Smallholders vs. Commercialization


When a country naturally endowed with agricultural riches that would be the envy of many other nations is always struggling with food security issues, it should be self evident that something needs to change.  Given the domination of the sector by smallholders, it is inevitable that we examine that model within the context of what is right for the nation.  Commercialization is certainly a possible alternative.  But is it the right one?

Editor’s note (8/1/2015): Ethiopia has been fortunate to not have had significant drought over the past decade but there are recent reports of failing rains across parts of the country.  The ability of commercial farms to better prepare for and cope with climatic variation is just one of the reasons why there should be a lot more balance between smallholders and commercial farms in Ethiopian agriculture.  And there hasn’t been anywhere near sufficient movement on this front since this article was first published in 2009.   

The ascendancy of the smallholder driven agriculture model in Ethiopia today isn’t working.  Not for the nation’s food requirements.  Not for exports.  Not even for the smallholders themselves who are in point of fact one of the most vulnerable demographics when inevitable drought followed by food shortages comes around.


An Urgent Debate

For some in Ethiopia, this particular topic may be taboo because of the political weight that it may carry.  After all, more Ethiopians by far are engaged in smallholder farming (80% of work force) than all other professions put together.  It should therefore not come as a surprise that hackles might be raised at any suggestion of a review of smallholder farming in Ethiopia.  But this is a debate that must be had because it isn’t simply about farmers but about what is right for an entire nation which has lived under the dark cloud of chronic food insecurity for as long as many of its citizens can remember.  Neither should there be an automatic assumption that any such debate threatens the livelihoods or the well being of the smallholder in Ethiopia.  In fact, no proposed solution could even be considered workable unless it aspired to achieve precisely the opposite.

Instead, this issue must be considered within the context of a national strategy that seeks to produce a quantum leap forward in leveraging Ethiopia’s enormous agricultural potential to not only eradicate food insecurity completely but also act as the primary driver of economic growth in the country for the foreseeable future.

Indeed the government’s current economic growth strategy as espoused in its Agricultural Development Led Industrialization (ADLI) framework proposes to do exactly that.  But it is a strategy that is inherently centered around “commercialization of smallholder agriculture” which although an admirable concept has not produced the desired results thus far.  In fact, there are fundamental challenges with this model that suggest it cannot do so in an acceptable timeframe.  Meanwhile, burgeoning population growth, increasingly volatile climatic variation and stagnant agricultural productivity continues to place millions of Ethiopians at risk of food insecurity year in and year out.  Hence the urgency of this debate in the hopes that it can produce a revised strategy for the accelerated growth of Ethiopia’s agriculture sector.

Inherent Challenges Of Smallholder Farming

© Binyam Mengesha

Smallholders in Ethiopia are mostly subsistence farmers.  Generally, they lack the know how to maximize usage of their land and protect it from degradation, do not have the financial capacity to use improved seed varieties or fertilizers and lack the market access or storage facilities to effectively utilize any surplus even if they were to produce it. And these are actually some of the simpler problems to solve.  In fact, there are certainly numerous examples where intervention by government projects or development organizations have produced good results in transforming some smallholders into viable commercial operations supplying their goods to local markets.  The CIDA funded IPMS Ethiopia and USAID’s ATEP program (implemented by Fintrac) are examples where successful interventions have been demonstrated.

But, while government and development assistance can go some way towards addressing some of the challenges smallholders face, it is less able to do so in the provision of assistance for irrigation schemes and light mechanization due to the tremendous costs that would be involved in doing so. Irrigation in particular, is especially critical for surviving the cyclical drought common in the country.  Cooperatives have been touted as a way of overcoming many of these obstacles and while these constructs may offer some hope for doing so, they are generally not a very efficient model and still lack the sufficient capacity to make the kinds of investments that the sector demands at the moment.

Cultural  attributes which do not promote a strong work ethic have also hampered smallholder productivity in some measure. Many of them demonstrate strong resistance to switching at least part of their output to cash crops from the subsistence crops they are normally focused on because there is such a strong identification of farming with their own survival needs.  Finally, smallholder farms are so small (generally 1-2 hectares) that once a farmer has tilled his land and sown seeds, there is not much for him or her to do besides occasional weeding, until harvest season comes around.

Medium And Large Scale Commercialization As A Jumpstart

ADLI actually has provisions within it for large scale commercial farming.  Many significant infrastructural investments by the government (roads, rural electrification, etc.) are in fact tied into this strategy of opening up new areas for such farming and linking them to markets for their goods.  But other elements of critical need for expanding commercial agriculture – such as access to capital particularly where Ethiopian investors/entrepreneurs are concerned – have not been focused on very much.

Genesis Farms in Debre Zeit

In some quarters, ‘commercialization’ in agriculture is a dirty word and large, multinational corporations are probably not the best ambassadors for it.  Still, there are clear benefits that this model can provide as can be easily demonstrated as in the example of  Brazil which is certainly one of the agricultural powerhouses of the world and is the 6th largest economy based largely on its agribusiness sector.  But commercialization isn’t by itself the panacea we seek.  It has problems of its own just like smallholder farming does.  It certainly is not the best way to preserve the biodiversity which gives Ethiopia such unique characteristics.  Nor is it likely to ensure that the benefits of Ethiopian agriculture are distributed in anything like a fair manner amongst those involved in the sector.  However, it is almost certainly the best and fastest way  by which to bring sizable amounts of investment in a scalable, market oriented model to the Ethiopian agriculture sector.  As such, it must be an integral and important element in an overall framework for the country in the interests of making the fastest possible progress towards eliminating food insecurity in Ethiopia.

The Best Of Both Worlds?

So the central challenge that we face as a nation is how to combine these models to reap the maximum benefit from our fertile lands, preserve our natural riches such as biodiversity while ensuring that our smallholders aren’t left behind in the wake of commercialization.  The answer may lie in building an integrated model that builds on smaller, commercial farms supplementing their own production with smallholders acting as outgrowers in exchange for technical and financial input from the commercial operatives.  Commercially based cooperatives so to speak.  In fact, many commercial operators are very willing to do this but have been hampered by smallholders who are frequently suspicious of and in many cases feel threatened by them.  But there are some examples where this integrated model has been shown to be very effective and could be the blueprints on which a national strategy could be formulated.  A successful model of commercial cooperatives could provide Ethiopia with the fastest path out of her chronic food insecurity while keeping most of the actors in the agriculture sector happy.

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