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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