Strategies for Rural Livelihood Development

1. Strategies for Rural Livelihood Development In most parts of Asia, rural areas face a triple challenge of population ageing, shrinking labour force and growing non-farm economy. This article is based on a recent report from the Asian Institute of Cornell University, “Strategies for Rural Livelihood Development in Asia: Uncovering New Opportunities for Smallholders”. The Asian countryside is rapidly changing. In most parts of Asia, rural areas face a triple challenge of population ageing, shrinking labour force and growing non-farm economy. These demographic and economic trends are accelerating depopulation and urbanisation trends in rural areas. This article addresses these challenges by exploring successful development models to support the growth of smallholder farms. The report surveys 18 case studies in six Asian countries – Cambodia, Kazakhstan, Kyrgyzstan, New Zealand, Sri Lanka and Vietnam – to identify opportunities for developing new business models with agri-value chains that can improve profitability and increase value capture. Strategies for success Successful business models in rural areas need to consider the unique context of each region. These include the following strategies: - Finding a niche in the value

2. chain - Successful value chain models provide added value to primary products, are scalable and are aligned with end-user demand. - Capitalising on complementary strengths, such as the availability of local raw materials, cheap labour, favourable climate, or proximity to ports. - Building long-term relationships with customers and suppliers, and investing in their capacity to improve quality and productivity. - Identifying the right partners with complementary skills and capabilities, such as financial institutions, technology providers, and extension officers. - Supporting value chain development through the use of grants, loans, or equity investments. - Adopting a co-operative business model that brings together smallholders, processors, and marketers into a single organisation. New value chain opportunities New growth opportunities and livelihood support in the agricultural sector are emerging through value chain investments. These include: - New global markets for high-value tropical fruits: Exports of tropical fruits from the region, such as dragonfruit, mangosteen and durian, are expected to grow in the coming years. Investing in plantations for these products will provide a new source of income for growers, as well as create new value-added products for consumers in the region. - Developing new markets for high-quality dairy products: Most of the dairy production in the region is consumed domestically. New Zealand has developed a model of partnering with Fonterra, which buys and processes milk from local farmers and markets the products globally, creating a strong source of income for dairy farmers and a consistent source of high-quality dairy products for export. - Expanding value chains for fresh produce: Fresh fruits and vegetables are the fastest growing segments of the food processing sector in Asia. - Developing value chains for fish and seafood: Asian marine fisheries are the world’s most productive, but fish stocks are declining. Many countries are looking to create sustainable value chains for fish, such as aquaculture and integrated fisheries that blend wild and farmed fish. - Building new value chains for livestock, such as dairy and red meat, through breeding and crossbreeding programs to produce high-quality breeds and breeds that are better suited to Asian conditions. Rural development and job creation through food processing Value chain investments in agriculture can also lead to rural development by creating jobs and improving incomes in rural areas. Rural development requires a long-term perspective that goes beyond agricultural value chains and focuses on creating a diversified economy with a broad range of service industries and small-scale manufacturing. Promising models for rural livelihood development include: - Increasing the value of crop residues: The majority of agricultural waste is used as fertiliser or fuel. Increasing the use of crop residues as feedstock for biogas or biopower can generate additional income for farmers and reduce pollution. -

3. Adopting sustainable farming practices to improve soil health and reduce fertiliser use: Sustainable farming practices, such as precision farming and integrated pest management, can reduce the amount of fertiliser needed. Investing in research and development to improve the adoption of sustainable farming practices can increase yields and reduce labour costs. - Investing in research and development of high-yielding crops that are suited to Asian conditions and are resistant to pests and diseases: Livestock and crop research and development can improve yields, increase profitability, and reduce the need for chemical inputs. Promoting sustainable, profitable livestock production and expanding dairy value chains In many Asian countries, farmers are shifting from growing to livestock production, particularly dairy. New Zealand’s Rural Investment (New Zealand) (RBI) program supports regional development through investments in agriculture. Some of the investments and livelihood support focus on improving dairy production and the quality of the milk produced by local farmers. The investments help dairy farmers modernise their operations, providing them with access to capital, information, and markets. This approach complements the New Zealand government’s initiative to create an “agrifood” economy. New Zealand has a competitive advantage in the dairy sector due to its favourable geography and climate, as well as its technical know-how. New Zealand dairy companies have experience operating in Asia, particularly China and India, where the demand for dairy products is rising. Developing regionally-specific premium products with a strong demand in the Asian markets In addition to improving production and investing in value chains, the government should invest in improving the quality of products produced by local farmers. Agri-tourism and agritourism provide opportunities to promote and sell high-quality products to domestic and international consumers. Partnerships between local farmers and agribusinesses can help improve product quality by providing training and technical expertise. Partnerships can be based on joint ownership or franchising models. Conclusion The Asian countryside is rapidly changing. In most parts of Asia, rural areas face a triple challenge of population ageing, shrinking labour force and growing non-farm economy. These demographic and economic trends are accelerating depopulation and urbanisation trends in rural areas. Strategies for rural livelihood development need to consider the unique context of each region. These include finding a niche in the value chain, investing in research and development of high-yielding crops, adopting sustainable farming practices, and promoting rural development through

4. agri-tourism. Investments in agriculture can also lead to job creation, improve product quality, and expand value chains for high-value products.