TRENDS AND IMPACTS OF FOREIGN INVESTMENT IN DEVELOPING COUNTRY AGRICULTURE

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ZAMBIA Trends and impacts of foreign investment in developing country agriculture the outgrower would remain with something like ZMK15 000 000 (US$3 167.40). Income from the sale of sugar cane is variable and when the harvest is poor, or when there price is unfavourable, incomes can be much lower than stated here. In a situation where an outgrower fails to get enough income to sustain him/her for the rest of year, Kascol gives an “advance” (that is, a loan) of ZMK1 000 000 (US$211) to the farmer. The price of sugar cane is set by the Zambia Sugar Company, which takes into account several factors including the demand for sugar on the local and international market. Outgrowers also receive dividends from their equity stake in the company, although as discussed, this revenue stream has so far been used to repay a bank loan. As already mentioned, outgrowers tend to have higher incomes, better living conditions and greater self-satisfaction than wage labourers employed by Kascol. Besides income from sugar sales, each outgrower has about 0.5 hectares of farmland used for residence and for staple crop (maize) production for household consumption. Kascol’s mode of operation also impacts the livelihoods of local suppliers who provide agricultural inputs and operating materials directly to Kascol, and those who supply to the Zambia Sugar Company factory which mills Kascol cane into sugar. There are more men (73 percent) than women (27 percent) among the 160 outgrowers. Older farmers appear to dominate; the few youths that are involved are heirs who have taken over the estate from parents who have either died or are too old to farm. In the case of the MDC, the main direct livelihood contribution is through wage employment. Other avenues through which the MDC may have positively impacted on the livelihoods of local communities appear limited. Virtually all its inputs, other than unskilled labour, are sourced from outside Mpongwe District, and this implies that the low-income members of the surrounding communities do not participate in the value chain as suppliers of inputs. Additionally, all its products are sold to corporate customers outside Mpongwe District, so that the low-income members of the surrounding communities do not participate in the value chain as consumers of affordable products. 310 The comparison between the Kascol and MDC models suggests that a model in which low-income groups participate more in value creation (as shareholders and suppliers, as well as labourers) offers more potential for local livelihoods than models that are mainly centred on wage employment. Productivity, technology transfer and skills development Both businesses offer training, but only to those members of the communities that are directly involved in the production activities of the businesses. Kascol provides training to outgrowers in areas such as cane production, farm management and good citizenship. Workshops and seminars are also held on matters relating to the health of outgrowers (e.g. HIV/AIDS). The MDC/ETC BioEnergy only provides training to its workers. However, the company believes that some transfer of expertise takes place by employing local farmers as seasonal workers. It was not possible for this study to verify this claim. However, earlier research by the study author in the same areas found that smallholders who obtain occasional employment with the company tend to have a higher productivity than those who do not (FinScope MSME Study, 2008). 4.3 Impact on food security The impact of the cases studied on food security is difficult to quantify in the absence of data on production and price trends. However, since two of the key elements of food security are the availability of, and access to, food, it can be argued that both projects have had significant impacts on the food security situation of employees, outgrowers and urban dwellers. As noted elsewhere in this chapter, both projects have enabled sections of the low income groups to earn cash incomes. These incomes are used to buy food – and this constitutes access, which is an element of food security. The MDC’s contribution to food security in the nearby towns on the Copperbelt Province is significant. Though data on the MDC’s maize production is unavailable, we can gauge its contribution by
considering aggregate production data at the district level. In 1996/97, for instance, Ndola Rural District, where the MDC is located, 8 contributed about 80 percent of the total maize produced on the Copperbelt (Table 4). In other words, one district produced virtually all the maize crop in the province. Maize production estimates for 2004/2005 makes the contribution of MDC even clearer as the data is disaggregated by farmer category. The large-scale farmer category in Mpongwe District’s contribution to total maize production on the Copperbelt was 45 percent and this was the highest production level in the region (see Table 5). 4.4. Public revenues and public infrastructure development Kascol pays land fees (ground rent) to the Ministry of Lands. On average, the company pays ZMK130 million (about US$27 450.83 at an exchange rate of US$1 to ZMK4 735.74). The annual tax to the government by Kascol is about ZMK500 million (about US$105 580.12). The annual contribution to Water Board by Kascol is ZMK 68 million (US$ 14 358.90). Payments for ground rent, water rights and tax go the central government. The local authority receives 8 Since 2000, following a change in district names and boundaries, the MDC lies in Mpongwe District, as discussed throughout the chapter. TABLE 4 Maize production estimates, Copperbelt Province, 1996/97 Data Source: CSO Crop Forecast Surveys Part 4: Business models for agricultural investment: Impacts on local development about ZMK40 million (about US$8 446.41) for rates and billboards. Councils charge a fee for advertisements and other information displays by organizations on billboards in their districts. A breakdown of public revenues provided by Kascol in 2010 is presented in Figure 3. ETC BioEnergy, on the other hand, has an agreement with the Government of the Republic of Zambia – the Investment Protection and Protocol Agreement – whereby the company enjoys a tax holiday. This means that for the first three years of investment in Zambia (starting in 2007), ETC BioEnergy has been exempted from paying tax. ETC has, however, been paying ground rent and the latest figures are as shown in Table 6. ETC BioEnergy also pays annual water rights and the 2010 figure was ZMK43 442 000 (US$9 173.22). Figure 4 shows that the biggest proportion of ETC BioEnergy’s payments is for ground rent. The volume of water utilised by ETC is 102 000 m 3 / day. The cost of the water rights is calculated on the basis of water volumes as follows: Up to 500m 3 per day: ZMK5 000 (US$1.06) per day; For every m 3 above 500m 3 /day: ZMK2 (US$0.0004) per m 3 ; Charge for registration: ZMK2 000 (US$0.42). In comparison, Kascol, although the smaller of the two projects, contributes more to public District Expected production (mt) % Production Chililabombwe 2 876.76 5 Chingola 1 338.12 3 Kalulushi 1 725.21 3 Kitwe 496.08 1 Luanshya 2 006.28 4 Mufulira 2 249.28 4 Ndola Rural 42 410.34 80 Total 53 102.07 100 311 ZAMBIA
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TRENDS AND IMPACTS OF FOREIGN INVES
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Trends and impacts of foreign inves
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Acronyms ABRAF Brazilian Associatio
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EAC East African Community EC Execu
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JV Joint Venture Kascol Kaleya Smal
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PTF Privatization Trust Fund PTS Pe
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Foreword Large-scale international
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xvi Page 4. The business climate fo
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xviii Page 4. Investments by transn
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xx Page 7. Conclusions and recommen
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xxii Page SENEGAL: ASSESSING THE NA
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xxiv Page PART 5: SYNTHESIS OF FIND
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TANZANIA: ANALYSIS OF PRIVATE INVES
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ZAMBIA: INVESTMENT IN AGRICULTURAL
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xxx Page Table 4 Foreign investment
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xxxii Page Table 5 Additional tax b
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PART 4: BUSINESS MODELS FOR AGRICUL
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P A R T O N E INTRODUCTION
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1. Introduction 1 Foreign Direct
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FIGURE 2 Trends in FDI-African case
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FIGURE 6 Average annual growth in c
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FIGURE 9 Share of agriculture in to
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FIGURE 12 FDI flows to agriculture
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FIGURE 18 Agricultural Investment i
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Improving the business climate for
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BOX 1 A brief history of FDI in Bra
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BOX 2 TNCs and the Brazilian agrifo
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BOX 3 Monsanto Company Part 3: Poli
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BOX 5 International Paper Company P
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the same time, conserving natural r
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CHART 2 Factors that contributed to
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TABLE 3 Performance of Brazil for s
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BOX 6 Checklist for Foreign Direct
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factors that affect, lead to succes
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CHART 4 PROMECIF phases cycle Phase
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the priority indicators within thes
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73 rd in a total of 182 countries e
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Sutainable Development: Lessons fro
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World Bank. 2009. Awakening Africa
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TANZANIA Trends and impacts of fore
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: Foreign investment and agricultur
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the two data sources are compiled o
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survey (accounting to approximately
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Students are entitled to tuition fe
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Free Trade Agreement (TAFTA), was s
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Germany, Switzerland, United Kingdo
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FIGURE 1 Investment promotion polic
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percent of GDP in 2001considerably
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Philippines indicate their signific
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TABLE 4 Foreign investment approved
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TABLE 6 Export-oriented FDI in the
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followed by fisheries, livestock an
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FDI and employment The impact of FD
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TABLE 12 Employment generated by fo
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BOI investment promotion policy are
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National Food Institute of Thailand
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: Analysis of private investment in
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FIGURE 3 Value of planned foreign i
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TABLE 1 Investment incentives, Ugan
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TABLE 3 Summary of enterprises in c
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Over 95 percent of the total annual
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CHART 1 Uganda coffee value chain C
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CHART 2 Value chain of chrysanthemu
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CHART 3 Value chain for fish proces
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companies and fully owned subsidiar
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(a) the decreasing fish stocks and
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TABLE 5 Sources of investment finan
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Part 3: Policies for attracting FDI
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TABLE 6 Market destinations for sel
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BOX 9 Community services provided b
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BOX 10 Examples of environmental im
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contributed to opening internationa
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Websites 1. faostat.fao.org 2. htt
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Local impacts of selected foreign a
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linkages; unsecured land ownership;
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hectare and 1.5 tonnes per hectare,
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3.2 FDI in agriculture by nationali
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form of pure Korean ownership or pa
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of the discrepancies between CDC da
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TABLE 7 Distribution of ELCs by nat
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the country’s economy. It is ther
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on forest use 13 . Across the count
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The National Strategic Development
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team in December 2010 in the Kompon
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order to transport materials and wo
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other agricultural purposes, but la
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stream (one that is 20-30 m wide) a
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MAFF, prohibited the import of live
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7.5 NGOs/Civil society Local NGOs
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: business models in Ghanaian agri
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TABLE 3 FDI agricultural projects a
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Part 4: Business models for agricul
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level of foreign ownership for each
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land disputes, slowing and complica
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TABLE 6 Ease of doing business in G
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TABLE 8 Selected indicators of the
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estate and out-grower scheme for th
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vice-chairman, secretary, assistant
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are exported, 40 percent are sold t
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strong advocate of bush fire preven
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chiefs, irrespective of whose land
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The Assemblyman of Jimle, a locally
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TABLE 12 Key features of the Solar
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given the lengthy time frame involv
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ESD (Environmentally Sustainable De
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Large-scale agricultural investment
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Touré, 2009). So, agricultural mod
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the lineage holdings to one family
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BOX 2 Content of agricultural inves
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of largescale land acquisitions. 6
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percent); and students, undoubtedly
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BOX 4 The conclusions of the feasib
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Malians. Significant players includ
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out in the absence of strategic pla
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ESIAs. The mass influx of foreign i
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objectives, but the contract makes
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in the sugar sector. The aim was to
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stresses the government’s respons
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covering 857 hectares of land, plus
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Final remarks about project design
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As a result, activities to implemen
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and rural electrification (Agence M
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shareholders began to ask questions
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Page 375 and 376: the project. This situation increas
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Page 382: EDITED BY: Pascal Liu Suffyan Korom
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TRENDS AND IMPACTS OF FOREIGN INVESTMENT IN DEVELOPING COUNTRY AGRICULTURE

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