Commercialisations In Agriculture

Abstract

Policy discourses around agricultural commercialisations tend to separate producers into different types of farm (small farms, large farms) growing different types of crops (food crops, cash crops) with simple distinctions made between ‘subsistence' and ‘commercial' or ‘export' agriculture. Lack of clarity about what commercialisation actually means may give rise to misconceptions, evoking certain fears that can obstruct the passage of policy into practice.

Writing on commercialisation highlights a number of aspects to what it means to be commercialised. However, the lynchpin of most, if not all, definitions of agricultural commercialisation is the degree of participation in the (output) market, with the focus very much on cash incomes. However, there are other dimensions to agricultural commercialization. First, there is the degree of participation in input markets. As farms become more commercial, they tend to rely less on own-produced inputs (e.g. manure, retained seed) and services from mixed farming systems (e.g. animal traction) and instead depend more on markets to supply their inputs (improved seed, inorganic fertiliser, crop protection chemicals) and services (mechanised equipment for ploughing, planting, weeding, harvesting etc – either hired/rented or purchased). Thus, on the input side we might define commercialisation as value of inputs acquired from market/ agricultural production value

Some writing on commercialisation highlights the importance attached to the profit motive within the farm business as an indicator of commercialisation. Agricultural commercialization means more than the marketing of agricultural output, it means the product choice and input use decisions are based on the principles of profit maximisation.

Looking beyond purely the agricultural activities of a household, some authors (e.g. von Braun and Kennedy (1994) propose household commercialization as a measure of integration into the cash economy, which they define as the proportion of total value of goods and services acquired through cash transactions or the share of gross income from all market sources.
In recent time commercialization of smallholder agriculture has got increased attention by policy makers. However, more often than not large farm bias may develop in practice even though policy appears to be pro-smallholder on paper. Actions to encourage smallholder commercialisations could include more attention to food crops, pro-actively encouraging asset accumulation processes and making markets work for poor farmers in poor areas. However, to ensure that pro-smallholder policy documents lead to pro-smallholder policy on the ground, policy makers should create enabling environment for smallholders and strengthen the service delivery process. Yet, creating a good enabling environment and ensuring sufficient, timely and efficient service delivery is crucially dependent on policy processes.

Ethiopian Journal of Economics Vol. 16 (1) 2007: pp. 3-42