Do Small-scale Farms in Africa Have a Future?

21 October 2009
24 year old Mahamadi Ganemtore irrigating his small farm with water pumped from a nearby dam reservoir. Photo: Aubrey Wade / Panos.Steven Wiggins - 21 October 2009

Smallholder agriculture was at the centre of a recent online discussion by the IDS-hosted Future Agricultures Consortium. Researchers debated farm scale and the food crisis in light of recent news stories about land grabs, food prices and the future of smallholder agriculture. The importance of small farming was underscored by a call for rural investment and context-sensitive policymaking.

Questions of scale

Whether the predominantly small farms of Africa can be the basis of agricultural development, or whether their scale is an obstacle, is a perennial question. It crops up regularly for the good reason that as circumstances change, answers that may have previously been valid may no longer be so.

Thus it was a useful reminder when one of the most eminent scholars of development, Paul Collier, argued in Foreign Affairs of Nov/Dec 2008 that small-scale farming in Africa was not capable of meeting the challenges of contemporary agricultural development:

'...reluctant peasants are right: their mode of production is ill suited to modern agricultural production, in which scale is helpful. In modern agriculture, technology is fast-evolving, investment is lumpy, the private provision of transportation infrastructure is necessary to counter the lack of its public provision, consumer food fashions are fast-changing and best met by integrated marketing chains, and regulatory standards are rising toward the holy grail of the traceability of produce back to its source....'

'Large organizations are better suited to cope with investment, marketing chains, and regulation.'

Debating the viability of small farms

In response to this the Future Agricultures Consortium convened a virtual debate. While most contributors thought that small farms were still viable, there were some important qualifications that emerged.

Studies have long shown that, in the early stages of economic and agricultural development, the small scale of farms is no obstacle to growth or conservation of resources. Small farmers do innovate, invest and conserve their soils and water - given the right conditions. Small-scale farming has advantages in the management of household labour that is effectively self-supervising. There are, moreover, reasons to expect smallholder development to be especially effective in reducing poverty; and indeed, for many of the rural poor farming may be a key safety net.

However, there are two qualifications:

1. 'Given the right conditions'
Small-scale, or any scale of farming, will find it hard to progress when governments do not invest in rural roads, agricultural research and extension, rural schooling and health care - key public goods for agricultural development. When market failures - especially those of monopoly power and too little information on markets and personal character - are deep and extensive, small farmers cannot get credit, inputs, and strike beneficial deals when marketing their produce. Above all, as the dismal history of agriculture in Africa in the 1970s showed, when farmers are heavily taxed both explicitly as has often applied to export crops, and implicitly through overvalued exchange rates and heavy protection of local industry, there is simply little incentive to invest and innovate.

Differences in these conditions may explain why there are such large differences in the growth of agriculture, almost everywhere dominated by small farms, between similar countries in Africa.

2. Different farm sizes make sense in different economic contexts
For example, when agricultural production is geared towards achieving exacting standards, quantities, timeliness and certification, and when labour costs rise and the relative cost of capital and machinery falls, the advantages of small-scale farming may diminish for some commodities. It is to be expected that increasing numbers of small farm households will gain ever larger shares of their incomes from off-farm activities including migration, while a minority of small farms intensify and commercialise their production, quite probably renting fields from their neighbours.

Read the e-debate summary report.

A call for rural investment and context-specific policymaking

In the long run, Paul Collier will probably be right that the future will see larger scale units in developing world agriculture. But whether policymakers should seek to accelerate the process of land concentration is another matter.

Few would disagree that agriculture, above all in Africa, would benefit from greater investment and know-how. Whether that is done by offering large-scale farmers land concessions, or whether it is through forms of contract farming and co-operation that link large firms in the supply chain to small farm suppliers, is a key question. In part this is a question of how to address market failures of information that leave small farms at a disadvantage when commercialising; but in equal or larger part it is also a social and political question about rights and entitlements, and the kind of rural society that people would like.

Steve Wiggins is a Research Fellow at the Overseas Development Institute and Researcher for the Future Agricultures Consortium.

Photo: Aubrey Wade / Panos.