Jayne, Thomas S.

Mather, David

Mghenyi, Elliot W.

English

Research Papers in Economics

 
  
 
POLICY SYNTHESIS 
for Cooperating USAID Offices and Country Missions 
(http://www.aec.msu.edu/agecon/fs2/psynindx.htm) 
 
 Number  81                                                                                December 2006 
 
Office of 
Sustainable 
Development 
 
SMALLHOLDER FARMING UNDER INCREASINGLY DIFFICULT CIRCUMSTANCES: 
POLICY AND PUBLIC INVESTMENT PRIORITIES FOR AFRICA 
 
by 
T.S. Jayne, D. Mather, and E. Mghenyi* 
 
Food Security III Cooperative Agreement between United States Agency for International Development, Global Bureau, 
Economic Growth and Agricultural Development Center, Office of Agriculture and  
Food Security and Department of Agricultural Economics, Michigan State University 
 
KEY POLICY MESSAGES 
 
•  There is no single “future” of the small farm in Africa.  African farms display great 
heterogeneity in the challenges and constraints that they face.   
•  However, without renewed attention to sustained agricultural productivity growth, most 
small farms in Africa will become increasingly unviable economic and social units. 
•  Sustained agricultural productivity growth will require progress on a number of fronts, 
most importantly increased public goods investments to agriculture, a policy 
environment that supports private investment in input, output and financial marketing 
and provision of key support services, a more level global trade policy environment, 
supportive donor programs, and improved governance.  
•  Most of these challenges can be met; meaningful progress will start when there is a 
critical mass of political commitment and leadership among African leaders and 
developed country governments.     
 
BACKGROUND:  Most small farms in 
Africa are becoming increasingly unviable 
as sustainable economic and social units.   
More so than in other regions of the world, 
small farmers in Africa suffer from civil 
disruptions, political turmoil, HIV/AIDS, 
and weak support from their governments 
for agricultural science and technology, 
extension support, health and education.   
Furthermore, many African farmers are 
disadvantaged by the global agricultural 
trading system and the increasing 
privatization of agricultural research.  In 
addition, there remains inadequate 
appreciation in current development 
strategies of the fact that most farm 
households in eastern and southern Africa 
control less than 1.5 hectares of land, that 
average farm sizes are continuing to decline 
steadily, and that the ability of most house- 
 
holds to produce a sustainable livelihood 
from their farms is declining.  Unless the 
policies of local governments, traditional 
authorities, donors, and rich country 
governments are changed dramatically, the 
world may see increasingly frequent and 
severe economic and social crises in Sub-
Saharan Africa.   
 
Many of these crises are likely to have 
global repercussions.  Thus, even from an 
insular and self-interested perspective, it is 
in the interests of the world community to 
pay increased attention to the challenges 
facing small farmers in Africa and other 
low-income regions of the world. 
 
OBJECTIVES:  This brief highlights 
findings from a larger report that identifies 
major trends affecting the future of the   2
small farm in Sub-Saharan Africa, and 
identifies policy responses and public 
investment strategies by African 
governments, governments of high-income 
countries, and multilateral donors that can 
give African smallholders the chance to be 
viable in an increasingly globalized and 
competitive world. 
 
CONCLUSIONS:  This work presents 
evidence in support of four broad 
conclusions.  First, without renewed focus 
on growth in agricultural productivity, 
improving rural households’ access to land 
and rural education, strengthening 
agricultural input and output markets, 
HIV/AIDS, real change in world trade 
protocols, and increasing investments in 
agricultural development by donors and 
governments, many small farms in Africa 
will face a very uncertain and untenable 
future, involving major dislocations, 
migration, growing problems of 
urbanization, and increasingly chronic crises 
of hunger and poverty.   
 
Recent commitments under the NEPAD/AU 
Maputo Declaration, in which African 
governments have resolved to devote at 
least 10% of their budgets to the agricultural 
sector are a good sign.  But the poverty 
reducing and productivity raising payoffs to 
these investments will depend crucially on 
how these increased public resources are 
allocated.  A meaningful agricultural growth 
strategy aimed to support the full range of 
small farmers will need to match recent 
promises of support for pro-poor 
agricultural growth with necessary financial 
support for high-payoff public investments 
and policies, including crop and animal 
science, improved extension systems, and 
market facilitating investments such as 
physical and communications infrastructure. 
 
Second, given the existing distribution of 
landholding sizes within the small farm 
sectors of eastern and southern Africa, land 
allocation and land use policy needs to be 
on the agenda.  The evidence suggests that 
farm size within the small farm sector is 
continuing to gradually decline with modest 
rural population growth and the closing of 
the land frontier in many parts of the region.  
The bottom 25% of rural agricultural 
households are virtually landless, having 
access to 0.12 hectares per capita or less in 
each of the five countries examined in this 
study (Table 1).  Under existing conditions, 
the ability of this bottom land quartile to 
escape from poverty directly through 
agricultural productivity growth is limited 
by their constrained access to land and other 
resources.  Even for the top land quartile of 
households, future income growth will 
require, among other things, the ability to 
acquire more land. 
 
Viewed in a static way, one could conclude 
that the only way out of poverty for the 
severely land-constrained rural poor is to 
increase their access to land, and indeed this 
may be needed in some cases. Viewed 
within a dynamic structural transformation 
framework, this group’s brightest prospect 
for escape from poverty (which is by no 
means a sure thing) is likely to involve 
being “pulled” off the farm into productive 
non-farm sectors.  For highly land-
constrained farm households, education 
appears to offer a pathway out of poverty, 
but human capital accumulation is largely a 
long-term and intergenerational process.   
 
Moreover, the payoffs to education will 
depend on non-farm job opportunities, 
which are ultimately dependent on broad-
based agricultural growth.  Abundant 
evidence of the transformation process 
elsewhere indicates that growth in non-farm 
sectors typically starts from a robust 
stimulus to agriculture, which generates 
rural purchasing power for goods and 
services.  Increased commitment to 
agricultural science and technology 
development appropriate to small farm and 
semi-arid conditions is likely to be crucial. 
 
Third, even though the AIDS crisis requires 
immediate action, dealing with the disease 
in the most cost effective way will require a 
better understanding of how alternative 
interventions affect rural household 
behavior, under the range of different 
farming systems found in Africa.  At the 
moment, there is very little knowledge to    3
 
Table 1.  Mean Attributes by Household Landholding Size Per Capita, Various African 
Countries 
 
Means for household quartiles 
ranked by per capita farm size 
Country 
(survey year) 
Household Attribute  Total 
sample 
1  2  3  4 
 
Kenya 
 
Landholding size per capita (ha)  0.33 0.08  0.17 0.30  0.76 
2000  Landholding size (ha)  1.77 0.64  1.18 1.84  3.45 
  Gross value of crop sales (2000 US$ per hh)  1,067 485 751 1,420 1,612 
  Household income (2000 US$ per capita)  553.9 272.6  379.4 568.2  998.4 
  Off-farm income share (%)    30.5 37.3  27.7 29.2  27.9 
            
Ethiopia  Landholding size per capita (ha)  0.24  0.03  0.12  0.22  0.58 
1996  Landholding size (ha)  1.17  0.20  0.67  1.15  2.58 
  Gross value of crop sales (1996 US$)  145.8  33.7  82.3  120.6  265.2 
  Household income (1996 US$ per capita)  71.6  53.1  52.1  88.3  91.0 
  Off-farm income share (%)  8.1  13.7  9.0  5.4  4.6 
            
Rwanda
a   Landholding size per capita (ha)  0.16  0.02  0.06  0.13  0.43 
2000  Landholding size (ha)  0.71  0.32  0.63  1.00  1.82 
  Gross value of crop sales (1991 US$ per hh)  68.0  34.1  45.1  72.4  169.3 
  Household income (1991 US$ per capita)  78.7  54.5  59.4  79.3  139.7 
  Off-farm income share (%)  24.8 34.5  24.4 22.2  18.2 
            
Mozambique  Landholding size per capita (ha)  0.41 0.09  0.22 0.37  0.96 
2002  Landholding size (ha)  1.66 0.53  1.20 1.76  3.14 
  Gross value of crop sales (2002 US$ per hh)  26.7 9.4  20.9  27.3  49.1 
  Household income (2002 US$ per capita)  59.5 45.7  46.4 55.4  90.6 
  Off-farm income share (%)  27.3 34.3  26.6 24.9  23.5 
            
Zambia  Landholding size per capita (ha)  0.58 0.11  0.27 0.50  1.42 
2000  Landholding size (ha)  2.73 0.74  1.60 2.75  5.81 
  Gross value of crop sales (2000 US$ per hh)  72.2 32.7  59.2 83.6  113.4 
  Per capita income (2000 US$ per capita)  122.3 107.5  107.0 115.6  159.2 
Off-farm income share (%)  28.5  39.7 26.9  25.0  22.2 
Source:  Compiled from data in Jayne et al. 2003. 
Notes: Samples include only agricultural households defined as households growing some crops or raising animals 
during the survey year.  All numbers are weighted except Kenya.  Income figures include gross income derived from 
crop production on rented land.  
a For Rwanda: data is not available for land loaned out, only data on rented land is 
included.   
 
guide how donor organizations should 
balance their efforts between mitigation 
strategies targeted at highly-affected 
communities vs. long-term pro-poor growth 
strategies such as investments in agricultural 
science and technology, extension systems, 
education, and market development. 
 
Fourth, the issue of how to effectively link 
African farmers to stable markets is 
transcended by issues of governance.  The 
aims of promoting producer and consumer 
welfare can be promoted – in principle – 
through either direct government marketing 
operations or through private trade.  In 
actual experience, neither approach has 
worked very well.  Effective governance is 
central to the effective operation of both 
state enterprises and markets.  Marketing 
boards have a mixed track record in Africa.  
But attempts to rely on markets, given a 
chronic under-provision of public goods 
investments, often fail too.  A 
comprehensive approach for addressing the 
problems of food price instability and risk in 
low-income countries requires a framework 
that provides a clear understanding of the 
political economy and institutional context 
in which food marketing policy making 
occurs.     4
A political economy approach is required to 
move beyond analysis that either attributes 
failure to implement reforms and encourage 
market-based risk transfer mechanisms to 
insufficient “political will”, or advocates 
greater state involvement in marketing and 
pricing to address market weaknesses 
without convincingly demonstrating how 
the failures of past state intervention can be 
overcome in the future.  The strategic 
interactions between government and 
private sector and their potential effects on 
food security underscore the need for 
greater transparency and consultation 
between private and public market actors to 
achieve reasonable levels of price stability 
within the dual food marketing systems that 
characterize most of the region. 
 
The  fifth major priority is to identify 
organizational arrangements that can 
concentrate the technical and management 
know-how, capital and financing, labor, and 
connections to local and international 
markets on the small farm.  Outgrower 
arrangements and farmer cooperatives are 
two such organizational forms that have 
been tried, with varying levels of success in 
the past.  Notwithstanding their mixed 
history, it is likely that the future of the 
small farm will greatly depend on whether 
farmer-driven organizations (variants of 
cooperatives or outgrower companies) can 
succeed in overcoming past difficulties so 
that their theoretical benefits can be 
achieved in practice.   
 
The need for group coordination seems clear 
when considering how the majority of small 
farms in Africa – working as individual 
units – can reasonably be expected to 
acquire the financing required for input 
purchase, cutting edge technical production 
know-how, the market clout to access 
domestic and international markets on 
favorable terms, and the political voice in 
domestic politics to garner some influence 
over public resource allocation.   
 
Promising areas for future research involve 
how to create the incentives, through 
attention to the institutional underpinnings 
of markets, for coordination between farmer 
organizations (accountable to farmers), 
multinational input and commodity trading 
firms, a supportive public sector, and an 
expanded role for commodity exchanges, 
forward contracting, and other mechanisms 
to reduce the costs and risks of investing in 
the entire food system.  Finding workable 
strategies to implement these scenarios is 
likely to be the key challenge facing the 
future viability of the small farm in Africa 
well into the twenty-first century. 
 
While many factors contribute to poverty, 
the problems in addressing poverty largely 
lie in the political-economic environment 
which structures economic incentives.   
Reform is required of “developed country” 
governments and local governments, as well 
as the international trade environment.  This 
will certainly require enlightened leadership 
on all fronts, with the honesty to be frank 
about the incentive problems facing both 
recipient and donor governments, and the 
political will to overcome them.  In such a 
political environment, there would be reason 
to be strongly optimistic about the potential 
for the small African farm, as well as for the 
emerging interdependent social and 
economic systems in the rest of the world. 
 
* Jayne, Mather, and Mghenyi are, respectively, 
Professor, International Development, Assistant 
Professor, and Graduate Research Assistant, 
Department of Agricultural Economics, Michigan 
State University. Funding for the full study was 
provided by the Food Security III Cooperative 
Agreement (GDG-A-00-000021-00) between 
Michigan State University and the United States 
Agency for International Development, through the 
Bureau for Economic Growth, Agriculture and 
Trade's Office of Agriculture and Food Security with 
supplemental funding from the Africa Bureau's, 
Office of Sustainable Development, as well as from 
USAID/Kenya in collaboration with Tegemeo 
Institute/Egerton University under the Tegemeo 
Agricultural Monitoring and Policy Analysis Project, 
and from USAID missions in Mozambique, Rwanda 
and Zambia; 
 
See the full paper this brief draws from at: 
MSU IDWP 86 Smallholder Farming Under 
Increasingly Difficult Circumstances: Policy and 
Public Investment Priorities for Africa. by T.S. 
Jayne, D. Mather, and E. Mghenyi. 2006.  
 

Smallholder Farming Under Increasingly Difficult Circumstances: Policy and Public Investment Priorities for Africa

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