Michael C. Lyne

Adoption of ISO 9000 quality assurance standards by South African agribusiness firms.

A postal survey was conducted in 1998 among 92 South African agribusiness firms to establish the extent of adoption of the ISO 9000 quality assurance standards, reasons for certification, and the costs and benefits of adopting these standards. Almost 36% of respondent firms were ISO 9000 certified. The desire to improve customer service, a basis for quality improvement, and the need to improve operational efficiency (reduce wastage) were the most important factors influencing certification. Respondents reported financial, managerial, and production benefits following certification. Two-group and three-group discriminant analyses were performed. Results revealed that ISO 9000 certified firms tended to be larger, established firms with parent company affiliation, manufacturing products derived from agricultural output and exporting to developed countries. Most non-ISO 9000 certified firms had adopted an alternative quality assurance system. The most important variable distinguishing ISO 9000 adopters from adopters of alternative quality assurance systems was turnover (firm size). lEcon-Lit citations: L100, L150, L200r

Land redistribution in KwaZulu‐Natal: An analysis of farmland transactions in 1997

This article presents the results of a census survey of all farmland transactions in the province of KwaZulu-Natal during the calendar year 1997. Data recorded by the Deeds Registry were stratified and analysed by race, gender and mode of land acquisition. It was estimated that 372 995 hectares, or 7 per cent, of the area available for redistribution have been transferred to new owners. Of this, just 0,43 per cent of the available area was redistributed to disadvantaged people. Although low, the rate of redistribution appears to have increased dramatically since 1995. The quality of land varied markedly across different modes of land redistribution. Land purchased with government grants was of a much lower agricultural quality than land purchased privately. Relative to government-assisted transactions, private market transactions accounted for a slightly smaller share of the area transferred to disadvantaged people but for a much larger share of the value of land redistributed. Inheritance and land donations accounted for the remaining redistributed land. Women were well represented in land transactions involving inheritance but were underrepresented in transactions financed with mortgage loans. In general, they acquired farms of much smaller size and land of lower quality than men.

Expenditure Patterns and Elasticities of Rural Households Sampled in Two Communal Areas of KwaZulu-Natal

Expenditure patterns among a sample of 99 rural households in two communal districts in KwaZulu-Natal were investigated to determine the potential impact of a widespread income shock on household expenditure. The results showed expenditure elasticities of close to unity for food. Low elasticities were found for staple foods. Elasticities for meat, meat products and poultry were close to unity, while horticultural products showed the greatest potential for demand growth within the food category. Of the statistically significant commodity categories, expenditure elasticities for durables, housing and transport were more than double those estimated for the aggregate food category. For consumer items, the district expenditure elasticities were estimated to be 0,76 and 0,71, while expenditure on social obligations would not increase with rural incomes. Wealthier households (the top expenditure decile) have a greater propensity for increased expenditure on transport, while poorer households show a greater propensity for increased expenditure on housing and durables. Although agriculture has the potential to generate widespread growth in rural incomes, the preference for manufactured goods casts some doubt on the strength of consumption multipliers for locally produced farm and non-farm goods in rural KwaZulu-Natal.

Possible causes of poverty within a group of land reform beneficiaries in the midlands of KwaZulu-Natal: Analysis and policy recommendations

Abstract This study identifies different dimensions of poverty affecting the current and future well-being of households within a community of land reform beneficiaries in the Midlands of KwaZulu-Natal. A census survey of the beneficiary households was conducted in May 2002 to gather data on poverty indicators. Principal Component Analysis was used to construct an index of the standard of housing, which was then combined with variables measuring other symptoms of poverty (income, wealth and health) in a Cluster Analysis of the households. The analysis revealed five clusters representing four distinct groups of poverty; households relatively income and asset rich, households relatively income rich but asset poor, households relatively asset rich but income poor and households with the lowest incomes and assets. While income is an important indicator of current poverty, household wealth (measured in terms of saleable assets) indicates ability to cope with adverse shocks—a key issue as life expectancy is declining and old-age pensioners account for a large share of household income in the survey group. It is concluded that child welfare grants could be increased as pension earnings become less effective in combating the symptoms of poverty in this area. In addition, land reform grants may address poverty more effectively when used to purchase equity in joint ventures with commercial farmers than when used to purchase land that many of the beneficiaries cannot use or transact.

Rural economic growth linkages and small scale poultry production: A survey of producers in KwaZulu-Natal

Abstract This study analyses survey data gathered from small and large poultry producers in the rural areas of KwaZulu-Natal, and highlights factors constraining the impact of commercial poultry production on the local economy. It was found that small-scale poultry production has the ability to initiate economic growth through the “export” of its products and to draw under-utilised resources such as labour into production. The impact of the subsequent multiplier effect is most likely strongest in the non-tradable, non-agricultural sector. Alleviating constraints for a large number of small enterprises is expected to impact more positively on the rural economy than if a few larger enterprises were encouraged to grow bigger. The descriptive results suggest that small producers face much higher transaction costs than larger producers. Government policies should focus on absorbing some of these transaction costs to nurture economic growth in the rural areas of KwaZulu-Natal, i.e. by improving education, physical infrastructure and technology transfer through extension. Other important interventions include the provision of mentoring and training services for new managers including institution, legal and financial management instruction.

A LAND RENTAL MARKET IN KWAZULU: IMPLICATIONS FOR FARMING EFFICIENCY

This paper emphasises efficiency and equity aspects of a rental market in rural KwaZulu. Most households have little incentive to farm land intensively. Almost 22 per cent of arable land is unused. Evidence from a sample survey suggests that land rental is precluded by high transaction costs. Transaction costs are high because lessors consider renting to be risky as they could lose their right to land unless they farm it themselves. Nearly 70 per cent of households perceived that they would be dispossessed if they did not show some use of their arable land. Rental transactions were observed only where the risk was low, i.e. where the government or chief was lessor. Results of a discriminant analysis show that surplus farmers rent in more land, invest more in agriculture and make greater use of credit and extension services than do deficit producers. Area rented was the most important of these discriminating variables. Of those respondents renting, 84 per cent claimed they would increase production if they could access more land. Expansion of farm sizes through renting improves the incentive to farm by lowering unit production costs and by increasing potential gains, as returns to information, innovation and management are scale dependent. Equity improves because rental transactions are voluntary. Inefficient land use is the result of an inefficient land market. Solutions may be found in efforts to reduce transaction costs in the rental market.

FACTORS INFLUENCING INTERNAL AND EXTERNAL CREDIT RATIONING AMONG SMALL-SCALE FARM HOUSEHOLDS IN KWAZULU-NATAL

The Heckman two-stage procedure is used to identify and rank the determinants of internal and external credit rationing in rural households using data sourced from two districts in the former KwaZulu homeland. The results confirm international findings that high transaction costs faced by rural households limit their access to formal credit markets. Income and savings levels are significant determinants of the level of credit obtained, with savings acting as a substitute for credit. Better access to financial markets will require public investment in rural infrastructure, literacy and vocational training, and legal reform in order to lower transaction costs, improve income levels, and facilitate the efficient use of collateral. Savings lose their value as a source of information when lending institutions are distinct from savings institutions, and moveable assets carry high collateral-specific risk in the absence of an efficient judicial system.

Agricultural growth multipliers for two communal areas of KwaZulu-Natal

Expenditure data were collected from 99 households in two rural areas of KwaZulu-Natal. District and wealth group expenditure analyses suggest a less-than-proportional increase in the demand for tradable farm commodities, and a more-than-proportional increase in the demand for non-tradable farm commodities following a 1 per cent increase in household expenditure. Expenditure on non-farm tradables (imported consumer durables) showed the greatest potential for demand growth, with expenditure elasticities ranging from 1,75 to 2,59. An increase of R1,00 in household income is predicted to add an additional 28 cents (multiplier of 1,28) to the local economy. The study estimates relatively weak growth linkages. However, even relatively weak growth linkages could lead to much needed new income and employment opportunities in the local farm and non-farm sectors if the constraints limiting agriculture, and hence broad-based growth in rural incomes, are alleviated. Agriculture-led growth in South Africa requires public investment in both physical and institutional infrastructure to reduce transaction costs and risks in all markets, thus encouraging greater participation by local entrepreneurs and private sector investors. In addition, the roles, functions and services offered by extension agents should be extended to promote collective marketing, facilitate land rental contracts and provide training, technical and business support for farm and non-farm entrepreneurs.

Measuring smallholder comparative advantage in three South African provinces

A major policy issue in South Africa is the redefinition of the role of the previously disadvantaged smallholder agricultural sector in providing rural livelihoods. This study shows that black small-scale farmers do produce certain agricultural activities both profitably and efficiently. This has major implications for broader rural growth and development. Agricultural policies aimed at promoting commodities that best make use of resources are required to exploit potential linkages with non-agricultural sectors of the economy.

Communities, institutions and natural resources: An assessment of case‐studies from KwaZulu Natal

This article describes three community‐based organisations (CBOs) that were established to protect natural resources in parts of KwaZulu Natal. The object is to determine why some CBOs are more successful than others. The case‐studies (Dukuduku Forest, Shongweni Resources Reserve and Thukela Biosphere Reserve) are analysed and compared using criteria suggested by the theory of institutional economics. It is concluded that the rural poor are unlikely to comply with rules restricting their access to natural resources unless the benefits are obvious. Creating appropriate management institutions is a necessary first step, but it may also be necessary to subsidise their enforcement costs and development programmes.