Was the wage burden too heavy? Profitability and wage shares of settler agriculture in colonial Malawi, c 1900-1960

The historical role of European farming in southern and central Africa is a delicate matter that has received a great deal of attention among scholars over the years. Going through this vast literature a striking consensus emerges: success or failure of European farming in southern Africa was to a large extent depending on their access and control over labour. These propositions have so far never been systematically and empirically tested. This paper is an attempt to do that by analyzing the ‘wage-burden’ European settler farmers faced. The wage-burden is identified by measuring wage shares (total amount paid in the form of wages as a share of total profits) on European farms in colonial Africa. Based on archival documents we construct time-series for value of output, transportation costs, investments and wage shares for European tobacco and tea farms in colonial Malawi. Our estimates show that the wage burden decreased significantly after 1930s, i.e. the European farmers were able to capture a larger part of the rent over time. We argue that the developments cannot be explained by domestic colonial policies, but changes in regional migration patterns, which had a significant impact on the supply of farm labour.