Politics of Poverty

Smallholder farmers are agricultural investors too, but they’re at risk

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Small-scale farmers are responsible for a significant portion of Colombia’s agricultural production and constitute 12 percent of households in the country. Photo by Oxfam staff in Colombia.

New Oxfam paper says that benefits of monoculture expansion in Latin America accrue to the few who control big agribusiness.

Stephanie Burgos is a senior policy advisor at Oxfam America.

International negotiations on what constitutes responsible agricultural investment are set to get underway in Rome next month under the auspices of the UN’s Committee on World Food Security (CFS).

One in eight people around the world still suffers from hunger. But food insecurity today is not simply a problem of supply. It’s a problem of access.

What will matter most then in Rome is the conditions of agricultural investment, particularly given that farmers themselves – many of them smallholders – are the biggest investors in agriculture.

Negotiators from 193 member countries will consider the draft text on principles to promote investments in agriculture that contribute to food security. To do so effectively, they should understand what conditions can best support smallholder agriculture and what conditions instead undermine small farmer livelihoods.

The recent rise in demand for globally-traded commodity crops (palm oil, soy, and corn/maize) has sparked new investments in land for large-scale monoculture. How do these big land-based investments affect small farmers? In a new report released today, Oxfam analyzes how companies are approaching and developing their agricultural investments in Latin America, how land was acquired, and how small farmers and communities were affected in Paraguay, Guatemala and Colombia.

What stands out most in all three cases is that the particular production model and the specific local context are what primarily determine whether impacts of agricultural investments are positive or negative for local populations.

The three agribusinesses involved (Desarrollo Agricola del Paraguay (DAP), Palmas del Ixcan, and Cargill) have all publicly stated their commitment to contribute to economic growth and community development in the areas where they operate. However, Oxfam´s report indicates that industrial monoculture is displacing small farming communities and both directly and indirectly reducing their access to land. This is leading to further concentration of land ownership, as large cattle farms are transformed into mechanized plantations and smallholders sell their land for lack of other options. The end result is that as agricultural commodities compete with family production and heavy use of agrochemicals damages food crops, communities are more food insecure.

The cases in Guatemala and Paraguay show that jobs generated by industrial monoculture tend to be informal, poorly paid, and mostly seasonal, with fewer new jobs for women than men. Where efforts were made by companies to engage small farmers as independent producers in supply chains, they still didn’t fare better for the most part. The high burden of risk they had to take on—in particular from climate and market conditions—meant that one bad harvest or adverse event trapped them in a cycle of indebtedness from which they couldn’t escape. The start-up capital support farmers received didn’t enable them to overcome the challenges they encountered.

Overall, the cases showed that capital-intensive industrial production has had adverse effects on smallholders primarily because the production model of industrial monoculture for soy and oil palm led to social and environmental costs that disproportionately affected them. This holds true even when considering the philanthropic and corporate social responsibility actions undertaken by all three agribusiness companies, which had some positive effects but failed to compensate the social and environmental damages associated with their production model and did not empower smallholders in the long-term.

In Guatemala and Paraguay, investments undermined the lives and livelihoods of communities near the plantations. These impacts, however, weren’t simply by-products of the model. They were context specific, contingent on local realities relating to land tenure, government institutions and policies, environmental and labor regulations and enforcement, as well as power imbalances, influenced by history and culture.

Agricultural investments seem to be missing that the policy, legal, and institutional context determines how widely the benefits and costs of agricultural investments are shared. In Colombia, Cargill ignored the full context of its land-based investment, and failed to take into account national policies on land distribution and acquisition, or to understand the consequences of further land concentration in the country.

So what happens in a context of inequitable access to land and a lack of public support to improve small farmer livelihoods? It’s simple: the cases in the Oxfam paper provide evidence that benefits to industrial monoculture tend to accrue to the few who control the investment, while the costs are borne more widely, particularly by local communities who are displaced and whose rights and traditional livelihoods are undermined.

CFS negotiators must ensure that the principles they will adopt set clear norms to guide responsible agricultural investment, which should result in a net positive outcome for smallholder communities. This requires partnerships that empower small farmers and share benefits and risks in a fair and transparent manner. It also requires adherence to strong principles that should be inherent in a company’s core business model, including respecting national and local laws and regulations as well as international norms. Above all, if agriculture is to help reduce poverty and inequality while contributing to sustainable development, governments must take an active role in ensuring that benefits of investment accrue to smallholder farmers.

Hopefully, CFS negotiators will take heed of these and other insights drawn from Oxfam’s on-the-ground experience. Global food security and the livelihoods of the world’s smallholder farmers depend on it.

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