UNU Update: Innovation and the New Agriculture


	Dr. Andy Hall is a researcher at UNU Institute for New Technologies where he specialises in innovation processes and policies in agriculture. The second and final part of this analysis will appear in the next edition of UNU Update.

Innovating to prosper:
Turning the 'new agriculture'
into a sustainable growth industry

The agricultural sector of many of world’s poorest developing countries is experiencing a largely unnoticed renaissance. This time it is not the international community that has intervened with high yielding crops to win the race to produce enough food to feed "the starving millions". Instead it is home-grown good news from countries like Bangladesh, Ethiopia, Kenya and Ghana. Here a mixture of entrepreneurial flair, far-sighted national planning and good old-fashioned luck and serendipity are creating a new type of dynamic agriculture notable for a diversity of products that includes cut flowers, shrimps, pineapples, medicinal herbs and processed foods.

Recent research at UNU Institute for New Technologies (UNU-INTECH) is exploring how countries can build on the vitality and dynamism of these New Agriculture sectors. The central question for farmers, processors and exporters finding them selves increasingly exposed to the turbulence of regional and international markets is how to innovate in order to cope, compete and survive. UNU-INTECH’s research on this topic, which it is doing in collaboration with the World Bank, is focusing on how the capacity to innovate can be most effectively developed in ways that contribute to the poverty reduction and sustainability targets of the UN Millennium Development Goals.

Rapid growth

From practically a zero base 20 years ago, flower production in Kenya and Colombia, shrimp production in Bangladesh and horticulture in Ghana have all emerged to become among the top export earners for their countries. This story is typical for a range of products as diverse as mangoes, herbal laxatives and Nile perch. While success is self evident, an explanation of how these New Agriculture sectors have achieved it and with such speed is not entirely clear. But what is common to all is a fortunate chain of events that put the right people in the right place when opportunities emerged.

The shrimp industry in Bangladesh has created a large
group of trained processing plant employees with
sophisticated hygiene and food handling skills.

Take the case of the food processing sector in Bangladesh. Ten years ago the Intermediate Technology Development Group, an NGO promoting food processing as an income generating activity for poor people, held a training course and as a venue used the garage of a retired army major. So inspired was the major that he set up a food processing business selling snack foods. Today, Pran Foods – the major’s company – is the biggest in Bangladesh with a turnover in the millions of dollars.

But that’s only half the story. The establishment of Pran Foods coincided with the explosive growth of the ready-made garments industry in Bangladesh. This attracted a veritable army of low paid workers and almost overnight created a whole new type of consumer – numbered in their hundreds of thousands – that needed convenience foods and for the first time had just enough cash to buy them.

In the Indian state of Kerala a number of farmers became interested in vanilla production. The reasons for this are obscure but it was probably because of vanilla’s relative novelty in India and the farmers’ curiosity. However, in the way that these things happen in farming communities, excitement about "the potential" of vanilla took on a momentum of its own – even at a time when the only way to make money out of vanilla was to sell it as planting material to other farmers who also wanted to get on to the vanilla bandwagon.

Knowledge about production techniques quickly spread through this farmer-to-farmer network. Within five years farmers had created a vibrant production base and local and international trading houses were starting to deal in Indian vanilla. When prices soared in 2000 because of a crop failure in Madagascar, the world's main vanilla producer, Kerala farmers were able to respond quickly, increasing production and entering the word vanilla sector as a major player.

These sorts of spontaneous events have played out around the world, be it large farmers with spare land experimenting with flower production in Colombia or Ghanaian entrepreneurs taking advantage of opportunities to export horticultural produce to Europe when the production by their neighbour and competitor Ivory Coast was disrupted by civil war. Farmers and entrepreneurs have begged and borrowed to get access to the technology, information and finance they needed to get started in these sectors. It has often been risky and the sectors can decline as rapidly as they boom. Despite that, New Agriculture seems to be taking hold in many of the world's poorest countries.

New agriculture and the poor

But is this just another skewed development pathway that will once again bypass the poor? It seems not. These rapidly growing sectors are creating a number of opportunities for poor people, but not in the old "small scale farmers are poor, let's help them" sort of way.

Snack food entrepreneurs in Bangladesh, where
there are countless thousands of small operations
like this candy-making and vending business.

For instance, the Intermediate Technology Development Group estimates that in a small Bangladeshi town the production and sale of snack foods by poor street vendors is worth US$2 million. More than 80,000 women are employed in the cut flower industry in Kenya. Although there are concerns about their working conditions, the introduction of ethical and environmental standards by European markets is encouraging flower growers to provide a safe, non-exploitative working environment.

In other cases farmers and small-scale processing enterprises get linked to large companies. In Ghana, Farmapine, a farmers' association, has created a network of small-scale pineapple farmers to produce export quality fruit for the European market. The shrimp industry in Bangladesh not only creates on-farm employment, it has also led to the creation of a large group of trained shrimp processing plant employees with sophisticated hygiene and food handling skills.

Dr. Nanam of Ghana’s Food Research Institute explains that after a decade of researching new products to help poor cassava farmers, he realised that "if you want to help poor people you need to work with the rich. The rich are the industrialists who can develop new markets for the products made from the crops that the poor can produce." Dr Nanan has been working with the plywood industry to develop cassava-based glues and establishing supply chains to help link farmers to this new market for their crop.

Munzure Aziz from the Business Advisory Services Centre in Bangladesh makes a similar point about food process interventions. "There is an irony in the many development NGOs working on food processing that have ideological problems with the idea of profit and private enterprise. If we are ever going to help the poor we have got to start talking to the private sector and taking business seriously in the development sector."

A common feature across these sectors is the co-existence of both small- and large-scale producers. In Ghana there are both plantation-scale export pineapple producers as well as farmers growing less than an acre. In the horticultural export industry in Kenya, Zimbabwe and Zambia it is common for micro-scale farms to sell their roses or green beans to large commercial farms that have the links and quality systems to service European markets. In Bangladesh there are both large food processing companies like Pran Industries as well hundreds of thousands of one- or two-person enterprises making and selling snack foods. Of course all of these sectors are constantly changing and one fear is that the small-scale producers will be pushed out by larger ones with more resources.

Dr Mohammed Taher, a development specialist from Bangladesh, believes that crowding out of small-scale producers and processors is not inevitable and should not be advocated by development planners in pursuit of modernisation. "Ultimately it is a policy choice of whether or not to maintain the diversity of small and large players in these sectors," he says. "There is good reason to believe that this diversity will have important developmental outcomes in terms of poverty reduction and should be given the attention it deserves. Capabilities and incentives can be created to support the competitiveness and viability of the small-scale sector without damaging large-scale players."

Unfortunately, the failure to follow this advice is often as much a result of lack of political will as it is of fresh ideas on how to move ahead with such an approach.

In the next edition of UNU Update:
Boom and Bust, Shocks and Setbacks
Concluding Andy Hall's analysis of the new agriculture

DOWNLOAD COMPLETE ARTICLE – PFD-115KB