Day 5: Group Mutuality Paves the Way to a Sustainable Future for Smallholders

Nicko Debenham

Blog post by Nicko Debenham

Chairman of Source Trust
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The fundamental problem for both female and male smallholders is the size of their farms. They are simply too small to generate an acceptable livelihood. An incorporated farm model could overcome many of the current obstacles and be the farming system of the future.

By Nicko Debenham, Director, Development & Sustainability at Armajaro Trading Ltd.

The fundamental problem of both female and male smallholder farmers is the size of their farms and their geographical isolation. They are simply too small to generate an acceptable livelihood. 

The reason why farms are so small is due to an inheritance culture which sees the land left to all the children of the deceased. As generations pass, plot sizes become smaller and smaller, and farmers’ incomes shrink. In many cases, families have reached the point where farms are a burden, rather than a legacy. 

“Families have reached the point where farms are a burden, rather than a legacy.”

One consequence of the abundance of small and geographically dispersed farms is a low level of knowledge transfer between farmers and other actors in the supply chain such as research institutions, extension services and financial service providers. The difficulty and expense of trying to communicate with such a wide-reaching group of individuals means that knowledge of better farming practices is not shared. If farmers had access to industry knowledge there would be more agricultural innovation and a better use of technology. 

A further concern is that smallholder farmers struggle to make well-informed budgeting decisions. They are often financially illiterate, and their level of income is quite volatile. Therefore, even those few farmers who have access to financial tools are rarely able to obtain loans, because repayment is so uncertain. When loans are available, they tend to be at a high cost because of the perceived risk and expense of administering many small loans when dealing with multiple smallholder farmers. 

If farmers were able to raise finance, they would be in a better position to invest in technology and innovations, such as improved planting material and vital inputs.

“Only when farming is viable will it be a credible career choice for youth.”

The situation just described is more severe for women farmers, because of a traditional mindset that views males as the bread-winners. Access to training, membership in farmer organisations and agricultural leadership roles are frequently denied to women. If men and women had equal opportunities in the agricultural sector, not only could families in farming communities benefit from the superior credit-worthiness which women tend to have, but women living in rural areas could be empowered by greater choice and earning potential. 

Help farmers understand the opportunitiesSmallholder farmers should be inspired to manage their farms as profitable businesses using a sustainable business model that will attract new generations of farmers into the industry. Only when farming is viable will it be a credible career choice for youth. 

It is a dismal reality that a legacy of land passed down through so many generations may no longer be capable of supporting an individual or a family, regardless of the size of investment in inputs. If farmers were to realize the potential production capacity of their farms, they could make better informed budgeting and lifestyle decisions.  Farmers must assess whether their farming pursuits are viable. 

A recent and ongoing exercise by the independent group GeoTraceability found evidence that an average cocoa farm size in West Africa is less than 1.6 hectares,  significantly lower than the previous industry-wide assumption of 2.5 hectares. This implies that many farmers have unrealistic expectations of their potential output and may be investing in false hopes. They may be remaining in a profession which will never be able to provide an income above subsistence level. 

“Farmers may be investing in false hopes “

With an accurate representation of a plot’s production capacity to evaluate their current and potential income, farmers will be more inclined to adopt an entrepreneurial approach in order to raise production. 

Additionally, earning capacities can then be more accurately compared to alternative employment opportunities. The point is not that an individual must seek off-farm employment, but for farmers to have a realistic appreciation of what can make their farms profitable. 

Encourage farmers to work togetherImagine a group of farmers pooling their farms together in mutual ownership. Such a larger-scale, ‘incorporated’ farm could reduce costs and improve access to market knowledge, industry technology and innovations, and financial tools. Under this business model, each smallholder could choose whether to be a shareholder only, or both a wage-earner and a shareholder. 

“The mutuality of the group enables easier knowledge transfer from research centres to farmers, which in turn encourages individual farmers to invest and innovate.”

A group structure would enable better communication and cooperation between farmers and external bodies such as research and financial institutions, to facilitate knowledge transfer. An incorporated farm model would also allow individuals to specialize their roles so that farming efficiency improves and credibility can be built up over time. 

Many development organizations take the approach of encouraging farmers to work together and support each other mutually.  Farmers often form groups which choose their own leaders and then are offered training in sustainable agricultural practices, access to necessary inputs, proven planting material, financial support, community infrastructure and information technology. 

Because the farmer group takes mutual responsibility for each member, financial institutions have fewer logistical challenges and can have greater confidence. Leaders usually coordinate the distribution of inputs and planting material relevant to the size and profile of the farms in the group. Over time, the mutuality of the group enables easier knowledge transfer from research centres to farmers groups, which in turn encourages individual farmers to invest and innovate. 

ConclusionFarming must become an aspirational occupation where entrepreneurial farmers belonging to a group and mutually responsible for each other can generate a more-than-acceptable living through sustainable farming. For this to be achieved, the structure of today’s agricultural landscape must be adapted to escape the limitations imposed by undersized farms. A new movement consisting of an incorporated farm model may be the key to overcoming this crucial obstacle.

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