Herman D. van Schalkwyk

Market access, poverty alleviation and socio-economic sustainability in South Africa

Markets continue to be seen as the means for ensuring that smallholder producers of agricultural products are effectively integrated into the mainstream of national economies, especially in developing countries. For one thing, markets provide the opportunity for farm production to contribute to poverty reduction through the cash income realised from sales of farm produce. In turn, markets drive production as farmers strive to meet the demands of consumers and end-users in terms of quantity and quality. But their very existence, or how effectively they function, cannot be guaranteed in many developing countries. In South Africa, there is a certain urgency to address the real concern that, in spite of considerable investments into restructuring the sector since 1994 and directly tackle agrarian and land reform, poverty is still rife and there is the clear indication that much of this arises from farmers not being able to sell produce at a profit. Unlocking markets for this group of farmers is therefore considered a crucial developmental necessity. Research conducted from 2004 in various parts of the country point to the importance of the market access to smallholders. The aim of this book is to attempt an aggregation of the findings from an investigation into the technical and institutional constraints to smallholders’ market access and how these affect other aspects of community life. Without a doubt, such concerns are not new and have formed part of theoretical and policy work focusing on the gains from trade for several centuries.

An analysis of factors affecting access to credit in Lesotho's smallholder agricultural sector

The agricultural sector in Lesotho is underperforming mainly due to the inability of smallholders to move from traditional agriculture to a more scientific and technology-based one. Among the challenges inhibiting the ability of smallholders to make the step up is access to financial services, especially credit. The purpose of this study was to examine the factors that may influence the ability of smallholders to access finance by making use of a logistic regression model within the principle component regression framework. The results revealed that the ability of smallholders to access finance, and the potential to make the transition towards a more scientific and technology-based agriculture sector, is influenced by the level of farm and non-farm income, remittances and pension, farm size, availability of family labour, land ownership, savings and repayment ability. The results present important information in terms of guiding institutional arrangements needed to improve credit availability in Lesotho.

Food retailing and agricultural development

The global food retail sector has, over the past few decades, evolved into a highly dynamic and competitive industry. The rise of supermarkets, as explained by many other researchers, was initially experienced in developed countries in Northern America and Western Europe (Cacho, 2003; Hagen, 2002; Reardon and Berdegue, 2002; Senauer and Venturini, 2005; Weatherspoon and Reardon, 2003). The majority of supermarkets spread to less-developed and developing countries, as economic, political and social environments allowed, and multinational companies wished to expand beyond their saturated and highly competitive domestic markets.

Smallholder market access and governance in supply chains

Smallholders in developing countries tend to sell their products at local markets because of their proximity and the fact that they are immediately paid for the produce delivered. Increasingly, they also perceive opportunities in both national or international markets or supply chains to sell their surpluses. They tend, however, to encounter several constraints. A first challenge regards the availability and accessibility of resources and competences which are required to deliver the products that consumers demand (Ingenbleek and Van Tilburg, 2009). Another challenge is the manner in which farmers can be organised to meet the quantities and qualities that their supply chain partners or the consumer market need. A third challenge regards the limited access smallholders have to market information and necessary services such as working capital to manage their operations properly.

Factors influencing the competitiveness of the South African wheat industry : a hedonic price model

ABSTRACT The South African wheat industry has been under severe pressure in recent years. Prescribed high wheat quality, which is enforced via cultivar release criteria, is believed to have negatively influenced the productivity and competitiveness of producers. The main hypothesis is that producers deliver lower yields because of high quality requirements and are not compensated for this high quality since prices are still determined by the lowest import parity price. Whether or not this is actually the case must be determined, firstly, by identifying the factors that influence the price of wheat, and secondly, by identifying the factors that do not influence the price of wheat but nevertheless have an adverse effect on producers’ productivity. In this study, a hedonic price model, built on the premise that price is a function of all the characteristics that the product possesses, is used to precisely determine the factors that impact – or otherwise – on price levels in the South African wheat industry. The authors apply the hedonic price model using a three-step process to obtain the best-fitting model for the available data. The results reveal that variations in price are mainly a function of Colour, P/L, Defects and Fall, and that these factors should form the basis of the prescribed quality to producers. By knowing the wheat characteristics that must be included in, and excluded from, the release criteria (prescribed quality) system, producers will be able to produce goods that positively impact their productivity as well as their competitiveness.

Unlocking markets to smallholder farmers: the potential role of contracting

In every ‘underdeveloped’ country I know of, marketing is the most underdeveloped or least developed part of the economy….[Marketing] would make the producers capable of providing marketable products by providing them with standards, with quality demands and with specifications for their product. It would make the product capable of being brought to markets instead of perishing on the way (Drucker, 1958).