LSE’s Martin Namasaka and Milou Vanmulken argue that when deciding on agricultural policies, African countries must guard against direct “policy mobility” by adopting policies which suit local needs to experience inclusive development.

The significance of agriculture as a driver towards inclusive development in Africa has been acknowledged in many policy circles, especially in terms of employment and as an enabler of a competitive industrial sector. The World Bank (2008: 6) postulates that “agricultural growth has special powers in reducing poverty across all country types.” Yet, what type of agriculture – small or large scale – is going to spark these powers in sub-Saharan Africa is still widely debated. Here, we analyse the implications of both types for inclusive economic growth and stress the need for a contextualised, non-polarised debate.

agric_large_small

A variety of factors often determine whether small-scale or large-scale farming is optimum for African communities around the continent

Small-scale farming is a major feature of sub-Saharan African agriculture. In 2010, it accounted for over 75% of all agricultural production and employment in East Africa (Salami, Kamara and Brixiova: 2010). These numbers signal its potential as a poverty alleviation strategy. The argument for small scale is largely based on the “Inverse Productivity Relationship” (IPR) of output per hectare (Chayanov 1926 in Collier and Dercon: 2014). While smaller farms experience an increasing output per hectare because they rely on flexible and readily available family labour, marginal returns diminish once the farm sizes becomes larger. Equally important, the extensive knowledge of local farmers about soil types and farm topography needs to be leveraged. A Green Revolution similar to that in Asia is not realistic without technological innovations appropriate for the large variety of soils and climates in Africa (Biswanger and Pingali: 1988).

Large-scale farms recently transformed Brazil and Malaysia into the fastest-growing economies in the world (Deininger and Byerlee: 2011). Although proponents of large-scale agriculture praise its scale-economies and potential to achieve labour productivity (Collier and Dercon: 2014), it has seen little success in sub-Saharan Africa. True, it is indisputable that large farms enjoy economies of scale, but a mass exodus of the rural population will simultaneously compound urban poverty and the high urbanisation challenges currently facing most African countries. In South Africa, large-scale agriculture does contribute a significant proportion to its GDP (Statistics South Africa: 2013). However, GDP alone does not reveal a country’s high inequality and unemployment (Tregenna and Tsela: 2008). This exposes the downside of growth based on large-scale agriculture if alternative low or semi-skilled labour-intensive sectors are absent: it is not inclusive and may deepen poverty.

Large-scale agricultural deals are often shrouded in secrecy and peasants tend to lose their land without consultation (Primitive Accumulation: Harvey: 2003). As a result, they miss out on potential benefits such as investment in infrastructure, compensation and local employment at an acceptable wage. Binding international agreements and foreign governments holding their companies responsible for consulting with locals from the inception of the project till actual implementation can help to secure these benefits (Deininger and Byerlee: 2011). However, even if consultation takes place, it remains questionable whether investment in infrastructure and employment will occur on a sufficiently large scale to realise growth that benefits the majority. Aabo and Kring (2010) conclude about large-scale investment in Mozambique: “The country’s demographic and socio-political characteristics suggest that a labour-intensive rural development strategy may be more suitable than the attraction of large-scale investments in farmland in effectively combating poverty.”

Clearly, smallholding agriculture has some merits over large scale, but should it be the only focus for growth in sub-Saharan Africa? There should never be a standard recipe that consists of either small-scale or large-scale farming. What Africa needs is a debate about how to transform its endowments into an efficient agricultural sector that spurs broad-based growth and leads to a rise in incomes. This may require complementarity of both large- and small-scale agriculture, depending on a country’s context and comparative advantage. Specific crops may not be suitable for small-scale production due to required expertise and technology; in areas with large tracts of unused and unclaimed land, large-scale production could be more efficient to achieve maximum yields and create some form of employment in addition to smallholder farming.

That said, where smallholder farming is common, it is difficult to deny its merits as a recipe for inclusive growth, but only if several conditions are met. Today, Africa’s unproductive smallholder agricultural sectors with limited infrastructure remain unattractive to investors, and will first need government support. Still, providing access to credit, irrigation schemes, subsidised fertilisers, improved infrastructure and allowing cooperatives, unions and marketing associations across the country will hardly result in significant gains unless these interventions occur in the same place. Support must be coordinated, large scale and focussed on food security, productivity as well as on market access (Afenyo: 2009). Under these conditions, gradual increases in household income from agriculture can raise local expenditure and open up opportunities for low-skilled surplus labour in the local market.

According to the World Bank (2008, p.138), farmers also need more secure rights to land to stimulate their investment in productivity and sustainability. Since most households depend on farming for their livelihood, access to land is their social security. Creating tenure security through private property rights would create a land market. In a context of poverty and inequality, this is likely to redistribute land into the hands of the ones who can offer the best price. Imagine a local farmer in northern Uganda who receives a relatively large sum of money for his land. This may seem attractive at first as he struggles to pay school fees and for daily meals. Later, when he is unable to turn this money into a stable income, selling the land appears to have impoverished his household. Therefore, a major challenge lies in creating secure land tenure that promotes investment without major redistribution as a result of private property rights.

To conclude, we may have become too obsessed with GDP figures or impersonal, dehumanising terms such as ‘labour surplus’, ‘urbanisation challenges’ and ‘economies of scale’, while forgetting that we aim to better the lives of actual people. When formulating agricultural policy, it is crucial to take the consequences to the poor into account. In doing so, it becomes easy to see that where smallholder agriculture is common, where it employs the majority of the population and where alternative employment opportunities are unavailable, it should be part of a strategy aiming for inclusive growth.

Martin Namasaka is a postgraduate student at LSE. Follow him on twitter @Martinnamasaka. Milou Vanmulken is a postgraduate student in Development Management at LSE.

 

The views expressed in this post are those of the authors and in no way reflect those of the Africa at LSE blog or the London School of Economics and Political Science.