Challenges to smallholder inclusion
Smallholders are an important players in value chains. In many developing countries, agricultural smallholder production is an important driver of the national economy and source of income for the rural economy. They also face challenges, such as low productivity, soil quality, lack of agricultural and business skills, lack of access to finance, climate change, food insecurity, and unequal bargaining positions that make smallholders struggle to make a decent living.
We convene local, national and international public-private coalitions. These coalitions create global sector platforms, national sustainability strategies, sector covenants & benchmarking. These forms of sector governance are crucial to address sustainability challenges that cannot be addressed by individuals alone, and more importantly, these challenges need both the public and the private sector to be engaged to create an enabling environment for improving smallholder livelihoods.
We support smallholders to improve their profitability, income and nutrition situation. Activities include for example, supporting the adoption of good agricultural and business practices through training / coaching of smallholders.
We also work to increase the resilience of smallholders by supporting them to diversify their income sources and provide them access to financial and insurance services. The “Bankability” of smallholders is an important next step to lift smallholders to become entrepreneurs. When smallholders have access to finance and / or to services on credit it allows them to implement the good practices which they have adopted through the training and coaching.
Other activities that aim to improve the smallholder and household situation are linked to traceability, gender equality and empowerment and nutrition.
IDH has developed a data driven, quantitative approach to analyse the economic sustainability of “Service Delivery Models” (SDM). SDMs are supply chain structures, which provide services such as training, access to inputs and finance to farmers. Efficient service delivery can improve farmers performance, and ultimately their profitability and livelihoods. Our approach generates key insights on what works work when operating a SDM.
We are actively working with partners to prototype innovations and further improve their SDMs. The instruments of Innovative Finance are being used for sharing risks with financial institutions that provide the financing to these SDMs innovations. The innovative financing allows SDMs to further scale their operations and take risks to restructure for long term sustainability.
SDMs will be successful in the long term when they make a return for the service operators and when they have a positive effect at smallholder level. Buying requirements can be helpful mechanisms for creating revenue mechanisms for SDMs.
|Terms of Reference (TOR): Farmer Segmentation Tool||TOR||2019|
|How IDH is making a difference for cocoa farmers and cooperatives in Côte d’Ivoire||Impact Study||2018|
|Driving Innovations in Smallholder Engagement||Report||2017|
|Empowering Smallholder Farmers Through Value Chain Integration||Factsheet||2017|
|Dalberg R&R Report||Report||2017|