The Quiet Rise of Large-Scale Trading Firms in East and Southern Africa

The share of smallholder-produced maize sold to large-scale traders (LSTs) has increased from virtually nil 10 years ago to 12 per cent and 37 per cent in Zambia and Kenya, respectively. We examine the causes and consequences of this transformation. LST investment has responded to growing market demand as well as to changes in farm structure and has been especially prominent in areas where medium-scale farms are concentrated. After controlling for distances travelled and other factors, farmers selling to LSTs receive prices that are 4.9 per cent and 3.6 per cent higher than those offered by small-scale traders, and are more likely to access input credit, private extension services, and price information.