Emerging economies are fed by smallholder agriculture. Its challenges are unique, but these world-leading businesses see it for the social and financial value creation opportunity it is.
As professionals working in the agriculture space, you and I are both well-aware of the challenges facing agriculture around the world: the growing global population. The changing climate. Plummeting profits for farmers. Rising costs for consumers.
But the global agriculture space is the farthest thing from a monolith: Because there are so many different kinds of farming around the world, from small acreage to massive acreage, family-owned or corporate, sustainably-run or not, different kinds of farmers are facing vastly different challenges — and need different solutions.
Bear with me for a moment, and let’s zoom out and look at the big picture of global agriculture: There are an estimated 570 million farms around the world. The scale of that number on its own shouldn’t be too surprising — we need a whole lot of farmers to feed the eight billion people on the planet.
Now, the United Nations estimates that family farms operate about 75% of the world’s agricultural land. The vast majority of them are small-scale family farms: about 95% of farmland is smaller than 5 hectares (that’s 0.05 square kilometers or about .02 square miles).
Other estimates look even closer: One notable paper shows that out of the approximate 570 million farms in the world, 73% are smaller than one hectare in size; 12% are 1–2 hectares in size; and 10% are between 2 and 5 hectares. On the global level, projections show that small farms (of less than 2 ha) make up about 12% of all farmland.
Diving even deeper into these statistics reveals that this big picture is more of a paint-by-numbers, where every region looks surprisingly different.
The paper shows that in countries at lower levels of income, smaller farms operate a far greater share of farmland than do smaller farms in the higher-income countries. In low- and lower-middle-income countries, as well as in countries of East Asia and the Pacific (excluding China), South Asia, and Sub-Saharan Africa, about 70–80% of farms are smaller than 2 ha and operate about 30–40% of the land.
For example, on average for 14 African countries, 80% of holdings are smaller than 2 hectares in size, operating about 25% of the agricultural land. In the European Union, 50% of farms are smaller than 2 hectares in size, and operate only about 2% of the agricultural land.
Many smallholders experience similar obstacles trying to sustain their livelihoods: Almost all already battle climate change’s impacts, with more spells of drought as well as more intense storms and rain. Accessing formal financial services can be tough because many financial institutions don’t operate at such scales. And markets can be unreliable given price fluctuations for commodities.
However, the challenges that smallholder farmers around the world face are not the same as the challenges that large-scale farms face, nor are they even the same from region to region. So support for these farmers must be extremely targeted.
Take India, for example. India is also an emerging and developing country, where as of 2018, agriculture employed more than 50% of the Indian workforce and contributed 17–18% to the country’s GDP, though the economic contribution of agriculture to India’s GDP is steadily declining with the country’s broad-based economic growth. Farming there features a mix of traditional to modern farming techniques. In some parts of the country, the traditional use of cattle to plow remains in use, but traditional farms have some of the lowest per capita productivities and farmer incomes. In fact, crop yields in India are still just 30% to 60% of the best sustainable crop yields achievable in other developed and developing countries.
Pranav Tiwari, the CTO of Indian agtech company nurture.farm, is tackling this exact challenge: the yield gap. “In India, if you look at the majority of crops, they’re cultivated on farms with really small acreage. The average is around 3 acres (12k square feet, 0.0047 square miles). The plantations that have larger numbers of acres are usually coffee plantations or fruit plantations.”
nurture.farm has created an end-to-end platform for farmers that features several scientific and technological solutions to help them more efficiently plant, fertilize, and harvest their crops, while boosting profit. They include running a fleet of machines such as tractor-sprayers that small farmers can cost-effectively use; data analysis tools and advisories; soil testing; spraying-as-a-service; and more. (These are all services that farmers in locations like the U.S. have easy access to, however, they are not accessible to small acre farmers in India; nurture.farm enables farmers to share, rent, access these technologies and tests etc. via an efficient shared-infrastructure platform.)
It specifically addresses the unique issues for Indian farmers, Tiwari told us. “The purpose for us to build these solutions is, we know that farming without scientific practices and technological interventions is becoming more and more unviable by the day. Any kind of manual farming requires a lot of labor intervention, and in a country like India, the cost of labor has grown faster than the ROI from farming.
That basically means that year-over-year, the bottom line for the farmers has gone down in real terms. But a mechanized and scientific approach to farming can improve this for the farmer.
For example, we want to enable the farmers to do scientific soil testing before they decide what fertilizer and how much fertilizer to use in their crop. We want to help farmers reduce their water footprint, so we have some technologies for that.”
Compare that to smallholder farming in Turkey, which the World Bank also describes as an emerging market economy.
According to the FAO, there are approximately 3 million farms in Turkey, most of which are family farms employing family labor. The average farm size is about 6 hectares, and the region faces drought and heat stress. Common crops are wheat, sugar beets, milk, poultry, cotton, tomatoes, hazelnuts, and other fruits and vegetables.
Many farmers there are happy to adopt new technologies that can help them, explains Dr. Geoff Thomas from May Seed, a leading Turkish seed company. “You’ll find guys with GPS trackers and crazy tech on their small farms … it’s high-tech and on the other hand we also have shepherds that go out with their flocks. The majority fall somewhere in between these two extremes.
Geoff discussed how May Seed helps Turkish farmers access solutions to their unique problems by providing seeds developed in Turkey for Turkish conditions. In their R&D programs, they use drones that look at plant health and plant stands and water efficiency to fight against water constraints.
Agriculture around the world is diverse, and in order to make it sustainable, profitable, and able to feed eight billion people, we need to treat it that way.
We’re bringing you exclusive content from our newsletter, The Forecast, here on Medium. This feature is called the Executive Brief, where our CEO, Himanshu Gupta, dives deep into the challenges in global agriculture, from our May 6th, 2021, newsletter. Want more insights like these in your inbox? Sign up for our newsletter here.