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An evolution in the middle: examining the rise of multinational investment in smallholder grain trading in Zambia

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Abstract

This article examines the causes and consequences of multinational investment in smallholder grain markets in Zambia. We show that direct purchases of smallholder maize and soybeans have increased rapidly over time and amounted to 90,000 mt of maize and 5600 mt of soybeans in 2014/15. Factors influencing this investment wave include: a large and growing segment of relatively larger smallholder farms, rapid expansion of processing capacity for animal feed and soybean oil, and reasonably stable macro-economic and foreign investment policy. This investment wave is associated with a decline in farm-gate to wholesale price margins of 13%, increased access to input credit and market price information for smallholders, and perceptions of increased market transparency by farmers. We find no evidence of market concentration driven by entry of these firms, as competition from domestic market traders remains robust. Some, but not all, of the factors driving this investment wave are shared by other countries in the region, suggesting an uncertain future for regional multinational investment in smallholder grain markets.

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Notes

  1. The multinational firms operating in Zambia’s grain trading sector during the time of field work were: Cargill, Export Trading Group, NWK Agri-Services, AFGRI, IntraAfrica Grain, DomZam (subsidiary of Holbud Ltd), Olam Zambia, Metl Group, and Senwes Ltd. Of these only Export Trading, Cargill, NWK, and AFGRI have invested in smallholder grain markets, the remainder confine themselves to the commercial farming sector.

  2. http://www.doingbusiness.org/).

  3. In 2010/11 purchases of maize by NWK were made by Dunavant Cotton

  4. (http://www.paoz.org/Datapercent20&percent20Statistics).

  5. Kwacha to $US exchange rates fluctuated between 5.5 to 11 during this period

  6. see http://www.cargill.com/worldwide/index.jsp#africa; http://olamgroup.com/locations/southern-africa/south-africa/).

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Authors and Affiliations

  1. Food and Agriculture Organization of the United Nations, Viale delle Terme di Caracalla, Rome, Italy

    Nicholas J. Sitko

  2. Indaba Agricultural Policy Research Institute, 26A Middleway, Lusaka, Zambia

    Brian Chisanga

  3. Department of Agriculture, Food, and Resource Economics, Michigan State University, 207 Agriculture Hall, East Lansing, MI, 48824, USA

    David Tschirley & Thomas S. Jayne

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Sitko, N.J., Chisanga, B., Tschirley, D. et al. An evolution in the middle: examining the rise of multinational investment in smallholder grain trading in Zambia. Food Sec. 10, 473–488 (2018). https://doi.org/10.1007/s12571-018-0767-6

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