Smallholder households: Distinct segments, different needs
This paper (PDF) by CGAPS identifies three segments of smallholder households and provides information to strategize how to reach and serve smallholder households. Understanding the distinct profiles of smallholder segments can help financial services providers, government bodies, and agricultural development partners better identify and serve their most relevant smallholder households, reducing costs and driving scale. Data from nationally representative surveys of smallholder households in Mozambique, Uganda, Tanzania, Côte d’Ivoire, Nigeria, and Bangladesh, is used to idenfity smallholders crop and livestock sales, amount of agricultural land, and smallholder livelihood profile. Three smallholder segments are identified: 1) Commercializing segment, is the primary market for financial solutions related to agricultural goals; 2) Diversifying segment, is in transition and generally values the standard portfolio of financial services; 3) Subsisting segment, is more vulnerable for which partnerships, technology and comprehensive approaches to financial and nonfinancial services are key. Agriculture exerts a strong influence on the identity and income of smallholder households. But their financial inclusion is not primarily determined by their agricultural livelihood profile: in all six sample countries, there is only modest variation between the three segments, despite their distinct livelihoods and the varying roles of agriculture. Farm and nonfarm aspects of their livelihoods need to be considered to help each segment of smallholder households effectively build resilience and capture opportunities. This wider lens is essential to understanding the financial, economic, and social exclusion of rural households and in striving for their inclusion.