Small farmers must be educated and ______ with proper incentive structures, to engage with agriculture.

Here, “encouraged” which means “give support, confidence, or hope to (someone)” perfectly fits in the given blank making the sentence grammatically correct and contextually meaningful. Hence, option 2 is the most suitable answer choice.

Fascinated: strongly attracted and interested.

Discouraged: having lost confidence or enthusiasm; disheartened. Harvested: gather (a crop) as a harvest.

Invited: make a formal or polite request for (something) from someone