The Business of Agroforestry: Opportunities and Challenges for Commercial Investment in Agroforestry-based Ventures
The Business of Agroforestry: Opportunities and Challenges for Commercial Investment in Agroforestry-based Ventureswca2014-LA-040 Sagun Saxena1,* Rahul Barua2 1Managing Partner, CleanStar Ventures 2Partner, CleanStar Ventures
: Rising global demand for food, feed, fibre and fuel is driving commercial investment in primary agricultural production around the world. A significant share of this capital is being lured into developing countries in sub-Saharan Africa and Latin America by apparent reserves of uncultivated land, favorable agro-climatic conditions, and low-cost labor pools in these regions. Traditionally, agricultural production in these countries has been dominated by subsistence farming families cultivating small land areas (i.e., smallholders), relying on few inputs and typically achieving low or moderate productivity. Driven by their desire to boost productivity and maximize financial returns, the new wave of commercial investors into these markets are introducing broad-scale monoculture farming systems that have delivered significant productivity gains in more developed countries. Where smallholder farmers are engaged in such ventures, they are typically encouraged to adopt similar high-input monoculture farming systems on their own land to produce output for sale exclusively to the ventures. While such arrangements can provide a vital new cash income stream for smallholders, they can also create increased vulnerability to market and climate shocks and reduce subsistence food crop production. Alternative approaches for boosting smallholder productivity, like Agroforestry Systems, have rarely been incorporated into these commercial ventures. This paper reviews the opportunities and challenges of commercial investing in primary agricultural production using smallholder-based Agroforestry Systems. Two practical business cases in Mozambique and India are presented and evaluated for financial returns, and associated socio-economic and lifecycle environmental impacts. The potential is demonstrated for smallholder-based Agroforestry Systems to increase return on investment and reduce risk for commercial investors in agribusiness ventures, while boosting long-term food security and livelihoods of smallholder farmers, enhancing local ecosystems, and mitigating climate change impacts.