APPG Submission to IDC Inquiry on Jobs and Livelihoods

Written evidence submitted by the All-Party Parliamentary Group on Agriculture and Food for Development

 

Summary

  1. The All-Party Parliamentary Group (APPG) on Agriculture and Food for Development welcomes this International Development Committee Inquiry into Jobs and Livelihoods. This submission focuses on the essential role of agriculture and smallholder agribusiness development in the creation of jobs and sustainable livelihoods in rural Africa. With over 70% of the population of sub-Saharan Africa engaged in agriculture, the best way to create jobs, to kick-start a rural economy, and to promote economic independence, is to focus on agriculture and the food chain – from seeds, fertiliser and machinery through farms to local markets and local down-stream processing capacity.  We need to start with what we have got.
  2. The APPG calls for increased support for small-scale farmers and the creation of the right conditions in order that small-scale farms and their ancillary services can thrive as profitable businesses. Empowering small-scale farmers to move from subsistence farming to commercially orientated farming will increase incomes; drive rural employment; and generate a vibrant, profitable and sustainable rural economy. There are significant barriers preventing this transition, including lack of access to technology, finance, technology and markets. However, pro-poor interventions by the public, private and not for profit sectors have enormous potential to improve livelihoods and create jobs, reduce hunger and malnutrition, and reduce poverty.

About the APPG on Agriculture and Food for Development

  1. The APPG on Agriculture and Food for Development brings together parliamentarians concerned with agriculture, nutrition and food security in developing countries. The APPG was established in 2008 in response to the growing concerns over heightened food prices and the chronic underfunding of agricultural development by bilateral and multilateral organisations and national governments. Chaired by Lord Cameron of Dillington, the APPG is a cross-party initiative drawing members from both Houses of Parliament.
  2. The APPG recognises that a vibrant, resilient and environmentally sustainable agricultural sector is key to development and that agriculture is one of the most effective tools to ensure economic, social and political well-being in developing countries. Smallholder farmers are central agents to addressing global hunger, eradicating poverty and increasing national productivity. In recognising this, the APPG uses its cross-party membership to facilitate informed and progressive debate to deepen understanding of the needs, opportunities and challenges of the 500 million smallholder farmers who feed 2 billion people worldwide.

Context

  1. 1.3 billion people are engaged in agriculture in developing countries and 70% of all Africans depend on agriculture for their livelihoods. The International Labour Organisation 2014 World of Work Report states that two-thirds of total employment in the least developed countries is located in agriculture, and this is often informal and low paid. Currently, the world’s 500 million smallholder farmers, farmers who manage less than 10 hectares of land, produce as much as 80% of the food consumed in Africa and Asia. Despite this, smallholder farming is often seen as a source of rural poverty and food insecurity, rather than a solution to those challenges. Agriculture is often seen as a ‘sunset’ sector, in which low incomes, self-employment, low productivity and vulnerability predominate.

Agricultural Growth and Poverty Reduction

  1. Yet agriculture offers new opportunities for growth and economic transformation. Improving agricultural performance is the most powerful tool to end global poverty and hunger and boost shared prosperity. According to the World Bank 2008 Development Report agricultural development is an essentially pro-poor source of economic growth – about 2 to 4 times more effective in raising incomes among the poorest than growth in other sectors. Agricultural growth reduces poverty both directly, by raising farm incomes, and indirectly through its positive impact on all other sectors of the economy. Even modest rates of growth in the agricultural sector have a considerable multiplier effect, increasing rural incomes, creating consumer demand, and boosting growth in the larger economy. The 2010 Montpellier Panel report called this the ‘virtuous circle of agricultural development.’ The poverty reduction potential of GDP growth originating from agriculture is particularly pertinent in sub-Saharan Africa where agriculture accounts for one-third of GDP and three-quarters of employment.
  2. Empowering small-scale farmers to move from low-productivity subsistence farming to profitable small businesses will boost economic self-sufficiency and resilience and help to create a profitable and sustainable rural sector in sub-Saharan Africa.

Barriers: Access to Knowledge, Finance, Technology and Markets

  1. In rural Africa small-scale farmers face significant barriers, including a lack of access to and use of new agricultural technologies (e.g. high-yielding seeds and affordable fertilisers), limited access to knowledge, finance and markets, and land tenure insecurity. Together with poor infrastructure (e.g. roads, power and irrigation) these barriers put farmers at an overwhelming disadvantage and significantly limit their productivity. Support to increase access to technology, knowledge, finance and markets for micro, small and medium sized enterprises (MSMEs) and agribusinesses is a critical gap in the business ecosystem in sub-Saharan Africa. Without this support smallholder farmers remain stuck in a vicious cycle where low investment, low productivity and low incomes are the norm.

Interventions

  1. There is a broad spectrum of interventions needed to improve the livelihoods of small-scale farmers and maximise the opportunities for income generation in agriculture. This requires reliable financing, strong public sector support and an enabling environment for private sector investment, which will underpin the transformation from subsistence farmers to successful small businesses.
  2. Governments, with assistance from donors, must act to create the conditions that attract pro-poor private sector investment to secure and sustain the livelihoods of smallholder farmers. This by its very nature needs to be a long-term venture. The role of governments in kick-starting commercially-viable smallholder agriculture includes adequate investment in public goods that support smallholder agriculture, specifically agricultural extension services, rural roads, education, and irrigation and power supplies. Although private enterprise will drive investment in the agricultural sector, governments have an important role to play in facilitating an enabling business environment, including creating a favourable investment climate for farming, in which farmers can buy inputs, access credit and sell their produce more easily. 
  3. Ensuring that there are effective institutions to allocate and protect property rights is another component of government support for smallholder agriculture. Secure property rights are critical to incentivising productivity-enhancing investments in the land. With secure rights to the land on which they rely, smallholder farmers are also more likely to qualify for credit, which can facilitate important productivity-enhancing investments, such as improved irrigation.

Catalysing the business ecosystem

  1. Unlocking the potential of MSMEs and supporting smallholder agribusiness development is critical for building resilient and productive farming and food systems. In order to improve the business ecosystem for MSMEs, expanding access to knowledge, finance, technology, infrastructure and markets are essential. Local organisations, national governments, donors and companies all have a role to play in creating the enabling environment in which smallholders and the private sector can thrive together.
  2. The APPG will shortly begin the evidence gathering phase of an inquiry looking at the reforms and innovation necessary to increase smallholder engagement in supply chains. The policy and financial support, incentives and other measures necessary to enable smallholder agriculture and MSMEs to flourish, as well as how these can be implemented effectively, sustainably and at scale will be considered in depth. What the UK government is doing to support smallholder agribusiness development, the effectiveness of its interventions, and where its work can be improved or scaled up will be a key focus of this inquiry. The inquiry’s findings and recommendations will be published in June 2015.

Value-addition

  1. Value-adding services include sorting, grading, processing, post-harvest storage and distribution to markets. The African Centre for Economic Transformation (ACET) and the United Nations Industrial Development Organisation have heralded agro-processing as key to increasing agricultural productivity and thereby raising incomes and employment opportunities. The ACET 2014 African Transformation Report highlights the enormous of potential of agro-processing or ‘upgrading’, whereby productivity is increased and value is added through processing and production, to create jobs and increase incomes, especially for women and youth if appropriately targeted. In order to increase agro-processing small-scale producers and enterprises must be able to access the necessary technologies and skills and increase their access to markets.

ICTs

  1. Key to enhancing agriculture-based livelihoods is access to knowledge, training and market information. The recent APPG report ‘Harnessing the potential: ICTs and Knowledge Sharing in Agriculture’ (2014) advocates that ICTs (Information Communication Technologies) have the potential to improve the livelihoods of smallholder farmers, offering great opportunities to increase their productivity, incomes and resilience. Whilst less than 10% of farmers in Africa and South America have access to the internet, almost 90% have access to basic mobile technology, including SMS. This rapid increase in mobile communication enables farmers in even the most remote locations to receive timely and targeted agricultural advice bridging the information gap that conventional public extension services cannot span. In India only 6.8% of farmers get support from traditional extension services, and in Africa the average farmer to extension ratio is 4000:1.
  2. The APPG inquiry, which led to this report, heard that ICTs are already playing a critical role and are being utilised across the agricultural value chain offering access to information about inputs, agronomic practices, weather forecasts, pest control and the market as well as facilitating farmer-to-farmer knowledge exchange. In addition, ICT applications are providing access to financial services, mobile banking, micro-credit and micro-insurance. Whilst ICTs are not a panacea and there are significant challenges ensuring that the opportunities offered by ICTs are realised in an inclusive way, ICTs are powerful tools in dispensing knowledge across vast distances.

The role of DFID and the UK

  1. The APPG would like to see DFID, and other funders, supporting smallholder agribusiness development and MSMEs. DFID support for smallholder agribusiness development will come under scrutiny in the forthcoming APPG inquiry detailed earlier in this submission.
  2. The APPG was disappointed to note that DFID did not acknowledge the critical role of agriculture and smallholder agribusiness development in their publication: ‘Economic development for shared prosperity and poverty reduction: a strategic framework’ (2014). Going forward the APPG would like to see DFID explicitly acknowledge the importance of agriculture in poor rural communities and the transformative impact of investment in small-scale agriculture and agribusiness on rural economies and the livelihoods of small-scale farmers.
  3. The UK has world-leading expertise in many of the areas that facilitate creation of jobs and improved livelihoods through smallholder agribusiness development in developing countries. This includes British expertise from think tanks, universities, research institutes, NGOs, etc. Sharing UK expertise and strengthening working across government can maximise the wider UK contribution to this important area.