Agricultural Development Sector Approach

Photo: Thatcher Cook for Mercy Corps

It is estimated that 900 million rural people in the developing world live on less than $1 a day.(1) The most recent estimates from UN-FAO find that 1 billion people worldwide are undernourished. While this level of poverty and food insecurity is severe, the agricultural sector offers an effective leverage point to alleviate this suffering: The world’s 450 million small farms – two hectares or less – are home to about two billion people, comprising roughly 46% of the global workforce.2

In the countries where Mercy Corps works, agriculture accounts for 30% of the GDP3 on average and is the lead means of food security and income for 57% of the population.4 Improving yields and diversifying production leads to higher incomes and improved food security. Research shows that a 1% increase in yields can decrease the percentage of the population living on $1 a day by 0.91%.5 Hence, agriculture as a livelihood for a large demographic group around the world and a primary means for food security, offers a direct avenue for meaningful reductions in global hunger and poverty.

The design and application of our agricultural development programs are proving to be an effective program area for the complex, transitional environments in which we work. There is a clear synergy with our food security and economic recovery and development programming, as well as the Mercy Corps Action Center to End World Hunger and with our environmental and conflict management strategies.

Agricultural Development Goal

To engage resource-poor farmers, agri-business and government to sustainably decrease hunger, increase incomes and improve environmental practices.

Household and Market Level Interventions

From experience, Mercy Corps recognizes that during severe disasters, conflicts and contexts of extreme poverty, household level interventions are often necessary to sustain life and to build the assets necessary for families to recover economically. In the long term, however, we know that sustainable development depends on developing a local economy that can drive not only wide economic growth, but also be the engine for social and environmental gains. We, therefore, also focus on market level interventions that build socially and environmentally responsible businesses. Identified through in-depth market analysis, these interventions act as drivers to raise household productivity and incomes, increase profitable businesses and jobs, and improve management of land and water resources. In addition, our interventions contribute to positive social change, such as building peace among conflicting groups, increasing participation of poor, marginalized families and strengthening social cohesion – all of which give people greater social, economic and political influence in their respective economies.

High-Impact Value Chain Development

Mercy Corps maps out the interrelationships between buyers, sellers, producers and end consumers along respective value chains and intervenes through a variety of means such as infrastructure improvements, technical assistance, financing and technology upgrades. The aim is to create agricultural market systems that favor economic growth for the largest number of smallholder farmers, and related agri-business entrepreneurs, in addition to making available more nutritious and affordable food in local markets for consumers.

We strengthen high-impact agricultural markets because they reach a large number of participants, create high economic return, improve locally specific social and environmental conditions, and have the highest potential for long-term financial sustainability. This enables us not only to achieve greater results of scale in terms of the number of smallholder farmers we assist, but also to apply donor funding in an economically efficient way that achieves greater results for less investment.

Financial Assistance and Services

Without capital, no enterprise could fund its operations or build its asset base. Given the importance of investment capital to the growth of the enterprises in the communities with which we work, Mercy Corps provides access to start-up capital for farmers and businesses in times of extreme shock to restart and rebuild business assets, while at the same time working on developing more sustainable access to financial services, even amongst marginal farmers and in rural areas. Mercy Corps has a large capacity for developing financial institutions and markets globally. We achieve this by three primary means: Starting up retail microfinance and SME institutions; Providing technical assistance and access to capital funds to pre-existing institutions; Partnering with commercial institutions moving down-market.

The chart to the right demonstrates the range of methods that Mercy Corps uses to improve access to investment capital in both emergency and recovery stages of our work, as well as how we work to develop sustainable access to credit and investment capital over the long term.

Infrastructure Support and Enabling Environment Assistance

Mercy Corps’ realizes that functioning economic infrastructure and good governance are key aspects of a more productive and profitable agriculture sector. Therefore, Mercy Corps works with community, local government, and the private sector to identify and rebuild key economic infrastructure, such as market access roads and irrigation systems, to jumpstart production and business activity across respective agriculture value chains. Additionally, Mercy Corps prioritizes working closely with local government offices to not only work in close cooperation with the authorities to ensure proper targeting of interventions, but also to build the capacity of government offices to sustain improvement made via project interventions. Specifically, significant on-the-job training is conducted in the areas of market research, trade promotion and regulation, environmental sustainability, development policy advocacy, and facilitation of agri-business support services.

For a complete explanation of our sector approach, please see the document posted below: