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Opinion: Environment, Market Access

Investing in Rural Infrastructure and Institutions to Empower Smallholder farmers

Wafaa El Khoury Wafaa El Khoury

Smallholder farmers in the developing world face multiple constraints that they must overcome to sustainably increase their productivity, enhance their income, connect with markets and become more resilient. These constraints often involve limited access to advisory services, natural resources and agricultural inputs – including seeds, fertilisers and agro-chemicals – as well as rural finance and markets.

The absence of basic rural infrastructure, especially roads, is another limiting factor. Roads link smallholders in remote areas to supplies and markets. They are central to reducing the transaction costs of input delivery, and to facilitating rural financial systems’ outreach to remote areas.

Beyond building infrastructure, though, one of the most important ways to contribute to smallholder farmers’ productivity is by building strong rural institutions – because stronger human and institutional capacities are critical for sustainable development.

IFAD’s focus on smallholders

The International Fund for Agricultural Development (IFAD) is an international financial institution and a specialized United Nations agency that sees investing in both rural infrastructure and rural institutions as an important part of its mandate. IFAD finances agricultural development programmes and projects globally, with a focus on smallholder farmers and rural poverty alleviation in developing countries. The aim is to empower rural people to overcome poverty, improve their food and nutrition security, and build resilience.

IFAD operates through a mix of low-interest loans and grants provided to the governments that are responsible for the implementation of these investment projects. Presently, IFAD is operating in nearly 100 countries with around 240 on-going initiatives.

Through its investments, which are often relatively small but carefully targeted, IFAD supports the construction of rural roads linking villages and farms to main roads and markets. It also invests in establishing market infrastructure – including markets, collection centres, drying and storage facilities and service hubs – as well as irrigation systems and soil and water conservation structures at the watershed, landscape and farm levels.

However, building rural institutions, starting with farmer and community groups, is the main entry point to overcome smallholder farmers’ constraints and enhance their food security and income.

Farmer, producer and community organizations

Rural institutions can improve smallholders’ livelihoods – either directly, by increasing their access to resources, services, inputs and markets, or indirectly, by empowering them with a greater voice in policy dialogue.

These institutions can adopt various forms and structures, depending on the objectives of farmers and community members. They can be community development groups and associations, common interest groups, production groups, water users’ associations, social forestry groups, land management groups, savings and credit associations (often composed of women) and labour contracting societies (also commonly composed of women working to upgrade local infrastructure).

Strong rural organizations are able to provide a full range of services to small producers, and hence play a leading role in meeting the growing demand for food on local, national and international markets. At the same time, producers or community members who work together as a group can create a critical mass of demand for agricultural inputs, and for advisory and financial services. Higher demand makes private-sector outreach into rural areas more attractive and cost-effective.

Building capacity at all levels

Still, the sustainability of smallholders’ groups, and their capacity to achieve common objectives, depend on how they develop. To succeed, they must form the following set of interdependent relationships:

  • Bonding among small producers at the grassroots level (intragroup relations).
  • Building bridges between small-producers’ groups to form apex organizations (intergroup relations).
  • Linking small-producers’ groups with apex organizations, public agencies, private-sector businesses and service providers, as well as policymakers (extra-group relations).

For strong intragroup relations, small producers must take the time to establish their groups from the base upwards, building on trust and common interests or goals. They also need proper capacity development and education in terms of technical issues, financial management, conflict resolution and social cohesion.

Depending on their maturity and level of development, small-producers’ groups may be able to federate into apex organizations, which allow them to become even more effective and independent. Based on solid intergroup relations, such organizations have great potential for providing services to their members, operating and maintaining common infrastructure and equipment, and engaging in policy dialogue.

A basis for empowerment

Smallholders’ groups and apex organizations need support at the various levels of rural institutional development. Small producers’ access to markets, for example, is often facilitated by the establishment of special multi-stakeholder platforms and inter-professional associations.

These groupings bring together producers’ organizations, buyers, extension services, local governments and other various value-chain actors. In the process, they allow smallholders to understand market needs; help buyers and processors understand farmers’ limitations and constraints; and give agricultural extension agents and the public sector information to help focus their interventions.

IFAD and its partners invest in building the capacity of rural institutions at every level. While this is a long process, it is a firm basis for the empowerment of smallholder farmers.

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