The Strategic Importance of Smallholders

The Strategic Importance of Smallholders

There has been much talk in Davos this week about how to achieve the UN Sustainable Development Goals, and a growing recognition of the important role that the private sector can play. This is especially evident when thinking about food security, as seen through Deloitte Touche Tohmatsu Limited’s (Deloitte Global) collaboration with the World Economic Forum’s (the Forum) Global Challenge on Food Security and Agriculture.

Did you know that 75 percent of all hungry people live in rural areas—particularly in the villages of Asia and Africa? Globally, employment in agriculture is associated with the highest sectoral incidence of families living below the poverty line. Poor environmental management, climate change, and other ecosystem shocks can leave communities that are dependent on a single form of subsistence extremely vulnerable. Moreover, the isolation of many poor rural communities limit farmers’ access to technology, markets and basic financial services.

This vulnerability is not isolated to these communities. Smallholders produce about 80 percent of food consumed in the developing world and serve as custodians for about 75 percent of all agricultural resources globally. Moreover, private companies in the agricultural sector are dependent on smallholder farmers—as both producers and consumers. The state of these farms govern stability within companies’ value chain and the long-term viability of their businesses, particularly in terms of quality and environmental sustainability. Smallholders are responsible for maintaining soil health, managing water and chemical usage, and producing high quality crops that will feed consumers. As the predominant form of agriculture, small farms play a critical role in global environmental sustainability and economic stability.

It therefore is prudent for companies to invest in these farms and their surrounding communities – and not just companies from the inputs or food and beverage sectors, but also companies from enabling sectors such as finance, information technology, and logistics. Doing so would fulfill a dual mandate. First, by engaging with smallholder farms, companies can help to ensure the sustainability and stability of their business operations over the long-term, and generate a deeper understanding of their producer and customer bases. Second, by making these investments, companies can assist in alleviating poverty, hunger and malnutrition—creating value for communities and their own organizations.

Companies are increasingly taking a holistic approach to smallholder engagement, recognizing that these business and social goals can only be achieved through a true understanding of smallholder constraints. While every local context is different, common challenges include a lack of training and education in farming best practices and technologies, a lack of access to credit, insurance and other financial services, and a lack of information on weather, market prices and other information that could help farmers maximize production decisions. Many promising and scalable models - from mobile money to infrastructure investment - are emerging to combat the distinct challenges of inclusive business models, as detailed in Deloitte India’s (Monitor Deloitte) “Beyond the Pioneer” report. New models for “pre-competitive collaboration” and multi-stakeholder partnership, as described in the Forum’s New Vision for Agriculture’s Guide to Country-Led Action launched this week at Davos, highlight the power of collective action by multiple sectors and stakeholder groups.

More and more companies are taking these models beyond the Corporate Social Responsibility (CSR) department and integrating them into long term strategies, proving that a sound, sustainable business strategy means looking beyond today’s bottom line. Such approaches to inclusive business are essential to ensure food security, environmental sustainability and economic opportunity for all.

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Grantley Morgan

Future of Work Analyst, Advisor, Speaker, Thinker

8y

Timely post given our conversation yesterday Felix Frahm

Mihai T.

Revenue and Growth Management Consultant

8y

Thanks Shay for the posting. This is at the heart of Syngenta's Good Growth Plan: http://www.syngenta.com/global/corporate/en/goodgrowthplan/commitments/Pages/empower-smallholders.aspx

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