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Download Strategies for Addressing Smallholder Agriculture And Please cite this paper as: Cervantes-Godoy, D. (2015-09-01), “Strategies for Addressing Smallholder Agriculture and Facilitating Structural Transformation”, OECD Food, Agriculture and Fisheries Papers, No. 90, OECD Publishing, Paris. http://dx.doi.org/10.1787/5jrs8sv4jt6k-en OECD Food, Agriculture and Fisheries Papers No. 90 Strategies for Addressing Smallholder Agriculture and Facilitating Structural Transformation Dalila Cervantes-Godoy OECD FOOD, AGRICULTURE AND FISHERIES PAPERS This paper is published under the responsibility of the Secretary-General of the OECD. The opinions expressed and the arguments employed herein do not necessarily reflect the official views of OECD member countries. The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law. The publication of this document has been authorised by Ken Ash, Director of the Trade and Agriculture Directorate. Comments are welcome and may be sent to [email protected]. © OECD (2015) You can copy, download or print OECD content for your own use, and you can include excerpts from OECD publications, databases and multimedia products in your own documents, presentations, blogs, websites and teaching materials, provided that suitable acknowledgment of OECD as source and copyright owner is given. All requests for commercial use and translation rights should be submitted to [email protected]. Abstract STRATEGIES FOR ADDRESSING SMALLHOLDER AGRICULTURE AND FACILITATING STRUCTURAL TRANSFORMATION Dalila Cervantes-Godoy Agricultural Policy Analyst, OECD This report aims to identify the main constraints that limit smallholders in emerging countries from accessing markets. It does this first through a literature review of economic development theory and findings from past empirical studies. It then looks at different policy instruments currently used in five countries: Brazil, Chile, Indonesia, Mexico and South Africa. The results suggest that the focus of agricultural policies in these five countries has been on input use subsidies, whether these are for variable input use, fixed capital formation, or on-farm services. Agricultural policies that strengthen the broader enabling environment (general services or public goods) are very limited in most countries covered in this report. Empirical evidence suggests that policies that best support the integration of smallholders into markets include investments in general services for the sector, as well as policies that reinforce land tenure systems or those that promote farmer associations. Keywords: Smallholders, agricultural policy, emerging economies. JEL classification: O13, Q1, Q18 Acknowledgements The author would like to thank Tomás Magalhães-Andreetta, Alberto Valdés, William Foster, Shingo Kimura, Carmel Cahill, and Trudy Witbreuk for their contributions. The draft also benefited from comments and suggestions by the Delegates to the Working Party on Agriculture Policy and Markets (APM). OECD FOOD, AGRICULTURE AND FISHERIES PAPER N°90 © OECD 2015 STRATEGIES FOR ADDRESSING SMALLHOLDER AGRICULTURE AND FACILITATING STRUCTURAL TRANSFORMATION – 3 Table of contents Executive summary ...................................................................................................................................... 5 1. Introduction ....................................................................................................................................... 7 2. Literature review ............................................................................................................................... 7 2.1. Dualism in agriculture ............................................................................................................. 7 2.2. Definition of smallholders and global trends on farm sizes .................................................... 8 2.3. What constrains the small farmer from growth and accessing markets? ............................... 14 2.4. What constrains smallholder adjustment? ............................................................................. 19 2.5. Agricultural policies and smallholders .................................................................................. 22 3. Case studies ..................................................................................................................................... 26 3.1. Brazil ..................................................................................................................................... 27 3.2. Chile ...................................................................................................................................... 34 3.3. Indonesia ................................................................................................................................ 38 3.4. Mexico ................................................................................................................................... 46 3.5. South Africa ........................................................................................................................... 52 4. Main findings .................................................................................................................................. 59 5. Policy conclusions ........................................................................................................................... 61 References .................................................................................................................................................. 63 Tables Table 1. Average farm size by region .............................................................................................. 10 Table 2. Percentage of farms by size class by major geographic region .......................................... 12 Table 3. Average farm size by major world region ......................................................................... 12 Table 4. Count of countries showing a change in average farm sizes, 1960 to 2000 ....................... 14 Table 5. Major categories of constraints affecting smallholder access to markets ........................... 19 Table 6. Brazil: Distribution of the number and size of farm holdings ............................................ 28 Table 7. Brazil: Distribution of the size of farm holdings by region ................................................ 28 Table 8. Matrix of agricultural policies for smallholders in Brazil .................................................. 32 Table 9. Chile: Total and proportion of farm area by size category (physical hectares), census data, 1965 to 2007 (excludes forestry) .................................................................... 34 Table 10. Total hectares by type of exploitation ................................................................................ 35 Table 11. Chile: Average farm sizes by farm type ............................................................................. 35 Table 12. Matrix of agricultural policies for smallholders in Chile ................................................... 39 Table 13. Indonesia: Number of land holdings by size range (000) ................................................... 38 Table 14. Indonesia: Proportion of all agricultural households by farm size and region, 2007 ......... 42 Table 15. Matrix of agricultural policies for smallholders in Indonesia ............................................ 44 Table 16. Mexico: Production units by size range ............................................................................. 46 Table 17. Mexico: Farm holdings by land tenure regime................................................................... 47 Table 18. Matrix of agricultural policies for smallholders in Mexico ................................................ 49 Table 19. South African farming units ............................................................................................... 52 Table 20. South African land utilisation ............................................................................................ 52 OECD FOOD, AGRICULTURE AND FISHERIES PAPER N°90 © OECD 2015 4 – STRATEGIES FOR ADDRESSING SMALLHOLDER AGRICULTURE AND FACILITATING STRUCTURAL TRANSFORMATION Table 21. Matrix of agricultural policies for smallholders in South Africa ....................................... 56 Table 22. Classification of constraints addressed by the five countries ............................................. 59 Table 23. Proportion of budgetary allocations directed to smallholders, 2014 .................................. 60 Figures Figure 1. 570 million farms in 161 countries, by region or country (up) and by income group (down) ............................................................................................. 11 Figure 2. World average farm sizes in decline since the 1950s ......................................................... 13 Figure 3. Smallholder characteristics affecting market participation ................................................ 16 Figure 4. The Wiggins and Keats approach to linking smallholders to markets ............................... 26 OECD FOOD, AGRICULTURE AND FISHERIES PAPER N°90 © OECD 2015 STRATEGIES FOR ADDRESSING SMALLHOLDER AGRICULTURE AND FACILITATING STRUCTURAL TRANSFORMATION – 5 Executive summary Many emerging economies
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