More consumers, but lower profits

Smallholder farmers must be empowered to meet the challenges of rapid urbanisation.

At the recent Solidaridad conference in Johannesburg, African farmers spoke about the challenges they faced in their respective countries. Solidaridad is an international organisation with more than 25 years’ experience in creating fair and sustainable supply chains from producer to consumer. It also helps companies to implement corporate social responsibility and find sustainable suppliers.

Although South Africa is far ahead of other African countries in terms of agricultural production, our smallholder farmers and those across the continent face remarkably similar problems. Access to markets, for example, is a common difficulty right across Africa. Where smallholder farmers do manage to gain access, it is always at a primary level, and because they are not part of the value chain, the reality is that these farmers remain very poor.

An example at the Solidaridad conference was Joseph Nkole from Zambia, who painted a sober picture of the realities experienced by smallholder cotton farmers in Zambia. Despite producing one of the most important commodities in the world, these farmers have remained poor.

Nkole related how cotton produced in Zambia is exported to Asia where it is used in the manufacture of shirts. These shirts are then shipped to Europe and the USA, sold and worn for three or four years. Then they are donated to an NGO or charity organisation and returned to Zambia and other countries – to be given to poor farmers! The farmers cannot afford new shirts and are unable to benefit from the cotton value chain.

Increasing urbanisation
It is to be expected that as the world’s population grows, more people will spend more money. According to the UN’s Food and Agriculture Organisation (FAO), the world’s population is currently split half-half between urban and rural areas. But by 2050, no less than 70% of the world’s population will be living in urban areas. This means that a portion of the remaining 30% will have to produce food for the rest of the world.

Lifestyles will change as a result of urbanisation, with a resultant increase in income. FAO predicts that there will be a further diversification of diets, with less consumption of grains and other staples, and greater consumption of meat, dairy products, vegetables, fruit and fish. People will also demand more semi-processed and ready-to-eat foods, and vast sums will be spent on buying food.

All this should be good news for farmers. However, farmers are not currently reaping the rewards of population growth, as profit margins are continually shrinking. The irony is farmers’ profits are not declining because people are buying or eating less – the opposite is actually true. It seems that the faster the population grows and the more money is spent on food, the more farming operations are failing.

The obvious solution would be to add value. But will smallholder farmers be able to achieve this on their own? Partnerships between government, farmers and the private sector will be key to solving this problem.