According to the World Bank, 70% of the global poor live in rural areas, and most of them rely on agriculture for their livelihoods. Finding ways to unlock the agricultural potential of underserved rural communities can help reduce poverty and empower smallholder farmers to increase their incomes and improve their livelihoods.
Nowhere are the opportunities and challenges clearer than in Africa, where our Clinton Development Initiative (CDI) is working with more than 85,000 smallholder farmers. The continent is rich in resources, including uncultivated land and fertile soil, yet agricultural production is low and agribusiness opportunities are limited. Some of the factors contributing to this paradox include detrimental and outdated farming practices like monocropping (not rotating crops, which fails to replenish the nutrients in the soil); use of inferior seed varieties, poor fertilizer and other inputs; and erratic weather patterns caused by climate change. But even if farmers do significantly increase their yields, limited access to markets continues to hinder farmers’ post-harvest profitability.
To address these challenges, CDI has developed an innovative market-based solution that is economically empowering smallholder farmers. We call this solution the Anchor Farm Business Model. Our model is rooted in the belief that farming—both small-scale and commercial—can be a viable business opportunity that fuels growth, and that we can put systems in place to help subsistence farmers move out of poverty and improve their access to markets.
As an inclusive business model marrying for-profit and non-profit approaches, our Anchor Farm Business Model pairs commercial farms and agribusinesses with smallholder agricultural extension programs to strengthen opportunities and fill gaps in the local agricultural value chain. Specifically, we connect farmers with inputs such as seeds and fertilizer; markets for their goods; access to warehousing and processing that is essential to their work; and training and financial services that can increase their yields and livelihoods. We work across these value chains to improve farmers’ access to the tools they need to lift themselves out of poverty. Each of these agribusiness interventions create jobs, promote skills development, spur investment in capacity building and infrastructure, and increase activity in the local agricultural economy—making it possible for farmers to dramatically increase their productivity and incomes. Alongside these benefits, our model’s smallholder extension program provides farmers with access to climate-smart agronomic training, key agricultural inputs, and market linkages.
From an operating standpoint, the structure of our Anchor Farm Business Model has two main strategic benefits: it provides us with a steady source of funding for CDI’s core social impact work with farmers, and it enables us to create self-sufficient and sustainable businesses that can eventually be transferred to local ownership. Specifically, the funding from these for-profit agribusinesses supports CDI’s social impact work, which includes the training of smallholder farmers, the ability to connect them to financial literacy training and services, and the opportunity to provide these farmers with access to better seeds, fertilizers, and other inputs.
All of this ultimately impacts the lives of smallholder farmers and empowers them to take control of their own destinies and live their best life stories. We’re serious about working ourselves out of a job, and we’re able to do just that by merging complementary non-profit and for-profit approaches, and creating a system and structure where investors, donors, and other key stakeholders can work together toward common goals. We believe that this shift from a donor-supported model to an investor-supported model is the future of social impact.
CDI’s Anchor Farm Business Model is already transforming the lives of tens of thousands of farm families and their local communities in Malawi, Rwanda, and Tanzania. And our aim is to take this highly successful and sustainable model of empowerment to millions of smallholder around the world.