Investments in this strategy aim to improve food security by increasing crop productivity and profitability, increasing diversity and resilience of food produced, improving storage options, and increasing access to food in general. — are we improving food or food security

What

Dimensions of Impact: WHAT

Investors interested in deploying this strategy should consider the scale of the addressable problem, what positive outcomes might be, and how important the change would be to the people (or planet) experiencing it.

Key questions in this dimension include:

What is the problem the investment is trying to address? For the people experiencing the problem, how important is this change?

Global food production must increase by 60% to 110% between 2005 and 2050 to meet growing food demand (4); production by smallholder farmers will be increasingly critical to meet the intensifying demand of the expanding global population. For labor-intensive crops, smallholder farms can be highly productive compared to larger farms due to targeted practices and positive labor incentive structures (2, 5). However, poorly developed smallholder farms lack this productivity advantage, with farmers unable to readily invest in new technologies or high-yield practices. Investments aiming to increase food security can improve farmer and community wellbeing by:

  • increasing crop productivity and profitability, thereby decreasing households’ reliance on self-produced food and increasing their ability to save or invest (5);
  • shifting crop selection to include more diverse, more weather-tolerant varietals, thus increasing the variety of food available while also helping to mitigate monoculture risks (5);
  • improving storage options to allow farmers to store partial or whole harvests to withstand price drops, earn steadier and less volatile income for their products, and preserve access to food in case of local shortages (6); and
  • contribute, through a combination of these factors, to a more varied and price-accessible local food market and more food-secure communities.

What is the scale of the problem?

Smallholder farms, of which there are roughly 450 million worldwide, supply the vast majority of food consumed in sub-Saharan Africa and Asia (2, 7). Roughly half of smallholders farm only for subsistence (225 million), while the other half sell and trade at least part of their yields (1). The World Food Programme estimates that 795 million people globally do not have enough food to lead a healthy life, a gap that, in countries like South Sudan, can include as much as 12.9% of the population (3).

Who

Dimensions of Impact: WHO

Investors interested in deploying this strategy should consider whom they want to target, as almost every strategy has a host of potential beneficiaries. While some investors may target women of color living in a particular rural area, others may set targets more broadly, e.g., women. Investors interested in targeting particular populations should focus on strategies that have been shown to benefit those populations.

Key questions in this dimension include:

Who/What is helped through this strategy?

Low-Income, Farm-Dependent Households: Over two billion of the world’s poorest individuals live in households that depend on agriculture for nutrition and income (1). Investments that increase the amount of food produced and decrease the amount of food waste can improve both income and nutrition for these households (2).

Rural Communities: Rural communities, which often have many smallholder farms, can be distant from larger cities and markets, with few options for food when their local markets face a shortage. Increasing the food available in the community or improving farmers’ ability to store food can thus improve the physical and financial wellbeing of rural communities.

Women: Women comprise 43% of smallholder farmers globally, but female farmers often lack access or financial ability to adopt new technologies and quality inputs. Some estimates suggest that giving female farmers the same access as men to farming resources would reduce the global number of food insecure individuals by 100 to 150 million (2, 3).

Children: Approximately 66 million children attend school while hungry, undernourished, or both every year (3). Increasing food security by improving the quantity, nutritional content, and price of the food smallholders produce can improve and increase the meals of school-aged children, thereby improving their ability to focus and learn in class.

What are the geographic attributes of those who benefit?

Most of the world’s 450 million smallholder farmers live in Asia, with smaller numbers in Africa, Latin America, and the Middle East and North Africa; most are in rural locations, though some are also peri-urban or urban (1). Food insecurity is common in many of the same locations, with the highest prevalence in sub-Saharan Africa and highest total number of food-insecure people in Asia (3).

Contribution

Dimensions of Impact: CONTRIBUTION

Investors considering investing in a company or portfolio aligned with this strategy should consider whether the effect they want to have compares to what is likely to happen anyway. Is the investment's contribution ‘likely better’ or ‘likely worse’ than what is likely to occur anyway across What, How much and Who?

Key questions in this dimension include:

Is the investment’s contribution ‘likely better’ or ‘likely worse’ than what is likely to occur anyway across What, How Much and Who?

The extent to which this strategy can increase food security depends on the investee business and the product they are bringing to market. For this strategy, investments that allow farmers to increase or to increase more quickly food supply, quality, and stability will likely lead to better outcomes than what would occur without the investment.

How Much

Dimensions of Impact: HOW MUCH

Investors deploying capital into investments aligned with this strategy should think about how significant the investment's effect might be. What is likely to be the change's breadth, depth, and duration?

Key questions in this dimension include:

How many can receive the outcome through this strategy?

Of roughly 450 million smallholder farms worldwide, nearly all could benefit in some way from increased productivity and food quality, whether nutritionally, financially, or otherwise. A 2013 study found high yield gaps (the difference between the yields of actual and research farms) in Africa and South Asia, suggesting that smallholders could achieve much higher yields if given a supportive enabling environment (8).

How much change can beneficiaries experience through this strategy?

The amount of change beneficiaries derive depends on the product offered and the extent to which it effectively increases or stabilizes food supply. Example outcomes from this strategy include the following:

  • By closing yield gaps, current irrigated and rain-fed cultivated land could produce between 24% and 80% more crop calories than in 2000 (4).
  • A comprehensive literature review showed that updated storage methods reduce food waste from 50–60% to 1–2% (9).
  • A study in Benin found a 500–750 gram per person, per day increase in beneficiary vegetable intake during the first year of a solar-powered drip irrigation project, compared to a 150 gram increase for non-beneficiary members of the same community (10).

Illustrative Investment

The agroprocessor Yedent is helping to address food security in Ghana, where more than 30% of children under the age of four suffer from chronic malnutrition. The business purchases and resells large quantities of maize and soybeans, then uses a portion of the profits to fund the development and distribution of fortified cereals for young children in rural regions. In addition to distributing food for free to schools and orphanages, it works with a network of salespeople to sell the products at a low price in local markets and individual homes. In conjunction with the Lending for African Farming Company (LAFCo), Root Capital has supported Yedent with over $1.3 million in financing since 2014. With that money, Yedent has purchased a soybean oil press and constructed a product testing lab for their line of fortified cereals. Recognizing the keen business acumen of the Yedent team, the World Food Programme has selected Yedent to be one of two manufacturers to distribute fortified cereals specifically designed to target malnutrition to 77,000 people across rural Ghana.

Draw on Evidence

This mapped evidence shows what outcomes and impacts this strategy can have, based on academic and field research.

NESTA: 3
Comprehensive Impact Report

One Acre Fund. “Comprehensive Impact Report.” September 2016.

NESTA: 1
Investing in smallholder agriculture for food security

Bosc, P. M., J. Berdegué, M. Goïta, J. D. van der Ploeg, K. Sekine, and L. Zhang. Investing in smallholder agriculture for food security. No. 6. HLPE, 2013.

NESTA: 1
Input Subsidies to Improve Smallholder Maize Productivity in Malawi: Toward an African Green Revolution

Denning, Glenn, Patrick Kabambe, Pedro Sanchez, Alia Malik, Rafael Flor, Rebbie Harawa, Phelire Nkhoma et al. “Input subsidies to improve smallholder maize productivity in Malawi: Toward an African Green Revolution.” PLoS biology 7, no. 1 (2009): e1000023.

NESTA: 2
Food Security: A Collaboration Worth Its Weight in Grain

Samberg, Leah H. “Food security: A collaboration worth its weight in grain.” Nature 537, no. 7622 (2016): 624-625.

NESTA: 3
Assessing the impacts of postharvest storage technology on household food security: Experimental evidence from Uganda

Omotilewa, Oluwatoba J., Jacob Ricker-Gilbert, Herbert Ainembabazi, and Gerald Shively. “Assessing the impacts of postharvest storage technology on household food security: Experimental evidence from Uganda.” Poster prepared for presentation at the 2017 Agricultural & Applied Economics Association Annual Meeting, Chicago, Illinois, July 30-August 1. 2017.

NESTA: 1
Towards a Water and Food Secure Future

FAO and World Water Council. “Towards a Water and Food Secure Future.” 2015.

NESTA: 2
Solar-powered drip irrigation enhances food security in the Sudano–Sahel

Burney, Jennifer, Lennart Woltering, Marshall Burke, Rosamond Naylor, and Dov Pasternak. “Solar-powered drip irrigation enhances food security in the Sudano–Sahel.” Proceedings of the National Academy of Sciences 107, no. 5 (2010): 1848-1853.

NESTA: 1
Smallholder agriculture’s contribution to better nutrition

Wiggins, Steve, and Sharada Keats. “Smallholder agriculture’s contribution to better nutrition.” ODI, London (2013).

NESTA: 1
Food price volatility: How to help smallholder farmers manage risk and uncertainty

Blein, R., and R. Longo. “Food price volatility-how to help smallholder farmers manage risk and uncertainty.” Round Table organized during the Thirty-second session of IFAD’s Governing Council(2009).

NESTA: 1
Reducing Postharvest Losses during Storage of Grain Crops to Strengthen Food Security in Developing Countries

Kumar, Deepak, and Prasanta Kalita. “Reducing Postharvest Losses during Storage of Grain Crops to Strengthen Food Security in Developing Countries.” Foods 6, no. 1 (2017): 8.

NESTA: 1
The role of producer organizations in reducing food loss and waste

IFAD, FAO, and WFP. “The role of producer organizations in reducing food loss and waste.” 2012.

NESTA: 3
Smallholder Participation in Contract Farming and Food Security

Bellemare, Marc, and Lindsey Novak. “Smallholder Participation in Contract Farming and Food Security.” In 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota, no. 169817. Agricultural and Applied Economics Association, 2014.

Each resource is assigned a rating of rigor according to the NESTA Standards of Evidence.

Define Metrics

Core Metrics

This starter set of core metrics — chosen from the IRIS catalog with the input of impact investors who work in this area — indicate performance toward objectives within this strategy. They can help with setting targets, tracking performance, and managing toward success.

Additional Metrics

While the above core metrics provide a starter set of measurements that can show outcomes of a portfolio targeted toward this goal, the additional metrics below — or others from the IRIS catalog — can provide more nuance and depth to understanding your impact.