WTO event on Micro-, Small and Medium-Sized Enterprises (MSME) Day

Smallholder farmers and international trade

Your Excellency, Ambassador Wilson, dear friend,

Dear Xiangchen Zhang, Deputy Director-General of WTO,

Excellencies,

Distinguished delegates,

Ladies and gentlemen,

Thank you for inviting us to join you for this session of the MSME celebrations, which I welcome focuses on smallholder farmers. These farmers produce up to 80 per cent of food consumed and are thus the backbone of food security in the world.

I cannot emphasize enough how important this is. With the multiple crises of this time, food security has come under threat. Hunger is on the rise, for the first time in decades. This is of great concern.

We must thus ensure that smallholder farmers and micro, small and medium enterprises in the agricultural sector can prosper.  

But smallholder farmers face various challenges to participate in global value chains and reap the benefits.

To illustrate the problem: An Ethiopian coffee grower gets less than 2.8 per cent of the price of a cup of coffee paid by a consumer in a developed country.

Challenges arise at different stages of the value chains and require policy action.

At the production level, smallholders often lack access to market information and farming inputs. It is thus important to expand agricultural extension services, expand the distribution of farming inputs such as improved seeds, fertilizers and pesticides, and improve irrigation systems. This will boost farmer productivity and income.

Another challenge is getting harvests to markets before crops perish. This requires government action to improve transport infrastructure, facilities and crop storage. Where such infrastructure is lacking, crops often perish before being processed by cooperatives into goods with more value added and a much longer shelf life, such as vegetable oils, roasted nuts or beans.

In terms of export capacity, farmer cooperatives encounter substantial barriers in terms of regulatory and private standards in foreign markets.

Certification procedures to demonstrate compliance with standards are largely unavailable locally, while international certification markets are beyond the financial and logistical means of most farmer cooperatives.

These points highlight the importance of farmer cooperatives. Hence, the organization of cooperatives should be supported to enhance their bargaining power and resource efficiency, such as for sourcing inputs.

Moreover, given the vital importance of smallholders, a clear policy for the development of smallholder farmers should be in place. This policy should link smallholders with larger firms and global value chains. About 80 per cent of international trade happens through global value chains, and large firms are critical for smaller firms and smallholders to upgrade products and skills and access new markets.

I want to highlight three concrete opportunities.

One - The potential of regional markets for smallholders: Regional markets tend to be less stringent in terms of standards and provide certification more easily. Our research in Africa shows that the refocus on regional markets has improved income opportunities for smallholder farmers by supporting local value addition opportunities for their crops. UNCTAD has been supporting these developments with policy through the AfCFTA, and through knowledge and multi-stakeholder engagements on Voluntary Sustainability Standards.

Two - Agricultural trade offers an opportunity to boost inclusivity as women are involved in large numbers and in multiple aspects. Yet, these women often face more barriers and need thus support. Support through secure savings mechanisms that enable them to insulate these funds from household demands.  Support with financial innovations that lower collateral requirements, that strengthens their land tenure rights, or expands their access to new business networks. Integration into global value chains has been a means to overcome gender inequalities in access to resources and markets.

And three - Access to trade and business information. UNCTAD together with ITC and WTO has invested in the Global Trade Helpdesk – an online platform - to provide MSMEs information on tariffs, non-tariff measures, and other relevant data to participate in international trade.
 

Dear friends,

We need smallholder farmers and MSMEs in agriculture to prosper as they make a vital contribution to development.  

I am happy to celebrate MSMEs Day with you, and commend Ambassador Wilson for his leadership as group coordinator.

Thank you for your attention.