The Future of Small Farms: Innovations for Inclusive Transformation

Abstract

The number of people living in rural areas of low and middle-income countries is projected to increase in the coming decades. It is in the rural areas of these countries where a large majority of the world’s extreme poor reside. The livelihoods of two to three billion rural people depend on small farms. These small farms are responsible for the production and supply of a large portion of the calories feeding low- and middle-income countries. Small farms are also preservers of crops and associated biodiversity and with the right incentives can contribute to land stewardship. Small farms are diverse, and, hence, so are their associated challenges. We categorize small farms as commercial farms, small farms in transition and subsistence-oriented farms and highlight evidence-based innovations for the sustainable transformation of each type of small farm. Broadly, small farms face high transaction costs, lack collective action, and experience coordination failure in production and marketing. Lack of market access is also a major challenge. Investments in infrastructure, including those that support access to digital technologies, can improve farmers’ access to markets and incentives as well as foster growth in the midstream segments of the value chain that provide inputs, storage, processing, and logistics to small farms. Rural Non-Farm Employment (RNFE) is increasingly the main source of income for most small farmers and provides them with a risk diversification strategy and cash, both to purchase food and for farm investments to raise productivity, expand commercial activities, and produce higher-value products. Public investments and policies that facilitate growth of the agrifood system must pay more attention to creating enabling environments for the development of RNFE and strengthening the synergy between agriculture and RNFE in rural areas.