# **2. Background and justification**

A key obstacle to a more evidence-based and rational debate on large land-based investment has been the difficulty of obtaining systematic data to document large land transfers and measuring farms’ performance. We describe how absence of such information has made large farm transfers a politically highly contested issue in Malawi, where a policy to establish estates as a driver of rural change that was adopted in the 1980s was quickly stopped and led to protracted policy debate that resulted in the 2016 passage of a Land Bill, though regulations and implementation arrangements remain to be drafted.

# **2.1 The challenge of assessing large farm performance**

Almost a decade after concerns about large scale agricultural investment first appeared in the literature, there seems agreement that, beyond any direct benefits, e.g. in terms of lease fees, transfer of land to investors has the potential to generate positive indirect effects (Collier and Venables 2012). Such effects may be realized by ‘pioneer investors’ helping with discovery of agro-ecological suitability and provision of access to technology and markets for credit, input, labor, and output for local smallholders. The desire to harness such effects led to formation of agricultural investment promotion agencies all over the world.

In African countries with often large land areas not all of which is deemed to be fully utilized,<sup>1</sup> low quality and weak maintenance of analog records, weak technical capacity, and lack of transparency often limited the ability to satisfy conditions to generate benefits (Deininger and Byerlee 2011). This may result in uncoordinated or poorly recorded land transfers, weak or non-existent business plans and a promotion of speculators and urban elites (Sitko and Jayne 2014 ; Jayne _et al_ . 2016) rather than pioneers. Together with the high risk of such investments (Tyler and Dixie 2013), this often dashed high expectations. It also created a danger of unsuccessful investors trying to use political channels to affect factor prices, e.g., by trying to keep down labor cost or constrain access to capital, with potentially unfavorable long-term consequences.<sup>2</sup> Yet, although a large number of studies assessing the impact of specific investments now available provide valuable insights regarding the dynamics of establishment and performance of large farms in specific cases, the extent to which these are representative of the sector at large is difficult to ascertain. Addressing this issue would require dealing with two issues. First, data on the universe of land transfers are needed to avoid that results are due to sample or case selection.<sup>3</sup> Second, to be able to assess how policies affect outcomes,

> 1 Most of the land available for expansion in Africa is concentrated in few countries (Deininger and Byerlee 2012), with poor access to infrastructure and low levels of profitability (Chamberlin _et al._ 2014), and often also weak governance (Arezki _et al._ 2015).

> 2 The importance of this issue is demonstrated by the many historical examples where accumulation of large tracts of land by large but relatively inefficient farms led to rent-seeking behavior and, using their locally dominant position, to monopolize input or output markets (Binswanger _et al._ 1995), subvert provision of public goods such as education (Nugent and Robinson 2010; Vollrath 2009), undermine financial sector development (Rajan and Ramcharan 2011), or restrict political participation (Baland and Robinson 2008).

> 3 If only one agency can transfer land and records are good, a complete transaction record is sufficient. If multiple agencies are involved, a fieldbased sample frame, ideally constructed and maintained by the national statistical agency is needed.Ali _et al._ (2017) illustrate this for Ethiopia.

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