Inclusive Businesses and Land Reform: Corporatization or Transformation?

Abstract

Abstract:Inclusive businesses (IBs), embodying partnerships between commercial agribusinesses and smallholder farmers/low-income communities, are considered to contribute towards rural development and agricultural sector transformation. Structured as complex organizational set-ups consisting of, and overcoming the limitations of, standard inclusive instruments (collective organization, mentorship, supply contract, lease/management contract and equity), they allow for the inclusion of smallholders and low-income communities into commercial agricultural value chains. IBs are a way for governments to engage private agribusinesses in agricultural and rural policies. However, will the commercial sector, through IB partnerships, contribute towards the government's transformation and developmental objectives? Based on case studies in South Africa-a country engaged in land and agrarian reforms-the effects of IBs at the project level appear positive, illustrated by an increase in production and growth in agricultural assets. However, individual beneficiaries experience only a marginal change in income and livelihoods. Whereas land reform, project development and market integration are generally achieved, the transformation and beneficiary development objectives are compromised. Although commercial agribusinesses contribute to investment needs in the sector and smallholder exposure to commercial markets, IB partnerships allow commercial entities control over the smallholders' assets. Ownership and secure rights, especially of land, and support of external parties to capacitate beneficiaries and adjust power asymmetries, are essential starting points. Without these aspects, IBs will not lead to effective transformation and development.

Inclusiveness revisited: Assessing inclusive businesses in South African agriculture

“…The most significant benefit seems to come from gaining market access for beneficiaries who (initially) are not able to operate independently. Conversely, the commercial partner is able to control the IB, prioritising the business aspect over the developmental facet of the partnership (Chamberlain & Anseeuw, 2018).…”

“…There is no additional asset base beyond land that allows smallholders to enter onto a path to accumulation, which questions the potential for IBs to drive development. Indeed, ownership needs to be combined with effective capacitation of the beneficiaries, and the commercial partner needs to take cognisance of the need for shortterm financial rewards for these beneficiaries (Chamberlain & Anseeuw, 2018).…”

“…The result is that, despite ownership over resources, the smallholders are denied control over these assets (Béné, 2003;Fréguin-Gresh & Anseeuw, 2014). Insufficient beneficiary empowerment places a question mark over the long-term ability of the beneficiaries to become independent players with increased participation in the agricultural sector, and hence the attainment of true transformation of the primary agricultural production structure as envisaged by the South African government (Chamberlain & Anseeuw, 2018).…”

Land Inequality Trends and Drivers

“…Even those promoting value chains have found that they are not effective in reaching the poorest, as they tend to involve farmers who already have more assets and education [127,129,130]. Independent studies have found that incorporation into global markets happens on very unequal terms and can have extremely adverse consequences for farmers and workers [80,[131][132][133] and risk undermining the local and territorial markets that most farmers already sell to and where most food is traded [39,106]. The core issue is the very unequal power relations involved, which lead to more dependency and inequality, typically transforming peasants into workers on their own land by subordinating them to "the dominant frameworks of global agribusiness and capital accumulation" [134], p.21.…”

The Potential Supply and Demand of Farmers’ Land Contract Rights-Based on 697 Households in Four Provinces of China

“…Guo and Zhang supposed that the lack of an LCR payout mechanism is not conducive to either realizing the land rights of farmers settled in cities or the advancement of urbanization, and the inequality of new land rights could cause social conflicts [13]. Chamberlain's research proved that the reform of the land property rights system and the stability of farmers' property rights in South Africa contributed to the success of inclusive businesses [14].…”