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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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  • Nicholas J. Sitko

    (Food and Agriculture Organization of the United Nations)

  • Brian Chisanga

    (Indaba Agricultural Policy Research Institute)

  • David Tschirley

    (Michigan State University)

  • Thomas S. Jayne

    (Michigan State University)

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.

Suggested Citation

  • Nicholas J. Sitko & Brian Chisanga & David Tschirley & Thomas S. Jayne, 2018. "An evolution in the middle: examining the rise of multinational investment in smallholder grain trading in Zambia," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 10(2), pages 473-488, April.
    • Handle: RePEc:spr:ssefpa:v:10:y:2018:i:2:d:10.1007_s12571-018-0767-6
    DOI: 10.1007/s12571-018-0767-6
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