Small Farms Survival and Growth: Making Investments Despite Credit Constraints

Abstract

This article argues that we know little about how small farmers in post-communist Europe survive and even grow while having little access to credit markets. In approaching small farmers, this paper builds on ideas of self-provisioning, contending that the tendency among small farmers is not one of growth towards and through economies of scale, but one of internalising and de-monetising costs, by growing in order to control upstream and downstream links in the value chain. It asks what is it that makes self-provisioning possible in two post-communist regions (located in Romania and Ukraine) and identifies various assets in the smallholders' environments, such as most importantly a diverse scene of intermediaries supplying smallholders with cash incomes. The implication of the research is that the existence of these assets is crucial for the smallholders' survival and growth, and these assets should be valued accordingly rather than dismissed in favour of integrating smallholders into modern, retailer-dominated, value chains.