Food security: Are we putting the cart before the horse?

Following is the speech delivered by Hatton National Bank PLC Deputy General Manager, Banking With The Poor Network Chairman and Lanka Financial Services for the Underserved Settlements Chairman Chandula Abeywickrema as the keynote speaker at the conference ‘Cracking the Nut: Overcoming Obstacles to Rural and Agricultural Finance,’ which was co-hosted by the World Bank, FAO, Inter-American Development Bank and USAID on 20 June in Washington DC:

Around the globe over 925 million people suffer from the hardships inflicted by hunger. This figure is at an escalation amidst the resources and reserves of the 21st century. World food prices scale new peaks; food security continuously threatens to dominate the headlines in 2011.

Reportedly, around 200,000 acres of paddy and other crops in the North, East and North Central Province of the country were affected by the recent floods, and this is estimated to reduce our total rice production by nearly 400,000 tonnes. Engulfed within a vortex of population growth, economic instability and climate change, food security presents a demanding challenge for national and global governance.

The term food security describes a countries access to enough food to meet dietary energy requirements. It is a topic discussed around the world extensively and all nations have a common footing in this regard. Food security at national and global level focuses heavily on the supply side of the food equation.

Yet, the questions remain as to what really determines food security and how can we achieve food security? We have arrived at a conclusion that food security should be ensured. Yet, we fail to give recognition and serious thought to the underline fact affecting food security. The truth is that food security is dependent upon farmer security.

Obstacles of farmer security

1.Continued use of traditional practices

Farmers have very little knowledge on modern practices and trends. They are still stuck with traditional cultivation practices than moving towards scientific agriculture practices. Thus find it difficult to earn a positive yield. The use of technology in agricultural practices remains low due to lack of knowledge and access to technology.

Agriculture should be treated as an industry where the involvement of stakeholders such as Government, agriculture and research institutions, corporate sector and retail chains are imperative. The farming community needs assistance from agricultural experts from choosing which agricultural product to produce to finding the market place.

Due to lack of knowledge on the seasons, productive seeds, market requirements, effective pest control mechanisms, cash flow management, storage and finding market for produce many farmers end up in a continued vicious cycle of debt. Knowledge should be transferred and farmers should be identified and made an integral stakeholder of the agriculture industry.

The agriculture industry should be taken very seriously and practical measures should be taken to resolve food security. In this context, farmers needs be supported at a national level with right people and expertise heading key national level agricultural related institutions.

2.Access to land ownership and title deeds by small and medium scale farmers

About half of the world’s food is sourced from 400 million small farms of less than two hectares, planting for a mix of household subsistence and surplus for market. This model has been unable to thrive and three-quarters of global hunger is located amongst the people who manage and work on these farms.

One barrier to prosperity is not having ownership of the land, which gives them little or no incentive to develop the cultivation land area. For instance, the farmer who emerged as the winner of a recently held national level competition for farming has no ownership to the land he is cultivating. Therefore, he is unable to expand and has not real incentive to develop his cultivation further.

The other barrier is insecure tenure, a fact of life for the majority of poor farmers in many parts of the developing world. This impedes investment and lowers resistance to eviction by state and corporate interests for mining or property developments.

3.Access to financial services

Financing for farmer community is often difficult to obtain in rural areas due to the lack of acceptable security, high cost of agricultural financing and high perceived risk by lending institutions. Moreover, they are not familiar with book keeping, budgeting and financial statement, which restricts access to finance. Finding partnering linkages to financial institutions and lack of financial institutions catering to this segment too are seen as barriers.

Therefore, financial services should be made available, accessible and affordable for the farmer community. Further, targeted agricultural lending products should be created; and introducing competitive matching grants in order to initiate private sector investment to expand agriculture services, particularly to jumpstart agriculture enterprises in areas where none exist

4.Storage of harvest

Crops need to be stored at certain quality standards in order to preserve its quality and to get the right price. However, most farmers do not have necessary access to storage or warehousing. Therefore, the whole produce is directly sold to the market in bulk at a very low price since the supply is higher than the demand. As a result the farmer forego on the opportunity of quoting a higher price whereas the middleman reaps the benefits.

5.Difficulty in finding a market for produce

Farmers often lose out on finding a market for their produce. At most times they get caught to intermediaries who are making money on farmer’s efforts. Smallholder farmer access to larger markets for distribution of their products as well as harvest management and getting the produce to the consumer with the right quality should be ensured. Basic output marketing training in order to increase farmer awareness of market opportunities and to help link them to existing market channels should be developed and delivered.

Solutions to farmer security

In classic supply and demand economics, food inflation tends to improve food production as high prices incentivise more planting. But the beneficiaries tend to be large farmers and commercialised agribusiness because of access to finance, well-established logistics and connections with the market. They tend to respond more quickly to incentives from increased food price shifts.

There has also been a traditional bias against smallholding. Smallholders receive little policy support, subsidies or preferential funding. The bias continues despite changes to land policy and smallholdings are still thought of as being uneconomical and inefficient.

Large retail businesses, like supermarkets, that have strong supply chain ties and favor smallholder production can do more for smallholders as they are more likely to create beneficiation than foreign holding of land that is unconditional.

A retail food market that is decidedly pushed in a pro-poor direction can ensure that contract arrangements retain the smallholding character of agriculture and help diversify crop production from staple to high value crops. They could bring financial stability through long-term contracts.

Increase and strengthen business and technical skills of the farmer community thereby, building capacity among the farmers.

Formation of farmer bodies is another major initiative towards greater farmer security. Collectively farmers are much stronger than as individuals thus giving them as sense of responsibility and an advantage over intermediaries.

Backward integration in the agricultural sector is important to ensure that a win-win situation is created. The higher the private sector involvement in the agriculture in form of corporate partnerships, financing, buy back agreements, technology transfer, infrastructure and warehousing will benefit the masses in farming.

It is vital that farmer access to finance is improved, farmers are connected to markets and agriculture policy advocacy is advanced to promote the interests of private sector growth and of the rural smallholder farmer.

While there are significant efforts, discussion and lobbying taking place on food security, we need to be conscious about the effort in vain of putting the cart before the horse. The farmer is the one to pull the cart of food security and if he remains insecure by the factors discussed above, we will not be taking constructive steps and contributing towards finding a valid solution to food security.

Globally, the smallholder farmers are the largest supplier of food to the value chain. Therefore, they need to be recognised and made a strong link in the chain. If all stakeholders open their eyes and ears in taking measures to ensure farmers’ security, then that is the way to fight food security.