The results of this study indicate that improving agricultural productivity by encouraging productivity enhancing investments amongst smallholders can improve rural welfare and livelihoods. However, while agricultural productivity can improve the overall welfare of both poor and non-poor households, the relative position of poor households is worse (increased inequality). This is supported by the evidence that policies improve agricultural productivity for wealthier farms, before supporting resource-poor, small-scale producers. The unequal distribution of assets, such as land, access to infrastructure and access to credit, can help explain why increased agricultural productivity is not always effective in reducing rural inequality. As such, measures need to be taken to support poor smallholder farmers so that they too can increase productivity, reducing the inequality gap. Measures to increase smallholder productivity could include providing access to credit for new agricultural technology and providing information and education on new production methods and current market risks.
