Resource information
Inclusive businesses (IBs), embodying partnerships between commercial agribusinesses and smallholder farmers/low-income communities, are considered to contribute towards rural development and agricultural sector transformation. Structured as complex organizational set-ups consisting of, and overcoming the limitations of, standard inclusive instruments (collective organization, mentorship, supply contract, lease/management contract and equity), they allow for the inclusion of smallholders and low-income communities into commercial agricultural value chains. IBs are a way for governments to engage private agribusinesses in agricultural and rural policies. However, will the commercial sector, through IB partnerships, contribute towards the government’s transformation and developmental objectives? Based on case studies in South Africa—a country engaged in land and agrarian reforms—the effects of IBs at the project level appear positive, illustrated by an increase in production and growth in agricultural assets. However, individual beneficiaries experience only a marginal change in income and livelihoods. Whereas land reform, project development and market integration are generally achieved, the transformation and beneficiary development objectives are compromised. Although commercial agribusinesses contribute to investment needs in the sector and smallholder exposure to commercial markets, IB partnerships allow commercial entities control over the smallholders’ assets. Ownership and secure rights, especially of land, and support of external parties to capacitate beneficiaries and adjust power asymmetries, are essential starting points. Without these aspects, IBs will not lead to effective transformation and development.
