Country-led agricultural
investment programs are a key mechanism for
achieving the goals of the Feed the Future
(FTF) strategy. The FTF strategy recognizes
that agricultural growth must be inclusive to
achieve poverty reduction and improved food
security and nutrition outcomes.
Smallholder-led structural transformation is
considered by most development economists
to be the major pathway from a semisubsistence
agrarian society to a more
prosperous, food secure, and diversified
economy. Johnston and Kilby (1975) and
Mellor (1976) first documented the structural
transformation process in the regions of Asia
where the Green Revolution later bloomed.
The structural transformation process starts
with broad-based agricultural growth, causing
a build-up of purchasing power by millions of
small farmers. These millions of farmers
subsequently spend and re-cycle more money
through the economy, igniting demand and
employment growth in non-farm sectors,
which in turn increases the demand for food
and other farm products in a virtuous cycle in
which the rural and urban labor forces provide
a market for each other. As the demand for
food and fiber products grows, private
investment flows into the storage, transport,
processing, and retailing stages of commodity
value chains, further expanding employment
and diversifying the economy. Over time,
broad-based income growth causes the share
of food in overall consumption to fall, leaving
increased disposable income to fuel the
development of non-farm sectors. As the
demand for non-farm goods and services rise,
the labor force responds by shifting gradually
from the farm to non-farm sectors, the demand
for education and job skills rises, and the
economy becomes increasingly diversified and
urban. Rural households are pulled off the
farm into viable non-farm activities, not
pushed into low-paying desperation jobs in the
towns due to poor prospects in agriculture.
The starting point of structural transformation
is broad-based smallholder-led agricultural
growth and commercialization. Mellor,
Johnston and others clearly documented that
“inclusive agricultural development” in Green
Revolution Asia was crucial to structural
transformation and poverty reduction. They
contrasted the Asian experience with parts of
Latin America, which also achieved
agricultural growth, but not in an inclusive
way. Latifundia estates expanded production
impressively in many cases while millions of
small peasant farms remained mired in
poverty. A major lesson for Africa from these
contrasting experiences of smallholder-led
Asia and estate-led Latin America is that if we
want growth to be inclusive it must address
issues of rural poverty. And if we want
agricultural growth to reduce poverty, it must
be inclusive. For these reasons, there is no real
alternative to a smallholder-led agricultural
development strategy.