Agribusiness challenges to effectiveness of contract farming in commercialisation of small-scale vegetable farmers
- Authors: Khapayi, Musa
- Date: 2017
- Subjects: Farms, Small -- South Africa -- Eastern Cape , Agriculture -- Economic aspects -- South Africa -- Eastern Cape , Agricultural industries -- South Africa -- Eastern Cape
- Language: English
- Type: Thesis , Doctoral , DTech
- Identifier: http://hdl.handle.net/10948/13981 , vital:27363
- Description: The spread of contract farming in South Africa in recent years has provoked an ideological debate in literature. Linking small-scale vegetable farmers with lucrative agricultural markets through agribusiness value chains is seen as one of the foremost emerging agricultural practices to develop the subsistence farming sector into a mainstream economic sector – thereby revitalising the rural economy and alleviating poverty levels in the developing rural areas of South Africa. However, the challenges agribusiness and small-scale farmers experience in contract farming engagement and the prospects for enhancing the inclusion of small-scale farmers into modern value chains remain open to debate – two decades after transition to democracy. Yet the factors and mechanisms influencing the effective application of contract farming in the transition to commercial farming by small-scale farmers have not been thoroughly explored in South African research. Despite the efforts and the substantial investments made and the various policies and initiatives instigated to fast-track the linkages of small-scale farmers into high-value markets, the success stories of previously disadvantaged farmers operating in commercial agri-food chains are rare. Given the millions of small-scale farmers in former homelands alone, the negligible number of small-scale farmers successfully operating in commercial agri-food chains shows that the objectives to enable small-scale farmers to improve their livelihoods through participation in commercial agri-food chains have not yet been met. The broad objectives of the study were therefore to investigate the agribusiness challenges inherent in contract farming and the conditions and incentives required by agribusiness firms to engage small-scale vegetable farmers in contract farming programmes. Furthermore, the study examined the role played by the South African government to reduce the high transaction costs incurred by agribusinesses when engaging small-scale farmers in contractual arrangements. The Amathole and Sarah Baartman (formerly Cacadu) district municipalities in the Eastern Cape Province of South Africa were chosen as the composite survey area for this study. A predominantly qualitative research approach was applied to gather data on the phenomena under study. The following methodologies and research instruments and tools were selected. Firstly – as the secondary component of the research – a systematic review of literature to date was conducted to guide the empirical research and primary methodology. Secondly, the empirical component of the study comprised a questionnaire survey, unstructured interviews and focus group discussions. The questionnaire survey was used to collect data from the agribusiness firms in the area surveyed concerning the following aspects: the significant determinants of contract farming, the incentives required by the agribusiness firms to engage small-scale vegetable farmers in their contract farming programmes and the challenges faced by agribusiness firms in their interaction with small-scale farmers in contractual arrangements. Unstructured interviews were used to gather data from officials at each of the three levels of government – the Department of Rural Development and Land Reform nationally, Department of Agriculture and Land Reform provincially and (at local government level) two district municipalities – on the role played by government to reduce the high transaction costs incurred by agri-firms when procuring agricultural raw materials from small-scale vegetable farmers. Focus group discussions were conducted with small-scale farmers regarding their perspective on working with agribusiness firms and to establish the distinguishing characteristics of small-scale farmers in the area surveyed. Relevant policy documents collected from two of the three representative groups of the study population, i.e. agribusiness personnel and government officials, provided the essential context. The study revealed a limited number of contract farming business linkages between small-scale vegetable farmers and agribusiness firms in the survey area. Those that do exist are problematic to both the agribusiness firms and the small-scale farmers. It emerged that the contract farming environment in the area surveyed is highly polarised and characterised by a fundamental conflict of interest between agribusiness and farmer. Among the divergent key factors inhibiting contract farming engagement were a lack in terms of quality seeds, trust, entrepreneurial skills and formal contract agreements. Asset endowment (both land and non-land assets) was found to be significant pre-selection determinants in the farmer’s capacity to be contracted. Access to innovative technology, as well as government incentives such as production inputs, were found to be critical to agribusiness firms to engage smallscale farmers in their contract farming programmes. Government assistance in terms of high transaction costs to agribusiness firms working with large groups of small-scale farmers was found to be essential but inadequate under current policy. This impacts directly on the effectiveness and promotion of contract farming. Furthermore, the current results corroborate the findings of numerous South African studies in the vast body of worldwide research. Firstly, lack of land and non-land assets continue to be major impediments to the direct participa-tion of small-scale farmers in contract farming programmes and, secondly, the transaction and market information costs incurred by agribusiness prevent the participation of less endowed farmers in contract farming programmes. Conducted within the interpretivist paradigm, the explorative research identified wide-ranging challenges in the relationship between agri-business and small-scale farmers which directly impact the effective-ness of contract farming as a development and agrarian reform strategy. Despite their problematic relationship, however, agribusiness and small-scale contract farmers were in agreement that the government needs to expand its support for agri-firms to incentivise greater numbers of small-scale farmers having the opportunity to achieve commercial status through contract farming. The study therefore recommends a collaborative partnership between private firms and government, with state support through revised policies and development programmes. These amendments are crucial to enhancing the engagement of small-scale vegetable farmers in lucrative agri-food chains.
- Full Text:
- Date Issued: 2017
- Authors: Khapayi, Musa
- Date: 2017
- Subjects: Farms, Small -- South Africa -- Eastern Cape , Agriculture -- Economic aspects -- South Africa -- Eastern Cape , Agricultural industries -- South Africa -- Eastern Cape
- Language: English
- Type: Thesis , Doctoral , DTech
- Identifier: http://hdl.handle.net/10948/13981 , vital:27363
- Description: The spread of contract farming in South Africa in recent years has provoked an ideological debate in literature. Linking small-scale vegetable farmers with lucrative agricultural markets through agribusiness value chains is seen as one of the foremost emerging agricultural practices to develop the subsistence farming sector into a mainstream economic sector – thereby revitalising the rural economy and alleviating poverty levels in the developing rural areas of South Africa. However, the challenges agribusiness and small-scale farmers experience in contract farming engagement and the prospects for enhancing the inclusion of small-scale farmers into modern value chains remain open to debate – two decades after transition to democracy. Yet the factors and mechanisms influencing the effective application of contract farming in the transition to commercial farming by small-scale farmers have not been thoroughly explored in South African research. Despite the efforts and the substantial investments made and the various policies and initiatives instigated to fast-track the linkages of small-scale farmers into high-value markets, the success stories of previously disadvantaged farmers operating in commercial agri-food chains are rare. Given the millions of small-scale farmers in former homelands alone, the negligible number of small-scale farmers successfully operating in commercial agri-food chains shows that the objectives to enable small-scale farmers to improve their livelihoods through participation in commercial agri-food chains have not yet been met. The broad objectives of the study were therefore to investigate the agribusiness challenges inherent in contract farming and the conditions and incentives required by agribusiness firms to engage small-scale vegetable farmers in contract farming programmes. Furthermore, the study examined the role played by the South African government to reduce the high transaction costs incurred by agribusinesses when engaging small-scale farmers in contractual arrangements. The Amathole and Sarah Baartman (formerly Cacadu) district municipalities in the Eastern Cape Province of South Africa were chosen as the composite survey area for this study. A predominantly qualitative research approach was applied to gather data on the phenomena under study. The following methodologies and research instruments and tools were selected. Firstly – as the secondary component of the research – a systematic review of literature to date was conducted to guide the empirical research and primary methodology. Secondly, the empirical component of the study comprised a questionnaire survey, unstructured interviews and focus group discussions. The questionnaire survey was used to collect data from the agribusiness firms in the area surveyed concerning the following aspects: the significant determinants of contract farming, the incentives required by the agribusiness firms to engage small-scale vegetable farmers in their contract farming programmes and the challenges faced by agribusiness firms in their interaction with small-scale farmers in contractual arrangements. Unstructured interviews were used to gather data from officials at each of the three levels of government – the Department of Rural Development and Land Reform nationally, Department of Agriculture and Land Reform provincially and (at local government level) two district municipalities – on the role played by government to reduce the high transaction costs incurred by agri-firms when procuring agricultural raw materials from small-scale vegetable farmers. Focus group discussions were conducted with small-scale farmers regarding their perspective on working with agribusiness firms and to establish the distinguishing characteristics of small-scale farmers in the area surveyed. Relevant policy documents collected from two of the three representative groups of the study population, i.e. agribusiness personnel and government officials, provided the essential context. The study revealed a limited number of contract farming business linkages between small-scale vegetable farmers and agribusiness firms in the survey area. Those that do exist are problematic to both the agribusiness firms and the small-scale farmers. It emerged that the contract farming environment in the area surveyed is highly polarised and characterised by a fundamental conflict of interest between agribusiness and farmer. Among the divergent key factors inhibiting contract farming engagement were a lack in terms of quality seeds, trust, entrepreneurial skills and formal contract agreements. Asset endowment (both land and non-land assets) was found to be significant pre-selection determinants in the farmer’s capacity to be contracted. Access to innovative technology, as well as government incentives such as production inputs, were found to be critical to agribusiness firms to engage smallscale farmers in their contract farming programmes. Government assistance in terms of high transaction costs to agribusiness firms working with large groups of small-scale farmers was found to be essential but inadequate under current policy. This impacts directly on the effectiveness and promotion of contract farming. Furthermore, the current results corroborate the findings of numerous South African studies in the vast body of worldwide research. Firstly, lack of land and non-land assets continue to be major impediments to the direct participa-tion of small-scale farmers in contract farming programmes and, secondly, the transaction and market information costs incurred by agribusiness prevent the participation of less endowed farmers in contract farming programmes. Conducted within the interpretivist paradigm, the explorative research identified wide-ranging challenges in the relationship between agri-business and small-scale farmers which directly impact the effective-ness of contract farming as a development and agrarian reform strategy. Despite their problematic relationship, however, agribusiness and small-scale contract farmers were in agreement that the government needs to expand its support for agri-firms to incentivise greater numbers of small-scale farmers having the opportunity to achieve commercial status through contract farming. The study therefore recommends a collaborative partnership between private firms and government, with state support through revised policies and development programmes. These amendments are crucial to enhancing the engagement of small-scale vegetable farmers in lucrative agri-food chains.
- Full Text:
- Date Issued: 2017
Socio-economic benefits of agricultural projects to surrounding communities: the case of Qamata Irrigation Scheme in the Eastern Cape, South Africa
- Authors: Masela, Zandile
- Date: 2017
- Subjects: Agricultural development projects -- South Africa -- Eastern Cape , Agriculture -- Economic aspects -- South Africa -- Eastern Cape , Irrigation farming -- South Africa -- Eastern Cape
- Language: English
- Type: Thesis , Masters , MSc
- Identifier: http://hdl.handle.net/10353/4716 , vital:28501
- Description: The Qamata Irrigation Scheme (QIS) is one of the largest irrigation schemes in South Africa. Despite substantial state investment, community members have only derived limited benefits from the scheme, leading the government efforts to revitalize the scheme. Many studies have been conducted about QIS but none of them have analyzed the effects of the QIS on the surrounding communities. This study investigated the socio-economic benefits of QIS to surrounding communities. For the purposes of this study, the units of analysis were the surrounding household members, questionnaires were used to collect data. Probabilistic sampling of random sampling method was used to select the villages; respondents’ were availability selected with sample size of 197 households. Quantitative and qualitative data were collected from the participants. To analyse data, descriptive statistics and multinomial logit regression model were used. The study found out that female-headed households constitute 63.45 percent compared to male-headed households at 36.55 percent. The average age of the households in the villages that are within the radius of 10km is 58 years, while it is 59 years in villages that are beyond the 10km radius. In villages within the radius of 10km, 86.08 percent of respondents are unemployed, 5.70 percent are employed at the scheme and 8.23 percent are self-employed. In villages beyond 10km, 84.62 percent of respondents are unemployed, 5.13 percent are employed at the scheme and 10.26 percent are self-employed. In both villages, 71 percent of respondents reported that that they do not get feed supply from the scheme while 29 percent of respondents reported that they get feed supply from the scheme. From the overall distribution of villages within and beyond the radius of 10km, 80 percent of respondents reported that they do not get job opportunities from the QIS while 20 percent of respondents reported that they get job opportunities from the QIS. The study shows that 53 percent of respondents from villages within the radius of 10km are low-benefitting, 33 percent of respondents are intermediate-benefitting and 14 percent of respondents are high-benefitting from the scheme, while in villages beyond the radius of 10km, 97 percent of respondents are low-benefitting, 3 percent of respondents are intermediate-benefitting and none of the respondents is high-benefitting from the scheme. Furthermore, the study, through the multinomial logit regression model, shows that gender for intermediate benefitting has a negative coefficient (-1.70) and shows a significance of 10 percent On the other hand, gender for high benefitting has a positive coefficient (2.57) and shows a significance of 1 percent. Distance from the scheme has a negative coefficient (-3.08) and shows a significance of 1 percent. Access to farmland has a positive coefficient (2.33) and shows a significance of 10 percent. The study recommends that surrounding communities should own home gardens so that they can grow fresh produce and create job opportunities. The surrounding communities are also encouraged to own more farmlands or produce their own crops so they can also learn from the skills of the scheme.
- Full Text:
- Date Issued: 2017
- Authors: Masela, Zandile
- Date: 2017
- Subjects: Agricultural development projects -- South Africa -- Eastern Cape , Agriculture -- Economic aspects -- South Africa -- Eastern Cape , Irrigation farming -- South Africa -- Eastern Cape
- Language: English
- Type: Thesis , Masters , MSc
- Identifier: http://hdl.handle.net/10353/4716 , vital:28501
- Description: The Qamata Irrigation Scheme (QIS) is one of the largest irrigation schemes in South Africa. Despite substantial state investment, community members have only derived limited benefits from the scheme, leading the government efforts to revitalize the scheme. Many studies have been conducted about QIS but none of them have analyzed the effects of the QIS on the surrounding communities. This study investigated the socio-economic benefits of QIS to surrounding communities. For the purposes of this study, the units of analysis were the surrounding household members, questionnaires were used to collect data. Probabilistic sampling of random sampling method was used to select the villages; respondents’ were availability selected with sample size of 197 households. Quantitative and qualitative data were collected from the participants. To analyse data, descriptive statistics and multinomial logit regression model were used. The study found out that female-headed households constitute 63.45 percent compared to male-headed households at 36.55 percent. The average age of the households in the villages that are within the radius of 10km is 58 years, while it is 59 years in villages that are beyond the 10km radius. In villages within the radius of 10km, 86.08 percent of respondents are unemployed, 5.70 percent are employed at the scheme and 8.23 percent are self-employed. In villages beyond 10km, 84.62 percent of respondents are unemployed, 5.13 percent are employed at the scheme and 10.26 percent are self-employed. In both villages, 71 percent of respondents reported that that they do not get feed supply from the scheme while 29 percent of respondents reported that they get feed supply from the scheme. From the overall distribution of villages within and beyond the radius of 10km, 80 percent of respondents reported that they do not get job opportunities from the QIS while 20 percent of respondents reported that they get job opportunities from the QIS. The study shows that 53 percent of respondents from villages within the radius of 10km are low-benefitting, 33 percent of respondents are intermediate-benefitting and 14 percent of respondents are high-benefitting from the scheme, while in villages beyond the radius of 10km, 97 percent of respondents are low-benefitting, 3 percent of respondents are intermediate-benefitting and none of the respondents is high-benefitting from the scheme. Furthermore, the study, through the multinomial logit regression model, shows that gender for intermediate benefitting has a negative coefficient (-1.70) and shows a significance of 10 percent On the other hand, gender for high benefitting has a positive coefficient (2.57) and shows a significance of 1 percent. Distance from the scheme has a negative coefficient (-3.08) and shows a significance of 1 percent. Access to farmland has a positive coefficient (2.33) and shows a significance of 10 percent. The study recommends that surrounding communities should own home gardens so that they can grow fresh produce and create job opportunities. The surrounding communities are also encouraged to own more farmlands or produce their own crops so they can also learn from the skills of the scheme.
- Full Text:
- Date Issued: 2017
The contribution of agriculture to rural development in Mbashe Municipality
- Authors: Malusi, Phaphama Paul
- Date: 2017
- Subjects: Agriculture -- Economic aspects -- South Africa -- Eastern Cape , Agriculture and state -- South Africa -- Eastern Cape , Community development -- South Africa -- Eastern Cape , Rural development -- South Africa -- Eastern Cape
- Language: English
- Type: Thesis , Masters , MA
- Identifier: http://hdl.handle.net/10948/18123 , vital:28578
- Description: Despite the decreasing contribution of agriculture to Gross Domestic Product (GDP) in South Africa, agricultural activities are critical in the development of rural households. These activities are an important route through which these rural communities can reduce poverty. This is mainly because agriculture has been the main source of income and employment in rural areas in South Africa and other less developed countries (LDC). However, it has not generated sufficient income to sustain rural households. Rural areas are characterised by factors such as low socio-economic conditions, low standards of living, lack of access to markets and inadequate infrastructure that does not create an enabling environment for private sector involvement. The private sector is not actively involved or engaged in rural development. Rural development involves improvement in the economic security of people in rural areas. It is poor households that look for employment in agriculture. The poor are portrayed in terms of qualifications, employment, access to resources, basic health services, skills possessed, self- sustaining activities, and income and expenditure patterns. Many individuals in rural areas are pushed into non-agricultural activities due to lack of opportunities in agricultural activities. Lack of opportunities in agriculture can be caused by subsistence agriculture in small holdings of land and lack of appropriate skills sets for certain agricultural activities. Ultimately, it is poor individuals who increase their dependence on agriculture. The primary objective of this research was to obtain a better understanding of the contribution of agriculture in rural development in the Mbhashe Local Municipality (MLM). Furthermore, the necessary conditions required to sustain livelihoods in the rural areas were identified. This was mainly done in an attempt to improve the quality of life in the rural areas. The study was based on three objectives. The first objective was to identify the constraints to agricultural activities in the Mbashe Local Municipality; the second was to investigate the plight of rural people in the Mbhashe Local Municipality. Lastly, the third objective was to investigate the contribution of agriculture in rural development in the study area. The main finding with regards to the first objective is that facors such as lack of infrastructure, low socio-economic conditions, lack of appropriate skills and lack of opportunities in agriculture are some of the constraints to agricultural activities. Investments in basic infrastructure need to be significant so that funds can flow into the rural areas to be invested in livelihood activities in order to create more employment opportunities. With regard to the second objective, the main finding is that rural people need to be empowered through increased knowledge and skills. This involves improving literacy and skills training, because the outcome of this training is that they are able to stand on their own feet and provide for their families. The main finding with regard to the third objective is that rural areas, by nature, are not easy to service but have indigenous knowledge that can be used in agriculture. However, the government must support them with the necessary infrastructure. Agriculture has been a major source of income and employment in the Mbashe Municipality.
- Full Text:
- Date Issued: 2017
- Authors: Malusi, Phaphama Paul
- Date: 2017
- Subjects: Agriculture -- Economic aspects -- South Africa -- Eastern Cape , Agriculture and state -- South Africa -- Eastern Cape , Community development -- South Africa -- Eastern Cape , Rural development -- South Africa -- Eastern Cape
- Language: English
- Type: Thesis , Masters , MA
- Identifier: http://hdl.handle.net/10948/18123 , vital:28578
- Description: Despite the decreasing contribution of agriculture to Gross Domestic Product (GDP) in South Africa, agricultural activities are critical in the development of rural households. These activities are an important route through which these rural communities can reduce poverty. This is mainly because agriculture has been the main source of income and employment in rural areas in South Africa and other less developed countries (LDC). However, it has not generated sufficient income to sustain rural households. Rural areas are characterised by factors such as low socio-economic conditions, low standards of living, lack of access to markets and inadequate infrastructure that does not create an enabling environment for private sector involvement. The private sector is not actively involved or engaged in rural development. Rural development involves improvement in the economic security of people in rural areas. It is poor households that look for employment in agriculture. The poor are portrayed in terms of qualifications, employment, access to resources, basic health services, skills possessed, self- sustaining activities, and income and expenditure patterns. Many individuals in rural areas are pushed into non-agricultural activities due to lack of opportunities in agricultural activities. Lack of opportunities in agriculture can be caused by subsistence agriculture in small holdings of land and lack of appropriate skills sets for certain agricultural activities. Ultimately, it is poor individuals who increase their dependence on agriculture. The primary objective of this research was to obtain a better understanding of the contribution of agriculture in rural development in the Mbhashe Local Municipality (MLM). Furthermore, the necessary conditions required to sustain livelihoods in the rural areas were identified. This was mainly done in an attempt to improve the quality of life in the rural areas. The study was based on three objectives. The first objective was to identify the constraints to agricultural activities in the Mbashe Local Municipality; the second was to investigate the plight of rural people in the Mbhashe Local Municipality. Lastly, the third objective was to investigate the contribution of agriculture in rural development in the study area. The main finding with regards to the first objective is that facors such as lack of infrastructure, low socio-economic conditions, lack of appropriate skills and lack of opportunities in agriculture are some of the constraints to agricultural activities. Investments in basic infrastructure need to be significant so that funds can flow into the rural areas to be invested in livelihood activities in order to create more employment opportunities. With regard to the second objective, the main finding is that rural people need to be empowered through increased knowledge and skills. This involves improving literacy and skills training, because the outcome of this training is that they are able to stand on their own feet and provide for their families. The main finding with regard to the third objective is that rural areas, by nature, are not easy to service but have indigenous knowledge that can be used in agriculture. However, the government must support them with the necessary infrastructure. Agriculture has been a major source of income and employment in the Mbashe Municipality.
- Full Text:
- Date Issued: 2017
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