Policy Options to Strengthen Smallholder Farmers with Agricultural Potential
T
he vicious circle of vulnerability, low-yielding activities, and food insecurity among smallholders needs to be broken. While many smallholder farmers can find more-
profitable livelihood opportunities outside of agriculture, other smallholders can be transformed into profitable businesses that operate at an efficient scale within agriculture. However, this group of potentially profitable smallholder farmers needs a policy environment that supports and nurtures this transformation and helps them overcome the challenges they face. Tis section focuses on a number of key (and oſten interlinked) interventions for potentially profitable small- holder farms described in Table 1 (page 4).
PROMOTE CONTEXT-SPECIFIC FARM-SIZE POLICIES
Given the heterogeneous character of economic growth and structures across developing countries, optimal farm size depends heavily on context, including the stage and structure of a country’s economic and demographic devel- opment. Because well-functioning land sale and rental markets can have a major impact on agricultural productiv- ity, governments in developing countries should not imple- ment policies that promote cookie-cuter farm structures (for both rental and owner-occupied farms), which can lead to misallocation of resources. Demographic projec- tions show that the rural and agricultural population in Africa—especially the rural youth—will continue to grow in absolute numbers for the next several decades, while these groups will soon decline in Asia (FAO 2012; van der Geest 2010). Te resulting decline in farm size in Africa can be mitigated to some extent if policies and investments conducive to urban and nonfarm growth are adopted. But the reality is that increasingly smaller farms will be a major part of the agricultural landscape in the region for the next
several decades. As a result, a greater emphasis needs to be placed on improving smallholders’ productivity through stronger links to input and output markets; beter access to rural infrastructure and agricultural services; access to capi- tal and capacity building, especially among young people in agriculture; land policies that enable efficient smallhold- ers to expand their operations by acquiring or renting land from less efficient neighbors who find other employment; and other business-friendly government policies (such as a sound legal and regulatory framework). A balance needs to be found between easing access to land among all farmers, including smallholders (especially the young), and large- scale land acquisitions by foreign and domestic entities. In many Asian countries, strong economic growth
in nonfarm sectors and large-scale exit from agriculture and rural areas offer an opportunity to increase farm size. Economies with vibrant nonfarm sectors and declining agri- cultural populations (in absolute and relative terms)—for example, emerging economies such as China and Viet- nam—are in need of institutions and policies that facilitate the growth of farm size and the movement of labor out of
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