Agri-food Enterprises in the Energy-Agriculture Nexus

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Background

The spectrum of agricultural enterprises is complex and diverse. These enterprises range from basic subsistence smallholder farmers growing food for their own consumption to large commercial, corporate farms supplying huge supermarket chains across the world. These systems vary according to their dependence on energy inputs and different energy sources, so they show differences in management and incorporation of renewables.

Check out the video lecture about the importance of different scales of agri-food enterprises and tools for techno-economic analysis by Stefania Bracco, expert in Energy-Food Chains working for the Food and Agriculture Organization of the United nations (FAO). 




Further information on the mentioned MOOC: Powering Agriculture – Sustainable Energy for Food and related materials you can find here.


Different scales of agricultural enterprises

Subsistence Level

This is the smallest system, in which households are engaged in basic forms of small-scale agricultural activities and produce food solely for their own consumption. Subsistence producers use very low energy inputs, usually deriving from human and animal power. These energy inputs are difficult to measure and not included in world energy statistics (FAO, 2011). Priority for subsistence farmers are gaining access to energy and securing an adequate livelihood. Lack of financial resources limits their ability to meet these priorities and to invest in sustainable energy solutions. Still, coordinated networks of subsistence farmers can benefit from renewable energy systems such as small-scale hydro, wind and solar powered systems.

Small Family Units

Small family units are usually engaged in a variety of activities, including cultivating small gardens or rice fields, tending orchards, raising livestock and maintaining dairy herds (FAO, 2011). In most countries, small-scale farmers provide fresh food to local markets and/or to processing plants. Depending on the degree of modernization, different renewable energy technologies and energy efficiency options exist for these small enterprises, except for those that depend solely on human and animal power. For instance, small farms may utilize solar heat for crop drying, on-farm produced biogas for cooking and electricity generated from a solar photovoltaic (PV) system (FAO, 2011).

Small Businesses

The differences between Small Businesses and Small Family Units are that small businesses can be family-managed but are usually privately-owned, they usually operate at a slightly larger scale and employ several staff. Having a larger capital availability, these businesses have opportunities to reduce their fossil fuel dependence by investing in on-farm renewable energy, which could also provide additional benefits for the surrounding local community.

Large Corporate Businesses

‘Corporate’, ‘industrialized’, ‘market-based’, ‘commercial’ and ‘multinational’ are terms used to describe modern, large-scale, food systems that produce food, fish, feed or fibre (FAO, 2011). Large-scale systems are usually dependent on high direct and indirect external energy inputs throughout the supply chain and have access to finance for capital investment for renewable energy technologies and energy efficient equipment. Therefore, they have large potential to substitute fossil fuels with renewable energy sources and energy efficient options for production or processing activities, such as solar/wind irrigation systems, storage facilities, drying operation, etc. Energy may be used on-farm or sold off-farm for additional revenue (FAO, 2011).



Typologies of typical "small" and "large" scale farms

Fossil fuel dependence

Capital availability

Major food markets

Energy intensity

Substistence level

Zero / low

Micro-finance

Own consumption

Low

Small family unit

Low / medium

Limited

Local fresh/ process/ own use

Low / high

Small business

Medium / high

Medium

Local/ regional/ export

Low / high

Large corporate business

High

Good

Regional process/ export

Low / high



Conclusion

  • The spectrum of agricultural enterprises is complex and diverse, ranging from basic subsistence smallholder farmers to large commercial farms.
  • In order to represent the various levels and intensities of energy inputs, agri-food enterprises can be divided between industrial large-scale farming systems using modern technologies, small businesses and family farms using simple technologies, and small-scale subsistence farming systems equipped with traditional technologies.
  • The differences in scale impact the ability to manage and incorporate renewable or energy efficient technologies and are therefore considered throughout the techno-economic analysis of agro value chains/projects.


References


Further Readings



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