Commercialization of Smallholders: The Tale of a Transforming Family

Berhanu Gebremedhin Market-Oriented Smallholder Development: IPMS Experience-

Sharing Workshop

ILRI, Addis Ababa, 2-3 June 2011

Subsistence family and farm profile: 2000

Family Profile:

•Ato Gebeyaneh Mirchaye, age 30•W/o Malefia Tirete, age 28•Two children •1.5 hectares of land

•A pair of oxen and farm implements•Two local cows and a calf•Ten sheep and goats•Some chicken•Thatched mud house and farm compound•3 extension agents working in the

village

Farm Profile:

Subsistence family farm planning, 2000Ato

Geb

eyan

eh:

Male

fia, th

e

rainy

seas

on is

appr

oach

ing. W

e

shou

ld ta

lk ab

out

our f

arm

plan

.

W/o Malefia: Oh!, Yes, it is time for planning. We should aim to produce the different

types of food for the family; we will use our own seed and

manure, and other inputs. why don’t you go ahead and

prepare a plan.

Commodity Area (tsimad)

Teff 2Wheat 2Pulses 2

Ato Gebeyaneh: Okay! Here is a plan:

This will ensure our household food

needs.

W/o Malefia: It looks good. But, wait! We will need money for family expenses. Aha! don’t worry! We may be able to sell some of our produce if we can; sell some of the sheep or goats or some butter to

generate cash for family expenses. In the last resort, you may try to work off-farm

•Objective: food self sufficiency•Input sources: own•Cash income: secondary

Subsistence family’s struggle for survival, 2005

Ato Gebeyaneh: No, Malefia! We can not proceed

like this! I heard that our government has a new policy for agriculture. I do not know

what it is. Maybe the DAs will lead us in a new

direction.

Ato Gebneyaheh: Malefia, the extension agents are

trying to help us use better technologies and practices to

produce more and feed ourselves. They are good

people. But, we are still poor, and sometimes unable to

feed ourselves for the year. What can we do?

W/o Malefia: My dear!, What else can we do? The DAs will just tell us to produce more.

We just pray to God! We have no choice other than try to produce our food to feed

ourselves!

W/o Malefia: Oh! God bless you, my dear! You are right. The DAs get training every time.

Maybe they will come up with some more useful

ideas.

•Subsistence agriculture: sustainable way out of poverty and food insecurity?•Role of extension in subsistence agriculture: limited to technology and production!

Role of the extension service, 2005Extension agent: Ato Gebeyaneh, I

would like to talk to you about how you can improve your life. My service to you

was limited only to technology and production. Now, I have come back from training on market oriented

transformation of subsistence agriculture. Sustainable way out of

poverty and food insecurity is through market oriented agriculture.

Extension Agent: You produce commodities that you can sell and get higher income. Then you can buy food in the market to

feed your family. You can then save part of the income, thereby accumulate wealth. In this way, you will be rich and food secure!! Next time, we would like to talk to you and

your wife together.

Ato Gebeyaneh: I always liked you. You

are here to help us. But, what you are telling me today is

difficult to understand. I should

think about it and also talk to Malefia!

Ato Gebeyaneh:

What is market

oriented agriculture

my dear?

•Commercialization has two aspects:-Market oriented production planning-Market participation

•Interventions needed at the two fronts•Introduction of new ideas can be difficult initially

Transformation can be gradual

Ato Gebeyaneh: Malefia, the extension agents talked to me today. They were not themselves. They want me to be like a trader!! My parents never did this.

W/o Malefia:

What did they

say, my dear?

Ato Gebeyaneh: They said we should

produce to sell, get cash and buy food from the market. It is amazing, isn’t it Malefia? Also,

they want to talk to us together.

W/o Malefia: My God! In deed, they are not themselves.

How can we feed our family if we do not produce our food?

•Commercial transformation can be gradual•Persistence in interventions and learning are required•Husband and wife training in extension very useful

Concerns in transformation

Extension Agent:

Ato Gebeyaneh and

W/o Malefia: Have

you thought of

what we told you?

Ato Gebeyaneh: Yes! We have! We are concerned about markets! We have three major concerns:•Will we get buyers for our produce?•Will we get food to buy in the market?•What about if the prices collapse?

Extension Agent: There are private and public solutions to all of these problems.

•Government is working to improve the output markets.•Demand for the market oriented commodities is increasing due to rising income, urbanization, and population growth•Trading business is developing

W/o Malefia: Okay! Let us think more about it and we will see you in

a few days!!

•Input and output markets major concern to commercializing farmers•Interventions to improve markets critical•Policies to promote private sector critical

Concerns in transformation

Extension

Agent: Ato

Gebeyaneh, and

w/o Malefia, do

you still have

concerns?

Ato Gebeyaneh: Sure!! How are you going to assist us? In the past

you only helped us use better technologies and produce more.

Now, we are going to produce for the market. Will you assist us

in input marketing, market oriented production planning

and output marketing?

Extension agents: You have hit the nail on its head!! Now, we have got training in market oriented extension service. Our role now is to help you:•Plan market oriented production•Build your capacity to adopt and use technologies and practices for the market oriented commodities•Link you up with input suppliers, credit suppliers and output buyers•Provide you with market information•Are you satisfied, Ato Gebeyaneh and W/o Malefia?

W/o Malefia: It sounds good! But,

perhaps, we should start it small. We should produce

both food crops and the market oriented

commodities. If it works for us, we

may expand.

•Broader extension service required

Semi-commercial family (farm planning conversation), 2007

Ato Gebeyaneh: Malefia,

the rainy se

ason is

approaching. We sh

ould

talk about our fa

rm plan.

W/o Malefia:

Yes! Now, w

e should

think of getting good

cash income. But, we

should not forget our

food crops as well.

Ato Gebeyaneh: You are right, Malefia. We

should also use purchased inputs in addition to our

own inputs.

W/o Malefia: Do you also realize there is going to be a lot more work than before. We may consider

hiring in labor.

•Objective: food production and cash income•Input sources: both own and purchased•Demand for inputs and technology increases

Semi-commercial family farm plan, 2007

Farm resource allocation:

Commodity Area (ha.)

Fruits 0.25

Vegetables (onion, pepper) 0.25

Forage 0.25

Teff 0.50

Pulses 0.25

•One cross-bred lactating dairy cow bought using credit from micro-finance•Shoats fattening enterprise (4 shoats fattened for three months cycle)

•Vegetables good source of income, fruits not yet producing•Dairy demand unable to be met

•Fattened shoats fetching twice purchase price, good profit

Income:

Semi-commercial family (life improved), 2008

Ato Gebeyaneh: Malefia,

we are now better-off than

when we were producing to

eat. But, this is too much

work. You and I are working

a lot harder than we used

to. What shall we do?

Ato Gebeyaneh: But, don’t you think that we should specialize in fewer enterprises? In that case, we can learn the job better

and do it better.

W/o Malefia: I told you,

my dear! We should hire

in labor. We can get the

money to pay for.

Besides, we should buy

farm machinery and

better farm equipment,

because our farm is profitable.

W/o Malefia: Oh! That is a good idea! I think we should focus on dairy and horticulture. We

need to get more credit to buy few more improved dairy cows. We need to introduce drip irrigation to use water more efficiently.

We should also rent in land from other farmers. This way, not only do we specialize,

but we also expand.

•Need for specialization arises in the process•Demand for credit increases

Extension agent revisits - 2009Extension agent: Ato Gebeyaneh and W/o

Malefia, you see! your life has improved now! You

have good income and your family is food secure. Are

you happy with our service to you?

W/o Malefia: Thank you very much! You are helping

us very well. You have shown us how to plan

market oriented production, adopt and use improved technologies.

Extension Agent: W/o Malefia, don’t forget the

other value chain aspects we are helping you with; Did you

forget them? Market information, linkages with

input suppliers, credit suppliers and output markets

have been also critical for your success.

Ato Gebeyaneh: My apologies, my dear!

She forgot about them. Without

these value chain aspects, we would

have been dead meat!

•The value chain approach for extension service

Commercial family farm planning, 2015

Ato Gebeyaneh: Malefia, It is that time of farm planning again. As you said, we should specialize in dairy and horticulture. We will

also allocate some land for teff.

Ato Gebeyaneh: You are right, Malefia! Efficiency and competitiveness are

now our prime issues. We will also need to rent in

land, buy more improved dairy cows. We can hire

trained labor, because we will have the money to pay

for.

W/o Malefia: Sure! but, we

need to reduce cost of

production, and be better

competitors in the market.

Besides, w

e should increase

our scale of production.

W/o Malefia: The public extension agents are always with us, but we

should also be able to pay for additional extension service as we need it.

•Objective: Cash income•Input source: External•Extension can be demand driven•Commercial farmers may not completely abandon food crops

Commercial family (functional value chains established), 2015

•More than 150 person-days of labor hired

Commodity Size

Vegetables 1.0 haFruits 0.25 haImproved dairy cows 10

Teff 0.25 haForage and maize(primarily as feed)

1.0 ha

Resource allocation:

•Closer links with vegetable buyers, and dairy processors established.•Regular connection with input suppliers established.

•Credit worthiness firmly established and securing credit easy

Inputs and credit:

•Vegetables and dairy good sources of income . •Cereals and pulses bought from market at harvest time and stocked.

Income and nutrition:

•W/o Malefia making sure adequate nutrition to the family, especially children.

•Irrigation facility well established and frequency of harvest increased

Farmer Groups & Attributes Broader Options for Transformation

Broad Commercialization Options and Strategies for Smallholder Farmers

Subsistence Farmers Assist them to become semi-commercial farmers through either surplus

production of subsistence enterprises and/or introduction of market oriented production:

Low tech skills development (technology) Entrepreneurial skills development Linkages with input and output markets Small-scale microfinance

Safety nets Providing conducive environment for out migration.

Semi – Commercialized Farmers Assist them to become more market oriented and commercial farmers through

intensification of staples and market oriented commodities: Medium tech skills development (technology) Entrepreneurial skills development Linkages with input and output markets Small-scale micro-finance and medium scale rural banks

Insurance Providing conducive environment for outmigration.

Commercialized Farmers Assist them to be more efficient, competitive, and economically viable. Facilitate consolidation to become medium to large scale farmers. Insurance Property rights, including land policy Providing conducive environment for outmigration