Forum: Economic Committee

Issue: Enhancing the role of smallholder producers in achieving food and

nutrition security

Student Officer: Maria Sergeeva

Position: Deputy Chair

Introduction

A continuously growing global population indicates that demand in the agricultural sector is

increasing, making the goal of nutritional security more challenging to achieve by 2030. Currently, an

estimated 40% of the world’s food supply is produced by smallholder producers (Food and Agriculture

Organization of the United Nations). The World Bank estimates there are 500 million smallholder

households globally adding to upwards of two billion people. This large percentage stipulates that the

key to achieving food and nutrition security lies within smallholder farmers.

Smallholder farmers operate in both developed and developing countries and regions. Around

two-thirds of farmers in the European Union are also considered smallholder producers operating on 5

or fewer acres of land (European Commission). However, the top ten nations reliant on agriculture as

their central sector are low-income countries (LIC) with the majority of their farming being small-scale

(Elisha Sawe). The issue materializes in the low income, crop insecurity, and poor access to tools and

technologies that small farmers in developing countries face. British economist Thomas Robert Malthus

theorized the Malthusian crash, where exponential population growth meeting the linear food production

growth will lead to disease, famine, and war. Finding sustainable farming practices and support of

smallholder producers will be crucial in pushing back the Malthusian crash and achieving goal 2 of the

Sustainable Development Goals.

The innovation and technological advancements made in the agricultural sector have a hard

time reaching smallholder producers. Instead, they commonly use old practices which decrease their

income and are not time or cost-efficient. Farmers may lose up to 40% of their harvest due to poor

storage conditions, therefore not having enough product to follow the market and sell when prices rise

(World Food Programme). This keeps small holder producers with little market competition and almost

no room for growth. Most of these farms are maintained by family households, occasionally hiring

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part-time workers during larger harvesting seasons. However, farmers bring little income as it is, and

pay forward small wages to the temporary workers, creating an unsustainable production cycle. As a

result, small farmers have a large contribution as their total supply amounts to around 40% of the

world’s food, however, little individual impact because of the sheer amount of workers employed in the

sector. If smallholder producers can be individually addressed to maximize their efficiency, then full food

and nutrition security would be a closer goal.

Definition of Key Terms

Smallholder producers

At the core of this report is smallholder producers which are relative to other farmers in the

agricultural sector of the nation. The FAO determines that criteria such as minimum size limits, area

of holding, area of arable land, area of temporary crops, number of livestock, number of livestock

over a certain age, quantity of output produced, the value of agricultural production, the quantity of

labor used and quantity of produce sold may be applied to define smallholder producers. For the

purpose of this debate, smallholder producers are assumed to operate on less than 2 hectares of

land and to be dependant on household members or temporary workers for the majority of the labor

(Khalil et al.)

Food and Nutrition Security

“Food security exists when all people, at all times, have physical and economic access to sufficient,

safe and nutritious food that meets their dietary needs and food preferences for an active and

healthy life.” (World Food Summit, 1996).

Agricultural Productivity

This is defined as the yield per hectare or the ratio of agricultural output, defined as a given amount

of outputs to a given amount of inputs. (See as a measure of efficiency for food production).

Informal Economy

The informal economy refers to all economic activities by workers and economic units that are – in

law or practice – not covered or insufficiently covered by formal arrangements or not counted in the

GDP. This does not include the illicit or black market (OECD and Organization). Many smallholder

producers are a part of the informal economy which makes them ineligible for government support.

Post-Harvest Storage

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Post-Harvest Storage is the handling of the stage of crop production following the harvest where the

crop is cleaned, stored, and packed. Because of the short product life of the agricultural sector,

post-harvest storage and processing determine the final quality of the product and whether it is

suitable for consumption/sale.

Commercial-Scale farmers

Commercial farming focuses on harvesting crops or animal production to export or sell the product in

large quantities for profitable reasons. These commercial-scale farmers have sufficient machinery,

human capital, and land to maximize revenue in the agricultural sector. Companies have the

revenue to invest in innovation and have the potential to work with smallholder producers (Miller).

Poverty

Poverty is the state of one who lacks a usual or socially acceptable amount of money or material

possessions. Each nation has its own poverty threshold that differs because of the economic stage

of the country. This is because of the different standards of living between all Member States. It is

important to note that most smallholders are under the poverty line in their respective countries.

Value Chains

A value chain is a business model that describes the full range of activities needed to create a

product or service. It describes the value-added within the inclusion of all production aspects that go

into a product. Meaning the value at the production of raw materials, taking then the value-added at

transportation and so on. Strong value chains mean that smallholder farmers would be able to feel a

secure connection to a market.

Background Information

When taking a holistic view of the smallholder farmer economy, many factors affect the

development and successful livelihood of these farmers. The agricultural industry is one of the oldest and

largest of all time, and two-third of developing countries’ citizens are employed in this industry (Roser).

Because of the low barriers to entry - starting a business in agriculture is an easier source of income to

many impoverished citizens, as well as the existing culture that encourages continuing family practices.

This cycle leads to generational employment in farming with old technologies, outdated practices, and

techniques that give small farmers little ability to improve their agricultural productivity. To sustainably

address the issue of ameliorating and maximizing efficiency in smallholder farmers, one must provide

newer and better technologies, improve their production cycle, and connect them to the national private

sector.

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The role of technology and tools in supporting smallholder producers

Over the past few years, there have been breakthroughs in the technological aspects of

enhancing agriculture. The issue here is that smallholder farmers keep and harvest their produce on

smaller plots of land compared to larger and more commercial businesses. Most small farmers are

unable to reap the benefits of these tools, both because of inadequate production, distribution, and lack

of utilization knowledge. As a result, this not only widens the gap between the low production of

smallholders and commercial-scale farmers but also limits the productive capabilities of the market.

Precision agriculture

Many smallholder farms in operation use techniques that are passed down from generation to

generation, using obsolete methods that prioritize routine instead of effectiveness or efficiency.

Using precision agriculture methods has the potential to lower the amount of manual labor

needed while increasing the productivity of crops. Temperature and moisture detectors, GPS

technology, and automated systems are some of the many advancements that allow

agricultural firms to prosper and yield a significant amount of crop, yet can also be used by

smallholders to boost their efficiency and quality of goods. Irrigation is another vital factor that

only very few smallholder producers can obtain - irrigated crops yield twice the agricultural

productivity compared to unirrigated ones. Incorporating all sorts of technology does not

equate to smallholders growing and transforming into bigger companies, instead, it would

make them more competitive within the market.

Distribution of tools

Especially during the pandemic, it has been harder than ever for smallholders to purchase

tools and machinery for the health of their crops. Technology has allowed both the local and

international distribution of tools to be more organized and logistical so that more smallholders

have access to them. Inventory management is also more efficient, where information about

inventory levels and product management can predict order amounts while reducing costs and

human error. With the use of GPS, distribution managers can use technology to select the

fastest route of delivery to the largest number of smallholders in demand. However, with a lack

of communication technology in lower-income countries paired with relatively expensive

operating costs, smallholders have still been struggling to keep up with targeted production

yields.

Education

Technology as a single factor will not be able to achieve food and nutrition security. Education

regarding the different tools available to farmers and how to utilize them is a major part of

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supporting and increasing efficiency, as well as food health. Smallholder farms in Malawi,

whose economy is 80% reliant on the agricultural sector, have been slow to incorporate new

technology for their steadings. The usage of fertilizer is positively correlated with more

educated farmers. This can also be seen in Nigeria, where smallholder farmers who are more

educated use fertilizers, pesticides, and plant genetics, allowing them to produce a higher

quality and more plentiful yield. In LICs, where most of the economy is in the primary sector,

improving education is a key factor in achieving food security and boosting the economy.

Private Sector Cooperation

Government, UN, and international support in terms of funding and opportunities are,

unfortunately, not limitless. Therefore, the work the UN is currently doing in LDCs such as Ecuador,

Lebanon, and Bangladesh will eventually conclude. To maintain continuity in the impact of the UN and

other international organizations, the need to connect smallholder producers to domestic markets, other

suppliers, and financial aid is highly crucial to sustainably address this issue.

Banking and Safe Financial Models

According to the case research done by the Consultative Group to Assist the Poor (CGAP),

various smallholder farmers reported losing the majority of their income due to poorly

regulated deals. This could be in the form of deals with producers who claim to supply a

service or buy the harvest and do not follow through on deals which can waste an entire yield

of crop (CGAP). For a population living in some African LDCs, on less than $0.40 - $0.50 a

day, earning $80 - 90 dollars per year is considered a successful harvest, however,

smallholders report losing 70%-80% of their potential earnings (UNCTAD). Loss of business

confidence perpetuates a pattern of utilizing known methods, maintaining small risk factors

that potentially stunt their development, and in turn, agricultural productivity. For an industry to

successfully develop, smallholders need an environment where they feel safe conducting

deals and gaining investment through interaction with other suppliers. Research from the FAO,

concludes that the improvement of the current system is crucial because insurance and credit

are either entirely missing or poorly functional. Since the 1980s, the world has seen a large

decline in investment from the public sector, such as government, into smallholder producers.

Instead, much of the agricultural investment has been going towards commercial-scale farms

(Swaminathan). This is due to reasons such as large farm investment into technology,

provision of higher job stability, and easier communication. As a result, many of the subsidies,

direct provision, and government aid have been directed toward commercial farms, while

neglecting smallholders. However, even when grants have been provided through smallholder

support schemes, the success of one year does not predict the other or guarantee long-term

results (Ripley). In terms of banking, there is a similar attitude towards investments and loans

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given to smallholders from banks. This is due to the distance between smallholders,

insufficient information on how to obtain financial services, low security for payback, no

insurance policies, and underdeveloped communication and transportation infrastructure

(Langyintuo). The World Bank reports that African nations employ about 55% of the population

in the agricultural sector, while approximately 1% of bank lending goes there. It highlights that

these disproportionate statistics apply primarily to farmers in loose value chains. Research

has been invested mostly in smallholders who have the opportunity to engage with the market,

however, the World Bank claims the key in agricultural development lies in those smallholder

farmers who have little to no access to financial services and loans (Varangis and Kioko).

Connection to Markets

UN intervention and international aid cannot be sustained indefinitely, so the importance of

creating reliable connections to domestic and international markets for smallholder producers

is vital in generating revenue. Larger revenue can also mean the diversification of income as

farmers have more investment in other ventures, therefore making their livelihood more

secure (World Food Programme). Mostly due to a lack of information, smallholders are not

able to access potential markets. There is asymmetric information on the prices and

supply/demand of the market which may lead them to not being able to capture seasons that

have higher prices or face exploitation from middlemen. While connecting smallholder farmers

into value chains of production may significantly boost their productivity and revenue, larger

cooperation and markets may underprice the harvest and take advantage of smallholder

producers (Committee on World Food Security) . Therefore, schemes from the International

Labor Organization (ILO), FAO, and United Nations Environment Program (UNEP) all highlight

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the importance of not only connection to markets but ensuring there is transparency and

reliable information available to small farmers to form the connection.

Improving the Production Cycle

The Production Cycle is defined as the set of business activities and operations that go into the

manufacturing of products. This involves all products, whether it be manufactured in a factory, digitally, or

naturally in a farm. In regards to the agricultural sector, the production cycle regards the crop-field prep,

planting, harvesting, storing, delivery to markets, receiving crop sale compensation, buying for the next

harvest cycle, then repeat. Naturally, with such a long and lengthy production cycle for crops/foods, it is

inevitable that this cycle is not perfect. There are places in the cycle that do not properly operate or are

too costly for producers like smallholders to maintain for a long time. Improving this cycle for smallholder

producers should be a focus in regards to strengthening food security.

(AFG, 2019)

Losses

The biggest difference in smallholder farms in comparison to commercial farms is that there is

a drastically different system in which they operate. Not just with larger farms but in

comparison to other jobs as a whole. Many smallholder farmers are excluded from a multitude

of financial services that developed firms would be privy to (Fan). In fact, most farmers are

excluded from productivity-enhancing financial services, such as loans and saving accounts,

and are thus unable to secure much-needed capital that goes to fight against adversity and

shocks that occur naturally (Fan).

Another reason for the lack of financial support towards smallholder farms administratively is

because of the nature of the farms themselves. The production level is dependent on

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non-controllable factors such as the weather, or pests. That would affect the willingness of the

already infrastructurally weak rural banks to lend support. These should all be considered

when making suggestions for improvement because there are factors that are out of human

control.

Aspects to improve

In regards to the specific aspects of the production cycle that are impacting smallholder

producers, there are quite a few. The biggest flaws of the production cycle right now are the

pricing/payout issues of the market to producers (Fan, Rue). The output of production versus

the payout received by markets is resulting in smallholder producers taking losses, or being

unable to sustain an expansion of production scale. For producers such as smallholders,

earning a proper profit is vital, as they want to expand their business, or sustain their business

for their families. In a society where everyone seems to be driven by monetary gain, looking

for ways to cut corners in terms of production costs to maximize profit seems to be more and

more common. This seems to be the case for markets as they underpay smallholders for

crops, in order to gain a larger monetary profit in resale.

Another aspect that should be considered for improving the production cycle is worker wages.

An extension of the previous loss, because of the loss of profit, smallholders do not have the

capacity to pay full-time all-year workers. They tend to rely on works with familial ties, or those

who are temporary and can therefore be charged for less. If this can be corrected, there will

be an increase in demand for jobs in smallholder farms, which will then allow smallholders the

manpower to expand and continue the business, should the market payout problem be

addressed. Improving the treatment and role of women would also be key in enhancing

smallholder production. It is estimated that women grow around 70% of agriculture output in

Africa, however, less than 20% of the land is owned by women (Abass). In Kenya, 65% of the

land is owned by the local or regional governments that limit property rights. Empowering

women to have equal rights and compensation would improve the output of smallholder

production holistically.

Major Countries and Organizations Involved

Food and Agriculture Organization of the United Nations (FAO)

The Food and Agriculture Organization of the United Nations is a specialized agency concerned

with defeating hunger and achieving food and nutritional security for all since 1945. The organization

leads international efforts in collaboration on issues related to sustainable agriculture, climate change

effects, and child hunger, as well as focus on support directed toward smallholder nutrition. FAO has

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hosted the Food System Summits this September, as well as other Food Summits since 1996. In

addition to leading UN collaboration, they lead direct schemes in smallholder support in Latin American

and African countries, especially during COVID-19 times. The FAO recognizes the importance of

smallholder productivity in achieving food and nutritional security, and therefore their efforts also extend

to investing into research and development on how the international community can better fund and

support smallholders. (FAO, “About FAO”).

International Fund for Agricultural Development (IFAD)

The International Fund for Agricultural Development (IFAD) is a specialized agency and

international financial institution dedicated to poverty and hunger of rural areas in developing countries.

Funding towards the IFAD comes primarily from Member State contributions, loan repayments,

investments, and special donations from non-Member States (IFAD, “Finance”). They collaborate with

the FAO to fund and finance projects. The IFAD places emphasis on the ability to invest and work with

impoverished people from rural areas to create access to financial opportunities. Their aid can be direct

in the form of funding new technologies or infrastructure, or indirect through connection to domestic

banking and connection to possible subsidization schemes.

India

There are around 120 million smallholder farmers in India who contribute to approximately 40% of

grain production and over half of its fruits, vegetables, and other harvests. Small farms deal with low

rainfall, price instability, and a surge of rising debts nationally. COVID-19 caused a shortage of labor and

equipment for much of the agricultural sector, which affected long supply chains (Maggo). India has a 5

tier classification system for its smallholders, ranging from less than 1 ha. to greater than 10 ha. (Singh

and Kumar). Due to the sheer size of the smallholder workforce, India has trouble reaching and making

an impact in the lives of the farmers (Bora). However, in 2016, the Indian government set out a plan to

double smallholder farm income by 2022. Due to COVID-19, this deadline was pushed back.

China

China has a significant portion of its rural population in the smallholder workforce - approximately

230-250 million people. The majority of these people fall below the poverty line or lead a close-to-poor

life (Marchisio). And because of COVID, smallholders in China have been experiencing a 50% decrease

in annual income. Despite this, China’s food supply comes predominantly from small farms. Some

studies show that to keep up with the market, small farmers have to maximize their agricultural

productivity by the overuse of fertilizers which leads to a higher cost of production. Therefore, a lack of

education in the use of agricultural equipment and competitive supply is characteristic of the Chinese

smallholder market (Zhang et al.)

Mozambique

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The agricultural sector is the main economic activity in Mozambique, contributing to 23.4% of the

GDP. 3.2 million smallholder farmers produce around 95% of the food supply within the country, while the

remaining 5% is left to around 400 commercial-scale farms. However, the high employment within the

agricultural sector does not negate the fact Mozambique is highly malnourished. Around 43% of children

under five suffer from chronic undernutrition due to low diversity of production and difficulty of access to

nutritious food (FAO, “Mozambique at a Glance”). Another issue Mozambique faces is loose value chains

within the country, which leads to difficulty connecting markets and producers in effective schemes.

Timeline of Events

Date Description of Event

9000 BCE. The creation and organization of agriculture as we know it today inMesopotamian society.

1903-1933. Increase of technology and genetics being used in agriculture, the worldbegins to see cross-breeding practices of crops available to the market. Thisimproves the quality and longevity of harvest.

1994. Norman E. Borlaug’s creation of Dwarf Wheat in Mexico was highly yieldingand disease resistant, which inspired work in India on rice grain. Hiscross-breeding discovery is estimated to have saved over one billion livesand initiated the green revolution.

November, 5-16, 1996. First World Food Summit held in Rome.

2009. FAO, World Bank, IFAD report on Gender in Agriculture and the importanceof women in smallholder farms as they play a large role in developing andmaintaining family business while not being appropriately compensated.

2013. IFAD and UNEP report that 2.5 billion people live directly under agriculturalproduction systems, with the majority being small farmers.

2014. United Nations General Assembly declares it as the International Year ofFamily Farming.

June 2014- June 2015. Financial diaries with Smallholder Families from CGAP publish longitudinalcase studies from Mozambique, Tanzania, and Pakistan.

2020 FAO COVID-19 relief programs to aid smallholder farmers across theregions, such as boosting smallholder resilience for recovery and Economicinclusion and social protection to reduce poverty.

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September 23, 2021. Food System Summit in New York General Assembly.

Relevant UN Treaties and Events● The role of smallholder farmers in sustainable commodities production and trade, 30 July 2015,

(TD/B/62/9)● The right to food, Human Rights Council, 24 March 2021, (A/HRC/RES/46/19)● United Nations Decade of Family Farming (2019–2028), 1 April 2021, (A/RES/72/239)● UN Food Systems Summit, September 23, 2021 (Conference rapport to be added when con

occurs)● The state of agricultural commodity markets. 2020: agricultural markets and sustainable

development: global value chains, smallholder farmers and digital innovations, 2020 FAO

Previous Attempts to solve the IssueFAO

The FAO is actively involved with the support of smallholders as they recognize them as a

vital part of achieving food and nutritional security. Their work with IFAD has been focused on

developing countries where smallholder farmers make up a significant portion of people under the

poverty line.

Boosting Smallholder Resilience for Recovery

This is the FAO’s most recent project working on supporting small farmers in Latin America,

the Caribbean, East and North Africa, Asia, and the Pacific. A USD 500 million budget has

been allocated for the time frame of 2020-2024. Their work includes focusing on social

protection through gender-sensitive schemes, insurance, microfinancing, and credit

schemes as well as finance for groups at risk. Additionally, economic recovery through food

processing and storage as well as marketing. However, this program is very COVID-19

specific, and using schemes that are effective in the short run potentially may not work in

the long run (Burgeon and Jones).

CGAP

A common failure in programs intended to help smallholders is that there is not enough data and

research to understand the most effective ways to aid small farmers. It should be noted that studying

smallholders in one area does not equate to smallholders in another area. The CGAP year-long case

study was one of the first in-depth looks at the lives of small farmers and allowed governments to pass

more effective policies, while also giving the UN a better understanding of the true statistics of the

financial struggles smallholders deal with. However, the research currently has little temporal validity as,

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due to COVID-19, the situations of small farmers are bound to change.

Possible Solutions

Improved Access to Technology and Tools

To improve the production of smallholders, it is necessary to aid them with the acquisition of the

improved technologies within the agricultural sector. This does not necessarily mean provision with

expensive technologies that need complex infrastructure for support. Rather, effective post-harvest

equipment such as transportable plastic silos or other tools that are low-maintenance and easy to use.

This would ensure that smallholder farmers would be able to utilize the tools and incorporate them into

their production. In the long-term, Member States should be looking at the improvement of infrastructure

and mobile technologies to support communication between smallholders, markets, banks, and

consumers.

Intervention within the Production Cycle

In addressing the issue with the production cycle, Member States could focus efforts on

ameliorating low wages and gender inequality. The use of family labor and temporary workers on low

wages is a common trait of smallholder production, therefore, to improve working conditions focus needs

to be placed on monetary injections into the smallholder market. This could be implemented through

work on connection to markets as the improved technology will lead to a larger harvest and smallholders

will have more products to sell. Another focus should be made on improving gender inequality of the

agricultural sector and investment into gender-specific schemes to boost the financial and social

opportunities of women in smallholder farms.

Connection to Financial Sector

Lastly, improving the financial state of smallholder farms would result in diversification of income

and allow smallholder farms to invest in their business. Member States should focus on how they can

connect domestic banking and subsidization to small farmers. This could be through means of mobile

banking or other communication platforms, where farms would be able to acquire loans and credit. This

approach would likely have to be paired with education on financial literacy and how smallholder farms

would be able to utilize these tools to aid their production.

In conclusion, a combination of economic policy and provision of opportunities would have to be

implemented to enhance the role of smallholder producers in achieving food and nutrition security.

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