Whether for profit or social motives - and often both - an increasing number of investors are targeting opportunities in African agriculture. At the same time innovative approaches for deploying aid to support farming businesses linked to smallholders are emerging. This blog provides a snapshot of who is doing what, where and how.

19 July 2013

Is supporting smallholder farmers enough?

A thought-provoking piece from Lion’s Head, a UK-based investment group, calls for more donor support for commercial agriculture in Africa. An exclusive focus on smallholder farmers, say the authors, risks leaving countries dependent on food imports.

Lion's Head also want to see private investors doing more to tackle start-up agribusinesses and invest growth equity. The closed end private equity fund model – which seeks large financial payoffs within 5-7 years – does not match the long-term nature of agriculture. New and more patient approaches are needed, which may require blending public and commercial finance.

Since the food crisis of 2008, donors and governments have shown more willingness to engage with the private sector as a partner to promote agricultural development. The Grow Africa initiative of the Africa Union and the World Economic Forum is an example. But in recent months, campaign groups have turned up the heat highlighting “land grabs” and stoking fears of a corporate take-over of African agriculture.

Lion’s Head is concerned that, in the face of criticism, the main donor agencies are falling back on traditional approaches that prioritise support to smallholder farmers, instead of seeking creative solutions to promote responsible investment in commercial agriculture.

At AgDevCo we invest in both smallholder and commercial agriculture. Our ECA business in Mozambique shows what can be achieved when smallholder farmers are given access to better inputs (quality seed and a little fertiliser) and linked to reliable markets.  ECA is already benefitting over 2,200 farmers and will expand to 5,000 this year. Farmer incomes have doubled or tripled as a result.
Is ECA enough? We don’t think so. For a country like Mozambique to achieve its potential and become self-sufficient in major food crops like maize, soya and rice it needs mechanised farming and large-scale irrigation schemes (plus modern logistics and marketing) alongside smallholder and emergent farmer outgrower systems.
As Lion’s Head says, while the concerns of campaigners should not be dismissed, they should not be allowed to crowd-out the debate. Donors need to have the courage of their convictions to support responsible private investment in commercial agriculture. And investors need to take a longer-term approach, recognising the agriculture opportunity remains attractive but there are no easy wins. 
As argued previously on this blog, an informed and pragmatic approach bringing together the public and private sectors has the best chance of solving the food security challenge.