Improving Supply Chains for Smallholder Farmers Must be a Two-Way Street

Smallholder Farmers

Since the G-8 L’Aquila Summit in 2009, the United States and other developed countries have largely met their commitments to spend an additional $22 billion to address global food security issues, in the wake of the global food crisis of 2007-09.
 According to a 2016 Congressional Research Service report, new commitments of U.S. funding had exceeded the additional U.S. portion of $3.5 billion, and more than 95 percent of the funding has already been disbursed.   A lot of those resources have gone to agricultural research, especially focused on helping smallholder farmers improve their agricultural productivity.

Similarly, President Obama announced a New Alliance for Food Security and Nutrition in 2012, aimed at bringing in private sector partners to help address food security in Africa. Since it was established, the New Alliance has enlisted more than 200 African and international companies to invest in agricultural sectors across the continent, committing to more than $10 billion in spending, primarily on developing supply chains.

Although U.S. assistance in these areas, from both the public and private sectors, has benefited tens of millions of smallholder farmers, there is a third piece of the puzzle that needs to be addressed with more urgency--the supply chain that makes inputs such as improved seed, fertilizer, and other chemicals both more available and more affordable to these farmers.

The starting point is low in many of these countries, especially in Sub-Saharan Africa.  For example, it is estimated that the average farmer in the region applies only 7 kilograms of nitrogen fertilizer per hectare to their cropland, meaning the vast majority of them use no fertilizer at all.  One study found that there was actually a decline in the volume of certified seed sold between 1997 and 2007 in several East African countries, including Angola, Zimbabwe, and Kenya.

Under the New Alliance described above, significant private sector investments of $300 million or more are being made in building up networks to distribute agricultural inputs and services in seven African countries--Burkina Faso, Cote d’Ivoire, Ethiopia, Ghana, Kenya, Malawi, and Tanzania.  These are encouraging developments, but it leaves input supply networks in 41 countries in Sub-Saharan Africa still in need of bolstering.

For smallholder farmers in most African countries, the lack of access to key inputs stems from a combination of problems--

• There is relatively little nitrogen fertilizer production within the continent, so most countries rely on imports, making them more expensive.  
• Interior road networks are poor in many parts of the continent, adding to both cost and availability problems for a range of inputs
• Most small-holder farmers are cash poor, and have little or no access to credit that would allow them to buy needed inputs at the beginning of a crop year
• Many countries have relatively few agro-dealers operating in rural areas, forcing farmers to travel long distances to purchase their inputs, and
• While several countries offer input subsidies to farmers to make them more affordable, these programs are not always well targeted.

At the village level, the One Acre Fund is working in six East African countries to help individual smallholder farmers improve their farm’s profitability.  They provide their farmers (305,000 through the end of 2015) with the following package of assistance:

• Financing for farm inputs
• Distribution of seeds and fertilizer
• Training on how to use their inputs, and
• Facilitating their participation in markets to sell their increased output

Several international NGO’s are engaged in projects to expand and improve the reach of agro-dealers.  For example, the International Fertilizer Development Center (IFDC), headquartered in Muscle Shoals, AL, has been providing training for hundreds of agro-dealers in Kenya, Tanzania, and Uganda.  Similarly, the Alliance for a Green Revolution in Africa (AGRA), is building agro-dealer networks across Kenya, placing them in 85 districts which represent the bulk of the country’s agricultural production.

Beginning in 2012, the government of Nigeria, under Agriculture Minister Akin Adesina (now President of the African Development Bank), set out to reform its system of subsidizing and distributing nitrogen fertilizer.  Minister Adesina enabled the adoption of a high-tech approach, with subsidies delivered through an electronic voucher, the e-wallet, allowing for an electronic record of subsidy redemptions, which provides transparency and accountability in the system. The reforms fostered the development of a private network of agro-dealers to deliver the product to farmers, rather than through a public distribution system rife with corruption.

Private sector firms desiring to establish reliable levels of production in developing countries to provide raw ingredients for their processing and distribution should be partnering with these organizations and others like them to make sure that smallholder farmers get the inputs they need to meet those production goals.