At World Food Prize Borlaug Conference, Making the Case for a Business Approach to Ag Development

During the World Food Prize Foundation’s 2024 Borlaug Dialogue conference in late October, Sierra Leone President Julius Maada-Bio held a meeting with representatives from global businesses, funders and nonprofits. The president shared his country’s agricultural development priorities and explored with the assembled guests how they might partner with the government to help achieve them.

As Maada-Bio outlined ambitious strategies for Sierra Leone’s rice and other value chains, he succinctly stated the agricultural development challenge faced by many low- and middle-income countries (LMICs) in Africa and elsewhere, using coffee as an example:

“We grow the coffee beans, they are sent to Europe where they are processed and packaged, and then we buy the coffee back from them.”

His observation highlighted that meaningful agricultural development requires not only productivity gains but also a move up the value chain to where these countries — and their farmers, big and small — can extract more value from the products they sell. The key, according to Maada-Bio and several other leaders who attended the conference, is to acknowledge and approach agriculture as a business, even for smallholders, not just a “production system.”

“Every smallholder farmer is a businessperson,” declared Akinwumi Adesina, president of the African Development Bank (AfDB), who also attended the Borlaug Dialogue. “When they and we produce and only sell commodities, it’s an open door to persistent poverty.”

Helping Farmers Compete

This sentiment aligns with Heifer’s approach to supporting smallholder farmers in ways that equip them to compete on a level playing field in formal agricultural markets. We help them establish cooperatives and other farm-based enterprises that boost collective market power, increase access to financing and key inputs, and facilitate the development of added-value products — for example, yogurt or cheeses instead of just raw milk. To be sure, selling more primary product is always a plus for poor farmers but it still leaves them at the bottom of the value chain where narrow margins and price volatility tend to reside.

AfDB Vice President Beth Dunford, speaking at a conference plenary, stressed that most countries are aware of where they need to go in the agricultural space but they lack the capital to do so. She said LMIC farmers “cannot thrive without investment,” and the global development community should put more emphasis on ways to derisk that investment. Dunford said this can be done in a variety of ways — such as through public-private partnerships, financing that “blends” commercial and concessional elements or funding through impact investors willing to take a first-loss position.

Here again, Heifer is addressing this need through the work of our Heifer Impact Capital unit and direct program activities that bridge typical gaps between financial institutions and farmers and their cooperatives through innovative mechanisms that reduce the risk level for creditors, insurers and others. For example, in 2023,  we partnered with the EthicHub Regenerative Finance Platform to establish a revolving credit facility for coffee cooperatives participating in Heifer’s Beyond Coffee II project in Chiapas, Mexico. Through use of a web-based platform, blockchain and “smart contract” tools, cooperative members will be able to access financing more readily.

Indeed, many Borlaug speakers made reference to the important role of web, digital and other technologies to facilitate smallholder access to what they need to run viable agri-businesses — not only financing but also technical advice, farm inputs, services such as tractors and of course potential buyers of their products.

One initiative is the Mobilizing Access to the Digital Economy (MADE) Alliance, of which Heifer is a member. The alliance aims to extend digital access to critical services to 100 million Africans, particularly the most vulnerable rural African women, over the next decade by leveraging Mastercard’s Community Pass platform. Farmers will be able to create “digital identities” to share data on their production that will help them qualify for high-quality seeds, inputs and financing.

Tara Nathan, executive vice president of Community Pass, told the Borlaug audience that smallholder farmers are in dire need of an “ecosystem organizer” — platforms they can leverage to gain access to resources that will help them scale and sell. She argued that we have to stop thinking of farmers earning $2-5 a day as “beneficiaries” needing a handout. Rather, we need to bring together partners to create the ecosystem that turns a beneficiary into a small business owner.

Acting Holistically

Another consensus point was the need to consider how smallholders produce more holistically, recognizing they are typically operating mixed farming systems, where livestock, food crops and forage crops interact in various ways, as opposed to a strictly monocultural approach.

At a panel on sustainable livestock, Heifer CEO Surita Sandosham said we need to “think about the whole ecosystem” and provide farmers with options and solutions that leverage these interactions, particularly as we seek to enable environmentally sustainable practices. She and others on the panel noted that the role of animals often gets less attention. Appolinaire Djikeng, director general of the International Livestock Research Institute (ILRI), noted that 1.7 billion people in LMICs rely directly or indirectly on animal agriculture for their livelihoods and that animal-source foods are a critical element in ensuring nutrition, especially during the important first 1,000 days of life.

Of course, efforts to empower farm businesses also need to address the growing threat from climate change on farmers’ ability to consistently grow crops and raise livestock — a common thread during the entire Borlaug Dialogue. The climate challenge is heightening the urgency of finding credible solutions for smallholders, especially since they have so little to fall back on in times of shock, and one bad season can make the difference between thriving and going hungry.

There is great work underway to develop crops and livestock that are more resilient to the new climate reality, but those developments will take time, and it’s not always evident how long it will take innovations to trickle down to smallholders. In the meantime, the concept of derisking again comes to the fore in the climate context, but in this case derisking the chance that a farmer will lose everything when that flood or drought happens. Climate-related farmer insurance instruments attracted attention at the conference — such as a pay-at-harvest Area Yield Index Insurance product developed by Heifer Nigeria with Pula Advisors, Olam Agri, Thrive Agric and Leadway Assurance Ltd.

Reason for Optimism

Despite all the challenges farmers and LIMCs face in achieving their agricultural goals, we also heard plenty of reasons for optimism, given the firm resolve of government officials, funders and others to move the ball forward.

Tanzania President Samia Suluhu Hassan was upbeat, saying that Tanzania is an example that food self-sufficiency is entirely possible; she said the country currently produces about 128 percent of its domestic food requirements and has thus become a significant food exporter to neighboring countries. “Agriculture is no longer a development activity — for decades, that’s how the conversation has been. We are now making sure agriculture is a wealth-creating sector,” she said.