Dr Sanjay Lanka is a Lecturer in Financial Management at the Management School.
Smallholder farmers who are farmers with less than or equal to 2 hectares of land are facing a crisis. In order to address this issue, this blog post which is the summary of a recent paper that I have co-authored, will outline the issues and propose a solution. The main argument of the paper is that the reduction in value received by the producers of agricultural commodities has challenged the survival of smallholder farmers who cultivate these commodities due to the fact that very little value is created at the producer end of commodity chains. The crops that farmers grow on their farms are commodities whose value in monetary terms is below the value of the labour that the farmers need to invest in order to grow them.
In smallholder agriculture, farmers have limited avenues to sell their produce directly to the end consumer and hence are compelled to sell to intermediaries who sell into corporate value chains. Thus the value created by farmers on the farm is captured by the companies that control the retail end of the value chain. Further, the use of industrial agriculture which mandates taking on high interest rate credit to pay for expensive inputs such as fertilizers and pesticides puts farmers into debt. The use of these dangerous chemicals has also compromised traditional agricultural systems which depended on nature’s biological functions.
Chemical fertilisers destroy the natural nitrogen in the soils that is available to plants and as a result farmers need to increase the amount of fertilisers they use every year to sustain yields. Soils around the world have lost, on average, at least 1–2 percentage points of organic matter in the top 30 cm since chemical fertilisers began to be used which amounts to about 150,000–205,000 million tonnes of organic matter, which has resulted in the emission of 220,000–330,000 million tonnes of CO2 emitted into the air or 30 per cent of the current excess CO2 in the atmosphere contributing to greenhouse gas emissions.
Clearly an alternative to this dysfunctional system is required. One such alternative is agroecology which is the science that provides the ecological principles and concepts for the design and management of productive agricultural ecosystems that conserve natural resources. Agroecology calls for the holistic management of the agro-ecosystem, by minimizing external inputs such as synthetic fertilisers and pesticides, therefore producing better environmental, economic and social outcomes for farmers by incorporating both, traditional knowledge and practices of modern agroecological science.
In order to understand how agroecology works in business terms, my research develops the field of agroecology accounting to explain how farmers could utilize the services provided by agricultural biodiversity to achieve a sustainable livelihood. The evidence is that the preservation of biodiversity promotes a symbiotic relationship between the farmers and their surrounding environment thereby promoting farmer’s livelihoods. The elimination of chemical fertilisers could also reduce annual global greenhouse emissions by as much as 10% since there is a growing body of evidence that shows that their products are not needed to feed the world and farmers can stop using chemical fertilisers without reducing yields by adopting agroecological practices. Additionally, the shift from chemical fertilisers to agroecological practices would allow farmers to rebuild organic matter in the world’s soils, and thus capture a possible two- thirds of the current excess CO2 in the atmosphere within 50 years.
In our paper we explore these concepts through a coffee cooperative in Southern India that was set up on the basis of bio-dynamic agricultural practices. The cooperative has a membership of over 11,000 farmers who depend upon growing coffee as a primary source of income. The cooperative has achieved Fairtrade and organic certifications for its products. However, despite having these certifications, the members of the cooperative have been adversely impacted by the coffee crisis. This problem is shared by coffee growers around the world who are suffering from low revenues from their coffee beans at the same time as they are facing increasing costs, as a result of which they have to switch to other economically attractive crops or leave farming altogether. In an effort to address these issues, a corporate foundation and a European multinational led investment mutual fund formed a partnership in 2011 with the cooperative to initiate an agroforestry project with the purpose of providing alternate sources of revenue by reducing the dependence on coffee.
The Agroforestry project
Since high quality coffee is often shade grown, the leadership of the Foundation in co-operation with the Mutual Fund came up with the idea of creating shade for the coffee using fruits trees. As discussed in the earlier section, this should also provide the means for the creation of habitats wherein biodiversity can return and provide ecosystem services to the coffee farmers. Further, given that trees sequester carbon; this enables the community to earn some extra money from selling carbon credits to the international market. In addition, as the fruit trees mature, they provide an alternate source of revenue for the farmers that enable them the opportunity to diversify their livelihoods from a dependence on coffee alone.
The farmers of the cooperative have undertaken the agroforestry project as an agroecology programme to plant around 6 million saplings during a five-year period in 6000 hectares and led to an increase in the variety of trees on the farm along with an increase of the biodiversity of birds, spiders, bees and ants. The project started with the planting of 1 million saplings each in 2011, 2012 and 2013 and in the next phase of the project, starting in 2014, coffee was introduced on 3,000 ha under the shade of these trees that were planted in 2011, 2012 and 2013. Since the agroforestry project was exclusively implemented on marginal or fallow lands, the trees were planted on parts of the community that did not provide any income in the past and did not have much biodiversity as the soil was degraded due to the practice of agriculture using chemicals. The planting of trees along with the practice of biodynamic farming, have started restoring the fertility of the soil and enabled the farmers to utilize the services provided by nature. The farmers are able to save money from not having to purchase expensive chemical fertilisers while also improving the soil ecology.
Progress and challenges for an agroecological transformation
Each of the individual plots of land for the members of the cooperative is between two to three acres. Instead of having a dependence on chemical inputs provided by agribusiness, the farmers in the cooperative are able to utilize elements of bio-dynamic farming which has provided them the means to secure their livelihoods since it incorporates the use of biodiversity to replace their need for external inputs. For example, supporting spider populations to grow and provide natural pest control webs enables the spiders to play a critical role of integrated pest management (IPM), thereby reducing the usage of synthetic pesticides, which harm biodiversity and endanger the health of the farmer.
Despite the benefits noted at the farm level, issues still remain for the cooperative and its farmers in terms of commercializing the produce from the agroforestry project. The cooperative has limited marketing and international trade expertise and its limited success in selling its coffee on the international market is largely due to the involvement of corporate value chains which retain a major share of the value that is generated. Due in part to their lack of control over the coffee value chain and the volatility inherent in commodity markets, the coffee farmers from the cooperative face a lot of hurdles in being able to use the coffee they grow to sustain their livelihoods. The cooperative through its participation in the agroforestry project has cultivated a diverse range of fruit trees and has found income sources to mitigate the effects of the coffee market volatility. Despite this, the cooperatives lack of marketing acumen and access to end consumers imposes a continued dependence on corporate value chains. The coffee cooperative is providing profit to the companies that control the value chain into which it sells its produce since it has limited avenues to sell its produce directly to the end consumer. Thus, despite the evidence of progress through the use of agroecological methods at the farm level, challenges still remain within the value chain. The emancipatory potential of an agroecological transformation can be considered to be complete when the two most important parts of the food system – consumers and producers – can be directly linked through the development of alternative food networks as evidenced by the creation of farmer to consumer markets, and short supply chains.