Agriculture, a highly seasonal activity, has been badly hit by the Covid-19 pandemic and subsequent lockdown in India. Cultivators, fishers, poultry and livestock farmers and floriculturists are facing serious problems in the supply chain, from inability to harvest crops to collapse in prices given the abrupt closure of transport and marketing channels. The consequences have been disastrous for the small producers (see MSSRF Policy Briefs 1, 2).

The newly-released global food policy report of the International Food Policy Research Institute (IFPRI) titled Building Inclusive Food Systems has thus come at a critical juncture. The focus of the Report is on how to address inequality, and include poor and vulnerable individuals and households and communities in the food system. Food systems are defined as “the sum of actors and interactions along the food value chain—from input supply and production of crops, livestock, fish, and other agricultural commodities to transportation, processing, retailing, wholesaling, and preparation of foods to consumption and disposal. Food systems also include the enabling policy environments and cultural norms around food.” (p. 8)

“Small holders have much to gain… by inclusion in the food value chain,” states the Report, and provides a range of suggestions to extend the benefits of food systems to the rural poor, small and marginal farmers, women and youth. To generate non-farm and off-farm activity, the Report suggests investing in infrastructure (roads, electricity, cold storages, etc.), in food safety and quality certification, and in skill training. To improve access to markets, suggestions include provision of secure land tenure, promotion of collective action in agribusiness, and leveraging of the new digital technology. Importantly, the Report underlines the need to provide social protection measures in addition to the interventions to raise employment and incomes.

While all these suggestions are useful at some level, the Report does not deal with potential problems and constraints to implementation, and specifically with constraints inherent to the functioning of the larger economy and society. Let me take two illustrations from India.

One of the institutional innovations outlined in the Report is the case of “producer organizations (that) allow small farmers to engage in collective marketing, which reduces their transaction costs, allows them to share risks, and improves their bargaining power (p. 24).” India has two decades of experience with this innovation. In 2002, the Companies Act was amended in India to allow for the creation of producer companies that could “bring together desirable aspects of the cooperative and corporate sectors for the benefit of primary producers.” Farmer Producer companies were thus an institutional innovation meant to give “scale” to small farmers and result in a better price for small farmers and eventually a move up the value chain. A recent study by Neti, Govil, and Rao shows that the majority of existing Farmer Producer Companies in the country are under-capitalised. They write: “Roughly 4.3 million producers (most of them small and marginal) have already contributed Rs 8.6 billion towards share capital in 7,374 producer companies. Policy-makers have a fiduciary and ethical responsibility to ensure that these funds, contributed by small producers from their meagre savings, are used effectively to generate returns, rather than lying unused due to inadequate working capital or being depleted due to loss-making operations.” In other words, small farmers invested in these new institutions that are now largely defunct. There are, of course, a few successful farmer producer companies, but the larger point is that we need to understand structural constraints that did not allow the majority of producer companies to flourish, specifically their inability to break in to value chains that are controlled by large players.

Another suggestion is to use the power of modern ICT (Information and Communication Technology) to make information flows better for small farmers. To quote, “Face-to-face extension services and farmers’ relationships with buyers are increasingly being complemented—and sometimes replaced—by information channelled through modern ICTs. This is bringing new benefits to smallholders. In India, for example, Internet service provided by a private food conglomerate to rural areas has given farmers access to more information, empowering them in the negotiation of farm gate prices.” In a recent review of applications of ICT to agriculture, we noted the huge possibilities for ICT in agriculture. However, “even if technology is gender-neutral or caste-neutral, technology is embedded in society and cannot on its own address problems of socio-economic development, such as the information gap experienced by historically disadvantaged social groups.”

To sum up, as suggested in this Report, we need to expand and deepen ways of including small producers in the value chain so as to increase their absolute and relative share of the pie. We must, however, also recognize the limits to such gains on account of local factors such as inequalities within a village, and national and international factors such as the presence of large multinationals (be it for farm inputs or produce) in the value chain.