Thematic Paper | High-Value Agriculture
Why is MDF involved in high-value agriculture?
MDF works in Fiji, Papua New Guinea (PNG), Sri Lanka and Timor-Leste to improve agricultural markets. The agriculture sector offers some of the best opportunities to promote higher incomes and rural employment, especially for women, who participate in nearly all on-farm activities. Australia and New Zealand are important markets for high-value agricultural produce from the Indo-Pacific.
Around 500 million smallholders produce approximately 30 per cent of the world’s food supply, but profits from agriculture are more likely to be enjoyed by the capital and skill-intensive parts of the supply chain than by farmers. To address this, MDF works with agribusinesses to integrate more smallholders into their supply chains or customer bases and invest in improved farmer practices, inputs and equipment, supply chain management, quality standards and market linkages. These investments drive up productivity, quality, sales and profits to farmers.
Technology will be a critical component in the shift from traditional farming to an industry that is more productive, sustainable and generates more equitable returns.
MDF increases the prospects for the profits of farming households by identifying high-value market segments that have strong domestic and/or export demand and then supporting a shift into these segments. High-value agricultural products tend to reward farmers’ investment and effort with higher returns and suffer from less price fluctuation than bulk commodity markets. This has proved particularly valuable during the COVID-19- pandemic, where demand for specialty coffee, cocoa and branded sugar has remained relatively stable, in spite of supply disruptions caused by domestic and international transport and trade restrictions. This suggests that MDF’s strategy of supporting the transition from commodity crops to high-value, speciality, and value-added agricultural products is timely.
Many agricultural technologies have matured to the point where they are ready for adoption in the smallholder farming system. This includes using digital tools for delivering extension services, improving supply chain management and enhancing traceability. This has been particularly evident in Sri Lanka and PNG.
Agriculture has proved resilient to the COVID-19- shock compared to the broader economy in most countries. MDF sees reasonable prospects for investment and growth in the agriculture sector in 2021, provided some of the challenges associated with the pandemic can be overcome. MDF will continue to focus on improving the yield, quality and climate resilience of high-value crops that offer farmers better profits.
