Strategies for Addressing Smallholder Agriculture and Facilitating Structural Transformation

This report aims to identify the main constraints that limit smallholders in emerging countries from accessing markets. It does this first through a literature review of economic development theory and findings from past empirical studies. It then looks at different policy instruments currently used in five countries: Brazil, Chile, Indonesia, Mexico and South Africa. The results suggest that the focus of agricultural policies in these five countries has been on input use subsidies, whether these are for variable input use, fixed capital formation, or on-farm services. Agricultural policies that strengthen the broader enabling environment (general services or public goods) are very limited in most countries covered in this report. Empirical evidence suggests that policies that best support the integration of smallholders into markets include investments in general services for the sector, as well as policies that reinforce land tenure systems or those that promote farmer associations.