Large-scale agricultural investments and household vulnerability to food insecurity: Evidence from Kenya, Madagascar and Mozambique

This study set out to estimate the role of large-scale agricultural investments on household vulnerability to food insecurity in sample communities in Kenya, Madagascar and Mozambique based on their adoption of coping strategies. The study used secondary data from the three countries (Kenya, Madagascar and Mozambique). The findings of the study revealed that households with members engaged in contract agreements with LSAIs adopted fewer coping strategies and were less food insecure than other households. Contract farming households seemed to cope better during food shortages (based on the marginal effects of the model). In comparison, households with members employed by a LSAI adopted more coping strategies than contract farming households. This might be because households with employed members had smaller numbers of livestock and smaller landholdings. Many LSAIs jobs were seasonal and low-paid, making the household less able to cope with food shortages. The study confirmed that households with more educated heads, smaller households, larger plot sizes and more livestock were less likely to slip into deeper levels of food insecurity should they face adversity. Most employed household heads had migrated from nearby districts. The job opportunities helped migrant workers mediate food insecurity. These results suggest that governments hosting LSAIs can promote plantation and contract farming that protect the land ownership of smallholder farmers, transfer good agricultural practices to improve agricultural production, household incomes and food security of smallholder farmers

The effect of large-scale agricultural investments on household food security in Madagascar

Large-scale agricultural investments in developing countries have escalated over the past decade. While much is written about the potential adverse effects of these acquisitions on local communities, there is a paucity of evidence of these impacts. This paper explores the effect of large-scale agribusinesses on household food security in two locations in Madagascar. One is plantation area or Location A and the other one is contract farming area or Location B. The sample of 601 households was classified into households (i) in which at least one member was employed or (ii) contracted to the agribusiness, (iii) in the same area that were neither employees nor contractors (non-engaged) and (iv) counterfactual households from another community. Employment opportunities from the agribusinesses seemed to improved food security. Dietary quality, food security and resilience were higher among employed households. Contract households were generally more food insecure than the counterfactual and non-engaged households. Living in the zone of influence did not seem to have major adverse effects on the food security of non-engaged households. However, female-headed households seemed disadvantaged in terms of access to employment and contracting opportunities. Unless attention is paid to women’s access to employment and contracting opportunities, inequality may be exacerbated.The Belmont Forum and the Joint Programming Initiative on Agriculture, Food Security and Climate Change (FACCE-JPI) African Food, Agriculture, Land and Natural Resource Dynamics (AFGROLAND) project funded by the Swiss National Science Foundation, the French National Research Agency and the South African National Research Foundation.http://link.springer.com/journal/125712021-07-13hj2020Agricultural Economics, Extension and Rural Developmen

THE EFFECT OF EXPORT TAX ON THE COMPETITIVENESS OF ETHIOPIA’S LEATHER INDUSTRY

Most countries have implemented export-oriented development strategies with the objectives of improving their economic stability and improving resource allocation efficiency. Export tax, which has been an integral part of trade policies for centuries, has not been given adequate attention by the World Trade Organization (WTO) or the economic literature. Export taxes on primary commodities serve as indirect subsidies to manufacturing and processing industries by lowering the domestic price of inputs, and also have a positive effect on government revenue. Conversely, export taxes can have a negative impact on the producers of raw materials and externalities for trade partners. The government of Ethiopia applied a 150% export tax on raw hides and skins (RHS) and semi-finished leather products in 2008, and another 150% export tax on crust leather in 2012 in order to encourage the leather manufacturing industry. The aim of this study is to examine the export trends of Ethiopia’s raw hides and skins and finished leather products, and to analyse the effect of export tax on Ethiopia’s leather industry’s export competitiveness. A linear trend analysis model was used to analyse the export trends of raw hides and skins and finished leather products. This study evaluated export volume data from 1997 to 2014 in order to estimate the trend coefficients. The results of the model showed that Ethiopia’s RHS and semi-processed leather products export had declined by -38.06% and significant at 1% significant level; this is due to the heavy export tax imposed by the government to increase the production and export of finished leather products. Meanwhile, finished leather products and footwear have increased by 75.34% and 44.37% respectively, and significant at 1% significant level. The comparative advantage analysis was used to examine the revealed comparative advantage (RCA) of Ethiopia by comparing selected countries. The results indicated that Ethiopia was a RCA of raw hides and skins and semi-processed leather products more than one (RCA > 1) before 2008; after the export tax implementation in 2008, the RCA became decreased, conversely, the RCA of Ethiopia’s finished product more than one for the period 2006 to 2014 and increased more after 2008. South Africa has comparative advantage only on the export of raw hides skins and semi-processed leather product (RCA>1). Nigeria was not stable RCA for both raw hides and skins and finished leather products and in most year revealed comparative advantage greater than one (RCA >1). The RCA indexes of footwear for all three countries were less than one except Ethiopia in (2007, 2008 and 2012). The RCA provides information on advantage to exports, such as product comparisons with other competitive countries. However, the RCA does not show the sources of advantage (growth), therefore the constant market share (CMS) model was used to indicate the source of advantage. The CMS model has been used to evaluate the competitiveness of Ethiopia’s leather products. The export value data of 2007 were used as the base year, whereas data in 2013 were considered as the year after the export tax implementation and increase. The results indicate that the implementation of the export tax has reduced the competitiveness of raw hides and skins and semi-processed leather products, but increased the competitiveness of the finished leather products in the world markets. The overall results showed positive export growth (2.55), which is most likely achieved by an increase in the export competitiveness of the leather industry of 2.25. The positive competitiveness value indicates that Ethiopian finished leather products are competitive with other exporters in selected markets (Italy, China and Hong Kong). Conversely, Ethiopia’s leather products have negative commodity composition effects and market composition effects (-0.132 and -0.262, respectively). The negative commodity composition effect shows that, because of the export tax, the export of Ethiopian raw hides and skins and semi-processed leather products have decreased, while the imports of these products have grown faster in selected markets. The same is true for negative market composition effects; because of the export tax, the demand for raw hides and skins and semifinished products decreased in selected markets.Even though the government imposed the export tax to reduce the export of raw hides and skins and semi-processed leather products to encourage the finished-product manufacturing industry, there is a shortage in the supply of raw materials. This need highly improved the supply of raw hides and skins and the quality of the leather-processing enterprises by constructing a new policy on livestock management and hides and skins collections. In the short run, the export tax may enhance the competitiveness of the leather industry. However, in the long run, it may lead to efficiency losses, lower welfare, and lower growth, because a temporary measure can have long-lasting effects. The Ethiopian government should consider reducing the export tax in the long run to make the industry as competitive as South Africa and other exporting countries

The effect of export tax on the competitiveness of Ethiopia's leather industry

Most countries have implemented export-oriented development strategies with the objectives of improving their economic stability and improving resource allocation efficiency. Export tax, which has been an integral part of trade policies for centuries, has not been given adequate attention by the World Trade Organization (WTO) or the economic literature. Export taxes on primary commodities serve as indirect subsidies to manufacturing and processing industries by lowering the domestic price of inputs, and also have a positive effect on government revenue. Conversely, export taxes can have a negative impact on the producers of raw materials and externalities for trade partners. The government of Ethiopia applied a 150% export tax on raw hides and skins (RHS) and semi-finished leather products in 2008, and another 150% export tax on crust leather in 2012 in order to encourage the leather manufacturing industry. The aim of this study is to examine the export trends of Ethiopia s raw hides and skins and finished leather products, and to analyse the effect of export tax on Ethiopia s leather industry s export competitiveness. A linear trend analysis model was used to analyse the export trends of raw hides and skins and finished leather products. This study evaluated export volume data from 1997 to 2014 in order to estimate the trend coefficients. The results of the model showed that Ethiopia s RHS and semi-processed leather products export had declined by -38.06% and significant at 1% significant level; this is due to the heavy export tax imposed by the government to increase the production and export of finished leather products. Meanwhile, finished leather products and footwear have increased by 75.34% and 44.37% respectively, and significant at 1% significant level. The comparative advantage analysis was used to examine the revealed comparative advantage (RCA) of Ethiopia by comparing selected countries. The results indicated that Ethiopia was a RCA of raw hides and skins and semi-processed leather products more than one (RCA > 1) before 2008; after the export tax implementation in 2008, the RCA became decreased, conversely, the RCA of Ethiopia s finished product more than one for the period 2006 to 2014 and increased more after 2008. South Africa has comparative advantage only on the export of raw hides skins and semi-processed leather product (RCA>1). Nigeria was not stable RCA for both raw hides and skins and finished leather products and in most year revealed comparative advantage greater than one (RCA >1). The RCA indexes of footwear for all three countries were less than one except Ethiopia in (2007, 2008 and 2012). The RCA provides information on advantage to exports, such as product comparisons with other competitive countries. However, the RCA does not show the sources of advantage (growth), therefore the constant market share (CMS) model was used to indicate the source of advantage. The CMS model has been used to evaluate the competitiveness of Ethiopia s leather products. The export value data of 2007 were used as the base year, whereas data in 2013 were considered as the year after the export tax implementation and increase. The results indicate that the implementation of the export tax has reduced the competitiveness of raw hides and skins and semi-processed leather products, but increased the competitiveness of the finished leather products in the world markets. The overall results showed positive export growth (2.55), which is most likely achieved by an increase in the export competitiveness of the leather industry of 2.25. The positive competitiveness value indicates that Ethiopian finished leather products are competitive with other exporters in selected markets (Italy, China and Hong Kong). Conversely, Ethiopia s leather products have negative commodity composition effects and market composition effects (-0.132 and -0.262, respectively). The negative commodity composition effect shows that, because of the export tax, the export of Ethiopian raw hides and skins and semi-processed leather products have decreased, while the imports of these products have grown faster in selected markets. The same is true for negative market composition effects; because of the export tax, the demand for raw hides and skins and semi-finished products decreased in selected markets.Dissertation (MSc)--University of Pretoria, 2015.Agricultural Economics, Extension and Rural DevelopmentMScUnrestricte

Evaluating the Impact of Large-Scale Agricultural Investments on Household Food Security Using an Endogenous Switching Regression Model

This study set out to estimate the effects of large-scale agricultural investments (LSAIs) on household food security in one community each in Kenya, Madagascar and Mozambique. An endogenous switching regression model was adopted to control for a possible selection bias due to unobserved factors. It was found that households with members employed by large-scale agricultural investment companies were more likely larger households headed by younger migrant males holding smaller plots and fewer livestock than non-engaged households. The endogenous switching regression results confirmed the presence of both a positive and negative selection bias. In general, the results showed that households with a member employed by an LSAI enjoyed better household food security, higher dietary diversity, better food consumption scores and more adequate household food provisioning. Households without employed members could also enjoy these benefits should the LSAIs employ their members. However, the seasonal nature and low wages paid by LSAI may only support the purchase of food and not facilitate savings and investments to significantly improve food security

The role of contract farming on household food security in Kenya and Madagascar

This study examined the impact of contract farming on household food security in Kenya and Madagascar in the context of large-scale agricultural investments. An endogenous switching regression model was used to control for a possible selection bias due to unobserved factors. In general, the household dietary diversity score, food consumption score and months of adequate household food provisioning improved the food security of the households engaged in contract farming in Kenya. While in Madagascar, only the months of adequate household food provisioning had a positive impact. These results revealed that contract farming models do not always have a positive impact on food security. The effect on household food security could depend on the local context and crop under contract

Evaluating the impact of large-scale agricultural investments on household food security using an endogenous switching regression model

This study set out to estimate the effects of large-scale agricultural investments (LSAIs) on household food security in one community each in Kenya, Madagascar and Mozambique. An endogenous switching regression model was adopted to control for a possible selection bias due to unobserved factors. It was found that households with members employed by large-scale agricultural investment companies were more likely larger households headed by younger migrant males holding smaller plots and fewer livestock than non-engaged households. The endogenous switching regression results confirmed the presence of both a positive and negative selection bias. In general, the results showed that households with a member employed by an LSAI enjoyed better household food security, higher dietary diversity, better food consumption scores and more adequate household food provisioning. Households without employed members could also enjoy these benefits should the LSAIs employ their members. However, the seasonal nature and low wages paid by LSAI may only support the purchase of food and not facilitate savings and investments to significantly improve food security.Supplementary Tables S1–S3: Endogenous switching regression results of Kenya, Madagascar and Mozambique.Agriculture, Food Security and Climate Change (FACCE-JPI) African Food, Agriculture, Land and Natural Resource Dynamics (AFGROLAND) project.https://www.mdpi.com/journal/landam2022Agricultural Economics, Extension and Rural Developmen

The role of trade policy on Ethiopia’s leather industry: effect of export tax on competitiveness

The government of Ethiopia implemented a 150 percent export tax on raw hides and skin and semi-finished leather products and crust leather in 2008 and 2012 respectively, in order to encourage leather manufacturing industry. The objective of this paper is to analyse the effect of export tax on Ethiopia’s leather industry export competitiveness. Constant Market Share (CMS) model has been used to evaluate Ethiopian’s performance in leather product trade. Export value data in 2007 was used as a base year, whereas data in 2013 was considered as a year after export tax. The results indicated that, implementation of export tax shifted the export of hides and skins and unfinished leather product to finished leather product. Besides the shift in export products from raw materials to finished leather product, implementation of export tax has also resulted in positive export growth (2.55. this indicate that,the country’s leather product export growth was higher than world demand after implementation of export tax; which is most likely achieved by an increase in export competitiveness of the leather industry (2.25)

Why do large-scale agricultural investments induce different socio-economic, food security, and environmental impacts? Evidence from Kenya, Madagascar, and Mozambique

International audienceLarge-scale agricultural investments (LAIs) transform land use systems worldwide. There is, however, limited understanding about how the common global drivers of land use change induce different forms of agricultural investment and produce different impacts on the ground. This article provides a cross-country comparative analysis of how differences in business models, land use changes, and governance systems explain differences in socio-economic, food security, and environmental impacts of LAIs in Kenya, Madagascar, and Mozambique. It brings together results on these aspects generated in the AFGROLAND project that collected data in a multi-method approach via household surveys, business model surveys, semi-structured household interviews, life-cycle assessments of farm production, analysis of remote-sensing data, key informant interviews, and document analysis. For the present project synthesis, we combined a collaborative expert workshop with a comparative analysis of 16 LAIs. The results show that the LAIs follow four distinctive impact patterns, ranging from widespread adverse impacts to moderate impacts. Results demonstrate how the following conditions influence how the global drivers of land use change translate into different LAIs and different impacts on the ground: labor intensity, prior land use, utilization of land, farm size, type of production, experience in local agriculture, land tenure security, accountability of state and local elites, the mobilization capacity of civil society, expansion of resource frontiers, agricultural intensification, and indirect land use change. The results indicate that commercial agriculture can be a component in sustainable development strategies under certain conditions, but that these strategies will fail without substantial, sustained increases in the economic viability and inclusiveness of smallholder agriculture, land tenure security, agro-ecological land management, and support for broader patterns of endogenous agrarian transformation