Strategies For Smallholders In Developing Countries: Commercialisation, Diversification And Exit

This paper proposes a strategic framework for policies to assist smallholders in developing countries. It describes the inevitable features of structural change in the agricultural and rural economy, the associated pressures that these changes place on smallholders, and the consequent need for policies to facilitate rather than impede adjustment. A key premise of the framework is that, for the majority of smallholders, the long term (i.e. inter-generational)future lies outside the sector. Hence, long-term policies need to make a distinction between those who potentially have a competitive future in the sector and those who do not. In either case, many of the necessary policies will not be agriculture-specific, so it is important that agricultural policies are framed in a broader economy-wide framework. In addition, a clear distinction needs to be made between short-term policies to reduce poverty and food insecurity and long-term policies to stimulate development. This is because there are intertemporal trade-offs (as well as complementarities) between policies that are likely to be effective in the short-run, and those promising most impact over the long-term. The paper discusses the role of different agricultural and non-agricultural policies in providing the appropriate policy mix in countries at different stages of development.