Revisiting smallholder inclusion in modern value chains as a path to sustainable development

Using the evidence and lessons from smallholder farmers’ involvement in modern value chains, IIED is taking stock of its ambitions, reality and signs of change.

Began April 2021
Alejandro Guarín

Principal researcher, Shaping Sustainable Markets

In the distance across a large field of plants, a farmer tends to his crop.

Green beans are cultivated in Kenya for export (Photo: Bill Vorley)

Including farmers in modern value chains has been one of the central goals of development over the last 20 years.

Smallholder farming is a key source of livelihoods in low-income countries, especially for women. Improving the incomes, opportunities and capacities of smallholders in an environmentally sustainable way is critical for achieving multiple Sustainable Development Goals

Supplying goods to formal buyers, such as global brands or their suppliers, has the potential to give small-scale farmers access to higher-value markets and better prices than traditional – often informal – markets for staples.

Smallholder inclusion in modern value chains has therefore been promoted as a route to improved rural incomes, an alternative to the survival economy, and a pathway to broader socio-economic development.

The scale of participation of smallholders in global value chains is not known precisely, but estimates suggest that as little as 10% (PDF) are involved.

However, a great deal of resources are devoted to both increasing the number of farmers in these global chains, and to improving the terms of their participation.

Smallholder inclusion has been assumed to bring positive benefits for different stakeholders.

For farmers and their organisations, inclusion promises to bring higher incomes, improved access to finance and services, and more equitable distribution of benefits in the supply chain, especially for women. Inclusion is also expected to have positive effects in environmental sustainability, for example by promoting biodiversity conservation.

For food businesses, inclusion can open up sources of supply, and may improve companies’ environmental and social performance. Governments may look to inclusion projects to drive agricultural upgrading and modernisation without large investments of public funds.

And for donor organisations, inclusion leverages private sector resources for development.

What is IIED doing?

IIED is working to address three key issues regarding smallholder inclusion in modern value chains: 

  1. Ambitions and expectations: what is inclusion supposed to deliver, and how is it supposed to work?
  2. Reality: to what extent have these expectations been met in reality?
  3. Signs of change: how are understandings of and approaches to inclusion evolving?

To answer these questions, we will:

  • Review and synthesise evidence about the impacts and benefits of interventions to include more smallholders in global value chains, and
  • Interview key experts from business and government, academics, investors and international development practitioners, who all bring unique insights beyond what has been published

Following this review, IIED will produce a ‘state of the debate’ report and convene a series of roundtable discussions with a diverse group to identify opportunities to rethink smallholder inclusion, and to identify common ground between different stakeholders.

We will also use the insights from this research to reflect on IIED’s own engagement with the private sector and large businesses, and how they contribute to IIED’s strategy to make change happen.