The challenge of meeting the Millennium Development Goals, and particularly the halving of poverty and hunger by 2015, is immense; and particularly so in rural areas where nearly half of the population lives on less than one dollar a day and one-third are undernourished. More than two-thirds of the poor in rural areas are smallholder farmers, whose resources, livelihood patterns and income sources are quite heterogeneous. Smallholders as a group, including the non-poor, still dominate most farming systems of developing countries and, on the positive side, account for a majority of rural employment, most food production and significant export earnings.
Globalization is characterized by increasing economic integration between countries, particularly of their trade and capital flows. The associated trade liberalization has enlarged and transformed agricultural input and commodity markets, markedly changing the terms of trade for agricultural producers and underlining the importance of international competitiveness. Agricultural support service and market institutions play a critical role in local growth. Their present status is a product of Structural Adjustment Programs and Policies (SAPs) which were initiated in many countries during the 1980s to remove distortions in product and factor markets through, inter alia, trade and market liberalization, stabilization and institutional reforms.
Despite the general concerns expressed in many quarters, relatively little is known about the actual impacts of globalization on the livelihoods of different types of smallholders and other rural poor. The literature reveals a considerable number of studies of national impacts of globalization, sometimes contrasting rural-urban differences, but few studies of the impacts differentiated by smallholder household types, farming systems and level of market access. Therefore, FAO and the World Bank launched the Study on Globalization and the African Smallholder. The Study characterized the impact of trade liberalization on different types of smallholders in three farming systems with different levels of market access in Ghana, Mali, the United Republic of Tanzania and Uganda.
With local level information on the impact of trade liberalization on smallholders in hand, the challenge is to assess policy options to improve smallholder opportunities and minimize negative consequences of trade liberalization. This calls for appraisals of alternative livelihoods and economic analysis of farm households, villages and commodity chains as well as the identification of policy measures which would increase the opportunities for smallholders to benefit from globalization and to protect them from its negative consequences.
In order to review approaches to the identification and analysis of such policy options, a Working Session was organized in June 2003 by the FAO AGS and ESA Divisions in FAO in Rome, with the support of the World Bank. Participants included more than 20 experienced economists from FAO, the World Bank, IFPRI and Universities in the USA and Africa. This document is based on the presentations and discussions during that Session. As such, it should be of interest to policy analysts and researchers working on globalization and agricultural development. The document commences with a framework for analysing impact and examines some illustrative field experience from Africa before considering policy options, in the particular context of Ghana. Two leading research initiatives in FAO are outlined. Household, village CGE and village SAM models and their data requirements are introduced in the ensuring chapters, prior to the presentation of the conclusions.
