivery systems, and quality guarantees for all smallholder farmers,” said Julia Franklin, One Acre Fund’s global sourcing director. “One of the best ways to do this is to support local agricultural businesses and to work with local partners to increase quality and make cutting-edge, productive agricultural technologies readily available within the region.”
These products include financing for farm inputs, distribution of seed and fertiliser, training in agricultural techniques and market facilitation to maximise profits from harvest sales.
“We do this by working with local organisations to make successful products available to farmers at affordable prices,” Franklin added.
“The focus for us is in identifying partners who share our mission of making smallholder farmers more prosperous, and specifically, those who want to help make quality agricultural products available and affordable to them.”
Content on this page is paid for and produced to a brief agreed with Diageo, sponsor of the Spotlight on Africa series
