Sustainable intensification at scale

Food Security18 Dec 2013Joost Gorter

Developing countries run the risk of growing their agricultural production in the short run at the expense of their long-term prospects.

The coming decades the demand for high-quality food will continue to increase due to a growing world population, changing diet patterns and the increasing use of biofuels. The Food and Agriculture Organization of the United Nations (FAO) predicts that overall food production will have to grow by almost 70% by 2050, meaning an annual increase of 1,75% in productivity to meet future demand.

Clearly, there is a need to increase agricultural productivity in the coming decades. In our effort to achieve this, we have to take into account that poverty and (low) productivity are linked. This means that improving agricultural productivity will not only address global food insecurity, it can also help lift a large part of the world population out of poverty through sustainable economic growth. How is this sector organized and what is the best way to realize an increase of its productivity in a sustainable way? NewForesight’s recent article provides the various stakeholders involved with a framework for what needs to be done and a direction on how it can be done.

Over the past 50 years, there have been many widespread efforts to intensify agriculture in developing economies. In the 1950s, 60s and 70s, donors invested heavily in agriculture, which resulted in the Green Revolution in Asia and Latin America and a series of large-scale interventions in Africa. These measures created an unsustainable, agricultural sector in Asia and Latin America and had little impact in Africa. The liberal market approach of the 1980s paid little attention to social and environmental issues, and hardly any structures were made to build a foundation for long-term growth.

Since the early nineties, standards and product labels have contributed to more environmentally and socially sustainable supply chains. Still, their impact remains limited and they have failed to reach smallholders on a large scale. Standards provide only limited agricultural and management advice for higher productivity and good management, and certified farmers still lack high-quality inputs and access to finance.

Given the pressure to produce more food in a sustainable way in the (near) future, new strategies are required to promote sustainable intensification. Neither markets nor governments can achieve this alone: models and policies are needed that build on the strengths of both.

Sustainable intensification requires farmers to have access to better agricultural practices (through extension work), the right inputs and finance. A farmer’s ability to obtain such access depends to a large extent on his or her level of professionalism and level of organization (of a single or group of farming operations). Based on the degree of organization and professionalism, one can identify five categories of farmers: low-intensity smallholders that farm for subsistence, entrepreneurial smallholders, emerging producer organizations (POs), professional POs, and competitive commercial farmers (estates and POs). The number of farmers in each category determines the sector shape of a commodity sector within a country.

If we examine the degree of professionalism within different farm economies we can see that huge differences exist both within and between countries and regions. This means that strategies for sustainable intensification will also need to vary to raise the level of organization and professionalism.

Different shapes

The basic sector ‘shape’ of a farming sector in the developing world is a flattened pyramid. Large numbers of poorly organised smallholders form the wide base, and a tiny number of well-organized farmers constitute a narrow top. The cocoa sector in West Africa and the cotton sector in India are typical examples of this shape. The pyramid shape -a mix of unorganized, semi-organized and well-organized farmers- is a slightly more efficient version of the previous, as some farmers have been able to organize themselves and create economies of scale, thereby increasing their productivity. The sector is in transition.

More developed farming sectors have a (pentagon) diamond shape – a narrower base of unorganized smallholders beneath a larger middle section, comprising well organized, medium-sized farms that are able to obtain the required inputs for growth, including finance. The sector competes on quality. A larger share of total production volume is produced at a higher productivity level. Poverty exists, but a large part of the sector consists of small and medium businesses. The key to this model is market diversification by farmers. Examples of this sector shape are found in wine and floriculture.

Agricultural sectors in (more) developed economies have often moved beyond the diamond shape and have obtained the shape of an inverse pyramid. Large-scale farms are the dominant players in this type of sector. Since the sector competes on efficiency, the drive towards greater productivity tends to lead to exploitation of natural and social resources with increasing negative externalities. Examples of this type are soy and corn in the Americas.

The diamond shape, with its medium-sized, well-organized farms, represents the optimum point for sustainable intensification. This does not mean that a diamond sector is sustainable by default. It means that its degree of scale and organization is most suitable for intensifying production in a truly sustainable manner. On the one hand, the structure allows the most entrepreneurial and professional farmers to absorb better farm management practices, scale up, and employ other rural workers. On the other hand, the moderate and flexible farm size allows for biodiversity protection and avoids large-scale mono cropping.

The relationship between productivity and a sector’s capacity to adopt sustainable farming practices and better management techniques is shown in a simplified way in the figure above.

Transforming pyramid-shaped agricultural sectors into diamonds depends on creating an enabling environment that allows entrepreneurial farmers to enter this medium-scale tier, while also helping other farmers to find employment elsewhere. Farming should no longer be the social safety net for people who have nowhere else to go.

The presented model of sector shapes and forces helps us understand why sectors often remain the way they are even despite large amounts of development aid and support. If aid and support are not impacting the forces that shape a sector sufficiently, the dynamics of the sector will not be altered and no sustainable intensification will take place. Development strategies need to focus on organizing and professionalising farmers, helping the most professional farmers reach greater scale. Not creating economies of scale means preserving economies of poverty. Around the competitive farms, a competitive economy will flourish in rural communities of increasingly diversified nature. A beneficial cycle will create alternative livelihoods so that those farming for lack of better options will leave the sector to find a better alternative.

If ever there was an opportunity for the necessary fundamental reform, it seems to be now. Developing economies are showing that they are ready to end their dependency and take their rightful place in the global agricultural economy. Donors are starting to show signs that they are heeding their call. Above all, companies have realized that sustainability means sustainable intensification. All these stakeholders know that without sustainable intensification, the world will not have the agricultural products it needs without draining the environment that produces it.

NewForesight is a strategic consultancy firm based in The Netherlands specialising in sustainable market transformation. In November this year the company published an article entitled ‘ Sustainable intensification at Scale – A Framework for Strategy Design.’ This blog post is a synopsis of that article. The article ‘Sustainable Intensification at Scale, a Framework for Strategy Design, contains a model explaining all the forces that shape agricultural sectors. To read the full article, including the Forces Model, published by NewForesight in November 2013, click here.