The socio-economic impact of commercial agriculture on rural poor and other vulnerable groups - a Working Document

by Caroline Pinder and Denis Wood for DFID - Zambia

February 2003

1 Aims of this Study were to:

• Provide an analysis, through a review of relevant policies and programmes, of the potential impact of GRZ's plans for the commercialisation of agriculture on poor people, identifying the opportunities and constraints; and

• Provide a social development perspective to complement recommendations from other ongoing studies for potential DFID engagement in the agricultural sector.

2 The target group for this study, and for pro-poor interventions were defined as the 830,000 rural households who are poor and dependent on agriculture:

• the very poorest and most vulnerable households who will require long-term social protection and support (200,000 ‘sub-subsistence' smallholders)

• the very poor households that have potential to achieve a poor but sustainable livelihood, regularly marketing a small surplus, with the eventual possibility of joining an outgrower scheme (300,000 ‘marginal' smallholders)

• the poor households with potential to become, or which have already become, commercially viable small-scale farmers, either joining an outgrower scheme or marketing their surplus in the domestic market (300,000 ‘viable small or emergent smallholders) In addition there are 30,000 medium farmers, with land in excess of 10 hectares, who are poor.

At an average of between 5-6 people per household these 830,000 households together total the estimated 4.6 million rural poor and ultra poor people.

3 Overview of DFID's development objectives in relation to agricultureThe institutions of market and state are of strategic and policy interest to social development practitioners, as well as the discipline's interaction with the more obvious ‘community' and ‘household' institutions. It is in this sense that social development, within DFID's overall purpose to reduce poverty, intersects with removing barriers to market entry and with supporting good governance. In the context of this study, DFID is essentially concerned with social analysis of Zambia's agricultural markets. This must necessarily take into account the barriers to market entry that are experienced by Zambia's rural poor, and the processes by which policy is (or is not) formulated and implemented by GRZ to take account of the needs of the rural poor.4 Conclusions on the impact of the macro-economic environment on the rural poor Overall, the ACP policy thrust has a number of advantages from the perspective of the macroeconomic environment. At the macro-level, the ACP policy is likely to increase the contribution of the agricultural sector to foreign exchange earnings. The policy thrust is also likely to increase agriculture's share of GDP, increase the diversification of cropping patterns and make a modest contribution to poverty reduction.

At the meso-level, the ACP's policies are likely to build new linkages with international markets, develop new farmer-driven institutions, create new partnerships between CBOs, NGOs and multinational companies, and promote new crop specific single chain marketing systems.

At the micro-level, the ACP policies are likely to improve access to credit and inputs for the small proportion of farmers that are being serviced by the large-scale multi-nationals. In addition, the policy is likely to provide them with "guaranteed" markets, increased levels of income, and promote the development of a competitive agricultural production and marketing system.However, in spite of the above advantages, the ACP policy is not pro-poor. Consequently, the PRSP's pro-poor ideals will remain on paper and increase rather than decrease the levels of poverty in outlying rural areas that are not designated as ‘high potential', ie the poorest parts of Western, Luapula, Northern and North-Western Provinces.

Full paper attached.