Increasing investment in agriculture is pivotal for achieving zero hunger (SDG1) and reducing poverty (SDG2). Around three quarters of the world's poor live in rural areas. In developing countries, the livelihood of most rural people derives from agriculture, especially smallholder farming families. By stimulating investments and innovation, inclusive growth can be fostered and this will help securing food and nutrition. Not only more investments are needed, but these investments should also be better by sustainably benefiting peoples' livelihoods, their environment and communities.

The perspectives of local communities and the smallholder farming families was examined through a series of interviews with farmers from communities located near the sites of Chinese investments in Mozambique (20 smallholder farming families, and 10 other stakeholders including public and private sector) and Tanzania (35 smallholder farming families, and 14 interviews with government officials and researchers). These farmers and their families have been farming for decades under customary tenure systems. Though the sample of interviewees is small, the answers of the farmers give an insight into the practical challenges they are facing, as well as showing the diversity of perspectives among smallholder farming families.

Contract farming is viewed as a means that does not involve any transfer of tenure rights. This means that smallholder farmers can be contracted to produce on their land for an investor without losing their land. Though this may safeguard their tenure rights, the obligations in the contract with the investor may lead to unfavourable consequences, especially in times of COVID-19. One smallholder producer in Mozambique, who is producing rice for a Chinese investor explained:

We work for six months. Our wages come at the end of the season (after six months). We have to take care of the rice. The company harvests using machines and then measures the kilograms we produced. Our wage is determined by the kilograms  we produced.

Another interviewee explained:

We are busy during six months taking care of rice, but then in the end we earn USD 274 or less than that. It is very difficult to subsist.

According to the farmers, the rice production is complicated because it requires specific attention involving sometimes work from sunrise to sunset in the field. This impedes the farmers doing other economic, political and/or social activities.

Employment opportunities for these smallholder producers are scarce. With no alternatives at hand, they continue to work the land to grow rice for the investor. To enhance their relationship with the Chinese investor, the smallholder farmers requested the government to sit down with the company to discuss how the contract farming conditions could be improved. They are asking the government because it has allowed the investor to acquire a DUAT, i.e. the Direito de Uso e Aproveitamento da Terra that provides the legal right in Mozambique to use and enjoy the land. Although several smallholder producers under contract arrangements have reservations concerning the contract farming model, others are pleased with the earned income that enabled them to step out from the poverty line. One smallholder producer explained:

Before I started working for the company I did not have this type of house [modern covered with zinc roof]. I used to sleep in the hut [grass-made house], my life has changed positively.

Based on an analysis of the interviewees, it was clear that those who benefited were often the ones that are close to, or belong to, the local elites. This group of farmers have motorbikes and modern houses, while others are still sleeping in grass huts and depend on remittances from their relatives. Furthermore, during the COVID-19 pandemic numbers of returning migrant workers increased posing an additional burden to the smallholder farming families because they need to be fed while incoming remittance dwindled. As one interviewee explained:

We are farming on a very small parcel of land, we do not produce enough food for ourselves to eat throughout the year. Now our children whom we did not expect to return for such a long time, it seems they have returned from South Africa to stay with us forever.

The smallholder farmers have changed their perspectives on the customary tenure system and their tenure security. A local smallholder producer elaborated:

I did not use to feel insecure on my land before the investor came here because this land belongs to my ancestors. We used to live here and produce here freely. However, when this company came here we started to feel fear. Now I have come to realize that I should have a DUAT to protect my land. The company is expanding the production area, if I do not have a DUAT, I may lose it.

Arrival of the investor changed the situation on the ground. A local smallholder producer elaborated:

I used to produce on five hectares of land. Within these hectares, I would intercrop maize with beans and on other small part with sweet potatoes. In one season, I used to fill up my granary of maize and I could put on the market part the beans and potatoes. Nowadays, it is very difficult. I remain with only 0.5 hectare for maize and other crops [the rest being used for rice cultivation]. I no longer have extra produce to sell. What I can afford is the produce we can consume and seeds for the next growing season.

As a result of the rice cultivation for the investor, not enough food is being produced throughout the year in this community in Mozambique. Therefore, some family members that lost land have devised several coping strategies. Most women are now opting to sell bananas along the national highways and in local markets, while men, mostly youth, are selling handicrafts products such as baskets and mats along the national highways and local markets. Others are engaged as wage labourers on the land of the investor, or on the land of local rich farmers.

In the COVID-19 pandemic, the situation in Mozambique and Tanzania aggravated because it negatively affected farmers who sell their produce on the markets. One smallholder farmer in Mozambique said:

As you can see here on my farmland, I have beans, maize and vegetables but due to this pandemic I do not know how I am going to put it on the market. The buyers are not coming.

Smallholder farmers in Tanzania faced a similar situation. One farmer and a member of an irrigation scheme said:

We have large stocks of rice from the previous season that we could not sell due to low prices of rice in the market. Before COVID-19 we used to have buyers from Kenya and Uganda, but this year because of COVID-19 we do not see them. We have loans from banks and other financial institutions, and we don’t know how we are going to pay them back if the government is not buying our rice.

Those farmers that were producing for the Chinese investor had to wait longer for their inputs because of disruption of transport channels. Technical assistance by the investor was hampered by travel restrictions making it difficult for technical experts to return from China to the host countries (i.e. Mozambique and Tanzania).

One villager working on an investor's farm in Tanzania said:

During planting period we waited for pesticides, tractor spare parts and fertilizer for about one month due to COVID-19 impact. Fortunately, we were doing weeding so we didn’t stop going to work.

In both countries, community members view the Chinese investments as beneficial to them and the country at large because they not only create jobs, but facilitate technology transfer through training/capacity development offered by the investors and/or demonstration centres. The technological know-how and exposure of farmers helps them to increase both their agricultural produce and income. A limited number of farmers feel that the investments are adding pressure to already land-scarce rural communities. Improved communication seems to be key to foster dialogue between communities, investor and government when circumstances are changing and challenging, as well as to execute the agricultural investment in true partnership thereby sustainably benefiting peoples' livelihoods, their environment and communities.

The remote field surveys in Mozambique and Tanzania were executed by the Tanzania Land Alliance (TALA) as part of the work stream on "Detailed studies of extraterritorial investments in agricultural land" under the GCP/INT/328/UK project. FAO would like to express its appreciation to the government of the United Kingdom of Great Britain and Northern Ireland (Department for International Development) for their support.

The article is related to the first phase of the extraterritorial investments work stream that resulted in the publication the document on Extraterritorial investments in agriculture in Africa: the perspectives of China and South Africa.