The Future of Zambian Agriculture

It seems simple enough: dried white maize, first pounded in a large wooden mortar, and later boiled in water over coals and then carefully stirred until the consistency is a thick paste. The result — known as “nshima” in most Zambian dialects — is the staple food to end all staple foods. In Zambia a meal without nshima is considered no meal at all. Indeed, the country has the highest maize consumption in the world — nearly sixty percent of the calories of an average Zambian come from corn in the form of nshima.[1] A full 85% of Zambians are subsistence farmers[2] and in a nation where peacefully democratic elections have now taken hold[3] the power of this enormous voting block cannot be ignored. It is no wonder, then, that Zambians are fond of couching the crop’s importance in drastic terms. “Maize is a political crop,” several professors of agriculture at the University of Zambia (UNZA) told me during a recent visit to Zambia. It is this politicized character that strips nshima of its simplicity as merely a beloved cornmeal and positions it squarely at the center of Zambia’s political and economic fortunes in the coming decade.

It took the countries of Western Europe 150 years to move from agriculture to industry. The United States did it in less than one hundred. The Asian tigers cut this timeline in half, and now many of the countries of Sub-Saharan Africa, including Zambia, are trying to improve further still on this remarkable progress, attempting to bride the gap from economically developing to developed nation in record time.

It is not simply that economic development brings with it increased cachet in some imagined global popularity contest. To be sure, a strong economy can lead to improved political standing and influence, but more importantly for poor countries like Zambia, industrialization brings with it vast improvements in the material well-being of its citizens: a boost to income, higher quality education, improved healthcare, better and safer jobs, more robust infrastructure, and so on.

It’s easy to mistakenly think that Zambia is well on its way to this new economic paradigm. In 2011 the country was featured as a case study in Steven Radelet’s Emerging Africa: How 17 Countries are Leading the Way.  Real GDP growth has hovered over 5% annually since 2000, and HIV adult prevalence has dropped from one in five adults in the late 1990s[4] to a much-improved 13.5% by 2011[5]. Between 2003 and 2007 malnutrition for children under 5 declined from just over 23% to under 15%.[6] Contraceptive use among prime-aged women (those between 15 and 49 years of age) nearly doubled from 22% in 1999 to almost 41% by 2007.[7] The country has also seen steady improvement in measures as diverse as school enrolment and price inflation, and Chinese investment has recently flooded Zambia’s Copperbelt region.

But to highlight these improvements is to ignore the obvious challenges that lay ahead. Just as statistics can build up Zambia, they can also tear it down. The country ranks 207th in the world in life expectancy at birth, sixth in the world in the rate of HIV infection and tenth in deaths (despite its improvement since the 1990s)[8]. It ranks 23rd in infant mortality[9] and despite improved use of contraception its birthrate is still remarkably high at 43 births per 1,000 people[10], placing it forth in the world. There is just one physician for every 18,000 people[11]. The World Economic Forum ranked Zambia’s infrastructure a meager 2.8 out of 7 in its 2012 profile of the country’s business competitiveness.[12]

Whatever the details, membership in the group of industrialized nations will necessarily involve Zambia moving away from smallholder farming to a system of large-scale agribusiness. To truly become an industrialized country while sidestepping large-scale commercial agriculture is not only a contradiction in terms, but would make Zambia a historical anomaly among developed nations. Nevertheless, in a country where maize is a political crop, a move away from small household farms is a transition that many in Zambia still find uncomfortable.

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I’m sitting in the office of Obed Luwgu, a professor of agriculture at UNZA and an expert in soil management. He’s regaling me with agricultural anecdotes, stressing the importance of the Zambian context. “When was this?” I ask in amazement. “This must have been in the early nineties,” Luwgu responds. He’s just finished telling me a tragic story about the power of culture in Zambia. “There was a drought,” he began. “During this time there was no food, people were starving. The international community, they decided to send maize for the people to eat. You know, in Zambia we eat white maize, but what was sent was yellow.” Even Luwgu seems amazed at what he is about to tell me. “The people wouldn’t eat it.” “Wait,” I say, trying to wrap my head around the tragic conclusion, “people were starving, but wouldn’t eat the maize because it was yellow?” “That’s right. Zambians, we like our nshima to be very white. And the nshima made with this corn, it was yellow, so the people wouldn’t eat it.” Hold in your mind, if you can, a culture so powerful that some people would rather starve than eat off-colored cornmeal.

Culture, in fact, is the oft-forgotten part of economic development, one economists are only now coming to grips with. The long history of the “misadventures in the tropics,” as economist William Easterly has termed it, is riddled with policy failures, oversights, and bad economics — nearly all of which came as American and Western European aid organizations struggled with the age old question Adam Smith first identified almost two-hundred and fifty years ago: how can we make poor countries rich? This is not to say that poor countries themselves have not misbehaved during this time of economic experimentation — a long list of dictatorships, state-sponsored human rights abuses, and a poor understanding of fundamental economics more generally demonstrates otherwise. It is simply to say that for much of the past five decades the West has done little to remedy the situation — and in some cases actually made matters worse — despite their instance that the intellectual fad of the day had unearthed the true formula for robust economic growth, which need only be applied mechanically to every undeveloped nation in order to lift billions out of poverty.

The most recent economic incarnation, however, may be more than mere intellectual exuberance. It incorporates two necessary, but long-absent ingredients: culture and institutions. Culture is the otherwise nameless power embodied by Obed’s white-nshima-or-starve mentality, but it also covers a great many other social norms concerning family, social interaction, marriage, group behavior, and so on.

Institutions, meanwhile, are the overarching set of formal and informal rules and norms of which culture is a part. Perhaps it is best to think of institutions as “the rules of the game” and individuals and organizations as the “players” in that game. “The world is socially constructed,” the sociologists are found of saying; economists have used the slightly different language of culture and institutions to define this same sociological truth. And this new theoretical framework has proved very powerful at beginning to explain the complex issues of development.

It is clear, for instance, that property rights are one of the most important institutions in Zambia today. In general, the property rights individuals have over their land and personal belongings is key to providing incentives for personal investment — why spend time making long-term investments in my property if it could be taken away at any moment? In Zambia in particular this fact is embodied in the traditional land tenure system.

Obed tells me just such a story to drive the importance of property rights home, one about his grandfather returning to Zambia after five decades spent living in Zimbabwe. “When he returned he went to his old village, which now had a new chief whom he did not know. He went to this chief. ‘Oh I use to live here, between this tree and that one,’” Obed says while pointing at the imaginary landmarks. “And the chief just gave my grandfather the land back no problem. The people living there were forced to move.”

Such traditional land rights account for approximately 95% of land in Zambia, with the remaining 5% owned by the government.[13] By law, it is possible to receive a 99-year lease from local chiefs, which affords greater legal protection, but in practice such accommodations are rarely given to anyone but wealthy foreigners. Because they are politically powerful — presidents routinely make visits to ask for the chiefs’ support leading up to elections — rules about their power are slow to change.

Besides diminishing incentives for investment the traditional land tenure system also takes away a vital financial asset from poor farmers. With a title comes ownership and with ownership comes a great many opportunities. Land rental and land sell are two common ways to create an income stream in many developed countries, for instance, but land can also act as collateral in exchange for bank credit. A skilled farmer could use a bank loan to buy new machinery, fertilizer, or improved seed varieties and increase his crop yield, vaulting the gap between smallholder farmer and agricultural entrepreneur. As it stands, the banking sector in Zambia is dismal. A 2005 World Bank report found that only .37% of the population in Zambia has a loan. There were only 152 total bank branches nationwide and even private business paid an annual real interest rate of 28%.[14]

Without access to capital farmers in Zambia today are reduced to using hand tools or, if they are lucky, oxen to help plow fields. In this respect, as in many others we will soon see, a life based on nshima is hard work indeed.

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There is some irony in the fact that what has become a centerpiece of Zambian culture — maize — was itself a product of colonialism. The crop was introduced to West Africa after 1500, but did not penetrate southern Africa until after 1650.[15] Each of the five primary varieties of maize — sweet, pop, floury, flint, and dint — took hold in Africa to varying extents and in different locals depending on which type was imported by the colonizers of that region, the soil and climate conditions of particular African geographies, and the sensibilities of the native peoples.[16] Indeed, it was often Africans themselves who took to maize and, while first only supplementing local crops, incorporated into their diets more predominately as time passed.[17] In southern Africa it was flint maize that first spread before later being supplanted by the American white dent known as “Hickory King.”[18] Hickory King was introduced following the completion of the railway at Kimberly in 1885 after diamonds were first discovered there in 1867.[19] This new type of maize was more tolerant of poor soil and produced higher yields than previous varieties.[20] Here, maize eventually came to all but replace foods like cassava, millet, and sorghum in the diets of southern Africans. In Zambia in particular, a usual diet consists of nshima, a leafy green called “rape,” sometimes chicken, perhaps supplemented by groundnuts (peanuts).

One late-August evening in a village near the town of Katete I had the opportunity to see nshima prepared from scratch first hand. Benson Banda, the head gardener at the Tikondane community center, had extended an invitation. A half-hour ox-cart ride down a rutted dirt road with thick bushes on either side eventually gave way to a clearing, finally exposing Benson’s village Kachipu. When I arrived, Benson’s wife Agnes had already gathered a small group of women and begun the first steps of preparation.

The steps are easy, but the techniques are not. One step, used to separate small pieces of chaff debris from the pure ground corn, involves swirling the pounded maize in a circular sieve until the debris ever so slightly separates outward toward the edge. A quick flip of the left wrist and the corn, along with the debris, are airborne for just a tenth of a second, long enough for the right hand to fly in open palmed, carving a careful arc that allows a purge of the debris while leaving the ground corn to fall safely back to the sieve.

Apart from a seven-year stint in the city, Benson has lived in the same 300-person village his entire life. As he showed us around he pointed out the site of his childhood neighbor and the tree he use to play under. “We lived next to the chief when I was a child,” he said proudly, pointing to an area now used as a roost. Though not tall, Benson has a smile fit for a man who stands fifty feet.  He is shy by disposition; if he has ever raised his voice it doesn’t show. Instead, he speaks with a calm quiet that requires an intimate lean in his direction. “Hello?” he says softly if he wants you to repeat yourself. You heard it often, only second in frequency to his favorite word: a soft “sure” followed by a little chuckle.

Benson told me he has always had a natural affinity for gardening. He first learned it at the age of 13 from several United States agriculture teachers that were brought to Zambia as part of a government program. He was the best in the class and often enjoyed the fruits –- figuratively and literally — of his labor. “Yes, they use to let some of us take our vegetables home,” he said with a nostalgic smile.

But the economic success that has accompanied his mastery of gardening has not come without notice. Though living by modest means by Western standards, Benson is clearly the richest man in his village; his wealth easily surpasses that of his headman (local chief). With wealth, however, comes jealousy. Last year alone Benson had a large portion of his maize supply stolen and his garden was set on fire. This is the insecurity of smallholder farming.

Watching Benson and his wife prepare nshima could cause one to fall victim to romantic visions of a rugged self-sufficiency. Facebook founder Mark Zuckerberg famously made it his new years resolution in 2011 to only “eat what he could kill.”[21] While Zuckerberg’s goal was a sort of forced vegetarianism, the idea of getting back to the roots of one’s food source, and indeed land and nature itself, seems to be becoming increasingly popular throughout the developed world — a sort of nostalgia for an old-word traditionalism that harkens back to the days of a simpler life. Though the life of a subsistence farmer is difficult to be sure, just as surely it seems that a glass-half-full assessment would give some credence to the simplicity of it all: cultivating crops by hand, harvesting them, and then cooking them over an open flame — almost like a type of perpetual camping.

The reality, however, is much more nefarious. Even the seemingly harmless act of preparing nshima can itself be deadly. In traditional Zambian cooking, pots with ground maize and water are boiled over simple brick ovens that take charcoal as fuel. According to the World Health Organization almost two million people die annually from indoor air pollution attributable to solid fuel use.[22] Surprisingly, the biggest cause of death among children under five in the developing world is pneumonia and half of these deaths are also caused by indoor burning. All told, smoke inhalation from indoor fuel is the tenth leading risk for mortality worldwide, and sixth in low-income countries.[23] To put death from indoor air pollution in perspective, only a third as many — 700,000 — people die annually from malaria.[24]

The repercussions go far beyond health, however. According to a report from MIT’s D-Lab, up to 25% of a family’s income can be spent on collecting firewood (compare this with just one percent of income spent on fuel among the poor in the United States).[25]

And the collection of firewood comes at an environmental cost as well. “About ten years ago is when I noticed the forests thinning,” Evans Graph, my guide through much of Zambia told me one day as we were driving through the Eastern Province. Indeed, the United Nations estimated in a recent report that deforestation levels in Zambia stand at between 250 and 300 thousand hectors per year.[26] Among the “ultimate drivers” the report identified are “agricultural expansion, charcoal production, and fuelwood collection. Deforestation and indoor air pollution are not the only forces of nature that threaten smallholder maize farming, however; wildlife attacks are rampant throughout much of Sub-Saharan Africa.

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Standing in the small natural history museum of Chipembele it’s hard to imagine it was put together as a hobby; nearly every item in the museum just outside of the town of Mfuwe was scavenged on day trips to the nearby South Luangwa National Park. A spread of local baskets on a long wooden table each hold a handful of seeds from a different local tree. One table over are the scat of two dozen local wildlife. To the left foul feathers are tacked in pairs on a wooden display board. Round a corner, look to the floor, and a line of animal skulls sit proudly. They’re all there: hippo, croc, impala. A small elephant skull on a nearby stand completes the set. All along the walls are informational posters detailing the tracks of animals, their history, and the specifics of Eastern Zambia flora.

Long before Steve and Anna Tolan retired as officers from the Oxford police force they had dreamed of creating a conservation organization. Chipembele is that dream realized. One day after giving me a tour of their small education center attached to the museum Steve sliped me a half-sheet of paper. At the top he’s written “Therapsids,” an ancient group of mammal-like reptiles I had asked him about earlier in the day. There are nearly a dozen different species Steve has written down. “If you want to learn more about the reptiles I told you about you should check these out on the internet,” he told me.

Steve’s interest in a niche group of long extinct pseudo-reptiles may seem strange until you realize he’s a strong contender for the title of Most Interesting Man in the World. After moving to Zambia in 1998, and quickly nearing fifty, Steve thought it would be a good idea to try his hand at construction. So with no previous experience he designed and built a Street of Dreams-style home, gathering many of the stones that complete the exterior wall by hand from the nearby forest. The interior is finished with impressive tribal memorabilia and a collection of wildlife skulls that includes one of the biggest crocodile heads in the world. Five years ago, after a friend expressed interest in studying rare leucitic Yellow Baboons — those with severely reduced pigmentation — Steve promptly marched out into the national park and photographed a baby baboon with just this condition.[27] The photo was later featured in National Geographic along with the research report his friend completed after Steve’s photo helped him secure grant funding. One of Steve’s favorite pastimes is arresting poachers, which he does by venturing deep into the park on foot to stay as silent as possible. He’s one of only a handful of foreign Zambian Wildlife Authority (ZAWA) marshals allowed to make such arrests. Meanwhile, Bulu, Steve’s Jack Russell terrier, having survived run-ins with lions, poisonous snakes, and crocodiles, had his life profiled in the aptly titled book Bulu: An African Wonder Dog.

And then there is his Therapsids obsession. “God, just don’t ask about the fossils,” Steve’s close friend and my guide Karen Beattie jokingly cautioned me as we drove to the Tolan’s property from the headquarters of her own non-profit Project Luangwa, “he’ll never stop talking.” Indeed, Steve’s passion for this specialized subfield of archeology is staggering. Though he has no formal education in the subject, Steve has become a renowned expert in the ancient remains of the reptile-like creatures, working with researchers from around the world. Many of his findings have been written up in leading archeology journals.

But it is wildlife education that has kept the Tolans in Zambia. They are trying desperately to bring harmony to an age-old fight between wildlife and farmers.  Safaris are a part of southern African life, but a truth little known to the Westerners who frequent safari lodges is that the same precious wildlife they have come thousands of miles to see in national parks are, perhaps that very evening, venturing several miles out of the parks, terrorizing villagers in surrounding communities.

This fact is so misunderstood that in his satirical piece How to Write About Africa Kenyan author Binyavanga Wainaina admonishes that while African people should be portrayed as starving and naked, African fauna must be treated with an exalted dignity. “Animals, on the other hand, must be treated as well rounded, complex characters,” he wrote. “They speak (or grunt while tossing their manes proudly) and have names, ambitions and desires. They also have family values: see how lions teach their children? Elephants are caring, and are good feminists or dignified patriarchs…Elephants may attack people’s property, destroy their crops, and even kill them. Always take the side of the elephant.”

As it stands, children in Mfuwe grow up both fearing and hating the local wildlife. The very reliance on nshima, and the maize necessary to produce it, means that an elephant or hippo destroying a smallholder’s maize field isn’t just devastating, it can be deadly. No maize means no nshima — not just for a few days, but possibly the entire season. A single elephant can destroy up to seventy-five percent of a typical field in a single night.[28]

“Hippos come at night and eat the crops,” said sixty-five year old Mfuwe resident Emily Njobvu, speaking through a translator. “We scare them away with maize husks set on fire,” she told me. Elephants too are a problem she said later and while she and her family are able to scare them away temporarily using cornhusk fires “they always come back” she concluded. Njobvu admitted it was very tiresome to constantly battle wildlife.

This battle reveals yet another difficulty with smallholder farming. Just as Benson discovered that unsecure farmland can make one vulnerable to the attacks of jealous neighbors, Emily’s story shows how a life spent cultivating maize is one that is under constant threat from the vagaries of nature.

In recent years, however, several Mfuwe-based NGOs have turned to focusing on the human-wildlife conflict, encouraging Zambians to see wildlife in a new light: not simply as a threat to their smallholder maize farms, but as a draw for wealthy Westerners that could prove to be a boon for poor Zambians in the east.

The Tolans are among those that believe tourism could save Mfuwe and that, despite the obvious harm done by elephants and hippos, there is still a moral and economic imperative to wildlife conservation. Toward these ends, the Tolans have begun promoting unique alternatives. One such method is the erecting of so-called chili fences, which can be constructed with moderately priced supplies: timber poles spaced two feet apart and spanned by cloth dipped in a mixture of dried, crushed chili, used motor oil, and elephant dung. However, the fences need fortnight maintenance and add labor to the already burdensome endeavor of smallholder farming, and in practice the fences aren’t always effective.

For now the Tolans are fighting an uphill battle. Safari lodges employ a small coterie of Zambians, but the wealth attracted to the park has yet to trickle down — or out — of the National Park lodges. Chili fences, meanwhile, are still uncommon in Mfuwe and at present the human-wildlife conflict continues. While in Mfuwe I heard several stories of elephant destruction in the past year; one case was so severe that ZAWA rangers were forced to kill the offending elephant and sell its meat in order to reimburse the farmer for destroyed maize.

Nevertheless, some in Zambia hold out hope that the tourism model can in time lift Mfuwe out of poverty. One such figure is Charles Banda, Eastern Province Minister. In late September of 2012 he made a surprise visit to the 290-billion-kwacha road being paved from Mfuwe to Eastern Province hub Chipata that is expected to be completed next year.[29] During the visit he urged construction to continue on schedule and stressed the road’s importance to increased tourism and economic progress. Improving infrastructure generally, and access to Mfuwe in particular, could be an important step to encouraging trade between Mfuwe and its wealthier, more industrialized neighbors. The question is whether increased tourism to the park will improve the prospects of everyday Mfuweians, and that question won’t be answered until the project is completed in 2013.

One man already laying the groundwork to support an increased boom when it finally does arrive is newspaperman turned social entrepreneur Will Colston. After spending much of his life editing for some of the biggest names in U.S. news — the New York Times, the Chicago Tribune, and the LA Times — Colston turned his sights east, moving to Zambia to settle down for good. He now manages the Kenneth Kaunda Center for Practical Agriculture in Mfuwe.

Under Colston’s leadership the center has undertaken the novel approach of providing fresh produce directly to the national park safari lodges, circumventing a current delivery system that has tomatoes, carrots, and other common produce sent from as far away as Spain. “I thought that was ridiculous,” Colston said during an interview at the center. “If we could get these people to diversify away from maize — just set aside a small part of their land to start a garden — they could grow that produce right here and send it thirty minutes down the road to the lodges.”

Colston’s model is simple. The center first allots fruit and vegetable seeds free of charge to local community members. Farmers set aside a portion of their farmland normally reserved for maize and instead create a small vegetable garden. Once or twice a week participants meet up at the center and turn in their produce. So far only a small number of farmers in Mfuwe are participating in the project, but Colston hopes to see the program grow.

To date one lodge, Flatdogs, has a standing order, which amounts to only a large crate or two of produce per week. In exchange, Colston turns one hundred percent of the revenue over to the farmers themselves. The center is funded by Colston’s own savings to the tune of $75,000 per year (though the center runs several other programs in addition to supplying lodges), which demonstrates his enormous personal and financial dedication to the center.

Though Colston is bullish on the idea, and on smallholder farming in general, the project has been fraught with difficulty; in fact, at times it seems as though the program is working almost too well. So much produce is being cultivated that a surplus has accumulated, more than Flatdogs is willing to purchase on a weekly basis. What’s more, having seen how successful selling to the lodges can be, a few local farmers are taking their goods directly to the lodges, undermining Colston’s attempts to expand. Finally, revenue from Flatdogs is distributed equitably, but this is only frustrating those who feel their produce is of higher quality and should demand a premium. “It’s difficult,” Colston says simply when asked about the process of deciding who will bring what produce over the course of a week and how the resulting revenue will be divided.

When I bring up the idea that Zambia will have to turn to commercial agriculture eventually, Colston responded thoughtfully: “I think that’s right. But right now the country is not set up for that. The people need jobs or else how are they going to buy the commercially produced agricultural products? Right now the only thing they know how to do is farm.”

Here it’s hard to argue with him. “How can we possibly extricate rural farmers from the infrastructure required to carry their goods to market, or government regulation from the creation of that market, or education from job prospects for the educated?” I wrote in my journal after reflecting on our conversation. What Colston touched on, and what is easily observed in Zambia and many other developing nations, is poverty’s complicated, interwoven nature.

Start with Zambia’s geography, which is not conducive to agriculture in the first place. Next, add in nshima as the staple food and subsistence farming as its primary source. What you get are livelihoods dependent in large part on the labor-intensive cultivation of maize, a cultivation exposed to the hardship of wildlife, weather, and vandals.

Low yields and hard work mean kids go to school tired and hungry and have little free time for homework. Instead, they clean the house, maintain the crops or livestock, or fetch water. By the time they get done with chores in the evening it is often too dark to study and electricity is still luxury that eludes most rural villages. At any rate, children have few incentives for investments in their own human capital through education — the only thing they know that exists for certain is what they have seen in their village. Schools could reorient them in theory, but in practice Zambian education has a long way to go.

For various reasons teachers may not show up to teach or may teach only half the day. If they happen to be dedicated, teachers must cope with classes that are too large and a severe lack of study materials. This often extends to an undersupply of even pencils and notebooks. As I saw first hand, foreigners fund computer labs in schools with inadequate electricity to power them and no teachers knowledgably enough to maintain them. But computers are sexy, pencils are not. Young girls may not be able to find or afford feminine hygiene products and so are embarrassed to go to school during their period, possibly losing a week of education per month and maintaining the societal gender gap.

Unfortunately, government polices have too often only compounded the problem. Because it is poor, tax revenue in Zambia remains low. Infrastructure in the country is underdeveloped so domestic trade remains expensive. This keeps costs of necessities like fertilizer high, diminishing vital income from farmers. Healthcare remains a problem and this too the government struggles to provide. Low income in rural areas means the private sector has little incentive to invest in for-profit hospitals or other critical services.

The government has decided hunger is a problem in the nation so it has restricted maize exports, unintentionally limiting a key avenue to economic activity for farmers. Instead, it subsidies maize production; first, by offering maize seeds and fertilizer at reduced cost, and then by buying surplus maize from farmers at above market price. To compound the problem it has mismanaged the maize reserves it collects, in one case letting tens of thousands of tons rot in a state warehouse. On the whole, these policies lead to an oversupply of maize and discourage crop diversification. Families remain reliant on maize and so rural residents tend to vote into power those who will continue to subsidize its production. Maize is indeed a political crop.

Those educated or wealthy enough to escape usually do, moving to cities like Lusaka or Chabata or leaving Zambia altogether. Those who do remain are mired in a poverty trap where education remains second to cultivating enough maize to survive, and where low income in turn leads to low government revenues, further inducing a lack of government services and infrastructure, reinforcing the trap.

This is to say nothing of culture, or laws, or colonial and tribal history, or national leadership, or domestic and international politics, or myriad of other factors that, along with those mentioned above, have contributed to the state in which Zambia finds itself.

Despite the enormity of these challenges, however, for now Colston remains bearish on agribusiness and instead wants to continue promoting smallholder farming. If the highway gets built on schedule, and if Colston can bring more lodges on board his program and overcome the obvious challenges of running a growing business, he might just help bring economic redemption to many of Mfuwe’s villagers. As a result they may eventually have the funds to replace chili fences with real ones, protect their maize, invest in their land, educate their children, and, perhaps one day, move away from maize altogether.

*     *     *     *     *

The dialogue around the commercialization of food is fraught with unintuitive results that seem to run counter to much of the public discourse regarding the benefits of local food sourcing. Like Colston, many consumers and advocates around the world now view locally grown organic produce as superior — environmentally, economically, and health wise — to large-scale agribusiness now reliant on extensive use of genetically modified organisms (GMOs).

Some NGOs beg to differ, however. Chief among them is the powerful Bill and Melinda Gates Foundation, which has recently invested more than $1.8 billion in agricultural development, primarily in Africa, with hundreds of millions directed toward GMO crop programs.[30] The foundation is drawing on a growing body of research that, perhaps surprisingly, suggests GMOs may provide a healthy, environmentally friendly, and highly productive agricultural option.

For instance, in 2008 two researchers from Carnegie Mellons published a study in Environmental Science and Technology, which looked at the lifecycle greenhouse gas (GHG) emissions of food production. Surprisingly, the study found that the production phase dominated all other phases of the cycle, accounting for a staggering 83% of emissions.[31] All told transportation made up just 15% of GHG emissions despite an average “food-mile” distribution distance of 6,760 km when all transportation factors were added. The authors found that cutting meat consumption just slightly was much more effective at cutting total GHG emissions than consuming locally grown food. A 2011 study published in the same journal by a team of researchers at UC-Santa Barbra found similar results.[32]

When economist Steve Sexton examined the efficiency of local versus commercial agriculture in the Unites States, he found an all-local, “150 food-mile rule” would require an extra 214 million acres of arable land, a roughly 30 percent increase in fuel costs, and increased fertilizer use between 35 and 61 percent depending on the crop.[33] “The direct environmental costs of large-scale agriculture are clearly non-trivial,” wrote Sexton, however, the key question, he concluded, is whether a system based on local agriculture is superior in terms of its environmental, economic, and health outcomes.

Indeed, looking more closely at Colston’s project reveals the difference in efficiency between agribusiness and his locally-grown option. “I haven’t looked at the accounts, but I would say we are about breaking even,” he revels when pressed about the financial condition of the project. According to Colston, Flatdogs pays his operation roughly the same price it offered its old Spanish supplier. Put differently, a tomato shipped across nearly the entire continent of Africa can arrive at a safari lodge in Mfuwe at an identical cost to what Colston and his farmers are able to manage from just fifteen miles down the road. To be sure, Colston’s farmers will improve their crop yield and reduce costs over time, and equally as certain, the project is benefiting farmers in Mfuwe who need income more than even the poorest Spaniard. The debate over local crops versus the commercially distributed GMO alternative does not end there, however. Many tout the health benefits of local, organic products, but here again, the science makes the matter much more complex.

For instance, a recent Stanford School of Medicine study titled Are Organic Foods Safer or Healthier Than Conventional Alternatives and published in the September 2012 issue of Annals of Internal Medicine, systematically reviewed existing medical literature, but found that “the published literature lacks strong evidence that organic foods are significantly more nutritious than conventional foods.”[34] The authors, however, were quick to note that more long-term research is required to reach a definitive conclusion on GMO health outcomes.

The Stanford study echoed previous research on the cautiously optimistic nature of GMOs. “The development of…GMOs offers the potential for…improved nutritional value that can contribute directly to enhancing human health and development,” a 2005 World Health Organization report concluded. But the report acknowledged the possibility for long-term unintended health consequences, “Many genes used in GMOs have not been in the food supply before,” it continued.[35] As far back as 2000, the United Nations Food and Agriculture department recognized the potential for certain GMOs to “improve the health of many low-income communities,” but ultimately recommended “a case-by-case approach” to GMO health assessment.[36] In 2004 the National Academy of Sciences released their position on GMOs, writing simply that, “To date, no adverse health effects attributed to genetic engineering have been documented in the human population,” but recommending “an appropriate safety assessment” based on the particular type of genetic modification in question.[37] Finally, in June of this year the American Medical Association released their position, recommending mandatory GMO premarket safety checks on the basis of the “potential for adverse [health outcomes],” but dismissing mandatory labeling, instead noting that over the twenty years since they were first consumed, “…no overt consequences on human health [from GMOs] have been reported and/or substantiated in the peer-reviewed literature.”[38]

GMOs may also be better for the environment. A study published earlier this year in the journal Nature found that Bt cotton, a common genetically engineered version of the crop, reduces pesticide use, thereby encouraging natural predators that can help minimize the harmful aphid population.[39] What’s more, these benefits extended to crops like soybeans and groundnuts in neighboring fields. The study was conducted over a twenty-year period (1990 – 2011) and took place in China where 95% of the cotton grown is now of the BT cotton variety. A separate study, which appeared late last year, also in the journal Nature, found that globally, non-organic growing methods produced five to 35% more yield than organic crops.[40] Since GHG emissions are embodied mostly in production, higher per-hector yields mean a more environmentally friendly product.

Even the technologically conservative Amish have embraced GMOs. “Amish law doesn’t say anything about growing genetically modified tobacco,” Amish tobacco farmer Dan Dienner told Joshua Davis of Wired Magazine back in 2003.[41]

None of this is to say, however, that GMOs are the right path for Zambia. And some are fighting back against the Gates Foundation’s partnership with agri-giants Monsanto and Cargill and its recent lobbying of the Zambian government to allow GMOs. Kasisi Agricultural Training Centre in Lusaka has started a campaign to fight against the Foundation’s efforts, for example.

“Biodiversity. That’s the biggest concern,” Victor Shitumbanuma head of UnZa’s Soil Management Department tells me. “Zambians are concerned about losing their traditional crop varieties.”

Of course, GMO implementation could be coupled with a simultaneous move toward agribusiness, allowing rural farmers to maintain whatever seed varieties they have currently. Even here there are concerns, however. European markets are notoriously strict on GMO importation, erecting the toughest GMO trade barriers in the world.[42] A move toward genetically modified crop use would likely mean Zambia would be cutoff from European markets, a crucial trade partner. Even a small portion of a country allowing GMO use is enough to get every crop in the nation banned from European import.

And the spread of GMOs has been a problem even in countries like the US where Midwest winds may disperse seed material from GMO fields to neighboring ones miles away, fertilizing those crops and creating a type of GMO contagion. Since many GMOs are patented, the second field is often in legal violation of federal law, sometimes resulting in small farmers being forced to pay licensing fees to the likes of Monsanto unless they can prove the contamination was natural and accidental.[43] Property right laws are still struggling to catch up to such modern phenomenon.

Obed believes that while an eventual move to large-scale agribusiness is necessary for Zambia’s future, GMO use is not. “Yields are not the problem,” he says, though he is not necessarily opposed to GMOs in general. His research at the Golden Valley Agricultural Trust (GART), has found various methods to help commercial farms increase yields to levels near those in developed countries. And for now, despite the Foundation’s persistence, the Zambian government is maintaining its current legal prohibition on GMOs.

*     *     *     *     *

Back in the bustling metropolis that is present day Lusaka the government’s Ministry of Agriculture is trying hard to encourage conservation farming, which they believe can increase yields without resorting to genetically modified crops.

The efforts cover a wide range of government programs. Traditionally, the Fertilizer Input Support Program (FISP) and Food Reserve Agency (FRA) have used economic policies to try and ensure farmers have cheap inputs on the front end and higher income on the back. The logic is simply: first, provide cheap fertilizer and later help support maize prices by purchasing the crop at above market prices. But the programs aren’t always effective. “You don’t even need to be a farmer to qualify for the fertilizer program,” Shitubanuma tells me. “Some people will join a farming organization and just receive the discounted fertilizer and then try to sell it for a profit. But other people actually want to start a small fertilizer business — they want to produce fertilizer themselves and sell it to farmers — but they could never compete with the prices offered by the government, so this policy discourages some small businesses from starting.”

In the past, the Food Reserve Agency has faired no better, supporting farmers by purchasing maize at up to two-and-a-half times the market price. However, in recent years they have undertaken an effort to restructure Zambian agriculture altogether, encourage farmers to move away from monocroping maize and towards more diversified practices. In addition to maize, at times the FRA now buys sorghum, millets, cassava, and cotton. What’s more, natural cross-breading methods have now created a white sorghum similar to the maize that is used in nshima, and a variety that Zambians accept in traditional cooking. This is being buttressed by increased private sector activity. Breweries, for instance, are now starting to produce a type of beer made from sorghum.[44]

Finally, the Government Extension Program (GEP) is increasing efforts to educate farmers. “They even have radio commercials,” Obed says with amusement. “What do they say?” I asked. “ Oh, you know, ‘The weather forecast is so-and-so’ and ‘This is how you can use fertilizer,’ ‘Here is how you should plant your crops.’ The GEP is doing a good job actually these days.”

Velvet beans are another alternative being promoted by the government. “Oh they taste horrible, you can’t eat them,’’ Shitumbanuma says with a smile. “But they are good for the soil. They are nitrogen fixing and they help stop erosion. You can plant them in the off-season and they create a lot of residue, which is great for the soil.”

Nitrogen depletion is a continual problem in Zambia, an inevitable result of repeated nitrogen-based fertilizer use. The most common solution is to use lime, Shitumbanuma tells me, but the chemical is still not widely available in-country.

Overall, the GEP program is encouraging because of its simplicity. With a few simple techniques farmers can increase yields without the need for more fertilizer or expensive equipment. “They are telling them [the farmers] to use minimum tillage,” Obed explains. “Now farmers will sweep away crop residue and burn corn husks. It’s not good for the soil actually. So the government is telling them simply, just let the crop residue stay on top of the soil, and in a few weeks the soil will absorb it and this will increase fertility. Or, if you can, rotate your crops, use some legumes. They will help bring nitrogen back to the soil, and next time you plant maize, you will see higher yields.”

For now though Shitumbanuma tells me conservation farming is slow to catch on. Those who can afford it still use fertilizer and techniques like minimum tillage are not widespread. Neverthless, Obed thinks the government is on the right track, though he admits reforms are needed. He concludes our conversation by pleading for the creation of a more robust agricultural market: improvement of current subsistence farming methods to help increase productivity and incomes along with a relaxation of government policy and a slow movement toward non-GMO agribusiness.

While sensible, the future of Zambian agriculture is not for Obed to decide. The new urban middle class is still partial to nshima and their increasing political power has them voting to maintain policies that keep nshima inexpensive.[45] The large rural population, meanwhile, relies on maize for their livelihoods, both in terms of economics and nutrition, and they too are partial to keeping things as they are. Chiefs remain politically powerful, and any threat to that power, including increased rural incomes, is likely not in their interest.

On the other side of the power struggle is the Gates Foundation and their continued pressure for agricultural reform. With hundreds of millions, perhaps billions, of dollars at stake in the coming decades from the Foundation and other powerful NGOs and international aid organizations, the Zambian government may find it increasingly difficult to resist their advances for GMO-based agribusiness. What’s more, Zambia and a handful of other African countries have found themselves at the epicenter of a global struggle between the United States and Chinese private enterprises, both battling for a position at the head of the table as Africa’s economic rise continues. China has taken control of Zambia’s Copperbelt, but U.S.-based businesses like Monsanto are pressing hard to establish an agricultural presence in the region.

There is no telling how this economic and political game will play out. One thing is for certain though, maize will play a major role in Zambia’s path over the next two decades, whatever that may be. After all, maize is a political crop.


[1] James McCann, “Maize and Grace: History, Corn, and Africa’s New Landscapes, 1500-1999,” Comparative Studies in Society and History 43, no. 2 (2001): 246–272.

[2] CIA World Factbook, “Zambia Country Report (2012)”, September 11, 2012,

[3] Steven Radelet, Emerging Africa: How 17 Countries Are Leading the Way (Center for Global Development, 2010).

[4] CIA World Fact Book, “Zambia – HIV/AIDS – Adult Prevalence Rate”, n.d.,

[5] World Economic Forum, “Zambia Country Profile”, 2011.

[6] CIA World Fact Book, “Zambia – Infant Mortality Rate”, n.d.,

[7] CIA World Factbook, “Zambia Country Report (2012).”

[8] Ibid.

[9] Ibid.

[10] CIA World Fact Book, “Zambia – HIV/AIDS – Adult Prevalence Rate.”

[11] CIA World Factbook, “Zambia Country Report (2012).”

[12] World Economic Forum, “The Global Competitieness Report 2011-2012: Zambia Profile”, 2012.

[13] Obed Luwgu, “UNZA Interview,” In Person, September 14, 2012.

[14] Aaditya Mattoo and Lucy Payton, Services Trade and Development: The Experience of Zambia (World Bank Publications, 2007).

[15] McCann, “Maize and Grace.”

[16] Ibid.

[17] Ibid.

[18] Ibid.

[19] Ibid.

[20] Ibid.

[21] Leo Hickman, “Facebook CEO Mark Zuckerberg Only Eats Meat He Kills Himself,” The Guardian, May 27, 2011,

[22] World Health Organization, “Indoor Air Pollution and Health,” WHO, September 2011,

[23] World Health Organization, Global Health Risks: Mortality and Burden of Disease Attributable to Selected Major Risks (World Health Organization, 2009), Link.

[24] World Health Organization, “WHO | 10 Facts on Malaria,” WHO, n.d.,

[25] MIT D-Lab, “Fuel from the Fields: Charcoal” (Massachusetts Institute of Technology, 2004).

[26] R. Vinya et al., “Preliminary Study on the Drivers of Deforestation and Potential for REDD+ in Zambia: A Consultancy Report Prepared for Forestry Department and FAO Under the National UN-REDD+ Programme Ministry of Lands & Natural Resources.” (Lusaka, Zambia, 2011).

[27] Wildlife Extra News, “Leucistic Baboons of the Luangwa Valley”, May 18, 2009,

[28] Karen Beattie, “Interview at Kenneth Kaunda Center for Practical Agriculture,” In Person, August 1, 2012.

[29] Inside Zambia Magazine, “Chipata-Mfuwe Road to Boost Tourism”, September 27, 2012,

[30] Bill and Melinda Gates Foundation, “Agricultural Development Strategy Overview”, August 2011.

[31] Christopher L. Weber and H. Scott Matthews, “Food-Miles and the Relative Climate Impacts of Food Choices in the United States,” Environmental Science & Technology 42, no. 10 (May 1, 2008): 3508–3513.

[32] David A. Cleveland et al., “Effect of Localizing Fruit and Vegetable Consumption on Greenhouse Gas Emissions and Nutrition, Santa Barbara County,” Environmental Science & Technology 45, no. 10 (May 15, 2011): 4555–4562.

[33] Steve Sexton, “Does Local Production Improve Environmental and Health Outcomes?,” Agricultural and Resource Economics Update 13, no. 2 (2009): 5–8.

[34] Crystal Smith-Spangler et al., “Are Organic Foods Safer or Healthier Than Conventional Alternatives?A Systematic Review,” Annals of Internal Medicine 157, no. 5 (September 4, 2012): 348–366.

[35] World Health Organization Food Safety Department, “Modern Food Biotechnology, Human Health and Development: An Evidence-Based Study”, June 2005.

[36] World Health Organization Food and Agriculture Organization, “Press Release: FAO Stresses Potential of Biotechnology But Calls For Caution”, March 15, 2000.

[37] National Academy of Science, “Safety of Genetically Engineered Foods: Approaches to Assessing Unintended Health Effects”, 2004,

[38] American Medical Association, “Report 2 of the Council on Science and Public Health (A-12): Labeling of Bioengineered Foods”, June 19, 2012.

[39] Damian Carrington, “GM Crops Good for Environment, Study Finds,” The Guardian, June 13, 2012,

[40] Verena Seufert, Navin Ramankutty, and Jonathan A. Foley, “Comparing the Yields of Organic and Conventional Agriculture,” Nature 485, no. 7397 (May 10, 2012): 229–232.

[41] Joshua Davis, “Come to LeBow Country,” Wired Magazine, February 2003,

[42] John Davison, “GM Plants: Science, Politics and EC Regulations,” Plant Science 178, no. 2 (February 2010): 94–98.

[43] Robert Kenner, Food, Inc, 2008.

[44] Luwgu, “UNZA Interview.”

[45] Victor Shitumbanuma, “UNZA Interview,” In Person, September 14, 2012.


American Medical Association. “Report 2 of the Council on Science and Public Health (A-12): Labeling of Bioengineered Foods”, June 19, 2012.

Beattie, Karen. “Interview at Kenneth Kaunda Center for Practical Agriculture.” In Person, August 1, 2012.

Bill and Melinda Gates Foundation. “Agricultural Development Strategy Overview”, August 2011.

Carrington, Damian. “GM Crops Good for Environment, Study Finds.” The Guardian, June 13, 2012.

CIA World Fact Book. “Zambia – HIV/AIDS – Adult Prevalence Rate”, n.d.

———. “Zambia – Infant Mortality Rate”, n.d.

CIA World Factbook. “Zambia Country Report (2012)”, September 11, 2012.

Cleveland, David A., Corie N. Radka, Nora M. Müller, Tyler D. Watson, Nicole J. Rekstein, Hannah Van M. Wright, and Sydney E. Hollingshead. “Effect of Localizing Fruit and Vegetable Consumption on Greenhouse Gas Emissions and Nutrition, Santa Barbara County.” Environmental Science & Technology 45, no. 10 (May 15, 2011): 4555–4562.

Davis, Joshua. “Come to LeBow Country.” Wired Magazine, February 2003.

Davison, John. “GM Plants: Science, Politics and EC Regulations.” Plant Science 178, no. 2 (February 2010): 94–98.

Food and Agriculture Organization, World Health Organization. “Press Release: FAO Stresses Potential of Biotechnology But Calls For Caution”, March 15, 2000.

Food Safety Department, World Health Organization. “Modern Food Biotechnology, Human Health and Development: An Evidence-Based Study”, June 2005.

Hickman, Leo. “Facebook CEO Mark Zuckerberg Only Eats Meat He Kills Himself.” The Guardian, May 27, 2011.

Inside Zambia Magazine. “Chipata-Mfuwe Road to Boost Tourism”, September 27, 2012.

Kenner, Robert. Food, Inc, 2008.

Luwgu, Obed. “UNZA Interview.” In Person, September 14, 2012.

Mattoo, Aaditya, and Lucy Payton. Services Trade and Development: The Experience of Zambia. World Bank Publications, 2007.

McCann, James. “Maize and Grace: History, Corn, and Africa’s New Landscapes, 1500-1999.” Comparative Studies in Society and History 43, no. 2 (2001): 246–272.

MIT D-Lab. “Fuel from the Fields: Charcoal”. Massachusetts Institute of Technology, 2004.

National Academy of Science. “Safety of Genetically Engineered Foods: Approaches to Assessing Unintended Health Effects”, 2004.

Organization, World Health. Global Health Risks: Mortality and Burden of Disease Attributable to Selected Major Risks. World Health Organization, 2009. Link.

Radelet, Steven. Emerging Africa: How 17 Countries Are Leading the Way. Center for Global Development, 2010.

Seufert, Verena, Navin Ramankutty, and Jonathan A. Foley. “Comparing the Yields of Organic and Conventional Agriculture.” Nature 485, no. 7397 (May 10, 2012): 229–232.

Sexton, Steve. “Does Local Production Improve Environmental and Health Outcomes?” Agricultural and Resource Economics Update 13, no. 2 (2009): 5–8.

Shitumbanuma, Victor. “UNZA Interview.” In Person, September 14, 2012.

Smith-Spangler, Crystal, Margaret L. Brandeau, Grace E. Hunter, J. Clay Bavinger, Maren Pearson, Paul J. Eschbach, Vandana Sundaram, et al. “Are Organic Foods Safer or Healthier Than Conventional Alternatives?A Systematic Review.” Annals of Internal Medicine 157, no. 5 (September 4, 2012): 348–366.

Vinya, R., S. Syampungani, E.C. Kasumu, C. Monde, and R. Kasubika. “Preliminary Study on the Drivers of Deforestation and Potential for REDD+ in Zambia: A Consultancy Report Prepared for Forestry Department and FAO Under the National UN-REDD+ Programme Ministry of Lands & Natural Resources.” Lusaka, Zambia, 2011.

Weber, Christopher L., and H. Scott Matthews. “Food-Miles and the Relative Climate Impacts of Food Choices in the United States.” Environmental Science & Technology 42, no. 10 (May 1, 2008): 3508–3513.

Wildlife Extra News. “Leucistic Baboons of the Luangwa Valley”, May 18, 2009.

World Economic Forum. “The Global Competitieness Report 2011-2012: Zambia Profile”, 2012.

———. “Zambia Country Profile”, 2011.

World Health Organization. “Indoor Air Pollution and Health.” WHO, September 2011.

———. “WHO | 10 Facts on Malaria.” WHO, n.d.

The Dutch East India Company and Dutch State Formation in the Seventeenth Century


Today firms are part and parcel of the modern capitalist state enterprise. Aside from provisions of the state, firms provide the goods and services people consume, as well as wages (the means of consumption). It is worth asking, then, if early firms had a part in the emergence of the modern state. This paper briefly examines the role of the largest business enterprise of its time, the Dutch East India Company (VOC), in the formation of early-modern Netherlands. It finds that the VOC had an important role in the emergence of an independent Dutch Republic in 1648.

Setting the Stage

The Netherlands, from very early in its history, had a dynamic and varied economy. The Holland region circa 1500 already had the highest urbanization rate in Europe, with 40 percent of labor in early forms of industry, 20 percent in services, 15 percent in fishing and peat digging, supported by a mere 25 percent in agriculture. In addition, it was already dominated by wage labor (at a time when Western Europe on average had only a quarter of its population producing for wages)[1].

Politically the Dutch Republic was unique. From its outset in the tenth century free peasants inhabited the region with property rights over their land, relatively lax feudal structures were in place, and nobility were weak.[2]

During the latter stages of the Middle Ages the merchant class began to secure control of the town and municipal councils in the provinces of Holland and Zeeland. This process was exacerbated during the opening years of the Eighty Years’ War when Sea-Beggars retook coastal towns from Spain and placed themselves at the head of the councils. There was considerable variation in political control, however. Regions like Guelderland and Friesland, for example, remained in the hands of the nobility and landowning farmers.

In 1568 war broke out with Spain. By 1579 the Seventeen Provinces of the Netherlands, first brought together under Charles V in 1543, were split. The southern provinces, having been substantially decimated by battles with Spain, had already pledged allegiance to the Habsburg Spanish King Phillip II. The northern states, meanwhile, united around William of Orange and banded together as the Republic of Seven United Provinces under the Union of Utrecht in 1579, were intent on fighting the Spanish.

There are, then, many occasions across history one could point to as the founding of the Dutch State. For the purposes of this paper we will take this founding event to be the Treaty of Münster in 1648. This is not at all unreasonable. Prior to this period, though seven states had come together to form the Dutch Republic, the future of the Republic was very much in doubt. The war with Spain consumed considerable resources and it was not at all clear the Dutch union would emerge independent of Spain as it did at the end of the Eighty Years’ War. Indeed, 1648 seems to be the consensus of scholars as to when the Dutch State first arose. This choice also facilitates an examination of how the Dutch East India Company, what would become the world’s largest business enterprise, aided in the Dutch Republic’s founding.

Emergence of the VOC

Seaborne exploration in the Netherlands has a long and rich history dating back to the High Middle Ages when fishing arose as a significant part of the early Dutch economy. By 1565 the Baltic trading fleet already numbered 700 ships and by the last decade of the sixteenth century approximately 12 ships per year sailed as far afield as Italy. Even West Africa saw 20 Dutch ships per year by 1600. But as trade pushed toward southern Africa, and further still toward Asia, additional costs–such as increased provisions and heavy artillery to fight privateers–quickly made funding by standard methods prohibitive. [3]

Traditionally, each voyage of a particular ship constituted its own “firm” (or rederij), with several partners coming together with equity shares sometimes down to the 1/128th ownership fraction. Ships traveling further east, however, were four times as expensive and took at least twice as long to return, increasing risk for investors. Sub-shares began being sold to friends and family, but an even more permanent enterprise was required for true success. In 1602 the States-General persuaded several existing partnerships to come together and form the The Dutch East India Company­—or Vereenigde Oost-Indische Compagnie in Dutch (hereafter referred to simply as “VOC” ). By 1607, after four rounds of equity financing, investment in the VOC stood at 9 million guilders.[4]

By the seventeenth century town and municipal councils had come to be largely controlled by the merchant class. This in turn meant that the States-General, the national governing body, was also largely influenced by merchants. The VOC, then, was an institution created by merchants for merchants. It was a State before the Dutch Republic itself had acquired full statehood. The VOC could enter into treaties, enlist soldiers and wage war, and build fortresses and outposts abroad. This gave it unrivalled economic freedom as well as the substantial political power that came with the profits.

There were three economic contributions the VOC made toward the formation of the Dutch State: increased liquidity in capital markets, the emergence of Amsterdam as the central European hub for information exchange, and general economic stimulus through employment and colonization efforts. All three led toward state formation through roughly the same means: helping to fund the Eighty Years’ War against Spain. 

Increased Liquidity

Firms in early seventeenth century Netherlands had two primary forms of raising funds. The first type was the dividing of equity shares. These were split between two or three, but up to 15, partners. The second form of fundraising was IOU issuance (essentially an early form of corporate bond). By 1600 these debt issuances varied in amount from 600 to 3,000 guilders and ranged from three to 12 months.[5]

The problem was that neither method was particularly liquid. Information asymmetries made the price of finding the probable success of a particular shipping venture costly. Since early operations were small, there was a perceived risk about whether the returning vessel would be loaded with enough tradable goods to recoup the initial costs and have enough leftover for interest payments. This hindered the development of a market for buyers of both the equity and debt financing.

This changed with the formation of the VOC. Share-ownership was split substantially more than previously, with about 1,100 initial subscribers in Amsterdam (which had a population of only 50,000)[6]. Perhaps more importantly, the VOC established a set of procedures to transfer ownership between parties. Shares were easily tradable by means of double-entry registration in the company’s ledger. What resulted was the Bourse, the world’s first stock exchange. The exchange led to the use of shares as collateral for loans on the money market, reducing transaction costs over other forms of collateral such as commodities. Indeed, from 1602 to 1620 interest rates on short-term debt dropped from nearly eight percent to 5.5 percent.[7] The primary cause of this drop was two-fold. The first reason was the increased liquidity of financing instruments described above. The second was an increase in capital availability as merchants immigrated to Amsterdam; this phenomenon was itself likely caused, in some part, by the rise of the VOC.

With time the Bourse grew and, along with the Dutch Central Bank founded in 1609, played an important part in maintaining Dutch credit. The availability of Dutch debt financing persisted even as Dutch borrowing continued and war expenditures crested at 13 million florins (90 percent of total outlays).[8]

Amsterdam as an Information Exchange

The VOC also improved the information gathering and dissemination of sixteenth century Amsterdam, helping it to become the key information hub of Europe. This is no small economic contribution. As W. Fritschy noted in his book on the early Dutch economy, “Economic historians have long stressed that assembly and exchange of business information are important parts of the operation of a commercial center.”[9]

The VOC made three important contributions in the area of information networking. First, the VOC, in an attempt to streamline its operations in marketing, ordering, and price setting, began compiling information from its vast overseas network of colonial outposts. Later, it hired correspondents specifically to fill the role of information reporter.[10] Second, the VOC aided in the distribution of information. The directors of the VOC, the so-called “Heeren XVII”, and other high-level company officers, were often members of the political merchant oligarchy. As members of this commercial group, they would share information coming in from abroad with other elites who would in turn share it with their friends and family, and so on. Information would then spread down through the commercial classes until it became common knowledge. Third, in an attempt to forecast commodity prices, seasonal and yearly variations in importation of goods, and supply and demand across Europe at large, the VOC instituted a process of archival record keeping. As with other types of information, the forecasts that were rendered from studying these archives became public knowledge. Even today there are about 4,000 meters of shelved VOC archival documents worldwide.[11]

General Economic Stimulus

The VOC was a massive organization, especially for its day, and as such was large enough to have a substantial effect on the larger Dutch economy. Between 1602 and 1796, 1,772 ships made 4,785 passages to outposts in the “East Indies.” Over these two hundred years nearly one million Europeans rode aboard its fleet for short- or long-term visits to southern Africa and Asia. At its height 3,000 VOC employees worked in the Dutch Republic at offices, warehouses, and shipyards while 12,000 seamen manned its fleet.[12] In total, more than 2.5 million tons of goods from Asia were brought back for trade. (Compare this to the VOC’s nearest competitor, The British East India Company, which carried only one-fifth the total tonnage on traffic of 2,690 ships)[13]. In addition, the substantial number of colonial outposts established by the VOC no doubt acted to project Dutch power abroad, transforming it into a world power.

The VOC was truly the behemoth of the world’s commercial trading system during these two centuries. Profits came with its success. From 1630 to 1730 the average annual profit was 2 million guilders, of which fifty to seventy-five percent were distributed as dividends with the remainder being reinvested.[14]

Although it is not possible to know the exact magnitude of the VOC’s effects on the Dutch economy on the whole, it no doubt had a substantial impact. The rise of the VOC paralleled a gradual rise in living standards for the average worker. Yearly income of urban day-laborers rose from 195 florins in 1600 to 292 by 1650, and from 270 to 384 for the middle class worker.[15] This in turn paralleled a steadily increasing reliance on tax revenue that, along with government debt, helped to fund the war with Spain.

VOC Political Control

It is clear that the VOC had a powerful positive impact on the Dutch economy and as a result helped it to rise ever further above the Malthusian trap, a process Francis Fukuyama identified as a prerequisite for state development. Additionally, it aided directly in the surge in the Dutch economy that kept credit flowing and incomes, and therefore tax revenue, rising. All of this is simply to say that, despite being part of a broader and richer network of economic and trading activity, the VOC in particular seems to have played an important role in funding the war against Spain and thus ensuring the establishment of a Dutch State.

The VOC’s influence, however, did not end with the economy. The Heeren XVII and other VOC shareholders were extraordinarily prominent in Dutch politics. In fact, the VOC felt so empowered that in 1644 the company told the States-General that:

“The places and strongholds which they had captured in the East Indies should not be regarded as national conquests but as the property of private merchants, who were entitled to sell those places to whomsoever they wished, even if it was to the King of Spain, or to some other enemy of the United Provinces.”[16]

The VOC, with this quite remarkable declaration, demonstrated it felt supremely confident with its preeminence within the wider Dutch system. This is likely because the States-General themselves had chartered the company years earlier and bestowed it with such broad latitude. This political influence was magnified by the rather prominent position of Holland, and in particular Amsterdam (home of the main VOC office), in broader Dutch political decision-making.

In theory, the Seven Provinces of the Dutch Republic were each autonomous and sovereign with the House of Orange acting as stadtholder responsible mostly for military affairs. The Dutch Republic has often been thought of as an exception to the standard pattern of divine right monarchical or absolutist centralization as a prerequisite for state formation. And it was certainly an exception to the model of prolonged war leading to strong centralized government as it did in Western Europe. In fact, the States-General had essential no national political authority to do things like impose a national tax—this was done at the provincial level. In practice, however, Holland came to fill the role of the central authority.

This stemmed simply from its substantial economic contribution to the Republic. Nominally, Holland carried a “mere” 58 percent of the Dutch Republic’s financial burden, but in practice its sway equated to far more.[17] This gave the region increased negotiating power—if a particular policy was to be implemented, Holland must first be convinced. For alas, if Holland happened to disagree, the autonomous nature of the confederation allowed for the province to simply boycott implementation. But this in turn would almost certainly prohibit funding for the policy since invariably Holland would end up footing the bill for any legislation that passed.

Within these various levels of municipal, provincial, and national government sat the VOC’s directors, officers, and shareholders. These groups were so influential in Dutch politics (indeed often they were the very same people) that it caused an anonymous pamphleteer to famously protest:

“For, they say, if we complain to the regents of the VOC and the magistrates of the towns, there sit the directors [the Heeren XVII], […] if to the admiralties, there are the directors again. If to the Estates General, we find that they and the directors are sitting there together at the same time.”[18]

The famous Johan de Witt, for example, known as “the first Dutch Statesman” for his leadership leading up to and during the Anglo-Dutch wars, was the largest shareholder in the Zeeland chamber of the VOC.[19]

The VOC was economically and politically the single most important Dutch enterprise and conducted the bulk of its business in Holland, which itself supplied the majority of wealth and tax revenue to the Dutch Republic and had the political sway to prove it. It stands to reason, therefore, that aside from its economic role in Dutch State building, the VOC had an important role in exerting centralized political authority on other Dutch Republican provinces.

The denouement of this authority was acutely visible in the passing of the Treaty of Münster, which ended the Eighty Years’ War in 1648. Though there was extreme opposition to the treaty from all sides—the House of Orange wanted to conquer the southern provinces to gain dynastic power (which a treaty would forbid), the region of Utrecht objected for religious reasons, even Zeeland disapproved—Holland, with its economic and political capital, was able to pass the measure and end the war. Dutch historian C.R. Boxer concludes:

“Yet the regents of the other towns of Holland, and, above all, those of Amsterdam, were able to drive the Treaty through against the opposition of so many of their fellow-countrymen. […][The war with Spain] had ended with the formation of a loosely federated republic dominated by a group of merchant oligarchs.”[20]


Although the Dutch Republic was, de jure, a loosely confederate body of seven autonomous provinces, it was, de facto, a republic with Holland as its head. And there was no more important enterprise in Holland, and indeed in the Republic, than the VOC. The company founded a stock exchange, employed thousands of workers, supplied countless trade-goods from its colonies aboard, and helped transform Amsterdam into the hub of Europe. By doing so, the VOC created a financial platform to help secure a victory in the must-win war against Spain.


[1] Bavel and Zanden, “The Jump-Start of the Holland Economy during the Late-Medieval Crisis, c.1350-c.1500.”

[2] Ibid.

[3] Gelderblom and Jonker, “Completing a Financial Revolution.”

[4] Ibid.

[5] Ibid.

[6] Ibid.

[7] Ibid.

[8] Fritschy, “A ‘Financial Revolution’ Reconsidered.”

[9] Smith, “The Function of Commercial Centers in the Modernization of European Capitalism.”

[10] Ibid.

[11] Van Boven, “Towards A New Age of Partnership (TANAP): An Ambitious World Heritage Project (UNESCO Memory of the World – reg.form, 2002).”

[12] Stevens, Dutch enterprise and the VOC, 1602-1799.

[13] Van Boven, “Towards A New Age of Partnership (TANAP): An Ambitious World Heritage Project (UNESCO Memory of the World – reg.form, 2002).”

[14] De Vries, The first modern economy.

[15] Fritschy, “A ‘Financial Revolution’ Reconsidered.”

[16] Boxer, The Dutch seaborne empire, 1600-1800,.

[17] Ibid.

[18] Hart, The making of a bourgeois state.

[19] Boxer, The Dutch seaborne empire, 1600-1800,.

[20] Ibid.


Bavel, Bas J. P. van, and Jan Luiten van Zanden. “The Jump-Start of the Holland Economy during the Late-Medieval Crisis, c.1350-c.1500.” The Economic History Review 57, no. 3. New Series (2004): 503-532.

Van Boven, M.W. “Towards A New Age of Partnership (TANAP): An Ambitious World Heritage Project (UNESCO Memory of the World – reg.form, 2002)”, 2002.

Boxer, C. The Dutch seaborne empire, 1600-1800,. [1st American ed.]. New York: Knopf, 1965.

Fritschy, W. “A ‘Financial Revolution’ Reconsidered: Public Finance in Holland during the Dutch Revolt, 1568-1648.” The Economic History Review 56, no. 1. New Series (February 1, 2003): 57-89.

Fukuyama, Francis. The origins of political order : from prehuman times to the French Revolution. 1st ed. New York: Farrar Straus and Giroux, 2011.

Gelderblom, Oscar, and Joost Jonker. “Completing a Financial Revolution: The Finance of the Dutch East India Trade and the Rise of the Amsterdam Capital Market, 1595-1612.” The Journal of Economic History 64, no. 3 (2004): 641-672.

Hart, Marjolein. The making of a bourgeois state : war, politics, and finance during the Dutch revolt. Manchester UK ;;New York: Manchester University Press  ;Distributed in the USA and Canada by St. Martin’s Press, 1993.

Smith, Woodruff D. “The Function of Commercial Centers in the Modernization of European Capitalism: Amsterdam as an Information Exchange in the Seventeenth Century.” The Journal of Economic History 44, no. 4 (December 1, 1984): 985-1005.

Stevens, Harm. Dutch enterprise and the VOC, 1602-1799. [Zutphen]: Walburg, 1998.

De Vries, Jan. The first modern economy : success, failure, and perseverance of the Dutch economy, 1500-1815. Cambridge ;;New York: Cambridge University Press, 1997.