Tag Archives: PLAAS

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

File 20170522 25082 38am7t
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”. The Conversation

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.

 

Leave a comment

Filed under Uncategorized

Zimbabwe exports agricultural skills and entrepreneurship to South Africa

Recent reports have celebrated five Zimbabweans who have taken over 15 ha of land, part of a farm in Malmesbury near Cape Town in South Africa. The N7 farmers as they call themselves were allowed to use the land – initially 3 ha now expanding – by the farmer. This was initially for free so they could get established, although now they pay a rent of $80 per hectare. The land was not being used intensively – apparently it had a fodder crop, lupins, planted over winter – and the farmer was happy for others to have a go.

Much to the surprise of many South Africans, and now praised by former President Thabo Mbeki, the Zimbabweans were able to transform the land into a vibrant horticultural enterprise, growing spinach, broccoli, cabbage, cauliflower, tomatoes and maize. The irrigation equipment on the land was put to work, and they applied manure to the land to improve the quality of the soil. The vegetables are sold at Cape Town’s Epping market.

For many in the media, it was the background of the Zimbabweans that was surprising too. They are all in full time jobs, and are highly qualified. One has a PhD apparently in agriculture, others have degrees in physics, science, engineering and languages. They now have 6 employees, one a Zimbabwean, while others are South African and a Malawian farm manager.

While there have been disputes about the details of the ‘good news’ story, and clearly a bit of a backlash from the South African farming community, the basic take-homes were clear. Zimbabweans – including highly qualified people – can farm, while South Africans had not taken the initiative to use this, or other similar, parcels of land in the same way.

This was rubbed in with Mbeki’s commentary. He linked this to land reform, complaining about the South African land reform and restitution programmes where South Africans preferred to take money rather than invest in actively farming the land. By contrast, he suggested, Zimbabweans were committed to the land and could make good use of it, as he hinted many had done in Zimbabwe’s land reform programme.

The contrasts between Zimbabwe and South Africa’s agricultural sector and land reform efforts have been widely commented upon. South Africa of course does not have the same type of agrarian economy as Zimbabwe, and many people have not had recent experiences of farming, even if living in rural areas. South Africa’s land reform has focused on attempting to emulate ‘commercial’ farming, with inappropriate visions of ‘viability’, often through cooperative group arrangements, and has often failed.

Yet the Malmesbury experience may offer some insights for South African land policy. The opportunities for ‘smallholder’ production does exist, especially when linked to certain value chains, and expecting land reform only to emulate large-scale commercial farming just on a smaller scale is, as so many studies have shown, is bound to fail. But equally this is not simply a land to the people story – as the heightened rhetoric of the Economic Freedom Front and Julius Malema suggests – but an example of where small-scale agriculture can work under certain conditions. And these conditions are quite specific – the N7 farmers have the skills, the market connections and the infrastructure in place to make things work.

South Africa’s land reform debate remains stuck between the government’s formal focus on planned redistribution using inappropriate commercial models and a naïve populist response of handing land out without thinking about how to embed it in a reformed agrarian economy. Malmesbury – and others places around the country from Limpopo to KZN – offer glimpses of what might be if the two false extremes were dropped in favour of something more realistic and appropriate. Maybe Zimbabwe’s lessons from land reform, and the N7 farmers, can indeed export some good ideas and practices to south of the Limpopo.

This post was written by Ian Scoones and appeared on Zimbabweland

 

Leave a comment

Filed under Uncategorized

Sharing results, generating impact: experience from Zimbabwe

One of the many exciting things I did when visiting our field sites in Zimbabwe at the end of last year, was to help hand out a new set of booklets based on our ‘Space, Markets, Employment and Agricultural Development’ project (supported by DFID-ESRC), that has now concluded.

P1040816

The project looked at how changing patterns of agriculture is influencing markets (upstream and downstream) and employment. We looked at a series of commodities – tobacco, beef, horticulture and maize – in two sites – Mvurwi in Mazowe area and Masvingo district.

This allowed for some important insights to emerge through both qualitative and quantitative work. We have produced a long report if you want all the detail, and some journal articles are in the works. But in our research we are also committed to making findings available to wider audiences. Our prize last year recognising ‘impact’ highlighted this approach. So we have produced some more popular outputs, including a series of much-viewed films (they are short – just 10 mins or less) that I have mentioned on the blog before. The films have been shared in showings in the study areas, and DVDs have been circulated to agricultural offices, training centres, schools and so on. And for those with good enough Internet connections they can be viewed online via youtube (there are hi and low res versions). At the end of last year we produced a booklet summarising the findings, and offering some case studies of how people have engaged with these changing markets, paid for in part by our prize money.

The booklets are in Shona and English, and are available to download here (scroll down to get the new booklets – they’re blue, and uploaded in low res quality so they are feasible to download). They complement our earlier booklets that offered an overview of the findings presented in our 2010 book (these are the green ones!). These proved a massive hit in our study areas, and ‘reading circles’ were formed to share them across villages in Masvingo.

As before we have produced a large print run of the colour booklets. In November-December we distributed over 1500 to our field sites in Mvurwi, Masvingo, as well as Masvingo. These were handed out to the villagers we have worked with over the years, as well as officials in Agritex offices, local government, private sector businesses and others. Not only were people delighted to see themselves and friends and family in the photos, but they were appreciative of the effort to feedback and share results. There have been many conversations of our findings since.

There is much talk about ‘impact’ these days in research circles. It’s become an obligation to demonstrate impact, uptake and so on, but these edicts are often followed rather reluctantly. In the last UK national research assessment exercise, university researchers had to produce ‘impact case studies’. Many were excellent, but there were a few where it was clear that researcher were scraping at the bottom of a rather empty barrel. Much of the research impact business is also rather mechanical. There are endless guidelines, tedious workshops, toolkits and yes inevitably consultants to help you with the process. And so often ‘impact’ efforts are added on after the event, with the funding body deciding (after being critiqued) that they need to ‘do impact work’ on research that has already been done, and with a group of people who are not really ready to do it.

But in my view with ‘engaged’ research (another buzzword), it’s an ethical obligation to feedback, link with research users and find ways that your research has resonance – and from the very beginning of all research efforts. Impact may not be immediate, and may require years and years of engaging before a moment arises when the research becomes relevant and useful. It may also be highly unexpected, with engagements from unusual sources. This is the problem with the approach to ‘compulsory’ impact, as people are forced to demonstrate impact and uptake in rather inane ways, when actually it wasn’t appropriate.

I am in the lucky position of working with an amazing group of people in Zimbabwe and over a long period of time. This is how we can have impact, but it is slow, patient and cumulative, and requires multiple strategies. These booklets are our latest effort: do read them!

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

 

3 Comments

Filed under Uncategorized

Land and commercial agriculture in Zimbabwe: new findings

Over the last few years we have been studying the relationships between land, markets and employment in commercial agriculture Zimbabwe through the SMEAD project, supported by the UK’s DFID-ESRC ‘Growth Research Programme’, and coordinated by PLAAS at UWC in South Africa as part of a regional, comparative study (research has also been completed in South Africa and Malawi). In Zimbabwe, the work has focused on Mvurwi area of Mazowe district and the Wondedzo area of Masvingo district, contrasting a high and low potential area.

The final report is now out, along with a briefing paper. I have already alerted readers to the series of films (‘Making Markets – in high and low res) we have made on the 3 commodities that we focused on in Zimbabwe – tobacco, horticulture and beef. Please do check out the publications and videos to get more detail. This blog offers some highlights of key findings and recommendations emerging from the work.

Despite many challenges, Zimbabwe’s agrarian economy is generating new economic activity and new employment because it is more locally rooted following land reform. Our research shows however how, while economic linkages generated by agriculture create opportunities, the distribution of benefits is patchy; some succeed and are accumulating, while others are not.

There are many challenges ahead. This blog has often focused on practical and policy challenges associated with agricultural production. These include for the need for a reliable supply of affordable fertilisers; the need for enhanced extension and service support, including through mobile phones and the Internet; the need for investment in water management and irrigation facilities; and the requirements of tenure security to encourage investment.

In our work in the SMEAD-Zimbabwe project, we focus on key recommendations for supporting economic linkages and the non-farm rural economy. These include:

  • Investment in rural infrastructure is essential. Restructuring rural production and economic activity following land reform requires a new configuration of infrastructure – roads, electrification, network coverage for mobile phones, market sites and storage facilities, business centres and so on. This is urgently required in order to facilitate the growth of economic linkages and support for the non-farm rural economy.
  • Encouragement of market information services via mobile phones, text messaging and the Internet will assist in increasing knowledge of prices and market options for farmers, input suppliers, service providers and other entrepreneurs, and help develop a more market-targeted approach, avoiding gluts and price crashes.
  • Contract farming arrangements for certain crops eases capital constraints, provides inputs and offsets some risks. In the tobacco sector, the Chinese company, Tian Ze, has contracted a number of (mostly larger) resettlement farmers, but has been key in supporting sales from the auction floors, and the wider contracting system for tobacco. However contracting needs sensitive regulation to protect all parties.
  • Finance and credit is extremely limited, and constrains on and off-farm business development. Bank loans are concentrated on contracting companies, and so a limited suite of crops and activities. Access to finance for others is constrained by major problems of liquidity in the banking and finance sector. There is need for low interest finance for farm and non-farm business activities. Rules and regulations have to be in place to protect financiers and borrowers.
  • Small towns and business centres near new resettlement areas are often booming, providing services, markets and employment. As ‘growth poles’, basic support for their sustained expansion is required, including infrastructure investments, and the facilitation of informal, small-scale trade and service supply.
  • Training in business development skills for farmers, service providers and technology manufacturers will help in the upgrading of business opportunities, particularly for youth and others without land, so they can participate in a local non-farm economy. Business training – including the issuing of business management certificates – is essential.
  • Investment in developing value addition from agricultural production is vital. This includes drying and bottling facilities for vegetables and meat products, as well as small-scale food selling, compliant with food hygiene and safety standards. Tobacco farmers lose on rejected leaf and sweepings. Value addition could involve technologies to make manures, as done by companies such as Nico Orgo.
  • Private sector-led agricultural trade, input supply and service support is often hampered by restrictive regulations and by-laws, combined with often punitive taxes and charges. Policy and regulatory reform to support the growth of small-scale businesses linked to agriculture in the rural areas is a priority. Local councils/government need to do away with out-dated rules and regulations that hinder the initiation and growth of new small businesses.

Zimbabwe’s rural economies are undergoing rapid change following land reform. However, redistributing the land was only the first step. Building sustainable local economic growth that generates employment and is rooted in vibrant rural markets is a longer process, requiring continued support. Local economic growth is being generated by a new vibrancy in the agricultural sector created by land reform. But for the full potentials to be realised, and for the benefits to be shared widely, greater investment in the conditions required – including infrastructure, skills, regulations and policy – is needed if Zimbabwe’s agricultural revolution is really to take off.

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

1 Comment

Filed under Uncategorized

Africa’s Land Rush: Rural Livelihoods and Agrarian Change – a new book

There is a rush on for African farmland – a phenomenon unmatched since colonial times. Africa’s land rush, and the implications for rural livelihoods and agrarian change, is the subject of a new book that I have edited together with Ruth Hall (from PLAAS at UWC, South Africa) and Dzodzi Tsikata (ISSER, University of Ghana at Legon). It includes a series of cases from Africa, written by researchers associated with the land theme of the Future Agricultures Consortium, and you can get a taste of the content from the introductory chapter, available here. The book is available from James Currey publishers (and for a 25% discount here). You can also buy it in all good bookshops  – and if you must, Amazon. It was launched in Cape Town last week at the Book Lounge.

AfricasLandRush_9781847011305rgb100dpi650h

By some estimates, 70% of the land transacted globally in large-scale deals in recent years has been in Africa, often considered the world’s last reserve of unused and under-utilised fertile and irrigable farmland. This is what has lured investors motivated by rising food prices, by growing demand for ‘green’ energy, and by the allure of cheap land and free water. But governments have often allocated to investors land that is occupied, used, or claimed through custom by local people, resulting in disrupted livelihoods and even conflict.

The case studies in the book show the striking diversity of such deals: white Zimbabwean farmers in northern Nigeria, Dutch and American joint ventures in Ghana, an Indian agricultural company in Ethiopia’s hinterland, European investors in Kenya’s drylands and a Canadian biofuel company on its coast, South African sugar agribusiness in Tanzania’s southern growth corridor, in Malawi’s ‘Greenbelt’ and in southern Mozambique, and white South African farmers venturing onto former state farms in Congo.

In many cases these big international deals were on land that had previously been state farms, and before that colonial estates. In the mainstream narrative of a ‘land grab’, there is little sense of the history of large-scale farming and how this evolved at different moments – and our research shows how recent land deals mimic and even resurrect forms of large-scale farming from the past.

A recurring theme in the book is the pivotal role of African governments – as actors and referees – in large-scale land transactions and how this is influencing change in local agrarian systems. States were willing to make major changes to their economic policies, provide preferential terms and often failed to leverage benefits in their attempts to keep investors coming.

Contrary to the popular depictions of a rampant neo-colonial push, dispossessing local people while investors cashed in, in fact some investors are having a rather hard time of it. New commercial investments are vulnerable to difficult agroecological conditions, changing market trends and local politics. Local people are certainly carrying many of the costs – most commonly, the loss of grazing land, water and forests – but there are also clear local ‘winners’ from the process. The picture is far more complex than has been portrayed in many mainstream accounts.

Many of the book’s case studies document deals that failed. Land was demarcated, people excluded, but in the end investments failed to materialise – or did so only with low levels of production and employment. But despite the African countryside being littered with failed agricultural commercialisation projects (as it has been for decades), there are major changes afoot, as land changes hands, and a new politics of access unfolds.

Such changes in who holds land, how it is farmed, at what scale, with what technologies, and for what value chains are profoundly reshaping rural societies and economies in ways that will have long-lasting impacts. Will farmers become wage workers or move to cities? Will smallholder production persist – or perhaps even thrive – alongside large-scale investments? Will people be incorporated into commercial ventures as outgrowers, and will this enable them to improve their livelihoods, educate their children, and move out of poverty?

While these deals are diverse in their contexts and design, the direction of change is clear: towards commercial production by medium- to large-scale local farmers alongside larger estates, now owned not by colonial powers but by foreign or multinational companies, often in partnership with domestic capital. As with previous moments of enclosure and commercialisation, Africa’s recent land rush is already sparking resistance and counter-movements.

Community responses have varied from enthusiastic support to outright hostility and resistance. In some cases, initial support for investment and the promise of development turned to hostility in the face of disappointments. Within communities, certain groups found new opportunities for employment or for enterprises linked to new commercial operations. But across our studies, many were locked out of these new opportunities and we found people resorting to various acts of resistance including theft, destruction and acts of vandalism.

Since its peak following 2007-08, Africa’s ‘land rush’ has slowed, as the real implications of investment and production have become more apparent, as opportunity costs in other investment destinations have changed, and as drivers such as spiking food and oil prices have abated, even if temporarily. Today, investors are far more cautious in their prognoses for profits: several ‘bubbles’ have burst, not least the hype surrounding biofuels. However, while the land rush may have slowed, it has not stopped. All indications are that global demand for food, fuel and feedstock will continue to drive demand for fertile land and water into the future. Growing African economies and consumer demand in urban centres compound this effect.

As the book shows, the land rush is best seen as one of a number of processes of commercialisation of agriculture, involving financialisation and commodification – not all of which result in the appropriation of land. The story is therefore far more complex than the simplistic caricatures of the ‘land grab’, as either catastrophe or opportunity. While there are both winners and losers in this process, the direction of change is towards large-scale farming linked to global markets. What is certain though is that rural Africa is being transformed in profound ways.

This blog is based on a piece by Ruth Hall for the African Griot, James Currey’s magazine profiling new books

This post first appeared on Zimbabweland

 

Leave a comment

Filed under Uncategorized

BRICS and development: new hubs of agrarian capital

When talking about the BRICS countries and their role in development, there is a lot of hot air surrounding debates on ‘South-South cooperation’ and plenty of warm words offered about ‘mutual learning’ and ‘solidarity’. But it was refreshing to be at a conference last week at PLAAS in Cape Town on the engagement of Brazil, China and South Africa in patterns of agrarian change to start from a different perspective: the influence on development pathways by the BRICS as new hubs of capital. The proposition of the BICAS group – similar but with different emphases to the CBAA project (also affiliated to the Future Agricultures Consortium) – is that we have to understand the origins, political and economic driving forces and limitations of the new hubs of capital, in order to get to grips with new dynamics of agrarian change across the world. There was a huge amount discussed at the conference, and the details are only now sinking in, but let me offer a few first thoughts on the emerging debates and their implications.

Emerging dynamics

Despite the hyperbole often associated with ‘rising powers’, one thing that struck me from across the presentations was the limits to accumulation and the extension and penetration of new forms of capital. There has been much debate about ‘land grabbing’, alongside much misinformation and confusion about its extent, but many of the big investment deals that were profiled soon after the 2007-08 crisis have not materialised, and even very high profile programmes – such as Prosavana in Mozambique, the subject of much debate and a panel at the conference – have not really materialised on the ground.

Capitalist accumulation of course takes many forms, and not always those of violent displacement and dispossession. Instead, a much longer, quieter pattern of accumulation may be happening, driven by a new global configuration of capital. This is what Jun Borras called for southeast Asia, the ‘thousand pin pricks’ of small scale transfers of land and extension of (often) Chinese capital in the region. In Africa too, while land grabs still continue, Ruth Hall emphasised the extension into processing, input supply, agricultural technology including seeds, transport and retail. The multiple ‘value webs’ created are crucial in understanding the impacts of the extension of capital from the new hubs. Compared to dramatic grabs, the slow, cumulative ‘dull compulsion of economic relations’ may have as big an effect in the end. But, participants argued, this requires a different lens to understand its dynamics.

Of course since the financial crisis, the possibilities of accumulation have changed. Africa with its vast land area, and apparent emptiness, was seen as a new frontier. But since then commodity prices have collapsed, and the urgency of seeking new markets via Africa – to Europe and beyond, possibly assisted by aid-funded preferential access and state support from African governments eager for investment – has receded. Africa in particular has proven a tough place to extend business ventures. Red tape, local politics, harsh environments, poor infrastructure plague new capital, just as they have old capital.

Domestic political contexts and economic imperatives in China, Brazil and South Africa have changed too. Talk in China is of the ‘new normal’ where consumption demand stabilises, and growth rates decline from the supercharged levels of a few years ago. As China turns to rebalancing and making the economy more sustainable, the massive commodity demand has tailed off. This of course has a direct impact on Brazil, where the decline in commodity prices, particularly in agriculture, has major consequences. This has combined with the domestic political crisis dominated by corruption scandals and a backlash by the middle classes. Concerns again are more inward looking. South Africa has its own economic and political crises, reflecting its failure to deal with the legacies of apartheid, as discussed on this blog last week. This at one level pushes capital to seek alternatives elsewhere, but also highlights the rather fragile claim to be a ‘rising power’, when perhaps Nigeria will prove its economic might in the region if conflicts in the north can be addressed.

Another theme running through the conference, and now more thoroughly understood thanks to some great new work, is the influence of financialisation. This is transforming land and agrarian change, as new players – be they equity funds, sovereign wealth investments, or banks of different sorts – see land and agriculture as new asset classes and investment opportunities. As Moises Balestro commented, the old landowning rentier class of Brazil has a new ally in financialisation. This transforms the way capital operates – no longer necessarily driven by companies associated with nation states (whether BRICS or not), but often truly globalised flows of finance that upset the notion that new political blocs centred on states rule the roost. Such finance has no particular national character, nor any form of political accountability, yet has enormous power and influence.

The mirror effect

Alongside these changing dynamics of capital and accumulation trajectories, another theme of the conference was how the political economy of the new hubs of capital establish the nature and direction of new investments abroad. This is a strong theme of the CBAA project that argues that the histories of domestic political economies in China and Brazil, and the associated imaginaries and narratives of agriculture and development, strongly influence what forms of agricultural development cooperation arrives in Africa – and so the meanings of agriculture, farming and development, and with this the pathways that emerge through these encounters.

In Brazil the long-running tension and political accommodation of both agribusiness and ‘family farming’ with agrarian reform, that Sergio Sauer and Sergio Schneider both talked of, is exported in various projects and technical assistance programmes. Models appropriate to Brazilian contexts – and reflecting this on-going very Brazilian political struggle – arrive in Africa, resulting in frequent confusion, as various cases under the CBAA project describe.

From China, the tension between ‘filling the rice bowl’ and the need to keep a stable, rural peasantry and the narrative of agricultural modernisation was discussed by Ye Jingzhong. This is also reflected in its ‘going out’ policy, as elaborated in CBAA work by Chinese Agricultural University colleagues led by Li Xiaoyun. Thus in different Chinese Agricultural Technology Centres, emerging from different provinces in China, very different visions of agriculture and development are reflected. There is no one China, and variegated forms of capital, reflected in the range of emphases of Chinese State Owned Enterprises that generally run these centres in Africa.

South African capital as it extends into Africa reflects a more unified vision, with its projection of large-scale commercial farming and vertically integrated value chains. This of course mirrors the historical evolution of South Africa’s agrarian sector, from the apartheid era to today, linked closely to what Ben Fine calls the minerals-energy complex that has historically defined South Africa’s political economy. With the power of large agribusiness even more entrenched by the processes of post-apartheid liberalisation, and now reinforced by financialisation, the extension of South African capital, perhaps especially in retail, processing, transport and logistics, but also technology and input supply is, as Ruth Hall and Ward Anseeuw, described, pushes a very particular logic and vision.

There is thus a striking mirroring of domestic struggles, tensions, accommodations and political-economic dynamics as capital extends from the new hubs. This imposes particular directions for accumulation and investment, and smooths certain paths for capital, and so the nature of investments. For this reason, in order to understand agrarian change, the scope must be cast wider, as much activity is focused on roads, mines and infrastructure development. Across the world, aid and state backed investments in ‘corridors’ and ‘investment zones’ are providing conducive conditions for capital accumulation. New agribusinesses follow on behind, often as the second or third wave of investment. This is a long game, where the quick wins of the speculative post-crash boom have gone, but state-capital alliances are forging longer term patterns, setting in train investments and visions of development framed in very different contexts, as Chinese, Brazilian and South African hubs (as well as Indian, Turkish, Indonesian, Vietnamese and other new hubs) extend their reach.

Beyond the rhetoric of South-South cooperation

To my mind, this is the context in which the high-sounding rhetoric around ‘South South cooperation’ must be set. For Zimbabwe, ‘Looking East’ to China – or to south of the Limpopo to South Africa or across the Atlantic to Brazil – must be seen in this light. While ‘conditionalities’ are not as imposed by the west or the old International Finance Institutions of the World Bank or IMF, there are consequences of engagement. Transfers are not just cash or technology, but much more. They include visions and trajectories of development that were constructed elsewhere, and so carry with them different politics and economic relations.

Talking about the emergence of a class of new entrepreneurial farmer, linked to urban markets, in Tanzania (very similar in many ways to what we see in Zimbabwe today), Marc Wegerif, only half jokingly, commented that being low on the World Bank’s index for doing business may be a good thing, providing some level of protection for smaller, domestic economic players. No-one denies Zimbabwe needs investment, but this conference reemphasised that understanding the wider system of finance and capital accumulation in a regional and global context is essential, so this can be responded to strategically.

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

 

1 Comment

Filed under Uncategorized

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

 

5 Comments

Filed under Uncategorized