FAQ: Agribusiness, Food Systems, and Agricultural Innovation

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FAQ

What is agribusiness?

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Agribusiness is the network of private enterprises that help produce and move food from the farm to the consumer, from farmers themselves to input suppliers, processors, transporters and traders.

It includes firms and services that connect smallholder producers to markets, from banks and insurance companies to technology companies.

Example

For example, maize farmers buy seeds and fertilizers, sell grain to aggregators and processors, and reach consumers through traders and retailers, supported by banks, insurers, and digital services.

Agribusiness can help farmers move up the value chain while creating jobs, raising incomes, and improving food security, but if infrastructure is weak, markets are concentrated, or smallholders lack finance, skills, or bargaining power, larger firms may capture more of the value while smaller producers run the risk of being excluded.

Implementation considerations

A balanced approach therefore requires policies and investments that make agribusiness more inclusive, competitive, and sustainable.

What impact does agribusiness have on employment?

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Agribusinesscreates jobs not only on the farm, but also in processing, transport, storage, trade, retail, and services that support the food sector.

In many developing countries, the food sector already employs a large share of the workforce, from farming, milling and packaging to cold chains and transport.

It’s expected to remain a major source of jobs as populations grow and the demand for food increases.

This is especially important for young people, because stronger value chains can create more diverse jobs than farming alone.

Example

One example is a rural development program in the Philippines that built roads, supported rural firms with business development and connections to buyers, helping increase household incomes and expand local business opportunities for more than 1.5 million people.

Implementation considerations

But to succeed in creating jobs, agribusinesses need basic rural infrastructure, clear regulations, and risk-sharing measures that attract private investment.

What role does agribusiness play in food security?

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Agribusiness strengthens food security by expanding supply, lowering costs, and improving the quality and safety of what people eat.

Food security depends not only on food production, but also on storage, processing, transport, markets, and affordability.

Importantly, it also depends on whether people can access markets.

An efficient and strong agribusiness network reduces post-harvest losses, connects producers to markets, and helps move food to consumers more efficiently.

Reliable infrastructure and logistics systems matter because weak connectivity can push transport and distribution costs so high that food becomes less affordable, even when there is enough food to go by.

Example

A recent World Bank report found that African food supply chains are 4 times longer than those in Europe, accounting for up to 45% of the price of some basic commodities—like rice, grains and casava.

Implementation considerations

Countries, therefore, need to reduce border and regulatory bottlenecks, strengthen storage and distribution networks, and improve market connectivity.

How can the private sector support the food sector without undermining food security, sustainability, or equity?

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The private sector produces the vast majority of all the world’s food through family farms, community or cooperatives, multinational companies and individuals along the supply chain.

Today, for example, the food sector accounts for roughly a third of global emissions, is the number one driver of biodiversity loss, and uses 70% of freshwater.

However, the impacts of private sector participation in the food sector depend on how food systems are structured and governed, including whether incentives support inclusive growth, sustainable resource use, and long-term environmental resilience.

The private sector has an important role to play in supporting small farmers to be more productive and helping businesses grow and scale food operations.

Private sector financing helps smallholders improve operations, strengthens livelihoods and drives efforts to cut emissions, limit water usage and restore ecosystems.

The World Bank Group works with agribusinesses to build inclusive supply chains that bring smallholders into markets, embed sustainability into core operations through standards and certifications, and use public tools to steer private capital toward shared social and environmental outcomes.

Implementation considerations

Achieving this at scale requires governments to set clear rules, development partners to align support, and the private sector to invest with long-term incentives in mind.

Example

One recent example is a financing window in the Global Agriculture and Food Security Program created to mobilize private investment into high-potential agricultural entrepreneurs and agrifood SMEs in poorer countries.

The window uses de-risking tools and blended finance to reach businesses that conventional finance often overlooks.

The idea is to crowd in private capital while keeping smallholders, nutrition, and climate resilience in view.

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FAQ

What is AgriConnect?

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AgriConnect is a World Bank Group initiative to help 300 million smallholder farmers move from subsistence to surplus.

AgriConnect helps countries to boost infrastructure, improve policies and mobilize private capital into the sector.

The initiative is already being rolled out through country compacts and projects.

Example

In Senegal, for example, AgriConnect aims to help the country meet its own target of extending food security to 90 percent of the country and creating 800,000 formal jobs in the agricultural sector.

Implementation considerations

Progress under AgriConnect depends on strong government leadership, clear execution plans, and the existence of a strong potential for partnerships and private sector involvement.

Why was AgriConnect launched?

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AgriConnect was launched because smallholder farming is central to food security and jobs, but it suffers from a chronic lack of investment.

Around 500 million smallholder farmers produce a large portion of the world’s food, but many are trapped in low productivity, lack access to markets, and don’t have a bank account or insurance.

This is a missed opportunity given the 1.2 billion young people are expected to reach working age in the coming decade, and that the growing demand for food could lead to millions of well-paid jobs.

AgriConnect aims to tackle that problem by improving the whole ecosystem in which farmers operate.

Example

In Brazil, for example, AgriConnect aims to reach 1 million family farms by 2030.

What are AgriConnect’s priorities?

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AgriConnect is built around three pillars: strengthening foundations, revamping policies, and mobilizing capital.

In practice, this means investing in roads, irrigation and storage, as well as the skills and research needed for modern farming; supporting reforms that improve the business environment; and building financial systems that can better serve farmers and agribusinesses.

AgriConnect focuses on six practical solutions:

• supporting farmer groups and cooperatives
• using digital and AgTech tools
• improving core infrastructure
• building skills and research
• expanding access to finance and insurance
• advancing targeted policy reforms.

While the framework remains the same, each country has its own priorities.

Example

In Guinea, for example, AgriConnect focuses on value chains such as rice, poultry, maize, soybeans, fonio, and mango.

Which countries will benefit from AgriConnect?

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Early rollouts have taken place in Brazil, Senegal, Guinea, Papua New Guinea and Togo. AgriConnect is expected to expand to over 40 countries across all regions. Some countries without compacts or implementation plans may still execute projects that align with AgriConnect principles and approaches.

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FAQ

How common is subsistence farming today, and where is it most prevalent?

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According to ILO, most of the world’s farms are smallholdings(84%) of less than two hectares.

Although many smallholdings are market-oriented, many others are devoted to subsistence farming.

Subsistence food producers, who grow food for their family’s consumption with no or little surplus for sale, account for a significant share of the world’s food production and thus play a crucial role in the efforts to achieve food security.

The prevalence of subsistence agriculture is often associated with a low level of development and a high poverty rate.

It is hard to give one precise global number for subsistence farming because definitions vary and many households partly produce for subsistence and partly for the market.

How does subsistence farming fit into modern food systems?

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Many smallholder farmers only produce enough food for their own consumption.

Some may sell a small surplus in local markets.

This makes it hard for them to thrive, with limited income to improve the quality of life or to grow their businesses.

Moreover, they could struggle to recover from a single bad harvest.

There are many reasons why small-scale farmers cannot participate in more lucrative value chains.

• They may be far from a market and transport costs may be high.
• Some may have limited business skills or are not part of an organization to pool their resources.
• Often, small producers simply don’t have bargaining power and can end up earning significantly less than their larger competitors.

Agricultural markets have changed significantly in recent decades.

Modern value chains that serve national and global markets now complement traditional local markets.

Efforts to connect smallholders to higher-value markets requires investment, public support and technical assistance.

The World Bank Group has been focusing on creating that link in places ranging from Latin America to Papua New Guinea.

Why do many farmers remain in subsistence agriculture?

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Many farmers remain in subsistence agriculture because moving beyond it requires assets, infrastructure, market access, and protection against all kinds of risks.

Small-scale farmers may stay in subsistence production because they are far from markets, face high transport costs, lack bargaining power, or do not belong to organizations that can help them pool output and reach buyers.

They may also lack access to credit, storage, irrigation, extension, and reliable price information, making commercial production too risky.

For many households, producing food for home consumption is a survival strategy in the absence of a safer alternative.

Implementation considerations

Integrating smallholders into wider value chains requires careful attention to environmental sustainability and social inclusion.

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FAQ

What is climate-resilient agriculture, and what does it look like on a small farm?

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Climate-resilient agriculture is farming that can better withstand shocks such as drought, heat, floods.

Climate-resilient agriculture is an approach to making farms more productive and more able to adapt to climate stress through context-specific practices and better risk management.

On a small farm, this can include:

• drought-tolerant seeds
• mulching
• crop diversification
• intercropping
• agroforestry
• water harvesting
• improved soil cover
• better timing of planting based on weather information.

This is not a one-size-fits-all solution, but a set of practical measures shaped by the local climate, soils, crops, and household resources.

Example

In Zambia, for example, a smallholder conservation agriculture mechanization scheme combined reduced tillage, residue cover, and crop rotation with access to rippers and related equipment, helping farmers adopt more resilient production practices amid worsening droughts and rainfall variability.

Common barriers

These practices can reduce risk, but they are not cost-free or universally easy to adopt.

Smallholders often face labor constraints, limited cash, uncertain returns in normal years, and weak access to markets or advisory services, which can slow adoption even when the long-term benefits are clear.

Implementation considerations

Climate-resilient farming works best when it is backed by extension, finance, and local institutions.

What is digital agriculture?

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Digital agriculture is the use of digital tools, data, and networks to help farmers and other actors make better decisions.

Digital agriculture includes tools such as mobile advisory services, digital payments, weather information, traceability systems, e-commerce platforms, smart irrigation, and artificial intelligence.

Digital agriculture is therefore not one tool, but a growing set of services that connect farming to information and markets in real time.

• mobile advisory services
• digital payments
• weather information
• traceability systems
• e-commerce platforms
• smart irrigation
• artificial intelligence

Example

In Tamil Nadu, a vast rural development project combined financing from the World Bank and commercial banks, and technical support from IFC, to disburse loans to women-led micro-enterprises, many of whom were getting bank loans for the first time.

The project uses the state’s single digital portal, which houses biometric identities and farmers’ credit histories, and enables online transactions.

To date, the project has facilitated 100,000 loans in both farming and non-farming activities, changing lives one at a time.

Common barriers

Agriculture remains one of the least digitized sectors, and many farmers still face barriers such as weak connectivity, low digital literacy, limited device access, and poor business incentives for providers to serve remote areas.

Can it help smallholder farmers, or does it mostly favor large farms?

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Digital agriculture can help smallholder farmers, but only if the tools are affordable, locally relevant, and designed for inclusion rather than scale alone.

Many digital services can help smallholders by improving access to advice, weather forecasts, payments, finance, and markets, especially through mobile phones and shared platforms rather than expensive standalone equipment.

At the same time, there is a real risk that better-connected, larger, or more commercial farms benefit first, especially where women, poorer farmers, and remote communities have less access to devices, data, and digital skills.

The key issue is not whether digital agriculture is only for large farms, but whether it is built in ways that lower barriers for smaller ones.

Example

For example, Kenya has built one of the world’s largest digital agriculture systems, registering 6.5 million farmers ( around 80%) and delivering local, weather- and crop-specific advisories powered by big data and geospatial mapping.

Over 4.8 million farmers—more than half women—receive weekly, location-specific guidance, increasing incomes by about $70 per season while strengthening productivity and climate resilience.

What problems does digital agriculture solve?

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Digital agriculture helps solve information, coordination, and shortcomings in the market that make farming less productive, more risky, and more costly.

Digital tools can:

• reduce gaps in weather and pest information
• improve farm planning
• connect farmers to buyers
• support traceability
• ease access to payments and finance
• reduce some of the inefficiencies that raise transaction costs across value chains.

Better data and analytics can serve a host of purposes, from strengthening price discovery to reducing waste or improving supply chain management.

Digital agriculture is often most useful where the biggest problem is not only low yields, but weak information and weak coordination.

Example

Video-based knowledge-sharing platforms in countries such as India, Kenya, and Ethiopia have been used to disseminate practical adviceon pest management, irrigation, and resilience, helping farmers learn from peers and improve decisions without relying only on in-person extension services.

Implementation considerations

In order to reach their full potential, digital agriculture solutions require robust infrastructure, widespread literacy, enabling regulations and policies, along with clear national strategies and stakeholder engagement.

What is precision agriculture and how can smallholder farmers afford it?

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Precision agriculture is a practice that employs data collection and analysis to optimize the use of inputs such as water, fertilizers, and pesticides based on local environmental conditions.

Precision agriculture is expensive due to high upfront costs for specialized equipment, subscription fees for software and satellite data, and the need for specialized training

Precision agriculture does not have to mean costly tractors, drones, or advanced sensors on every farm.

For smallholders, it can begin with low-cost services such as SMS or app-based advice, shared weather stations, digital logbooks, access to soil or crop data through extension providers, and local service models that spread costs across many users.

Rather than buying expensive machinery on their own, smallholders can adopt elements of precision agriculture through:

• shared services,
• mobile advice,
• and low-cost data tools.

In addition, Artificial Intelligence (AI) and the availability of low-cost sensors have renewed interest in precision agriculture and have broadened areas of application to the livestock sector.

Falling costs have further increased the accessibility of these tools to smallholder farmers.

Example

Low-cost remote sensing toolsdeveloped and tested for smallholder agriculture in Peru and Tanzania showed that useful crop monitoring can be built with more affordable systems rather than only with expensive commercial platforms.

Common barriers

Low-cost precision does require reliable extension, coordination, and trust.

Its benefits may be modest due to small size, poor data quality or other limitations.

What evidence is there that climate-smart agriculture works at scale?

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There is evidence that climate-smart agriculture can work at scale, but success usually comes from combining practices, institutions, finance, and policy support rather than from one isolated technique.

Evidence from global case studies shows that climate-smart agriculture can improve productivity and resilience, and reduce greenhouse emissions when it is adapted to local conditions and supported by broader systems for implementation. Experience from West Africa and the Sahelalso suggests that bundled packages combining seeds, inputs, mechanization, soil and water management, and climate information tend to deliver stronger resilience than single interventions.

Scaling approaches across Africa, Latin America, and Asia have been used to test and expand combinations of practices and incentivesrather than relying on one-off pilots.

Climate-smart agriculture is highly context-specific, and the trade-offs are real. What works well for one crop, landscape, or market may not work the same way elsewhere, and large-scale adoption still depends on policy coordination, financing, and the ability to tailor support to local realities.

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FAQ

How is AI used in agriculture today?

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AI is already being used in agriculture to improve farm advice, monitor crops and livestock, forecast risks, and make value chains more efficient.

Current uses of AI in agriculture range from pest and disease detection to the management of logistics. It is also being used in research and extension to analyze large datasets and support decisions. AI is most useful where it helps turn complex data into timely, applicable advice.

In practice

For example, voice-based advisory tools tested in India have used generative AI to provide farming advice in local languages through mobile phones.

What this depends on

AI is not a silver bullet for weak agricultural systems. Its usefulness depends on good data, reliable connectivity, local adaptation, and institutions that farmers trust.

Without those foundations, AI tools may remain pilots, serve only better-connected users, or generate advice that is too generic to act on.

Can AI predict yields or detect crop failure early?

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Yes, AI can help predict yields and flag early signs of crop stress or failure, especially when it combines satellite, weather, soil, and field data.

Machine learning can estimate yields and detect risks earlier than traditional reporting in many settings, by analyzing patterns in satellite imagery, soil data and other types of information.

These systems can support early warnings and support efforts to prevent crises, but their accuracy depends heavily on having enough high-quality local data and validation on the ground.

In short, AI can improve prediction, but it does not remove uncertainty from farming.

Examples

In Ethiopia, experts used satellite imagery and machine learning to estimate smallholder maize yields, showing that publicly available imagery combined with local ground data can produce useful plot-level estimates for policy and planning.

In India, an AI-enhanced rice decision-support tool has also used legacy farmer data to help estimate target yields and refine advice at scale.

Where limits show up

Predictions can break down when farms are highly fragmented, local conditions change quickly, or ground data are weak.

Smallholder systems are especially hard to model because plots are diverse and field-level observations are often limited, which means AI outputs should support judgment, not replace it.

Predictions can break down when farms are highly fragmented, local conditions change quickly, or ground data are weak. Smallholder systems are especially hard to model because plots are diverse and field-level observations are often limited, which means AI outputs should support judgment, not replace it.

What are the risks of AI in agriculture?

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The main risks are exclusion, bias, weak accountability, poor data governance, and overreliance on tools that may not match farmers’ realities.

AI in agriculture can reinforce existing inequalities if systems are built around farmers who already have smartphones, connectivity, stronger literacy, or more formal market access.

There are also risks linked to:

• opaque models
• biased data
• privacy
• weak farmer control over data
• advice that appears precise but is not actually trustworthy or locally valid.

System costs

At a broader level, AI also has environmental and infrastructure costs, including energy and water demands tied to expanding digital systems.

What recent experience shows

Recent work on digital agricultural technologies in Kenya and Zambia has highlighted how tools can miss the needs of smallholders who lack smartphones, stable internet, or the ability to use proprietary systems effectively.

AI adoption should take into account:

• data sovereignty and ethics
• energy and environmental considerations
• training needs
• public-private collaboration.

Recent work on digital agricultural technologies in Kenya and Zambia has highlighted how tools can miss the needs of smallholders who lack smartphones, stable internet, or the ability to use proprietary systems effectively. AI adoption should take data sovereignty and ethics, energy and environmental considerations, training needs, and public-private collaboration into account.

A practical view

AI offers transformative potential, but it is not a universal solution.

Not every problem in agriculture requires AI, and not all AI investments will deliver equitable returns.

Strategic deployment requires clear-eyed cost-benefit analysis, identifying where AI adds distinctive value—such as in processing unstructured data at scale, enabling predictive insights, or personalizing services in low-connectivity environments.

In many contexts, simpler digital tools, better data governance, or improved institutions may yield more immediate and sustainable impact.

What data is needed for AI to work in agriculture?

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AI in agriculture needs reliable data on crops, soils, weather, markets, and farming practices, ideally linked to local conditions and checked against what is happening on the ground.

Useful AI systems in agriculture typically draw on a combinations of remote sensing, weather records, soil information, farm management data, and other knowledge.

What matters is not just volume of data, but quality, interoperability, and local relevance.

Why this is difficult

Collecting and governing this data well is difficult.

Many low-income settings still lack strong digital infrastructure, data standards, secure sharing rules, and capacity for maintenance and analysis.

If these gaps are ignored, AI systems may look sophisticated but rest on weak foundations. Many promising tools fail because the data is incomplete, hard to share or outdated.

What this looks like in practice

Efforts to estimate yields in Ethiopia combined satellite imagery with field-level yield data, climate measures, and soil quality indicators to improve model performance, showing that AI works best when remote sensing is grounded in local evidence.

The World Bank Group’s guidance for AI-ready agriculture also emphasizes open and interoperable data systems rather than isolated datasets locked into individual tools.

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FAQ

Why do so many agricultural innovations fail to scale beyond pilots?

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Many agricultural innovations fail to scale because they solve a narrow technical problem without fixing the wider market, policy, financing, and delivery constraints that farmers face.

Pilots often work under unusually favorable conditions: close donor support, intensive training, subsidized inputs, and strong monitoring.

But scaling requires something harder: a viable delivery model, institutions that can learn and adapt, local ownership, and alignment with real incentives for farmers, firms, and government.

Innovations also struggle when they face multiple binding constraints at once, such as weak roads, poor credit, and uncertain demand, because no single pilot can solve all of these problems at once.

What often gets overlooked

Most importantly, scale can fail to happen due to political economy considerations.

Lessons from work on scaling insurance and other agricultural services show that pilots rarely become durable systems if the incentives for a wide range of stakeholders to support scale are not aligned.

Not every pilot should scale

Some pilots are useful because they show what does not work, or because they reveal that a model needs a re-design before expansion.

The real problem is when programs treat scale as an afterthought instead of taking it into account from the start.

Not every pilot should scale. Some pilots are useful because they show what does not work, or because they reveal that a model needs a re-design before expansion. The real problem is when programs treat scale as an afterthought instead of taking it into account from the start.

What role do markets, policy, and private firms play in turning pilots into large-scale impact?

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Markets, policy, and private firms sometimes determine whether a promising pilot becomes a lasting system rather than a one-off project.

Well-functioning markets help innovations spread because farmers and firms need a reason to adopt, invest, and keep using them after external support ends.

Policy matters because laws, regulations, public spending, and standards shape whether innovations can move through input systems, extension, finance, transport, and trade channels.

Private firms matter because they often carry the innovation through supply chains, service delivery, input distribution, aggregation, and finance, but they need a clear business case and an enabling environment to do so.

One example

In Kenya, efforts to promote on-farm storage were structured to incentivize firms to address a market failure by rewarding verified adoption outcomes rather than funding inputs upfront.

This illustrates how policy design and private incentives can work together when the market barrier is clearly understood.

Why this is not automatic

Markets and private firms do not automatically deliver inclusive outcomes.

They may bypass remote areas, favor larger producers, or avoid investments perceived as risky unless public policy reduces costs and aligns incentives.

That is why large-scale impact usually depends on a mix of public goods, regulation, and commercially viable models rather than on any one actor alone.

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FAQ

What are some examples of policies that help improve agricultural practices?

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The most helpful policies are usually those that improve incentives, reduce risk, and facilitate services and innovations for farmers to invest in better practices over time.

Examples include policies that:

• strengthen extension and advisory services
• boost research and innovations
• improve seed systems
• support irrigation and water management
• secure land tenure
• build farmers institutions like producers’ organizations
• encourage sustainable soil and land stewardship.

Multi-stakeholder work on tenure governance has supported policy and legal reforms in multiple countries to improve access to land and strengthen decision-making around natural resource management, helping create conditions for longer-term investment in production.

Why implementation still matters

However, good policy on paper does not guarantee results.

Implementation can be slowed by weak institutions, limited budgets, lack of proven solutions, uneven enforcement, or policies that ignore local realities.

Some policy reforms also involve trade-offs, especially if they benefit better-resourced farmers first or overlook women and other excluded groups.

How public spending shapes outcomes

Good policy also means better public spending choices: Each year, agriculture receives more than $650 billion in public support in around 90 countries.

Yet, much of today’s support still encourages inefficient use of resources, distorts markets, and contributes to environmental damage, climate pressures, and poor nutrition outcomes.

For every dollar spent on agricultural subsidies, the world sees only 35 cents of added output.

What repurposing could achieve

Shifting just 10 percent of the most distortive subsidies to green innovations could generate an additional $2.4 trillion by 2040. It could also reduce food prices by 18 percent, reduce sector emissions by 40 percent, and restore more than two percent of all farmland to natural habitats. Importantly, repurposing public support can be tailored to benefit smallholder farmers, attract investors, unlock new market opportunities all along the supply chain, and help the private sector drive the transition at speed and scale for growth and jobs at the agrifood systems.

Agriculture needs more than land and labor; it depends on roads, water, energy, storage, connectivity, and services that let farmers produce, preserve, and sell what they grow.

Core agricultural infrastructure includes:

• irrigation
• rural roads
• bridges
• storage
• cold chains
• processing facilities
• electricity
• water supply
• information and communication systems.

These systems lower transaction costs, reduce post-harvest losses, improve resilience, and connect farms to input suppliers and markets.

In modern agriculture, digital connectivity is also increasingly important because extension, finance, logistics, and weather services often depend on it.

Examples from current operations

Rural development work in the Philippineshas combined climate-resilient roads, support for enterprises, and storage facilities to help farmers reach markets more easily, reduce losses, and create jobs at scale.

Similar investments in rural roads in Nigeriahave been designed specifically to improve access to markets and reduce post-harvest losses.

The broader foundation

Infrastructure is not just roads and power; it is people with the right skills and institutions, and the natural systems—land, water, climate—that underpin productivity and resilience.

Growth and jobs depend on investing in all three, together.

What public investments best support smallholder market access?

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The most effective public investments for connecting smallholders to markets are often the foundational ones: rural roads, irrigation, storage, electricity, digital connectivity, and farmer organizations. These reduce the cost and risk of getting crops from farms to buyers and make private investment more viable.

A common example is rural roads.

Better feeder roads can sharply reduce transport times and post-harvest losses while increasing the prices farmers receive and their access to inputs, traders, and services.

In countries such as Ethiopia and Vietnam, road investments helped farmers shift from subsistence production toward higher-value commercial crops and stronger links to processors and markets.

Why infrastructure alone is not enough

But infrastructure alone is rarely enough.

Market access only works when several conditions come together:

• farmers need reliable buyers
• access to finance
• quality standards
• extension services
• policies that encourage competition and private investment.

Otherwise, roads can simply make it easier for cheap imports to flow in, or for middlemen to capture most of the value.

Smallholders also struggle to reach formal markets when they are fragmented, lack storage, or cannot produce consistent volumes and quality.

That is why aggregation models—such as cooperatives, producer organizations, and digital platforms— often need to accompany physical infrastructure.

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FAQ

How can farmers access reliable markets and better prices?

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Farmers gain access to more reliable markets and better prices when they have access to  buyers, finance, infrastructure and information that strengthen their bargaining power.

Smallholders often earn less not only because of low productivity, but also because they are disconnected from markets.

Public and private investments that improve roads, storage, irrigation, digital tools, and logistics can reduce transport costs, post-harvest losses, and uncertainty for both farmers and buyers.

How aggregation helps

Individual smallholders are often too small and risky for formal buyers to work with directly.

Aggregation models such as producer organizations, including cooperatives and contract farming arrangements can help farmers pool production, meet quality standards, negotiate better prices, and access larger markets.

In countries like Kenya and Vietnam, the Bank has highlighted how stronger producer groups and digital advisory systems helped connect farmers to processors and exporters.

The financing piece

Access to finance is another major factor.

Farmers who can obtain credit, insurance, and digital payments are better able to buy quality inputs, invest in productivity, store crops longer instead of selling immediately after harvest.

The Bank increasingly promotes blended finance, de-risking instruments such as guarantees, and digital financial services to help crowd private lenders into rural markets.

When do cooperatives or producer organizations work, and when do they fail?

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Producer organizations (POs) work when they help smallholders solve problems they cannot solve alone: reaching larger buyers, lowering costs, accessing finance and inputs, meeting quality standards, and strengthening bargaining power.

By pooling production, farmers can reduce transaction costs, supply consistent volumes, negotiate better prices, invest in storage or processing, and connect to formal value chains.

In sectors such as dairy, coffee, and horticulture, POs have helped smallholders access higher value markets and agribusiness firms that would not normally buy from scattered individual farmers.

What successful models have looked like

In India, dairy cooperatives helped millions of small producers access collection systems, refrigeration, processing, and national markets.

Similar models have been highlighted in coffee and horticulture value chains across Kenya and Ethiopia.

Why some fail

Many POs fail when they are poorly managed, or disconnected from market opportunities.

Some exist largely to distribute subsidies rather than run viable businesses.

Others suffer from weak governance, lack of transparency, or insufficient managerial skills.

Farmers may also lose trust if payments are delayed or prices are uncompetitive.

What successful POs tend to have in common

Successful POs usually share a few characteristics: strong leadership and professional management, financial transparency, clear commercial incentives, and links to profitable markets.

They tend to work best when participation is voluntary, members see clear economic benefits, and the cooperative operates as a business rather than an administrative structure.

Public support can help at early stages, but the World Bank generally stresses that cooperatives must ultimately be commercially viable and responsive to market signals if they are to survive.

Why does food safety matter, and how can agribusiness support it?

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Food safety matters because unsafe food can harm public health, reduce productivity, increase healthcare costs, and undermine consumer and market confidence.  On the other hand, strong food safety systems can improve public health, reduce food waste, build consumer trust, and open access to higher-value domestic and export markets.

Agribusiness can improve food safety by investing in safer supply chains from farm to market.

That includes:

• better storage
• refrigeration
• processing
• packaging
• transport
• traceability systems
• food labeling systems that reduce contamination and spoilage.

What else is needed

Standards and training also matter.

Farmers, processors, and food companies need support to adopt safer production practices, improve hygiene, monitor quality, and comply with food safety regulations.

Digital tools can also help.

Traceability systems, mobile platforms, and better data allow companies and governments to identify risks more quickly and respond to outbreaks or contamination.

Why public systems still matter

But food safety cannot rely on the private sector alone.

Governments play a critical role through inspections, laboratories, regulations, and public infrastructure such as electricity, water, roads, and cold chains.

The challenge is to raise standards without excluding smallholders and small businesses from markets, which is why the World Bank Group supports gradual, inclusive approaches that combine investment, training, and access to finance.