Large scale agriculture and private equity investments are crucial for farmers in developing countries.
Five major issues in developing countries that require large scale agriculture
By Asad Minhas and Adrian Rossio
The challenges faced by farmers in developing countries vary considerably depending on the ecological zone. Whereas some major challenges exist and are unique to certain countries, such as desertification and farmer-herders conflicts in Nigeria, scarcity of capital in India, internal human security in Afghanistan, and lack of Agriculture Research and development in sub-Saharan Africa, all developing countries face the same basic challenges. Just as lack of clean water is still a bigger threat than Ebola or Corona so too the biggest threat to farmers in developing countries is the prevalence of small farm holdings; lack of capital; lack of quality seeds, fertilizers and cropping inputs; outmoded and inefficient farming techniques; and lack of agriculture extension services.
For some reason, smallholder farming has been touted as the solution to poverty. That is a strange logic. The industrial revolution led to a lot of problems, but at no point did the world go back to the cottage industry model. No cottage industry production could compete with the factories. Why then would smallholder farming be a solution? It is only keeping farmers locked in poverty.
Let’s take a look at the 5 most common challenges;
1. Small farm holdings:
There are more than 570 million small farms scattered around the globe that are less than 1.8 hectares in size. While the number is decreasing, they are unable to meet the higher standards in regards to quality of food products that are demanded universally. Small farms can by definition not invest in technology.
2. Lack of skills:
Farmers in developing countries lack technical knowledge, skills, and training regarding many concepts pertaining to crop production, diseases and climate change. They resist innovation and instead stick to what they feel is tried and true, even though traditional practices makes it impossible to produce the standards and quantities that the international market demands. This is primarily due to the poor infrastructure of extension and adoptive research services in these countries.
3. Financial constraints:
Local governments, NGO’s and foreign aid agencies are either incapable of sourcing suitable international financing for these farming communities or lack an effective dispersal mechanism. The corruption and mishandling of funds are of course also a big constraint. Moreover, smallholder farmers are unable to get subsidies or discounts on agricultural inputs and are forced to depend on local suppliers, compromising on the costs of inputs which are considerably higher.
4. Lack of Quality Inputs:
The lack of financial resources also makes it near impossible for farmers in developing countries to purchase quality seeds, fertilizers, insecticides, and equipment needed to boost the quality and quantity of their yields. When they are forced to depend on conventional inputs and traditional practices, quality and quantity are inevitably compromised, and they are unable to compete or turn enough of a profit so as to invest in their farms.
5. Irrigation Practices:
Crops are often very sensitive to under and over-irrigation. They can need more water at certain times of their growth stage and at other times, too much water can cause damage. When countries lack irrigation systems and farmers are forced to depend on rain-fed water, crops often don’t get a sufficient amount of water at the needed stage. This is of course very detrimental to the quality of produce, as the crops are far more susceptible to wilt and pests
Climate change and poor food supply infrastructure, storage and transport are of course also hurdles that cause considerable losses as this triggers food spoilage.
At HVA, we believe that large scale agriculture and the involvement of funding via Private Equity eliminates these challenges. By simply applying sustainable agricultural practices that are in line with the SDG principles, it becomes possible to extricate smallholder farmers from the vice-like grip of poverty and create positive impact for their communities, countries and the world at large..
By growing on a large scale, you can make large-scale changes!
Handelsvereniging Amsterdam/ HVA (Est. 1879)