Are Medium-Scale Farms Driving Agricultural Transformation in Africa?
For many years, we’ve been trying to understand the implications of shrinking farm sizes for millions of rural African households. Driven by population growth and growing land scarcity, most African farm households are witnessing the gradual sub-division of their farms over time, causing the median African farm to become smaller and smaller. Shrinking farm sizes was regarded by many as a metaphor for the declining prospects for African agriculture.
Imagine our surprise, then, when we started to see evidence of a major rise in the number of farms between 5 and 100 hectares, starting about 10 years ago. We thought we knew African agriculture well but were surprised by this development.
In hindsight, we shouldn’t have been. The prolonged surge in global food prices starting in 2007 ushered in major investment in African farmland by foreign investors. Why shouldn’t African investors have done the same? While the foreign “land grab” was well covered by the international media, the farmland investments by African professionals, entrepreneurs and civil service employees occurred largely under the radar screen. Ironically, the amount of land acquired by middle-sized African farmers (5-100 hectares) since 2000 far exceeds the amount acquired by foreign investors.
A forthcoming study carried out jointly under the Feed the Future Innovation Lab for Food Security Policy and the Agricultural Policy Research in Africa (APRA) Project shows that in countries like Ghana, Nigeria, Tanzania and Zambia, the value share of national agricultural output accounted for by medium-scale farms has risen rapidly between 2000 and 2016. In some countries, medium-sized farms now account for roughly 50 percent of the value of national marketed agricultural production. In the more land-constrained areas of Kenya and Rwanda, by contrast, small-scale farms still account for the majority of national marketed agricultural output, though even in these countries, their share is slipping.
While much remains unknown and the story is still unfolding, we believe that medium-scale farms are an important driver of agricultural and rural transformation in much of Africa. Here are our views on some frequently asked questions:
- Who are these medium-scale African farmers? They are relatively wealthy and influential Africans, often professionals, entrepreneurs or retired civil service employees. Many accumulated wealth from non-farm jobs, invested in land and became either part-time or full time farmers. Many are based in rural areas and have political and/or social influence with local traditional authorities. Others are urban “telephone farmers” who retain jobs in the cities, hire managers to attend to their farms and occasionally visit on weekends. Only a small proportion of current medium-scale farmers started out as poor small-scale farmers who successfully expanded their operations.
- How are medium-scale farmers getting their land? Medium-sized farmers are getting land from traditional authorities and by purchasing land from others, including from small-scale farm households. Land markets are developing rapidly in many areas where they were formerly considered illegal.
- Are local people being kicked off their land? We’ve encountered many cases where land acquired by African investor farmers was formerly being utilized by local small-scale farmers, especially in areas close to towns and cities. In some cases, smallholders are selling their land and relocating to other areas.
- Why have medium-scale farms grown so important in recent years? We identify three drivers. First, rapid population growth, urbanization and rising incomes have contributed to massive growth in demand for food in Africa. Rapid population growth, especially in urban areas, transitioned almost all of Africa to import parity pricing conditions thereby providing a stable and rapidly growing market for local food production. Second, many Africans with money to invest found farming to be a lucrative investment especially during the sustained period of high global commodity prices starting in the mid-2000s. Third, an under-appreciated contributory factor has been the agricultural market and economy-wide policy reforms undertaken during the 1990s. These reforms removed major barriers to private trade and improved the conditions for private investment in African agri-food systems. The effects of these reforms exploded after world food prices suddenly skyrocketed, enabling thousands of small, medium and large-scale private firms to rapidly respond to profitable incentives, thereby rapidly building up the region’s agri-food systems during this period.
- Are medium-scale farms helping or hurting smallholder farmers? We expected to find that African investor farmers were impeding smallholders’ access to land and marginalizing them. We’ve changed our views on this in light of evidence that:
- Medium-scale farms are providing access to markets and services for nearby smallholder farms. For example, many medium-scale farms own a tractor and rent it out to smallholders, which allows them to farm their land with much less labor input, freeing up opportunities to work in off-farm pursuits.
- Large-scale trading firms are setting up buying depots in areas of high concentration of medium-scale farms in response to the large surplus production that they generate. Their investments in the value chains are improving market access conditions for nearly smallholders too.
- Medium-scale farms constitute a major source of new capital being invested in farming – fertilizers, irrigation equipment, tractors, animal and fish production operations, etc. The rapidly rising marketed output coming off these farms is moderating sub-Saharan Africa’s rising reliance on food imports.
- Perhaps most importantly, medium-scale farms have contributed to Sub-Saharan Africa’s 4.6 percent annual rate of agricultural production growth between 2000 and 2015 – the highest of any region in the world over this period. Through these multiplier effects of agricultural growth, most Africans have benefited from unprecedented growth in job opportunities in the non-farm economy.
Is it all positive? The answer depends on one’s time frame. The development of land markets – which is the process through which medium-scale farms are rapidly growing – is part and parcel of more wholesale changes in rural African societies. These changes are uprooting the traditional social fabric and creating new power structures. Some regard this as just an inevitable process of economic development, while others regard it as an erosion of indigenous peoples’ livelihoods and a way of life. Certainly, no region has transformed itself economically without major hardship and dislocations in the process. Policy makers will need guidance on how to minimize these hardships – protecting those who are most vulnerable as the processes of economic transformation gradually raise living standards for the majority of the population. The overall impacts of land reallocation from small to medium-scale farms on Africa’s economic transformation remain to be clearly understood. With support from the Innovation Lab for Food Security Policy and the APRA Project, we are hopeful that our forthcoming study will provide new evidence on these questions.
Thomas Jayne is University Foundation Professor, Michigan State University. Milu Muyanga is Assistant Professor, Michigan State University. Both are carrying out research with collaborators in Nigeria, Zambia, Kenya, Tanzania and Ghana on the impacts of the rise of African investor farmers on the region’s unfolding rural transformations.
The work summarized in this blog was originally funded by the GISAIA Project, funded by the Bill and Melinda Gates Foundation and led by Michigan State University and by the Innovation Lab for Food Security Policy, funded by USAID’s Bureau for Food Security and led by Michigan State University, the International Food Policy Research Institute, and the University of Pretoria. This work has entered a new phase in Nigeria with support from the APRA Project, funded by DFID and led by the Institute of Development Studies/Sussex.