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Written Evidence Submitted by the Small Foundation GFS 01 Written evidence submitted by the Small Foundation 1. Summary and recommendations 1.1. Small Foundation (SF) is a grant-making organization registered as a charity in Ireland. Its objective is the speedy and permanent elimination of the threat of famine from Africa. The people most at risk of famine are rural smallholder families. SF believes the threat of famine can be eliminated only through the widespread creation of opportunities for these people to gain economic independence through income generation. The necessary first steps are the improvement of agricultural productivity in volume, quality and reliability and the creation of linkages to markets. This will contribute to food security not just for the producers but globally. 1.2. SF funds the scaling up of initiatives by NGOs and businesses that open up access for smallholder communities to knowledge, technology, finance and markets. But it believes only the private sector can create those opportunities on the required continent-wide scale. 1.3. The private sector does not operate in a vacuum. Action is required by the public sector and other actors to enable smallholders to become part of opportunity-creating value chains. 1.4. We therefore believe that the key issues for the inquiry are: What are the obstacles to the private sector providing adequate and sustainable opportunities for smallholders and their communities? These are all the factors, whether physical, legal, political or institutional, that inhibit access by smallholders to knowledge, technology, finance and markets. How can the public sector foster the conditions for private sector-led solutions to thrive? This role lies in the removal of the obstacles referred to above. This involves public investment in: education at all levels, including training in community organisation, business and entrepreneurship; last-mile distribution (and, where appropriate, local manufacture) of productivity-enhancing technology, including improved inputs and irrigation; financial institutions to meet the financing needs of farmers and of all the players along the value chain; transport and communication infrastructure; and legal systems to create a robust and trusted commercial law framework, including title to land. How can we bring the required parties together to enable smallholder farmers to be embedded in viable value chains? A new type of organisation to broker effective partnerships may have a role. How can the Doing Business in Agriculture Index being developed by the World Bank help African governments improve the environment for domestic and international investment and for smallholders seeking to improve their incomes? GFS 01 2. Smallholder farmers and food security 2.1. Small-scale subsistence farmers, who make up about 80% of the population in sub-Saharan Africa, mostly rely on rain-fed agriculture to provide for their families’ needs. As a result, even in good years, they are often hungry and their children are malnourished. 2.2. SF believes that, given the opportunity, even the most impoverished subsistence farming communities in sub-Saharan Africa can transform their own lives. Such a transformation requires them to move from subsistence farming to farming as a business with diversified produce for the market as well as their own consumption, with larger and more reliable harvests and more off- farm income. The farmer's family would then be able to meet its own food needs and the surplus income can be invested in health, education and further improvements in productivity. At the broader level, the surplus food produced contributes to the global food supply. 2.3. SF believes that this transformation can be achieved by giving smallholder farmers access to opportunities. It funds a range of approaches, run by NGOs, social businesses and profit making businesses, aimed at finding ways to do this. However, SF firmly believes that scaling up these opportunities so that the majority of smallholder farmers can benefit will require a greatly enhanced private sector in Africa. This will be mostly local small-scale businesses, though larger businesses, both local and multinational, also have an important role to play. 2.4. The probable long-term future for the majority of poor people in rural Africa is to become urbanized, as has happened with their counterparts in the histories of now-developed countries. The conclusion is sometimes drawn from this that it is futile to try to improve rural economies in Africa. This conclusion is seriously wrong-headed. Improving rural economies is a necessary step on the road to prosperous urbanization in Africa, as it has been everywhere else with the exception of a handful of small city states. 3. The role of the private sector 3.1. In SF’s thinking, the private sector encompasses small local businesses in Africa, including smallholder farming businesses, as well as the largest multinationals, and every business in between. 3.2. Agriculture is, for the most part, the domain of the private sector. This has always been the case, but there is renewed interest in the role of the private sector in providing more of the inputs and income generation opportunities, including access to markets, that smallholders need to thrive. This was reflected in the New Alliance for Food Security and Nutrition announcement at the Camp David Summit in May 2012 that aimed to forge a new partnership between African governments, international donors and the private sector “to increase responsible domestic and foreign private investments in African agriculture, take innovations that can enhance agricultural productivity to scale, and reduce the risk borne by vulnerable economies and communities.” The announcement recognised “the critical role played by smallholder farmers, especially women, in GFS 01 transforming agriculture and building thriving economies.” The New Alliance seeks to align public and private sector investments with African strategies for food security and nutrition, but recognises that the conditions for private sector investment need to be right. 3.3. SF applauds this initiative but it must be built on and broadened. 4. The need for effective partnerships 4.1. Companies such as Diageo, SAB Miller, Unilever, as well as African companies, are already using African smallholder farmers to supply them with produce. SF knows of, and has some involvement with, examples of this in Ethiopia, South Sudan, Mozambique and Kenya. Several private sector companies have signed up to the New Alliance country plans, outlining what they will provide. Most of them – domestic and international - are looking to expand their use of small-scale producers in their supply chains. Working with smallholder farmers, however, presents particular challenges, not least ensuring a consistent quantity and quality of supply. Ill-conceived plans that underestimate the effort and understanding required to get farmers to the required level of expertise, both organisational and technical, can be disastrous for both business and farmers. 4.2. Reducing and overcoming these challenges requires action from others. African governments can create conditions conducive to such investment. Non-governmental actors, from local cooperatives to international NGOs, have an important role to play in working with farmers, and farmer organizations, to reach the levels of output and standards required to enter supply chains securely and profitably. Donors and financial institutions are needed to provide the 'patient' finance required to move these businesses forward. 5. Improving the investment climate 5.1. CAADP, and particularly its 'Pillar 2' on market access, is doing important work in encouraging domestic and international investments of this kind. We are also pleased to see that the World Bank is working on a 'Doing Business in Agriculture' index and would like to see DFID and other sovereign donors supporting this initiative. This index will look at the various factors required to make a country a conducive environment in which to invest in agriculture – measuring the ease, for example, of accessing credit, irrigated land and inputs. 5.2. To capture the full picture, the Index should include factors that particularly affect smallholders, that reflect the developmental and food security benefits of increasing their incomes and that help governments, donors, NGOs and others to identify areas that need to be addressed to help them achieve this. The environment for the creation of cooperatives and other producer organizations, vital to aggregating smallholders' production, will be a key factor. 6. The need to broker more and better partnerships GFS 01 6.1. If the private sector and value chains are to expand the opportunities for income creation for smallholder farmers, more partnerships are needed between all the necessary elements: companies who need produce, smallholders who can meet that demand, cooperatives and NGOs who can work with the farmers to prepare them to supply the produce, the patient capital required to get these projects off the ground and the trade and pre-harvest finance needed to keep them going. 6.2. We therefore believe that sparking an exploration of how these partnerships might be brokered more effectively would be a productive line of inquiry for the Select Committee. 7. The role for the UK Government 7.1. The UK Government has the opportunity to build on the New Alliance when it assumes the G8 Presidency in 2013. As the sixth largest donor to African agriculture, helping smallholder farmers position
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