Smallholder producers – Too small to be considered?

This year I was asked by the German Cooperation to participate to an online international conference on the impacts of climate changes on Africa’ SME agribusinesses and smallholder producers.

Sub-Saharan Africa accounts for less than 4% of global greenhouse gas emissions. However, small-scale farmers and agri-businesses in Sub-Saharan Africa are among those who are most affected by and vulnerable to climate change impacts. Climate finance available for mitigation and adaptation purposes currently covers only a very small fraction of their total needs.

The question I was asked to reply was?‘Are smallholder producers too small to be considered’?

Smallholder producers feed most of the supply chains that have propelled the global economy for the past 150 years. The same supply chains responsible for the main climate changes. They certainly have a role to play in supply chain decarbonization, but they face power imbalances that make it difficult for them to change anything.

But their livelihoods and their capability to feed these supply chains will be dramatically impacted in the coming years. Climate change mitigation and adaptation is what is needed to build their resilience. If smallholders in developing and emerging economies fall, westerners will follow quickly.

To play an effective role in mitigation and adaptation programs to come, some prerequisites are necessary. I shared with the audience what they are from my perspective.

What we have tried over the last 60 years, as international and corporate programs, to empower smallholders and improve their livelihood did not work well. They are still largely excluded, poor and vulnerable.

So as Albert Einstein was saying:?“If you want different results, do not do the same”. We need to do things differently.

The goal is to make the invisible, visible; to put smallholders on the map. They should be considered as the smallest business units in complex supply chains and engaged in tailored programs.

I have identified five prerequisites that are needed before smallholders could contribute effectively to mitigation and adaptation programs. For each of them I give an?example of an innovative business model and technology that works and could be scaled up.

These prerequisites are necessary because since agriculture started,?we have considered smallholders as achieving only three roles: producing, harvesting, and aggregating. We have systematically excluded them from any other supply chain activities that generate added value.?Same for their organizations like cooperatives. The role we let them play is to aggregate the production of their members.

They are also excluded from finance, which is at the center of our commercial exchanges. Recently, they have been left aside of a new flourishing economy, the digital one. And they will certainly not be included in this new economy which are climate changes. Even if it is a threat for mankind, it is a new economy that will generate billions of dollars in consulting, decarbonization initiatives, and adaptation and mitigation programs.

As the movie?Don't Look Up?points out, a major disaster is still a great business opportunity. This is the paradox of Sustainable Development.

DIGITAL IDENTITY

This is the start. If you have ever managed farmer lists you know how many Fatima, Mamadou, Kouamé, and Rashid live in the same village!

Since most developing and emerging countries do not have a functioning national identity system, unique identifiers are needed to make the invisible, visible.

Because there is no system present, we can forget about ID card printing (which no longer adequately protects our personal information anyway) and go straight to digital.

Innovative business model and technology

Convergence.Tech ?founded by Chami Akmeemana

GRANULAR INFORMATION & TRACEABILITY

My last venture, Geotraceability Ltd., was the first tech company to collect granular information at scale on smallholders and trace what they produce.

Our first project in Ghana in 2012 engaged over 83,000 cocoa farmers with their farms mapped, their cocoa traced, information on the household, farm characteristics, farming practices, support they received and transactions involving them. When I sold the company in 2018, the technology had been used in 21 countries and various supply chains.

Collecting and updating this granular information on farmers, their practices, their production, and their impacts is the only way to change things and to measure real outcomes.

Innovative business model and technology

Sourcemap ?founded by Leonardo Bonanni

FINANCIAL SERVICES

Because of their high banking fees and risk mitigation practices, traditional banking systems will never be able to give financial services to smallholders.

Without financial services you are nothing, invisible!

It is a top priority to reinvent this system. Here again we need to do things differently. We must look to financial inclusion supported by decentralized systems and digital vouchers adapted to the context of smallholders.

Innovative business model and technology

hiveonline ?founded by Sofie Blakstad ??

IMPACT DATA

Smallholders produce raw materials and commodities. But I realized a few years ago that they also produce impact data, environmental and social, linked to their activities and practices. And there is a large and growing market for impact data. Trading houses sell commodities as well as impact data. For example, in 2014 a GeoTraceability program for cocoa was costing between 4 and 6 $ per ton. Our customers were selling this impact data to brands for 16 to 18 $ per ton and making a very good profit. But the farmers are receiving nothing, there are excluded from this digital economy that they feed.

We need a way to monetize this data for the benefit of smallholders. Farmer organizations aggregate commodities, they could also aggregate impact data and sell it with the input material.

Or we can create new jobs ‘the rural data collectors’ and reward them to collect data and connect farmers with markets.

Innovative business model and technology

Hara ?founded by Regi Wahyu

NATURE-BASED SOLUTIONS

We are at a time where each acre of land must contribute restoring balance. Supply chains decarbonization is certainly required but won’t be sufficient.

We also need nature-based solutions to restore degraded lands. In Africa, up to 65 per cent of productive land is degraded, while desertification affects 45 per cent of Africa’s land area.

African governments don’t have the resources to reverse the trend. Impact investors are needed as well as a mechanism to engage smallholders and share the financial return with them.

Innovative business model and technology

Viridis Terra International ?founded by Martin Beaudoin Nadeau

CLOSING REMARK

I shared my opinion on what needs to be changed and put in place to include smallholders in our old and new economies.

The examples I give work and deliver results and drive impacts. There are other companies and organizations offering innovative solutions. Obviously, I don’t know them all, but I can point out a few more like?One Acre Fund ,?Koltiva ,?Farmerline ,?Farmforce ,?SourceTrace ,?SAWIE ,?ECOTIERRA ,?BanQu ,?Dream Start Labs ,?Crowde.co ,?myAgro ,?MERIDIA .

I simply want to indicate that solutions and new models exist and can be deployed rapidly on a large scale.

I encourage you to visit the websites of these organizations and connect with their teams to learn more on their solutions and services.