Can small farms still play a role in reducing poverty?

In the past, the development of small farms has played a major role in reducing poverty, particularly during the ‘green revolution’. But is this still possible in today’s changing world? With more than two thirds of rural people in developing countries still living on small farms, the question is urgent.

In the immediate future, the majority of the world’s poor people will live in rural areas of developing countries, and most will be engaged in farming to some degree. Research from the International Food Policy Research Institute considers whether small farms have a future, and if so, what can be done to help them succeed.

In the past, agricultural development in the form of the ‘green revolution’ has done much to reduce poverty. The benefit of small-scale farming is clear: farming has a high potential to create jobs and provide returns from the assets poor people have – their labour and their land. Agricultural growth can also reduce food prices. Besides, there are few alternatives to farming in many rural areas.

Agricultural development is becoming increasingly difficult, however. The prices of most products have fallen on world markets and the impact of new technologies is declining. Also, environmental degradation and HIV/AIDS epidemics create serious problems for small farmers. For these reasons, there are arguments that promoting the rural non-farm economy might be a better option.

The authors discuss some of the arguments for and against small farms:

• Efficiency: small farms typically use land intensively by using a lot of labour, and save costs on worker supervision and marketing. However, large farms can increase efficiency because they can obtain agricultural inputs, and access markets and credit more easily.
• Equity and poverty reduction: small farms use local labour, and workers spend incomes on locally-produced goods and services. This stimulates the rural non-farm economy and creates jobs.
• New technologies: small farms are at a disadvantage if these require considerable funds, mechanisation, or high levels of education.
• Marketing chains: increasingly dominant supermarkets have stricter standards for produce and supply timetables, which small farms may struggle to meet. 

Where there is no indication that supporting small farmers will have significant benefits, governments should instead help small farmers move into other occupations, and provide support (‘safety nets’) whilst this move takes place. Where small farms can provide benefits, policies should be based on:

• getting the basics right: ensuring a stable economy, providing public goods (such as rural roads, education and health care), good governance, and intervening in food and credit markets where necessary
• encouraging farmers to follow market demand and improve their marketing by upgrading transport systems, providing credit, and forming farmer associations
• providing inputs and services to small-scale farmers, which are coordinated among the state, the private sector, non-governmental organisations and farmer associations.

Source(s):
‘The Future of Small Farms for Poverty Reduction and Growth’, 2020 Discussion Paper 42, IFPRI: Washington, DC, by Peter Hazell, Colin Poulton, Steve Wiggins and Andrew Dorward, 2007 (PDF) Full document.

id21 Research Highlight: 22 January 2008

Further Information:
Steve Wiggins
Overseas Development Institute
111 Westminster Bridge Road
London, SE1 7JD
UK

Tel: +44 207 9220300
Fax: +44 207 9220399
Contact the contributor: s.wiggins@odi.org.uk

Overseas Development Institute, UK

Peter Hazell
Centre for Development, Environment and Policy
SOAS, University of London
Thornhaugh Street, Russell Square
London, WC1H 0XG
UK

Contact the contributor: p.hazell@cgiar.org

School of Oriental and African Studies, University of London, UK

Peter Hazell

Contact the contributor: p.hazell@imperial.ac.uk

International Food Policy Research Institute

Other related links:
'Can targeting family farms help to reduce poverty?'

'Would a green revolution work in sub-Saharan Africa?'

'High transaction costs obstruct smallholder access to better markets'