Food assistance and institutional demand: supporting smallholder farmers to fight hunger and boost agricultural production

United Nations Development Programme – International Policy Centre for Inclusive Growth (UNDP/IPC-IG)

The importance of Smallholders for

Development• Post-war technologies that strived for modernization, urbanization

and industrialization marginalized smallholders • Narrowing and specialization of the commodity chains presented

additional challenges • Over 70 percent of the world’s poor reside in rural areas and a

majority depend on agriculture for their livelihoods • Despite this, smallholders/peasants produce 70% of the world’s food

(ETC Group 2009)• Production based on crop diversity and local/regional specificity to

incorporate culturally and climatically appropriate food

• According to the UN Committee on World Food Security and the United Nations’ High Level Task Force on Global Food Security, “smallholder agriculture has a central role to play in increasing agricultural production sustainability and in reducing poverty” and “efforts to connect smallholder farmers to markets – for example, through food procurement operations— contribute to farmer productivity”.

Assumptions • Responses

o State intervention o Price mechanisms o Procurement of local produce

• Culturally appropriate • Local economy linkages

o Increased demand o Bolster farmer organization o Expand infrastructure

• Challenges o Narrow supply chains o Uncompetitive markets

• Trader monopolies • Incomplete information • Land tenure uncertainly

o Food Importso Infrastructural

inadequacies/remoteness

Homegrown School Feeding (HGSF)

“A new model of school feeding that is designed to deliver agricultural/market improvements as well as nutritional and educational benefits” (Morgan et al. 2007)

Social Protection Benefits of School Feeding• Increases school enrollment and attendance• Improves educational achievement • Promotes food security and nutritional health

Synergies with Rural Development• Food for school feeding programmes can be procurement from smallholders • Increases demand for food• Provides a secure marketing channel • Increases productivity • Raises famer incomes • Secure income contributes to household’s food security

Local and Regional Food Procurement

(LRP)Policies based on purchasing food from smallholders • World Food Programme’s Purchase for Progress (P4P) • Brazil’s Food Acquisition Programme and (PAA) • Purchasing from Africans for Africa (PAA-Africa) • USAID/USDA supported LRP programmes in Africa

• Additional innovationso Targeted support for nutritionally superior, domestics produce

• i.e. Cereals in Senegal for bread production

o Direct supermarket supply chainso Domestic food safety net programmes

• i.e. Bolug-Raskin programme in Indonesia

Brazil’s Food Acquisition Programme – PAA

• Targets the most vulnerable family farmers

• Budget of around US$700 million • Distributes food through social

protection networks and public institutions

• Implemented through various scales and across governmental levels

Institutional Demand as

Social Protection

for Development

Price Stability

Farmer Organizati

on

Food Security

Income Generation

Institutional demand policies promote development by procuring smallholder produce and protecting vulnerable populations through

coordinated markets to expand food availability

Price Stability • Many producers remain net food buyers

o Volatile food prices affect production and consumption decisions o Globally, food price volatility can make import dependent countries

even more vulnerable

• Domestic food markets need to be supported o Institutional demand policies help to set a price benchmark for

producers• Regional price surveys • Procurement of certain crops can have spillover effects to support

price stability in others o Seasonal fluctuations in prices can be mitigated by assuring a market

for producers eliminating post-harvest sell-offs

Income Generation• Financial risks inhibit productive investments

o Market information – demand, crop type, income security o Income shocks often result in selling off productive assets or reducing

investments in household human capital (i.e. taking children out of school, reducing clinic check-ups, etc)

• Institutional demand supports longer-term decision making to invest in productive assets o Increased and assured market demand

• Crop type with more certainty • Assured income • Longer-term planning to invest in production based on demand

Food Security • Institutional Demand has four main components

that bolster domestic food security o Availability

• Increased demand supports more productivity by incentivizing productive investments to expand food supply

o Access• Food distribution through social protection networks increases food

access to vulnerable populations (via food banks, schools, community kitchens and other public institutions)

o Utilization • Domestic and/or local administration of institutional demand

recognizes more culturally and ecologically appropriate crops for production

o Shocks• Domestic and/or local support of food systems enhances the

resiliency of producers and consumers through the support of food production that is less reliant on volatile international food prices

Farmer Organization• Institutional Demand and farmer organizations

are mutually reinforcingo Program implementation typically utilizes farmer organizations to

facilitate procurement and food delivery o Organized production can increase the capacity of local/regional food

systems to meet the demand of local institutional markets o Multiplier Effects

• Opportunity for shared learning about production and processingo i.e. Bulking other produce for improved market leverage

Issues/Controversies of Institutional Demand

• Pricingo How are regional/local prices for procurement determined? Who manages the a pricing mechanism?o What effect will this have on the existing infrastructure of private traders/intermediaries?

• Infrastructure o Transportation issues for food delivery o Organization and implementation of the program

• Who are the producers? Where does food get delivered, stored and distributed?

• Payments o How are payments made and is there a procurement limit per producer/household?

• Tendering Requirements o Procurement rules may impose burdensome bureaucracies which smallholders may find difficult to

comply – health and safety regulation, tax registration for producer organizations, etc o Countries may need to reform their legislation regarding public purchases in order to facilitate

smallholder participation in tendering processes

• Registration/Targeting o What system exists to target the most vulnerable producers? o Can the producers meet production requirements?

• Scalability o How can ID policies be scaled-up to include other producers (fisherfolk, landless, highly-capitalized

family farmers, etc)

• Dependencyo Loss of state funding resulting in less of a market than prior to Institutional Demand programme

Graduation?