Large-scale investment in African farmland and its potential role in unlocking smallholder agricultural growth: case studies from Zambia

Abstract

Large-scale investments (LSI) in farmland, commonly referred to as “land grabs”, have recently attracted widespread interest from various sectors, ranging from academia, activist organisations, donors to national governments. On one hand are proponents who argue that these investments help to fill the investment gap in African agriculture, and on the other are those who see this as nothing more than neo-colonialism. Much of the hype on the LSI in farmland has mostly been negative, with civic activists arguing that these investments disenfranchise smallholder farmers and contribute to their demise. Despite the range of reactions this phenomenon has attracted, there has not been commensurate research producing empirical evidence on whether such investments might contribute to unlocking constraints that hinder growth in the smallholder farming sector or evidence of a mutually beneficial coexistence of the LSI in farmland and smallholder farmers. This study therefore sought to analyse the potential of LSI in farmland for contributing to smallholder agricultural growth. It sought to do this by answering the following three questions: Can LSI in farmland offer opportunities for smallholders’ agricultural growth through vertical and horizontal integration and technology transfer or will they further marginalise them? Do LSI in farmland engage with smallholder farmers in their farming operations or do they exclude them? Do LSI in farmland consolidate smallholder farmers and crowd them out of markets? Field work was carried out in Zambia in 2014. Three case studies were analysed and these were selected from the pool of districts with LSI in farmland. The study utilised the Rural Agricultural Livelihood Survey (RALS) data sets for 2012 and 2015 as well as the Land Matrix database for secondary data. A combination of statistical, econometric regression and semiparametric models (particularly propensity score matching and double differencing) was used to analyse the data. The treatment and control groups for propensity score matching were provided by smallholder farmers in districts with investments, and those in districts without investments, respectively. Results revealed that there was no difference in agricultural performance of smallholder farmers in districts with investments and those in districts without investments. There is also no evidence of consolidation or displacement of smallholder farmers from the case studies analysed, except where smallholder farmers had settled on state land assuming it to be communal land as none of the land acquired by the investors was communal land for smallholder farmers. This points to a possible preference for brownfields and greenfields investments by the LSI in farmland to avoid negative publicity associated with displacement of smallholder farmers from communal land. The study also noted that LSI in farmland are contributing to the creation of and access to markets by smallholder farmers, rather than crowding them out. Lastly, the results showed that the investors in the various case studies do engage with smallholder farmers, and that those smallholder farmers who are included in the investors’ farming operations perform better in terms of maize gross value, total crops gross value and maize yield per hectare of land than those who are excluded. The study therefore demonstrates that there is potential for LSI in farmland under certain conditions such as provision of input packages and access to technical knowledge through training, to unlock bottlenecks facing smallholder farmers, which may lead to agricultural growth of the latter. This also points to the possibility of LSI in farmland and smallholder farmers to have a reciprocal co-existence. The implication of these results for policy means that there is need for recipient governments to treat each LSI in farmland deal separately as these investments are not homogenous. This calls for critical anlysis of potential benefits versus the costs and where the benefits outweigh the costs, to put in place measures that encourage horizontal and vertical integration of smallholder farmers in the investors’ farming operations. In this regard, an enabling policy environment is important to encourage non-state actors to facilitate access to basic productive goods and services necessary for smallholder growth. This could be realised through fostering public-private partnerships between governments and LSI in farmland to ensure government’s active involvement in smallholder development. In addition, governments also have to put measures in place to safeguard the rights and interests of smallholder farmers who face the possible threats of displacement in the event of acquisition of occupied state land or acquisition of communal land through negotiations with local chiefs and authorities.