4
Sustainable agriculture and rural development (SARD) focuses on improving rural livelihoods and satisfying the economic, social and cultural needs and aspirations of the present generation without endangering the ability of future generations to do the same. The success of SARD depends mainly on expanding the rural economy which in turn depends essentially on the viability, profitability and sustainability of agricultural and non-agricultural enterprises. This Policy Brief deals with the major policy issues related to strengthening the economy which are trade, markets, productive options, technology, natural resource and environmental management, human resource management, entrepreneurial capacity, effective institutional frameworks and capacity. Policy issues Free and fair trade Free trade in agriculture can benefit developing countries, provided they have human, infrastructural and technological capacity to enable their agriculture to compete internationally. A number of OECD countries favour free trade but actually protect and subsidize their agriculture. Many developing countries have so far not benefited from trade liberalization, or have benefited only marginally. There are increasing pressure and incentives to jump on the free-trade bandwagon. Many poor, food-importing countries are frustrated by the lack of access to industrialized countries’ markets, and are sceptical of freer trade policies which would de-protect their staple food production. They are supported in this view by international NGOs and some International Finance Institutions (IFIs). They would prefer a focus on a development agenda and more emphasis on fair terms of trade between producers in developing countries (for better and stable incomes and livelihoods) and the consumers in developed countries (for safe, healthy and quality food). Production and income-generation Within the trade-environment framework set by central governments, the major policy challenges affecting production and income generation by small farmers and the rural poor are often the following: Promoting equitable access to assets (land, water and other natural resources, credit, and technology), particularly enabling the rural poor, the landless and women to gain access to land which often is a prerequisite to access to credit and other resources. Promoting access to markets through development of roads, transport, information, communication. Understanding and promoting competitiveness – by using technological innovations to lower cost and increase efficient use of scarce resources - and realizing local potentials, within the framework of a proper, home-grown strategy. Identifying opportunities to diversify agriculture, produce high-value commodities, develop new or niche markets, and promote small enterprises. SARD – Sustainable Agriculture and Rural Development – is a people-centred approach that focuses on improving livelihoods and satisfying the needs of current and future generations. It strives to orient policy, institutional and technological change for the sustainable management of agriculture, forestry, fisheries, natural resources, and other rural activities. It rests on four pillars: environment, economic, social and cultural. Briefs in this series: 1. Sustainable Agriculture and Rural Development: the Policy Challenge 2. Engaging stakeholders in policy development for agriculture and rural development 3. Strengthening sustainable agricultural and rural enterprises 4. Decentralization and sustainable agriculture and rural development 5. Some policy priorities for sustainable agriculture and rural development 6. Participatory monitoring and evaluation for sustainable agriculture and rural development 7. Information note on SARD Farming System Evolution Guidelines The SARD-Farming Systems Evolution project is supported by the governments of France and Japan 3. Strengthening sustainable agricultural and rural enterprises SARD BRIEF This SARD brief is based on the SARD-Farming Systems Evolution project of the Rural Development Division of FAO, which studied major farming systems in Honduras, Mali and the Philippines to find ways to improve policies and institutions to achieve sustainable agriculture and rural development (SARD).

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Page 1: Policy issues

Sustainable agriculture and rural development (SARD) focuses on improving rural livelihoods and satisfying the economic, social and cultural needs and aspirations of the present generation without endangering the ability of future generations to do the same. The success of SARD depends mainly on expanding the rural economy which in turn depends essentially on the viability, profitability and sustainability of agricultural and non-agricultural enterprises.

This Policy Brief deals with the major policy issues related to strengthening the economy which are trade, markets, productive options, technology, natural resource and environmental management, human resource management, entrepreneurial capacity, effective institutional frameworks and capacity.

Policy issuesFree and fair tradeFree trade in agriculture can benefit developing countries, provided they have human, infrastructural and technological capacity to enable their agriculture to competeinternationally. A number of OECD countries favour free trade but actually protect and subsidize their agriculture. Many developing countries have so far not benefited from trade liberalization, or have benefited only marginally. There are increasing pressure and incentives to jump on the free-trade bandwagon.

Many poor, food-importing countries are frustrated by the lack of access to industrialized countries’ markets, and are sceptical of freer trade policies which would de-protect their staple food production. They are supported in this view by international NGOs and some International Finance Institutions (IFIs). They would prefer a focus on a development agenda and more emphasis on fair terms of trade between producers in developing countries (for better and stable incomes and livelihoods) and the consumers in developed countries (for safe, healthy and quality food).

Production and income-generationWithin the trade-environment framework set by central governments, the major policy challenges affecting production and income generation by small farmers and the rural poor are often the following:• Promoting equitable access to assets (land, water and other natural resources, credit, and technology), particularly enabling the rural poor, the landless and women to gain access to land which often is a prerequisite to access to credit and other resources. • Promoting access to markets through development of roads, transport, information, communication.• Understanding and promoting competitiveness – by using technological innovations to lower cost and increase efficient use of scarce resources - and realizing local potentials, within the framework of a proper, home-grown strategy.• Identifying opportunities to diversify agriculture, produce high-value commodities, develop new or niche markets, and promote small enterprises.

Market development has to be considered as a central pillar of rural institutional development. Rural markets are largely inadequate for inputs and products, labour, land ownership and rent, water resources, capital, credit and insurance. Even if they do exist, stakeholders often lack information on markets and prices. Infrastructure and expertise for storage, processing and marketing of local products is often lacking; this causes products to be drained from the area as low-priced raw materials rather than being processed locally. Adding value is vital to boost employment and income.

Access to resources, such as land and water for local producers, with special attention to women, and the information and rules concerning their tenure need to be addressed. Conversion of land from agricultural to non agricultural use is also an issue, because it can hamper or foster local economic development. Key considerations include improving land-use planning, developing cadastres, improving land titling and enforcing property rights, developing markets for land rental or property, enacting land reforms (redistributive or market-based) or enforcing water laws.

Savings, credit and insurance services, remittances from migrants. Structural adjustments and the removal of subsidies have reduced farmers’ access to credit. Many local state-supported rural banks have closed. Formal bank credit and insurance are non-existent, or out of reach for small-scale farmers. Quite often, land tenure and property rights systems are weak and do not allow for the guarantees needed to obtain conventional credit, especially for the vulnerable groups, women and landless farmers. Some alternative credit and saving mechanisms have emerged; they include NGOs handling financial services and other micro-finance institutions. Remittances can be an important source of investment in production, and policies can be shaped to ease their transfer and facilitate their productive use in relation to SARD.

Information and communication technologies and other production-related infrastructure. The Internet and mobile phones are efficient ways to link rural areas with markets and to enable the development of new markets. Investment is also required in other productive infrastructure such as roads and energy.

Local taxes and incentives. The management of business/professional taxes, land taxes, “sin” taxes (alcohol, gambling, etc.) and the creation of incentives such as tax exemption or export promotion zones for external investors and newcomers are proven ways to attract them.

Strengthening small farmer/producer/rural worker organizations. These organizations can contribute effectively to many of the above. In a globalizing environment, small-scale farmers need ways to enhance their bargaining power in markets and in negotiations with the government and other stakeholders, promote economies of scale, and appropriate best practices in key operations (for example, compliance with food quality, health and safety standards). Organizing can enable them to do this. They can also influence the research and extension agenda, influence policy making, and force institutions to be accountable. They can build effective partnerships with government, the business community and external donors.

Expected benefits By making clear, explicit choices among these policy and institutional options, decision makers will strengthen the potential for enterprise development.• The local “rules of the game” will be clearer for local entrepreneurs and potential external investors. • Incentive frameworks will enhance the attractiveness of the area for external investors.• Efforts to add value and create wealth will be based on local production, and ensure that the economy benefits and enterprises develop nearby. Small farmers and marginalized groups can play a key role in this, and can reap the benefits.• Natural resource management can be improved by enhancing land-use planning, enforcing property rights and rules on access to natural resources, and taking advantage of marketing options for environmental, carbon sequestration, watershed, rural and agri-tourism and cultural services. Such improvements prove much more effective when they are community-based, rooted in participatory and negotiated processes among users.

The SARD-Farming Systems Evolution project of FAO (GCP/INT/819/MUL) aims to strengthen the ability of government and non-government stakeholders to improve policies and institutions to achieve sustainable agriculture and rural development (SARD).

The project studied how selected farming systems in Honduras, Mali and the Philippines had evolved over the long term. It identified their driving forces, current strengths and weaknesses, and outlined future policy priorities and actions for sustainable agriculture and rural development.

The project used participatory, bottom-up approaches to ensure that the views of stakeholders at all levels, including local people, were taken into account, and integrates the cultural, social, economic and environmental dimensions in the analysis of sustainability.

The SARD-FSE project, supported by the governments of France and Japan, was implemented with the Programme for Sustainable Agriculture on Sloping Lands of Central America (PASOLAC) in Honduras, the Institute of Rural Economics (IER) in Mali and the Asian NGO Coalition for Agrarian Reform and Rural Development (ANGOC) in the Philippines.

SARD-Farming Systems Evolution projectFood and Agriculture Organization of the United NationsViale delle Terme di Caracalla, Rome, Italywww.fao.org/sard

3. Strengthening sustainable agricultural and rural enterprises

SARD – Sustainable Agriculture and Rural Development – is a people-centred approach that focuses on improving livelihoods and satisfying the needs of current and future generations. It strives to orient policy, institutional and technological change for the sustainable management of agriculture, forestry, fisheries, natural resources, and other rural activities. It rests on four pillars: environment, economic, social and cultural.

Briefs in this series:

1. Sustainable Agriculture and Rural Development: the Policy Challenge2. Engaging stakeholders in policy development for agriculture and rural development3. Strengthening sustainable agricultural and rural enterprises4. Decentralization and sustainable agriculture and rural development5. Some policy priorities for sustainable agriculture and rural development 6. Participatory monitoring

and evaluation for sustainable agriculture and rural development

7. Information note on SARD Farming System Evolution Guidelines

The SARD-Farming Systems Evolution project is supported by the governments of France andJapan

SARD BRIEF

3. Strengthening sustainable agricultural and rural enterprises

SARD BRIEF

This SARD brief is based on the SARD-Farming Systems Evolution project of the Rural Development Division of FAO, which studied major farming systems in Honduras, Mali and the Philippines to find ways to improve policies and institutions to achieve sustainable agriculture and rural development (SARD).

Page 2: Policy issues

3. Strengthening sustainable agricultural and rural enterprises

3. Strengthening sustainable agricultural and rural enterprises

SARD BRIEF SARD BRIEF

MORE INFORMATION• FAO, SARD-FSE case studies and regional workshops, www.fao.org/sard• FAO Asia and Pacific Region, www.fao.org/world/ regional/rap/susdev_rural_ devt_activities.asp• C.K. Prahalad and S.L. Hart, 2004. The fortune at the bottom of the pyramid. www.digitaldividend.org/ pdf/bottompyramid

• Identifying ways to support local post-harvest processing to add value to the commodity, and to promote local quality products.• Identifying possibilities to diversify economic activities to boost the local economy, reduce poverty and manage the environment.• Encouraging investment in non-agricultural activities such as rural industries, tourism and other services, through promotion and incentive schemes, as well as improved infrastructure, energy and skills development.

Environmental protectionMajor challenges in the environment encompass:• Identifying ways to promote rural ecotourism and use it to support natural resource management and protection.• Mobilizing technological innovations such as renewable energy and sustainable agricultural practices to improve the management and use of local resources.• Promoting payments for natural resource conservation, environmental, watershed, water quality and wildlife management services (e.g. through the Kyoto Protocol).• Enforcing laws on the ownership, use and conservation of land, water, forests and biodiversity. • Enhancing land-use planning for sustainable development and environmental management.

Other critical issues• Strengthening human and social capital through education, entrepreneurship and agri-food business management, paying special attention to gender equity.• Covering the other basic and vital needs of farmers, other producers, rural workers and marginalized groups such as women, youth and indigenous people.

Policy options and priorities

At the macro levelPolicy objectives should be designed primarily to boost the local economy (i.e. primary production, industries and services), picking options that best match local resources and future development trends.

National government policy makers are primarily responsible for macro policy decisions that are relevant to SARD, in particular exchange rate and trade policies. In the latter connection, regional or sub-regional free-trade agreements can play an important role, since they can boost domestic and sub-regional trade, or help in selectively protectingsensitive products (e.g. UEMOA in West Africa, DR-CAFTA in Central America, and ASEAN in Asia).

At the sectoral and subsectoral levelsAt the domestic sectorial level, and in the above macro context, decision makers should compare the strengths and weaknesses of each of the following economic sub-sectors, in relation to their local development priorities and plans:

Traditional agricultural exports (small, medium and large farming units). Their prices are often unstable or declining. Abandoning traditional exports has high costs. It oftenrequires transforming the sector to cater to new production and marketing norms. To substitute for conventional coffee, for example, Honduras explores agro-forestry

options, organic and special coffees, appellations of origin, diversification with fruits and apiculture. Countries may have to rely on a traditional export (such as cotton in Mali) in the short term because few other options are available, or because the switch would demand technology, market or policy changes.

Traditional food production (small farms). Staple food production is concentrated into subsistence farming units and is associated with poverty. Unattractive prices do not stimulate production and wealth creation: farmers grow so they can merely survive. In some cases (e.g. rice in the Philippines), the potential exists to enhance productivity through irrigation or improved varieties. In other cases (cereals and tubers in Mali) such potential is limited. Rural communities can add value to traditional food production by engaging in value-adding packaging, processing or developing new products from or recycling their by-products.

Non-traditional exports or high-value products for national markets (small farmers and others, traders, exporters). Opportunities linked to new export markets or new high-value products for national urban markets must be studied. They include flowers, fruits, vegetables and livestock for export, niche, organic or fair trade markets; supply to national or international supermarkets through contract farming, supply to hotels and restaurants, “functional foods” (herbs, dietetic products), organic products, typical local products that can be labelled to show their quality and origin (“Geographical Indications”) and protected internationally under the trade-related aspects of intellectual property rights (TRIPs) agreement of the World Trade Organization.

Non-agricultural rural activities (all local stakeholders). Agri-tourism can offer significant win–win benefits for all stakeholders – farmers, tour operators, NGOs, businesses, and local governments. It can generate income and foreign exchange, increase public revenues, and promote infrastructure development. It should be managed in a socio-culturally responsible, businesslike and environmentally sustainable manner. Rural factories (e.g. sewing factories in Honduras) can boost local employment and the local economy, and benefit a wide range of stakeholders. Some countries (such as China) have chosen them as a major rural development mechanism. Developing such factories requires incentives and political will from the central government, as well as an enabling local environment in terms of electricity, transport infrastructure, information and communication technology. Environmental services. These embrace a wide array of possibilities, including the creation of protected areas, payments for carbon sequestration services for reforestation and other natural resource management programmes that qualify for the Kyoto Protocol market mechanisms, watershed services (water quality, erosion, salination and siltation control), and wildlife control and management.

Non-agricultural and non-rural options (enterprises, small farmers and other stakeholders): Migrating away from the area seasonally or permanently is a good option for the poor, educated young people – and even some local entrepreneurs faced with declining markets or export prices. Non-agricultural and non-rural options can bring benefits to the rural area: less pressure on limited natural resources, inflows of remittances, new rural–urban linkages and opportunities, and less pressure on local social services. Local and central governments can create further incentives (such as training for departing migrants, and incentives for them to get established elsewhere), which can be seen as an investment for local development, provided they send back remittances or resettle with newly acquired skills.

At the institutional level:The development of the various sub sectors above has to be sustained and accompanied by initiatives that can strengthen local institutions, particularly in terms of focusing on gender and youth issues. Key options include the following:

Education and training are major drivers of medium- and long-term change in rural areas. Literacy and numeracy, college-level skills development, and education for ruralpeople are vital to diversify economic activities. Universities should adapt curricula and research and development programmes to better suit income-generation priorities.

Promoting Organic Farming “From Seeds to Shelves”

Rural enterprisein Nicaragua

Rural mechanization in Nicaragua

Bread and pastry shopestablished by a women’s

cooperative in Mexico

Investment in ruralindustries in the Philippines

Page 3: Policy issues

3. Strengthening sustainable agricultural and rural enterprises

3. Strengthening sustainable agricultural and rural enterprises

SARD BRIEF SARD BRIEF

MORE INFORMATION• FAO, SARD-FSE case studies and regional workshops, www.fao.org/sard• FAO Asia and Pacific Region, www.fao.org/world/ regional/rap/susdev_rural_ devt_activities.asp• C.K. Prahalad and S.L. Hart, 2004. The fortune at the bottom of the pyramid. www.digitaldividend.org/ pdf/bottompyramid

• Identifying ways to support local post-harvest processing to add value to the commodity, and to promote local quality products.• Identifying possibilities to diversify economic activities to boost the local economy, reduce poverty and manage the environment.• Encouraging investment in non-agricultural activities such as rural industries, tourism and other services, through promotion and incentive schemes, as well as improved infrastructure, energy and skills development.

Environmental protectionMajor challenges in the environment encompass:• Identifying ways to promote rural ecotourism and use it to support natural resource management and protection.• Mobilizing technological innovations such as renewable energy and sustainable agricultural practices to improve the management and use of local resources.• Promoting payments for natural resource conservation, environmental, watershed, water quality and wildlife management services (e.g. through the Kyoto Protocol).• Enforcing laws on the ownership, use and conservation of land, water, forests and biodiversity. • Enhancing land-use planning for sustainable development and environmental management.

Other critical issues• Strengthening human and social capital through education, entrepreneurship and agri-food business management, paying special attention to gender equity.• Covering the other basic and vital needs of farmers, other producers, rural workers and marginalized groups such as women, youth and indigenous people.

Policy options and priorities

At the macro levelPolicy objectives should be designed primarily to boost the local economy (i.e. primary production, industries and services), picking options that best match local resources and future development trends.

National government policy makers are primarily responsible for macro policy decisions that are relevant to SARD, in particular exchange rate and trade policies. In the latter connection, regional or sub-regional free-trade agreements can play an important role, since they can boost domestic and sub-regional trade, or help in selectively protectingsensitive products (e.g. UEMOA in West Africa, DR-CAFTA in Central America, and ASEAN in Asia).

At the sectoral and subsectoral levelsAt the domestic sectorial level, and in the above macro context, decision makers should compare the strengths and weaknesses of each of the following economic sub-sectors, in relation to their local development priorities and plans:

Traditional agricultural exports (small, medium and large farming units). Their prices are often unstable or declining. Abandoning traditional exports has high costs. It oftenrequires transforming the sector to cater to new production and marketing norms. To substitute for conventional coffee, for example, Honduras explores agro-forestry

options, organic and special coffees, appellations of origin, diversification with fruits and apiculture. Countries may have to rely on a traditional export (such as cotton in Mali) in the short term because few other options are available, or because the switch would demand technology, market or policy changes.

Traditional food production (small farms). Staple food production is concentrated into subsistence farming units and is associated with poverty. Unattractive prices do not stimulate production and wealth creation: farmers grow so they can merely survive. In some cases (e.g. rice in the Philippines), the potential exists to enhance productivity through irrigation or improved varieties. In other cases (cereals and tubers in Mali) such potential is limited. Rural communities can add value to traditional food production by engaging in value-adding packaging, processing or developing new products from or recycling their by-products.

Non-traditional exports or high-value products for national markets (small farmers and others, traders, exporters). Opportunities linked to new export markets or new high-value products for national urban markets must be studied. They include flowers, fruits, vegetables and livestock for export, niche, organic or fair trade markets; supply to national or international supermarkets through contract farming, supply to hotels and restaurants, “functional foods” (herbs, dietetic products), organic products, typical local products that can be labelled to show their quality and origin (“Geographical Indications”) and protected internationally under the trade-related aspects of intellectual property rights (TRIPs) agreement of the World Trade Organization.

Non-agricultural rural activities (all local stakeholders). Agri-tourism can offer significant win–win benefits for all stakeholders – farmers, tour operators, NGOs, businesses, and local governments. It can generate income and foreign exchange, increase public revenues, and promote infrastructure development. It should be managed in a socio-culturally responsible, businesslike and environmentally sustainable manner. Rural factories (e.g. sewing factories in Honduras) can boost local employment and the local economy, and benefit a wide range of stakeholders. Some countries (such as China) have chosen them as a major rural development mechanism. Developing such factories requires incentives and political will from the central government, as well as an enabling local environment in terms of electricity, transport infrastructure, information and communication technology. Environmental services. These embrace a wide array of possibilities, including the creation of protected areas, payments for carbon sequestration services for reforestation and other natural resource management programmes that qualify for the Kyoto Protocol market mechanisms, watershed services (water quality, erosion, salination and siltation control), and wildlife control and management.

Non-agricultural and non-rural options (enterprises, small farmers and other stakeholders): Migrating away from the area seasonally or permanently is a good option for the poor, educated young people – and even some local entrepreneurs faced with declining markets or export prices. Non-agricultural and non-rural options can bring benefits to the rural area: less pressure on limited natural resources, inflows of remittances, new rural–urban linkages and opportunities, and less pressure on local social services. Local and central governments can create further incentives (such as training for departing migrants, and incentives for them to get established elsewhere), which can be seen as an investment for local development, provided they send back remittances or resettle with newly acquired skills.

At the institutional level:The development of the various sub sectors above has to be sustained and accompanied by initiatives that can strengthen local institutions, particularly in terms of focusing on gender and youth issues. Key options include the following:

Education and training are major drivers of medium- and long-term change in rural areas. Literacy and numeracy, college-level skills development, and education for ruralpeople are vital to diversify economic activities. Universities should adapt curricula and research and development programmes to better suit income-generation priorities.

Promoting Organic Farming “From Seeds to Shelves”

Rural enterprisein Nicaragua

Rural mechanization in Nicaragua

Bread and pastry shopestablished by a women’s

cooperative in Mexico

Investment in ruralindustries in the Philippines

Page 4: Policy issues

Sustainable agriculture and rural development (SARD) focuses on improving rural livelihoods and satisfying the economic, social and cultural needs and aspirations of the present generation without endangering the ability of future generations to do the same. The success of SARD depends mainly on expanding the rural economy which in turn depends essentially on the viability, profitability and sustainability of agricultural and non-agricultural enterprises.

This Policy Brief deals with the major policy issues related to strengthening the economy which are trade, markets, productive options, technology, natural resource and environmental management, human resource management, entrepreneurial capacity, effective institutional frameworks and capacity.

Policy issuesFree and fair tradeFree trade in agriculture can benefit developing countries, provided they have human, infrastructural and technological capacity to enable their agriculture to competeinternationally. A number of OECD countries favour free trade but actually protect and subsidize their agriculture. Many developing countries have so far not benefited from trade liberalization, or have benefited only marginally. There are increasing pressure and incentives to jump on the free-trade bandwagon.

Many poor, food-importing countries are frustrated by the lack of access to industrialized countries’ markets, and are sceptical of freer trade policies which would de-protect their staple food production. They are supported in this view by international NGOs and some International Finance Institutions (IFIs). They would prefer a focus on a development agenda and more emphasis on fair terms of trade between producers in developing countries (for better and stable incomes and livelihoods) and the consumers in developed countries (for safe, healthy and quality food).

Production and income-generationWithin the trade-environment framework set by central governments, the major policy challenges affecting production and income generation by small farmers and the rural poor are often the following:• Promoting equitable access to assets (land, water and other natural resources, credit, and technology), particularly enabling the rural poor, the landless and women to gain access to land which often is a prerequisite to access to credit and other resources. • Promoting access to markets through development of roads, transport, information, communication.• Understanding and promoting competitiveness – by using technological innovations to lower cost and increase efficient use of scarce resources - and realizing local potentials, within the framework of a proper, home-grown strategy.• Identifying opportunities to diversify agriculture, produce high-value commodities, develop new or niche markets, and promote small enterprises.

Market development has to be considered as a central pillar of rural institutional development. Rural markets are largely inadequate for inputs and products, labour, land ownership and rent, water resources, capital, credit and insurance. Even if they do exist, stakeholders often lack information on markets and prices. Infrastructure and expertise for storage, processing and marketing of local products is often lacking; this causes products to be drained from the area as low-priced raw materials rather than being processed locally. Adding value is vital to boost employment and income.

Access to resources, such as land and water for local producers, with special attention to women, and the information and rules concerning their tenure need to be addressed. Conversion of land from agricultural to non agricultural use is also an issue, because it can hamper or foster local economic development. Key considerations include improving land-use planning, developing cadastres, improving land titling and enforcing property rights, developing markets for land rental or property, enacting land reforms (redistributive or market-based) or enforcing water laws.

Savings, credit and insurance services, remittances from migrants. Structural adjustments and the removal of subsidies have reduced farmers’ access to credit. Many local state-supported rural banks have closed. Formal bank credit and insurance are non-existent, or out of reach for small-scale farmers. Quite often, land tenure and property rights systems are weak and do not allow for the guarantees needed to obtain conventional credit, especially for the vulnerable groups, women and landless farmers. Some alternative credit and saving mechanisms have emerged; they include NGOs handling financial services and other micro-finance institutions. Remittances can be an important source of investment in production, and policies can be shaped to ease their transfer and facilitate their productive use in relation to SARD.

Information and communication technologies and other production-related infrastructure. The Internet and mobile phones are efficient ways to link rural areas with markets and to enable the development of new markets. Investment is also required in other productive infrastructure such as roads and energy.

Local taxes and incentives. The management of business/professional taxes, land taxes, “sin” taxes (alcohol, gambling, etc.) and the creation of incentives such as tax exemption or export promotion zones for external investors and newcomers are proven ways to attract them.

Strengthening small farmer/producer/rural worker organizations. These organizations can contribute effectively to many of the above. In a globalizing environment, small-scale farmers need ways to enhance their bargaining power in markets and in negotiations with the government and other stakeholders, promote economies of scale, and appropriate best practices in key operations (for example, compliance with food quality, health and safety standards). Organizing can enable them to do this. They can also influence the research and extension agenda, influence policy making, and force institutions to be accountable. They can build effective partnerships with government, the business community and external donors.

Expected benefits By making clear, explicit choices among these policy and institutional options, decision makers will strengthen the potential for enterprise development.• The local “rules of the game” will be clearer for local entrepreneurs and potential external investors. • Incentive frameworks will enhance the attractiveness of the area for external investors.• Efforts to add value and create wealth will be based on local production, and ensure that the economy benefits and enterprises develop nearby. Small farmers and marginalized groups can play a key role in this, and can reap the benefits.• Natural resource management can be improved by enhancing land-use planning, enforcing property rights and rules on access to natural resources, and taking advantage of marketing options for environmental, carbon sequestration, watershed, rural and agri-tourism and cultural services. Such improvements prove much more effective when they are community-based, rooted in participatory and negotiated processes among users.

The SARD-Farming Systems Evolution project of FAO (GCP/INT/819/MUL) aims to strengthen the ability of government and non-government stakeholders to improve policies and institutions to achieve sustainable agriculture and rural development (SARD).

The project studied how selected farming systems in Honduras, Mali and the Philippines had evolved over the long term. It identified their driving forces, current strengths and weaknesses, and outlined future policy priorities and actions for sustainable agriculture and rural development.

The project used participatory, bottom-up approaches to ensure that the views of stakeholders at all levels, including local people, were taken into account, and integrates the cultural, social, economic and environmental dimensions in the analysis of sustainability.

The SARD-FSE project, supported by the governments of France and Japan, was implemented with the Programme for Sustainable Agriculture on Sloping Lands of Central America (PASOLAC) in Honduras, the Institute of Rural Economics (IER) in Mali and the Asian NGO Coalition for Agrarian Reform and Rural Development (ANGOC) in the Philippines.

SARD-Farming Systems Evolution projectFood and Agriculture Organization of the United NationsViale delle Terme di Caracalla, Rome, Italywww.fao.org/sard

3. Strengthening sustainable agricultural and rural enterprises

SARD – Sustainable Agriculture and Rural Development – is a people-centred approach that focuses on improving livelihoods and satisfying the needs of current and future generations. It strives to orient policy, institutional and technological change for the sustainable management of agriculture, forestry, fisheries, natural resources, and other rural activities. It rests on four pillars: environment, economic, social and cultural.

Briefs in this series:

1. Sustainable Agriculture and Rural Development: the Policy Challenge2. Engaging stakeholders in policy development for agriculture and rural development3. Strengthening sustainable agricultural and rural enterprises4. Decentralization and sustainable agriculture and rural development5. Some policy priorities for sustainable agriculture and rural development 6. Participatory monitoring

and evaluation for sustainable agriculture and rural development

7. Information note on SARD Farming System Evolution Guidelines

The SARD-Farming Systems Evolution project is supported by the governments of France andJapan

SARD BRIEF

3. Strengthening sustainable agricultural and rural enterprises

SARD BRIEF

This SARD brief is based on the SARD-Farming Systems Evolution project of the Rural Development Division of FAO, which studied major farming systems in Honduras, Mali and the Philippines to find ways to improve policies and institutions to achieve sustainable agriculture and rural development (SARD).