Agricultural Investment Models in Africa. Ruth Hall PLAAS University of the Western Cape South Africa

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1 Agricultural Investment Models in Africa Ruth Hall PLAAS University of the Western Cape South Africa

2 Main directions of land use change Type A Food to Food Type B Food to Biofuels Type E Food to Nonfood Very little; some rice and some cultivation and livestock by SA and Zimbabwean farmers Type C Nonfood to Food Rice expansion in Mozambique and as above; degree of displacement of local food production difficult to ascertain Very substantial, in Mozambique, Zambia, Angola, Zimbabwe, South Africa, Madagascar, Tanzania (but slowing down?) Type D Nonfood to Biofuels Likely widespread, especially as in-filling of unused land surrounding cultivated fields Displacements of people and their land uses (ie. whole settlements) for mining, forestry and tourism deals Type F Nonfood to Nonfood Widespread enclosures for forestry (including plantations), mining, forestry and tourism deals Source: Hall 2012, building on Borras and Franco 2010

3 Land use changes not readily reversed Forest livelihood at Kilwa, Tanzania (Sulle, undated) Cleared forest at Bioshape jatropha plantation trial plot Kilwa district (IFM report, 2009)

4 12 dimensions of land-based agricultural investments Dimension Range of experiences documented Size Available data on deals over 1,000 hectares; huge variation ranging up to deals of 500,000 hectares and plans of deals up to 10 million hectares Duration Source Commodity Business model Tenure arrangements Resource access Lease / compensation payments Displacement Labour Settlement Infrastructure Short to medium term, but mostly long-term year (often renewable) leases, and up to 50 or 99 year leases Domestic private investors, foreign private investors (both being individuals or large companies), parastatals, foreign sovereign wealth funds, Jatropha, sugar, rice, other foods, forestry, various minerals, also tourism experiences. Enclave model, colonist model, large commercial estates, nucleus estates with outgrowers, outgrowers and processor, smallholder model Lease, concession, illegal enclosure, or purchase (rare) Land, water, minerals, marine resource, wildlife, forestry (and labour) Value, method of calculation, timing (once-off or repeat, eg. annual payments) and distribution to local communities, traditional leaders and local, district, provincial and national government Vacant and unused land, claimed land, grazing land, cultivated lands, lands used for natural resource harvesting Locally hired labour, imported labour, self-employment as outgrower Changes in settlement (eg. villagisation), de-agrarianisation Investment in infrastructure for production, processing transport (roads, ports), and social infrastructure (schools, clinics)

5 3 phases of work on large-scale land investments Phase 1: quantify and characterise the phenomenon (how much land, who, what, where?) Phase 2: explain the phenomenon (how is it happening, what enables it) and why is it happening (what are the drivers?) Phase 3: identify impacts and outcomes (with what results?) and what factors determine different outcomes (are there better and worse models?)

6 Not all land-based investments are land grabs! it depends on: how they happen (process) & what models of investments they involve (structure)

10 What is the best pathway to commercialisation? Debates continue among policymakers and academics about the relative merits of large and small farms, their implications for labour absorption, rural livelihoods and growth in Africa s farm sector Some countries have promoted commercialisation in specific regions, aiming to attract local and foreign commercial farmers as pioneers to build a commercial farming sector. Recent transnational investments in commercial agriculture have prompted the resurgence of plantations (large estates) and other forms of large-scale commercial agriculture often reviving models used during colonialism and during state-led developmentalism. (We should learn from history!)

11 Accumulation from above commercialise agriculture by importing capital in return for land & labour 1.transnational: import into country 2.domestic: import into sector Accumulation from below commercialise agriculture through reinvestment of capital by those who hold the land and labour

12 Outcomes depend on the model of commercialisation Concerns about exclusion or displacement of rural smallholders in favour of large-scale commercial farming have prompted policy attention towards inclusive farming models, and specifically contract farming or outgrower schemes. A variety of institutional arrangements establish partnerships between: local landholders (contributing the land and water rights, and often the labour) and external investors (contributing the capital, market linkages and technical expertise) under There are a variety of different types of land, production and associated contracting arrangements.

13 Questions to ask about investment & accumulation 1. What new models of agricultural investment are emerging? 2. How do these affect people s resource access through displacement and dispossession? 3. What forms of accumulation are occurring? 4. In sum, who owns what, who does what, who gets what, and what do they do with it (Bernstein 2010)?

14 Questions to ask about the impacts on livelihoods 1. What are the livelihood and food security impacts of different kinds of land transactions and institutional arrangements on rural communities 2. What is the nature of rural social differentiation in terms of class, gender, ethnicity following changes in land use and land property relations as well as organisations of production and exchange? 3. For different types of deals, who wins and who loses? 4. How are these impacts evident over time?

15 Three models of agricultural commercialisation in Africa Large plantations or estates Contract farming or outgrower schemes Commercial farming areas

16 Three models of agricultural commercialisation in Africa Plantations large, self-contained agribusiness farms vertically-integrated processing chains, associated with one major crop, permanent or seasonal hired labour. not much interaction with local economy Commercial farm area medium-to-large farms more or less contiguous, and dominate an area associated with mixed farming operations owned by individuals or small companies may be planned or not Contract farming a processing firm, sometimes with a nucleus estate outgrowers are contracted to supply their produce outgrowers farm on their own land use their own family labour may also work on the nucleus estate

18 Ghana Norpalm oil palm plantation on 4,500ha following privatisation of state farm and processing mill, 68% Norwegian owned No displacement as this was an established plantation but conflict with chiefs over rent and revenue Blue Skies outgrower scheme for fresh cut fruit processing for European market, 90% UK owned Substantial factory employment but wholly seasonal (2,000-2,500 in season) Commercial mango farming area at Somanya: mostly (retired) urban business and political elites, expanding production and local small farmers becoming workers while sometimes maintaining their own plots

19 Zambia Illovo s Nakambala sugar estate is expanding its outgrower scheme, mostly benefitting larger landowners (and men) Younger men s labour now in higher demand Negative effects on poorer households and women who have less land and rely more on common property resources Zambeef Chiawa estate in Lower Zambezi, producing staple grain crops, little integration into local economy Limited employment creation, mostly women on casual or temporary contracts

20 Nigeria New Nigerian Farms, Shonga, in Kwara State: commercialisation through settlement of 13 white Zimbabwean and South African farmers Dairy and grain production from 2005, on 1,000ha plots Commercial success entirely due to state provision of land & cheap stateguaranteed credit Production declined to under half the area cultivated, with uptake of more local staple crops Displaced villagers compensated with alternative land, leading to conflict, but rising (male) employment (though increasingly seasonal)

21 Assessing the 3 models Initial evidence suggests that: big plantation agriculture might be most weakly integrated into local economies more enclave than dynamic catalyst of development. in commercial farming areas, what passes as growth might be merely the transfer of capital from one sector to another, for instance Ghana mango farmers and Nigeria dairy farmers. Insecure tenure & absence of finance is an impediment to endogenous commercial farmers (more than markets). outgrowing or contract farming is a way to connect small farmers into markets, but variation in how this is done; important that they participate in value-adding processes; also a need to preserve land (and water) for food crops, otherwise marginalises women.

22 Conclusions 1. There are clear patterns of capital accumulation happening within agriculture in many African states 2. This is happening in different ways and with different implications for rural poverty and underdevelopment; important not to look at all agricultural investments in the same light. 3. The key is to enable re-investment within agriculture, to allow for accumulation from below. 4. At the same time, an inflow of capital is essential but this cannot be only from the private sector, which typically prefers large-scale investments. 5. Policymakers may well be missing the degree to which commercialisation is the transfer of capital from one sector to another, rather than endogenous development. The impacts of commercialisation on local economies, on poverty and on employment depends on the model.

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