AGRICULTURAL MANAGEMENT, MARKETING AND FINANCE 19 AGRICULTURAL MANAGEMENT, MARKETING AND FINANCE OCCASIONAL PAPER 19 OCCASIONAL PAPER Profitability and sustainability of urban and peri-urban agriculture Profitability and Urban agriculture (UA) is a dynamic concept that comprises a variety of livelihood systems ranging from subsistence production and processing at the household level to more sustainability of urban commercialized agriculture. It takes place in different locations and under varying socio-economic conditions and and peri-urban agriculture political regimes. The diversity of UA is one of its main attributes, as it can be adapted to a wide range of urban situations and to the needs of diverse stakeholders. Despite UA is increasing in cities in developed countries as well as in developing countries, many urban farmers around the world operate without formal recognition of their main livelihood activity and lack the structural support of proper municipal policies and legislation. Appropriate policies and regulations are required to enhance the potential of agriculture in cities and mitigate its potential risks. The challenge is for UA to become part of sustainable urban development and to be valued as a social, economic and environmental benefit rather than a liability. This paper aims to provide pertinent information on profitability and sustainability of UA to a wide audience of managers and policymakers from municipalities, ministries of agriculture, local government, Non-Governmental Organizations (NGOs), donor organizations and university research institutions. It aims to highlight the benefits of linkages between agriculture and the urban environment, leading to a more balanced understanding of the conflicts and synergies. It examines how UA can contribute substantially to the Millennium Development Goals (MDGs), particularly in reducing urban poverty and hunger (MDG 1) and ensuring environmental sustainability (MDG 7). ISBN 978-92-5-105881-7 978 9 2 5 1 0 5 8 8 1 7 TC/M/A1471E/1/11.07/1000 The designations employed and the presentation of material in this information product do not imply the expression of any opinion whatsoever on the part of the Food and Agriculture Organization of the United Nations (FAO) concerning the legal or development status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. 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Applications for such permission should be addressed to: Chief Electronic Publishing Policy and Support Branch Communication Division FAO Viale delle Terme di Caracalla, 00153 Rome, Italy or by e-mail to: [email protected] © FAO 2007 Profitability and sustainability of urban and peri-urban agriculture iii Contents PREFACE v ACKNOWLEDGEMENTS vii ACRONYMS ix EXECUTIVE SUMMARY xi 1. INTRODUCTION 1 1.1 URBAN AGRICULTURE ON THE POLICY AGENDA 1 1.2 AIMS AND STRUCTURE OF THIS STUDY 3 2. URBAN AND PERI-URBAN AGRICULTURE 5 2.1 CHARACTERIZATION OF URBAN AGRICULTURE 5 2.2 DYNAMICS OF URBAN AGRICULTURE 10 2.3 CLASSIFICATION OF URBAN FARMING SYSTEMS 15 2.4 CONCLUSIONS 24 3. PROFITABILITY AND SUSTAINABILITY OF URBAN AGRICULTURE 27 3.1 MEASURING ECONOMIC IMPACTS AND PROFITABILITY OF URBAN AND PERI-URBAN AGRICULTURE 28 3.2 ECONOMIC IMPACTS AND PROFITABILITY OF URBAN AND PERI-URBAN AGRICULTURE 31 3.3 ECONOMIC IMPACTS OF URBAN AGRICULTURE AT THE CITY LEVEL 40 3.4 SUITABILITY OF URBAN AND PERI-URBAN AGRICULTURE 53 3.5 CONCLUSIONS 56 4. POLICY DEVELOPMENT REGARDING URBAN AGRICULTURE 59 5. SUMMARY OF MAIN CONCLUSIONS AND RECOMMENDATIONS 67 REFERENCES 73 ANNEXS 83 iv Contents LIST OF TABLES TABLE 1: URBAN FARMING PER REGION 7 TABLE 2: AGRICULTURE IN RURAL AND URBAN SITUATIONS 11 TABLE 3: GENERAL INDICATORS AND PARAMETERS FOR SUSTAINABILITY ASSESSMENT 28 TABLE 4: INDICATORS TO ASSESS PROFITABILITY USED IN THE STUDIES REVIEWED 31 TABLE 5: REVENUE GENERATED IN DIFFERENT FARMING SYSTEMS IN KUMASI, GHANA 34 TABLE 6: PROFITABILITY OF CROPPING PATTERNS IN UPA IN KUMASI,GHANA 34 TABLE 7: ESTIMATE OF AVERAGE MONTHLY INCOME OF COMMERCIAL GROWERS AND RETAILERS 35 TABLE 8: INCOME AND ADDED-VALE OF UPA (VEGETABLES), BRAZZAVILLE, CONGO 36 TABLE 9: CAPITAL REQUIREMENTS AND RETURNS IN ANIMAL PRODUCTION SYSTEMS 37 TABLE 10: MONTHLY NET INCOME FROM IRRIGATED MIXED VEGETABLE FARMING 39 TABLE 11: FOOD PROVIDED BY URBAN AND PERI-URBAN AGRICULTURE 42 TABLE 12: SUSTAINABILITY INDICATORS USED IN STUDIES ON UPA 54 TABLE 13: SUSTAINABILITY OF UPA IN ACCRA AND KUMASI (GHANA) 55 TABLE 14: SYNERGIES AND CONFLICTS IN URBAN AGRICULTURE SUSTAINABILITY 56 TABLE IN ANNEX 15A: CHARACTERISTICS OF MAJOR OFF-PLOT FARMING SYSTEMS IN LOMÉ, TOGO 83 15B: CHARACTERISTICS OF MAJOR OFF-PLOT FARMING SYSTEMS IN COTONOU,BENIN 84 15C: CHARACTERISTICS OF MAJOR OFF-PLOT FARMING SYSTEMS IDENTIFIED IN BAMAKO, MALI 85 15D: CHARACTERISTICS OF MAJOR OFF-PLOT FARMING SYSTEMS IDENTIFIED IN OUAGADOUGOU, BURKINA FASO 86 15E: CHARACTERISTICS OF MAJOR OFF-PLOT FARMING SYSTEMS IDENTIFIED IN DAKAR, SENEGAL 87 16: FACTOR SHARES IN URBAN AGRICULTURE ENTERPRISES , NIGERIA 88 17: S.OLITORIUS ENTERPRISE BUDGET FOR INTENSIVE URBAN PRODUCTION, IN CFAF 88 18: S. SCABRUM ENTERPRISE BUDGET FOR SEMI-INTENSIVE PERI-URBAN PRODUCTION, IN CFAF 89 19: MAJOR HORTICULTURAL CROPS CULTIVATED IN BAMAKO AND OUAGADOUGOU 89 20: BENEFIT-COST RATIOS OF CROPS PRODUCED IN URBAN AND PERI-URBAN, TAMALE 89 21: COSTS OF PRODUCTION AND INCOME GENERATION FROM MAIN URBAN, PERI-URABN AND RURAL FARMING ALONG THE MUSI RIVER IN HYBERBAD 90 22: REVENUES, COSTS AND INCOME PER FARM 91 23: AVERAGE INPUT COSTS, REVENUES AND RETURNS OF VEGETABLE CROPS 92 24: SIZE AND PROFITABILITY RANKING OF LIVESTOCK AND POULTRY ENTERPRISES IN PERI-URABN AGRICULTURE 93 25: AVERAGE ANNUAL INCOME FROM DIFFERENT UPA ENTERPRISES 93 26: POTENTIAL ENVIRONMENTAL IMPLICATIONS OF URBAN AGRICULTURE 94 LIST OF FIGURES FIGURE 1: POLICY DIMENSIONS AND MAIN TYPES OF URBAN FARMING 24 LSIT OF BOXES BOX 1. THE MILLENNIUM DEVELOPMENT GOALS 8 BOX 2 ECONOMIC VALUATION OF ENVIRONMENTAL SERVICES OF URBAN FORESTRY 30 BOX 3: MULTI-STAKEHOLDER PROCESSES FOR POLICY-MAKING AND PLANNING FOR UPA 61 Profitability and sustainability of urban and peri-urban agriculture v Preface Urban agriculture (UA) is a dynamic concept that comprises a variety of livelihood systems ranging from subsistence production and processing at the household level to more commercialized agriculture. It takes place in different locations and under varying socio- economic conditions and political regimes. The diversity of UA is one of its main attributes, as it can be adapted to a wide range of urban situations and to the needs of diverse stakeholders. UA or urban and peri-urban agriculture (UPA) as it is referred to in this paper, can make important contributions to social, economic and ecological objectives of sustainable urban development (SUD). UA is increasing in cities in developed countries as well as in developing countries, and the number of cities revising existing policies or formulating new policies and action programmes on UA is growing rapidly (van Veenhuizen, 2006). However, many urban farmers around the world operate without formal recognition of their main livelihood activity and lack the structural support of proper municipal policies and legislation. Appropriate policies and regulations are required to enhance the potential of agriculture in cities and mitigate its potential risks. The challenge is for UPA to become part of SUD and to be valued as a social, economic and environmental benefit rather than a liability. To support this development, an overview is provided of the role and importance of UPA on the basis of three studies. In 2002, two assessments of the profitability and sustainability of urban farming were undertaken for the Food and Agriculture Organization of the United Nations’ (FAO) Rural Infrastructure and Agro-Industries Division ( AGS), by the International Water Management Institute (IWMI) (Ghana Office) and the French Agricultural Research Centre for International Development (CIRAD). These studies were carried out in selected urban and peri-urban sites in Ghana, West Africa (Gyiele et al., 2002) and in Thailand, Asia (Vagneron et al., 2002). The studies attempted to contribute to a greater understanding of issues and opportunities characterizing intra-urban and peri-urban farming from a long-term perspective. In a third study, Danso et al. (2003) sought to identify and typify urban farming systems (UFSs) and discuss indicators to measure and assess profitability and sustainability of urban farming, with a focus on Africa. FAO requested ETC-Urban Agriculture to integrate the results of the three studies, putting them in a wider context, using additional published and unpublished information available at the