Decent agricultural work can be a vehicle for economic growth. Kristin Williams, Communications Manager at Root Capital, tells Farming First how investments can empower smallholder farmers.
Farming is hard work. This is especially true on the world’s 500 million smallholder farms, which rely almost entirely on informal family labor. There, farmers rise before the sun, and toil in plots of land just large enough to grow food for the table and perhaps one or two crops for sale. Sudden shocks—like drought, flood, or disease—can wipe out the fruits of their labor in an instant. If they’re lucky, they can get their crops to a nearby market; once there, they have little recourse if buyers refuse to give a fair price.
Billions of people make their living in this difficult way. And it’s no coincidence that they comprise much of the world’s extreme poor, surviving on less than $2 per day. But the connection between farming and poverty is not a foregone conclusion. Yes, farming is hard work; but with targeted investments it can also be “decent work.”
What is “Decent Work”?
The term “decent work” captures people’s aspirations for full, productive, and fair employment. According to the International Labour Organisation:
It involves opportunities for work that is productive and delivers a fair income, security in the workplace and social protection for families, better prospects for personal development and social integration, freedom for people to express their concerns, organize and participate in the decisions that affect their lives and equality of opportunity and treatment for all women and men.
Decent work is one of the engines of Sustainable Development Goal (SDG) 8, in which UN members committed to “promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all.” Indeed, without decent work, many of the other SDGs—from zero poverty to good health to reduced inequalities—are next to impossible. In order to elevate billions of people out of extreme hardship, we must ensure they have higher incomes and job security for the foreseeable future.
Decent Agricultural Work is a Catalyst for Growth
Thanks to the sheer scale of employment in agriculture, which engages one in three workers worldwide, a change in this sector would be catalytic. The World Bank estimates that growth in the agricultural sector is two to four times as effective in reducing poverty as growth in any other sector. By focusing on smallholder farmers—who are concentrated in impoverished rural communities throughout Latin America, Africa, and Asia—that reduction of poverty can be exponential.
Improving working conditions for farmers will also benefit two particularly vulnerable populations: women and youth. Women make up 43 percent of the agricultural workforce in developing countries; in some countries, more than 50 percent. Women in agriculture typically own less land, complete less schooling, and have less access to relevant resources than men. They also work more hours per week than their male counterparts because they’re responsible for most of the housework, cooking, and childcare. Because of this, their poverty is more entrenched.
Youth, meanwhile, face different challenges. Today’s global population of young people is the largest in history at 1.2 billion. The majority of youth in developing countries live in rural communities, where they struggle to find reliable jobs. Having watched their parents labor day in and day out and barely scrape by, agriculture seems neither rewarding nor meaningful as a career. Many youth migrate in search of better opportunities, but rarely find productive, fair employment in cities or abroad.
The Power of Agricultural Businesses to Provide Decent Work Opportunities
If elevating billions of rural men, women, and youth into decent working conditions is the goal, agricultural businesses are the lever. These businesses—cooperatives, farmer associations, and small private enterprises—are the beating hearts of many rural communities.
Over the last two decades, Root Capital has invested in the growth of agricultural businesses and seen them create transformative impact. They do this primarily by linking individual farmers to reliable markets, ensuring fairer and more sustainable incomes. They also offer direct employment opportunities in non-farming positions, such as management, accounting, and agro-processing. But many also provide services that improve economic and social conditions for whole communities. In Peru, for instance, the Pangoa coffee cooperative offers its members training in organic agronomic practices: how to prune correctly, how to control disease, how to fertilize with compost. These skills help farmers increase their crop yields, while improving their long-term health by reducing exposure to chemical fertilizers and pesticides.
Many of our client businesses offer loans for members to purchase new equipment or rehabilitate their farms, pathways to Fair Trade or organic certification, and income diversification opportunities—all of which can lead to better livelihoods for farmers. Some enterprises, like Fair-Fruit in Guatemala, even pay directly for members, employees, and their children to get an education and healthcare. These are benefits that families in rural communities generally cannot access on their own; with the business, they have better prospects for the future.
For smallholder farmers, this is what decent work can look like. Where previously they were at the mercy of volatile weather and disease, as part of an agricultural enterprise they are resilient. Where they had minimal resources and training to make the most of their labor, as part of a business they are productive. Where their limited access to markets and credit restricted their job security, now the future is sustainable. The bottom line is: When agricultural businesses thrive, inclusive growth follows.
Example: Transforming the Lives of Women and Youth in Kenya
In the shadow of Mount Kenya, a macadamia nut processor called The Village Nut Company sources its harvest from 12,000 farmers located in the surrounding hills. The business was established in 2013 by the Mary, Johnson, Maina, and Ann Muhara, four siblings who grew up in the local community. Inspired by their late mother, who was a leader in the village, they’ve created a business that’s more than just a place to work: It’s an engine of impact.
Kenya’s agricultural sector accounts for nearly a third of its GDP and employs 62 percent of the country’s workforce. The country also has the highest youth unemployment rate in all of East Africa. This is more than a minor demographic dilemma. The lack of decent work opportunities has vast implications for national competitiveness and long-term economic growth. Conversely, investing in decent work for Kenya’s agricultural sector—especially young people—could improve the lives of millions.
The Village Nut Company recognizes that agriculture will only be an attractive career to the extent that it offers dynamic, creative, and prosperous opportunities. That’s why they’ve invested in workplace satisfaction and leadership pathways for their employees. From machine operators and trainers to quality control specialists and sorters, the company provides employment to nearly 100 individuals. Most are young people, especially young women, in their twenties and early thirties. For many, this is their first formal job.
In partnership with Root Capital, Village Nut Company has provided these young employees with training in financial literacy and governance. With these skills, they will have a better chance at a long-term, lucrative career in the agricultural sector. Village Nut has also implemented savings and credit programs for workers, enabling them to borrow money to renovate houses, enroll children in school, install electricity or water tanks, procure land titles, and purchase productive assets for income diversification.
For young women at Village Nut, there have been additional benefits. The company’s young mothers singled out the financial and time burdens of childcare as a barrier to their full, productive employment. Many had to take time off work, losing wages and opportunities for career advancement. With funding from Root Capital’s Gender Equity Grants program, Village Nut built and staffed an on-site daycare facility; an activity that has had myriad impacts. Young women report less stress and increased job security. Where previously childcare had been managed primarily through relatives and neighbors, the facility freed those providers up to pursue their own income-generating activities. What’s more, Village Nut trained several women in brick-making to support the construction of the facility—providing them with a lucrative new skill for off-season work. This investment in young women is boosting prospects for the entire community; and none of it would be possible without the agricultural business at the heart of it.
Pushing the Lever
The complexity of agricultural supply chains—combined with the rising demand for food and a finite supply of natural resources—means that opportunities for decent work are numerous. Whether people work the land directly as farmers or are employed on the business side of aggregators and processing plants, their chances for success are greater if they are connected to a central enterprise.
But challenges remain. Many of these businesses still fall into the “missing middle” of financing: too big for microfinance and too small and risky to obtain capital from traditional banks. To meet the impressive commitment of SDG 8, public and private entities—including governments, financial institutions, impact investors, and philanthropists—must come together to invest in the growth of agricultural enterprises. For maximum effect, this should include not only lending capital but also sharing the knowledge that will help them use it: technical training, financial capacity building, and extension services. As these businesses thrive, so too will their farmer members and employees—who will finally have a fair chance at opportunity.
This post was originally published on the Chicago Council’s Global Food for Thought blog.