Globalizing Food Markets and New Challenges for Smallholder Farmers

Understanding and addressing global agriculture developments—both advantageous and not—are critical to improving smallholder livelihoods, in which ICT can play a major role. The continued increase in globalization and integration of food markets has intensified competition and efficacy in the agriculture sector, and has brought unique opportunities to include more smallholders into supply chains.

weather impact on us corn yields
Source: US EPA

Yet in the same vein, agriculture faces a range of modern and serious challenges, particularly in developing countries exposed to price shocks, climate change, and continued deficiencies in infrastructure in rural areas.

New Challenges

When commodity prices rise quickly and steeply, they precipitate concerns about food insecurity, widespread poverty, and conflict—more so in countries that import high volumes of staple foods. Globalized food markets also increase the risk that some countries and many smallholders will remain marginalized from the expanding and more profitable agricultural value chains (such as premium foods, which have seen an increase in demand due to an expanding middle class) that rely on technical sophistication to ensure speed, scale, and customization.

Climate change has also played an acute role in keeping smallholders in the underbelly of value chains. Farmers can no longer rely on timeworn coping strategies when all of their familiar benchmarks for making agricultural decisions— the timing of rains for planting and pasture, the probability of frost, the duration of dry intervals that spare crops from disease—are increasingly less reliable. Severe and unexpected weather are shrinking already-limited yields and promoting migration from rural areas and rural jobs. Weather-related events leave developing-country governments, who lack the resources and the private sector investment to provide risk management instruments, to cope with major crop failures and the displaced victims only after the fact.

It is in the context of globalizing agriculture where the need for information becomes most vivid. The smallholders, who still provide a significant portion of the world’s food, need information to advance their work just as much as industrialscale producers. Comparing the two types of farmers—industrial and small-scale—exemplifies the latter’s disadvantages. Where wealthier industrial producers can use the Internet, phone, weather forecasts, other digital tools, and technologies as simple as vehicles and infrastructure as basic as electricity to glean information on prices, markets, varieties, production techniques, services, storage, or processing, smallholders remain dependent primarily on word of mouth, previous experience, and local leadership.

The smallholder disadvantage does not stop there

Financial and insurance services are often out of reach and poorly understood. Key intermediaries like producer organizations and rural institutions (including local government) could help alleviate the disadvantage, but in many places, the former are just emerging and the latter are inefficient and nontransparent. Both require a variety of technical and financial support to grow and become inclusive and effective. Many of these challenges and others can be addressed by using ICT effectively.

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