Study: Smallholder agricultural supply chains – Sustainability is (currently) not sustainable

What the projcet set out to do was to understand what was needed to create genuinely sustainable agricultural supply chains based on smallholder farmers. The aim was two-fold. Firstly, to share learnings from across a range of different supply chains, and secondly to bring in new perspectives from areas like development economics and political economy. The report draws on nearly 80 interviews covering a wide range of supply chains including cotton, fruit and vegetables, dairy, coffee, soya, palm and maize. This included representatives of INA and its partners.

 

When it comes to smallholder farming communities themselves, the picture is quite detailed. Furthermore there is a high degree of commonality between different supply chains. Farmers need support in improving their agronomic practices; they need better access to market to maximise their prices; they need to diversify their production; and they need better support from financial institutions.

 

A key tool in addressing these challenges is to bring farmers together to collaborate in cooperatives or other collective associations. These vehicles provide a basis for farmer field schools to improve farming practices. They also allow farmers to aggregate their production in order to access larger markets and get better pricing, and provide the basis for better access to finance. However, cooperatives are not a magic bullet, and their governance processes are key. These groups are not necessarily inclusive, and can reflect existing divisions in the local society. They are also open to the challenge of elite capture, and the very poor, and women are often under-represented in leadership positions. 

 

However, much less is known about what happens between when goods leave the farm, to when they arrive at a port. There are few insights into the environmental impacts of this part of the supply chain, and about the income levels and working conditions of those working as traders, in the transporting of goods, or those employed, for example in horticultural pack houses. If we’re worried about the incomes of farming families, why not about those working in other parts of the supply chain? 

 

However, also clear from our research that the creation of sustainable smallholder supply chains hinges also on a range of wider and complex contextual factors. The first is the need to engage better with governments of origin countries.  Many of these countries lack coherent policy on the development of agricultural communities, and often extension services are underfunded. Extension services are particularly important since these structures could be the conduit to reach farmers at scale, whereas, at present, the approach a very project based.  

 

There is also a need to engage better with governments of what we might term ‘destination markets’ such as the UK, USA, and the EU. Most obviously, there is a need to collaborate better with the development agencies of these countries, for whom agriculture is a huge area of focus. However, there are also some rather more difficult issues to address as well. Firstly, initiatives such as the European Commission’s work on cocoa in West Africa need close scrutiny to ensure they are practical. Secondly, there is a need to address the tariff structures which means that most value-addition to agricultural commodities happens in destination countries, not origin ones.  

 

Then there is the issue of agricultural markets per se. International spot and futures commodity exchanges operate on the basis that they are trading largely-undifferentiated commodities. It is not clear how these structures are compatible with sustainability, which accords greater value to reductions in environmental degradation and better incomes. 

 

If these issues are to be tackled effectively, there is a need to look closely at how we are going about effecting change. At the moment, it is clear that current approach to creating sustainable smallholder supply chains is not, itself, sustainable, for the following reasons: 

• The current approach is a project-based one. A more systemic approach is needed if we are to get to scale.  

• Even those projects do not join up effectively and efficiently. There is a need for greater collaboration on the ground to create synergies and avoid wasted effort. 

• There is a need to grapple with some of the big systemic issues which have largely been avoided so far, such as: 

• Can smallholder farms ever be sustainable, and do we need to look for other models of rural agricultural development? 

• How can we properly assess and address issues of capacity and capability in host governments? 

• Large parts of the business world still see the sustainability agenda as largely irrelevant. We need to engage much better in particular with procurement teams and those working in public policy.  

These are significant challenges which will not be solved easily, or in the short term. Therefore, the next stage for this project is to explore practical steps to address these challenges. This will include: 

• Geographically-specific projects to map the global findings to different locations. 

• A feasibility study of a ‘sustainable goods marketplace’ to begin to map what sustainably-produced goods are being produced, in what quantity, and where. 

• Examining how to better engage companies’ procurement teams, and the wider ‘corporate ecosystem’ that is needed if sustainability is to become embedded in buying decisions.  

• How can the public policy initiatives underway be better informed by the realities on the ground?