Social capital is the value that can be created through networking and trust built within and between people and organisations. Characteristic of a network of shared norms and values that shape the attributes of a community’s interactions,  social capital can facilitate cooperation amongst groups and enable collective action. Building cohesiveness within a community lowers the transaction costs of working together and enhanced trust can enable communities to overcome societal dilemmas.
Increasing evidence demonstrates that building social capital is vital for societies to prosper economically and to develop sustainably. Social capital may even be the most important resource available to communities of poor smallholder farmers burdened with low incomes, limited education and few physical assets. Strong social networks can serve as safety nets to help resource poor individuals or communities cope with shocks, especially when formal types of risk management such as credit or insurance are unavailable. Within farming communities, social capital can also improve productivity because it is a pre-requisite for the management of natural resources or the adoption of new practices and technologies.
Trust and cooperation are fundamental for implementing natural resource management projects such as maintaining irrigation systems or restoring forests because they require collective action. Building social capital for smallholders can also positively impact the adoption of new technologies such as the use of improved seeds, soil and water conservation practices, and agroforestry. The trust that is established with strong social cohesion and connectedness encourages knowledge sharing and reduces aversion to risk-taking.
Local institutions, agricultural value chains and agricultural cooperatives create the social infrastructure for relationships to be developed and strengthened, forming the basis for building social capital.,, Institutions are the rules that structure social interactions and incentives. Both formal (policies and laws) and local informal (customs, traditions and values) institutions provide the framework within which farmers, value chains and agribusinesses operate. Depending on how they are structured, they can either encourage or discourage productive behaviour. Value chains – the sequence of production, marketing and consumption where at each stage of the process exists the opportunity to add value – must become more accessible and beneficial for smallholder engagement. Forming or joining cooperatives can help smallholder farmers improve their negotiating power and increase their access to suppliers of knowledge and extension services; productive assets such as seeds and tools; and marketing information and skills. In this way they can capture greater value from the sale of their products.