IDEAS home Printed from https://ideas.repec.org/a/gam/jlands/v9y2020i12p512-d460407.html
   My bibliography  Save this article

Agricultural Resources and Trade Strategies: Response to Falling Land-to-Labor Ratios in Malawi

Author

Listed:
  • Sarah Ephrida Tione

    (School of Economics and Business, Norwegian University of Life Sciences, P.O. Box 5003, 1432 Aas, Norway)

Abstract

This study assesses how growing land scarcity relative to family labor is influencing farm household decisions to trade in agricultural land and labor markets to improve their livelihood. Using the farm household model, I analyze decisions to rent-in land or hire out labor among smallholders in Malawi. I use data from two rounds of a nationally representative balanced-household panel and apply a systems approach to jointly estimate land rental and labor market decisions while controlling for simultaneity and unobserved heterogeneity. The results indicate that the falling owned-land-to-labor-endowment ratio can push households to participate in either land rental or seasonal agricultural labor markets. However, the probability of hiring out labor for casual work and short-term gains decreases when potential tenant households rent-in land. Based on asset-wealth-to-labor-endowment ratios, wealthier households are more likely to rent-in land while poorer households, including most smallholder households, are more likely to hire out labor. These results suggest higher friction in the land rental market compared to the agricultural labor markets and liquidity constraints dictating what is necessary to support agricultural operations and household needs. Accordingly, agricultural policy in Malawi should aim to reduce friction in factor markets.

Suggested Citation

  • Sarah Ephrida Tione, 2020. "Agricultural Resources and Trade Strategies: Response to Falling Land-to-Labor Ratios in Malawi," Land, MDPI, vol. 9(12), pages 1-32, December.
    • Handle: RePEc:gam:jlands:v:9:y:2020:i:12:p:512-:d:460407
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2073-445X/9/12/512/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2073-445X/9/12/512/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Marcel Fafchamps, 2004. "Market Institutions in Sub-Saharan Africa: Theory and Evidence," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262062364, April.
    2. Alastair Orr & Blessings Mwale & Donata Saiti-Chitsonga, 2009. "Exploring Seasonal Poverty Traps: The 'Six-Week Window' in Southern Malawi," Journal of Development Studies, Taylor & Francis Journals, vol. 45(2), pages 227-255.
    3. T. S. Jayne & Milu Muyanga & Ayala Wineman & Hosaena Ghebru & Caleb Stevens & Mercedes Stickler & Antony Chapoto & Ward Anseeuw & Divan van der Westhuizen & David Nyange, 2019. "Are medium‐scale farms driving agricultural transformation in sub‐Saharan Africa?," Agricultural Economics, International Association of Agricultural Economists, vol. 50(S1), pages 75-95, November.
    4. Holden, Stein T. & Deininger, Klaus & Ghebru, Hosaena, 2007. "Impact of Land Certification on Land Rental Market Participation in Tigray Region, Northern Ethiopia," MPRA Paper 5211, University Library of Munich, Germany.
    5. Bezu, Sosina & Barrett, Christopher B. & Holden, Stein T., 2012. "Does the Nonfarm Economy Offer Pathways for Upward Mobility? Evidence from a Panel Data Study in Ethiopia," World Development, Elsevier, vol. 40(8), pages 1634-1646.
    6. Lowder, Sarah K. & Skoet, Jakob & Singh, Saumya, 2014. "What do we really know about the number and distribution of farms and family farms in the world? Background paper for The State of Food and Agriculture 2014," ESA Working Papers 288983, Food and Agriculture Organization of the United Nations, Agricultural Development Economics Division (ESA).
    7. Sarah Alobo Loison, 2015. "Rural Livelihood Diversification in Sub-Saharan Africa: A Literature Review," Journal of Development Studies, Taylor & Francis Journals, vol. 51(9), pages 1125-1138, September.
    8. Kusunose, Yoko & Lybbert, Travis J., 2014. "Coping with Drought by Adjusting Land Tenancy Contracts: A Model and Evidence from Rural Morocco," World Development, Elsevier, vol. 61(C), pages 114-126.
    9. Stein T. Holden & Keijiro Otsuka & Klaus Deininger (ed.), 2013. "Land Tenure Reform in Asia and Africa," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-137-34381-9, October.
    10. Tione, Sarah E. & Holden, Stein T., 2020. "Urban proximity, demand for land and land shadow prices in Malawi," Land Use Policy, Elsevier, vol. 94(C).
    11. Fink, Günther & Jack, Kelsey & Masiye, Felix, 2014. "Seasonal Credit Constraints and Agricultural Labor Supply: Evidence from Zambia," IZA Discussion Papers 8657, Institute of Labor Economics (IZA).
    12. David Roodman, 2011. "Fitting fully observed recursive mixed-process models with cmp," Stata Journal, StataCorp LP, vol. 11(2), pages 159-206, June.
    13. Deininger, Klaus & Xia, Fang, 2018. "Assessing the long-term performance of large-scale land transfers: Challenges and opportunities in Malawi’s estate sector," World Development, Elsevier, vol. 104(C), pages 281-296.
    14. Stein T. Holden & John Quiggin, 2017. "Climate risk and state-contingent technology adoption: shocks, drought tolerance and preferences," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 44(2), pages 285-308.
    15. Davis, Benjamin & Di Giuseppe, Stefania & Zezza, Alberto, 2017. "Are African households (not) leaving agriculture? Patterns of households’ income sources in rural Sub-Saharan Africa," Food Policy, Elsevier, vol. 67(C), pages 153-174.
    16. Sergio Gomez y Paloma & Laura Riesgo & Kamel Louhichi, 2020. "The Role of Smallholder Farms in Food and Nutrition Security [Le rôle des petites exploitations agricoles dans la sécurité alimentaire et nutritionnelle]," Post-Print hal-02611174, HAL.
    17. 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.
    18. Mundlak, Yair, 1978. "On the Pooling of Time Series and Cross Section Data," Econometrica, Econometric Society, vol. 46(1), pages 69-85, January.
    19. Sergio Gomez y Paloma & Laura Riesgo & Kamel Louhichi (ed.), 2020. "The Role of Smallholder Farms in Food and Nutrition Security," Springer Books, Springer, number 978-3-030-42148-9, December.
    20. Ellis, Frank & Kutengule, Milton & Nyasulu, Alfred, 2003. "Livelihoods and Rural Poverty Reduction in Malawi," World Development, Elsevier, vol. 31(9), pages 1495-1510, September.
    21. Jeffrey M Wooldridge, 2010. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232588, April.
    22. Headey, Derek D. & Jayne, T.S., 2014. "Adaptation to land constraints: Is Africa different?," Food Policy, Elsevier, vol. 48(C), pages 18-33.
    23. Ricker-Gilbert, Jacob & Jumbe, Charles & Chamberlin, Jordan, 2014. "How does population density influence agricultural intensification and productivity? Evidence from Malawi," Food Policy, Elsevier, vol. 48(C), pages 114-128.
    24. Ward Anseeuw & Thomas Jayne & Richard Kachule & John Kotsopoulos, 2016. "The Quiet Rise of Medium-Scale Farms in Malawi," Land, MDPI, vol. 5(3), pages 1-22, June.
    25. Arne Bigsten & Sven Tengstam, 2011. "Smallholder Diversification and Income Growth in Zambia," Journal of African Economies, Centre for the Study of African Economies, vol. 20(5), pages 781-822, November.
    26. Michael R. Carter & Yang Yao, 2002. "Local versus Global Separability in Agricultural Household Models: The Factor Price Equalization Effect of Land Transfer Rights," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(3), pages 702-715.
    27. Tione, Sarah E. & Holden , Stein T., 2019. "Urban proximity, demand for land and land prices in Malawi," CLTS Working Papers 1/19, Norwegian University of Life Sciences, Centre for Land Tenure Studies, revised 16 Oct 2019.
    28. Dimowa, Ralitza & Michaelowa, Katharina & Weber, Anke, 2010. "Ganyu Labour in Malawi: Understanding Rural Households’ Labour Supply Strategies," Proceedings of the German Development Economics Conference, Hannover 2010 29, Verein für Socialpolitik, Research Committee Development Economics.
    29. Cornia, Giovanni Andrea & Deotti, Laura & Sassi, Maria, 2016. "Sources of food price volatility and child malnutrition in Niger and Malawi," Food Policy, Elsevier, vol. 60(C), pages 20-30.
    30. Kaat Van Hoyweghen & Goedele Van den Broeck & Miet Maertens, 2020. "Employment Dynamics and Linkages in the Rural Economy: Insights from Senegal," Journal of Agricultural Economics, Wiley Blackwell, vol. 71(3), pages 904-928, September.
    31. Josephson, Anna Leigh & Ricker-Gilbert, Jacob & Florax, Raymond J.G.M., 2014. "How does population density influence agricultural intensification and productivity? Evidence from Ethiopia," Food Policy, Elsevier, vol. 48(C), pages 142-152.
    32. John Pender & Marcel Fafchamps, 2006. "Land Lease Markets and Agricultural Efficiency in Ethiopia," Journal of African Economies, Centre for the Study of African Economies, vol. 15(2), pages 251-284, June.
    33. Jacob Ricker-Gilbert & Jordan Chamberlin, 2018. "Transaction Costs, Land Rental Markets, and Their Impact on Youth Access to Agriculture in Tanzania," Land Economics, University of Wisconsin Press, vol. 94(4), pages 541-555.
    34. Ayala Wineman & Thomas S. Jayne, 2021. "Factor Market Activity and the Inverse Farm Size-Productivity Relationship in Tanzania," Journal of Development Studies, Taylor & Francis Journals, vol. 57(3), pages 443-464, March.
    35. Chamberlin, Jordan & Jayne, T.S. & Headey, D., 2014. "Scarcity amidst abundance? Reassessing the potential for cropland expansion in Africa," Food Policy, Elsevier, vol. 48(C), pages 51-65.
    36. Chamberlain, Gary, 1982. "Multivariate regression models for panel data," Journal of Econometrics, Elsevier, vol. 18(1), pages 5-46, January.
    37. T.S. Jayne & Jordan Chamberlin & Lulama Traub & Nicholas Sitko & Milu Muyanga & Felix K. Yeboah & Ward Anseeuw & Antony Chapoto & Ayala Wineman & Chewe Nkonde & Richard Kachule, 2016. "Africa's changing farm size distribution patterns: the rise of medium-scale farms," Agricultural Economics, International Association of Agricultural Economists, vol. 47(S1), pages 197-214, November.
    38. Jordan Chamberlin & Jacob Ricker-Gilbert, 2016. "Participation in Rural Land Rental Markets in Sub-Saharan Africa: Who Benefits and by How Much? Evidence from Malawi and Zambia," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 98(5), pages 1507-1528.
    39. Kassouf, Ana Lúcia & Hoffmann, Rodolfo, 2006. "Work-Related Injuries Involving Children and Adolescents: Application of a Recursive Bivariate Probit Model," Brazilian Review of Econometrics, Sociedade Brasileira de Econometria - SBE, vol. 26(1), May.
    40. Asfaw, Solomon & Scognamillo, Antonio & Caprera, Gloria Di & Sitko, Nicholas & Ignaciuk, Adriana, 2019. "Heterogeneous impact of livelihood diversification on household welfare: Cross-country evidence from Sub-Saharan Africa," World Development, Elsevier, vol. 117(C), pages 278-295.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sarah E. Tione & Stein T. Holden, 2021. "Can rainfall shocks enhance access to rented land? Evidence from Malawi," Agricultural Economics, International Association of Agricultural Economists, vol. 52(6), pages 1013-1028, November.
    2. Sarah Ephrida Tione & Dorothy Nampanzira & Gloria Nalule & Olivier Kashongwe & Samson Pilanazo Katengeza, 2022. "Anthropogenic Land Use Change and Adoption of Climate Smart Agriculture in Sub-Saharan Africa," Sustainability, MDPI, vol. 14(22), pages 1-29, November.

    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. Sarah E. Tione & Stein T. Holden, 2021. "Can rainfall shocks enhance access to rented land? Evidence from Malawi," Agricultural Economics, International Association of Agricultural Economists, vol. 52(6), pages 1013-1028, November.
    2. Abay, Kibrom A. & Chamberlin, Jordan & Berhane, Guush, 2021. "Are land rental markets responding to rising population pressures and land scarcity in sub-Saharan Africa?," Land Use Policy, Elsevier, vol. 101(C).
    3. Makate, Clifton & Angelsen, Arild & Holden, Stein Terje & Westengen, Ola Tveitereid, 2022. "Crops in crises: Shocks shape smallholders' diversification in rural Ethiopia," World Development, Elsevier, vol. 159(C).
    4. Baumert, Sophia & Fisher, Janet & Ryan, Casey & Woollen, Emily & Vollmer, Frank & Artur, Luis & Zorrilla-Miras, Pedro & Mahamane, Mansour, 2019. "Forgone opportunities of large-scale agricultural investment: A comparison of three models of soya production in Central Mozambique," World Development Perspectives, Elsevier, vol. 16(C).
    5. Kopper, Sarah A., 2018. "Agricultural labor markets and fertilizer demand: Intensification is not a single factor problem for non-separable households," 2018 Annual Meeting, August 5-7, Washington, D.C. 274184, Agricultural and Applied Economics Association.
    6. Tesfaye, Wondimagegn & Tirivayi, Nyasha, 2020. "Crop diversity, household welfare and consumption smoothing under risk: Evidence from rural Uganda," World Development, Elsevier, vol. 125(C).
    7. Mark Musumba & Cheryl A. Palm & Adam M. Komarek & Patrick K. Mutuo & Bocary Kaya, 2022. "Household livelihood diversification in rural Africa," Agricultural Economics, International Association of Agricultural Economists, vol. 53(2), pages 246-256, March.
    8. Ricker-Gilbert, Jacob & Lunduka, Rodney W. & Kanyamuka, Joseph Samuel & Jumbe, Charles & Kaiyatsa, Stevier & Chamberlin, Jordan, 2017. "Do Farm Land Rental Markets Really Promote Efficiency, Equity and Investment in Smallholder African Agriculture? Evidence from a Matched Tenant-Landlord Survey in Malawi," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258391, Agricultural and Applied Economics Association.
    9. Kibrom A. Abay & Leah E. M. Bevis & Christopher B. Barrett, 2021. "Measurement Error Mechanisms Matter: Agricultural Intensification with Farmer Misperceptions and Misreporting," American Journal of Agricultural Economics, John Wiley & Sons, vol. 103(2), pages 498-522, March.
    10. 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.
    11. Makate, Clifton & Angelsen, Arild & Holden, Stein Terje & Westengen, Ola Tveitereid, 2023. "Evolution of farm-level crop diversification and response to rainfall shocks in smallholder farming: Evidence from Malawi and Tanzania," Ecological Economics, Elsevier, vol. 205(C).
    12. Desiere, Sam & D'Haese, Marijke, 2015. "Boserup versus Malthus: does population pressure drive agricultural intensification? Evidence from Burundi," 89th Annual Conference, April 13-15, 2015, Warwick University, Coventry, UK 204296, Agricultural Economics Society.
    13. Kibrom A. Abay & Lina Abdelfattah & Hoda El‐Enbaby & Mai Mahmoud & Clemens Breisinger, 2022. "Plot size and sustainable input intensification in smallholder irrigated agriculture: Evidence from Egypt," Agricultural Economics, International Association of Agricultural Economists, vol. 53(5), pages 792-810, September.
    14. Chamberlin, Jordan & Jayne, T.S., 2020. "Does farm structure affect rural household incomes? Evidence from Tanzania," Food Policy, Elsevier, vol. 90(C).
    15. Kijima, Yoko & Tabetando, Rayner, 2020. "Efficiency and equity of rural land markets and the impact on income: Evidence in Kenya and Uganda from 2003 to 2015," Land Use Policy, Elsevier, vol. 91(C).
    16. Lay, Jann & Nolte, Kerstin & Sipangule, Kacana, 2021. "Large-scale farms in Zambia: Locational patterns and spillovers to smallholder agriculture," World Development, Elsevier, vol. 140(C).
    17. Liverpool-Tasie, Saweda & Nuhu, Ahmed Salim & Awokuse, Titus O. & Jayne, Thomas S. & Muyanga, Milu & Aromolaran, Adebayo & Adelaja, Adesoji, 2020. "Spillover effects of Medium-Scale Farms on Smallholder Behavior and Welfare: Evidence from Nigeria," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304606, Agricultural and Applied Economics Association.
    18. Nancy McCarthy & Talip Kilic & Alejandro de la Fuente & Joshua M. Brubaker, 2018. "Shelter from the Storm? Household-Level Impacts of, and Responses to, the 2015 Floods in Malawi," Economics of Disasters and Climate Change, Springer, vol. 2(3), pages 237-258, October.
    19. Marwan Benali & Bernhard Brümmer & Victor Afari‐Sefa, 2018. "Smallholder participation in vegetable exports and age‐disaggregated labor allocation in Northern Tanzania," Agricultural Economics, International Association of Agricultural Economists, vol. 49(5), pages 549-562, September.
    20. Mugizi, Francisco M.P. & Matsumoto, Tomoya, 2021. "A curse or a blessing? Population pressure and soil quality in Sub-Saharan Africa: Evidence from rural Uganda," Ecological Economics, Elsevier, vol. 179(C).

    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:gam:jlands:v:9:y:2020:i:12:p:512-:d:460407. 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: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    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.