Post on 05-Feb-2018
Agrarian
transformation in
smallholder
agriculture in South
Africa: A diagnosis of
bottlenecks and public
policy options
Maxwell Mudhara
University of KwaZulu
Conference paper presented at ‘Overcoming
inequality and structural poverty in South Africa:
Towards inclusive growth and development
Johannesburg, 20-22 September 2010
transformation in
agriculture in South
Africa: A diagnosis of
bottlenecks and public
University of KwaZulu-Natal
onference paper presented at ‘Overcoming
inequality and structural poverty in South Africa:
owards inclusive growth and development’,
ptember 2010
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Theme 4: Rural development and agrarian transformation, including an
integrated understanding of the dynamics of the South African food system
Topic: Agrarian transformation in smallholder agriculture in South Africa: A diagnosis of bottlenecks
and public policy options
By
Maxwell Mudhara1
Abstract
Smallholder agriculture is not fulfilling the pivotal role it should be playing in a developing country
like South Africa. In rural areas, smallholder farmer’s households only derive a minuscule proportion
of their livelihoods directly from agricultural sources. In its place, non-agricultural sources such as
remittances, off-farm work, government transfers have all been gradually strengthened in light of
the demise of agriculture. The question is how agriculture can be a key component of the drivers of
rural economic development in SA.
This paper looks at the factors underlying the demise of the role and contribution of smallholder
agriculture in South Africa. In particular, it focuses on the effects of lack of extension support and
infrastructural development suitable for the needs of the smallholder farmers. Marketing is a major
challenge for smallholder farmers, especially when they have to compete with the resource-
endowed large scale commercial farmers. A comparison of small-scale farmers against large scale
commercial farmers, though seemingly obvious, points to a need for a different approach to address
the development needs of smallholder agriculture. Options suitable for re-dressing the shortcoming
in the smallholder agriculture are explored..
The paper proposes a shift in public support from the provision of free production inputs and
services, in their various forms, which to date have resulted in variable and unsustainable levels of
production, to enhanced access to markets. This, we argue required that public support shift to the
organization of farmer’s to achieve economies of scale in marketing. Viable markets for smallholder
farmers’ produce (produced at their small scale but based on their comparative advantage) should
be identified. The second shift would be required in the research and development (R&D) arena.
Approaches that seek to develop smallholder agriculture by building various areas of comparative
advantage need to be developed. The paper analyses the different R&D approaches that have been
tested and suggested for smallholder agriculture and draws recommendations on the way forward
for public policy.
1 Farmer Support Group, School of Agricultural Sciences and Agribusiness, University of KwaZulu-
Natal. P. Bag X01, Scottsville 3209. Pietermaritzburg, South Africa. Email: mmudhara@ukzn.ac.za
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Introduction
South Africa has a large proportion of its population residing in rural areas and are, one way or the
other, involved in some agriculture-related activity. Agriculture, forestry, and fisheries is a R66
billion industry, thus constituting 2.7% of the country’s GDP in 2009 (Statistics South Africa, 2010).
According to Aliber, et al, (2009) cited in Cousins (2009), agriculture employs 4,75 million people, of
whom 4 million are engaged in agriculture for “own consumption” purposes. Given that the non-
agricultural sectors jointly employed 8 million employees, it means that those who grow their own
food, i.e., the smallholders “employ” or have the potential to employ approximately 33 percent of
the total labour force in the country. The government of South Africa has set itself 12 national
outcomes which include decent employment through inclusive economic growth; an efficient,
competitive infrastructure network; vibrant, equitable, sustainable rural communities contributing
to food security for all; protect and enhance our environmental assets and natural resources.
Therefore, bringing the smallholder farmers into mainstream economic activities lies the core of
achieving the development path the is desired by government.
Most farming households are still characterised by poverty, hunger, poor remuneration, under
employment as well as unemployment. Rural areas continue to lack economic activities close to
communities. Limited access to employment opportunities further limit the potential of most rural
communities to create and sustain economic growth. As a result, there are frequent incidents of
social strife and crime.
The Department of Agriculture (2002) Integrated Food Security Strategy for South Africa notes that
government realises the importance of food security and therefore prioritises expenditure for the
good of the of the historically disadvantaged groups. The policy has resulted in increased spending in
social programmes such as school feeding schemes, child support grants, free health services for
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children between 0-6 years, for pregnant and lactating women, pension funds for the elderly,
working for water, community public works programmes. Support mechanisms implemented
provincially include community food garden initiatives, land reform and farmer settlement,
production loans scheme for small farmers, infrastructure grant for smallholder farmers and the
tractor mechanisation scheme. Department of Agriculture (2002) also identified the following key
food security challenges in South Africa:
• availing enough food to all, now and in the future;
• matching incomes of people to prices in order to ensure access to sufficient food for
every citizen;
• to empower citizens to make optimal choices for nutritious and safe food;
• ensure that there is adequate safety nets and food emergency management systems to
provide these people unable to meet their food needs through their own efforts and
mitigate the extreme impact of natural or other disasters on people;
• to possess adequate and relevant information to ensure analysis, communication,
monitoring, evaluation and reporting on the impact of food security programmes on the
target population.
A wide range of interventions are proposed for dealing with food security and include issues like:
land reform; production of food; procurement and marketing of food products; processing, storage
and transportation of food; development of micro finance; infrastructure development; research
and technology development; food prices; international trade; social security grants and food
emergencies and access to food legislation, among others.
It is the thesis of this paper that the government has excelled in identifying the challenges facing the
rural communities and coming up with the requisite interventions. Gaps exist in the methodologies
for rolling out the interventions. In this paper we suggest alternative ways of delivering the
interventions that could lead to positive contributions to rural development in South Africa.
Smallholders and Rural Development
The agricultural sector in South Africa is characterized by dualism, where large-scale commercial and
smallholder sectors exist side-by-side. The former comprises of well resourced large, mainly white-
owned and operated farms. The sector contributes to the whole value of agricultural production in
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the country. In fact, the sector produced surplus maize in 2009/10 season due to use of superior
production techniques. The latter are resource-poor small-holder farms owned and operated by
black farmers who mainly produce for subsistence and lack institutional support. The sector is
inflicted by all the vagaries of poverty, food insecurity, lack of employment, HIV/AIDS, etc.
Households are also influenced by their interaction with external factors, i.e., agro-ecological and
socioeconomic environments (Ruben et al, 1998). The agro-ecological environment determines the
potential agricultural activities which households could engage in. On the other hand, the
socioeconomic environment determines the activities that households select. The socioeconomic
environment is determined by the macro-economic policies, e.g., prices, institutions, laws. The task
of understanding how the livelihood strategies of households are influenced by the socioeconomic
and agro-ecological circumstances around them is made easier by the fact that farmers have been
observed to be rational in their behaviour. This paper focuses on the policy options that could be
brought to bear on the smallholder farming sector for them to meaningfully contribute to rural
development.
Definitions of smallholders differ across authors. Some have tended to emphasise their lack of land
tenure, others have pointed to the productivity levels, yet others have pointed out to the limited
resource levels of the sector. Smallholders are constituted around the household in their
management of production resources and organization of consumption (Netting, 1993; Timmer et al,
1983; Hilbebrand, 1986, de Koeijer et al, 1999, Ruben et al, 1998). De Koeijer et al (1999, p34) argue
that the farm is also the level at which "the psycho-sociological, agro-economic and agro-ecological
disciplines interact most profoundly". Therefore, most development concerned with smallholder
farmers focus on the household level.
They operate complex systems (as contrasted to discrete enterprises) typified by a variety of
activities undertaken at the same time to fulfill the livelihood requirements. Resources are allocated
across different options to maximize a household utility function subject to varied constraints
(Becker, 1965).
Netting (1993) described smallholders through a number of key characteristics, as follows:
• Rural activities practicing intense, permanent, diversified agriculture on relatively small
farms in areas of dense population.
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• Family households is the major the major corporate social unit for mobilizing agricultural
labour, managing productive resources and organizing consumption;
• The household produces both for consumption and for the market and undertakes cottage
industry or other off-farm employment.
Schultz (1964), Netting (1993) and Becker (1965) argued that smallholder farmers behave rationally.
Becker (1965) further pointed out that resources are allocated in a utilitarian manner. Cousins
(2009) points out three distinguishing features of smallholders that resonates with that of Netting
(1993)2. He points out that farming constitutes only a partial contribution to their social
reproduction, farming meets most of their social reproduction requirements and farming produces a
significant surplus, allowing profits to be reinvested and, for some, capital accumulation in
agriculture to begin. Similarly, in agreement with Netting (1993), Cousins (2009) observed that
smallholders need cash income to purchase many other goods for purposes of both production and
consumption. Cash income can be obtained from selling farm produce and, if insufficient, family
members engage in other activities, in addition to farming, such as wage labour, crafts or petty
trading. Therefore agricultural production is the cornerstone of smallholder livelihoods and should
not be seen as a substitute of other activities that occur.
Smallholder farmers have multiple objectives (Ellis, 1992; Hildebrand, 1986). They could seek to
increase cash for buying consumer goods, to achieve greater food security and/or to reduce the
amount of family labor time used in farm work. Some of the objectives are complimentary yet others
are competitive. Ellis (1992) argued that multiple objectives mean that smallholder farmers do not
have a single response to changes in economic stimuli. For example, when there is a change in
market conditions such as prices, the response is more than merely maximizing cash income, rather
it is blended with other objectives. The heterogeneity, autonomy and self-determination of farmers
make their responses to similar stimuli also heterogeneous (Netting, 1993; Ellis, 1993). Indeed,
Cousins (2009) noted the heterogeneity of smallholders. This variation even cascades into the
household level in terms of its human resources and how they can be utilized. Low ( ..) suggested
2 Chayanov (1986) described farmers with little or no access to markets, abundant land, sparse
population and periodic land reallocation. Then he argued that the farmers only produced enough
for their needs while minimizing labor effort. It is now rare to find farmers who meet the description
given by Chayanov.
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that the household takes deliberate decisions to employ different people at different places,
according to their competencies to undertake different tasks.
Smallholder farmers and Sustainable Livelihoods
African countries realize the critical role agriculture can contribute to smallholder agriculture. As
testimony to this, all SADC countries have signed NEPAD’s 2002 Comprehensive Africa Agriculture
Development Programme (CAADP), committing to spending 10 percent of their budgets on
agriculture and achieving a six percent annual agricultural growth rate by 2015. The commitment of
the African governments to achieving these targets is highly questionable as only 10 out of 57
African countries, have achieved allocations of 10 percent of their GDP to agriculture. Indications are
that no SADC country, including South Africa, is on track to achieve the target by 2015.
The current reality of agriculture in the former homelands of South Africa is a depressing situation
characterized by widespread abandonment of land. Therefore, the smallholder agriculture is not
fulfilling the pivotal role it should be playing in a developing rural areas and the country at large.
Indeed authors have started to question whether smallholder agriculture can play any role in the
South African economic development process. The land reform programmes in South Africa
disregard and are largely premised on alternative models to the smallholder agriculture. Commercial
agriculture, underpinned by the so called “emerging farming sector” is the preferred model as it is
adjudged to bring several benefits, chief among which is employment creation on the farms,
national food security, accompanied with affordable food prices.
Development models suggest that the rural population can become the engine of economic growth
if it can be harnessed to make meaningful contributions (Hayami and Ruttan, 1971). Employment
figures from Aliber, et al (2009) Cousins (2009) show that four million people in SA are involved in
smallholder agriculture. This statistic indicates the vast contribution that this sector could play if its
members could find satisfaction and income (in cash and kind) from working on their farms. The
question is what policies options are available for stimulating this sector into sustained productivity
and contribution to economic development. However, before these options can be developed, it is
necessary to highlight some of the shortcomings that have been used hitherto with smallholder
farmers.
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Currently, government has adopted a variety of initiatives to develop smallholder agriculture. This
has included placing extension officers in the wards. The extension officers are mandated to
implement government programmes rolled out of nationally and provincially. In KwaZulu-Natal
government has rolled out several cycles of the “massification” programmes where land is identified
and then the government contracts external service providers to put the identified land to
productive use in that season. The land owners can then harvest and take ownership of the produce.
The hypothesis of this approach is that the beneficiaries acquire knowhow and income to “kick start”
their agricultural production activities. Results to date are disappointing in that the programme has
largely turned out to be a government transfer programme rather than cultivating productivity.
These programmes are not accompanied by the supporting measures that ensure sustainability. No
markets have been provided for the surplus production. Even places where the farmers can
continue to purchase the inputs use in the schemes are not developed. Whereas the programmes
bring their own traction power, no mechanism is put in place to ensure that the farmers continue to
have access to traction power afterwards.
In rural areas, smallholder farmer’s households only derive a small proportion of their livelihoods
directly from agricultural sources. This was dues to historical imperatives imposed by the apartheid.
The Natives Land Act No 27 of 1913 was the first concerted legislative attempt to force black farmers
off the land. It limited them to native reserves, which at that time covered 8 percent of the total land
area. The political and economic objective of the “reserve” policy was to maintain labour reserves, in
which a degree of food self-sufficiency could be retained, with households depending on migrant
remittances for supplementary cash income. In its place, non-agricultural sources such as
remittances, off-farm work, government transfers have all been gradually strengthened in light of
the demise of agriculture.
The activities of smallholder farmers depend on the household objectives, the amount of resources
they have for undertaking the set objectives and the entitlements they can draw upon. Decisions are
taken under limited resource endowments, i.e., land, labor and capital. In addition, decisions are
made from the point of view of the home. In such decisions, the wellbeing of the home and family
override profit considerations. Smallholder farmers prioritize the satisfaction of subsistence
requirements before seeking to make profits. Households engage in diverse activities, such that they
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tend to have limited management time for any particular activity. In addition, low education levels
and limited access to information tend to reduce the quality of management on small farms.
Services such as information, marketing, transportation, storage and processing are limited
(Hildebrand, 1986). This has implications for the technologies that smallholder farmers use in their
livelihood strategies.
Households are also influenced by their interaction with external factors, i.e., agro-ecological and
socioeconomic environments (Ruben et al, 1998). The agro-ecological environment determines the
potential agricultural activities which households could engage in. On the other hand, the
socioeconomic environment determines the activities that households select. The socioeconomic
environment is determined by the macro-economic policies, e.g., prices, institutions, laws. The task
of understanding how the livelihood strategies of households are influenced by the socioeconomic
and agro-ecological circumstances around them is made easier by the fact that farmers have been
observed to be rational in their behaviour. Households use their assets to achieve their livelihoods.
Assets are in the form of natural resources, social and political, human, physical and financial assets
(Scoones, 1998). Natural resources include land, water, common-property resources, flora, and
fauna. Social and political assets are the networks, social claims, affiliations from which households
could draw bequests to meet some of their livelihood requirements. Human assets such as
knowledge, skills, good health are also used in achieving livelihoods. Finally, financial assets
incorporate cash, credit, savings and physical assets such as physical infrastructure, i.e., roads,
markets, clinics, schools, and bridges. These enable households to pursue different livelihood
strategies.
This paper will focus on the following policies:
• Limited access to marketing channels and local markets,
• Limited extension support and business skills development,
• Limited access to capital.
Marketing
Marketing is a major challenge for smallholder farmers, especially as they have to compete with the
resource-endowed large scale commercial farmers. The agricultural marketing environment dictates
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the level of incentives that farmers can realize from selling surplus produce. In South Africa, prior to
1996, a variety of marketing boards existed and worked closely with the large scale producers to
ensure efficient and orderly conduct of business. They also ensured that the commercial farmers had
sufficient margins to remain viable. Smallholder farmers were excluded from participating in such
markets. The government liberalized the marketing environment through the Marketing of
Agricultural Products Act of 1996. This policy shift abolished the marketing boards and vested the
authority of regulating the marketing environment on those participating on the market. While some
analysts have pointed out that this resulted in positive outcomes in the form of increased value
chain, others have argued that these benefits have largely eluded the smallholder farmers.
Marketing boards represent institutionalized marketing, which though often over regulated, provide
clear processes involved in marketing. As such, they are suitable for meeting the needs of the less
sophisticated smallholders.
Smallholder farmers produce a large part of their subsistence food requirements mainly to cushion
themselves from food insecurity arising from failure of the marketing system. A market failure
means that farmers are unable to sell their produce and subsequently use the proceeds for buying
other basic requirements. Market failure occurs largely due to poor infrastructure and institutions
that may be at the development stage. Poor infrastructure is in the form of poor or non-existent
roads and transport that is not readily available or which tends to be expensive. This means that
benefits from interacting with the market are low. Transport and distribution constraints isolating
smallholder farmers from markets dictate that they can be more food secure by producing their own
food.
The smallholder farmers have been documented to be responsive to good support services and
policies. As pointed out earlier, their behaviour has been observed to be rational. Rorhbach (1986)
noted that smallholders in Zimbabwe responded positively to incentives such as improved access to
credit, extension support and improved marketing infrastructure and pricing incentives by increasing
agricultural production. Therefore, markets, in combination with other policy interventions, can
contribute to the transformation of national economies and households can safely rely "on the
market for disposal of their production, for purchases of raw materials, for opportunities to hire
labour and work for wages, for investments and loans, for other goods and services" (Tomich et al,
1995, p36). The resultant specialization leads to the emergence of new manufacturing and service
activities.
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Policy needs to be revisited with a view to increasing the accessibility of markets to smallholder
farmers. This could partly be achieved if government could provide subsidies to support points
where farmer sell their produce. At the initial stage, the depots will operate below capacility and
require government subsidy. The subsidy would be a temporary intervention and could be removed
when the volume of the produce is sufficient to cover the costs of running them.
The government should also strengthen other areas that could contribute to increased production
through creation of an enabling environment, provision of substantial assistance to farmers in poor
rural areas. This support should include providing finance, extension services, input supplies and
subsidies and enforcing structural changes in the economy, for example, through land reform.
Access to Inputs
Agricultural input supplies are critical for ensuring production. Government supports smallholder
farmers through the provision of free production inputs and services, in various forms. One of the
schemes used by the KZN provincial government is the Crop Massification Programme. In her
speech to the provincial legislature on April 15, 2010 the MEC of Agriculture, Environmental Affairs
and Rural Development, indicated that the programme is aimed at empowering small scale farmers
to farm collectively as cooperatives. She also indicated that, as part of the programme, the
department assists with mechanisation, agricultural inputs, mentorship and markets access. In
2009/10 a total 1,364 ha were planted with maize and 322 ha were planted to beans, benefitting
1,100 farmers. The plans were to increase the area under the programme to 2,424 ha. The impact of
the programme has not been evaluated, and to date, has resulted in variable and unsustainable
levels of production, with no evident enhanced access to markets. However, large pieces of land
remain under utilized, showing that the massification programme is not creating the necessary
“seed” that can them lead to extensive use of land.
With respect to production inputs, public support should move away from provision of free
production inputs to creation of the enabling environment. The latter should be in the form of
organization of farmer’s to achieve economies of scale in marketing. Cooperatives could be one
mode of organizing smallholder farmers for this purpose. However, more importantly is to ensure
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that farmers have the access to markets. As argued above, marketing boards, with a specific
mandate to serve the previously disadvantaged sector of the smallholder farmers, could serve this
purpose. The rules operating in the marketing environment should be relaxed to allow smallholder
farmers to participate. Under the current scenario, farmers are required to have tax identification
numbers, and be registered as a legal entity. Such seemingly simple requirements are quite onerous
for smallholder farmers. In addition, buyers sometimes change their positions when relating to small
holder farmers, they might express a willingness to purchase one product but no longer require it
when the farmer tries to deliver. In some cases, this happens because the buyers manage to secure
the produce from the large scale commercial farmers. The low levels of literacy amongst the
smallholder farmers also diminish the ability of farmers to effectively participate in liberalized
markets, including entering into contracts to guarantee markets.
Government agricultural development programmes, as manifested through the massification
programmes, seek to make the smallholder farmers competitive (against the large scale farmers)
through formation of cooperatives that can produce returns to scale. The challenge of access to
markets facing the smallholder farmers cannot be addressed only through achieving economies to
scale, and the smallholder farmers cannot compete with the large scale farmers. Smallholder
farmers cannot compete with large scale commercial in the production of commodities that benefit
from economies of scale, e.g., maize. Instead, they should go into production of scale-neutral
commodities, especially labour intensive production. Government agricultural support should
instead seek to develop those competences that can allow the smallholder farmers to have
comparative advantages over the large scale commercial farmers. Such capacity building should be
accompanied by the identification of markets.
Infrastructure
The functioning of markets relies on infrastructure (Kohls & Uhl, 1998) and institutions. Ahmed and
Donovan (1992) drew up four criteria to define infrastructure as follows:
• “the services that facilitate or are basic to economic activity;
• the services are usually public goods because of economic externalities;
• the services cannot be imported;
• investments tend to be indivisible”
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This indicates that infrastructure are public goods whose consumption does not forbid consumption
by others. Ahmed and Donovan (1992) also pointed out that infrastructure development is lagging in
Africa, when compared, for example, with Asia. Infrastructure can be measured in terms of mileage
of paved road and railway lines per 1,000 persons, density of mechanized vehicles per unit of paved
road. Rural electrification and communication systems are other aspects of infrastructure.
Lakshmanan (1989), quoted in Ahmen and Donovan (1992) suggests that infrastructure has an effect
on the production function of reducing the marginal costs of production. This, in turn, allows a
higher output to be made available on the market, at any given price level. Such reductions in
marginal costs could be due to fall in transaction costs, improved diffusion of technology, new
combinations of output and inputs, better input prices, increase specialization, commercialization,
improved entrepreneurial capacity, etc.
Classical agricultural development models, such as the “frontier model” where new land is opened
up and put into use and, the “diffusion model”, which postulate technological spread, are all
premised on availability of infrastructure (Ahmen and Donovan, 1992). They also point out that
infrastructure play an important part in production of technology choices and output increase.
Better infrastructure enhances better agricultural practices, including level of input use.
JBIC (2007) specifically looked at and pointed to the role of irrigation infrastructure on poverty. In
addition irrigation infrastructure also tended to affect other socio-economic and demographic
variables at household level, e.g., family size, number of workers per household, years of schooling,
and experience in farming, land markets. However, Lam and Ostrom (2009) pointed out that
infrastructure, on its own is not sufficient for rural development. They also noted the need for
farmers to encourage local entrepreneurs, organise themselves, create the necessary institutions/
rules and follow-up those rules.
The government of South Africa has set itself develop an efficient and competitive infrastructure
network. Emphasis should also be placed on the infrastructure required by smallholder farmers.
Communication has vastly increased as a result of the advent of the mobile phone and internet.
However, the later is still relatively inaccessible to smallholder farmers. Government should
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continue to enhance the access of rural communities to the internet. Roads are the most significant
infrastructure for rural communities for which government is best placed to put in place. Roads can
result in the integration of rural communities in the mainstream economy.
Research and Development
When viable markets for smallholder farmers’ produce (produced at their small scale but based on
their comparative advantage) have been identified, the second shift would be required in the
research and development (R&D) arena. Approaches that seek to develop smallholder agriculture by
building various areas of comparative advantage need to be developed. Different R&D approaches
have been tested and suggested for smallholder agriculture.
R&D efforts have been dedicated to the development of the most effective methods of generating
and disseminating the technologies to address agricultural development needs of smallholders.
World Bank (2006) and Spielman (2005) have noted that the national agricultural research system
(NARS) in the 1980’s and the agricultural knowledge and information systems (AKIS) in the 1990’s
are the precursors of the innovation systems approach which is gradually emerging at the dominant
approach.
Smallholder farmers operate in complex farming systems which have evolved over time. With
varying degrees of success, they have managed to innovate and then share and disseminate
amongst themselves. In SA, the apartheid policies undermined the productive and innovative
potential of the smallholder farmers. Besides the limitation on the amount of land available for
farming, research and development was concentrated on addressing the needs of the large scale
commercial farming sector. In the complex smallholder farming systems where societal factors
interact with the innovations endogenously, the society determines the innovations that are
developed, yet on the other hand the innovations also influence the societal changes. Market and
non-market factors play a critical role in defining development pathways.
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The complexity of smallholder farming systems makes the linear approach to R&D unsuitable where
technologies are developed at research stations, communicated to extension personnel who then
disseminate to farmers. In this linear approach, knowledge is supposed to originate from the
scientific researcher, flowing to the farmers.
South Africa, like other developing countries, faces new and increasingly complex challenges to
organize agricultural research and development (R&D) efforts to address eliminate hunger and
poverty, especially in the face of increasing population pressure that necessitates the use of land
marginally suitable for agricultural production. Technological options developed externally at
research stations, as is the case in the linear approach to R&D, are often unsuitable for the marginal
environments that smallholder farmers face, leading to limited adoption of technologies. The
circumstances of smallholder farmers are different from those on large scale commercial farms and
research stations in terms of scale, resources available for production or agro-ecological
environment. Developing technologies that are not only suitable for the circumstances of
smallholder farmers and in which they can have a competitive advantage over large scale
commercial farmers will require that the smallholder farmers become active participants in the R&D
process. The innovativeness of some of the farmers, has to be recognized and be exploited for the
development of locally grounded technologies. Nonetheless, technologies can also be introduced,
when necessary.
Failure to recognize the innovativeness of smallholder farmers has meant the loss or underutilization
of the knowledge and experience which the farmers have, over time, developed under their
circumstances. Innovations developed at research stations have been developed on a reductionist
philosophy which ignores the complexity of the smallholder farming systems.
The linear approach is justified when the objectives to be achieved from agricultural research are to
attain a defined production system, such as achieving food security and poverty alleviation through
enhancing crop yields (Spielman, 2005). However, the linear approach has resulted in a glaring
inability of technical scientific institutions to deliver technologies appropriate for the smallholder
farming systems. Consequently, food security and environmental degradation persist. These
shortcomings point to the need for participatory innovation development where smallholder
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farmers and the scientists interact to find solutions. This is the thrust of the innovation systems
approach.
The Participatory Innovation Development (PID) approach is due where farmers participate in all
aspects of technology development. Its starting point is the belief that knowledge for advancing
research is vested in both scientists and smallholder farmers. Therefore, unlike in the linear
approach to R&D, in PID, farmers are key to innovation development. PID recognises indigenous
knowledge (IK) and of the capacity of farmers to adapt to change – to develop their own site-
appropriate systems and institutions of resource management so as to attain food security, sustain
livelihoods and safeguard the environment. Innovation is any new knowledge introduced into and
utilized in an economic or social process for the improvement of livelihoods. The innovations can be
technical, institutional or process/ organizational in nature. PID recognises that smallholder farmers
can also innovate with regards to the manner in which they work with each other, i.e., institutional
innovations.
PID advocates for the building on and scaling up of farmer-based development. It starts by
discovering how farmers experiment on their own to develop and test new ideas. Understanding
local innovation transforms how research and extension agents view local people. This experience
stimulates interest in joint action and analysis leading to mutual learning. Local ideas are further
developed in a participatory process that integrates IK and scientific knowledge.
The emphasis on local innovation stems from a recognition that many international and national
research institutes have operated in relative isolation from the intended beneficiaries of research,
especially with respect to smallholder farmers. They have generally failed to effectively link with
smallholder farmers which inhibits the understanding of farmers’ issues and appreciation of their
constraints and imperatives. All of these should play a larger role in activities of people interested in
developing technologies relevant for small-scale farmers. Delve and Roothaert (2004:234) advocated
for the involvement of farmers in the research process when they noted that there is “… strong
evidence that enhancing farmers technical skills and research capabilities, and involving them as
decision-makers in technology development process results in innovations that are more responsive
in their priorities, needs and constraints.”
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The challenge is not only that the innovation developed on research stations may not be appropriate
for smallholder farmers. A new challenge, particularly for smallholder, farmers is emerging from
climate change. Climate change is expected to have detrimental effects such as an increased year-
to-year variability in rainfall resulting in increases in both droughts and heavy precipitation events.
The net effect will be lower agricultural production with consequent negative effects on income and
food security. Households will need to adapt to the changes, e.g., cropping and planting practices
and grain storage, land management including erosion control, and soil protection.
This calls for a change in the manner in which research and extension are delivered. This will require
their reorientation to have an understanding of how to involve smallholder farmers. Policy makers
should also place more resources to R&D work that directly address issues involving smallholder
farmers. Research should focus on developing technologies that are appropriate for smallholder
farmers and which addresses their multiple objectives. Where research it directed at commodities
for the market, it should be those options that can result in enhanced comparative advantage for the
producers. The PID approach, which recognises both technical and institutional innovations, is
proposed.
Credit
The provision of credit is critical for farmers to invest into production inputs and equipment.
However, credit could be provided once people have a good financial understanding of interest,
repayment, etc. The then Minister of Agriculture, Ms Xingwana, in a foreword to the 2008/09–
2010/11 Strategic Plan (Department of Agriculture, 2008), noted that her department had re-
established the Agricultural Credit Scheme, renamed Micro-agricultural Financial Institutions of
South Africa (Mafisa). The establishment os such schemes ensures that smallholder farmers, who
otherwise cannot access credit from the banking institutions, have access to credit at concessionary
interest rates. Most smallholder farmers do not have title deeds to the land and thus cannot use the
land as security against credit.
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Beginning 2005, the South African government started to promote cooperatives, among other
initiatives, which could access government finance, usually provided through parastatal agencies,
e.g., Ithala Bank. Cooperatives are advanced 100 percent of the funds to start projects. The
government set up Mafisa to target the micro and small agricultural and related business and to
provide capital to increase agricultural and other related activities. Land Bank also provides credit,
mostly to commercial farmers. However, small holder farmers are reluctant to get credit from the
Land Bank, since paperwork and guarantees are clearly oriented for commercial activities.
Stokvels are informal rural saving and money lending schemes operating at village level. Many village
communities have ‘stokvels’, usually formed by females. The members usually put money in a
common pool, which they share at the end of the year. Variations of the stokvels are emerging
which allow members to invest the savings into some business or other investment options. These
variations should be encouraged so that credit generated from local savings can be available locally
without the stringent conditions of collateral.
Government and development agents should consider promoting more accessible, user friendly
models which allow access to finance, such as, the Gramean bank (mini credits with social collateral).
Further development of local saving and money lending schemes can be based on the stokvel
concept. At a later stage credit unions might emerge out of it.
Conclusion
Rural development should recognise the potential offered by putting resources on smallholder
farmers, especially given their large members. Nevertheless, the complexity of the systems these
farmers operate calls for a multi-faceted approach rather than a top-down linear one. New tools,
skills, and competencies, new methods of designing and implementing research and policy; new
ways of managing and financing complex innovation and research activities; and new approaches to
working with diverse actors in the creation and dissemination of knowledge, or in the search for
existing and relevant information and technologies are required. Improved capacity in conducting
scientific research, promoting collective action, and managing information can result in innovations
to benefit smallholder farmers, food-insecure households, and other vulnerable social groups. The
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innovation systems approach, coming in the advent of the participatory methodologies, recognizes
the strength of all the role players in contribution to the enhancement of the system. Government
should also ensure access to credit and develop infrastructure to enhance market access.
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