From subsistence to profit: Transforming smallholder farms

Shenggen Fan, Joanna Brzeska, Michiel Keyzer, Alex Halsema
food policy report

This food policy report presents a typology of the diverse livelihood strategies and development pathways for smallholder farmers in developing countries, and offers policy recommendations to help potentially profitable smallholders meet emerging risks and challenges.

Main Findings

Smallholder farmers in developing countries play a key role in meeting the future food demands of a growing and increasingly rich and urbanized population. However, smallholders are not a homogeneous group that should be supported at all costs. Whereas some smallholder farmers have the potential to undertake profitable commercial activities in the agricultural sector, others should be supported in exiting agriculture and seeking nonfarm employment opportunities.

For smallholder farmers with profit potential, their ability to be successful is hampered by such challenges as climate change, price shocks, limited financing options, and inadequate access to healthy and nutritious food. By overcoming these challenges, smallholders can move from subsistence to commercially oriented agricultural systems, increase their profits, and operate at an efficient scale—thereby helping to do their part in feeding the world’s hungry.

Policy Implications

Such achievements are possible only in a policy and investment environment that

  • promotes context-specific farm size,
  • supports productive social safety nets,
  • improves risk-mitigation and adaptation strategies,
  • links agriculture, nutrition, and health,
  • promotes pro-smallholder value chains, and
  • increases smallholder-friendly financing and investment.

All of these measures, adapted to each country’s stage of economic development and transformation, will play a critical role in bringing down the barriers to profitable and scale-efficient agricultural operations by smallholders.