Linking Farmers to Markets: What Could Go Wrong?

For the last 5+ years, I worked as a landscape scientist on the CGIAR flagship program on Water, Lands and Ecosystems (WLE) focusing on landscape restoration, finance and governance. These are some reflections from that period.

While attending a session on Unlocking Private Capital to Restore Africa's Degraded Landscapes at the 2018 Global Landscape Forum in Nairobi, a panelist stated the following: "One must always find a way to monetize the economic value of landscapes [and] figure out how to leverage [landscape] assets to generate cash flow to attract financing." I looked around and saw a couple nodding heads in the audience as I asked myself: what could possibly go wrong?

Proponents of this neoliberal approach argue that public financing is insufficient to achieve global restoration targets and that we must therefore find ways to entice private capital to get involved. The approach has been widely embraced by multilateral development organizations and international environmental NGOs.

Almost every month I read about some new investment fund that will solve Africa's land degradation problem. The notion that "the market" is the best way to solve environmental problems has become so common that it is hardly challenged. People seem to believe that is how things ought to be rather than that it is one of several possible solutions. In the rare occasion that these ideas are challenged, my experience is that we are either preaching to a choir of Marxists evangelicals or we are speaking to an audience where people quickly tune out rather than engage in healthy debate.

To be clear, I am not (necessarily) opposed to ‘unlocking’ private capital for landscape restoration. I have even tried to develop a business model for sustainable agricultural intensification and landscape restoration in the hope of pitching it to investors. However, I am a bit more aware of all the ways that commodification of landscape assets can go wrong.

So, let’s look at a few scenarios: the hockey stick, the degradation and marginalization, and the growing pie theses.

Hockey stick references usually apply to the graph of CO2-equivalent concentrations in the atmosphere over time. There is another hockey stick, which refers to global wealth accumulation by a few and the resulting uneven distribution. The concentration of wealth with the super-rich is accelerating at an alarming speed, even during the ongoing global pandemic. Inequality.org reminds us, for example, that the wealth of U.S. billionaires increased by USD1.1 trillion since the SARS-CoV2 global pandemic started.

What does this have to do with restoration of smallholder landscapes in Africa? This exponential growth, much like the growth of the covid-19 virus in a human’s lungs, is symptomatic of a system that is designed to dispossess people of their assets. And, worse, this is more pronounced in African countries where power of the economic and political elites remains largely unchallenged. The fastest way to dispossess people of their assets is by commodification, given things like land, water or even carbon stocks a price so that they can be "leveraged". The most important factor contributing to the dispossession of (landscape) assets is the imbalance in knowledge, and therefore power, between the asset holders and the investors. For example, concepts such as compounded interest are still not well understood, let alone complex contract negotiations where people have to "figure out" how to leverage assets in order to generate cash flow - as the GLF panelist put it simply.

The second scenario is a classic story of “unintended consequences” or a failure to account for negative externalities - in economist terms. The Green Revolution may be a helpful comparison. It was by all means a huge success driven by human ingenuity ... if we only look at the intended outcome: greater food production. Yet, the unintended outcomes were dispossession of smallholder common lands, thus further marginalizing poor farming communities, and environmental degradation. The degradation and marginalization thesis was proposed by political ecologist Paul Robbins and implies that otherwise sustainable production systems “undergo transition to overexploitation of natural resources on which they depend as a response to … increasing integration in regional and global markets.”

We may think of this as the failure of success. Let’s assume that a farming community successfully managed to connect to regional markets thereby allowing the community to increase production and income while improving livelihoods. Once market access is established, production switches from traditional crops and methods to high-value crops that usually require more inputs. I have even seen smallholder farmers in the Kenyan Central Highlands switch to flower production, once those markets became accessible, and scarce water for household food production was diverted to flower irrigation. Regulations for monitoring withdrawals from the landscape (e.g. surface or ground water) and disposing of waste into the landscape are frequently lacking and lagging – they take time to realize, formulate, legalize and enforce. Overexploitation of the environment leads to reduced resilience and a system shock, e.g. drought, leads farmers to sell their livestock and land as a coping strategy. Robbins has plenty of examples of such events unfolding over and over across different socio-ecological systems.

The third scenario is also a case of unintended consequences. The growing pie metaphor is often used to explain the concept of Linking Farmers to Markets. Reducing obstacles for farmers to reach markets, allows them to produce more (the growing pie) thus benefitting all people in the value chain (growers, middle men and seller all get a bigger piece of the bigger pie).

When farmers are linked to markets, however, they don’t just sell their goods to other consumers but they themselves become consumers in that market. For every truckload of freshly dug potatoes that leaves the village for the city market, a truckload of processed potato chips that are high in fat and salt enters the village. This is the proverbial growing pie that is likely washed down with the latest sugary drink, probably made from subsidized high fructose corn syrup and imported from abroad, just like the chips. The image below is taken from a February 2018 New York Times article describing the obesity problem in Chile but it could have just as easily been a picture from a roadside stall in rural Kenya.

Land degradation is still happening at a faster pace than we are restoring land, and some estimates indicate that USD 300-400 billion is needed annually to restore the world’s degraded lands. I am not downplaying the problem and I do think that there is a role for private finance. During presentations of landscape restoration projects, I have at times asked the presenter “what could go wrong,” but was usually met with a blank and somewhat annoyed stare. I believe that the development and investment communities should take this more seriously, perhaps by making it a requirement to do a serious Scenario Planning Exercise in preparation for how well-intentioned interventions can go wrong. The status quo is to spend a minimal amount of time to list set of assumption, perhaps as part of a SWOT analysis, but remain mostly uncritical so not to jeopardize the project.

Lastly, there is a tendency to think that if we help in one way, e.g. linking farmers to markets, it should be someone else’s responsibility to do the rest of the work because "we can only do so much". I've heard colleagues say: we cannot help attract private finance and ALSO educate people in healthy diets, policy processes or business negotiation. But this attitude ignores the fact that we choose to enter complex systems with many non-linear feedback loops and where real people's livelihoods are at stake.

We must critically examine our approach to unlocking private capital to restore Africa's degraded lands and for each proposal answer the question: "what could go wrong?"