Helping Small-Scale Agricultural Producers Withstand Shocks
Shocks can be particularly harmful to small-scale agricultural producers’ livelihoods. This, in turn, can make affording nutritious food all the more challenging. We have seen this during the pandemic; the biggest threat to food security and nutrition has not come from disruptions to food availability, but from the often severe reductions in poor households’ economic access to food.
According to the Food and Agriculture Organization of the United Nations (FAO), a shock that reduces incomes by one-third will put healthy diets out of reach for 1 billion people, in addition to the 3 billion people who already cannot afford healthy diets. Countries may be affected differently by such shocks, depending on how much of the population already cannot afford a healthy diet and how much of it is at risk, as shown in the figure below.
Why is this relevant to small-scale agricultural producers? Nearly half of the world’s population, including four out of five people living below the poverty line, live in rural areas.
Social protection programs are an important tool to ensure access to healthy diets. Such programs can help low-income farming households adopt more profitable, but also riskier, economic activities and provide an alternative to negative coping strategies in case of shocks. They can be tailored to the four broad categories of countries shown in the figure.
- Orange oval: Countries in dire need of improving the affordability of healthy diets, as most of the population cannot afford them. These are mostly low-income countries located in sub-Saharan Africa.
In these countries, promoting economic inclusion in social protection programs is essential to reduce poverty. This requires a long-term approach to raise incomes and reduce inequality. Gradual interventions may provide intensive support for a certain period, with the objective of ensuring the gradual progression of the rural poor along economic inclusion pathways.
- Blue oval: Countries where many can afford a healthy diet, but a large share of the population is at risk. These are mainly upper-middle income countries in Latin America and the Caribbean. Over half of the region’s workers are in the informal sector with lower-quality and more vulnerable jobs than in the formal sector.
Here, the key challenge is to ensure resilience to shocks rather than ensuring accessibility in normal times. Social protection programs should, therefore, be shock-responsive and designed to buffer income shocks that make healthy diets unaffordable for poorer households.
- Yellow oval: Countries where many still cannot afford a healthy diet and many others are at risk. These are mostly lower-middle income countries in Southern Asia and sub-Saharan Africa.
Social protection programs in these countries should combine the approaches proposed for the orange and blue countries. They should be shock-responsive and able to buffer income shocks, but also involve a longer-term development perspective to raise incomes and reduce inequality.
- Green oval: Countries where affordability is generally guaranteed, even in times of crisis. These are mostly high-income countries.
Productive support programs are, likewise, helpful to small-scale agricultural producers. These are highly complementary to social protection programs and allow small-scale agricultural producers to benefit from logistical support, production innovations, inclusive governance of food supply chains, sustainable production practices, risk management tools and crop insurance schemes.
Key components of productive support programs that promote small-scale agricultural producers’ resilience involve:
- Integrating small-scale agricultural producers into supply chains for food, inputs and services through producer associations. They can reinforce livelihoods by allowing the pooling of resources to achieve scale, facilitating access to productive resources (for example, machinery, equipment and credit) and enhancing market power.
- Reducing different types of risks. For market risks, coordination with other actors in the food supply chain is important. For example, forward contracts can allow for mutual benefits. Farmers receive guaranteed prices for their outputs, regardless of market conditions, while processors and distributors receive products of a desired quality. As extreme climatic events become more frequent and more pronounced, producers will need agroclimatic disaster risk and early warning systems. Increasing their access to crop and weather insurance will enhance their ability to take out production loans and participate in riskier, but higher-return farming activities.
For more information, please see the following recent publications by FAO:
The State of Food and Agriculture 2021. “Making agrifood systems more resilient to shocks and stresses.”
“Ensuring economic access to healthy diets during times of crisis.” FAO Agricultural Development Economics Policy Brief, No. 43.