On 7 August 2014 Russia announced a ban on food imports from Western countries which, in an earlier move, had imposed sanctions on Russian business interests in connection with the crisis in eastern Ukraine. The prohibition was effective immediately, and will stay in place for one year, blocking all imports of affected products from the European Union, United States, Canada, Australia and Norway. The list published by the Russian government covers bovine meat, pig meat, processed meats, poultry, fish and other seafood, milk and milk products, vegetables, fruits and nuts1. The import ban came in the wake of other import restrictions imposed by Russia on agricultural and food products earlier this year. In January 2014, Russia banned all pork imports from the EU on the grounds of recorded cases of African swine fever in wild boars in border areas of Poland and Lithuania. Other prohibitions included a ban on dairy exports from the Netherlands, quoting sanitary reasons, and on exports of meat from Ukraine, referring to an inadequate level of monitoring of meat quality standards. At the end of July 2014 bans on milk and milk products from Ukraine and fruit from Moldova were introduced, all on SPS grounds. On 1 August 2014 fruits and vegetables from Poland had already been blocked from entering the Russian market on the basis of unacceptable levels of pesticide residues and nitrates.
Although the latest bans add to a long list of import restrictions already in place, the scope of the bans, involving a large range of products from the main exporters to the Russian market raised concerns that supplies of key commodities to the Russian market would be further constrained, with negative implications for Russian consumers across all income levels, at least in the short run. This note examines the importance of the affected imports for consumption in Russia and discusses factors which will influence the dynamics of supply and demand response to the ban
Recent increases in the levels and volatility of food prices have created significant challenges to efforts to reduce levels of food insecurity both at national and household levels. As a result, significant political attention has been given to the promotion of improvements in food staples productivity in developing countries, both to offset the rapidly increasing costs of food imports, and to stimulate increased incomes and hence food security status at the household level. This attention has been manifested both at country level, with many developing countries placing food staples at the centre of their agriculture development programmes, and at the global level, for example in the context of the recent G20 initiatives.
A central focus of these initiatives has been to develop and advocate mechanisms that will result in increased levels of production by smallholder producers through the adoption of productivity —enhancing technology underpinned by improved research and development, facilitated access to critical inputs and production — related risk reduction measures. Less attention has been given to the significant heterogeneity of smallholder producers, both in terms of their access to the productive assets required to be able to increase production and, perhaps more importantly, in terms of their willingness to increase production for sale. A key message of this report is that without better understanding the determinants of smallholders’ participation in agricultural markets, and formulating appropriate measures to facilitate improved participation, initiatives seeking to promote the adoption of productivity enhancing technology by smallholder producers are likely to have limited success.
Part 1 examines the characteristics of smallholder farming from a market perspective, explaining that different categories of smallholder producer face widely different sets of issues and constraints to market participation, stressing the mutual reinforcement of productivity growth and market integration, and setting this in a dynamic context of the constrained choices facing different producers. It then sets up the policy challenges facing governments in attempting to alleviate the constraints facing these producers.
Part 2 considers the determinants of smallholder participation in rapidly evolving agricultural markets, considering the categories of constraints and risks faced in increasing levels of production for sale in different market outlets and the mechanisms through which the choices made by different market participants shape smallholders’ integration into markets.
Part 3 introduces examples of the types of solutions that may be required to facilitate the participation of smallholders in markets at different levels of formalization, considering arrangements such as producer organizations in aggregating smallholder production to market, and then the potential of mechanisms, or support services, such as market-based risk management instruments, market information systems and extension.
Part 4 then turns to examine how such arrangements and mechanisms might best be delivered to the smallholder sector, with prominence given to the role of the public sector, broadly defined to include government, donors and civil society
FAO’s studies on foreign investment in developing country agriculture suggest that the disadvantages of large-scale land acquisitions often outweigh the few benefits to the local community. In countries where local land rights are not clearly defined and governance is weak, large scale land acquisition raises particularly high risks for the local community. Even from the perspective of the investor, land acquisition is unlikely to be the most profitable business model due to the high potential for conflict and damage to reputation.
Conversely, the studies suggest that investments that involve local farmers as equal business partners, giving them an active role and leaving them in control of their land, have the most positive and sustainable effects on local economies and social development. These inclusive business models need strong external support for supporting farmers and facilitating the investor-farmers relationship in order to succeed. They also require ‘patient capital’, as financial returns to investment are unlikely to materialize in the first years.
Beside the business model, other important factors include the legal and institutional framework in the host country, the terms and conditions of the investment contract and the social and economic condition in the investment area. Strengthening the governance and capacity of institutions in host developing countries is essential to enhancing the developmental impacts of foreign agricultural investment.