Global Canopy
Jul 4, 2018 · 3 min read
Photo from Eddie Kopp

Alexandra Pinzon

According to the International Finance Corporation, rising populations and land degradation mean we’ll need 200 million hectares of new arable land to meet rising demand for food, feed and biofuel by 2050. Some areas will need dramatic increases in agricultural output, with Sub-Saharan Africa and South Asia needing to more than double current production. The challenge is how to boost agricultural production without serious impacts on the climate, water security, and traditional livelihoods.

Smallholders can help

Increasing agricultural yields in tropical and subtropical regions has tended to focus on clearing land to bring more area under cultivation. However, another option exists — intensifying the productivity of existing farms. Smallholder farms must be a key player. Of the 570 million farms worldwide, 480 million are smallholder-owned, meaning they are less than 2 hectares in size. As we have found in our analyses, there is currently a significant gap between the yield of these smallholder farms and what their yield could be with access to the right technical assistance and equipment. Supporting smallholders will also progress key issues such as land tenure, social justice and sustainable economies.

The role of the finance sector and companies

According to the World Bank, smallholders must be better integrated into commodity supply chains if we are to be able to feed the projected 9.8 billion people in 2050. Some of these steps include helping smallholders adopt the practices of small businesses, thereby boosting productivity, and building better understanding of what credit for farming entails. However, the role of the finance sector should not just be in offering credit, but using credit to boost productivity and drive supply chain transparency.

On a broad scale, companies are taking a greater interest in sustainable sourcing against a backdrop of greater expected demand. Increasingly, this is driving greater engagement with their producers, through financing the initial stages of the supply chain outside of traditional approaches, and looking to influence management practices. Supranational organisations, such as the GAFSP, are lending to companies, who can then offer credit to their small holder suppliers and enhance their participation in the supply chain.

The link to transparency

A recent expansion of tools to trace supply chains makes it easier for companies and financial institutions to ensure they are lending to farmers implementing sound agronomical and environmental policies. This allows ‘good’ farmers to access more traditional finance more easily, and to demonstrate the financial case for sustainable production throughout the supply chain. If this can be implemented for smallholders globally, who currently have little access to markets and finance, major improvements in productivity and return may be possible.

This will require a concerted effort from governments, NGOs, agribusinesses and the farmers themselves. It will also require financial incentives for small farmers or for agribusiness trying to engage with smallholders — particularly with those just transitioning to new, more sustainable business models. However, the combination of supply chain transparency tools and the opportunity for innovative finance mean real progress can be made in boosting productivity on existing agricultural land. This will protect forests, while improving sourcing for entire sectors and helping lift smallholders out of poverty.

Global Canopy

News and blogs from Global Canopy, an environmental think tank based in Oxford, UK.

Global Canopy

Written by

Global Canopy is a tropical forest think tank working to demonstrate the scientific, political and business case for safeguarding forests.

Global Canopy

News and blogs from Global Canopy, an environmental think tank based in Oxford, UK.

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