Stuart R.D. Ferrer

FARM SIZE, LAND FRAGMENTATION AND ECONOMIC EFFICIENCY IN SOUTHERN RWANDA

Abstract Butare, where this study was conducted, exhibits one of the highest population densities in Rwanda. As a direct result of population growth, most peasants have small fields and land fragmentation is common. The purpose of this article is to examine the effect of land fragmentation on economic efficiency. Regression analysis shows that area operated is primarily determined by the population-land ratio, non-agricultural employment opportunities, ownership certainty and adequate information through agricultural training. Results from a block-recursive regression analysis indicate that the level of net farm income per hectare, which indirectly reflects greater economic efficiency, is determined by the area operated, use of farm information, field extension staff visits, formal education of a farm operator, and the fragmentation of land holdings. Economies of size are evident in the data. The results obtained using ridge regression support the findings of two-stage least squares. Policies should be implemented to improve the functioning of land rental markets in order to reduce land fragmentation, improve rural education and access to relevant information; and strengthen extension facilities to individual farmers.

Rural livelihood diversity to manage economic shocks: Evidence from south-east Zimbabwe

Abstract Livelihood strategies used by households and individuals in rural communities are shaped by human, natural, financial, social and physical capital resources that can be accessed. The ability to diversify livelihoods depends on asset portfolios and the economic shocks that rural households face. The main objective of this paper is to improve understanding of rural livelihood challenges in south-east Zimbabwe and how households in this area diversify livelihoods to cope with these challenges. A cluster analysis of 200 households surveyed in 2008 in the Chiredzi district identified five distinct livelihood strategies: (1) subsistence smallholders/ unskilled workers; (2) subsistence smallholders/nontimber forestry products (NTFPs) harvesters; (3) crop production and NTFPs extraction integrators; (4) commercial smallholders with regular off-farm employment; and (5) specialised commercial livestock producers. Multinomial logit model results showed that the level of education of the household head, value of physical assets, cattle numbers and income, remittances, NTFP income and economic shocks were the main determinants of these livelihood choices. There is also some evidence that those households that were statistically significantly affected by HIV/AIDS shock practised distresspush diversification by harvesting NTFPs. These results suggest that policymakers need to advise rural households on how to improve their risk management capacities, and move from geographically untargeted investments in livelihood assets to a more integrated approach adapted to the asset bases of individual households.

What will South Africa's new Cooperatives Act do for small producers? An analysis of three case studies in KwaZulu-Natal

Abstract The new Cooperatives Act 14 of 2005 was promulgated in August 2005 to promote the development of sustainable cooperatives in South Africa and their use as a vehicle to develop small enterprises. This paper uses the new institutional economics (NIE) to highlight problems created by the Act. Case studies were done of three producer groups in KwaZulu-Natal that formally registered as cooperatives after August 2005. It is clear that the cooperative model was adopted because it was seen as a precondition for government support. All of these cooperatives displayed symptoms of institutional problems and two of them had mitigated these problems by shedding their poorest members and creating their own rules to reward investors with capital gains. The first of these ‘solutions’ is not consistent with the objective of pro-poor economic development; the second is at odds with the new Act. It is recommended that the new Act should be amended so that cooperatives can at least issue tradable equity shares that offer benefits proportional to shareholding. In addition, it is recommended that the same level of start-up support should be made available to all producer groups that formally register their business, regardless of the business model chosen, and that member empowerment should be an essential requirement for registration and public funding.

CRITERIA TO MONITOR THE POVERTY ALLEVIATION, EMPOWERMENT AND INSTITUTIONAL PERFORMANCE OF EQUITY-SHARE SCHEMES IN SOUTH AFRICAN AGRICULTURE

Abstract This paper extends a previous study in South Africa aimed at developing methodology for assessing the performance of equity-share schemes. The previous study proposed four broad criteria to measure performance: poverty alleviation; empowerment and participation; institutional arrangements and governance; and financial performance. This paper does not aim to assess the performance of existing equity-share schemes but to develop a methodology for the first three criteria based on empirical analysis of data gathered in 2004 from a land reform project in the Midlands of KwaZulu-Natal and seven established equity-share schemes in the Western Cape. Poverty alleviation is measured using a transition matrix of households grouped by four different symptoms of poverty: current income, wealth, health and a principal component index of housing quality. Eight categories of indicators are recommended for empowerment and participation: control and ownership; skills transfer; understanding; information; outcomes; trust; outreach; and participation. A scorecard applying norms based on empirical evidence gathered at the equity-share schemes in the Western Cape is used to test the indicators. A scorecard approach is also applied to institutional arrangements and governance, which are measured using three categories of indicators: accountability, transparency and property rights. The proposed performance measures are relevant, manageable in number and have feasible norms based on empirical evidence. These indicators and their norms need to be tested on a wider scale and monitored over time. Future research should be undertaken to determine weights for the empowerment and institutional indicators.

Farmland transfers in KwaZulu-Natal, 1997–2003: A focus on land redistribution including restitution

Abstract Census surveys of land transactions show that 203,300 hectares of KwaZulu-Natals commercial farmland transferred to previously disadvantaged South Africans over the period 1997–2003. This represents 3.8 per cent of the farmland originally available for redistribution in 1994. The annual rate of land redistribution in the province fell from a peak of 1.06 per cent in 2002 to 0.41 per cent in 2003, following an increase in the real price of farmland. Transactions financed only with government grants accounted for almost one-half of the redistributed farmland. However, the quality of farmland financed with grants awarded under governments land redistribution programme was poor relative to that financed privately. The LRAD programme introduced in 2001 improved governments contribution to land reform, attracting private capital and expertise into the process. Unfortunately, the number of transactions financed with a combination of LRAD grants and mortgage loans fell from 14 in 2002 to just six in 2003. It is recommended that all reputable banks (and not just the Land Bank) should be allowed to approve LRAD grants for eligible clients. Previously disadvantaged women gained less land, and much less land wealth, than did their male counterparts. Somewhat surprisingly, women were well represented in transactions financed by Ithala Finance and Investment Corporation to establish emerging sugarcane farmers. However, the same was not true of clients financed by the Land Bank.

Extraction of non-timber forest products as a coping strategy for HIV/AIDS-afflicted rural households in south-eastern Zimbabwe

This article examines the role of the extraction of non-timber forest products (NTFPs) as a coping strategy in response to HIV/AIDS-related economic shocks among rural households in the semi-arid Sengwe communal lands in south-eastern Zimbabwe. Using panel data for 200 households in 2008 and 2009, an econometric analysis revealed NTFP extraction as an important ex-post coping mechanism for the HIV/AIDS-afflicted households. Many of the households responded to HIV-related economic crises by increasing NTFP extraction to smooth both consumption and income. On average, the additional income from NTFPs offset about 48% of a households income shortfalls due to the impact of HIV or AIDS. The importance of NTFPs as an economic safety-net for households depends more on the timing of extraction than on the magnitude (i.e. as a share of total household contribution). Hence, sustainable forest management is of great value for semi-arid tropical areas, such as the Sengwe communal lands, which are hard hit by the HIV epidemic. Consequently, government and other stakeholders would be well advised to implement programmes that reduce pressure on the forest resources, such as by introducing other incomegenerating enterprises like raising small livestock, while improvements in access to education and healthcare will further help the rural poor cope with HIV/AIDS-induced economic crises.

Management decisions on commercial sugarcane farms in KwaZulu-Natal: a focus on choice bracketing behaviour for risk management

Abstract The sugar industry is an important contributor to the South African (SA) economy, with average annual production estimated at 2.5 million tons of sugar. This study aims to quantify actual use of management instruments by a sample of commercial sugarcane farmers in KwaZulu-Natal (KZN) that are commonly associated with risk management, and uses factor analysis to investigate the extent to which these farmers bracket their management decisions. Data were obtained in 2006 via personal interviews of a stratified random sample of 76 large-scale sugarcane farmers in two separate mill-supply areas of KZN. Respondents were asked questions regarding risk-related management strategies, including diversification of on-farm enterprises, investments and management time. Factor analysis identified six management choice brackets, collectively explaining 77% of the variance in all of the 12 risk-related management responses considered. Recommendations that stem from these findings include that policy makers create a more enabling business environment and that government make labour legislation more flexible. Farmers need to search for information more proactively and develop management strategies that reduce barriers to efficiency. Future research based on time series data could be important to identify how management portfolios and choice bracketing levels change over time.