IDEAS home Printed from https://ideas.repec.org/a/eee/wdevel/v90y2017icp294-310.html
   My bibliography  Save this article

Large-Scale Agricultural Investments and Smallholder Welfare: A Comparison of Wage Labor and Outgrower Channels in Tanzania

Author

Listed:
  • Herrmann, Raoul T.

Abstract

This article evaluates household welfare effects of large-scale agricultural investments in Tanzania, one of the main recipients of such investments in Africa. Specifically, the article compares households participating in sugar and rice investments through outgrower schemes or as agro-industry workers with non-participants in terms of household income and income poverty. Building on primary household data, it is one of the first studies to empirically analyze ex-post impacts of large-scale agricultural investments in Africa. The analysis draws on cross-section survey data of 516 households collected in Kilombero District, a priority cluster for the Southern Agricultural Growth Corridor of Tanzania (SAGCOT). The results show overall positive household welfare differences between participants of the investments and the respective counterfactual. However, there are large differences between arrangements and subsectors. Estimated effects for outgrowers are largest, yet for land-rich outgrowers more so than for land-poor. Effects for agro-industry workers in the sugar investment are significantly larger than for those in the rice investment, though in both investments land-poor workers seem to benefit. Hence, the study results suggest potential benefits of outgrower schemes and potentials of agro-industry wage employment for the land-poor to escape extreme poverty. Yet, it also stresses particularly the need to address the constraints of land-poor outgrowers. Qualitative interviews, for example, pointed to growing risks for land-poor outgrowers in the context of rising elite capture by larger outgrowers.

Suggested Citation

  • Herrmann, Raoul T., 2017. "Large-Scale Agricultural Investments and Smallholder Welfare: A Comparison of Wage Labor and Outgrower Channels in Tanzania," World Development, Elsevier, vol. 90(C), pages 294-310.
    • Handle: RePEc:eee:wdevel:v:90:y:2017:i:c:p:294-310
    DOI: 10.1016/j.worlddev.2016.10.007
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0305750X16300390
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.worlddev.2016.10.007?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Deininger, Klaus & Xia, Fang, 2016. "Quantifying Spillover Effects from Large Land-based Investment: The Case of Mozambique," World Development, Elsevier, vol. 87(C), pages 227-241.
    2. Carlos Oya, 2013. "The Land Rush and Classic Agrarian Questions of Capital and Labour: a systematic scoping review of the socioeconomic impact of land grabs in Africa," Third World Quarterly, Taylor & Francis Journals, vol. 34(9), pages 1532-1557, October.
    3. Carlos Oya, 2013. "Rural wage employment in Africa: methodological issues and emerging evidence," Review of African Political Economy, Taylor & Francis Journals, vol. 40(136), pages 251-273, June.
    4. Bernard, Tanguy & Gabre-Madhin, Eleni Z. & Taffesse, Alemayehu Seyoum, 2008. "Heterogeneous Impacts Of Cooperatives On Smallholders’ Commercialization Behavior: Evidence From Ethiopia," 2007 Second International Conference, August 20-22, 2007, Accra, Ghana 52161, African Association of Agricultural Economists (AAAE).
    5. Klaus Deininger & Derek Byerlee & Jonathan Lindsay & Andrew Norton & Harris Selod & Mercedes Stickler, 2011. "Rising Global Interest in Farmland : Can it Yield Sustainable and Equitable Benefits?," World Bank Publications - Books, The World Bank Group, number 2263.
    6. Rabah Arezki & Klaus Deininger & Harris Selod, 2015. "What Drives the Global "Land Rush"?," The World Bank Economic Review, World Bank, vol. 29(2), pages 207-233.
    7. D. Glover, 1990. "Contract Farming And Outgrower Schemes In East And Southern Africa," Journal of Agricultural Economics, Wiley Blackwell, vol. 41(3), pages 303-315, September.
    8. Barrett, Christopher B. & Bachke, Maren E. & Bellemare, Marc F. & Michelson, Hope C. & Narayanan, Sudha & Walker, Thomas F., 2012. "Smallholder Participation in Contract Farming: Comparative Evidence from Five Countries," World Development, Elsevier, vol. 40(4), pages 715-730.
    9. Miyata, Sachiko & Minot, Nicholas & Hu, Dinghuan, 2009. "Impact of Contract Farming on Income: Linking Small Farmers, Packers, and Supermarkets in China," World Development, Elsevier, vol. 37(11), pages 1781-1790, November.
    10. Sashi Sivramkrishna & Amalendu Jyotishi, 2008. "Monopsonistic exploitation in contract farming: articulating a strategy for grower cooperation," Journal of International Development, John Wiley & Sons, Ltd., vol. 20(3), pages 280-296.
    11. Warning, Matthew & Key, Nigel, 2002. "The Social Performance and Distributional Consequences of Contract Farming: An Equilibrium Analysis of the Arachide de Bouche Program in Senegal," World Development, Elsevier, vol. 30(2), pages 255-263, February.
    12. Frank Ellis, 2000. "The Determinants of Rural Livelihood Diversification in Developing Countries," Journal of Agricultural Economics, Wiley Blackwell, vol. 51(2), pages 289-302, May.
    13. Jayne, T.S. & Chamberlin, Jordan & Headey, Derek D., 2014. "Land pressures, the evolution of farming systems, and development strategies in Africa: A synthesis," Food Policy, Elsevier, vol. 48(C), pages 1-17.
    14. Maertens, Miet & Swinnen, Johan F.M., 2009. "Trade, Standards, and Poverty: Evidence from Senegal," World Development, Elsevier, vol. 37(1), pages 161-178, January.
    15. Davis, Benjamin & Winters, Paul & Carletto, Gero & Covarrubias, Katia & Quiñones, Esteban J. & Zezza, Alberto & Stamoulis, Kostas & Azzarri, Carlo & DiGiuseppe, Stefania, 2010. "A Cross-Country Comparison of Rural Income Generating Activities," World Development, Elsevier, vol. 38(1), pages 48-63, January.
    16. Derek Byerlee & Klaus Deininger, 2013. "The Rise of Large Farms in Land-Abundant Countries: Do They Have a Future?," Palgrave Macmillan Books, in: Stein T. Holden & Keijiro Otsuka & Klaus Deininger (ed.), Land Tenure Reform in Asia and Africa, chapter 14, pages 333-353, Palgrave Macmillan.
    17. Miet Maertens & Liesbeth Colen & Johan F. M. Swinnen, 2011. "Globalisation and poverty in Senegal: a worst case scenario?," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 38(1), pages 31-54, March.
    18. Bolwig, Simon & Gibbon, Peter & Jones, Sam, 2009. "The Economics of Smallholder Organic Contract Farming in Tropical Africa," World Development, Elsevier, vol. 37(6), pages 1094-1104, June.
    19. Arndt, Channing & Benfica, Rui & Tarp, Finn & Thurlow, James & Uaiene, Rafael, 2010. "Biofuels, poverty, and growth: a computable general equilibrium analysis of Mozambique," Environment and Development Economics, Cambridge University Press, vol. 15(1), pages 81-105, February.
    20. Marco Caliendo & Sabine Kopeinig, 2008. "Some Practical Guidance For The Implementation Of Propensity Score Matching," Journal of Economic Surveys, Wiley Blackwell, vol. 22(1), pages 31-72, February.
    21. Bellemare, Marc F., 2015. "Contract Farming: What’s In It for Smallholder Farmers in Developing Countries?," Choices: The Magazine of Food, Farm, and Resource Issues, Agricultural and Applied Economics Association, vol. 30(3), pages 1-4, September.
    22. Bellemare, Marc F., 2012. "As You Sow, So Shall You Reap: The Welfare Impacts of Contract Farming," World Development, Elsevier, vol. 40(7), pages 1418-1434.
    23. Baumgartner, Philipp & von Braun, Joachim & Abebaw, Degnet & Müller, Marc, 2015. "Impacts of Large-scale Land Investments on Income, Prices, and Employment: Empirical Analyses in Ethiopia," World Development, Elsevier, vol. 72(C), pages 175-190.
    24. German, Laura & Schoneveld, George & Mwangi, Esther, 2013. "Contemporary Processes of Large-Scale Land Acquisition in Sub-Saharan Africa: Legal Deficiency or Elite Capture of the Rule of Law?," World Development, Elsevier, vol. 48(C), pages 1-18.
    25. Harrison, Ann, 1994. "Multinationals in economic development: the benefits of FDI," MPRA Paper 36270, University Library of Munich, Germany.
    26. Tanguy Bernard & Alemayehu Seyoum Taffesse & Eleni Gabre‐Madhin, 2008. "Impact of cooperatives on smallholders' commercialization behavior: evidence from Ethiopia," Agricultural Economics, International Association of Agricultural Economists, vol. 39(2), pages 147-161, September.
    27. Phil Simmons & Paul Winters & Ian Patrick, 2005. "An analysis of contract farming in East Java, Bali, and Lombok, Indonesia," Agricultural Economics, International Association of Agricultural Economists, vol. 33(s3), pages 513-525, November.
    28. Dirk Willem te Velde, 2003. "Do Workers in Africa Get a Wage Premium if Employed in Firms Owned by Foreigners?," Journal of African Economies, Centre for the Study of African Economies, vol. 12(1), pages 41-73, March.
    29. Ruth Hall, 2011. "Land grabbing in Southern Africa: the many faces of the investor rush," Review of African Political Economy, Taylor & Francis Journals, vol. 38(128), pages 193-214, June.
    30. Raoul Herrmann & Ulrike Grote, 2015. "Large-scale Agro-Industrial Investments and Rural Poverty: Evidence from Sugarcane in Malawi," Journal of African Economies, Centre for the Study of African Economies, vol. 24(5), pages 645-676.
    31. Rao, Elizaphan J.O. & Qaim, Matin, 2011. "Supermarkets, Farm Household Income, and Poverty: Insights from Kenya," World Development, Elsevier, vol. 39(5), pages 784-796, May.
    32. Narayanan, Sudha, 2014. "Profits from participation in high value agriculture: Evidence of heterogeneous benefits in contract farming schemes in Southern India," Food Policy, Elsevier, vol. 44(C), pages 142-157.
    33. Stephanie Barrientos & Andrienetta Kritzinger, 2004. "Squaring the circle: global production and the informalization of work in South African fruit exports," Journal of International Development, John Wiley & Sons, Ltd., vol. 16(1), pages 81-92.
    34. Ellis, Frank, 2000. "Rural Livelihoods and Diversity in Developing Countries," OUP Catalogue, Oxford University Press, number 9780198296966.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bellemare, Marc F. & Bloem, Jeffrey R., 2018. "Does contract farming improve welfare? A review," World Development, Elsevier, vol. 112(C), pages 259-271.
    2. Maertens, Miet & Vande Velde, Katrien, 2017. "Contract-farming in Staple Food Chains: The Case of Rice in Benin," World Development, Elsevier, vol. 95(C), pages 73-87.
    3. Wendimu, Mengistu Assefa & Henningsen, Arne & Gibbon, Peter, 2016. "Sugarcane Outgrowers in Ethiopia: “Forced” to Remain Poor?," World Development, Elsevier, vol. 83(C), pages 84-97.
    4. Biggeri, Mario & Burchi, Francesco & Ciani, Federico & Herrmann, Raoul, 2018. "Linking small-scale farmers to the durum wheat value chain in Ethiopia: Assessing the effects on production and wellbeing," Food Policy, Elsevier, vol. 79(C), pages 77-91.
    5. Soullier, Guillaume & Moustier, Paule, 2018. "Impacts of contract farming in domestic grain chains on farmer income and food insecurity. Contrasted evidence from Senegal," Food Policy, Elsevier, vol. 79(C), pages 179-198.
    6. Marc F. Bellemare, 2018. "Contract farming: opportunity cost and trade†offs," Agricultural Economics, International Association of Agricultural Economists, vol. 49(3), pages 279-288, May.
    7. Ragasa, Catherine & Lambrecht, Isabel & Kufoalor, Doreen S., 2018. "Limitations of Contract Farming as a Pro-poor Strategy: The Case of Maize Outgrower Schemes in Upper West Ghana," World Development, Elsevier, vol. 102(C), pages 30-56.
    8. Khan, Muhammad Fawad & Nakano, Yuko & Kurosaki, Takashi, 2019. "Impact of contract farming on land productivity and income of maize and potato growers in Pakistan," Food Policy, Elsevier, vol. 85(C), pages 28-39.
    9. Ton, Giel & Vellema, Wytse & Desiere, Sam & Weituschat, Sophia & D'Haese, Marijke, 2018. "Contract farming for improving smallholder incomes: What can we learn from effectiveness studies?," World Development, Elsevier, vol. 104(C), pages 46-64.
    10. Susanne Väth & Michael Kirk, 2014. "Do property rights and contract farming matter for rural development? Evidence from a large-scale investment in Ghana," MAGKS Papers on Economics 201416, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    11. Van den Broeck, Goedele & Swinnen, Johan & Maertens, Miet, 2017. "Global value chains, large-scale farming, and poverty: Long-term effects in Senegal," Food Policy, Elsevier, vol. 66(C), pages 97-107.
    12. Susanne Väth & Simone Gobien, 2014. "Life Satisfaction, Contract Farming and Property Rights: Evidence from Ghana," MAGKS Papers on Economics 201415, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    13. Nolte, Kerstin & Ostermeier, Martin, 2017. "Labour Market Effects of Large-Scale Agricultural Investment: Conceptual Considerations and Estimated Employment Effects," World Development, Elsevier, vol. 98(C), pages 430-446.
    14. Deininger, Klaus & Xia, Fang, 2016. "Quantifying Spillover Effects from Large Land-based Investment: The Case of Mozambique," World Development, Elsevier, vol. 87(C), pages 227-241.
    15. Delelegne A. Tefera & Jos Bijman, 2021. "Economics of contracts in African food systems: evidence from the malt barley sector in Ethiopia," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 9(1), pages 1-21, December.
    16. Luitfred Kissoly & Anja Faße & Ulrike Grote, 2017. "The integration of smallholders in agricultural value chain activities and food security: evidence from rural Tanzania," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 9(6), pages 1219-1235, December.
    17. Viet Hoang, 2021. "Impact of Contract Farming on Farmers’ Income in the Food Value Chain: A Theoretical Analysis and Empirical Study in Vietnam," Agriculture, MDPI, vol. 11(8), pages 1-16, August.
    18. Ton, Giel & Vellema, Wytse & Desiere, Sam & Weituschat, Sophia & D’Haese, Marijke, 2016. "Effectiveness of contract farming for improving income of smallholder farmers-Preliminary results of a systematic review," 149th Seminar, October 27-28, 2016, Rennes, France 244792, European Association of Agricultural Economists.
    19. Bhanot, Disha & Kathuria, Vinish & Das, Debabrata, 2021. "Can institutional innovations in agri-marketing channels alleviate distress selling? Evidence from India," World Development, Elsevier, vol. 137(C).
    20. Marc F. Bellemare & Lindsey Novak, 2017. "Contract Farming and Food Security," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 99(2), pages 357-378.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:wdevel:v:90:y:2017:i:c:p:294-310. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/worlddev .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.