Quantifying Extent and Impact of Large Scale Land Transfers: Evidence from Malawi's Estate Sector
Fang Xia & Klaus Deininger
We combine data from complete computerization of all large leases in Malawi with satellite imagery and a geo-coded farm survey to document opportunities and challenges of land-based investment in novel ways. Our focus of analysis is on evolution and status of Malawi?s estate sector; type and intensity of land use by different types of estates; and impact of estates on nearby small farmers. We find that, with 1.5 mn. ha (of which some 140,000 ha are registered twice) area under estates is larger than previously estimated. Some 70% of agricultural leases expired, reducing tenure security and public revenue from lease fees. Remotely sensed imagery suggests that only 42% of estate land is under crops and less than 20% of estates crop more than two thirds of their land. Comparing production and yields between estates and smallholders using survey data also suggests that estates are less productive than smallholders. Small farmers cultivating on an estate (encroachers) are less likely to grow a second crop and use less irrigation or inputs, reducing yields but proximity to estates is associated with higher input use, suggesting positive spillovers. To prevent that the option to demarcate customary estates under the new Land Act will further exacerbate tenure insecurity, initiatives to this end will need to be preceded by efforts to clarify boundaries and the status of leases for existing estates.
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