Agriculture’s Global Challenges
Agribusinesses operate in a rapidly changing world. Demand for agricultural crops is expected to double as the world’s population reaches 9.1 billion by 2050. Rising incomes, urbanization, and changing lifestyles will drive greater consumption of resource-intensive commodities, such as meat, dairy, and bio-fuels. Yet the resources needed for food production are dwindling, and consumers are beginning to demand that the food industry operate more sustainably.
In short – the security and sustainability of the global food supply has never been a more critical issue.
Smallholder Farmers are a Solution
The world’s 525 million smallholder farmers are one solution to the global food challenge. Smart firms realize that smallholders can help them both expand markets and procure safe and sustainable supplies of agricultural commodities. Sourcing directly from smallholders secures a firm’s supply base, reduces margins paid to middlemen, and facilitates quality, safety, and productivity improvements. Smallholders are also potential customers for firms marketing inputs, information, and financial services.
Working with smallholders, however, presents some obstacles, including low productivity and poor crop quality, difficulties in meeting certification standards, and a lack of farm management skills.
Agribusinesses can address these obstacles through actions that benefit both the firm and the smallholder. As part of its investment and advisory services in agriculture, IFC provides strategic guidance and tools to firms that want to realize the shared value of working with smallholder farmers.