Small farms, big farms

There is a classic debate in agricultural economics and development policy about the relative efficiencies of small and big farms. It is centred on what is known as the ‘inverse relationships’ which posits that as farms become smaller they become more productive per unit area, as costs – such as the supervision of labour – get reduced (or at least passed on to cheaper family labour arrangements). The argument is that small farms are the ideal, efficient solution to agricultural production.

Of course there are qualifications – and these are important, perhaps increasingly so in a globalised world. Very small farms, fragmented in different ways, are clearly not ideal, and suffer from many inefficiencies. Yet, what is ‘small’ and ‘very small’ is often not clear in the literature. Equally, there may be economies of scale in certain production-marketing systems, making larger farms more efficient. For example, getting high value products into international markets may mean complying with quality standards which small farmers would find difficult to adhere to.

This discussion remains at the centre of the debate about agricultural development in Africa. The African Union’s Comprehensive Agriculture Development Programme (CAADP) makes a strong case for smallholders being at the centre of agricultural growth, as does the Gates-funded  Alliance for  a Green Revolution in Africa (AGRA). In a new book, Gordon Conway, of Imperial College in the UK, argues that smallholders must be at the centre of strategies to feed 9 billion people.

For decades, then, smallholder agricultural production has barely been questioned as the central pillar for agricultural development in Africa. But now there are some dissenting voices; and influential ones too. In a provocative paper for an FAO meeting on African agriculture in 50 years, Paul Collier – author of the best-seller, ‘The Bottom Billion’, and professor at Oxford University – and Stefan Dercon – now Chief Economist at the UK’s Department for International Development, and a well-respected research economist who has worked extensively in Africa – make the case that the advocacy of smallholder farming was sometimes wildly overblown, often inappropriately romanticised. They argue that the inverse relationship debate was misleading, and did not provide the definitive evidence sometimes supposed for smallholder farming, and that large farms are increasingly the way forward, for some commodities and in some places.

The arguments presented certainly have merit and deserve scrutiny, but they are also potentially flawed in important ways. The arguments for large farms are that economies of scale in today’s globalised world are such that smallholder farming can never really be expected to generate sufficient growth to facilitate the necessary transition out of agriculture into industrial-led growth trajectories. In Africa in particular access to global markets, and so positioning of agriculture near road infrastructure and ports is seen as crucial, if comparative advantages in a highly competitive market setting are to be realised.

Yet the argument ignores some key facts. First, smallholders have been very successful at producing a range of key commodities. In a review for a World Bank study on competitive commercial agriculture in Africa, Colin Poulton and colleagues found that “Large-scale agriculture has proven more competitive in export horticulture, sugar and flue-cured tobacco, whilst smallholders dominate in cotton, cashew and food staples. For tea and burley tobacco there are mixed stories. Second, markets are not all global, governed by highly stringent standards. Niche selling into such markets may offer good returns, but the costs of entry are high. Perhaps better is to produce for growing domestic and regional markets, and here the flexible strategies of smallholders in feeding urban Africa have long been seen to be effective. Third, the negative effects of large scale farming on local economies, food security patterns, environmental conditions and labour and employment conditions are not factored into these arguments. Large scale commercial farming does not have a universally good track-record, frequently resulting in enclave economic operations, with poor labour conditions and high externalities, focusing on single export-oriented crops, leading to negative impacts on the local food economy.

What are the implications of this debate for Zimbabwe? Following land reform, Zimbabwe has a radically reconfigured agrarian structure. Gone is the dualism of the past – with tracts of very large scale farming, separated off from the small-scale farming areas in the communal lands and resettlement. The limited ‘Purchase Area’ land was anomalous, fitting neither model, but not integrated either. Today, we have a huge mix of farm sizes, as Sam Moyo has described. Large-scale farms and estates remain, but the majority is now a mix of small and medium scale farms.

Crucially these are much more integrated, both spatially in terms of their proximity and economically in terms of their connections, of labour, marketing, skill and knowledge transfer and so on. The economic apartheid of the past, divided by racialised social and economic barriers, has given way to a more complex, integrated patchwork. While smallholder farming dominates, it is not the only farm type. It is the mix that is important, which is different in different parts of the country, depending on agroecology, market access, infrastructure and, of course, politics.

Getting to grips with this new farm size configuration, and the implications for economic development is an important challenge. Yet it is one that policymakers have yet to get their heads around. So fixated are people on the small vs large dichotomy, often with an implicit assumption that small is backward and big is better, that the potentials of the new agrarian structure are not being grasped. The small farm populists argue for peasant efficiencies, while the big farm advocates claim business and growth opportunities.

In my view neither is correct. But where the gains are to be had is in the mix: in the economic multiplier linkages between farm sizes, in the capturing of the comparative advantages of different farm configurations, in the growth of district level economies, in the sharing between groups of equipment, skills and knowledge, and in the flexible movement of labour in a certain area. None of these opportunities could be realised in the old dualistic agrarian structure, but today there are many potentials.

But it requires a different mindset: rather than thinking about the ‘ideal type’ farm (small or large), and fixed and outdated notions of what is ‘viable’, we should shift to thinking about processes of economic development based on agriculture in an area. A territorial approach to local economic development, as we argued in our book, is the way forward, and will help us shed the often unproductive and diversionary obsession with farm size.

This post was written by Ian Scoones and originally appeared on Zimbabweland