Smallholder Heterogeneity and Maize Market Participation in Southern and Eastern Africa: Implications for Investment Strategies to Increase Marketed Food Staple Supply

Policymakers in many African countries, and other parts of the world where a significant part of the rural population is poor and food insecure, face a two‐edged dilemma. On the one hand there is a need to increase the quantity of marketed food staple surpluses to feed a growing population, especially rapidly growing urban centers where unrest can be politically destabilizing. Many of these new urban consumers are very poor, arriving from the countryside with few skills and barely subsisting on informal sector daily earnings. At the same time they seek to reduce rural poverty rates which, since smallholders represent the bulk of the rural poor, means finding ways to increase smallholder incomes. Are these two objectives, increases in marketed supply of low‐cost staples and increases in smallholder incomes, in conflict with one another or are they complementary? The answer is very important for CAADP investment plans in Africa, and similar programs in other food insecure countries, that aim for sustained increases in marketed food production and rural economic growth. A number of African countries have recently sought to resolve the dilemma through large‐scale fertilizer subsidy programs to increase production, often coupled with purchases of a large part of the marketed surplus by state‐run marketing boards to avoid price collapses. There is growing evidence that such programs are not sustainable from a fiscal perspective, and have little enduring benefit for either urban consumers or rural smallholders. The evidence presented in this paper suggests that there are alternative ways to invest these resources that will lead to sustainable outcomes, recognizing that safety nets for poor urban consumers and food insecure rural households will continue to be needed in the near term to alleviate suffering and safeguard political stability until they bear fruit (an area addressed by CAADP's Pillar 3). We examine the question how to achieve increases in marketed surplus and improve smallholder incomes for the case of maize, Africa's most widely marketed cereal food staple, using nationally representative smallholder panel data sets for Kenya, Mozambique and Zambia. Across these three countries there is a wide range of market access as conventionally measured by distance to a tarmac road or an input dealer. In Kenya, for example, a smallholder farmer need travel just 3 km on average to purchase from a fertilizer retailer, compared to 37km in Zambia and almost 70km in Mozambique. Within countries there is again wide variation in …