# **5. LAND SUPPLY AND FARM SIZE EVOLUTION**

To assess how the above factors may affect the potential for emergence of large farms, they need to be related to endowments at the country level, in particular (i) growth of non-agricultural employment and the sector’s ability to productively absorb labor; (ii) availability of land that is potentially suitable for agricultural production in areas with very low population density that is currently not cultivated; and (iii) the extent to which gaps in provision of public goods or market imperfections may limit the ability of the agricultural sector to achieve its potential.

If little ‘new’ land is available for expansion, the only way in which large farms can be established is by obtaining land from existing operators, suggesting that, if markets work well, market transactions will determine farm size. On the other hand, if large areas of currently uncultivated land (i.e. not used for sedentary agriculture) could be brought under more intensive agricultural cultivation, large farms may help better utilize existing resources and, if agreements are fair and a regulatory framework is in place to prevent negative externalities, provide benefits to land owners and local communities. We use the typology as well as experience with actual land acquisitions to illustrate typical cases.

# **(a) Assessing land availability and the yield gap**

With stronger global markets for agricultural commodities, concerns about food security, and improved transportation, pressure on previously uncultivated lands that could be suited for crop cultivation is increasing. Typically, these are areas of low population density with important traditional uses for hunting and gathering, pastoralism, or low intensity agriculture (e.g., swidden farming systems in forest areas). In many of these, the scope for intensification of existing operations is limited. Labor supply through migration from other regions is likely to be inelastic in the short to medium term so that intensification of land use would require some mechanization and larger farm sizes. Trends towards larger operational units may be reinforced by high capital outlays to clear land or establish necessary infrastructure and the production of unfamiliar new crops which can place a premium on skills and entrepreneurship that may not be available locally.<sup>4</sup> To gauge how relevant this may be in practice, data on potential supply of land for rainfed cultivation is needed. We use the global agro-ecological zoning (GAEZ) methodology developed by the International

> 4 Historically these areas have been cultivated through **s** ettlements from more densely populated areas of the country or from abroad (e.g., North America and Australia). Settlement may be state supported or spontaneous in response to land pressures in the origin area. Large state-supported schemes were generally costly and less productive than expected as inexperienced farmers have to adjust to new crops and environments or nonfarmers attempt to learn farming (Kinsey and Binswanger 1993). Conflicts, with local land users have been common. Ethiopia’s resettlement program from high density highlands to the ‘virgin’ lowlands in the 1980s under the communist regime has been revamped in 2004-06 to resettle 600,000 people under strict guidelines. But, lack of respect for local rights was still a major source of conflict (Pankurst and Piguet 2009). 16