How does agricultural commercialisation affect livelihoods in Zimbabwe?

The question of how agricultural commercialisation affects livelihoods has been central to the recently completed APRA programme (Agricultural Policy Research in Africa), which, along with Ethiopia, Ghana, Nigeria and Tanzania, had work going on in Zimbabwe. A core part of the Zimbabwe work was major repeat panel surveys of smallholder A1 resettlement farms in Mazowe district. The surveys were undertaken in 2018 and 2020, reflecting on the previous season’s performance, with a repeated matched sample of 533. A cluster sample randomly chose 11 A1 (smallholder) resettlement schemes in Mvurwi and 7 in Concession and then all households in those areas were included. The panel design allowed for confounding factors to be controlled for and analysis of effects of different variables could be discerned, even though the seasons were radically different.

The team, led by Chrispen Sukume and involving Godfrey Mahofa, Vine Mutyasira and others – supported by a large team of enumerators and others drawn especially from Agritex – explored some key questions at the top of policymakers’ minds. Does commercialisation (i.e., regular sales) of tobacco, soya and maize result in improved incomes and accumulation of assets, and so reductions in poverty? How does the focus on cash crops influence seasonal hunger and food insecurity? Do women benefit from this process of commercialisation?

A1 farmers generating income and investing in assets

As discussed many times on this blog, these A1 areas are at the forefront of a new agricultural revolution, particularly in the high potential zones of the country. They are a significant supplier of marketed crops contributing 36 per cent of all soybeans sold on formal markets, 26 per cent of all maize registered a6s sales and they constitute 41 per cent of registered producers of flue-cured tobacco in the country, with the remainder made up by A2 medium-scale farms and remaining large-scale farms. Even though this is only the formally recorded sales (there are many, many more, including informal exchanges), this is a major contribution to the core of Zimbabwe’s formal economy. But how do farmers themselves fare? This was the question for the research, now reported in a series of APRA Working Papers.

In terms of income and accumulation (or rather the value of asset ownership, as the studies do not look at trajectories over time), the results shared in an APRA paper show that those households engaging in tobacco, soya and maize sales all gain more income and own more assets. Income is measured as volume of sales x the cash gained as reported by farmers and assets are those reported by farmers valued according to replacement costs. Tobacco producers fare best, followed by soya and maize producers. However, it’s those who combine tobacco and soya that have the best incomes, and it is the tobacco producers in particular who see the most impressive asset ownership levels. Econometric analysis suggests that selling both tobacco and soya will result in an increase of income by 194%, “all else being equal”. Positive outcomes in terms of farm income are also correlated with spending on inputs, livestock ownership, area of land planted and tractor usage.

Farming pays: returns to land and labour

The results are of course not surprising – cash crops provide cash and cash can be invested in assets – and the pattern seen from the surveys confirm what we and others have found before. Further questions are raised, however. Of course, getting cash from sales is one thing, but what about the varied expenses of production? This is tackled in another APRA paper that looks across countries at ‘gross margins’ (incomes minus expenditures) and so calculates returns to land and labour for different crops in different settings. For Zimbabwe, the results show (again) that farming tobacco results in good returns, especially to land (US$1053/ha), but also to labour even though labour costs are high (US$6.4/day). The returns to land for maize are less spectacular (US$781/ha) but returns to labour are higher (US$19.4/day), as maize returns are boosted because of the artificially high value of maize in Zimbabwe (compared to international border prices) and it is a less labour-intensive crop.

Returns are of course highly sensitive to changing prices, with major swings in returns resulting as prices increases or decrease. Intensification – increasing costs on inputs – however may not always be a good idea, as returns may not be sufficient, and this appears to be especially the case for the already high-cost production of tobacco in Zimbabwe, facilitated by contract arrangements with companies. Contract arrangements and facilitation and intermediation of value chains by brokers of different sorts, however, can bring bigger returns for commercial crops such as maize. As the paper concludes, overall, it pays to be a small-scale farmer these days, even with relatively low levels of intensification, as these returns represent reasonable overall incomes for a family, especially if higher than world prices are paid for maize.

Does cash cropping increase seasonal hunger?

How does commercialisation affect seasonal hunger? One of the arguments against cash cropping is that such crops divert effort away from food, leaving people vulnerable. But is this the case? Can people use the cash they earn to buy food and so offset any food deficits? The results from the surveys in another APRA paper show that overall cash cropping reduces seasonal hunger and that this is especially the case for tobacco and food crops (but not soya), and the effect is greatest for asset poor households. ‘Hunger’ during six months of the lean season (November to May) was assessed in relation to people’s recall of whether they had enough to eat during the day for each month and various commercialisation indices were also used (by crop and overall), representing the ratio between sales value and total value. Here, the timing of payments from the tobacco crop is crucial as this happens at the time when food deficits are at the peak.

Other variables that had a positive correlation with reduced seasonal hunger were being a male head of household, having larger cropped area and having access to remittances and off-farm work. Of course, there is variation across households, but the overall conclusion drawn is that supporting cash cropping is not a route to food insecurity. This supports earlier findings in cotton-growing areas, such as Gokwe where in the boom cotton years, people did well.

Who benefits from agricultural commercialisation?

Another important question is who benefits? This basic distributional question requires delving into cross-household comparisons. The averages and median figures presented in these papers do not tell us much about distribution, and especially the implications for particular groups of people, such as women or younger farmers. Here there are wider questions raised about equity in commercialisation trajectories.

Another APRA paper looks at how commercialisation of different crops was related to ‘women’s empowerment’. This was imputed through an aggregate indicator from assessments of whether women primarily managed agricultural plots, decided on how outputs are used, decided on sales and involved in decisions around how crop sales revenue was used. Those households with high levels of commercialisation of tobacco and soya in particular tended not to show indicators of women’s empowerment. As many have pointed out before, these crops are male-dominated, as value chains are highly gendered in Zimbabwean agriculture as an earlier APRA paper discussed.

Longer-term trajectories

A further question not really tackled by these papers is how the surpluses from high returns from commercial agriculture (for some) are spent over time. This is important as the way assets are accumulated affects the wider economy and the broader trajectory of development in an area. Here more longitudinal studies beyond two snapshot panel surveys, as the processes of change are slow and intermittent, and affected by wider political-economic dynamics.

In our historical studies, which overlap with these survey sites in Mvurwi, we see periods of accumulation – associated with good rainfall years and more stable economic and political conditions, such as during the Government of National Unity – and periods of stagnation (such as now), with different impacts on the local economy, household accumulation and also the environment.

Also, over the 20 years since resettlement, the forms of accumulation have shifted. At settlement there was initial investment in land clearing and preparation and the building of homes; this shifted after establishment to investment in transport, mechanisation and intensification of farming, including well-digging irrigation; and more recently there has been a move by some to invest away from the farms in businesses and houses for rental in town. This pattern is important because different people gain from such shifts at different times, with the linkage effects of land reform increasing over time.   

While none of these papers offer anything hugely surprising – (male) farmers in Mazowe all well know that tobacco is profitable but has high inputs costs yet can provide good income and potential for investment – the confirmation of the patterns across sites with in-depth, rigorous quantitative analysis, complemented by econometric models, helps reinforce our understanding, suggesting some important policy directions for the future.

So, do delve into the papers, there’s lots of rich information contained in them all – and some complicated econometric equations too!

This blog was written by Ian Scoones and first appeared on Zimbabweland

The political economy of agricultural commercialisation in Zimbabwe

The Agricultural Policy Research in Africa (APRA) programme of the Future Agricultures Consortium has recently produced a series of papers on the political economy of agricultural commercialisation. The paper on Zimbabwe by Toendepi Shonhe argues that “debates on Zimbabwe’s agricultural development have centred on different framings of agricultural viability and land redistribution, which are often antagonistic”. Yet, agricultural commercialisation pathways are “complex and differentiated” across the country.

As discussed a few weeks ago in relation to the thorny concept of ‘viability’, normative–political constructions of farming are at the centre of the debate about agricultural commercialisation pathways, with some arguing that ‘good’, ‘modern’ and ‘progressive’ farming can only be large-scale farms, while others that ‘justice’, ‘poverty reduction’ and ‘equity’ ae best achieved through smallholder agriculture.

The paper – and associated policy brief– explore how these contrasting debates have played out in Zimbabwe over time, and what interests are aligned with different positions. Focusing on the post-2000 period after land reform, the research examines shifts in production and commodity marketing, showing how these have had an impact on commercialisation patterns. This in turn helps to reveal how power, state practice, and capital all influence accumulation for different groups of farmers.

These are the key messages from the briefing:

• A new agrarian structure, and better access to agricultural financing, are shaping commercialisation patterns in Zimbabwe (although with the current economic crisis, this is again more challenging).
• New, non-bank financing options are driving the production of food and cash crops in all farming sectors of Zimbabwe. These options include government-mediated command agriculture, independent contract farming and joint ventures.
• Government support to the agricultural sector has changed over time, primarily as a result of shifting ideologies, and changing state capacity to finance the agricultural sector.
• Both farmers and the government agree on the need for agricultural commercialisation, though often for different reasons. With links to global markets, cash crops are the main drivers of commercialisation.
• Political patronage plays a significant role in determining agricultural policy, rendering ordinary farmers disillusioned with the political system, and resigned to merely ‘jump through hoops’ to make a living.
• Political struggles over the control of the state and its limited resources revolve around land and agriculture as they have always in Zimbabwe, but now with greater confusion and uncertainty.

The on-going work in Mvurwi area shows how, “there is a disconnect between the day-to-day practices of local people trying to negotiate livelihoods by producing and selling crops, and the wider political machinations of Zimbabwe’s fraught political economy”, the paper argues. Patronage politics, subsidy regimes and selective state support certainly support certain elites, most people, the paper shows, must get on with life and engage in business in what is a highly uncertain, often risky context.

As the research shows, the insertion of contract farming and command agriculture support into the agricultural economy is profoundly shaping the directions of pathways of commercialisation, and the opportunities these offer to different people. But contracts and command subsidies are not available to everyone. For many smallholders, the paper notes “Zimbabwe’s wider political economy is irrelevant, and subsidy and support regimes are more symbolic than having any tangible effect”.

A combination of diminished state capacity in rural areas and because the reach of party politics and patronage – outside of election time – is fragmented and poorly coordinated, means only a few benefit from state support and patronage. Instead, in places like Mvurwi, “the local political economy is more about making deals with traders, input suppliers, contractors and others”, the paper argues.

Day-to-day concerns are the priority, rather than the high politics discussed in the media and academic political commentary. Living with the uncertainties of Zimbabwe’s political economy can be harsh: “A disillusioned rural majority therefore merely jump through the hoops of a shifting, disconnected and often corrupt political system, in order just to make a living”, the paper observes.

The policy brief concludes: “Today, commercial farming in Zimbabwe is at a crossroads, where political economy – perhaps more than factors of productivity, technology or labour – influences production and accumulation outcomes…..Political struggles over the control of the state and its limited resources revolve around land as they always have in Zimbabwe, but now with greater confusion and uncertainty”.

This post was written by Ian Scoones and this version first appeared on Zimbabweland.

Photo credit: Toendepi Shonhe

 

Commercial agriculture in Africa: winners and losers

The findings of the Land and Agricultural Commercialisation in Africa project, funded by DFID and ESRC, have just been published in the Journal of Peasant Studies in a series of four papers – an introduction (open access) and country cases from Ghana, Kenya and Zambia.

In this work we asked what difference did the ‘model’ of commercial farming make, contrasting large-scale plantations/estates, medium-scale farms in commercial farming areas and contract farming arrangements linked to core estates (see background paper here). This is a theme being picked up by a new initiative – the Agricultural Policy Research in Africa project of the Future Agricultures Consortium – which includes new work in Zimbabwe, starting this year.

A blog on The Conversation – The pros and cons of commercial farming models in Africa (Ruth Hall, University of the Western Cape; Dzodzi Tsikata, University of Ghana, and Ian Scoones, University of Sussex) – discusses the findings. In the debate about what approaches to revitalising commercial agriculture, at what scale (including medium-scale farms), with what relationships between smallholders and large-scale agribusiness, this research from across Africa is highly relevant to ongoing debates in Zimbabwe.
The pros and cons of commercial farming models in Africa

Workers harvesting from a commercial farm in Ethiopia.
Reuters/Barry Malone

Ruth Hall, University of the Western Cape; Dzodzi Tsikata, University of Ghana, and Ian Scoones, University of Sussex

Colonialism brought large-scale farming to Africa, promising modernisation and jobs – but often dispossessing people and exploiting workers. Now, after several decades of independence, and with investor interest growing, African governments are once again promoting large plantations and estates. But the new corporate interest in African agriculture has been criticised as a “land grab”.

Small-scale farmers, on family land, are still the mainstay of African farming, producing 90% of its food. Their future is increasingly uncertain as the large-scale colonial model returns.

To make way for big farms, local people have lost their land. Promises of jobs and other benefits have been slow to materialise, if at all.

The search is on for alternatives to big plantations and estates that can bring in private investment without dispossessing local people – and preferably also support people’s livelihoods by creating jobs and strengthening local economies.

Two possible models stand out.

Contract farming is often touted as an “inclusive business model” that links smallholders into commercial value chains. In these arrangements, smallholder farmers produce cash crops on their own land, as ‘outgrowers’, on contract to agroprocessing companies.

Then there is growth in a new class of “middle farmers”. These are often educated business people and civil servants who are investing money earned elsewhere into medium-scale commercial farms which they own and operate themselves.

So what are the real choices and trade-offs between large plantations or estates; contract farming by outgrowers; or individual medium-scale commercial farmers?

These different models formed the focus of our three-year study in Ghana, Kenya and Zambia. Evidence suggests that each model has different strengths. For policy makers, deciding which kind of farming to promote depends on what they want to achieve.

Plantations are ‘enclaves’

Our cases confirm the characterisation of large plantations as being “enclaves” with few linkages into local economies. They buy farming inputs from far afield, usually from overseas, and in turn send their produce into global markets, bypassing local intermediaries.

Plantations are large, self-contained agribusinesses that rely on hired labour and are vertically-integrated into processing chains (often with on-farm processing). They’re usually associated with one major crop. In Africa, these started with colonial concessions, especially in major cash crops such as coffee, tea, rubber, cotton and sugarcane. Some of these later became state farms after independence while others were dismantled and land returned to local farmers.

Many plantations do create jobs, especially if they have on-site processing. Plantations may also support local farmers if they process crops that local smallholders are already growing. For example, we found an oil palm plantation in Ghana that buys from local smallholders, giving them access to processing facilities and international value chains they would otherwise not reach.

But, typically, plantations have limited connections into the local economy beyond the wages they pay. Where production is mechanised, they create few jobs, as we found in Zambia: the Zambeef grain estate employs few people, and most of these are migrants whose wages don’t go into the local economy. And the jobs that are created are invariably of poor quality.

The main story is that plantations take up land and yet often don’t give back to the local economy. In the cases we researched, all the plantations led to local people losing their land. For instance, the establishment and later expansion of the 10,000-hectare Zambeef estate led to forced removals of people from their cropping fields and grazing lands.

There are some benefits from plantations and estates. But, given more than a century of bad experience, it may be time to concede they seldom – if ever – live up to their promises.

Contract farming brings benefits for some

Contract farming has a long history in Africa, dating back to colonial times. As with plantations, these arrangements were largely for the major cash crops, including cocoa, cotton, tobacco and sugarcane.

Contract farmers are smallholders who enter into contracts with companies that buy and process their crops. Sometimes members of outgrowers’ households might also get jobs on larger “nucleus” estates run by the companies. Whether or not they benefit, or get mired in debt and dependence, depends entirely on the terms of these contracts. Our study looked at contract farming in Ghana’s tropical fruit export sector, in French bean production in Kenya and in sugarcane farming in Zambia.

Contract farming has been hailed by some as the “win-win” solution, enabling commercial investment for global markets without dispossessing local farmers. Farmers farm on their own land, using their own family labour, while also accessing commercial value chains – rather than being displaced by large farms. But we found that this is not necessarily the case. Crucially, there are different kinds of arrangements that determine who benefits.

In Kenya, contract farmers are poorer than most farmers around them. For them, farming on contract provides a crucial livelihood, especially for poor women, who cultivate French beans for the European market and combine this with seasonal jobs on big farms.

In one Zambian block scheme all outgrowers gave up their land to Illovo, a South African company that grows sugarcane. The company pays them dividends. Here, the landowners, typically the old patriarchs, benefit from cash incomes. Young people lose out: they neither inherit the land nor control the cash incomes.

Contract farming clearly provides one effective avenue for smallholders to commercialise. It means, though, that smallholders take on both the risks and the benefits of connecting to commercial value chains.

Medium-scale farming: a promising option

Between the large plantations and the small contract farmers is another model: medium-scale commercial farms owned by individuals or small companies. We studied areas where medium-scale farms were dominating: mango farmers in Ghana, coffee farmers in Kenya and grains farmers in Zambia. While this kind of medium-scale farming also has colonial origins, the past two decades have seen massive growth in new “middle farmers”. Many of them are male, wealthy, middle-aged or retired, often from professional positions.

The medium -scale commercial farming model has a lot to offer. We found that they create more jobs and stimulate rural economies more than either big plantations or smallholder contract farmers. Yet cumulatively, such farms may threaten to dispossess smallholders, just as the big colonial and more recent plantations and estates have done.

The push behind the explosion of the “middle farmers” in the countries we studied has been investment by the educated and (relatively) wealthy. In Ghana in particular, we found, their expansion has displaced smallholders. Cumulatively, even modest-sized farms have led to substantial dispossession and reduced access to land.

Their informal employment patterns mean poor working conditions and few permanent jobs. But, unlike the plantations, these farms are well connected with the local economy. Building on social networks, these “middle farmers” often buy inputs and services from local businesses. At least some of their produce is sold into local markets.

Winners and losers

While policy choices are of course political, they can and should be informed by research about the implications of these different pathways of agricultural commercialisation. What is clear from our research is that different kinds of commercial farming will have different effects on the economy. It’s not just about efficiency. Ultimately, it’s about who wins and who loses.

Ruth Hall, Associate Professor, Institute for Poverty, Land and Agrarian Studies, University of the Western Cape; Dzodzi Tsikata, Associate Professor, University of Ghana, and Ian Scoones, Professorial Fellow, Institute of Development Studies, University of Sussex

This article was originally published on The Conversation. Read the original article.

 

Access to $1000 credit: would this help unleash agricultural commercialisation in Zimbabwe?

One of the repeated complaints of farmers on the new resettlements is the lack of access to finance. This is holding back commercialisation, particularly for A2 farmers with bigger plots but also for those on A1 farms eager to expand, intensify or diversify. All of this needs money, and it is in short supply.

In our studies of farmers’ fortunes in Masvingo, and more recently in the tobacco growing areas of Mazowe, as part of the Space, Markets, Employment and Agricultural Development project, we identify three standard pathways of agricultural commercialisation, each associated with different sources of finance. All are limiting, and available only to a few, or relate only to particular commodities.

The first route is through regular accumulation, investment and saving. This is tough, given all the other demands on funds, and requires real tenacity. Each year profits have to be sunk back into the farm, and new equipment purchased. This is a route we see in the vegetable farmers of Masvingo who by making use of water resources, investing initially in a small pump, have expanded their production and marketing significantly, and after a few years are able to upgrade, with new irrigation equipment, the purchase of pick-up trucks and so on. The regularity and reliability of income from horticulture (if the water is available and the pests can be kept at bay) helps drive this pathway to commercialisation. Some farmers have been very successful, now with turnovers of tens of thousands of dollars, employing large numbers of people and with transport businesses on the side. And all from an initial outlay of a few hundred dollars.

The second route is investment from external income sources. Getting going in farming is often the hardest part, like many businesses. Basic up-front investment is necessary. For A2 farmers with quite large plots – up to 100 or 200 ha – making productive use of this land really requires substantial capital investment. Most such farms were formerly ranches in our study areas in Masvingo, and had limited infrastructure. Those farmers that inherited dams and irrigation equipment were lucky, but most did not. A2 farmers tended to have jobs in town, or at least good connections. These were crucial in getting going. But in the economic crisis period, standard government jobs were not enough to live on let alone provide additional income for investing in farming. Those who were able to get going usually had NGO jobs paying on foreign exchange, or had connections overseas. This diaspora and employment money was recycled and invested in farms. Such farmers, unlike their neighbours, were able to rebuild or rehabilitate irrigation schemes, build dairies and farm sheds, as well as purchasing transport – the ubiquitous 1 tonne truck – to facilitate marketing.

The third route we have identified is of course via contract farming. This is important for crops such as tobacco, but also cotton, and through a different arrangement, sugar. This means the farmer does not have to pay for inputs up front, and the contracting company will supply seed, fertiliser, pesticides and other inputs and also take care of the marketing. Increasingly cash-strapped farmers are hooking up with contractors for other crops, including maize. I have been amazed how many readers of this blog get in touch, and ask to be put in touch with a contractor for selling their crop. There is clearly a massive demand for this intermediary function, where those with cash and capital can invest in farming without taking on the burden of actually owning or holding land or producing. Former white farmers are heavily involved, as well as the new black business elite, alongside the standard cotton and tobacco companies, and of course the estates. The terms of the contract may be one-sided, with the risk pushed towards the producer, as discussed in earlier blogs, but contract farming does release cash, in the absence of any other source.

It is this absence of any other source of finance that is striking across our case studies. Rural financial institutions simply are unable to respond. Some say this is due to the lack of collateral due to the land tenure system, but this is red herring in my view, given the possibility of loaning with all sorts of other security beyond freehold tenure. Surely the new farmers who are desperate for finance would open up commercial possibilities for banks and other finance providers. But the financial sector is very conservative in Zimbabwe, being used to a very different structure of agriculture and form of finance. They do not know their new client base and have few incentives to offer new financial products.

Rural finance in Zimbabwe thus has a massive missing middle ground – between the miniscule forms of finance offered by savings clubs and rotating loans schemes promoted by church groups and NGOs and the large lumpy finance offered through the conventional routes. While there have been some state-backed attempts at improving the situation, they have often foundered due to complex bureaucracy, absurd conditions and lack of outreach. The type of finance offered by banks is largely irrelevant to most new farmers (see Tables 4 and 7 in this Finmark report from 2012)

While I have little knowledge the type of business models that would work, my bet is that a company, perhaps initially supported by a development organisation, that could offer a US$1000 loan on flexible terms would have massive uptake and success. This is the sort of amount that is needed, sufficient to buy a decent pump and irrigation kit, sufficient for a down-payment on a second-hand pick up, sufficient to get going on a commercial chicken project, sufficient to buy a beast or two, or some basic farm equipment. This would make all the difference (and there are now some examples supported by USAID and others). It is standard in Asia for example, so why not in Zimbabwe?

While the three pathways to commercialisation noted above are great if your crop is contracted, if you have close ties to someone with a well-paid job, or if you farm a commodity that gives quick, reliable returns, and you can manage to save. But this is not everyone, or every type of agriculture. Today commercial agriculture in Zimbabwe is being held back, and rural finance is probably the biggest blockage.

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