How much private investment is the agricultural sector able to bear?

Small farmers in developing countries must modernise their farming methods, but poorly understood reforms could exacerbate poverty instead of alleviating it.

Pedro Morazán

Dr. Pedro Morazán, born in Honduras, is an economist who has been working as a research assistant at SÜDWIND since 1992. During this time he has been in charge of numerous evaluations and partner consultations. He has also published various studies and expert reports for different organisations, including GIZ/BMZ.

 

Because of low rates of industrialisation, particularly in Africa, the agricultural sector remains the most important employer in many regions. At the same time, it’s smallholder farming that provides the basis for food security in many countries. It produces more than 80 per cent of the food in developing countries, and so makes an important contribution to poverty alleviation. However, this contribution is under threat from the increasing fragmentation of small properties, the expansion of agribusiness, insufficient funding for investment, climate change and a disregard for international cooperation.

 

A further threat to small-scale agricultural production is the notion, currently prevalent even among some UN institutions, that food security is primarily a question of revenue and increased productivity. Funding for the Global Alliance for Improved Nutrition from the Bill & Melinda Gates Foundation aims is to combat hunger and malnutrition primarily by fortifying foods with added nutrients. For this, private businesses and multinational companies are incorporated into public-private partnerships (PPP).

 

Only a few smallholder businesses can withstand the pressure of competition generated by agribusiness

 

The Food and Agriculture Organization of the United Nations (FAO) has also developed a strategy for cooperation with the private sector. Along with the European Investment Bank (EIB), it wants to promote investment in agriculture, in the development of the private sector, and in value-added chains. The extent to which the interests of European agricultural corporations will take priority in this remains to be seen. Representatives of civil society and small producers have been concerned on seeing how much power multinational companies in the UN system have gained in recent years. Many institutions in civil society are advocating an alternative approach, through which the role of national and international markets and the integration of smallholder businesses into the value-added chains can be better clarified. Only a few smallholder businesses can withstand the pressure of competition generated by agribusiness. So inclusion in local value-added chains is still very important, but all too often the farming practices of small producers undermine the ecological foundations of the global food system.

 

(c) Jörg Böthling
Kenya - GIZ project Green Innovation Center - milking with modern equipment
(c) Jörg Böthling
Malawi, GIZ Project Green Innovation Centers, hand tractor training for small-scale farmers at the NRC. (c) Jörg Böthling

Overuse and degradation of the soil are major contributors to this. In such cases an ecologically sustainable transformation of the agricultural sector can provide the answer. Small producers need support to help them cope with market pressure and overcome other obstacles to sustainable land use. Furthermore, the creation of jobs through the establishment of a local value-added chain in the agricultural sector is very important.

 

At the G8 summit in 2012 in the USA the New Alliance for Food Security and Nutrition was formed. The plan was to lift as many as 50 million people out of poverty by 2022 with the help of investment from agribusiness and with the support of governments and development cooperation. The New Alliance for Food Security and Nutrition was aimed at ten African countries willing to undertake reform: Benin, Burkina Faso, Ethiopia, Ghana, Ivory Coast, Malawi, Mozambique, Nigeria, Senegal and Tanzania. Appropriate ‘reforms’ were to integrate agribusiness into agricultural production and thus modernise the agricultural sector.

 

However, a bias towards support for the industrial agricultural sector and the reforms that this entails also harbour a risk of exacerbating poverty.

  • The idea was to enable corporations to acquire land more easily in Africa – something that in the past had resulted in people being driven from their own land (land grabbing).
  • The practice of seed licensing can hinder farmers in the cultivation, storage and exchange of seeds.
  • Production relies on the use of chemical fertilisers and pesticides. For many smallholder families these are prohibitively expensive and also contribute to pollution and degradation of the soils.
  • Jobs that are created on the large plantations are often poorly paid and involve working in inhumane conditions that contravene labour laws.

 

(c) Jörg Böthling
Burkina Faso, "ProCIV Green Innovation Centers", agricultural vocational school. (c) Jörg Böthling

Development cooperation also depends on companies, banks and financial investors to increase investment in the fight against poverty. Through the availability of public money from development cooperation, and special investment funds combining public and private money, it is anticipated that private sector investment will also be expanded through mega-projects in the agricultural sector. The responsibility for problematic investments is becoming increasingly unclear, due to complicated shareholdings, intricate financial influences, investor-focused monitoring mechanisms, and banking confidentiality or trade secrets. Profit-orientated institutions and companies are becoming key players in development policy, and the lines between government subsidies for one's own company and funding under development policy are becoming blurred.

In the unequal power relationship between developing countries and large corporations, there is a very real danger that the interests of poorer sections of the population will be traded off against the interests of making a profit.

 

In the unequal power relationship between developing countries and large corporations, there is a very real danger that the interests of poorer sections of the population will be traded off against the interests of making a profit.

 

In 2014 the Federal Ministry for Economic Cooperation and Development (BMZ) introduced the special initiative, ‘ONE WORLD – No Hunger’, which makes additional financial resources available every year for global food security. Under this initiative, it is anticipated that cooperation with agriculture and the food industry in so-called green innovation centres in 14 countries will be stepped up. This initiative could increase the potential for the structural change that is required, as long as it actually supports the structures of smallholdings as specified, reinforces their land rights and promotes the creation of value locally and higher incomes in rural areas. Support for small family businesses should also include the development of higher-quality products – for example, from horticulture or livestock farming – while also forging a link with small and medium-sized businesses in local value-added chains. In this way, smallholding businesses would be able to contribute to food security and sovereignty, economic growth and employment, poverty alleviation and a reduction in geographical and socio-economic inequality. This kind of strategy supports the attainment of a whole range of sustainable development goals at the same time.

 

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One Health – What we are learning from the Corona crisis

A contribution by Dr. May Hokan and Dr. Arnulf Köhncke (WWF)

Due to the coronavirus crisis, the connection between human and animal health has gained new attention. Politicians and scientists are joining forces to propagate the solution: One Health. But what is behind the concept? And can it also guarantee food security for all people worldwide?

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The Forest Maker and his director

Double interview with Tony Rinaudo and Volker Schlöndorff

Tony Rinaudo uses conventional reforestation methods to plant millions and millions of trees – and Volker Schlöndorff is filming a cinema documentary about the Australian. The outcome so far: An educational film on behalf of the BMZ (Federal Ministry for Economic Co-operation and Development).

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(c) Gudrun Barenbrock/GIZ

Edible bugs - the new beef?

A contribution by Marwa Shumo

Insect farming is economical and environmentally sustainable, they are high in protein and they live on agricultural waste. Marwa Abdel Hamid Shumo thinks: They are the best weapon to combat hunger

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Success story allotment garden: Food supply and women's empowerment

A contribution by Nadine Babatounde and Anne Floquet (MISEREOR)

To prevent malnutrition among young children and strengthen the role of women in their communities, Misereor, together with the local non-governmental organisation CEBEDES, is implementing a programme on integrated home gardens in Benin - a series of pictures.

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picture-alliance/Zentralbild

Land is Crucial for Development

A contribution by Roselyn Korleh and M. Sahr Nouwah (WHH)

The Liberian town of Kinjor is a picture-book example for what happens, if land rights aren’t protected, and it illustrates how to move forward from there. The keyword: Multi-Actor Partnership

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From Berlin to Yen Bai: 10,000 trees for Vietnam

A contribution by GIZ and BMZ

It began with clicks at a trade fair and ends with concrete reforestation: a campaign at the Green Week in Berlin is now enriching the forests of the Yen Bai Province in Vietnam. A chronicle of an education about climatic relevance to concrete action - and about the short distances on our planet.

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Quinoa could have a huge potential in Central Asia, where the Aral Sea Basin has been especially hard-hit by salinisation.

Planetary Health: Recommendations for a Post-Pandemic World

A contribution by Dr. Kathleen Mar and Dr. Nicole de Paula

Against the backdrop of the COVID-19 pandemic, health is receiving unprecedented public and political attention. Yet the fact that climate change is also affecting the environmental and social determinants of health in a profound and far-reaching way deserves further recognition.

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"Extreme is the new normal"

A report by Alexander Müller and Jes Weigelt (TMG)

As the climate changes, the population of Africa is growing and fertile land and jobs are becoming scarcer. New ways are currently leading to urbanisation of agriculture and a new mid-sized sector in the countryside

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© GIZ / Angelika Jacob

This is how developing countries can adapt better to droughts

A contribution by Michael Brüntrup (DIE) und Daniel Tsegai (UNCCD)

Droughts are the natural disasters with far-reaching negative consequences. While rich countries are still vulnerable to drought, famines are no longer found.

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(c) Christof Krackhardt/Brot für die Welt

Together and resourceful against worldwide hunger

A contribution by Brot für die Welt

Climate change disturbs the climate in Ethiopia. The answer from small farmers in the northern region is convincing: diversify!

 

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Food system transformation starts and ends with diversity

A contribution by Emile Frison and Nick Jacobs (IPES-Food)

While having failed to solve the hunger problem, industrial agriculture appears to be causing additional ones both in environmental and health terms. Emile Frison and Nick Jacobs call for a transformation.

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What do you expect from this Pre Summit, Mr. Haddad?

Interview with Lawrence Haddad (GAIN)

Nutrition experts from all over the world are coming together in Rome. They are not only distilling 2000 ideas to improve food systems - they are also preparing for the big UN summit in New York in September. An interview. 

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Mr. Campari, how do we create sustainable food systems?

Interview with Joao Campari (WWF)

Journalist Jan Rübel spoke with Joao Campari ahead of the UNFSS Pre-Summit. The Chair of Action Track 3 highlights key challenges in transforming existing food systems towards sustainable production and shares his expectations for the Summit.

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Biodiversity and agriculture – rivalry or a new friendship?

A contribution by Irene Hoffmann (FAO)

In this article, the author describes what we know about interlinkages, what role agriculture has to play in the sustainable use and conservation of biodiversity, and what the necessary changes in agricultural systems might look like, both on small and large-scale farms.

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Land Rights, Gender and Soil Fertility in Benin

A contribution by Dr. Karin Gaesing and Prof. Dr. Frank Bliss (INEF)

Especially in densely populated areas, land pressure leads to overexploitation of available land and a lack of conservation measures. The West African country of Benin, with heavily depleted soils in many places, is no exception.

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“Corona exposes the weaknesses of our nutritional systems"

Interview with Arif Husain (WFP)

The United Nations plan a Food Systems Summit - and now the Corona-Virus is dictating the agenda. The Chief Economist of the UN World Food Programme takes stock of the current situation: a conversation with Jan Rübel about pandemics, about the chromosomes of development - and about the conflicts that inhibit them.

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"Agriculture can become a job engine"

Interview with Reiner Klingholz

How can agriculture modernise Africa? And does the road to the cities really lead out of poverty? Dr. Reiner Klingholz from the Berlin Institute for Population and Development in conversation with Jan Rübel .

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New campaign for women: "Poverty is sexist"

Interview with Stephan Exo-Kreischer

This is a benchmark for everybody: More rights for women are a very influencing solution in the struggle against extreme poverty and hunger worldwide, says Stephan Exo-Kreischer, Director of ONE Germany. The organisation specialises in political campaigning as a lever for sustainable change.

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(c) GIZ

Youth employment in rural areas

The world’s population keeps on growing; with this rise comes an increased need for food as well as productive employment opportunities. Offering young people in rural areas better employment prospects is one of the objectives of the sector project. The young population is the key to a modern and efficient agricultural economy.

A project of GIZ

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More than just a seat at the table

A contribution by Welthungerhilfe

Africa is home to the world’s youngest and fastest growing population. For many young people, agriculture could offer a job perspective. But to improve the living conditions and job prospects of young people in rural areas, political reforms and investments are desperately needed, as these people will be at the centre of agriculture and agricultural development in the future.

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An opportunity for the continent

A contribution by the Bill & Melinda Gates Foundation

Africa’s population is young and ready to take its destiny into its own hands. Agriculture offers amazing opportunities in this regard. The Bill & Melinda Gates Foundation wants to support the next generation in this way.

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Do we have to dare a new food system?

A contribution by Dr. Felix zu Löwenstein (BÖLW)

Lack of seasonal workers and virus explosion in slaughterhouses, rising vegetable prices, climate crisis – all this demonstrates: Our food system is highly productive and (at least for the rich inhabitants of planet earth) guarantees an unprecedented rich and steady food supply - but it is not resilient.

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The Life of Their Dreams - What Children Want

Interview with Gnininkaboka Dabiré and Innocent Somé

Later on you want to become a farmer yourself, or would you prefer to take up another profession? Two young people from Burkina-Faso talked to representatives of the Dreyer Foundation about their parents' farms, the profession of farmer and their own plans for the future.

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An investment in Africa's future

A contritbution by Essa Chanie Mussa (University of Gondar)

Rural youth need viable livelihood opportunities to escape out of poverty and realize their aspirations. How could they be helped to fully unleash their potential? This is an aloud call that needs novel strategies among governments, policy makers, and international development partners and donors.

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UNFSS Pre-Summit: What did it achieve?

Interview with Martina Fleckenstein (WWF), Michael Kühn (WHH) and Christel Weller-Molongua (GIZ)

After the summit means pre-summit: It was the first time that the United Nations held a summit on food systems. Martina Fleckenstein (WWF), Michael Kühn (WHH) and Christel Weller-Molongua (GIZ) reviewed the situation in this joint interview.

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How do you campaign “Food Systems”?

Interview with Paul Newnham, Director of the SDG 2 Advocacy Hub.

The UN Food Systems pre-Summit in Rome dealt with transforming the ways of our nutrition. How do you bring that to a broad public? Questions to Paul Newnham, the Director of the Sustainable Development Goal (SDG) 2 Advocacy Hub.

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