Model Development? Zambia Sugar and the Uneven Terrain of Social Benefit Laura German and Lowery Parker University of Georgia Annual World Bank Conference

Model Development? Zambia Sugar and the Uneven Terrain of Social Benefit

Laura German and Lowery ParkerUniversity of Georgia

Annual World Bank Conference on Land and Poverty, March 23-27, 2015

Overview

I. Positioning Within wider academic debatesCase study: Importance, uniqueness

II. Methodology

III. Findings: Uneven Outcomes

IV. Questions for Discussion

I. Positioning: Academic DebatesRecurrent debate in academic circles: Whether, and under what circumstances, the logic of capital

accumulation driving farmland acquisition / investment can engender broad-based economic development (skepticism)



Argument: Can find evidence for and against different social outcomes …

employment, smallholder inclusion, livelihood costs & benefits Ongoing search for the ideal set of conditions under which

“shared growth” is maximized Yet there is unevenness in every situation (mixed results, even in

best case scenarios) “Success” is subjective (what is valued, how that is measured)



Argument: Can find evidence for and against different social outcomes …

employment, smallholder inclusion, livelihood costs & benefits Ongoing search for the ideal set of conditions under which

“shared growth” is maximized Yet there is unevenness in every situation (mixed results, even in

best case scenarios) “Success” is subjective (what is valued, how that is measured)... Who should determine what constitutes “shared growth”?

I. Positioning: Case Study(Zambia Sugar’s 2007-2011 Expansion)

In Zambia: Zambia Sugar viewed as a model of inclusive growth, a model

for national Farm Block Scheme Expansion of Nakambala Estate “the largest single investment

in Zambian agriculture to date” (UNCTAD 2008):− Planned 5,945-ha cane expansion (purchased/leased, outgrowers)− Factory expansion − Ethanol refinery (80,000 liters/day)


In Zambia

Globally: Southern Africa the “hottest spot in the sugar industry” outside

Brazil (Wall Street Journal 2007), $3 billion in recent investment Emblematic for its promise: flex crop, nucleus estate-outgrower

business model, most environmentally sustainable ethanol feedstock


In Zambia

Globally

Relative to Other Similar Investments: Best case scenario:

− Limited displacement given history of land occupation (benefits without costs?)

− Hybrid business model (nucleus estate-outgrower)− Labor-intensive crop that is not fully mechanized − Smallholder incorporation heavily subsidized with public $$

…. widely viewed as a model to be emulated

II. MethodologyResearch Site: Zambia Sugar’s Nakambala Estate Plantation and mill established in 1966 by Northern Rhodesia

Sugar Refinery Initial investment and damming of Kafue River displaced

livelihoods of “hundreds of thousands” (Richardson 2010) Bulk of recent expansion occurred on industrial-scale farms

(land lease & outgrower contracts) minimal displacement

II. MethodologyResearch Site: Zambia Sugar’s Nakambala Estate Plantation and mill established in 1966 by Northern Rhodesia

Sugar Refinery Initial investment and damming of Kafue River displaced

livelihoods of “hundreds of thousands” (Richardson 2010) Bulk of recent expansion occurred on industrial-scale farms

(land lease & outgrower contracts) minimal displacement Smallholder schemes:

Scheme Inception(year)

Area (ha)

Households(number)

Kaleya 1980 1,074 160

Maggobo 2011 434 80

II. MethodologyData Collection:1. Semi-structured interviews with key informants and focus

groups to identify salient themes from diverse perspectives:− Company officials and managers (6)− Local chiefs (2)− Commercial outgrowers (3) − Government representatives (2)− Zambia Sugar employees (cane cutters) − Small-scale outgrowers from Maggobo & KASCOL schemes

2. Household surveys with cane cutters and Maggobo scheme participants (within constraints)

3. Archival research for wider economic, social and ecological spillovers

III. Findings: Social BenefitsLand Losing Households: Impacts limited in terms of number of households affected Negative outcomes in select cases, driven by land speculation

(household members making non-transparent deals, leaving other household members destitute)

III. Findings: Social BenefitsSmallholders: Evidence of social benefits / shared growth:

i. 80 new small-scale growers brought on boardii. Kascol: on-scheme income twice that of farmers off-schemeiii. Initial spike in Maggobo household incomes

III. Findings: Social BenefitsSmallholders: Evidence of social benefits / shared growth Unevenness of benefits:

i. Cane expansion dominated by commercial (out)growers:

Category Ha Expansion % Expansion

ZS owned/operated 2,867 29.3

Commercial-scale outgrowers

6,337 64.7

Small-scale outgrowers

598(of which 164 ha KASCOL expansion to core estate)

6.1

(4.4)


i. Cane expansion dominated by commercial (out)growersii. No evidence that (minimal) smallholder incorporation is part

of core investment logic: Smallholders schemes brought on board with third party finance

No progressive incorporation in 30-year interval (neither ZS-led nor smallholder initiative)

Scheme Year Total Cost Public Funding Private Funding

KASCOL 1980 ZMK 17 M* (CDC, GoZ) - 2 Bank loans*

Maggobo 2011 US$ 5 M EU: 60% - Bank loan: 27%- Maggobo CGT: 13%



of core investment logiciii. Shift in landholdings during establishment of contiguous area

of cane (on avg: 8.5 ha rainfed 1.1 ha rainfed + cane): Evidence for widespread hardships during transition Shift from broad-spectrum to specialized livelihood portfolio Uncertain long-term consequences (gendered control over

production/income, food security), in light of KASCOL evaluation




of cane iv. Are small-scale outgrowers “farmers”? Many KASCOL participants were retired public servants Agronomics heavily controlled by Zambia Sugar




of cane iv. Are small-scale outgrowers “farmers”? v. Progressive shift to smallholder control? Despite initial intention, KASCOL shareholding structure never led

to smallholder ownership or control

III. Findings: Social BenefitsEmployees: Evidence of social benefits / shared growth:

i. ZS expansion created 1,000 seasonal/temporary jobs + “less than 50” permanent positions

ii. Many cane cutters reported an ability to better provide for the dietary, health and educational needs of their families

III. Findings: Social BenefitsEmployees: Evidence of social benefits / shared growth Unevenness of benefits (cane cutters):

i. Poor job quality Poor living conditions; families prohibited Seasonality a challenge to many (getting by during off-season)

III. Findings: Social BenefitsEmployees: Evidence of social benefits / shared growth Unevenness of benefits (cane cutters):

i. Poor job quality ii. Life histories: livelihood consequences of employment are

geographically uneven Preferential hiring of cane cutters from Western Province

(perceived strength/work ethic) Challenges in leveraging wages for livelihood improvements

(directly or via other investments) greatest for migrant workers HIV/AIDS

III. Findings: Social BenefitsWider spillovers: Evidence of social benefits / shared growth:

i. Road expansion and improvement ii. Clinic built by Zambia Sugar

III. Findings: Social BenefitsWider spillovers: Evidence of social benefits / shared growth Unevenness of benefits:

i. Infrastructure investments driven by business needs more than social investment:

Road network serves production needs in core estate Road improvement (molasses) needed for waste management Clinic built to serve employees; access for others rests on ability to

pay

III. Findings: Social BenefitsWider spillovers: Evidence of social benefits / shared growth Unevenness of benefits:

i. Infrastructure investments driven by business needs more than social investment

ii. Economic spillovers disproportionately small relative to 50-year investment history

iii. Environmental consequences of expansion (water availability and rights in Lower Kafue Basin, waste treatment)

IV. Discussion Points1. Uneven terrain of social benefit (and cost): Who gets to decide

when an investment represents “shared growth”? And shared by whom? By what metrics?

2. What matters for specific groups is strongly shaped by context & experience (e.g. land tenure vs. control over land and business decisions; employment vs. health risks): Is it possible to identify “ideal conditions” for shared growth?

3. Shared growth in Zambia Sugar case is driven by 3rd party (largely public) investments: Does this constitute “socially inclusive” private investment, public-private partnership or public subsidy?

4. The material effects of “shared growth” discourse: Is the idea of “shared growth” more a driver than an outcome?

Documents

Model Development? Zambia Sugar and the Uneven Terrain of Social Benefit Laura German and Lowery Parker University of Georgia Annual World Bank Conference