Productivity, livelihood and risk in large-scale land acquisition and contract farming

Abstract

Recent reports on “land and water grabs” in low-income countries gained attention in the international development community as these forms of investments in agricultural land often cause human rights violations and negative environmental impacts in host countries. This thesis analyses two business models in agriculture that have recently been popular among investors: large-scale land acquisition (LSLA) and contract farming (CF). The objective is to assess attributes of both business models and to elaborate incentives for fair value sharing between investors and smallholding farmers in food value chains. A framework is developed to determine the responsiveness of LSLA and CF to value sharing indicators. It is expected that investment strategies, that a) consider farm size as a determinant of productivity, b) value livelihood security in host countries and c) incorporate a multifaceted risk calculation, are most gainful for investors and host country economies. A key outcome is that contract farming offers an alternative to large-scale land acquisition in some regards. The analysis of farm size productivity and risk distribution reveals that the integration of smallholding farmers in the supply chain offers attractive opportunities for agribusiness investors. Moreover, contract farming creates an enabling environment for human and economic development in host countries.