Inclusion in Markets Replaces Exclusion from Success - How Seeds and Insurance Can Lead to Pride

• by Dr. Marco Ferroni (basel)
• Saturday, October 15, 2016
• Inter Press Service

How, then, to turn humiliation and exclusion into pride and inclusion? My own field, agriculture, offers numerous opportunities. Many smallholders are, for example, excluded from the markets that would help them step out of poverty. One is the market of knowledge. In many places, agricultural extension services – through public or private advisors – are unavailable. Frequently, farmers cannot read. Few are fortunate enough to hear agricultural broadcasting in their local language. Excluded from knowledge of innovations and better techniques, these smallholders are unable to improve the way they farm.

They are further handicapped by exclusion from commercial markets. If, for example, irrigation or improved seed is personally unaffordable, locally unavailable or nationally inaccessible, smallholders' harvests limp far behind their potential. If lack of organisational strength prevents farmers from selling into more lucrative markets than their grandparents did, then their families remain condemned to low incomes. Inclusion in such markets, conversely, goes hand in hand with farmers' pride – not just in the material signs of better income, but also pride in their crops, their work, and their children's development.

More access, less risk

But how, people often ask, can farmers break out of the vicious cycle of poverty? How, for example, can a smallholder with almost no spare cash get the better seed that would (all being well) grow into a profitable crop? There are two crucial aspects to the answer: access and risk reduction.

Access to seeds remains a key constraint to sustainable intensification of smallholder agriculture, worldwide. In Sub-Saharan Africa alone, critically important crops such as sorghum, potatoes, beans and cassava grow on more than 29 million hectares and support over 100 million smallholders*. Yet only a tenth of the seed used is of certified quality*. This situation is the single most important reason for the region's yield gap.

Why does this occur? In the Syngenta Foundation's view, it is because business models are often lacking for non-hybrid crops, and the markets are uncertain. Small seed companies need a much easier operating environment. But they will only enter markets in which they see a genuine chance of recouping their investments. There must therefore be enough customers able to pay a fair price for the seeds.

Making all this possible requires strong partnerships between public breeders, the companies and potential seed purchasers. So far, however, such Private-Public Partnerships have been few in number and limited in scope. There is a clear need for trusted and independent intermediaries to broker these relationships, so that smallholders gain access to better planting material.

Detractors of formal seed supply solutions claim repeatedly that smallholders have neither the inclination nor the means to buy better-quality certified seed. The first of these claims is contradicted by our experiences in the field; the second cries out for innovative solutions.

Clearly, new technology initially costs more than old versions. Buying seed is more expensive up front than saving it from the previous harvest. What are required are therefore smart ways to lower the entrepreneurship threshold – in other words, to make it easier for smallholders to invest in their harvests. Government subsidies may help kick-start a change, but are not a sustainable option. Making credit and/or insurance affordable and accessible is a better way to encourage investment, year after year. The insurance typically addresses weather-related issues, because weather represents farmers' largest, least predictable and most wildly fluctuating block of risk. However, well-designed insurance products not only help shift the burden of risk from smallholders' shoulders. By acting as security, they can also open the door to loans.

With initial barriers to investment reduced, smallholders can look forward much more confidently to the increased yield and income brought by better seed. They can escape from a poverty trap caused by very understandable reluctance to spend their limited cash several months before a harvest can be sold. A virtuous circle begins. Inclusion in markets replaces exclusion from success; pride will then increasingly drive out humiliation.

*Syngenta Foundation internal data

 Marco Ferroni is an expert on international agriculture and sustainability issues. He has been Executive Director of the Syngenta Foundation for Sustainable Agriculture since 2008. Ferroni had previously worked at the Inter-American Development Bank and the World Bank. A Swiss citizen, he holds a PhD in agricultural economics from Cornell University.

The Syngenta Foundation's mission is to modernize small-scale farming in low- and middle-income countries through sustainable intensification, diversification and the activation of value chains. The Foundation incubates scalable products and solutions, tests them and catalyzes uptake and dissemination through commercial partnerships. Focus areas include seed systems, agricultural insurance and finance, and farmer support services, including digital decision tools in agriculture. www.syngentafoundation.org

© Inter Press Service (2016) — All Rights ReservedOriginal source: Inter Press Service

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