AGRIBUSINESS CHALLENGES TO EFFECTIVENESS OF CONTRACT FARMING IN COMMERCIALIZATION OF SMALL-SCALE VEGETABLE FARMERS IN EASTERN CAPE, SOUTH AFRICA
Abstract
The study investigated the key factors that influ- ence small-scale vegetable farmers’ participation in contract farming arrangements. A sample of 70 small-scale vegetable farmers and 15 key informants of agribusiness firms involved in contract farming production of vegetables were selected in Amathole and Sarah Baartman (formerly Cacadu) district municipalities in the Eastern Cape province of South Africa. Focus group discussions and in-depth interviews were chosen as data collection tools to identify the factors that influence small-scale vegetable farmers’ participation in contract farm- ing arrangements with agribusiness firms. The data was ana- lyzed using open multi-stage coding with an inductive frame- work approach. Atlas.ti was used to sort and organize data. The findings indicated availability of farm assets, hydrologi- cal conditions, farming skills and distance of producer to the markets as key determinants of contract farming participation. The use of unmarketable cultivars, inappropriate agricultural practices and inconsistent supply in quality and quantity of vegetables were found to be bottlenecks to contract participa- tion. The study recommends a more meaningful state support and incentives for agribusiness firms; otherwise, growth of small-scale farmers in contract farming is unlikely because of the financial implications for private sector companies.
Keywords
agribusiness; commercialization; contract farming; small-scale vegetable
References
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Gulati, A., Minot, N., Delgado, C., Bora, S. (2007). Growth in high-value agriculture in Asia and the emergence of verticallinks with farmers. Global supply chains: standards and the poor: how the globalization of food systems and stand- ards affects rural development and poverty (pp. 98–108).
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Haggblade, S., Andersson Djurfeldt, A., Banda Nyirenda, D., Bergman Lodin, J., Brimer, L., Chiona, M., Chitundu, M., Chiwona-Karltun, L., Cuambe, C., Dolislager, M., Dono- van, C. (2012). Cassava commercialization in Southeast- ern Africa. J. Agribus. Dev. Emerg. Econ., 2(1), 4–40.
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Homans, G. C. (1961). Human behavior: Its elementary forms. Harcourt Brace: San Diego.
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Jari, B. (2009). Institutional and technical factors influenc- ing agricultural marketing channel choices amongst small holders and emerging farmers in the Kat River Val- ley. Doctoral thesis. Alice: University of Fort Hare.
Jayne, T. S., Mather, D., Mghenyi, E. (2010). Principal chal- lenges con-fronting smallholder agriculture in sub-Saha- ran Africa. World Dev., 38(10), 1384–1398.
Jordaan, H. (2012). New Institutional Economics analysis of emerging irrigation farmers’ food value chains. Ph.D. thesis. Department of Agricultural Economics. Bloemfon- tein: University of the Free State.
Kirsten, J. F., Sartorius, K. (2006). Contracts and contract farming as potential mechanisms to improve market ac- cess for black farmers in South Africa. University of Pretoria. Retrieved April !st 2010 from: http://www.web. up.ac.za
Koranteng, K. Y. (2010). Contract farming model of financ- ing smallholder farmers in South Africa: The case of the IDC-Kat River citrus development scheme. Unpublished research report. Bellville: University of Stellenbosch Business School.
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Mor, S., Sharma, S. (2012). Technical efficiency and supply chain practices in dairying: The case of India. Agric. Econ. Zemedel. Ekon., 58(2).
Mouton, J. (2001). How to succeed in your master’s and doc- toral studies: A South African guide and resource book. Van Schaik.
Moyo, B. H. Z. (2010). The use and role of indigenous knowl- edge in small-scale agricultural systems in Africa: the case of farmers in northern Malawi. Doctoral thesis. Glasgow: University of Glasgow.
Moyo, S. (2011). Three decades of agrarian reform in Zimba- bwe. J. Peas. Stud., 38(3), 493–531.
Nichol, J. (1997). Bioclimatic impacts of the 1994 smoke haze event in Southeast Asia. Atm. Env., 31(8), 1209–1219.
Omiti, J., Otieno, D., Nyanamba, T., McCullough, E. (2009). Factors influencing the intensity of market participation by smallholder farmers: A case study of rural and peri-ur- ban areas of Kenya. Afr. J. Agric. Res. Econ., 3(1), 57–82.
Ortmann, G. F., King, R. P. (2010). Research on agri-food supply chains in Southern Africa involving small-scale farmers: Current status and future possibilities. Agrekon, 49(4), 397–417.
Oya, C. (2012). Contract farming in Sub‐Saharan Africa: A survey of approaches, debates and issues. J. Agrar. Change, 12(1), 1–33.
Pingali, P. L. (1997). From subsistence to commercial pro- duction systems: The transformation of Asian agriculture. Am. J. Agric. Econ., 79(2), 628–634.
Poulton, C., Macartney, J. (2012). Can public–private part- nerships leverage private investment in agricultural value chains in Africa? A preliminary review. World Dev., 40(1), 96–109.
Raleting, P. M., Obi, A. (2015). An analysis of institutional factors Influencing vegetable production amongst small- scale farmers in six vegetable projects of the Nkonkobe Local Municipality. J. Agric. Sci., 7(6), 184–196.
Raphela, M. G. M. (2014). Smallholder farmers in Ekurhu- leni: the challenges and constraints of access to agricul- tural markets. Doctoral dissertation. Stellenbosch: Stellen- bosch University.
Richards, M. A. (2005). Fundamentals of radar signal process- ing. Tata McGraw-Hill Education.
Rugema, S. H., Sseguya, H., Kibwika, P. (2018). Determi- nants of smallholder farmers’ participation in rice value chains in Uganda. J. Agric. Exten., 22(2), 62–71.
Rwelamira, J. (2015). Strengthening farmers organizations and civil society organizations. Sasakawa Africa Associa- tion. Retrieved at November 20th 2018 from: https://www. afdb.org/fileadmin/uploads/afdb/Documents/Events/Dak- Agri2015/Strengthening_Farmers_Organizations_and_ Civil_Society_Organizations.pdf
Sikwela, M. M., Mushunje, A. (2013). The impact of farmer support programmes on household income and sustaina- bility in smallholder production: A case study of the East- ern Cape and KwaZulu-Natal farmers, South Africa. Afr. J. Agric. Res., 8(21), 2502–2511.
Staatz, J. (2011). Enhancing agricultural productivity. Agri- business for Africa’s prosperity. Vienna: United Nations Industrial Development Organization (UNIDO).
Statistics South Africa (2011). General household survey 2012. Pretoria: Statistics South Africa.
Strauss, A., Corbin, J. (1990). Basics of qualitative research: Grounded theory, procedures and techniques Newbury Park, CA: Sage publications.
Thibaut, J. W., Kelley, H. H. (1959). The social psychology of groups New York: Wiley.
Van der Meer, C. (2006). Exclusion of small-scale farmers from coordinated supply chains. In: R. Ruben, M. Slinger- land, H. Nijhoff (Eds.), The Agro-Food Chains and Net- works for Development. Dordrecht: Springer.
Van Schalkwyk, H. D., Carstens, J. P., Cloete, P. C., Van Der Merwe, J. D. (2009). Master plan for agriculture in the North West Province. Mafikeng: North West Dept of Agriculture, Conservation, Environment and Rural Development.
Van Schalkwyk, H. D., Groenewald, J. A, Fraser, G. C. G, Obi, A., Van Tilburg, A. (2012). Unlocking markets to smallholders: Lessons from South Africa. Mansholt Pub- lication series, 10. The Netherlands.
World Bank (2011). Cultivating knowledge and skills to grow African agriculture: A synthesis of institutional, regional and international review. Washington: Agriculture and Rural Development Department, Africa Region: Human Dept.
Altman, M., Hart, T. G., Jacobs, P. T. (2009). Household food security status in South Africa. Agrekon, 48(4), 345–361. Ayinke, O. O. (2011). Contract farming in developing emerg- ing farmers in South Africa: Exploring the Gledhow Man- somini sugarcane scheme. Master’s dissertation. Stellen-
bosch: University of Stellenbosch.
Bahta, S., Bauer, S. (2012). Policy options for improving mar- ket participation and sales of smallholder crop producers: A case study of the Free State Province of South Africa. Afr. J. Agric. Res., 7(24), 3525–3533.
Baloyi, J. K. (2010). An analysis of constraints facing small- holder farmers in the agribusiness value chain: a case study of farmers in the Limpopo Province. M.Inst.Agrar. disser- tation. Department of Agricultural Economics, Extension and Rural Development. Pretoria: University of Pretoria.
Blau, P. M. (1968). Social exchange. International encyclope- dia of the social sciences (7, 452–457.
Davis, J. H., Goldberg, R. A. (1957). Concept of agribusiness. Division of Research, Graduate School of Business Ad- ministration. Boston: Harvard UP.
Dawe, D., Morales-Opazo, C., Balie, J., Pierre, G. (2015). How much have domestic food prices increased in the new era of higher food prices?. Glob. Food Sec., 5, 1–10. Duma, M. (2007). Contract farming as a tool for the devel- opment of smallholder farmers. Unpublished dissertation.
Stellenbosch: University of Stellenbosch.
Gani, O., Hossain, E. (2015). Market participation decision of smallholder farmers and its determinants in Bangladesh. Ekon. Poljopriv., 62(1), 163–179.
Goetz, A. (2015). Different Regions, Different Reasons? Com- paring Chinese land-consuming outward investments in Southeast Asia and Sub-Saharan Africa. Conference Paper No. 37, Land grabbing, conflict and agrarian-environmen- tal transformations: Perspectives from East and Southeast Asia, 5-6 June 2015, Chiang Mai University.
Groenewald, J. A. (2004). Conditions for successful land re- form in Africa. South African J. Econ. Manag. Sci., 7(4), 673–682.
Gulati, A., Minot, N., Delgado, C., Bora, S. (2007). Growth in high-value agriculture in Asia and the emergence of verticallinks with farmers. Global supply chains: standards and the poor: how the globalization of food systems and stand- ards affects rural development and poverty (pp. 98–108).
Ha, T. M., Bosch, O. J., Nguyen, N. C. (2015). Systemic in- terventions addressing market access challenges of small- holder vegetable farmers in Northern Vietnam. Int. J.
Haggblade, S., Andersson Djurfeldt, A., Banda Nyirenda, D., Bergman Lodin, J., Brimer, L., Chiona, M., Chitundu, M., Chiwona-Karltun, L., Cuambe, C., Dolislager, M., Dono- van, C. (2012). Cassava commercialization in Southeast- ern Africa. J. Agribus. Dev. Emerg. Econ., 2(1), 4–40.
Homans, G. C. (1953). Status among clerical workers. Human Org., 12(1), 5–10.
Homans, G. C. (1958). Social behavior as exchange. Am. J. Soc., 63(6), 597–606.
Homans, G. C. (1961). Human behavior: Its elementary forms. Harcourt Brace: San Diego.
Homans, G. C. (2017). Contemporary theory in sociology. In: Sociological Methods (pp. 51–69). Routledge: London.
Jari, B. (2009). Institutional and technical factors influenc- ing agricultural marketing channel choices amongst small holders and emerging farmers in the Kat River Val- ley. Doctoral thesis. Alice: University of Fort Hare.
Jayne, T. S., Mather, D., Mghenyi, E. (2010). Principal chal- lenges con-fronting smallholder agriculture in sub-Saha- ran Africa. World Dev., 38(10), 1384–1398.
Jordaan, H. (2012). New Institutional Economics analysis of emerging irrigation farmers’ food value chains. Ph.D. thesis. Department of Agricultural Economics. Bloemfon- tein: University of the Free State.
Kirsten, J. F., Sartorius, K. (2006). Contracts and contract farming as potential mechanisms to improve market ac- cess for black farmers in South Africa. University of Pretoria. Retrieved April !st 2010 from: http://www.web. up.ac.za
Koranteng, K. Y. (2010). Contract farming model of financ- ing smallholder farmers in South Africa: The case of the IDC-Kat River citrus development scheme. Unpublished research report. Bellville: University of Stellenbosch Business School.
Levinger, G. (1979). A social exchange view on the dissolu- tion of pair relationships. In: Social exchange in develop- ing relationships (pp. 169–193). New York – San Fran- cisco – London: Academic Press
Little, P. D, Watts, M. J. (Eds.). (1994). Living under contract: Contract farming and agrarian transformation in sub-Sa- haran Africa. Madison: University of Wisconsin Press.
Louw, A., Vermeulen, H., Kirsten, J., Madevu, H. (2007). Se- curing small farmer participation in supermarket supply chains in South Africa. Dev. South. Afr., 24(4), 539–551.
Minot, N. (2011). Contract Farming in Africa: Opportunities and Challenges, presented at the AAMP Policy Seminar – “Successful Smallholder Commercialization”, Rwanda, Kigali. Retrieved from http://fsg.afre.msu.edu/aamp/Ki- gali%20Conference/Minot_Contract_farming_in_Africa. pdf
Mmbengwa, V. M., Groenewald, J. A., Van Schalkwyk, H. D., Maiwashe, A. (2012). Analysis of capacity building indicators and their influences on the viability of farming small, micro and medium enterprises (SMMEs) in South Africa. Afr. J. Bus. Manag., 6(36), 9923–9935.
Mor, S., Sharma, S. (2012). Technical efficiency and supply chain practices in dairying: The case of India. Agric. Econ. Zemedel. Ekon., 58(2).
Mouton, J. (2001). How to succeed in your master’s and doc- toral studies: A South African guide and resource book. Van Schaik.
Moyo, B. H. Z. (2010). The use and role of indigenous knowl- edge in small-scale agricultural systems in Africa: the case of farmers in northern Malawi. Doctoral thesis. Glasgow: University of Glasgow.
Moyo, S. (2011). Three decades of agrarian reform in Zimba- bwe. J. Peas. Stud., 38(3), 493–531.
Nichol, J. (1997). Bioclimatic impacts of the 1994 smoke haze event in Southeast Asia. Atm. Env., 31(8), 1209–1219.
Omiti, J., Otieno, D., Nyanamba, T., McCullough, E. (2009). Factors influencing the intensity of market participation by smallholder farmers: A case study of rural and peri-ur- ban areas of Kenya. Afr. J. Agric. Res. Econ., 3(1), 57–82.
Ortmann, G. F., King, R. P. (2010). Research on agri-food supply chains in Southern Africa involving small-scale farmers: Current status and future possibilities. Agrekon, 49(4), 397–417.
Oya, C. (2012). Contract farming in Sub‐Saharan Africa: A survey of approaches, debates and issues. J. Agrar. Change, 12(1), 1–33.
Pingali, P. L. (1997). From subsistence to commercial pro- duction systems: The transformation of Asian agriculture. Am. J. Agric. Econ., 79(2), 628–634.
Poulton, C., Macartney, J. (2012). Can public–private part- nerships leverage private investment in agricultural value chains in Africa? A preliminary review. World Dev., 40(1), 96–109.
Raleting, P. M., Obi, A. (2015). An analysis of institutional factors Influencing vegetable production amongst small- scale farmers in six vegetable projects of the Nkonkobe Local Municipality. J. Agric. Sci., 7(6), 184–196.
Raphela, M. G. M. (2014). Smallholder farmers in Ekurhu- leni: the challenges and constraints of access to agricul- tural markets. Doctoral dissertation. Stellenbosch: Stellen- bosch University.
Richards, M. A. (2005). Fundamentals of radar signal process- ing. Tata McGraw-Hill Education.
Rugema, S. H., Sseguya, H., Kibwika, P. (2018). Determi- nants of smallholder farmers’ participation in rice value chains in Uganda. J. Agric. Exten., 22(2), 62–71.
Rwelamira, J. (2015). Strengthening farmers organizations and civil society organizations. Sasakawa Africa Associa- tion. Retrieved at November 20th 2018 from: https://www. afdb.org/fileadmin/uploads/afdb/Documents/Events/Dak- Agri2015/Strengthening_Farmers_Organizations_and_ Civil_Society_Organizations.pdf
Sikwela, M. M., Mushunje, A. (2013). The impact of farmer support programmes on household income and sustaina- bility in smallholder production: A case study of the East- ern Cape and KwaZulu-Natal farmers, South Africa. Afr. J. Agric. Res., 8(21), 2502–2511.
Staatz, J. (2011). Enhancing agricultural productivity. Agri- business for Africa’s prosperity. Vienna: United Nations Industrial Development Organization (UNIDO).
Statistics South Africa (2011). General household survey 2012. Pretoria: Statistics South Africa.
Strauss, A., Corbin, J. (1990). Basics of qualitative research: Grounded theory, procedures and techniques Newbury Park, CA: Sage publications.
Thibaut, J. W., Kelley, H. H. (1959). The social psychology of groups New York: Wiley.
Van der Meer, C. (2006). Exclusion of small-scale farmers from coordinated supply chains. In: R. Ruben, M. Slinger- land, H. Nijhoff (Eds.), The Agro-Food Chains and Net- works for Development. Dordrecht: Springer.
Van Schalkwyk, H. D., Carstens, J. P., Cloete, P. C., Van Der Merwe, J. D. (2009). Master plan for agriculture in the North West Province. Mafikeng: North West Dept of Agriculture, Conservation, Environment and Rural Development.
Van Schalkwyk, H. D., Groenewald, J. A, Fraser, G. C. G, Obi, A., Van Tilburg, A. (2012). Unlocking markets to smallholders: Lessons from South Africa. Mansholt Pub- lication series, 10. The Netherlands.
World Bank (2011). Cultivating knowledge and skills to grow African agriculture: A synthesis of institutional, regional and international review. Washington: Agriculture and Rural Development Department, Africa Region: Human Dept.
Khapayi, M., Van Niekerk, P., & Celliers, P. (2018). AGRIBUSINESS CHALLENGES TO EFFECTIVENESS OF CONTRACT FARMING IN COMMERCIALIZATION OF SMALL-SCALE VEGETABLE FARMERS IN EASTERN CAPE, SOUTH AFRICA. Journal of Agribusiness and Rural Development, 50(4), 375–384. https://doi.org/10.17306/J.JARD.2018.00429
Musa Khapayi
musa.khapayi@mandela.ac.za
Nelson Mandela University, Port Elizabeth South Africa
https://orcid.org/0000-0002-5839-7587
Nelson Mandela University, Port Elizabeth South Africa
https://orcid.org/0000-0002-5839-7587
Pieter Van Niekerk
Nelson Mandela University, Port Elizabeth, South Africa Poland
Nelson Mandela University, Port Elizabeth, South Africa Poland
Phillip Retief Celliers
Nelson Mandela University, Port Elizabeth, South Africa Poland
Nelson Mandela University, Port Elizabeth, South Africa Poland
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