Today there are 842 million who are hungry. As the global population approaches 9 billion by 2050, demand for food will keep increasing, requiring sustained improvement in agricultural productivity. Where will these productivity increases come from? For decades, small-scale family farming was widely thought to be more productive and more efficient in reducing poverty than large-scale farming. But now advocates of large-scale agriculture point to its advantages in leveraging huge investments and innovative technologies as well as its enormous export potential. Critics, however, highlight serious environmental, animal welfare, social and economic concerns, especially in the context of fragile institutions. The often outrageous conditions and devastating social impacts that “land grabs” bring about are well known, particularly in severely food-insecure countries. So, is large-scale farming—particularly the popularly known “super farms”—the solution to food demand challenges? Or is it an obstacle? Here are the 10 key questions you need to ask yourself to better understand this issue. I have tried to address them in the latest issue of Food Price Watch. 1. What is a super farm? There is no widely accepted definition of the minimum area (or livestock headcount) that a farm must have to be considered a “super” farm. Some studies use 500 hectares (ha) while others use 10,000-15,000 ha as the threshold for large-scale agriculture. For example, the median farm size in Brazil’s savannah region is around 1,000 ha, but many exceed 10,000 ha. In South Asia, a typical oil palm mill averages 10,000 ha. In Sub-Saharan Africa, some farms exceed 100,000 ha, while in the Russian Federation, some are even larger than 300,000 ha. 2. Are all super farms the same? Super farms are quite heterogeneous in terms of the capital involved (foreign, national, or mixed; private, public, or combined), property terms (lease or purchase), production model (land concentration or independent small farms) and degree and terms of integration (vertical or horizontal integration), among other criteria. What brings them together is their large scale of operations, large investment flows, and an unambiguous profit orientation. 3. Is a super farm the same as a land grab? No. Oxfam defines a land grab as an acquisition of land that involves one or more of the following circumstances: violation of human rights; affected communities did not provide free, prior, and informed consent; lack a proper assessment of social, economic, environmental impacts; lack transparent and competitive contracts; or disregard meaningful participation. There are legitimate large-scale farming operations that do not engage in these behaviors. 4. Do super farms exist only in the developing world? Super farms are not unique to the developing world. There are sprawling farms all over the world, from the United States, the United Kingdom, and Australia to middle-income countries such as Brazil, Chile and Vietnam, as well as poor and fragile countries such as the Democratic Republic of Congo, Liberia, and Sudan, to name just a few. Neither do super farms imply that investments flow exclusively from rich countries into developing countries. For example, China has engaged in large-scale farming in Africa, while also developing large farms domestically. Similarly, Brazil is exploring new deals in Mozambique in addition to farms in its savannah region. Trinidad and Tobago has been exploring the possibility of developing such activities in Guyana. 5. What are the benefits of super farms compared to small farms? For decades, small family-operated farms have been thought to be more productive than larger commercial units. Family workers typically are more motivated than hired workers, require less supervision, and have a more intimate knowledge of local conditions. Small farms are also more flexible when seasonal and annual variations require adjusting labor demand. Yet, large-scale farming can potentially provide multiple benefits. Acquiring and processing information and technology is cheaper for large farms and gaining safety, environmental, and/or product identity certification is easier. In some cases, large operations can fill gaps in public services, constructing their own port terminals for exports. They can also access international capital markets and conduct their own private research and development. 6. What problems do super farms cause? The list of potential problems is indeed large. In cases of corruption, weak land governance and institutions, investments without compensation can damage traditional users and cause inequality in land ownership. They can also generate environmental risks when they expand into tropical forests or produce uncontrolled waste disposal. There can be serious concerns regarding sanitary conditions—because agglomeration makes it easier for epidemics to spread—and on animal welfare—due to zero grazing (that is, very limited or no grazing of livestock in open fields). Land speculation also has been denounced by civil society and other stakeholders, with increasing evidence of large land acquisitions either not having resulted in action on the ground, or having been associated with inequality and resource degradation. 7. Do super farms have a positive impact on poverty and employment? Evidence has shown that small-scale and family farming can reduce poverty and increase employment. They are labor intensive and favor food security in areas of high poverty incidence. But this information should not be taken to imply that large firms do not have potential to impact poverty. Unfortunately, evidence on specific large-scale farming impacts remains scarce but it points to sizeable employment and economic opportunities, for example in Brazil, Indonesia, Liberia, Peru, and Ukraine. This is more so the case among relatively labor-intensive crops such as oil palm, sugarcane, rubber, or jatropha. What is troubling is that studies also find increases in income inequality and in social costs (for example, increased medical costs from respiratory illnesses related to increased pollution). But neither benefits nor damages should be assumed automatic or intrinsic. More evidence is needed. 8. Can super farms complement small-scale agriculture? A view typically held among international institutions is that small- and large-scale farming can coexist because they have different comparative advantages depending on land and labor abundance, functioning of institutions and property rights, and the extent of yield gaps and types of crops. A more critical view –among academics and civil society organizations– argues that large-scale farms tend to become monopolies and crowd out small farms. 9. Are super farms a solution to the increasing demand for food? The jury is still out. Simply put, more evidence is needed to form conclusions on the net economic, social, environmental, and welfare effects. It is probably equally ungrounded to hail super farms as a solution for future food security challenges as it is to rule them out on the basis of outrageous episodes of land grabs. A lot of empirical work is needed to understand their impacts and also to develop effective and enforceable responsible investments and standards. 10. Under what circumstances will super farms generate positive impacts on food security and poverty reduction? Numerous stakeholders must get involved—including governments, private sector, civil society, and the international community. Interventions should be wide ranging, ensuring the following issues are addressed: making information on land deals publicly available; prioritizing public investments on infrastructure and technology; improving competition and governance in land and agriculture markets; preventing skilled managers from going elsewhere; increasing truly participatory community tools; and designing, disseminating, implementing and monitoring responsible agro-investment principles. Note: This blog is based on evidence reported in several academic journals, reports, and strategy papers. For specific references and citations, please see the November Food Price Watch. http://blogs.worldbank.org/voices/super-farms-solution-world-food-insecurity-challenge?cid=EXT_FBWBPubs_P_EXT
Senior Economist José Cuesta is a development economist with a Ph.D. in economics from Oxford University. He is an affiliated professor at Georgetown University's Public Policy Institute. Cuesta was previously an assistant professor in development economics at the Institute of Social Studies in the Netherlands. He also worked as a research economist and social sector specialist for the Inter-American Development Bank, and as an economist for the United Nations Development Programme in Honduras. Cuesta's research interests revolve around poverty and conflict economics, specifically the distributive analysis of social policies; intra-household allocation; social protection and labor distortions. He also studies the interaction between poverty, conflict and culture. A Spanish national, Cuesta has experience from a number of countries in Latin America, Asia and Africa.
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