3. Economic Dimension of Agroecology
3.1 Agroecology promotes fair, short distribution networks rather than linear distribution chains and builds a transparent network of relationships (often invisible in formal economy) between producers and consumers.
3.2 Agroecology primarily helps provide livelihoods for peasant families and contributes to making local markets, economies and employment more robust.
3.3 Agroecology is built on a vision of a social and solidarity economy.
3.4 Agroecology promotes diversification of on-farm incomes giving farmers greater financial independence, increases resilience by multiplying sources of production and livelihood, promoting independence from external inputs and reducing crop failure through its diversified system.
3.5 Agroecology harnesses the power of local markets by enabling food producers to sell their produce at fair prices and respond actively to local market demand.
3.6 Agroecology reduces dependence on aid and increases community autonomy by encouraging sustainable livelihoods and dignity.
Impact of this dimension
By using local resources and providing food to local and regional markets, agroecology has the potential to boost local economies and contribute to eliminating the negative impact of international ‘free’ trade on small-scale food producers’ livelihoods.
Judith Hitchman, President & co-founder of Urgenci
Agroecological practices are economically viable as agroecological production methods reduce the cost of external inputs and therefore allow greater financial and technical independence and autonomy for food producers. By diversifying production and peasant activity, food producers are less exposed to market-related risks such as price volatility or loss due to extreme weather events exacerbated by climate change. Small-scale farmers in particular benefit from implementing agroecology, as they can sustainably increase their yields, improve their food and nutrition security and raise their income. With regard to productivity and revenues, agroecology is particularly beneficial for less well-off households and can thus be described as inherently “pro-poor”. Agroecology also contributes to economies by providing appropriate technology and food-based employment opportunities in rural and peri-urban areas. At the same time, it can offer a livelihood for people in cities with a small plot or access to public land. One of the objectives of agroecology is to provide decent work that respects human rights and provides a decent income for food producers. By decreasing the distance between producer and consumer, agroecology reduces storage, refrigeration and transport costs, as well as food loss and waste. Agroecology takes externalities for society and environment fully into account, as it minimizes waste and reduces effects on health, and supports positive externalities such as ecological health, resilience and regeneration.
Example 1: Agroecology benefits rural economies
In 2016, Trócaire, with local partner organisation, Red K’uchubal prepared a research call with the aim of estimating food and resilience-related changes among small-scale farmers who had adopted agro-ecological practices in Western Guatemala. The Programme for Territory and Rural Studies at the University of San Carlos in Guatemala was to the fore in the team that carried out the research in 2016 by comparing outcomes based on a range of social, economic and environmental criteria between a group of ten agroecology-adopting farmers with a group of ten semi-conventional farmers. The findings from the research were finalised in 2017 and are reflected in a report in Spanish (with short English abstract) and a video resource, also in Spanish with English subtitles.
With regard to the economic dimension of agroecology, the research found statistically significant differences in gross agricultural income. The agroecology farmers achieved higher levels of agricultural incomes than their semi-conventional peers. As a result, agro-ecological farmers said they generated enough income to live off the land throughout the year while their semi-conventional counterparts said they needed to supplement their farm incomes with off-farm employment. This outcome was due to a number of factors including:
– Achieving comparable yields in crops such as maize but without reliance on expensive inputs, including chemical fertiliser, pesticide and herbicides,
– Better locally-based market integration associated with more diverse production, and
– Lower dependency on food purchases to meet food and nutritional needs; food-related weekly expenditure in agroecological households on average representing just 47% of that in conventional households.
The video resource looks at the development of agroecological production chains and the important role of farmer co-operatives in marketing diverse agro-ecological product lines, illustrating how agroecology provides for farmer livelihoods while also contributing to strengthening local markets, local economies and employment.
Sources/further information
Praun, A., Calderón, C., Jerónimo, C., Reyna, J., Santos, I., León, R., Hogan, R., Córdova, JPP. (2017). Algunas evidencias de la perspectiva agroecológica como base para unos medios de vida resilientes en la sociedad campesina del occidente de Guatemala.
Example 2 : How a microfinance institution tailored financial products to the environmental impact of farming practices
Developing and financing the transition and adaptation to agroecological practices is an important issue for many farmers’ organizations in West Africa. The stakeholders in the PAIES programme, CCFD and SIDI (the microfinance branch of CCFD), have been tackling this issue on behalf of their partners since 2014 in putting together its PAIES programme (supporting farmers making the transition to agroecology). Transition cannot rely on direct support from the NGO alone; it also needs to be included in microfinance practices and products available to farmers.
To address issues facing all farmers’ organizations, UBTEC, a microfinance institution (Caisse d’Epargne et Crédit), studied the agroecological practices of its members to develop financial products with a bonus/penalty system (a lower/higher interest rate) linked to the environmental impact of farming practices.
This research produced a catalogue of agricultural practices in northern Burkina Faso and analysed the profitability of production linked to the methods and practices used (employing chemical inputs or agroecology). A catalogue of the most sustainable farming and non-farming practices (taking account of the ecological, social, and economic dimensions of sustainability at all times) was produced. This catalogue helped UBTEC promote sustainable practices through its current finance products.
It showed that some crops had the potential to be more profitable if farmers use an agroecological approach and methods such as using organic fertilizers, natural pesticides (onions, potatoes or cowpeas) but also that others could be less profitable, or unprofitable (tomatoes, chillies or cabbages). This is an important point. A balance needs to be found between profitability and the agroecological approach that respects the environment and health of producers and consumers. Through the research, the characteristics of agroecological practices were set out to help design a model for implementing and prioritizing them at farm level. In addition, it analyzed different types of investments farmers made to increase yields, lock-ins that food producers faced and possible strategies to minimize them. These different components of the research allowed UBTEC to propose ways of financing and selecting farming activities that could be financed, as well as practical ways of supporting borrowers adopting agroecology. In late 2017, the outcome of the study and partnership were marked by the launch of new financial products (seasonal agricultural loan) supported by a guarantee fund. In this, UBTEC started to lend money to its members with an interest rate varying according to the practices adopted and their environmental impact. Agroecology attracts a lower rate; non-agroecology, a higher rate. Within 4 months of launching the loan, there had been 450 applications from farmers to finance agroecological practices.
Sources/further information
“Rapport de l’étude pour adapter les produits financiers de l’UBTEC avec un système de Bonus/Malus en fonction de l’impact environnemental des activités financées : Programme PAIES »
Video on the research and how it was carried out.