Making Small Farms More Sustainable — and Profitable

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Making Small Farms More Sustainable — and Profitable
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Smallholder farms provide a large proportion of food supply in developing economies, but 40% of these farmers live on less than U.S.$2/day.  With a rapidly growing global population it is imperative to improve the productivity and security of farmers making up this sector.  This article presents the results of Better Life Farming, an ecosystem that connects smallholder farmers in India, Indonesia, and Bangladesh to the capabilities, products, and services of corporations and NGOs.

More than 2 billion people currently live on about 550 million small farms, with 40% of them on incomes of less than U.S. $2 per day. Despite high rates of poverty and malnutrition, these smallholders produce food for more than 50% of the population in low-and middle-income countries, and they have to be part of any solution for achieving the 50% higher food production required to feed the world’s projected 2050 population of nearly 10 billion people.

At present, these smallholders are trapped in a negative cycle that damages both themselves and the planet.  They are vulnerable to adverse weather incidents and water scarcity, have limited access and low bargaining power with purchasers of their output, and incur high crop losses, estimated at 28% of their production during on-farm growing and post-harvest storage. In order to increase their meager incomes, they cut down trees to access more land.

But this deforestation reduces the planet’s capacity for absorbing carbon gases from the atmosphere, releases carbon gases when the felled trees rot or burn and adds new greenhouse gas (GHG) emissions from the additional livestock and crops on the deforested land. Scientists have estimated that 10 to 15% of global carbon dioxide emissions can be traced to this deforestation. The global community and its businesses have every incentive to help small holders improve their productivity, escape poverty, and end destructive agricultural practices.

Companies can help break this cycle through profitable and inclusive strategies that enable smallholders to lift themselves out of poverty by improving farming and business practices. Bayer, a global life science company, has been working with the World Bank’s International Finance Corporation (IFC), Netafim, a global supplier of irrigation solutions, and more than 20 local partners at a country level to form the Better Life Farming (BLF) multi-stakeholder alliance. The alliance offers last-mile delivery solutions to help smallholder farmers become sustainable, commercially viable suppliers of agricultural products.

Local Ecosystems, Locally Managed

BLF creates local ecosystems of private and public partners, offering comprehensive and accessible services to smallholders. These products and services include education and training, access to credit and insurance, and supplies of seeds, fertilizers, crop protection, irrigation, and farming equipment. The ecosystem also engages smallholders with downstream customers, including local aggregators, distributors, and off-taking corporations, and capacity-building partners, such as the IFC, Development Financial Institutions, NGOs and local farmer organizations.

The novel component in a BLF ecosystem is a Better Life Farming Center that connects up to 500 small and previously fragmented, and isolated smallholder farmers in a region to the capabilities, products, and services of corporations and NGOs. Each center is owned and operated by an agri-entrepreneur under an agreement with BLF.

The agri-entrepreneur, typically a farmer from the community or a young graduate, receives training in modern agricultural practices and business at a BLF Academy. Assisted by a BLF agri-consultant, the agri-entrepreneur then develops a model farm where local farmers are trained in effective, efficient, and sustainable agronomic and irrigation practices. The education and training enable the smallholders to operate with lower environmental footprints while becoming higher-quality and higher-yield producers.

The agri-entrepreneur works with local BLF partners to improve farmers’ financial literacy, provide financing and insurance services, offer integrated access to supplies of efficient irrigation equipment, seeds, fertilizers, and crop protection, and downstream connections to regional aggregators, distributors, markets, and corporate supply chains.

In short, the BLF Center becomes the center of a new ecosystem of education, training, financing, supplier, and distribution services for smallholders. The BLF centers pay special attention to unlock previously untapped business potential by supporting women smallholders and creating more opportunities for women, both in the roles of agri-consultants and agri-entrepreneurs.

Making a Tangible Difference

BLF did its first proof of concept in 2016 working with 20 smallholder farmers of green chili from 20 different villages around Varanasi in Uttar Pradesh, India. The farmers’ chili yields tripled, from 7.8mt/acre in 2016 to 22.7mt/acre in 2020. Their net income increased from around US$600 in 2016 to US$3,300 in 2020. As BLF expanded its range of agricultural products to tomato, corn, and paddy, smallholder farmers in different states across India achieved similar productivity gains (see Figure 1).

As of July 2021, BLF had established 900 BLF Centers in India, Indonesia, and Bangladesh, reaching more than 300,000 smallholder farmers with products and services from 29 different partner organizations. The agri-entrepreneur owners of the BLF Centers, almost 10% of them women, earned an average of US$2,000 in their first year of operation, double the country’s rural household average income. This amount is expected to increase over time, to US$5,500 in year 2, and US$10,900 in year 3, as the BLF Center becomes more established, expands to more farmers, and supports a broader portfolio of product and service offerings.

Reducing Environmental Damage

Training programs held at the BLF Centers on the correct and efficient use of fertilizers and crop protection products have enabled farmers to reduce the quantity of these inputs and associated environmental damage from incorrect usage.

The centers taught farmers how to lower food spoilage and wastage through better linkages to aggregators and distributors, and by improved local disposal of the waste that did occur. The centers helped interested farmers introduce micro-irrigation systems and better water management practices to enable optimal utilization of scarce water supplies. In future projects, BLF expects to further promote water-efficient farming and reduce GHG emissions, especially the high methane emissions from traditionally tilled rice fields.

Helping Out in a Crisis

The close ties and continuous support the BLF Centers provide to rural farming communities proved especially helpful during the covid-19 pandemic. The centers instantly adopted heightened safety norms and educated farmers on hygiene concepts.   With help from their regional partners, they helped maintain farmers’ incomes and assure local food supply during the crisis. As part of a global covid-19 response program supported by local governments, the centers distributed thousands of kits to subsistence farmers, which contained a combination of free commercial samples of high-quality hybrid seeds and crop protection products, along with face masks and personal protective equipment.

By end of 2021, BLF will have more than 1,000 BLF Centers operating in India, Indonesia, and Bangladesh, reaching more than 800,000 farmers. The increased scale will enable new partners to be introduced into the BLF alliance to extend BLF Center service offerings to include village-level health and nutritional support.  New BLF pilot programs are scheduled to be introduced in other Asian countries plus countries in Africa and Latin America.

Better Life Farming provides a vivid case study about how a company can create win-win inclusive growth ecosystems encompassing rural communities, local governments, and agribusiness companies. BLF Centers enable smallholders in rural farming communities to increase high-quality agricultural production with much lower ecological footprints. The inclusive growth BLF ecosystem increases profits for rural smallholder farmers and their private partners while directly supporting the first two United Nations’ Sustainable Development Goals (SDG) to eliminate poverty in all its forms everywhere, and to end hunger, achieve food security and improved nutrition, and promote sustainable agriculture.

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