Ensuring small holders aren't squeezed out of agricultural investments

Guest post by
6 December 2012

Tipping the Balance, a new joint research report from Oxfam and the IIED has discovered that current popular policies can tip the balance away from small farmers. How can we ensure small holder farmers get a better deal?

Harvesting paddy fields

Some believe that the secret to prosperity lies in governments 'getting out of the way' and unleashing private investment as the engine of growth. This was certainly Mitt Romney's (failed) pitch during the recent US presidential election. It influences thinking behind policies such as the World Bank's Doing Business indicators, which rate countries on the degree to which they have protected investors, opened borders and cut business taxes; or the New Vision for Agriculture, an initiative backed by the world's largest food and agriculture companies. In one of the NVA pilot countries, Tanzania, the initiative has advocated reviewing taxation policies and streamlining arrangements for granting land rights to (commercial) investors.

There are two fundamental problems with this approach, especially when applied to agriculture, a major focus of international donors and national governments alike.

Small farm development can not only provide a commercially viable option but can also maximize the pursuit of poverty reduction and environmental protection.

First it treats all investors as the same, failing to acknowledge that small-scale farmers often fail to benefit - despite being the main investors in agriculture, through their own savings and small loans.

Second it treats investment as an end in itself, rather than a means towards other national goals such as poverty reduction or food security. There is strong evidence to show that small farm development can not only provide a commercially viable option but can also maximize the pursuit of poverty reduction and environmental protection, mainly because of its more labour-intensive production methods. And women in smallholder households play a particularly important role in producing food for both home consumption and for domestic and global markets.

Today, Oxfam and the International Institute for Environment and Development (IIED) are publishing a new report, Tipping the Balance which tackles these issues head on. In it we find that the investment climates that support smallholder investment and corporate investments in agriculture, while having elements in common, are not the same. Many of the policy levers most in fashion - business-friendly reforms, public-private partnerships, the structure of tax incentives and a support for individual rather than collective land rights - tip the balance away from women and men smallholder farmers.

Four country-level reports (Guatemala, Nigeria, Philippines and Tanzania) were critical components of the research. These both highlight some of the problems and provide good examples of innovations that can deliver for smallholders and for women.  For example, Guatemala's Land Fund, established in 1999, helps small-scale farmers gain access to land and has a unit responsible for promoting women's equality. In Nigeria, the Women in Agriculture Programme helps improve women farmers' access to training by ensuring that each of the country's states has female extension workers from headquarters down to the field level. And Tanzania has included in its tax reform proposals an element of protecting agricultural products against highly subsidized imports.

Many of the examples in Tipping the Balance show that the real problem is not so much policy design, but implementation - especially in the face of powerful vested interests. What I take away from this is that significantly more effort needs to go into advocating and holding governments to account for implementing progressive policies, rather than policy inflation. The Philippines case study describes an interesting proposal to improve implementation of the current policies by reviewing existing bottlenecks, as well as reviewing, updating, and aligning the land use plans and policies of local government units.

Most of all, Tipping the Balance demonstrates that to a very large degree, policy makers are oblivious to the difference between investment in agriculture and investment for agriculture; with farmers themselves often not even considered as 'investors' within policy frameworks. If agriculture is to support investment in the smallholder sector, then governments will need to do more than attract corporate investment. With the right conditions in domestic markets to support smallholders and other entrepreneurs to invest in production, states may no longer need to feel so reliant on commercial investment at all costs as the engine of agricultural development.

Jodie Thorpe is private sector policy adviser for Oxfam GB. Her expertise is on business and economic justice issues, particularly related to climate change and natural resources, food security and livelihoods. Prior to joining Oxfam GB, Jodie led the emerging economies programme at SustainAbility, an international think-tank and consultancy.

This guest blog is cross-posted from Oxfam's policy and practise blog.

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