This scoping study reviews the range of evidence available on how business environment reform (BER) can support the formalisation of smallholder agriculture in developing countries, and specifically in the Department for International Development (DFID) priority countries. The results of the scoping exercise will be used to guide a more detailed review to fill the gaps in the evidence in this field. This work will help DFID’s Growth and Resilience Department to develop the strategic case for a programme to support the commercialisation of smallholder agriculture in some of DFID’s Priority Countries.
The World Bank’s Independent Evaluation Group notes that agriculture is the most important sector in the majority of developing countries. Thus, identifying and removing industry-specific barriers that hinder competition, and improving the regulatory and institutional framework for accessing finance in agriculture are considered important.
The smallholder agriculture sub-sector is typically informal, as is much of the service sector (such as transport, distribution, wholesale, retail and finance) around it. This exposes those working in the subsector to poor working conditions, exploitation and corruption (International Labour Conference, ILC 2002). It also limits the opportunities for smallholder farmers and agribusinesses to integrate into higher-value supply chains or access finance and also reduces tax revenues for the government.
This scoping study will help DFID to understand the evidence about the impact of formalisation in different contexts, and to determine whether a phased or partial approach to formalisation can be developed to suit the individual contexts.
This research was funded under the Business Environment for Economic Development programme
White, S and Aylward, D (2016) Formalisation of smallholder agrisulture and agri-business. Business Environment Reform Facility