Small towns, rural transformations and food consumption in the Global South
Small towns are an essential, but often neglected, element of rural landscapes and of food systems.
These smaller urban centres perform a number of essential functions, from market nodes to
providers of services and goods as well as non-farm employment to their own population as well as
that of the wider surrounding region. In demographic terms, they represent about half of the world’s
urban population, and are projected to absorb much of its growth in the next decades. Small towns
are also central in food systems, as they connect producers to wider markets and provide access to
cash incomes for landless and land-poor groups who are net food buyers. When all is well, small
towns are therefore an essential element of the ‘virtuous circle’ of rural and urban development,
and promote growth through the diversification of the local economic base. But the functions of
small towns are shaped by several context-specific factors, ranging from environmental change,
international and domestic trade patterns and perhaps most importantly the technical capacity,
financial revenue and accountability of their local governments which in turn depends largely on the
support of national governments.
Introduction
Most food is produced in rural areas, and consumed by the growing proportion of the world’s
population living in urban centres. But there is an assumption that this is a simple and unidirectional
connection. This paper examines how a comprehensive and dynamic understanding of rural-urban
linkages contributes to the analysis of food security in both rural and urban areas, with a focus on
how rural transformations affect both food production and consumption. Central to these
transformations is the role of small urban centres and the related processes of ‘bottom-up’
urbanisation, including the increasing diversification of rural households’ income sources.
Current debates on food security tend to emphasise the need to increase production through
improved productivity and the integration of small-scale farmers in large supply chains 1. In this
context, urbanization is mainly presented as a contributing factor to food insecurity through
increased consumption of resource-intensive foodstuffs, despite evidence that this is largely the
result of higher incomes, rather than urbanization per se 2. Hunger and food insecurity are important
indicators of poverty, and while it is often assumed that rural residents are able to rely on
subsistence production and so less likely to go hungry than urban low-income groups, the growing
proportion of rural net food buyers suggests that this is less and less the case. And while food is
generally more available in urban centres, it is not necessarily affordable for large proportions of the
urban poor 3. Overall, the multiple and complex interconnections between rural and urban spaces,
people and enterprises – and how this affects poverty and therefore food insecurity - are overlooked
in most discussions of food security.
Defining rural-urban linkages
Rural-urban linkages can be defined as the tangible and intangible exchanges between rural and
urban areas, people and enterprises. These linkages are spatial, in the sense that they include the
physical movement of goods, people, money and information, as well as the social networks and
relations that span rural and urban locations. Rural-urban linkages also refer to sectoral interactions
between agriculture, manufacturing and services. These include agricultural production’s backward
linkages (the manufacturing of inputs) and its forward linkages (processing, transport, distribution).
Rural-urban linkages are central to the production and consumption of food, as urban demand for
agricultural produce has great importance for rural incomes. A key issue is whether the growing and
changing demand for food and other agricultural products linked to urbanisation, which reflects
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dietary changes as well as the higher number of net food consumers, can underpin rural prosperity.
This is especially important in the light of global declines in agricultural land per person, soil
degradation and water constraints – all of which are likely to be exacerbated by the impacts of
climate change, which also have the potential to disrupt production, processing and distribution of
food 4. It is also important because of the changes in supply chains, with globalisation, trade
liberalisation and the growing role of modern retail and agrifood business concentration that can
make access to markets difficult for smallholders, still the majority of food producers throughout the
world and especially in low-income nations 5.
However, while net food buyers – individuals and households who consume more food than they
produce – are the overwhelming majority of the urban population, they are also an often high if
overlooked proportion of rural residents. In East and Southern Africa more than half the region’s
emerging middle class (defined as people with incomes between 2 and 20 dollars ppp/day) is rural,
and purchases 60 to 80 percent of its food, especially processed and perishable goods produced
within the region 6. But rural net food buyers also include very small-scale and marginal farmers,
landless and land-poor rural households who suffer the most from increases in food prices 7. For
these groups, access to non-farm income generating activities, often linked to mobility, is an
important strategy of adaptation to socio-economic transformations as well as environmental
change.
Urbanisation and rural transformations
Urbanization is widely recognised as one of the major trends of this century, and one that offers
great opportunities as well as significant challenges for poverty reduction in both urban and rural
areas 8. In demographic terms, urbanisation refers to the share of people living in areas classed as
urban. Since 2009, more than half the world’s population live in such settlements. Between 2009
and 2050, urban areas are projected to absorb the entire world’s population growth while the
world’s rural population is expected to start decreasing in about a decade. Perhaps more significant
is that virtually all population growth will be in cities and towns of Africa and Asia. This will
substantially change the population distribution of these two regions, which are currently the least
urbanised with on average 40 and 48 percent of their populations living in urban centres, against
around 70-80 percent in the rest of the world 9.
Urbanisation is inextricably linked to transformations in the structure of national and global
economies. Changes in urbanisation levels reflect changes in the proportion of GDP generated by
industry and services and the proportion of the workforce employed in these sectors, as the shift
from an agrarian to an industrial economy, which generally coincides to higher incomes, involves a
concentration of economic activities 10.
As the global, regional and national structures of the economy undergo major shifts, access to nonfarm employment becomes increasingly important for the livelihoods of rural residents. Figures on
the proportion of rural incomes derived from non-agricultural sources vary, and should be taken
with some caution as part-time and seasonal occupations are usually under-counted, especially if
they take place in the informal sector. Even then, they are high and growing: in China, it is estimated
that the non-agricultural part of rural incomes went from 17 percent in the early 1980s to 40 percent
in the late 1990s 11. While this reflects the extraordinary growth of manufacturing in the country,
rural non-farm incomes are also high in countries where agriculture is the main economic base, such
as Tanzania, where they went from 11 percent in 1991 to 46 percent in 2000. On average, and with
variations between countries as well as the caveats mentioned above, it is estimated that in the
1990s and 2000s non-agricultural sources accounted for 37 percent of African rural incomes, and for
51 percent in Asia and 47 percent in Latin America 12.
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At least in part, the growing importance of non-farm incomes for rural households is related to
increased mobility. Rural-urban migration is a crucial component of urbanisation; however,
migrating to cities and towns can be costly, and in both Asia and Africa, much mobility is temporary:
currently, the numbers of seasonal migrants moving between rural areas and to urban centres is
estimated to be high and growing, as is movement between rural areas. Moreover, not all ruralurban movement is to large cities, and small urban centres are an important destination for rural
residents.
Small urban centres and rural development
Despite their high visibility, megacities (agglomerations with more than 10 million inhabitants)
account for only about 9 percent of the world’s urban population. Cities with between 1 and 5
million inhabitants account for about 20 percent and smaller cities with between 500,000 and one
million inhabitants account for 10 percent of the overall urban population. About half the world’s
urban population live in smaller urban centres with less than 500,000 and in many cases just a few
thousand inhabitants, with large variations across regions: in Africa, more than half of urban
dwellers live in such settlements, compared to close to two thirds in Europe but just one third in
North America 13.
International comparisons are difficult, however, as definitions of what constitutes an urban centre
vary between nations and, in many cases, even national definitions can change over time, and this
affects smaller towns. Definition criteria typically include one or more of the following: population
size (which can vary between 200 and 20,000), economic base (the proportion of residents
employed in non-farm activities), infrastructure (roads, public services such as hospitals) and
administrative status. The economic and social functions of small centres also vary depending on the
national urban hierarchy and economic base. But while large cities play an important role in national
and regional economies, smaller urban centres have the potential to play a more direct role in the
development of their rural region. They are in many ways a crucial connection in rural-urban
linkages, and reflect the urbanisation of rural regions, with a more diversified local economic base
and links to wider markets 14.
The economic inter-dependence between urban-based enterprises and rural producers and urban
markets, and the reliance of many households on both rural and urban-based resources are often
stronger in and around smaller urban centres, which can provide access to markets for small-scale
producers who may find it otherwise difficult to attract the interest of large supply chains that
usually require consistent quality and relatively large quantities of produce. As incomes grow,
domestic demand increases for locally produced perishable foodstuffs, supporting related
processing activities in small towns 15. Value-adding processing of food is thus also, and increasingly,
an important function of enterprises based in small towns and in many cases the basis of successful
diversification of the local economic base. Small towns can also act as providers of manufactured
goods and services to the surrounding rural areas. These services include health and education as
well as banking, agricultural extension, services of professionals such as lawyers and accountants,
and wholesale and retail sales of manufactured goods from within and outside the region.
Hence small urban centres often are where the growth and consolidation of non-farm activities and
employment is located within the rural region, either through the development of small and
medium-sized enterprises or through the relocation of branches of private and public enterprises. In
so doing, small urban centres attract migrants looking for non-farm employment or to work as wage
agricultural labourers in local family farms. Research in Tanzania suggests that migration to small
towns is more likely to lead to poverty reduction than moving to large cities 16.
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There are, however, great variations in the extent to which small urban centres can fulfil this
developmental role. This is reflected in their demographic transformations: while the annual
population growth rates of small towns are often higher than those of large cities, many of them
stagnate or even lose population. A key difference between growing and declining settlements is the
relative diversity of their economic base. This relates to the specific context in which such centres
grow, including the nature of the crops produced in the surrounding area, and whether they provide
opportunities to generate added value through local processing, as in the case of perishable that
cannot be transported in bulk and require grading, packaging and rapid transport to final markets. It
is only when this added value is retained and re-invested locally that small towns grow, and
stimulate the development of the surrounding rural region.
The structure of agricultural markets is thus a critical factor. Many successful small towns develop in
close symbiosis with their surrounding rural areas, and their fortunes are interlinked to those of
specific commodities. While the majority of their residents usually engage in non-farm activities,
these are closely related to agricultural production, or are related to increasing demand from
farmers whose incomes are growing as a result of successful agriculture. But this presupposes equal
access to natural resources, especially land and water.
Vietnam’s Mekong Delta fruit production areas are a good example of such virtuous circles of ruralurban development, where small towns have become market nodes responding to growing demand
from urban centres. Grading, processing, packaging and transport employ local residents and
migrants, while at the same time demand from the local population and from residents of the
surrounding rural areas for services, including restaurants and cafes, manufactured goods and
personal services such as hairdressing, result in an increasingly diversified local economic base.
Critical factors that support the developmental functions of these small towns are the relatively
equitable access to land and water, good infrastructure including electricity, communications and
roads connecting to larger urban centres as well as to the surrounding rural settlements.
Employment opportunities in the growing manufacturing sector in nearby urban centres mean that a
large proportion of farming households rely on non-farm incomes to finance agricultural innovation.
Equally important is that large-scale value chains remain marginal in the fresh fruit sector, which is
dominated by local traders who offer more flexibility to small-scale farmers as they are able to
consolidate volumes and sell on different markets with varying quality requirements 17.
In contrast, in most agricultural regions where production is dominated by large commercial farms,
local small towns do not usually play a significant role as market nodes. In these systems, large
volumes of cash crops tend to bypass local centres, while the low wages of waged agricultural
workers do not stimulate demand for goods and services. Even where production is mainly by smallscale farmers but is integrated in global export value chains, rapid changes in requirements can
deeply affect local economies. In southern Ghana, pineapple production for export markets has
driven local agricultural growth from the 1990s up to 2005. Then, buyers’ switch from large to
smaller, sweeter types of fruit better grown in Central America than in West Africa has effectively
decimated local production, and has resulted in the stagnation and often the economic and
demographic decline of local towns 18.
Territorial development policies and decentralisation
In the past years there has been a renewed interest among international agencies in regional and
development and, by implication, in the role of small and intermediate urban centres 19. But this is
not new: much has been written about the nature and shortcomings of various policies that, since
the 1960s, have been implemented to promote the role of such centres in territorial development.
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Many of these policies have been (often costly) failures, and a relatively large body of literature has
identified the key reasons for this 20.
The first and perhaps most important reason is the underestimation of macro-economic policies,
pricing policies and sectoral priorities, including policies related to agrifood systems, that do not
make explicit reference to spatial dimensions. Equally important are issues of land tenure and
security: evidence from successful small town development shows that equal access to land and
secure tenure is a crucial factor. Neglecting the powerful influence of such policies has often been,
and potentially still is, a major reason for the failure of local and territorial development policies, as
sectoral investments can increase poverty and exacerbate social polarisation. This can severely
undermine the ability of small towns to act as engines of local economic growth and poverty
reduction, which require a relatively broad base of producers and consumers alike.
A second, but equally important reason is that in many cases policies are not grounded in the
recognition of context-specific factors that are determinant in shaping opportunities and constraints
for local development. Inadequate information, both about local needs, priorities and resources, and
of the impacts of narrowly defined sectoral policies, can hamper effective local initiatives. Moreover,
the general lack of subnational data undermines local government action. This includes economic
activities, especially the large proportion of informal sector enterprises and wage labour,
demographic changes due to migration and mobility, especially seasonal and temporary movement,
poverty and vulnerability characteristics, including non-income dimensions such as access to housing
and basic infrastructure.
Local institutions and local governments are increasingly recognised as central to regional
development. Decentralisation processes have taken place since the late 1980s and 1990s in many
low and middle income nations, and have the potential to stimulate and support local development
while addressing issues of inequality and social and economic polarisation. But in many cases this is
severely hindered by the limited financial autonomy of local governments. This is especially the case
in low and middle income nations: while in Europe the proportion of local government revenue is
above 35 percent of total government revenue, and in Japan it is 40 percent, in African countries, on
average, it is only 7 percent 21. This makes local governments heavily dependent on central
government transfers and limits their ability to invest according to local priorities and needs.
Local governments also need to be accountable to their citizens and achieve legitimacy, often in a
context where competing institutions – traditional authorities, powerful private sector actors – can
make this difficult. At the same time, transparency on expenditure and collaboration with civil
society, for example in collecting locally relevant information, are crucial ways to increase legitimacy.
But perhaps the key message is that while local governments in small towns can and should have a
major role in ensuring the provision of services and supporting local economic development, they
cannot solve fundamental issues behind rural and urban inequalities. These, as mentioned above,
depend largely on national policies. Successful decentralisation thus requires a better fit between
national macro-economic and sectoral policies and local development strategies, while synergy and
collaboration between local governments and national ministries are essential to the
implementation of territorial development policies.
Conclusions
There are several reasons why the role of rural-urban linkages in food production and consumption
deserves more attention than is currently the case. Urbanisation is usually seen as a threat to food
security, rather than an opportunity to contribute to rural prosperity. Dietary changes and the
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growing proportion of net food consumers reflect higher incomes in both rural and urban areas
which, in turn, are related to urbanisation.
Policy prescriptions on food security generally focus on increasing production, but with growing
numbers of net buyers – the majority of the rapidly rising numbers of urban residents, as well as a
large proportion of rural dwellers – non-farm incomes are an increasingly essential element of
access to food. Small urban centres have the potential to fulfil the role of market nodes and to
provide opportunities for income diversification. Their ability to do so, however, depends on a wide
range of factors that are context-specific. Among these, the prevailing agricultural production
systems in the surrounding rural area, equitable access to land and water for small-scale producers,
good infrastructure and trade links to a network of urban markets are perhaps the most important
as they help ensure that added value is retained and reinvested locally. Clearly, local governments in
small towns have a key role to play, but one that can be negatively affected by limited information,
revenue and collaboration with regional and national government.
1
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Haggblade et al (2007) op cit
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United Nations Population Division (2014) op cit
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Tschirley et al, op cit
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Christiaensen, L., and Todo, Y. (2013) Poverty Reduction During the Rural–Urban Transformation: The Role
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Hoang, X.T., Xuan Thanh, Thi Thu Phuong Dinh, Thu Huong Nguyen and C. Tacoli (2008) Urbanization and
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18
Fold, N. and Tacoli, C. (2010) Agricultural frontier settlements: markets, livelihood diversification and small
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World Bank (2009), World Development Report: Reshaping Economic Geography, The World Bank,
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20
For a summary, see Tacoli and Satterthwaite (2003) op cit
21
OECD (2015) op cit
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