IRD Seminar

Small scale farming and local food supply: linking farmers to marketsAndrew Speedy – Visiting Professor, School of Agriculture

Monday 12 January 2015

Small scale farming

Ways out of poverty (small farmers)

• Technology– Apply existing technology– New technology – biotech, GM, chemical, precision ag

• Microfinance (better: savings schemes)• Access to markets• Contract farming• Value chain approach (private sector led)• Exit strategy

Ways out of poverty (small farmers)

• Diversification– Fruit and veg– Aquaculture– Non farm enterprises– Agro-tourism

• Internal migration (urban industries)• International migration

FAO themes• Animal health• Animal production• Aquaculture• Biodiversity• Biotechnology• Child Labour in Agriculture• Climate change• Climate smart agriculture• Communication for

development• Decent Rural Employment• Emergencies

• Family farming• Fisheries• Food chain• Food prices and markets• Food loss and food waste• Gender• Genetic resources• Hunger• Indigenous people• Investment in agriculture• Land tenure• Livestock and the

environment

• Nutrition• Organic farming• Pollinators and bees• Quinoa• Research and Extension• Right to Food • Rural Institutions • School food• Seeds• Social protection• Sustainable forest

management• Trade• Urban agriculture• Water

Projects

• Rice production• Dairying• Small ruminants• Agricultural policy• Normative activities (Codex, OIE, IPPC)• Technical cooperation in emergencies

Milled rice yield by country MT/HaCountry Yield MT/Ha

Source USDA

Milled rice yield by country MT/HaCountry Yield MT/Ha

Source USDA

Milled rice yield by country MT/HaCountry Yield MT/Ha

Source USDA

United States

Item 2013 

   

Gross value of production USD Primary product: Rice 3,227.13 Total, gross value of production 3,227.13

Operating costs: Seed 201.63 Fertilizer 2/ 276.27 Chemicals 203.43 Custom operations 141.11 Fuel, lube, and electricity 350.79 Repairs 77.26 Purchased irrigation water 40.95 Commercial drying 90.87 Interest on operating capital 0.57 Total, operating costs 1,382.88

Allocated overhead: Hired labor 53.94 Opportunity cost of unpaid labor 127.70 Capital recovery of machinery and equipment 346.76 Opportunity cost of land (rental rate) 532.11 Taxes and insurance 49.47 General farm overhead 71.73 Total, allocated overhead 1,181.72

Total costs listed 2,564.60

Value of production less total costs listed 662.53Value of production less operating costs 1,844.25   

Supporting information:

Yield (tonnes per ha) 10.16 Price (dollars per tonne at harvest) 317

*http://www.ers.usda.gov/datafiles/Commodity_Costs_and_Returns/Data/Current_Costs_and_Returns_All_commodities/crice.xls

[USA] Rice production costs and returns per planted [ha], excluding Government payments, 2013*

Production solutions:Improved varieties

Seed production and distribution of improved varieties

Fertilizer and chemicals

Integrated pest management

SRI

Improved feeding

Animal health

Livestock diseases

• Zoonotic diseases– Food borne diseases– Cistercercosis

• Avian influenza• Newcastle disease• CSF, ASF and PRRS• Foot-and-Mouth Disease FMD• Hemorrhagic septicaemia• East Cost Fever

“Household incomes range from 420 US-$ to 1,570 US-$ per year. Income structure is quite diverse with non-cash benefits being prominent in the small systems. For example, draught power, manure and fuel from cow dung, and milk used in the household account for 16 percent of the household income in IN-2CO. Off farm income is quite important for all the stall fed systems in Orissa and constitutes 5 to 45 percent of the household income.

The returns from farming range from 460 US-$ to 2,910 US-$ per year. The dairy contributes 25 to 85 percent to the whole farm returns. The returns from cash crops are also important, ranging from 15 to 70 percent, depending on farm type. Net cash farm income closely follows the level of farm returns with the exception of the large commercial cow system (IN-15CO), where net farm income is relatively low, mainly due to comparatively high cash costs and hired labour costs in dairy per 100 litres ECM. The highest net cash farm income was obtained in the commercial buffalo based dairy farming system (IN-6BO), mainly due to lower unit costs of milk production.

The net cash farm income ranges from 190 US-$ to 1,100 US-$ per year. The low net cash income of 190 US-$ per year (IN-2CO) is due to low milk yields, small size of land holding, and slightly lower milk prices paid by the cooperative due to lower fat content and remote location.”

From: FAO 2004. The Economics of Milk Production in Orissa, India, with Particular Emphasis on Small-scale Producers

Economics of small scale milk production [India]

Linking farmers to markets

• Local markets• Traders• Cities, hotels, schools, government offices• Export• Cooperatives• Contract farming

Springfield Centre | Making markets work

Potential interventions

Technical assistance to supply-side players

Introducing new idea or ‘business model’

Information on new opportunities

Social marketing to stimulate demand

Technical assistance to regulators

Forums for ideas and exchange

One-to-one replication

Developing a new commercial service

Limited ‘risk-defraying’ financial support for new idea

Research on constraints and opportunities

Vision-building with public and private players

A range of activities are possible .....

Alan Gibson, Bangkok, 2008

Value chain approach

Sheep & goats (Ethiopia)

Group breeding scheme (Menz)

Farmers group (Menz)

Pig production (Uganda)

Cattle production (Tanzania)

Milk trader (Morogoro)

Value chain actors

• Service providers (extension, credit, veterinary etc.)• Input suppliers (feed, seed, breeding)• Producers (farmers)• Traders• Processors• Retailers• Consumers

Constraints in value chain approach

• Access to credit• Input supply (seed, feed, drugs)• Technology, training• Transport to market• Information (demand, price)• Private sector• Interest rates

Interventions

• Breeding• Feeding• Animal Health• Group marketing• Dairy hubs• Traders, transport• Processors• Exporters• Supermarkets, hotels, schools, etc,

Keys to value chain approach

• Identified market with potential growth• Private sector leadership• Government only in enabling role• Sustainable economics• No external support (interference)

Agricultural restructuring

• The objectives for agriculture and rural development will be set within the conceptual framework of ‘sustainable development’.

• Agriculture will become increasingly market-based, with the primary set of goals pertaining to the welfare of farmers, the broader rural population, and consumers.

• The role of government will shift from being the provider to being a facilitator of investments and services provided by others.

• The government will embrace and apply the concepts of “partnership’ and ‘co-management’ with the private sector and with community-based organizations in order to better achieve societal goals.

Agricultural restructuring

• Ensure adherence to principles that encourage sustainable development and the welfare of farmers and consumers.

• Provide public investment in appropriate infrastructure.

• Encourage but closely regulate investment by the private sector.

• Develop a fair system of contract farming for small farmers to work with the private sector.

Small farms / Commercial farms

• Households (nông hộ)• Small farms (gia trại) • Large farms (trang trại)• Towards 50:50 urban:rural• Dualistic approach• Support for small farmers• Commercial value chain (private sector)

Rural urban market

Global 201350 percent rural

50 percent urban

History of development

• Korea• Malaysia• Vietnam• Cambodia• Laos

Income - Livelihoods

Poultry!

Dairy improvement