Impact of large-scale agricultural investment support on smallholder agricultural commercialisation: a case of Amatheon Agri Zambia.
Date
2024
Authors
Kazekula, Eurelia Mutinta
Journal Title
Journal ISSN
Volume Title
Publisher
The University of Zambia
Abstract
Smallholder farmers in Africa are perpetually constrained by a number of factors such as limited market access, poor infrastructure, and low production and productivity which in turn affects their levels of commercialisation. One strategy that has been touted as the panacea to the low levels of smallholder agricultural commercialisation is the corporate social responsibility (CSR) initiative by foreign-owned large-scale agricultural investments (LSAIs) aimed at transforming traditional subsistence farming into commercially viable enterprises. Using the case study of Amatheon Agri Zambia limited (AAZ), a German-owned company with approximately 40,000 hectares of land in Central Zambia, the overarching objective of
this study was to investigate the impact of AAZ’s nucleus out grower scheme programme on smallholder agricultural commercialisation in Mumbwa and Chibombo districts. The study used secondary longitudinal data from 590 households collected in 2018 and 2021 to address three specific objectives: (i) to examine the level of agricultural commercialisation between participants and non-participants of the AAZ out grower scheme; (ii) to determine the key drivers of agricultural commercialisation among smallholder farmers, and; (iii) to estimate the impact of the AAZ out grower scheme interventions on smallholder agricultural commercialisation. Summary statistics were computed to compare the levels of commercialisation between participants and non-participants using three household commercialisation indices generated for maize, soya beans and an aggregate crop index. The three household commercialisation indices were also used as outcome variables for the fractional regression approach to explore the key determinants of smallholder agricultural commercialisation in the context of nucleus out grower schemes. To estimate the impacts of AAZ support on agricultural commercialisation, propensity score matching techniques were used prior to the computation of average treatment effects. Factors such as age of the household head, ownership of agricultural assets, household wealth, maize yield, average maize price per unit, farm size, and distance to Lusaka influenced maize commercialisation. Soya bean commercialisation was influenced by ownership of agricultural assets, yield, and farm-gate prices. Crop commercialisation was influenced by household size, education level, grain sales to AAZ, loan access, agricultural assets, and total land cultivated, with household head age negatively affecting commercialisation. Results further show a general significant increase in
commercialisation between the treatment and control groups at both study rounds with soya beans being farmed for commercial purposes. Maize farmers in the AAZ scheme are medium commercialised and overall crops are highly commercialised. There was a decline of soya beans at the end line particularly due to AAZ’s strategic shift to high-value crops and restructuring of its out grower scheme. In the treated group, 61.08% of individuals are engaged in maize commercialisation, compared to 49.45% in the control group. The Average Treatment effect on the Treated (ATT) indicates a significant difference in maize commercialisation between the groups, suggesting that AAZ's support enhances smallholder farmers' maize commercialisation by 61.08% relative to those without AAZ support. However, the average treatment effect for soya bean commercialisation is minimal, with T-statistics showing no significant difference, implying that AAZ's impact on soya bean commercialisation is similar for both treated and control groups. Consequently, 83.0% of households that received AAZ support commercialised soya beans, mirroring the effect on non-participating households. Additionally, the AAZ support does not differ in its impact on overall crop commercialisation between the treated and control groups, indicating that participants and non-participants experience the same level of intervention effect by 74.6% on the marketing of cowpeas, sunflower, groundnuts, and vegetables. In conclusion, this research underscores the positive influence of LSAIs, particularly AAZ, on smallholder agricultural commercialisation in Zambia. Policy recommendations include targeted support to enhance education, promote asset ownership, and improve market access. Additionally, diversifying crops and building resilience against natural shocks are vital. These findings provide valuable insights for policymakers and stakeholders, guiding strategies for sustainable agricultural development in SSA.
Description
Thesis of Master of Science in Agricultural Economics.