Land and technology requirements for economically prosperous smallholder farming in sub-Saharan Africa: Evidence from Tanzania

Abstract

Making a living from a small farm is difficult in sub-Saharan Africa. In this paper, we quantify how difficult, using a simple, robust, relation between per capita daily income from farming (FPDI), land per capita and whole-farm net profitability per hectare. This relation allows the calculation of the land area required to generate various levels of household income as a function of farm performance. We use nationally representative household data for Tanzania to investigate the range of whole-farm profitability and to estimate an upper limit for it. For 6818 cases where households with land reported figures for gross crop and livestock revenues and for costs in any of the three years 2009, 2011 or 2013, actual median whole-farm net profitability was only $454/ha/y even without including the opportunity cost of family labour. When those were considered, median net profitability was negative $238/ha/y, i.e. a net loss. The maximum whole-farm profitability achieved was $4485/ha/y without family labour costs and $2742/ha/y with it. We evaluated actual and potential farm performance for their ability to generate a range of values of FPDI up to $10 per person per day. Most farms are not very profitable, particularly when household labour costs are considered, and few would be considered economically prosperous. Our analysis underscores the fact that improving their operations or adopting new technologies alone is unlikely to lift many smallholder farmers out of poverty in developing countries, given typical farm size distributions and reasonable assumptions about the realized economic returns to adoption of currently available agricultural technologies. While continued agricultural R&D investments are certainly worthwhile, such efforts alone will be insufficient to meaningfully address welfare needs of the world's rural poor. This suggests that agricultural development programs should expand their attention to incorporate off-farm and non-farm components of the rural economy.