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An evolution in the middle: Examining the rise of multinational investment in smallholder grain trading in Zambia

Year of publication 2016

Pages 27 p.

Author Sitko, J. N.;Tschirley, D.;Chisanga, B.

Publisher FAO ;

Product type Meeting

Edition 1

Synopsis (short abstract) African agrifood systems are being transformed by multinational capital. To date, research on this transformation has focused most intently on the rise of supermarkets and demand for African land. Multinational investment in African grain trading has received less attention. Using a range of qualitative methods and representative household survey data from Zambia, this article seeks to understand the causes and consequences of multinational investment in smallholder grain markets. We show that m ultinational investment into smallholder grain and oilseed trading grew substantially between 2012 and 2015. This has been driven by a range of important supply and demand factors, most notably transformations in downstream markets and stable macro-economic conditions. These are highly sensitive to change and highlight the fragility of this investment wave. The expansion of multinational investment has coincided with a drop in margins between farm-gate and wholesale prices. Moreover, these firms appear to be altering the structure and conduct of grain markets in beneficial ways, including expanding the range of services provided to farmers and increasing perceived levels of trust in private market by farmers. However, prices paid to farmers by these firms are lower than traditional small-scale market channels, ceteris paribus.

Meeting Session Number 19-20 September 2016

Language English

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    Book (series)
    International grain reserves and other instruments to address volatility in grain markets
    Working paper presented at the World Grain Forum 2009 St. Petersburg/Russian Federation, 6-7 June 2009
    2013
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    The dramatic rise in global food prices in 2007/08 was widely viewed as a threat to global food and nutrition security that endangered millions of the world’s poorest and most vulnerable. It has also brought political instability to some countries and the prospect of unrest to many more. The rapid increase in world food prices was caused by a combination of cumulative effects of long-term trends, more recent supply and demand dynamics, and (governmental) responses that have exacerbated price volatility. This crisis has exposed existing and potential weaknesses and vulnerabilities of households, governments, and the international system to food and nutrition insecurity. The international community has responded with a range of initiatives and established instruments to assist the neediest nations. Major stakeholders worldwide continue to discuss potential instruments to address the recent food crisis and to prevent or reduce the impact of future crises. Besides a gricultural productivity improvement and national food self-sufficiency targets, physical grain stocks (“humanitarian food reserves”) have resurfaced in these discussions. And more recently, the idea of “a ‘virtual’ internationally coordinated reserve system for humanitarian purposes”—first mentioned in the G8 Leaders’ Statement on Global Food Security at the Hokkaido Toyako Summit on July 8, 2008—was added to the debate. In conjunction with the St. Petersburg International Economic Forum, the Russian Federation will host, on June 6 and 7, 2009, the World Grain Forum 2009. During the Forum, which intends to shape a common vision of issues facing global food (grain) security and to inform future G8/G20 meetings, high-level discussions are expected to cover—inter alia—global grain production and marketing, food aid programs, new challenges of world trade in grain, and mechanisms for the stabilization of grain markets including an international grain reserve.In vie w of the controversies surrounding the topic of grain stocks and other instruments to reduce price volatility in (food) commodity markets, and at the request of the Organizing Committee of the World Grain Forum 2009, The World Bank (WB), the Food and Agriculture Organization of the United Nations (FAO) and the European Bank for Reconstruction and Development (EBRD) (the three sponsoring organizations) have commissioned the present working paper on international grain reserves and oth er instruments to address volatility in grain markets. The purpose of this paper is to inform international debates on the occasion of the World Grain Forum 2009 on issues and options related to price volatility in (food) commodity markets with special reference to international grain reserves.
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