The Chicago Council on Global Affairs is pleased to launch a new blog series, “The Next Generation,” to explore the challenges and opportunities of agricultural systems in a world with unprecedented numbers of young people. We will publish one post each week addressing these issues, and our series will culminate with the release of a new Council report at the 2018 Global Food Security Symposium. Join the discussion using #GlobalAg, and tune in to the symposium live stream on March 21 and 22.
By Laura Glenn O'Carroll
Agricultural development is good for business. Investments in smallholder farmers not only raise the incomes of the rural poor but also create dynamic markets and an expanding middle class, which drives up demand for consumer goods. By recognizing and capitalizing on the connections between societal and economic progress, leaders can improve livelihoods up and down the supply chain, in both big and small enterprises.
The idea that that in order for businesses to thrive they must support the well-being of communities has become known as “shared value”. Shared value has emerged as a counterbalance to business practices that generated profits but at the expense of environmental and human rights. By creating economic growth and value for society, businesses can preserve the resources they depend on and support the health of their communities of consumers. Many large firms have already adopted shared value as a core tenet of their work—they know that the future success of global business networks will rely on the purchasing power of consumers around the world.
For example, Unilever, one of the world’s largest consumer product companies, has centered their business model on shared value creation with sustainability in mind. In an era faced with increased public distrust of business, Unilever has pursued products and marketing campaigns that address public ills. In 2002, Unilever’s India branch introduced an affordable bar of soap (for about $0.03) paired with a public outreach campaign around handwashing to address health problems related to poor hygiene. By 2010, Unilever says that 119 million people were reached with educational campaigns, and the soap continues to see double-digit sales growth each year.
For many businesses, strong sales depend on a vigorous middle class. The “middle class” is an inexact social classification, but broadly reflects the ability of consumers to enjoy stable housing, healthcare, education, and discretionary income. Historically, increasing middle class populations have helped drive economic growth as a major source of consumer demand. As Western markets plateau, multinational companies seeking growth will need to expand into emerging markets and their success will depend on the buying power of these populations.
While the middle-class market in high-income countries is projected to grow at only 0.5 to 1 percent per year, middle-class markets in low- and middle-income countries (LMICs) could see growth rates of 6 percent or more annually. By 2020, Africa will have over 1.1 billion consumers, more than the populations of North America and Europe combined. This rising population is also increasingly middle-class. By 2010, 34 percent of Africa’s population was middle class, up from 27 percent in 2000. The Asia Pacific region alone is projected to have more than 85 percent of middle class growth through 2020. Consumer spending in Africa, primarily driven by the middle class, rose to an estimated $680 billion a year in 2008. This increasing demand offers the potential for rich profits, if it can be properly developed.
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Preparing for Success
It is vital that leaders, investors, and civil society support young people so that they can be a part of this economic growth. In order to continue this movement of middle-class growth, incomes must rise for the next generation, many of whom are among the poorest poor. Currently, nearly 70 percent of Africans work in the agricultural sector, largely on small plots of farmland. Investing in their work and supporting the creation of necessary infrastructure that their businesses need will increase their family’s incomes while also developing off farm economies. History has demonstrated that developing agricultural productivity remains the most effective way to raise incomes for the majority of low income people.
In order for young people to be interested in food and agricultural sectors, they must see these occupations as capable of providing good livelihoods. To move agriculture from subsistence-oriented to productive and commercialized, agricultural transformations must be focused in a whole systems and market driven agenda. As economies across the globe develop, increasingly urbane consumers are demanding high quality, value-added food products.
But it isn’t enough to just prepare the enabling environment for agriculture to succeed. Investing in young people is fundamental to building the human capital needed to transform agriculture. Training programs can help empower young people with the skills needed to succeed in agricultural businesses. For example, TechnoServe and the MasterCard Foundation have supported the Strengthening Rural Youth Development through Enterprise (STRYDE) program to help give youths aged 18 to 30 in East Africa the knowledge needed to find employment, start a business, and become reliable income earners. Within the programs first 18 months, the 2,400 trainees created more than 800 new businesses and expanded another 150.
Educating women and girls and ensuring equal access to resources is one of the most impactful business decisions leaders can make. Even one year of secondary education can increase a women’s wages later in life as much as 25 percent according to the World Bank. Strengthening the earning power of women grows economies. According to the UN, half of the economic increase in OECD countries over the past 50 years can be credited to increased educational attainment, of which more than half is due to increased equality in education between women and men.
Even when access to education is improved, the success of women and girls will be curtailed without equal access to finance and land rights. Next week, this blog will consider the particular challenges faced by young women in agricultural communities and examine the promise and power of female farmers and agribusiness owners.