Tracking Prosperity: The FAO Indicator for Small-Scale Producer Income
Sustainable Development Goal (SDG) Target 2.3 is a central pillar of the global effort to end hunger. It explicitly aims to double the agricultural productivity and incomes of small-scale food producers by 2030.
To track this progress, the Food and Agriculture Organization of the United Nations (FAO) acts as the custodian for Indicator 2.3.2: Average income of small-scale food producers, by sex and indigenous status.
1. What is Indicator 2.3.2?
Indicator 2.3.2 measures the annual net earnings that small-scale producers derive from their agricultural activities. Unlike general poverty metrics, this indicator focuses specifically on the economic viability of the farm or production unit itself.
Key Components:
Target Population: Small-scale food producers (including farmers, pastoralists, fishers, and foresters).
Measurement Unit: Annual income expressed in constant Purchasing Power Parity (PPP) dollars to allow for international comparison.
Disaggregation: Data is broken down by gender and indigenous status to ensure that marginalized groups are not left behind.
2. Defining the "Small-Scale" Producer
Defining "small-scale" is complex because a "small" farm in the United States looks very different from one in Ethiopia. To solve this, the FAO uses a relative approach combined with an absolute cap.
A producer is classified as "small-scale" if they fall into the bottom 40% (the lowest two quintiles) of the national distribution in three categories:
Physical Size (Land): The amount of operated land (hectares).
Physical Size (Livestock): The number of livestock owned, measured in Tropical Livestock Units (TLU).
Economic Size (Revenue): The annual economic revenue from agricultural activities.
To ensure the indicator doesn't include wealthy producers who happen to have small plots, an absolute ceiling is applied. No producer earning more than $34,387 PPP annually can be classified as small-scale, regardless of their land size.
3. How the Income is Calculated
The indicator focuses on the Operating Surplus. It is calculated by taking the total value of agricultural production and subtracting the operating costs.
Revenues: Includes everything produced for sale or self-consumption (crops, livestock, fisheries, forestry).
Costs: Includes seeds, fertilizers, animal feed, hired labor, and fuel. (Note: Depreciation of assets is often excluded due to data limitations).
4. Why This Indicator Matters
Small-scale producers provide up to 80% of the food consumed in much of the developing world. Despite their importance, they are often the most vulnerable to climate change, market fluctuations, and poverty.
Policy Direction: By identifying the specific income gaps of women and indigenous producers, governments can tailor subsidies, credit, and infrastructure support.
Poverty Alleviation: Increasing the income of smallholders has a direct multiplier effect on rural economies and local food security.
Sustainability: Small-scale producers often use more traditional and biodiverse farming methods; supporting their income helps preserve these sustainable practices.
5. Data Sources and Methodology
As the custodian agency, the FAO relies on several primary data streams to compile this indicator:
Agricultural Surveys: Such as the AGRISurvey (Agricultural Integrated Survey) program.
Household Surveys: Including the World Bank's LSMS-ISA (Living Standards Measurement Study - Integrated Surveys on Agriculture).
Administrative Data: National registries and agricultural censuses.
While the methodology is now standardized (Tier II status), data scarcity remains a challenge in many regions, particularly in capturing informal transactions and gender-disaggregated data.
Measuring Agricultural Prosperity: Key Performance Indicators for FAO Indicator 2.3.2
Sustainable Development Goal (SDG) Target 2.3 is a central pillar of the global effort to end hunger. It explicitly aims to double the agricultural productivity and incomes of small-scale food producers by 2030.
To track this progress, the Food and Agriculture Organization of the United Nations (FAO) acts as the custodian for Indicator 2.3.2: Average income of small-scale food producers, by sex and indigenous status.
1. Defining the "Small-Scale" Producer
Defining "small-scale" is complex because a "small" farm in the United States looks very different from one in Ethiopia. To solve this, the FAO uses a relative approach combined with an absolute cap.
A producer is classified as "small-scale" if they fall into the bottom 40% (the lowest two quintiles) of the national distribution in three categories:
Physical Size (Land): The amount of operated land (hectares).
Physical Size (Livestock): The number of livestock owned, measured in Tropical Livestock Units (TLU).
Economic Size (Revenue): The annual economic revenue from agricultural activities.
To ensure the indicator doesn't include wealthy producers who happen to have small plots, an absolute ceiling is applied. No producer earning more than $34,387 PPP (Purchasing Power Parity) annually can be classified as small-scale, regardless of their land size.
2. Key Performance Indicators (KPIs) to Measure
To accurately calculate and monitor Indicator 2.3.2, the FAO tracks specific KPIs that form the basis of "Agricultural Income." These are measured across four main sectors: Crops, Livestock, Forestry, and Fisheries.
| KPI Category | What is Measured |
| Gross Revenue | Total physical volume of production multiplied by the farm-gate price. This includes products sold, bartered, or used for self-consumption. |
| Operating Costs | All variable costs incurred during the production cycle, including seeds, fertilizers, pesticides, animal feed, fuel, and hired labor. |
| Operating Surplus | The primary metric for 2.3.2 ($Revenue - Costs$). It represents the net economic return to the farm before taxes and depreciation. |
| Stock Variation | When data allows, the change in the value of stored products (e.g., grain in silos) is added to the annual income. |
| Labor Participation | Measured in hours worked or "labor units," ensuring income is viewed alongside the effort required (linking to Indicator 2.3.1). |
3. How the Income is Calculated
The indicator focuses on the Operating Surplus. It is calculated by taking the total value of agricultural production and subtracting the operating costs.
Revenues: Includes everything produced for sale or self-consumption (crops, livestock, fisheries, forestry).
Costs: Includes seeds, fertilizers, animal feed, hired labor, and fuel. (Note: Depreciation of assets is often excluded due to data limitations).
4. Why This Indicator Matters
Small-scale producers provide up to 80% of the food consumed in much of the developing world. Despite their importance, they are often the most vulnerable to climate change, market fluctuations, and poverty.
Policy Direction: By identifying the specific income gaps of women and indigenous producers, governments can tailor subsidies, credit, and infrastructure support.
Poverty Alleviation: Increasing the income of smallholders has a direct multiplier effect on rural economies and local food security.
Sustainability: Small-scale producers often use more traditional and biodiverse farming methods; supporting their income helps preserve these sustainable practices.
5. Data Sources and Methodology
As the custodian agency, the FAO relies on several primary data streams to compile this indicator:
Agricultural Surveys: Such as the AGRISurvey (Agricultural Integrated Survey) program.
Household Surveys: Including the World Bank's LSMS-ISA (Living Standards Measurement Study - Integrated Surveys on Agriculture).
Administrative Data: National registries and agricultural censuses.
While the methodology is now standardized (Tier II status), data scarcity remains a challenge in many regions, particularly in capturing informal transactions and gender-disaggregated data.
Global Ranking of Small-Scale Producer Income (Indicator 2.3.2)
The ranking for Indicator 2.3.2 is not a simple "rich vs. poor" list. Because the FAO defines "small-scale" relative to each nation's own economy, a "top-ranked" country is often one that has successfully narrowed the gap between small and large farms or has transitioned its smallholders into high-value global markets.
1. Top Performing Countries (By Absolute Income)
These countries report the highest annual net earnings for their small-scale producers, typically due to advanced technology, high-value crop specialization, or robust cooperative systems.
| Rank | Country | Avg. Annual Income (PPP USD) | Key Success Factor |
| 1 | Denmark | $45,000+ | High-tech cooperatives & organic exports. |
| 2 | Norway | $38,000+ | Heavy subsidies & specialized aquaculture. |
| 3 | Slovenia | $28,000+ | Diversified "farm-to-fork" agritourism. |
| 4 | Vietnam | $18,000 - $22,000 | Global leadership in coffee, rice, and shrimp. |
| 5 | Mexico | $15,000 - $19,000 | Integration into US/Canada avocado & berry markets. |
2. Fastest-Improving Countries (The "Doubling" Leaders)
SDG 2.3 specifically aims to double income. The following countries have shown the fastest growth rates since the 2015 baseline, regardless of their starting dollar amount.
Uzbekistan: Significant land reforms and a shift toward high-value horticulture have made it a global standout for income growth.
Benin: Rapid improvement driven by cotton and cashew productivity gains for smallholders.
Vietnam: Consistently leads Southeast Asia in transforming small-scale subsistence farming into profitable business units.
Togo: Recognized for aggressive digitalization of agricultural services (e.g., mobile-based fertilizer subsidies).
3. The Bottom Quintile (Income Below $2,000)
In many Least Developed Countries (LDCs), small-scale producers remain at or near subsistence levels. In these regions, the "operating surplus" is often barely enough to cover household needs.
Ethiopia: Despite being a regional agricultural powerhouse, smallholder income remains low due to small plot sizes (average <0.8 ha).
Malawi: High dependence on rain-fed agriculture and tobacco market fluctuations.
Niger: Extreme climate vulnerability leads to highly volatile annual incomes.
4. The Gender Gap Rank
A critical sub-metric of 2.3.2 is the ratio of Female-to-Male income.
Best Performers: In several Eastern European and Southeast Asian countries, the income gap is narrowing toward parity ($1.0$).
Worst Performers: In parts of Western and Central Africa, women small-scale producers still earn roughly 60-70% less than their male counterparts, often due to restricted access to land ownership and credit.
Measuring Agricultural Prosperity: Growing Country Rank for Indicator 2.3.2
While absolute income (measured in PPP USD) tells us which small-scale producers are currently the wealthiest, the "Growing Country Rank" is arguably more important for the Sustainable Development Goals. This rank focuses on momentum: which countries are making the fastest progress toward the target of doubling smallholder incomes by 2030.
1. Top Countries by Income Growth (2025–2026)
According to the FAO SDG Progress Report 2025 and recent 2026 agricultural forecasts, several "emerging leaders" have distinguished themselves through policy reform, digital integration, and market access.
| Growth Rank | Country | Primary Growth Driver | Regional Context |
| 1 | Uzbekistan | Agricultural liberalization & horticulture shift. | Central Asia |
| 2 | Vietnam | AgriTech adoption & high-value aquaculture. | Southeast Asia |
| 3 | Indonesia | "Food Estate" programs & digital market platforms. | Southeast Asia |
| 4 | Benin | Cashew and cotton value-chain integration. | West Africa |
| 5 | Mexico | Expansion of climate-smart, high-export produce. | North America |
2. Deep Dive: Why These Countries Are Growing
Uzbekistan: The Policy Reformer
Uzbekistan has seen some of the world's most rapid increases in smallholder income since 2017. By dismantling the state-order system for cotton and encouraging small-scale "Dehqan" farms to switch to high-value fruits and nuts, the country has significantly boosted the operating surplus per hectare.
Indonesia: The AgriTech Powerhouse
As of early 2026, Indonesia has emerged as a regional benchmark for AgriTech. By connecting small-scale producers directly to urban consumers via mobile platforms and investing in massive irrigation infrastructure (the Food Estate Program), the country is successfully bypassing traditional "middlemen" who previously captured most of the profit.
Vietnam: The Value-Chain Leader
Vietnam continues to lead the world in transitioning subsistence farmers into agribusiness owners. Its small-scale producers are among the most integrated into global supply chains for coffee, black pepper, and shrimp, consistently reporting higher income growth than the regional average.
3. Challenges to Growth Sustainability
Despite these success stories, the 2026 outlook identifies three "headwinds" that could stall the ranking of growing countries:
Climate Volatility: Extreme weather in the Northern Tonle Sap Basin (Cambodia) and the African Sahel remains the single biggest threat to income stability.
Input Costs: While global fertilizer prices have eased slightly in 2026, high costs for energy and labor continue to squeeze the net margins of smallholders in lower-income brackets.
The "Middle-Income Trap": As countries like Mexico and Brazil grow, their small-scale producers face stiffer competition from large-scale industrial farms, requiring constant innovation to maintain income growth.
4. Regional Growth Trends (2025–2026)
Southeast Asia: The fastest-growing region overall, driven by digitalization and strong export demand.
Central Asia: High growth rates due to post-Soviet agricultural restructuring.
Sub-Saharan Africa: Mixed performance; countries like Togo and Benin are growing fast, but conflict and drought have caused income stagnation in the Horn of Africa.
Strategic Projects to Double Small-Scale Producer Income
To reach the ambitious SDG target of doubling the income of small-scale food producers by 2030, the FAO, IFAD, and World Bank are currently spearheading a series of high-impact projects. These initiatives focus on three pillars: Market Access, Digital Innovation, and Gender-Sensitive Investment.
1. Flagship: The Hand-in-Hand (HIH) Initiative
The HIH Initiative is the FAO’s premier evidence-based program. It uses geospatial modeling to identify regions where targeted investment can have the highest "Internal Rate of Return" (IRR) for smallholders.
Peru (Andean Grains & Camelids): A 2024–2026 investment case targeting 25,000+ small-scale producers.
Goal: Increase per capita income by an average of $2,859 annually.
Methods: Mechanized irrigation, improved storage, and vertical integration into high-value global markets for quinoa and alpaca fiber.
The "Dry Corridor" (Central America): Focusing on climate-resilient water management systems to stabilize income for farmers suffering from recurring droughts.
2. Digital Transformation & "Uber for Farmers"
Digital projects are the primary engine for "growing country" ranks, as they bypass traditional middlemen and reduce input waste.
| Project Type | Lead Agency | Example Impact |
| Mechanization Platforms | Hello Tractor (Africa) | Connects smallholders to tractor owners via an app, increasing productivity by up to 40% while lowering labor costs. |
| AI Disease Detection | CGIAR / PlantVillage | Mobile apps (e.g., Nuru) allow farmers to diagnose cassava and maize diseases in real-time, preventing yield loss and protecting net revenue. |
| AgriTech Hubs | FAO Indonesia / GIZ | Digital "Soil Mapping" provides location-specific fertilizer advice, leading to an estimated 25% yield increase and higher profit margins in Ethiopia and Mali. |
3. Targeted Gender & Youth Projects
Because Indicator 2.3.2 specifically tracks sex and indigenous status, dedicated projects are launching in 2026 to address these gaps.
International Year of the Woman Farmer (2026): A global FAO/IFAD campaign focusing on legal reforms and policy actions.
Objective: Close the "24% productivity gap" between male and female-managed farms by improving women’s legal rights to land and credit.
IFAD Rural Youth Action Plan (2026–2031): A 6-year plan to transition young rural workers from informal labor to "agri-entrepreneurship," focusing on higher-value digital services like drone-as-a-service for pest control.
4. The SACP & RAINS Projects (South Asia)
In countries like Bangladesh, the FAO is providing technical assistance for the RAINS (Diversified Resilient Agriculture) project, set to run through June 2026.
Focus: Strengthening market linkages and off-farm diversification (e.g., small-scale food processing).
Outcome Target: Improving income for households in vulnerable climatic zones by introducing "homestead gardens" and machinery rental businesses.
Conclusion: The Path to 2030
The FAO Indicator 2.3.2 is more than a statistical metric; it is a global barometer for the economic dignity of the world’s most essential food providers. As we move past the midpoint of the 2030 Agenda, the data reveals a clear picture of both immense potential and significant hurdles.
Summary of Progress
A Shift in Focus: Monitoring has evolved from simply counting yields to measuring net profitability. This shift acknowledges that productivity is meaningless if the rising costs of seeds, fuel, and labor consume all of a producer's gains.
The Growth Divergence: While "growing countries" like Uzbekistan and Vietnam provide a blueprint for doubling incomes through market reform and high-value exports, many producers in Sub-Saharan Africa and the Dry Corridor remain stuck near subsistence levels.
The Data Revolution: The transition of this indicator to Tier II status means we finally have a standardized global language to discuss smallholder poverty. However, the "data gap" for women and indigenous producers remains a critical barrier to inclusive policy-making.
The 2030 Outlook
Achieving the target of doubling incomes is still possible but requires a shift from general aid to surgical intervention:
Closing the Gender Gap: If female small-scale producers are given the same access to land and credit as men, global agricultural output could rise enough to lift millions out of poverty.
Climate-Linked Income Protection: As of 2026, crop insurance and "Climate-Smart Agriculture" (CSA) are no longer optional; they are the primary tools for preventing climate shocks from wiping out years of income growth.
Digital Inclusion: The "Growing Country Rank" proves that when smallholders are connected to digital markets, they capture a higher share of the final sale price, directly boosting the Operating Surplus.
Ultimately, Indicator 2.3.2 reminds us that global food security is inseparable from the prosperity of the smallholder. By focusing on the Operating Surplus of these producers, the international community is not just fighting hunger—it is building a more resilient and equitable global economy.