Study and workshop results: food vs cash crops
The debate over cash crops versus food crops reflects a critical challenge in agriculture: balancing economic growth with food security and environmental sustainability.
On the one hand, cash crops such as coffee and cotton may drive exports and generate income which improves livelihoods by enabling access to a varied diet, education and healthcare. However, they may also expose smallholder farmers to volatile global markets, divert resources from local food systems and deplete natural resources as they tend to be grown intensely as monocrops.
As SSNUP aims to enhance food security and to promote fairer food systems, the programme seeks to encourage food production over non-edible or export-oriented cash crops. A study commissioned from Wageningen Economic Research analysed the pros and cons of this approach and examined how to boost private investments in local food value chains to improve food and nutrition security in developing countries.
Finding the right crop balance is key
The study found that, instead of solely promoting food crops, a balanced mix of cash crops, food crops, and livestock would reduce risks and strengthen the resilience of smallholders. Instead of focusing only on the type of crop to support, interventions by development actors must consider the broader context and ecosystem to ensure lasting sustainability.
This can be achieved by promoting intercropping and diversified farming at the farmer and farmer organisation levels as well as by diversifying investment portfolios and by securing varied funding sources through strategic partnerships as exemplified by SSNUP.
The study also found that cash crops can indeed contribute to greater food security under certain conditions as they can boost farmers' income by improving their value chain integration and market access. However, higher earnings don’t always mean better food security. Ultimately, it is essential to continuously assess how cash crop cultivation aligns with the natural, social, and economic environment to ensure that it enhances food and nutrition security.
Encouraging investments in food crops through blended finance
Investors tend to focus on cash crops because they are more profitable, have a high export potential and benefit from more structured value chains and stronger financial and policy support than food crops. Food crops are seen as more risky investments.
However, blended finance programmes seeking to improve food security as a prerequisite for economic development such as SSNUP can help investors to overcome this risk to encourage them to also finance food crops. The researchers therefore also explored whether SSNUP should incentivize private investments in local food value chains. They also suggest that investors can be encouraged to not only support various food crops but also to invest in different types of organisations throughout the value chain, for example in food processors and other organisations that add local value.
The key findings of the study were presented to SSNUP stakeholders during a knowledge-sharing webinar which was also an opportunity to discuss the practical experience of participants investing in different types of crops and their links to food security and nutrition.