Smallholders: an important part of agriculture

In India and Zanzibar, smallholders plant and harvest high-quality organic spices for DEMETER and other products. This is made possible by farmer association Ecoland Herbs & Spices and is co-financed by DEG using develoPPP.de funds. The self-organised cooperatives in India primarily grow pepper and cardamom while their counterparts in Zanzibar focus on cloves, vanilla and cinnamon.

Ecoland Herbs & Spices is one of DEG’s investments in the agricultural sector that is geared towards smallholders. These also include Kenyan fruit juice producer Kevian, which sources and processes fruit from some 40,000 smallholders. DEG provided the company with a loan of 7.5 million US-dollars for modernising and expanding its production activities. By the end of 2016, more than 630,000 smallholders were involved in investments co-financed by DEG in Asia, Africa and Latin America.

Smallholders are an important pillar of agriculture: 85 percent of farming operations worldwide are smaller than two hectares; taken together, they make up more than half of all farmland. Most of these farms are in Asia and Africa. Smallholders are often faced with substantial challenges: low yield, high harvest loss and low income, to name but a few.

In order to further develop agriculture and improve value creation at local level, investments are needed in training, pre-harvest financing and insurance, in processing local products, in logistics and in ensuring a more efficient use of water and other resources.

Development finance institutions (DFI) such as DEG make different contributions towards this. This is done by financing investments that allow small farmers to generate more income for themselves and their families. With just two cotton and coffee initiatives in which DEG joined forces with other partners, it was possible to reach and train over one million smallholders in Africa. Other areas of focus include overseeing the development of agricultural businesses, for example in using sustainable environmental and social management systems, and providing expert advice and financing to trading and logistics companies in order to provide the necessary infrastructure for agricultural products.