Centre d'investissement de la FAO

How can governments and the private sector work together to upskill farmers?


Private sector investors can help to empower farmers and optimise returns by partnering with governments and development agencies, reveals a new FAO investment brief.

The new brief is part of a suite of publications resulting from a global study into agriculture human capital investment (AHCI) from FAO and the International Food Policy Research Institute (IFPRI), supported by FAO Research and Extension Unit and CGIAR Research Program on Policies, Institutions, and Markets (PIM).

The brief gives recommendations for governments and development partners on how to best facilitate sustainable and beneficial private sector investment in farmers. It shows how the private sector can play a key role in upskilling farmers to meet their full potential.

About 1.5 billion people, most of the world's poor, live on smallholder farms in developing countries. Enabling these farmers to farm productively and sustainably requires investing in 'agriculture human capital'– or their skills, education, knowledge, experiences and capacities.

"Massive investment in agriculture is needed to transform our food systems – and this starts with meeting the needs and aspirations of farmers," said John Preissing, Deputy Director of the FAO Investment Centre and co-author of the brief. "Private sector investment needs to be targeted towards delivering inclusive economic growth, environmental sustainability and poverty reduction."

Urgent need to invest in people

Less than 3 percent of agriculture development finance from 2015 to 2018 was invested in farmers – and often they can't afford to boost their own skills.

Private sector investment is needed to fill gaps, expand farmers' capacity, raise productivity and incomes and help to lift rural communities out of poverty.

Advanced skills are increasingly in demand as farming becomes more commercial, technological, mechanized and information-intensive.

Skills like adaptability and innovation are also invaluable, as farmers face the impacts of climate change.

"There is vast potential for the private sector to benefit from untapped resources within farmers, and deliver on government priorities, with mutual benefits," said Kristin Davis, Senior Research Fellow, IFPRI, AHCI series co-author. "Such investment can help to drive innovation, create jobs, and generate inclusive, resilient economic growth."

Yet, there are many limitations and challenges with increasing private sector investment in farmers.

The private sector may focus on a narrow range of inputs or products which align with business interests, or they may be less likely to work with marginalized groups.

"Strong public-private-producer partnerships are needed to ensure private sector businesses don't acquire excessive market power, and that they respect smallholders' rights," said Preissing. "Development partners and governments can facilitate private sector investment in expanding farmers' capabilities to ensure such investment benefits them."

How to upskill and upscale farmers' capacity?

There is a vast range of options for private sector investors looking to capitalize on upskilling farmers – and governments and development partners must make sure farmers benefit.

Launching public–private partnerships can be a mutually beneficial way to harness the complementary strengths of private and public sector investment in farmers' human capital.

An array of education options is available for farmers, such as extension and advisory services from government, private companies, NGOs and farmer organizations. Other options include technical and vocational training centres or on-the-job trainings.

Evidence suggests that internal rates of return to public spending on agricultural research, development, education and extension in terms of agriculture productivity and poverty reduction is approximately 60 percent.

Private sector providers of credit or market information can help farmers use their services to increase profitability. Sellers of seed, fertilizer and feed can teach farmers how to use these inputs to increase productivity and efficiency. Bulkers, processors and exporters can guide farmers on product consistency and quality, helping businesses to source the volume and quality of produce they need.

Development partners and governments can enhance private sector capacity development efforts by improving infrastructure services, boosting basic education or providing incentives for training provision.

Governments and development partners can also help to empower farmer organizations – helping to counterbalance the financial weight and market power of private companies.

Public–private–producer partnerships

The private sector has an increasingly important role to play in investing in and strengthening agriculture human capital.

Governments are turning to agribusinesses to fill farmers' skills shortfall, while agribusinesses are looking to governments to help facilitate their human capital needs.

Increasing private sector engagement with smallholders means that governments, development partners and international financial institutions must partner with companies to empower farmers and support rural communities.

Sustainable, farmer-centred policies and projects can help to maximize private sector returns and boost benefits for farmers and communities.