Department of Agricultural, Food, and Resource Economics Feed the Future Innovation Lab for Food Security Policy

EXECUTIVE SUMMARY

Mounting evidence suggests that sub-Saharan Africa has undergone profound rural transformation since the early 2000s, though progress has been highly uneven across countries. Conventional views of African agriculture are in many respects becoming obsolete. Our review highlights the evidence of farm-level transformation in the region, identifies the key sources of dynamism in the sector, and proposes an updated typology of farms that reflects the evolving nature of African agriculture. We underscore the rising importance of an entrepreneurial class of African commercialized medium-scale farmers, and examine the causes and consequences of this phenomenon.

Key findings

The size distributions of farms in many African countries are rapidly changing. In most of the countries for which national rural household surveys exist, and particularly those with substantial potential for cropland expansion, it is no longer true that the vast majority of farmland in Africa is under small-scale cultivation. The national shares of area under cultivation, the value of production, and marketed crop output on farms under five hectares has been declining over time, with corresponding increases in shares among medium- and large-scale farms. Medium-scale farms (defined here as farm holdings between 5 and 100 hectares) account for a rising share of total farmland, especially in the 5- to 25-hectare range where the number of these farms is growing especially rapidly. Medium-scale farms control roughly 20 percent of total farmland in Kenya, 32 percent in Ghana, 39 percent in Tanzania, and more than 50 percent in Zambia. Medium-scale farmers are a diverse group, reflecting several distinct pathways into medium-scale farming, including (1) the successful expansion of small-scale farms into medium-scale farms, generally in the 5- to 25-hectare range, through new land acquisition made possible because of increasingly active land markets; (2) the diversification into farming by rural nonfarm businesspeople and wage earners; and (3) land acquisitions by urban-based professionals, retirees, and rural elites. The relative importance of these pathways varies by country according to differences in potentially available cropland, the economic potential of that land, the ease of acquiring land through customary and statutory tenure systems, and the degree of farm scale bias of agricultural policies. The rapid development of land rental, purchase, and long-term lease markets has encouraged the growth of each of these pathways.

This trend is not happening everywhere. In densely populated countries such as Kenya, Malawi, Uganda, and Rwanda, land scarcity and high land values are impeding the pace of medium-scale farm acquisitions, and the share of land under medium-scale farms is growing slowly if at all. However, as we establish in Section 2, the population-based Living Standards Measurement Survey (LSMS)-type data utilized in this study may underrepresent medium- and large-scale farm holdings, based on comparisons of larger farm censuses and LSMS data from the same year. Therefore, the share of cultivated land, farm production, and marketed output accounted for by medium-scale farms as reported in this review most likely are underestimated.

Causes and consequences of the rise of medium-scale farms

Farm size distributions in Africa have been changing for four reasons: the rise of land markets, the recent era of relatively high global food prices, agricultural policy reforms, and the growing influence of relatively wealthy and politically influential “emergent farmer” interests. The rise of medium-scale farms is affecting the region in diverse ways that are difficult to generalize. Many such farms are sources of dynamism, technical change, and commercialization of African agriculture. They attract private investment in crop buying and input suppliers, and in doing so they improve market access conditions for all surrounding farms regardless of scale. They also may make it more feasible for governments to raise taxes from the farm sector. However, medium-scale land acquisitions may exacerbate land scarcity in favorable rural areas, raise land prices, and crowd out young peoples’ access to land for farming.

Medium-scale farmers tend to dominate farm lobby groups and influence agricultural policies and public expenditures to agriculture in their favor. Nationally representative Demographic and Health Survey (DHS) data from six countries (Ghana, Kenya, Malawi, Rwanda, Tanzania, and Zambia) show that urban households own 5 to 35 percent of total 5

agricultural land, and that this share is rising in all countries where DHS surveys were repeated. This change suggests a new and hitherto unrecognized channel by which medium-scale farmers may be altering the strength and location of agricultural growth and employment multipliers between rural and urban areas.

African states seem to be generally supportive of such changes. They are keen to increase food production and marketed farm output to feed their rapidly swelling cities and reduce dependence on food imports. Putting land into the hands of capitalized, educated, and entrepreneurial African farmers may be viewed as supporting this objective. Medium-scale farms are attracting major new private investment by input suppliers that improve market access conditions for nearby smallholders. Farming areas with a high concentration of medium-scale farms attract greater investment by large-scale grain buyers. In Tanzania, small-scale farms are much more likely to rent mechanization services in areas with a high concentration of medium-scale farms. Other evidence from Tanzania indicates that smallholder household incomes are positively and significantly associated with the share of land in the district controlled by 5- to 10-hectare farms, after controlling for market access, rainfall, and other local conditions.

However, there are warning signs as well. The acquisition of land by outside investors certainly reduces the stock of land under customary tenure that will be accessible to current and future generations of local people. As traditional authorities sell land to outside investors based on willingness-to-pay criteria, their actions are raising the price of land, making it more difficult for young people to acquire land, and raising the likelihood that young people will exit farming and migrate out of the area. The rise of land markets is creating a new class of landless workers in Africa; having sold their land informally to others, they become dependent on the local nonfarm economy for their livelihoods.

Implications for agricultural and land tenure policies

A major policy question for African governments and international development partners concerns the future role of smallholder farms in Africa. While opinions are divided, our interpretation of available evidence is that governments may most effectively achieve their national development goals by explicitly promoting the productivity of smallholder farms to achieve agricultural and economic transformation with poverty reduction. Inclusive forms of rural income growth are likely to accelerate the pace and equity of structural transformation processes. Where competition for land is not intense, new investment in medium-scale farms can be a powerful source of economic dynamism, attracting private sector investments in input and output markets that improve market access conditions and the commercialization potential of small-scale farms. In such areas, questions of “either/or” might be misplaced.

However, in densely populated areas where small-scale farms predominate and where only limited additional land remains available for area expansion, the priority is clear: focus on promoting the productive potential of small farms, realizing that success in this endeavor will lead to progressive movements of individuals and households out of farming and into off-farm jobs as part of the structural transformation process. In short, a successful smallholder-led agricultural strategy will result in a declining share of the labor force in farming over time.

Inclusive forms of rural transformation will require greater attention to supporting smallholder farms even as larger farms gain greater traction in the region. Given the diverse nature of extant customary land tenure systems in Africa and of the threats to tenure security facing different landholders and regions, policies to strengthen tenure security and regulate land transactions in Africa will need to be carefully tailored to the local tenure context and needs of different landholders to affect perceived tenure security and agricultural outcomes. Where land rights derive primarily from community membership, customary tenure systems effectively regulate within-community transactions, and external actors pose the primary threat to land rights, land registration at the community level accompanied by formal recognition of customary tenure institutions may be sufficient to reduce insecurity. In other areas where land rights are already individualized and internal actors pose the greatest tenure security threat, and especially where informal transactions involving outsiders are common, a more costly and time-consuming investment in registering individual land rights and transactions may be needed to secure existing rights and avoid conflicts that customary institutions will not be able to manage. 6

Implications for national statistical agencies

We do not yet know how generalizable these trends are across the region. However, existing population-based data collection platforms may systematically underreport a dynamic segment of African agriculture: the medium-scale farms. This omission, however understandable, has profound implications. Under the status quo, African governments cannot accurately monitor, much less understand, how farm structure is changing over time. Similarly, policymakers cannot adequately address such routine questions as the magnitude and location of marketed agricultural surplus. These questions are important for guiding strategic policy decisions aimed at stimulating agricultural growth, reducing rural poverty, and managing strategic food reserves and trade policies.

Redressing this informational blind spot will require new modes of data collection. We advocate for the expansion of agricultural sample census surveys to better capture the magnitude, location, and other characteristics of this growth of medium and large farms that currently structured LSMS-type surveys cannot adequately capture. We also advocate for the systematic collection of data on nonlocal land control—that is, ownership or other usufruct rights over rural agricultural land held by urban or other nonlocally residing households. This data collection demand will require new approaches to sampling, listing, and enumeration, as well as questionnaire designs that explicitly capture nonlocal holdings.

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