To business leaders, international political leaders, intellectuals, and journalists, the World Economic Forum gathering in Davos has no peer — it is the most powerful conversation and gathering in the world.
This year’s agenda highlights a number of trends which are cause for concern — deteriorating international cooperation, eroding trust in leadership, and unaddressed societal challenges, to name just a few.
As a Schwab social entrepreneur, these words energize me, because I know the potential they have to focus global attention on very solvable problems. There’s one in particular that Davos participants have the immediate power to change — extreme poverty. While it’s arguably one of the most serious problems facing our planet, it’s also one of the easiest to solve. But, first, a bit of background:
Interestingly, the vast majority of the extreme poor share a common profession — farming. Of the approximately 1.2 billion people living on less than $1.25 per day, 75 percent of them work in agriculture on small holdings of land.
Why should Davos participants care about farming? Because improving farmer productivity has enormous downstream effects beyond merely putting food on people’s tables. It is one of the most efficient and cost-effective ways to reduce poverty, improve the health of children and families, grow economies and mitigate the adverse effects of climate change. Simply put, investing in boosting subsistence farming in the developing world is a prudent investment for the worldwide business community.
The World Bank and FAO estimate that growth in agriculture is at least twice as powerful a force to reduce poverty than any other sector. In Sub-Saharan Africa, it can be up to 11 times as powerful. The potential for these subsistence farmers to become more productive is enormous. Cereal yields in Africa are about a third of the world’s average while the continent is home to some of the world’s most fertile land.
Second, improving farmer productivity and increasing their incomes can improve the health of farm families and their surrounding communities. Poverty is intimately linked with hunger and malnutrition. Childhood stunting and wasting is prevalent in poor countries — in Africa, stunting affects 40 percent of children under five — and its condition has severe long-term consequences. Economists estimate that left unaddressed, childhood stunting alone lowers a country’s GDP by 3 percent.
Unexpected medical care costs are some of the most destabilizing shocks to poor households, but increasing farmers’ income enables them to afford medical care for themselves and their children.
Third, as farmers become more productive, the environment benefits from less land clearing. Traditionally viewed as a contributor to carbon emissions, agriculture can actually help mitigate future emissions, especially through climate-smart practices in areas where yields are below their potential.
The FAO projects that global food production will need to increase 60 percent by 2050 to meet rising demand from population growth and dietary changes. In agriculture there are only two ways to increase production:
- get more food out of existing land (intensification); or
- clear land for agricultural use (extensification).
The carbon footprint of clearing land is 10 times more than increasing productivity on existing farmland, thus making a strong environmental case for improving agricultural productivity.
To illustrate how improving agriculture can change lives, I’d like to tell you about a farm family in Kenya I met in 2010. David and Zipporah live in Webuye, Kenya (about 400km from Nairobi) and have four children: Andre, Brian, Mercy, and Charity.
Every year before 2010, David and Zipporah shared a shockingly common set of constraints:
- They lacked access to credit or other financial services to afford decent quality seed and fertilizer.
- Even if they had a modest amount of cash, those inputs remained nevertheless inaccessible, as the nearest agro-stockist was far beyond what they could reasonably reach.
- If David and Zipporah managed to access and buy inputs, they (and an appallingly low percentage of farmers in their situation) had little idea how to make the most of that investment, such as good planting practices like seed spacing or micro-dosing fertilizer. This is due primarily to the fact that African agricultural extension systems are over-stretched and under-resourced.
- Finally, if a family did manage to find, buy, and use modern agricultural technologies to grow a surplus, they would likely lose much of their harvest through poor storage techniques. In addition, they would remain vulnerable to any number of shocks, such as drought, pest, crop virus, or even a death in the family.
In 2010, that all changed for David and Zipporah. It is the year they joined One Acre Fund, a social enterprise founded on the simple premise that if provided with a comprehensive set of products and services, a farmer is more than able to grow his or her own way out of poverty. (2010 is also the year I began my association with One Acre Fund, and have been privileged to serve since then, first as staff and then as board member.)
One Acre Fund offered David and Zipporah an entire functional value chain (a “market in a box,” if you will), delivered to within walking distance of where they lived: high-yielding seeds and fertilizer on credit, delivered on time, with training, insurance, and market facilitation.
Prior to joining One Acre Fund, they grew about 120 kilograms of maize during good conditions. Just last year, David and Zipporah grew 716 kilograms of maize — a nearly six-fold increase. With consistently good harvests like these, this farming family, and all those we serve, can think about how to allocate their surplus income on school fees, healthcare, and investment opportunities such as buying cows to sell milk. And as they increase their productivity on their existing plot of land, they don’t have to worry about trying to clear additional land.
Since 2006, One Acre Fund has grown dramatically. We’ve gone from serving 40 farmers in Kenya to 200,000 smallholder farmers across Kenya, Rwanda, Burundi, and Tanzania, ending extreme poverty for more than 1,000,000 people and their families. We’re just hitting our stride, and will soon expand across the continent.
Farmers working with One Acre Fund earn at least 150 percent return on investment (ROI), historically a doubling of farm incomes, which ends hunger and creates surplus for investment.
Our farmers pay program fees from their profits so that we can run like a business. We recorded our highest ever repayment rate (99.3 percent) this year, fueled by our first-ever 100 percent repayment in Kenya.
Unfortunately, with some 50 million farm families in extreme poverty, most farmers aren’t as lucky as David and Zipporah. Poor farmers are essentially micro-entrepreneurs who lack the working capital to buy farm inputs that will increase their production. To pay for these inputs, they need financing, but many lenders overestimate their risk profile and choose not to lend to them, or lend at unaffordable rates. This is where we — and our investors — come in. We help these farmers with the resources to invest in more productive farming. Of course, farmers need training to use inputs correctly; otherwise, their crops may fail. And they need to safely store their harvests so that they can wait to sell them when prices are more favorable.
In addition to One Acre Fund, several other organizations are doing groundbreaking work to unlock the power of agriculture and farming all across the value chain.
Root Capital, a nonprofit social investment fund, provides financing for agribusinesses that buy the crops these farmers sell. Over the last 15 years, Root Capital has loaned over $700 million to over 500 small agricultural businesses that source the products of nearly a million smallholder farmers across Africa and Latin America.
This level of financing has “spillover” effects that benefit farmers themselves. For every loan a small agribusiness receives, an average of 1,000 smallholder farmers gain access to new markets.
Global agricultural research institutions like the CGIAR (formerly known as the Consultative Group on International Agricultural Research), where I serve as Senior Partnership Specialist of the CGIAR Fund, develop seed varieties and farming systems for smallholders that improve productivity. The CGIAR was founded in the 1971, amid growing awareness that the world’s burgeoning population would outpace its ability to sustainably feed itself. Today, the CGIAR is the world’s largest producer of global public goods for agriculture, and plays a pivotal role in developing science, technology and innovation — all for the benefit of the smallholder farmer.
As environmental conditions change, agriculture must adapt. The CGIAR’s research program on Climate Change, Agriculture, and Food Security (“CCAFS”) develops drought-tolerant seeds designed to protect the most vulnerable farmers. Using a climate-smart approach, farmers can sustainably increase their yields, adapt to climate change, and reduce overall greenhouse gas emissions.
Despite this progress, there’s still a long way to go to reach the millions of African smallholder farmers who have been overlooked by the emergence of global supply chains and last-mile distribution mechanisms. It is time to end the persistent hunger that plagues some of the hardest working people on the planet — and this is a power that resides among many who will be in Davos.
Today, the vast majority of farmers still use low-quality seeds, and most cannot afford fertilizer. It’s estimated that only 4 percent of the agricultural land in Sub-Saharan Africa is irrigated. Their soils are degraded and devoid of the nutrients that plants need to grow.
Simple changes, such as using high-yielding seed and small doses of fertilizer, can lead to big improvements in production. But the greatest problem so far has been getting farm inputs into the hands of farmers, along with finance, training, and risk mitigation. For seed and fertilizer companies, distribution costs are too high to reach rural farmers who live in remote areas with few paved roads. Yet, experience shows that there is high demand for their products.
Africa’s smallholders are the continent’s largest untapped market. As organizations like Root Capital and One Acre Fund expand across Africa, we are building an incremental and sustainable demand for private sector products and services — among a population that is developing purchase power, as well as the know-how to make the most of those investments. If the private sector could figure out how to distribute farm inputs to the millions of smallholder farmers who demand them, it could permanently lift them out of poverty, improve health outcomes, and protect communities from climate change.
We live in a world full of life-saving agricultural technology that never makes it into the hands of those who need it most. If we are serious about addressing the concerns of the “new global context,” we must act urgently to address what World Bank President Jim Kim calls the “science of delivery.” It’s been done in other sectors, with significant success.
In response to the deadly spread of HIV/AIDS, tuberculosis, and malaria that were taking 6 million lives per year, in 2002 a coalition of governments, civil society, and private sector created The Global Fund, a “war chest” of funds designed to fight these infectious diseases.
The Global Fund doesn’t implement any programs on its own. It uses a grant-making model and disburses grants to governments and organizations to help them implement programs and distribute medical supplies.
Since its inception, programs supported by The Global Fund have provided antiretroviral therapy to 7.3 million people, tested and treated 12.3 million people for tuberculosis, and distributed 450 million insecticide-treated nets to protect families against malaria.
Importantly, the fund has benefited from country ownership, flexible timelines, feedback loops between the fund and local programs, low overhead costs, and transparency. Grant recipients have a lot of control over each aspect of their partnership with The Global Fund. They set the grant application timeline, design programs in accordance with national health priorities, and determine country-specific programs. This level of autonomy is important to ensure local ownership of the fund.
To deliver agricultural solutions to farmers, we need a similar fund for agriculture. Like the Global Fund, similar levels of autonomy should be in place. Likewise, the private sector must be an integral part of any solution, contributing ideas that serve farmers in their regions. For example, the fund could finance local seed companies in Nigeria to produce enough seed to meet market demand and in turn catalyze the overall economic growth of Africa’s largest country.
Farmers are in desperate need of a “war chest” of new ideas that can help them increase their productivity, profitability, and resilience. Innovators need the funding and space to test, iterate, and scale solutions that alleviate the seed and fertilizer bottlenecks in the value chain. And the global development community should seize the opportunity to do in agriculture what has been so successfully executed in other sectors — enable a “distribution revolution” and unlock the potential of millions of hard-working farm families.
At Davos, when you think of “improving the state of the world,” think of the enormous good — and, ultimately, economic opportunity — that a Global Seed and Fertilizer Innovation Fund could create. With the finalization of the Sustainable Development Goals and the Financing for Development conference in Addis Ababa, 2015 is a big year for international development. Let’s make it count for farmers like David and Zipporah.
Tony Kalm is the inaugural leader of One Acre Fund in the US. 2013 Social Entrepreneur of the Year of the Schwab Foundation for Social Entrepreneurship. One Acre Fund Director. Senior Partnership Specialist of the CGIAR Fund, a billion dollar global partnership that unites organizations engaged in research for a food secure future, based at the World Bank. Prior to that he helped establish the Global Crop Diversity Trust, which maintains a collection of genebanks around the world as an insurance policy for the world’s food supply. Returned Peace Corps Volunteer from Sri Lanka with a BA from Cornell and an MPH from Johns Hopkins.
The World Economic Forum’s Annual Meeting 2015 will take place from 21–24 January in Davos-Klosters, Switzerland, under the theme “The New Global Context.” You can find out more about the meeting here.
