EXPLORING INTERVENTIONS FOR PARTICIPATION OF EMERGING FARMERS IN THE EASTERN CAPE
OSTRICH-INDUSTRY SUPPLY CHAIN
T.M. PITTAWAY
2013
EXPLORING INTERVENTIONS FOR PARTICIPATION OF EMERGING FARMERS IN THE EASTERN CAPE
OSTRICH-INDUSTRY SUPPLY CHAIN
By
TIMOTHY PITTAWAY
Submitted in fulfilment of the requirements for the degree of Doctor Technologiae to be awarded at the Nelson Mandela
Metropolitan University
December 2013
Promoter/Supervisor: Prof P. VAN NIEKERK
Co-promoter/Co-supervisor: Dr J. VANSTEENKISTE
I
DECLARATION
I, Timothy Pittaway 9320652, hereby declare that the thesis for the degree of Doctor
Technologiae to be awarded is my own work and that it has not previously been
submitted for assessment or completion of any postgraduate qualification to another
University or for another qualification.
…………………………………………
Timothy Pittaway
Port Elizabeth
December 2013
II
DEDICATION
To God and my wonderful wife Renè Ann Flanagan Pittaway
Philippians 4:13
III
ACKNOWLEDGEMENTS
I would like to sincerely express my appreciation to the following:
Professor Pieter van Niekerk for his guidance, patience and making this work
possible.
Dr Vansteenkiste for her continuous, empathic support and motivation.
Dr Jacques Pietersen for his assistance with the statistical analysis.
Rosemary Batchelor for her many hours of proof reading and providing valuable
input.
Professor Andrew Leitch for his support and encouragement.
The NMMU Research Office and Research Capacity Development, Belinda du
Plooy, her support and assistance.
Financial support from Nelson Mandela Metropole University (NMMU) and
National Research Foundation (NRF).
My friends and colleagues at the Department of Agriculture and Game Ranch
Management at NMMU.
My students, Yandisa Msindo, Vuyokazi Mxoli and Sive Mbangiswano for their
assistance with data collection.
Vernon and Leanne Naidoo, Grant Dryden, Grant and Karen Weyer for their
encouragement, support and prayer.
Professor Enver Motala and Dr Andrew Krajewski for their inspiration.
My mom and dad: Ethel and Mike for their love and support during this study.
Thank you for providing a foundation to make this possible.
My sister, Carrie for her support and her daily Dr jokes.
My parents-in-law: Norma and Terry for their support.
My wife, Renè, and children Cameron and Olivia, for believing in me and for
giving me the space needed to complete this study.
IV
TABLE OF CONTENTS
DECLARATION I
DEDICATION II
ACKNOWLEDGEMENTS III
CONTENTS IV
ABSTRACT XI
LIST OF FIGURES XV
LIST OF TABLES XVII
CHAPTER 1
INTRODUCTION AND ORIENTATION OF RESEARCH
1.1 INTRODUCTION TO THE RESEARCHER 2
1.2 INTRODUCTION TO THE RESEARCHED AREA 3
1.3 PROBLEM STATEMENT 5
1.4 SUB-PROBLEMS 6
1.5 HYPOTHESIS 7
1.6 RESEARCH OBJECTIVES 8
1.7 DELIMITATION OF THE RESEARCH 8
1.7.1 Emerging ostrich farmer programme 8 1.7.2 Ostrich industry stakeholders 9 1.7.3 Other stakeholders and role players 10 1.7.4 Geographical demarcation 10
1.7.5 Livestock 11
1.8 RESEARCH METHODS 12
1.9 RESEARCH DESIGN AND DATA COLLECTION 14
1.10 SOCIO-ECONOMIC SIGNIFICANCE AND RATIONALE OF THE RESEARCH 17
1.11 DEFINITION OF CONCEPTS 18
1.11.1 Exotic livestock 18 1.11.2 Market access 18 1.11.3 Opportunities for participation 19 1.11.4 Supply chain versus value chain 19 1.11.5 Industry 19 1.11.6 Registered Ostrich Compartment 20 1.11.7 Ostrich out-grower 20
V
1.12 STRUCTURE OF THE RESEARCH 20
CHAPTER 2
RESEARCH METHODOLOGY
2.1 INTRODUCTION 25
2.2 LITERATURE REVIEW 28
2.2.1 Literature database review 28 2.2.2 Content analysis 29
2.3 PILOT STUDIES 30
2.4 EXPLORATIVE INVESTIGATION 31
2.4.1 Situational analysis of ostrich industry 32
2.5 MULTIPLE CASE STUDIES 34
2.5.1 Research localities 35 2.5.2 Peddie Ostrich Programme 36 2.5.3 Rockhurst Ostrich Programme 37 2.5.4 Hlumani Co-operative 38 2.5.5 Zamukwanda Ostrich farm 39 2.5.6 Mimosadale Ostrich farm 40
2.6 QUESTIONNAIRE 41
2.7 FOCUS-GROUP DISCUSSIONS 45
2.8 DEVELOPMENT OF PARTICIPATION CAPACITY INSTRUMENT 46
2.9 OPERATIONALISATION AND ANALYSIS OF QUALITATIVE DATA 47
2.10 LIMITATIONS OF THE STUDY 49
2.11 ETHICAL CONSIDERATIONS 50
2.12 SUMMARY 51
CHAPTER 3
OVERVIEW OF THE RURAL EASTERN CAPE: AN AGRARIAN POINT OF VIEW
3.1 INTRODUCTION 54
3.2 AGRO-ECOLOGICAL ENVIRONMENT 55
3.2.1 Geology and Soils 55 3.2.2 Topography 56 3.2.3 Climate and water resources 56
3.3 HISTORICAL FACTORS AFFECTING AGRICULTURAL PARTICIPATION OF BLACK FARMERS 57
3.4 LOCATION AND SOCIO-ECONOMIC DESCRIPTION 59
VI
3.5 ECONOMIC OVERVIEW OF THE EASTERN CAPE 62
3.6 RURAL DEVELOPMENT AND SOCIAL SUPPORT INTERVENTIONS 64
3.7 RELATED RESEARCH ON EMERGING FARMER PROGRAMMES 67
3.7.1 Technical constraints on market access 67 3.7.2 Challenges and recommendations in emerging farmer co-operatives 68 3.7.3 Contract farm modeling 70 3.7.4 Development planning 70 3.7.5 Influences on market aspects 71 3.7.6 Linking emerging farmers with markets 71 3.7.7 Scaling-up farmers 72 3.7.8 Consultation with Amathole Economic Development Agency 73
3.8 CONCLUDING REMARKS 74
CHAPTER 4
RURAL LIVESTOCK FARMING IN THE EASTERN CAPE
4.1 INTRODUCTION 77
4.2 REVIEW OF RURAL LIVESTOCK FARMING IN THE EASTERN CAPE 78
4.3 ANTHROPOLOGICAL OVERVIEW OF THE ROLE OF CATTLE 80
4.4 OVERVIEW OF LIVESTOCK MARKETING-CHANNEL AND INTERVENTIONS TO ASSIST PARTICIPATION 82
4.5 CONCLUDING REMARKS 85
CHAPTER 5
AN INTRODUCTION TO THE OSTRICH INDUSTRY
5.1 INTRODUCTION 88
5.2 OVERVIEW OF THE SOUTH AFRICAN OSTRICH INDUSTRY 89
5.3 SOUTH AFRICAN OSTRICH INDUSTRY HISTORY 91
5.4 CONTENT ANALYSIS OF OSTRICH RESEARCH INTEREST 95 THROUGH TEXT-MINING METHOD
5.4.1 Introduction 95 5.4.2 Findings 96
5.5 OVERVIEW OF OSTRICH HUSBANDRY 101
5.5.1 Epidemiology 101 5.5.2 Genetics 104 5.5.3 Breeding 104
VII
5.5.4 Incubation and rearing of chicks 105 5.5.5 Feed management 106 5.5.6 Animal behavior 107 5.5.7 Farming systems 108
5.6 CONCLUDING REMARKS 109
CHAPTER 6
REVIEW OF OSTRICH INDUSTRY SUPPLY CHAIN AND INTRODUCTION TO CASE STUDIES
6.1 INTRODUCTION 112
6.2 INTRODUCTION TO SUPPLY CHAINS 113
6.3 GOVERNANCE IN SUPPLY CHAINS 114
6.4 LIVESTOCK FARMING SUPPLY CHAINS IN THE DEVELOPING WORLD 116
6.5 THE OSTRICH INDUSTRY SUPPLY-CHAIN RELATIONSHIP MAP 117
6.6 OSTRICH INDUSTRY SERVICE PROVIDERS 122
6.6.1 The South African Ostrich Business Chamber 122 6.6.2 National Ostrich Processors of South African 124 6.6.3 South African Ostrich Producers Organisation 125 6.6.4 South African Ostrich Breeders Association 125 6.6.5 Department of Agriculture, Forestry and Fisheries 125 6.6.6 National Residue Monitoring Programme 126 6.6.7 EU Agricultural attaché 126
6.7 OSTRICH PRODUCTION AND PROCESSING IN SOUTH AFRICA 128
6.8 EASTERN CAPE OSTRICH PRODUCTION 129
6.9 BACKGROUND TO EMERGING FARMER CASE STUDIES
6.9.1 Peddie Ostrich Programme 131 6.9.2 Rockhurst Ostrich Programme 133 6.9.3 Hlumani Ostrich Co-operative 135 6.9.4 Zamukwanda Ostrich Programme 136 6.9.5 Mimosadale Ostrich Farm 138
6.10 RELATIONSHIP MAPPING OF CASE STUDIES 139
6.11 CONCLUDING REMARKS 141
CHAPTER 7
BLACK ECONOMIC EMPOWERMENT STIMULUS IN THE OSTRICH INDUSTRY
7.1 INTRODUCTION 143
7.2 INTRODUCTION TO BLACK ECONOMIC EMPOWERMENT 144
7.3 INTRODUCTION TO BLACK ECONOMIC EMPOWERMENT IN
VIII
AGRICULTURE 145 7.4 COMMODITY PROJECT ALLOCATION COMMITTEE FOR THE OSTRICH INDUSTRY 147
7.5 OVERVIEW OF THE NATIONAL FRAMEWORKS UNDERPINNING LEGISLATION AND POLICY FRAMEWORKS OF THE OSTRICH INDUSTRY
7.5.1 Comprehensive Agricultural Support Programme 148 7.5.2 Land and Agrarian Reform Programme 149 7.5.3 Comprehensive Rural Development Programme 149 7.5.4 Strategic Plan for South African Agriculture 150 7.5.5 Eastern Cape Rural Development Strategy 151
7.6 OSTRICH INDUSTRY AGRIBEE INITIATIVES 151
7.6.1 Western Cape 152 7.6.2 Northern Cape 153 7.6.3 Eastern Cape 153
7.7 CONCLUDING REMARKS 156
CHAPTER 8
SITUATIONAL ANALYSIS OF THE OSTRICH INDUSTRY
8.1 INTRODUCTION 159
8.2 CONTENT ANALYSIS OF INDUSTRY ARTICLES 160
8.2.1 Introduction 160 8.2.2 Synopsis of main themes from content analysis 160
8.3 MICRO ENVIRONMENT INFLUENCES 163
8.3.1 Introduction 163 8.3.2 Product characteristics 163 8.3.3 Geographic competitive considerations 173 8.3.4 Competitive forces in the ostrich industry 175
8.4 MACRO ENVIRONMENT INFLUENCES 185
8.4.1 Introduction 185 8.4.2 Political influences 185 8.4.3 Economic influences 189 8.4.4 Socio-cultural influences 195 8.4.5 Technological influences 196 8.4.6 Environmental influences 198 8.4.7 Legal influences 201
8.5 STAKEHOLDER INTERVIEWS 203
8.5.1 Ostrich farming and production 204 8.5.2 Ostrich products 204
IX
8.5.3 Intermediary agents structure 205 8.5.4 Marketing channels 206 8.5.5 Threats to the industry 207 8.5.6 Network View 207
8.6 CONCLUDING REMARKS 210
CHAPTER 9
PRESENTATION OF FINDINGS: EASTERN CAPE EMERGING OSTRICH PROGRAMMES
9.1 INTRODUCTION 216
9.2 QUESTIONNAIRE FINDINGS 216
9.2.1 Profile of farmers and socio-economic aspects of programmes 217 9.2.2 Human capital endowments 221 9.2.3 Farming period and activities 223 9.2.4 Comparison of various variables between the case studies 224 9.2.5 Frequency of key topics from questionnaires 227
9.3 FINDINGS FROM FOCUS GROUPS 231
9.3.1 Source of feed and feeding system constraints 232 9.3.2 DAFF’s contribution to the ostrich programmes 233 9.3.3 Intensity of ostrich farming constraints 234 9.3.4 Financial constraints 235 9.3.5 Mentors and leadership 236
9.4 FINAL DISCUSSION 237
CHAPTER 10
THE DEVELOPMENT OF A PARTICIPATION CAPACITY INSTRUMENT
10.1 INTRODUCTION 240
10.2 INSTRUMENT FORMULATION 241
10.2.1 Local Vulnerability Index 241 10.2.2 Human Capacity Index 241 10.2.4 Agrarian Capacity Index 242 10.2.5 Market Access Capacity Index 243
10.2 LOCAL VULNERABILITY INDEX FINDINGS 244
10.3 HUMAN CAPACITY INDEX FINDINGS 245
10.4 AGRARIAN CAPACITY INDEX FINDINGS 246
10.5 MARKET-ACCESS CAPACITY INDEX FINDINGS 248
10.6 CONCLUDING REMARKS 249
X
CHAPTER 11
MAIN FINDINGS, CONCLUSION AND RECOMMENDATIONS
11.1 INTRODUCTION 254
11.2 SUMMARY OF MAIN FINDINGS 255
11.2.1 Livestock farming in the rural environment of the Eastern Cape 255 11.2.2 The present state of the ostrich industry 256 11.2.3 The ostrich supply chain 260 11.2.4 Present interventions for participation for emerging ostrich- farmer in the ostrich industry 261 11.2.5 Synopsis on the emerging ostrich farmers in the Eastern Cape with emphasis on main constraints 262 11.2.6 Contributory value of programmes 267
11.3 FINAL DISCUSSION 268
11.4 RECOMMENDED INTERVENTIONS 271
11.4.1 Feasibility study of programmes and review of location selection before initiation 274 11.4.2 Providing supportive interventions for programme start-ups 274 11.4.3 Improved selection of programme beneficiaries 275 11.4.4 Improved structure of emerging farmers’ co-operatives 276 11.4.5 On-going and appropriate training for emerging ostrich farmers 276 11.4.6 The role of government and mentors needs to be defined 277 11.4.7 Reducing feed costs 278 11.4.8 Establishing programmes linkages to informal markets and facilitating increased self-consumption 278 11.4.9 Developing new export markets 279 11.4.10 Alternative finance for the no-income months 280 11.4.11 Alternative marketing channels to export markets 280 11.4.12 Representation of emerging farmers in the ostrich-industry leadership structures 281
11.5 OPPORTUNITIES FOR FURTHER RESEARCH 281
11.6 CONCLUSION 282
REFERENCE LIST 284
XI
ABSTRACT
The changing agricultural environment (dualistic agricultural landscape, land
reform programme, market liberalisation and globalisation) has caused emerging
ostrich farmers to become increasingly isolated. Governmental agriculture
reforms and public sector interventions have been insufficient to address all the
challenges faced by rural ostrich farmers in the Eastern Cape. Participation in the
ostrich supply chain for emerging farmers in the Eastern Cape is currently
unsustainable as a result of avian influenza, control and registration protocols for
ostriches (VPN04), structural barriers in marketing, technical constraints and a
lack of market participation.
People in the rural areas of the Eastern Cape are challenged by inferior
infrastructure, poor site conditions, low earnings, poor access to health services
and unreliable water sources. The marginal conditions and prevalent
complexities in which agriculture is practised require costly resource intervention.
Intensive ostrich production necessitates continuous genetic improvement,
methodical record keeping, intensive egg incubation methods and high-
maintenance chick rearing and ostrich handling while minimising feed costs
throughout this process. Rural farmers have not embraced ostrich farming in the
same way as they have done with other livestock farming because it does not
offer the anthropological functions that traditional livestock farming provides. The
ostrich supply chain requires a wide range of activities to bring products to the
final consumer. The worth of ostrich production lies mainly in the higher returns
which are achieved only through the export markets. Today the ostrich industry
has become vulnerable to market cannibalism, a lack of market development,
unregulated numbers of ostriches and recurring international meat bans.
XII
The deregulation of the ostrich single-channel marketing system had a
substantial effect on the value chain on which farmers depended for market
access and market protection. As the majority of ostrich products are being
exported to the European Union, the role of intermediary agencies is becoming
an important factor influencing entry into the high-end markets. This agent
structure that represents the South African ostrich industry is vital for the
distribution, market penetration and regulation of the ostrich products. The
ostrich leather, which is today the main product line, is primarily used for luxury
goods and is susceptible to economic downturn and over-supply. The ostrich
meat industry has been severely influenced by outbreaks of avian influenza and
processors now pre-heat the meat in order to maintain export. However, this pre-
heating meat facility is only for export produce and available to farmers who
conform to VPN04 and have officially registered farms. The relevant South
African government departments played a crucial role in identifying avian
influenza outbreaks and liaising with the European Union about avian influenza
isolation strategies.
No previous studies have been conducted on the participation of emerging
farmers in the Eastern Cape ostrich-industry supply chain and on the
interventions required to address the multiple constraints and forces in this
sector. This led to a study with research emphasis on the required capacity for
supply-chain participation and the supporting mechanisms that would be required
for emerging ostrich farmers to integrate successfully into this supply chain. An
exploratory research approach was chosen for the investigation, as no earlier
research has been undertaken that could serve as a source of reliable data or
reference. A triangulation research methodology using both the quantitative and
the qualitative approach was applied. The qualitative research entailed an
interpretive approach associated with using grounded theory and content
analysis for interpreting data.
XIII
The comparative case study design was the main qualitative research instrument
for the multiple-case studies on emerging ostrich farmers in the Eastern Cape.
The study was undertaken at five different sites, namely, the Peddie Ostrich
Programme, the Rockhurst Ostrich Programme, the Hlumani Co-operative farm,
the Zamukwanda Ostrich farm near Pearston and the Mimosadale Ostrich farm.
The quantitative methods were applied to capture all the measurable
components and representations of the stakeholders and participants, through
interviews, questionnaires and focus group interviews. The quantitative study
also included an experimental instrument to measure the capacity of emerging
farmer programmes for supply chain participation.
It was found that the main driver for three of the case studies pertained to land
ownership and that ostrich farming was incidental and only seen as means of
activity for income. These three humanitarian farming projects had limited
capacity for intensive management requirements for ostrich farming. It was found
that the VPN04 bio-security protocols and disease control require a higher level
of record keeping for EU markets and is prohibitively expensive for poor rural
emerging farmers. The study established that the emerging ostrich farming
programmes contributed value to the industry and government rural development
in land redistribution programmes, vehicles for reduction of poverty and job
creation in the rural areas and by acting as out-grower programmes for
commercial farmers. The researcher’s observation is that through strategic
interventions the programmes have potential to become commercial players in
the industry.
XIV
The following interventions were recommended from this study:
Feasibility study of programmes and review of location selection before
initiation.
Providing supportive interventions for programme start-ups.
Improved selection of programme beneficiaries.
Improved structure of emerging farmers’ co-operatives.
On-going and appropriate training for emerging ostrich farmers.
The role of government and mentors needs to be defined.
Reducing feed costs.
Establishing programmes linkages to informal markets and facilitating
increased self-consumption.
Developing new export markets.
Alternative finance for the no-income months.
Alternative marketing channels to export markets.
Representation of emerging farmers in the ostrich-industry leadership
structures.
Keywords: emerging ostrich farmer, supply chain, interventions, market channel, EU regulations, bio-security, avian influenza, pre-heated meat, VPN04, participation capacity measuring instrument, development path mapping, Eastern Cape.
XV
LIST OF FIGURES
Figure 1.1 The research circle 13
Figure 1.2 Process of research design and structure of research 23
Figure 2.1 Eastern Cape research area 35
Figure 2.2 Map of Peddie Ostrich farm 36
Figure 2.3 Map of Rockhurst farm 37
Figure 2.4 Map of Hlumani Co-operative farm 38
Figure 2.5 Map of Zamukwanda Ostrich farm 39
Figure 2.6 Map of Mimosadale Ostrich farm 40
Figure 2.7 Qualitative data coding and analysis process 48
Figure 2.8 Process of research design and structure of research 52
Figure 3.1 Process of research design and structure of research 75
Figure 4.1 Marketing channels for produce from smallholder farmers 83
Figure 4.2 Process of research design and structure of research 86
Figure 5.1 South African ostrich slaughter figures 94
Figure 5.2 Categories of researched literature on ostriches 97
Figure 5.3 Categories of ostrich researched literature in date clusters 99
Figure 5.4 Process of research design and structure of research 110
Figure 6.1 Typology of governance systems in value chains 115
Figure 6.2 Relationship map of the ostrich supply chain with supporting service providers 120 Figure 6.3 South African Ostrich Business Chamber linkage to stakeholders 122
Figure 6.4 Relationship map of the ostrich supply chain with supporting service providers 127 Figure 6.5 Spatial distribution of primary ostrich production and processing in South Africa 128
XVI
Figure 6.6 Ostrich production per province 129
Figure 6.7 Ostrich compartments at Peddie Ostrich Programme 133
Figure 6.8 Rockhurst ostrich-egg electronic incubators 135
Figure 6.9 Bathurst ostrich chick raising structures 136
Figure 6.10 Pearston ostrich compartments 137
Figure 6.11 Programmes linkage to supply chain during initiation 140
Figure 6.12 Programmes linkage to supply chain on final year of production 140
Figure 6.13 Process of research design and structure of research 141
Figure 7.1 Spatial distribution of AgriBEE projects in the ostrich industry in 2010 155
Figure 7.2 Process of research design and structure of research 157
Figure 8.1 South African ostrich leather exports by destination 167
Figure 8.2 South African ostrich meat exports by destination 170
Figure 8.3: Ostrich product earnings 2003 - 2013 171
Figure 8.4 Comparison of KKI and other South African production 182
Figure 8.5 Provincial evolution of the South African ostrich industry 184
Figure 8.6 List of main grounded and density of codes 208
Figure 8.7 Network view of axial coding with relational linkage 208
Figure 8.8 Ostrich farming relational messy map 213
Figure 8.9 Process of research design and structure of research 214
Figure 9.1 Process of research design and structure of research 238
Figure 10.1 Bar chart comparison between five case studies 249
Figure 10.2 Radar chart comparison between five case studies 251
Figure 10.3 Process of research design and structure of research 252
Figure 11.1 Emerging ostrich farmer development path 273
XVII
LIST OF TABLES
Table 2.1 Summary of research methodology 27
Table 2.2 Researched determinants on smallholder participation in literature 42
Table 2.3 Summary of questionnaire 44
Table 5.1 Findings of most popular research topics on ostriches 96
Table 8.1 Main themes from content analysis of magazine articles related to the ostrich industry 161 Table 8.2 Analysis of Code Families between respondents 209
Table 9.1 Farmers’ gender 217
Table 9.2 Farmers’ marital status 217
Table 9.3 Average age of farmers 218
Table 9.4 Age groups of farmers 218
Table 9.5 Average period of residence 219
Table 9.6 Farmers’ household size 219
Table 9.7 Number of social grants in the farmer’s household 220
Table 9.8 Number of child support grants in the farmer’s household 220
Table 9.9 Farmers level of education 221
Table 9.10 Farmers’ access to transport 222
Table 9.11 Farmers’ access to electricity 223
Table 9.12 Years of farming ostriches 223
Table 9.13 Farmers engaged in other farming activities 224
Table 9.14 Comparison of various variables between the case studies 226
XVIII
Table 9.15 Frequency of main topics raised in the farming, production, management and open ended question sections 230 Table 9.16 Detail of focus group participants 231
Table 10.1 Local Vulnerability Index for case studies 244
Table 10.2 Calculation of human capacity scoring 245
Table 10.3 Calculation of agrarian capacity scoring 247
Table 10.4 Calculation of market access scoring 248
Table 10.5 Percentage comparison between five case studies 249
Table 10.6 Accumulative percentage comparison between five case studies 250
1
CHAPTER 1
INTRODUCTION AND ORIENTATION OF RESEARCH
1.1 INTRODUCTION TO THE RESEARCHER 1.2 INTRODUCTION TO THE RESEARCHED AREA 1.3 PROBLEM STATEMENT 1.4 SUB-PROBLEMS 1.5 HYPOTHESIS 1.6 RESEARCH OBJECTIVES 1.7 DELIMITATION OF THE RESEARCH 1.8 RESEARCH METHODS 1.9 RESEARCH DESIGN AND DATA COLLECTION 1.10 SOCIO-ECONOMIC SIGNIFICANCE AND RATIONALE OF THE
RESEARCH 1.11 DEFINITION OF CONCEPTS 1.12 STRUCTURE OF THE RESEARCH
2
CHAPTER 1
INTRODUCTION AND ORIENTATION OF RESEARCH 1.1 INTRODUCTION TO THE RESEARCHER Research is required to embrace multiple standards of quality, such as
credibility, validity, rigour, reliability and trustworthiness. According to Schutt
(2011:5) researchers engage in one or more of the following processes when
investigating the social world: observing, generalising, reasoning and
re-evaluating.
Stating who the researcher is in the context of environment and background is
an integral part of the process of reasoning and evaluation. The values of the
researcher can influence what is observed and the researcher’s underlying
biases may influence the actions taken while conducting research.
Acknowledgement of being a South African, white, English-speaking male
remains the starting point from which the researcher approached this research.
The foremost part of this study lay in interpreting the history, cultures, agrarian
systems and sociological environment in a post-apartheid era. In the case of
this study the researcher attempted to embed himself in the rural farming
community in an effort to understand the perspective and agricultural activities.
The researcher has over 10 years’ experience in the exotic livestock industry
and disclosure of potential influence and social position on interpretations may
not be the norm for others. Therefore the researcher acknowledges his
theoretical post-positivism role in the research study.
3
1.2 INTRODUCTION TO THE RESEARCHED AREA The South African emerging black farmers originate from the group of
disadvantaged smallholder farmers who were previously excluded from
conventional markets and economies (Makhura, 2008:4; Senyolo, Chaminuka,
Makhura and Belete, 2009:208). Access to commercial farming for emerging
farmers has been inhibited with policy regulations, structural barriers, technical
constraints and a lack of market participation (Pote, 2008:9; Groenewald and
Jooste, 2012:133). Interventions have been insufficient and have failed to
address all the challenging areas faced by emerging ostrich farmers. The
reluctance on the part of South African agribusiness to accommodate small-
scale farmers into supply chains has resulted in limited participation of
emerging farmers (Sartorius and Kirsten, 2006:5). It is essential that
participation and empowerment of emerging farmers be included in the whole
process if poverty alleviation programmes are to be sustainable and have a
desired pro-poor growth (IFAD, 2004:116). The emerging farmers in the former
homelands in the Eastern Cape have been characterised mainly by poor
market access and deteriorating infrastructure and support services (Van Zyl,
Binswanger and Kirsten, 1996:3).
The livestock supply chain consists of a full range of activities that are required
to bring leather and meat to the final consumers. Each necessitates different
phases of production, processing and delivery. The global trade chains are
becoming more complex while the regulation and food safety requirements are
making it increasingly difficult for poor livestock farmers to participate
(Rota, 2010:4). Apart from environmental challenges, the participation of small-
scale farmers in the marketing of livestock is impeded by the fragmented and
discrepant infrastructure available in rural areas (Coetzee, Montshwe and
Jooste, 2006:91). From 1996 the ostrich industry started to initiate ostrich
production programmes for the Eastern Cape emerging farmers in order to
boost livestock numbers and production throughput. Prior to that, small-scale
emerging farmers in South Africa faced limited opportunity to participate
effectively in the ostrich industry value chain and were confronted with
considerable isolation.
4
Ostrich farmers are consistently faced with market instability which is influenced
by global market forces. In the exotic livestock production the risks and market
exposure are higher than in other livestock sectors as the products are prone to
price volatility due to their veblen nature (commodities whose demand is
proportional to their price). The emerging ostrich farms have mostly been run
as out-growers’ programmes and are in contrast to the more common
large-scale farming operations found in the Western Cape. The emerging
farmers’ lack of participation in the ostrich industry is compounded by limited
participatory foresight (Jonker, 2008:4) and inadequate marketing information
(NAMC, 2003:54; Carbajo, 2006:24). The Western Cape Province has domi-
nated the ostrich industry in South Africa since the early 1900s. Approximately
90 percent of the industry’s primary production output emanates from the
Oudtshoorn and Mossel Bay areas.
It is estimated that the total value of investments to the emerging ostrich farmer
programmes in the Eastern Cape since 2003 has amounted to over R15 mil-
lion. Since then the Eastern Cape ostrich industry has been heavily plagued by
avian influenza (AI) which was one of the reasons that led to ostrich-based op-
erations in Grahamstown closing in 2011 (Sipondo and King, 2012). This has
led to inadequate support and a shortage of ostrich-processing facilities for the
Eastern Cape farmers and many of the emerging farmer programmes have
faced closure and isolation from international markets.
5
1.3 PROBLEM STATEMENT
A major challenge for rural agricultural development in South Africa is the
limited capacity of emerging farmers to access international markets which offer
high financial returns. The barriers and constraints facing emerging farmers are
acute when they are farming exotic livestock requiring intensive management
practices for a high-value market. The introduction of ostrich farming into rural
Eastern Cape areas has met with severe production constraints and failure.
Furthermore, the ostrich industry has been governed by monopolistic and
excessive corporate concentration in processing and global marketing in the
Western Cape. The South African ostrich industry has been severely influenced
by cyclic market demand, global economic volatility, disease outbreaks and
strict bio-security protocols.
Against this background it is clear that emerging farmers are finding it difficult to
participate in the ostrich-industry supply chain. The main research question for
the study is therefore:
What interventions are required for participation of emerging farmers in
the Eastern Cape ostrich-industry supply chain?
6
1.4 SUB-PROBLEMS
In this study the interventions required to address multiple influences and
forces will be explored. The study adopted two main focus areas, namely, to
determine what the required capacity is for supply chain participation and to
determine what supporting mechanisms would be required for emerging
ostrich farmers to integrate successfully into the ostrich supply chain. The
following sub-problems were identified to address and answer the main
problem statement:
What is known about the rural environmental influences affecting
emerging ostrich farmers in the Eastern Cape region?
Why has ostrich farming not been embraced by emerging farmers to
the same extent as other livestock in the Eastern Cape region?
What is known about the present state of the ostrich industry and the
ostrich-industry supply chain?
What interventions have been available for emerging ostrich farmer
programmes to have participation into the ostrich-industry supply
chain?
What is known about the emerging farmers in the ostrich-industry
supply chain and what are the main constraints that prevent them
from participating?
What value does the emerging ostrich farmer provide for the ostrich
industry and South Africa’s agriculture and rural development?
7
1.5 HYPOTHESIS
It is the researcher’s hypothesis that participation in the mainstream
supply chain for emerging ostrich farmers in the Eastern Cape is
currently unsustainable. Interventions are required for the transition from
subsistence to commercial ostrich farming for high-value export markets
for the rural ostrich farmers.
The Eastern Cape economic and social environment, the agrarian constraints
and bio-security protocols have contributed powerfully to ruling out participation
in the ostrich-industry supply chain by black emerging ostrich farmers. The
growing polarisation between the commercial ostrich industry and emerging
farmers is resulting in a reduction in programme outcomes due to
incompatibility with market structures. The deterioration of the ostrich industry
in the Eastern Cape owing to avian influenza has resulted in the segregation of
emerging ostrich farmers from the industry’s supply chain and reduced
opportunities to participate in export.
It is the researcher’s point of view that through an understanding of the ostrich
industry and the determinants that influence emerging ostrich farmers’ position,
improved participation can be reached for the emerging ostrich farmers in the
Eastern Cape.
8
1.6 RESEARCH OBJECTIVES
The objectives of the study are to:
increase understanding of the ostrich industry and its supply chain;
describe and assess present participation of emerging farmers in the
Eastern Cape ostrich industry;
investigate participation determinants and develop an instrument to
evaluate participation capacity for emerging farmers; and
devise a development path for improved smallholder participation in
the ostrich industry.
1.7 DELIMITATION OF THE RESEARCH
1.7.1 Emerging ostrich farmer programme
According to Rother, Hall and London (2008:104), emerging farmers are “black
farmers who are operating in disadvantaged circumstances compared with their
white counterparts, regardless of their intention of engaging in large-scale
commercial production”. Rother et al’s approach to defining emerging farmers
was used to classify the representative sample for this study including:
those actively involved with ostrich husbandry in the Eastern Cape;
those who have their operations located in agro-ecological zoning areas with
climatic characteristics that represent the Eastern Cape; and
those who have an association with the ostrich industry and/or are receiving
support from the extension service of the Department of Agriculture, Forestry
and Fisheries (DAFF) extension services and who are participating in the
ostrich-industry supply chain.
9
The DAFF Eastern Cape regional offices and the South African Ostrich
Business Chamber were contacted to determine what emerging ostrich projects
existed and were being supported. Forty-six emerging ostrich farmers from five
separate enterprises met the above criteria in the Eastern Cape. These farmers
formed part of the following five programmes: Rockhurst Ostrich Programme
near Grahamstown, Hlumani Ostrich Co-operative near Port Alfred, Peddie
Ostrich Programme near Peddie, Zamukwanda Ostrich Programme near
Pearston and Mimosadale Ostrich Farm near Graaff-Reinet. According to the
DAFF, the Peddie Ostrich Programme is the largest emerging ostrich farmer
programme in the Eastern Cape and possibly in South Africa. There was a
group of emerging ostrich farmers in the Jansenville area that had received
training for ostrich farming, but because they had not received any ostriches
and had not actively commenced farming, they were excluded from the
research sample.
1.7.2 Ostrich industry stakeholders
The following Eastern Cape tanneries or processing plants were identified as
recognised and influential role players in the Eastern Cape ostrich industry:
African Hide Trading (Pty) Ltd, Exotan division of Camexo, Gondwana
Marketing (Pty) Ltd, Klein Karoo International (Pty) Ltd, Ostrimark SA, Saag
Jonker Holdings, Phillippe Exotic Leathers, South Cape Ostrich Tanning (Pty)
Ltd division of Mosstrich group, Swartland Ostriches and Ostrich Emporium SA.
The list was derived from studies conducted on the South African ostrich-
industry value chain by the National Department of Agriculture, members of the
National Ostrich Processors of South Africa and the South African Shoes and
Views 2010 Leather Directory (Shoes and Views Leather Directory, 2010:2-17).
10
1.7.3 Other stakeholders and role players
Cappelen (2004:1) identified two criteria for classifying stakeholders. The first is
the relationship approach, in which stakeholders have a relationship if
obligations arise between individuals or groups. The second approach of
identifying stakeholders is the assignment approach which claims that
obligations only arise if a particular relationship exists between the company
and a group. The following stakeholders were identified using the above
approaches and selected to contribute to this study: mentors, programme
managers, DAFF extension officers, the Society for the Prevention of Cruelty to
Animals, supply-account managers, industry researchers and international
traders.
1.7.4 Geographical demarcation
The researched area falls within the national borders of South Africa between
32°15′07″ S and 34 22' 31” S. The empirical component of this study was
limited to farmers and role players operating within the Eastern Cape. The
emerging ostrich programmes were concentrated in the Cacadu and the
Amathole Districts. The following economic information about these two
districts was obtained from the Eastern Cape Department of Economic
Development, Environmental Affairs and Tourism (DEDEAT, 2013:para. 4).
Cacadu District consists of an area of 9,786 square kilometres and has a
population of 450,600, covering 34% of the entire Eastern Cape Province's land
area. About 6% of the population of the Eastern Cape live in the Cacadu district
which makes a 1.4% contribution to the agriculture, forestry and fishing sector
of the South African economy, but its contribution is 21.8 percent to the Eastern
Cape sector. The Cacadu economy is dependent on the agricultural sector
which has a high prevalence of game farming which is seen as one of the
district’s major industries. The unemployment rate stood at 17 percent in 2010.
The selected farms in this study are found around Grahamstown, Graaff-Reinet
and Pearston, which have been the main supporting centres in terms of ostrich-
product processing infrastructures and extension services in this district.
11
The Amathole District consists of an area of 3,607 square kilometres and has a
population of 892,600. Two-thirds of the district is made up of the former
homeland areas of Transkei and Ciskei. The district makes a 0.71 percent
contribution to the agriculture, forestry and fishing sector of the South African
economy. The unemployment rate is 28 percent. In 2010 it contributed 0.68
percent of the South African economy and 8.7 percent to the Eastern Cape
economy. The selected farms in this study are found near Peddie on the
northern banks of the Great Fish River.
1.7.5 Livestock
Other livestock will be used as points of reference in this study due to limited
information on ostrich farming in a rural context. The focus of the study was
limited to the main commercially farmed ostrich species called the South
African Black-neck, S.c. domesticus. Discussion will also include Nile crocodile,
Crocodylus niloticus, which provides one of South Africa’s main types of exotic
leather. It is interesting to note that both these species are oviparous (egg-
laying).
12
1.8 RESEARCH METHODS
The research applied a mixed method approach of both qualitative and
quantitative paradigms. According to Johnson and Onwuegbuzie (2004:17),
“mixed methods research is formally defined here as the class of research
where the researcher mixes or combines quantitative and qualitative research
techniques, methods, approaches, concepts or language into a single study.”
The quantitative research methodology provided insight into demographics,
biographical information, production and the participation capacity of the
emerging ostrich farmers. The data from the quantitative results were also used
to establish a profile of the emerging ostrich farmer involved in the ostrich
programmes. The qualitative research methodology applied to interviews and
focus groups provided insight into emerging farmers’ and stakeholders’
opinions, perceptions and concerns. Focus groups were arranged to
accommodate a variety of participants and to re-evaluate survey findings.
Owing to the unstructured nature of this method, the researcher was able to
probe for new information.
According to Guion, Diehl and McDonald (2011:1), the mixed method
triangulation research reduces ambiguity through transforming perceptions into
pre-structured and quantifiable categories. This triangulation method involves
using different sources of information in order to increase the validity of a study.
Information from surveys, interviews and focus groups was compared against
each other to see if similar results or themes were found. If similar points of
information across the methods occurred, then validity was established.
Other sources of information and evidence included stakeholders in a
programme, mentors, management and other community members. During the
analysis stage, information was compared to determine areas that
corresponded as well as any areas of divergence.
13
Although extensive research has been conducted on market integration, market
access and value chains, an exploratory research was conducted as no earlier
studies had been undertaken on emerging ostrich farmers that could serve as a
source of reliable data or reference. Exploratory research assisted in the
development of the hypothesis, as well as in gaining insights into the problem
area (Nunamaker and Chen, 1990:91). This type of triangulation is particularly
well suited to unexplored areas of information and phenomena (Hussein,
2009:8). The topic of ‘emerging ostrich farmers’ is relatively new and has not
been previously researched; therefore it conforms to the requirements of an
exploratory study.
The inductive research approach was applied in this study, which entailed
starting with the data or from observation of empirical reality (Schutt, 2011:45).
Therefore the researcher started with the data and empirical observations and
let the theory emerge from the data. In addition, the observations were based
on the researcher’s personal experience in the ostrich industry. Inductive
research was better suited to this qualitative data as it started from a
description of the case studies and then moved towards an explanation (Figure
1.1).
Figure 1.1 The research circle
Source: Adapted from Schutt (2011:42).
14
This study includes emphasis on relational embeddedness (nature of
relationships), market orientation and influences on market participation. The
qualitative study included the case study format as it provided a strong
contextual analysis of the farmers’ environment and constraints. Yin (1984:23)
defines the case study research method as “an empirical inquiry that
investigates a contemporary phenomenon within its real-life context; when the
boundaries between phenomenon and context are not clearly evident; and in
which multiple sources of evidence are used”.
1.9 RESEARCH DESIGN AND DATA COLLECTION
Blanche, Blanche, Durrheim and Painter, (2006:50) define research design as
“plans that guide the arrangement of conditions for collection and analysis of
data in a manner that aims to combine relevance to the research purpose with
economy in procedure”. In preparation for the study and owing to the limited
research on emerging ostrich farmers a literature review was initially
conducted. Fink (2010:2) explains that a literature review “describes the content
of knowledge already available and presents the significance of previous work”.
According to Kekälede, de Weerd-Nederhof, Cervai and Borelli (2009:73), as
an academic piece the literature review cannot simply echo the subject matter;
but should contribute to the work in a twofold approach of examining the
available material and offering critique. Only in providing both these functions
does a literature review meet the requirements of rigour (Okoli and Schabram,
2010:4). The sources used in this study included literature in industry
magazines, as well as annual and technical reports.
15
An explorative investigation overlapped the literature study to uncover the
present state of the emerging farmers’ environment, market dynamics and
influences on the ostrich supply chain. This investigation included a pilot study,
analysis into the South African ostrich industry and collation of secondary data
from case studies, programmes, industry processes and events. The pilot study
involved interviews with stakeholders in the ostrich industry, a preliminary
review of the research area and identifying suitable case studies. The pilot
study also included the development of the instrument for emerging farmer
capacity measurement. The ostrich farmer programmes were evaluated in
order to determine the application of research methods. After obtaining a broad
view of the limitations and delimitations of the programmes, the researcher was
able to select the appropriate research methodology.
The literature study followed a chronological design focusing on five areas that
had influence on the problem statement, namely, the Eastern Cape, rural
livestock farming, the ostrich industry, ostrich supply chain analysis and black
empowerment programmes in South Africa. The exploratory investigation then
focused on the ostrich industry to gain insight and information related to the
industry and its supply chain.
The data-collection process commenced at examining of the ostrich industry,
defining the ostrich supply chain and identifying the emerging ostrich
programmes. This phase was followed by research using a multiple-case study
design. Case study methodology included focus groups and face-to-face
interviews with emerging farmers in the Eastern Cape. The respondents were
from a less developed rural environment and the use of other approaches such
as mailed questionnaires and telephone surveys would have caused difficulties
because of the unreliable communication infrastructures in rural areas. The
researcher believed that respondents might uphold some aspects of the
traditional culture and language in Xhosa and would therefore be unable to
read English questionnaires. Additional advantages of face-to-face interviews
are that interviewers can observe the surroundings of their respondents and
observe non-verbal communication.
16
The researcher was of the opinion that the emerging farmers might not have
made an accurate evaluation of market constraints and that it was required to
include external programme participants and stakeholders that could contribute
and understand additional constraints. Farmers and stakeholders were
organised into smaller groups for focus-group discussions (FGDs). The
participants included the mentors, extension officers, programme managers,
and representatives from the Department of Agriculture. A participatory
approach was applied to encourage collaboration with the farmers and to
attempt to understand the systems used on the farms. The final phase of the
research design included the application of an experimental farmer’s capacity-
measuring instrument. The capacity-measuring instrument was used to
synthesise qualitative and quantitative insights from the data collection and
compare characteristics between case studies.
The field assistants recruited to assist with data collection were students from
the Department of Agriculture and Game Management at the Nelson Mandela
Metropolitan University in Port Elizabeth. The students were selected on the
basis that they were familiar with the study area and that they would also be
able to assist with interpretation and data collection. Being members of the
university community they were able to relate to the requirements of research.
The field assistants’ role was to accompany the researcher for the interviews
and focus groups and provide translating between Xhosa and English when
required. Prior to the interviews, the researcher explained and outlined the
questions to confirm that translations were correct.
17
1.10 SOCIO-ECONOMIC SIGNIFICANCE AND RATIONALE OF THE RESEARCH
The total investment in the ostrich industry in South Africa exceeds
R1.2 billion and employs 20 000 people. It exports 90% of products in the form
of feathers, leather and meat (Cooper, Tomasik and Horbanczuk, 2007:87;
Department of Agriculture, 2011:87). The industry has been established and
developed mainly for international markets with a limited contribution from
emerging black farmers. According to Fick (2009:1), “the ostrich business in
South Africa has been a limited entrants only industry for more than a century.
Small-scale emerging farmers in rural South Africa have never had real
ownership nor have they had the opportunity for participation in the whole
industry value chain.” There appears to be a general reluctance on the part of
agribusiness to include black small-scale farmers in supply chains because of
the incremental transaction cost (Sartorius and Kirsten, 2006:3). This has been
compounded by the globalisation standards and strict bio-security requirements
(Henson and Loader, 2001:100).
Avian influenza (AI) has been one of the main impediments to the ostrich
industry and according to the South African Department of Agriculture, Forestry
and Fisheries the AI outbreaks have been caused mainly by lapses in bio-
security measures (Kleyn, 2012:1). DAFF compels all ostrich farmers to comply
with a set of bio-security requirements, as well as registration and maintenance
of registration of ostrich compartments in South Africa, also referred to as
VPN04. The Eastern Cape emerging ostrich farmers have faced other limiting
factors including access to land, overly capital-intensive agriculture, climate and
agro-ecological potential constraints and limited entry to supply chains.
Knowledge with regard to the emerging ostrich farmers’ required capacity and
how they can integrate into the ostrich industry successfully will contribute to
the livestock farming sector, job creation and poverty reduction in the Eastern
Cape.
18
1.11 DEFINITION OF CONCEPTS
1.11.1 Exotic livestock Commercially raised exotic livestock includes animals of the families bovidae,
cervidae, antilocapridae, birds of the ratite group, and reptiles. Exotic livestock
farmed for their leather are usually farmed intensively. The hides and skins
from these animals receive higher prices in the market and unlike other farmed
livestock the meat is sold as a by-product. Trade of products from these types
of exotic livestock is usually restricted because of conservation, sustainability
and protection against over-exploitation.
1.11.2 Market access According to Vorley (2001:4), market access for producers to supply chains
does not have much to do with classical notions of ‘efficiency’; but is a feature
of the ability to exploit marketing advantage, meeting large processor and
supermarket demands for consistency of supply, as well as compliance with
standards. IFAD (2003:9) describes market access as concerning physical
access to markets (roads and costs), market structures (relationships and
market intermediaries) and the level of farmer’s human capital (skills and
training). According to Van Tilburg and Van Schalkwyk (2012:35), market
access is the ability to obtain necessary farm inputs and farm services resulting
in the ability to deliver farm products to the buyers. In this study market access
was measured with a focus on measuring market channels and structures,
human capital, transport and market information.
19
1.11.3 Market integration
Market integration is where separate markets for the same product become one
single market. This situation is influenced by socioeconomic and institutional
factors such as cost of doing business and trade liberalizations (Adekambi,
Ingenbleek & Van Trijp, 2013:2). According to Fafchamps (1992:98), market
integration in context of third world agriculture, progressively diminishes the
need for food self-sufficiency.
1.11.4 Opportunities for participation
Emerging farmer participation takes place primarily upstream in the ostrich
supply chain. This includes chick rearing and animal husbandry. According to
Delgado and Siamwalla (1997:166), promoting growth in smallholder
agriculture in Africa through increased participation for high-value items would
require significant vertical integration of smallholders into processing and
marketing firms. Makhura (2001:101) states that market participation is
measured by the probability and the value of output sold in the market; however
market participation occurs only after market access has been achieved. In this
study the focus is mainly, but not exclusively, on supply and how emerging
farmers integrated and linked with processors, market intermediaries or
markets.
1.11.5 Supply chain versus value chains
According to Feller, Shunk and Callarman (2006:4) supply chains take into
consideration costs and efficiency of supply, including the flow of materials from
sources to final destinations. Supply chains therefore focus on operational
matters and the provision of raw materials, while value chains focus more on
innovation, product development and marketing and, to a greater extent, on
customer requirements. Although this study is on the ostrich supply chain other
areas of processing and marketing will be discussed.
20
1.11.6 Industry
Johnson and Scholes (2008:110) defines an industry as a group of firms
producing the same principle product or a group of firms producing products
that are close substitutes for each other. The industry is made up of number of
role players and service providers and due to convergence, overlapping
industries and service providers will be also included in this study.
1.11.7 Registered Ostrich Compartment
The Registered Ostrich Compartment is a property consisting of one single,
contiguous piece of ground where ostriches are kept and where such premises
and ostriches comply with the requirements of South African Ostrich Veterinary
Procedural Notice (VPN04).
1.11.8 Ostrich out-grower
An out-grower scheme is a contractual partnership between the grower and a
commercial farmer for the production of ostriches. The grower agrees to
provide certain numbers at a certain age. In turn, the commercial farmer
commits to purchase the ostrich, at a pre-determined price. The out-grower
schemes can vary in the extent to which inputs, costs and benefits are shared
between growers and the commercial farmer. Another term often used to refer
to out-grower is contract farming. According to Maertens, Miet, Swinnen and
Johan (2009:20), there is potential for rural households to benefit from gains in
high-standard export chains. However, it has been argued that large agro-
industrial firms can exploit the unequal power relationship in out-grower
arrangements.
21
1.12 STRUCTURE OF THE RESEARCH
The structure of the thesis is discussed below and summarised in Figure 1.2
Chapter 2 explains the research methodology implemented in this research by
elaborating on the chosen sample, measuring instruments and method of data
collection. The data analysis and statistical techniques used are also described.
The empirical results of the reliability and validity analysis of the measuring
instrument are discussed.
Chapter 3 is an overview of the emerging farmers’ rural environment in the
Eastern Cape. The intention of this chapter is to set the scene in the
environment where the case studies were undertaken. The chapter outlines the
agro-ecological environment, socio-economics and historical background to
what led to the marginalisation of black farmers and the decline of participation
in agriculture in general.
Chapter 4 reviews livestock farming in the context of the rural Eastern Cape
environment. This chapter sets the scene on the livestock practices for rural
emerging farmers. The chapter starts with a review of rural livestock farming in
the Eastern Cape and is then narrowed down to a review on the
anthropological role of cattle in an African cultural context
Chapter 5 explains the background of the ostrich industry and how it
developed. An overview of ostrich husbandry is provided and the main aspects
of production that require attention for small-scale ostrich production are
identified.
Chapter 6 provides an overview of supply chains and explains the role of
governance within these chains. This chapter includes the relationship map of
the ostrich industry supply chain with service providers. Finally, the present
state of ostrich production in the Eastern Cape Province and selection of case
studies is reviewed.
22
Chapter 7 is a review of black economic empowerment (BEE) in South African
agriculture. The intention of this chapter is to set the scene on how BEE is used
as a vehicle to facilitate participation. The discussion is then narrowed down to
how the ostrich industry has facilitated the participation of smallholder farmers
through ostrich industry AgriBEE initiatives referred to as OstriBEE.
Chapter 8 presents the results and findings from a situational analysis of the
ostrich industry. Several dimensions of research were investigated in order to
profile the ostrich industry and explore entry points into the supply-chain for the
emerging ostrich farmers.
Chapter 9 discusses the results and findings regarding the emerging ostrich
programme case studies. Several dimensions of research were explored in
order to profile the emerging ostrich farmers, namely, relationship mapping,
surveys and focus groups.
Chapter 10 presents the formulation and findings from the experimental farmer-
capacity measuring instrument which presents an index comparison between
the case studies.
Chapter 11, which is the final chapter of the study, presents the findings,
conclusions and recommendations of the research. The contributions and
possible limitations of the study are discussed and interventions for future
emerging farmer ostrich programmes are proposed.
23
Figure 1.2 Process of research design and structure of research
Source: Researcher’s own construction
24
CHAPTER 2
RESEARCH METHODOLOGY 2.1 INTRODUCTION 2.2 LITERATURE REVIEW 2.3 PILOT STUDIES 2.4 EXPLORATIVE INVESTIGATION 2.5 MULTIPLE CASE STUDIES 2.6 QUESTIONNAIRE 2.7 FOCUS-GROUP DISCUSSIONS 2.8 DEVELOPMENT OF PARTICIPATION CAPACITY INSTRUMENT 2.9 OPERATIONALISATION AND ANALYSIS OF QUALITATIVE DATA 2.10 LIMITATIONS OF THE STUDY 2.11 ETHICAL CONSIDERATIONS 2.12 SUMMARY
25
CHAPTER 2
RESEARCH METHODOLOGY
“Methodology refers to the coherent group of methods that complement one
another and have the ‘goodness of fit’ to deliver data and findings that will
reflect the research question and suit the research purpose”
(Henning, 2011:36).
2.1 INTRODUCTION The following chapter provides the reasoning behind and description of the
design, operationalization, limitations and ethical considerations followed in this
research. Research methodology is an important part of the research
procedure which determines how the research project should be undertaken
(Saunders, Saunders, Lewis and Thornhill, 2011:43). This chapter elaborates
on the introduction to the previous chapter by discussing the approaches used
to collect and analyse data. An exploratory cross-sectional study (comparative
study at a single point in time) was applied to investigate the ostrich industry
and emerging ostrich farmer programmes in the Eastern Cape. Both the two
main research approaches, namely the quantitative approach and the
qualitative approach, were applied; however, more of an interpretive approach
was used to collect data describing not only as objective, but also observing
aspects of human behaviour (Lee, 1991:347). In this study the term ‘interpretive
approach’ also refers to qualitative procedures associated with hermeneutics
and phenomenology and case studies (Roth, 2007:360).
By using quantitative methods the researcher aimed to capture all the
measurable components and representations of the participants, the variables
being measured according to how the different farms and farmers related to
one another. The quantitative research methodology focused on a survey
design to provide insight into demographics, human capital endowments,
farming production, marketing channels and supporting institutional information
of the emerging ostrich farmers and programmes.
26
The literature review formed part of the design logic primarily to gain
information related to the ostrich industry, as there is little published information
about the ostrich supply chain. The literature review focused on three main
themes, namely, the Eastern Cape, the ostrich industry and emerging farmers,
in order to contextualise the study. However, it became apparent that
understanding was also needed in the area of Black Economic Empowerment
(BEE) and supply chains. The literature review formed an integral part of the
initial study to synthesize results and discussions related to interpretation of the
inquiry. The literature review was also integrated into the pilot study which was
conducted on the ostrich industry, the main commodities and present emerging
farmer programmes in the Eastern Cape. As discussed in Chapter 1, the pilot
study included identifying case studies, a review of researched areas and the
development of a capacity instrument. The study then progressed to an
explorative study on the ostrich supply chain with focus on the ostrich leather
industry. This was to gain broad insight into information on the supply chain and
markets. It was at this point that the collection of data commenced. The final
phase involved conducting qualitative research on the present Eastern Cape
emerging ostrich farmers in the form of comparative case studies and focus
groups (participation research). Owing to limited availability and the complexity
of emerging ostrich farmer programmes, the case-study research approach
was chosen. A phenomenological approach required that the researcher be
imbedded in the rural farming community in an effort to understand the
perspective and capacity of the people involved. The aim was not only to
describe the cases for the sake of description, but also to identify phenomena,
interaction and dynamics that could influence the farmers’ participation. A
comparative study approach was applied to five case studies to explore farming
systems and emerging programme models.
27
Focus group meetings in which the farmers participated to share experiences
and farming constraints were arranged. Content analysis was performed to
explore emotional, cognitive and motivational factors. Throughout the
interviews and focus-group meetings, grounded theory analysis was applied to
expedite qualitative data collection and analysis to gain further insight into
situations facing emerging ostrich farmers. The three stages of grounded theory
as set out by Corbin and Strauss (2008:195) were applied, namely, open
coding, axial coding and selective coding. To perform this analysis, the
narratives produced by participants were entered and coded using Computer
assisted Qualitative Data Analysis Software. Then, finally, empirical data was
used to develop an instrument to measure emerging farmer participation
capacity potential. This instrument was intended to develop, measure and
determine what potential the emerging farmers had of successfully
participating. A summary of the research methodology applied in this study is
presented in Table 2.1.
Table 2.1 Summary of research methodology
Research approach Qualitative and qualitative
Process logic Inductive
Quantitative research methods Frequency counts, percentages and
descriptive statistics
Qualitative research methods
Content analysis and Grounded
theory analysis: Comparison of
coding, themes and categories
Type of case study design Multiple-case design
Sources of literature data Multiple sources: Industry reports,
and research articles.
Data collection instruments Surveys, focus groups, capacity
instrument and interviews.
Source: Researcher’s own construction, modelled from Burger (2003:86)
28
2.2 LITERATURE REVIEW A literature review is intended to anchor the rest of the research findings. It
describes the content of knowledge already existing and highlights the
importance of previous work studied (Fink, 2010:2). For academic writing, the
literature review cannot only repeat the subject matter, but should contribute to
explain and compare with similar studies elsewhere (Kekälede, Weerd-
Nederhof, Cervai and Borelli, 2009:75). By providing both these functions, the
literature review contributes to the requirement of rigour (Okoli and Schabram,
2010:20). The literature review was conducted to provide theoretical
background for future research, learn the range of research on the topic and
understand what existing research has to say on the matter. However, the
literature review can constitute an original and valuable work of research of
itself (Okoli and Schabram, 2010:1). The literature study consisted of two
phases: a literature search on research databases and an analysis of research
literature using the text-mining method.
2.2.1 Literature database search
A comprehensive literature search was conducted which included a search to
determine if research similar to this study had been undertaken earlier. Limited
research was undertaken by the National Agricultural Marketing Council South
Africa on ostrich industry deregulation and black participation. The databases
searched include EBSCOhost, LexisNexis, LexisNexis Academic, NEXUS,
Sabinet Online, Science Direct, Scopus, BioOne and Wiley Online Library. As
far as could be established, no research had been conducted on interventions
for participation of emerging ostrich farmers in the Eastern Cape. The following
screening search keywords and wildcard searches were used in order to
achieve comprehensiveness and consideration:
emerging farmers: profile, beneficiary selection, establishment, constraints,
participation, dependency, livestock systems, land reform schemes,
programmes, collective marketing, market access, contract farming, rural
livelihoods, sociology, smallholder, out-growers, marketing systems and
participation schemes;
29
Eastern Cape: history, reform, support programmes, poverty, economy,
environment, agro-processing, livestock, policies, land tenure, rural,
homelands, reconstruction and development; and
ostrich industry: historical overview, supply chain, production, participants,
markets, avian influenza, husbandry, processes and future direction.
2.2.2 Content analysis
Delen and Crossland (2008:1709) stated that “researchers conducting
searches and reviews of relevant literature have faced an increasingly complex
and voluminous task; and that in extending the body of relevant knowledge, it
has always been important to work hard to gather, organize, analyse, and
assimilate existing pieces from the literature, particularly from the researcher’s
‘‘home discipline”. According to Hsieh (2005:1277) there are three approaches
to content analysis, namely, conventional, directed, or summative.
In this study a directed approach has been taken using existing prior research
and literature to identify key topics as theme categories. The themes are used
to interpret meaning from the content, hence, it was susceptible to the
naturalistic paradigm (multiple possible interpretations). However, the
researcher has strived for trustworthiness through comparing other forms of
research methodology to validate findings.
30
2.3 PILOT STUDY
According to De Vos, Delport, Fouché and Strydom (2011:211) a pilot study
involves four aspects, namely, a literature study, interviews with experts,
exploring the actual research area and intensive study of strategic units. The
main aim of the pilot study was to determine the best and most effective
research methods and instrument design for further use in a full scale study.
The pilot study involved a literature study and was the preliminary exploratory
study into the ostrich industry. This included a broad array of approaches,
namely, international leather shows, consultations and visits to the research
area. Owing to the researcher’s past involvement in the ostrich industry, the
preliminary review and references are based on attendance at international
leather shows, the Lineapelle in Italy (2008) and the National Western Stock
Show in the USA (2009). Between 2009 and 2010 consultations were
conducted with two main ostrich industry stakeholders, namely, Jonker
Holdings in Oudtshoorn and South Cape Ostrich Tanning in Mossel Bay. The
Peddie emerging ostrich farmer project was visited in 2011 and the
characteristics of the project were evaluated in order to assist in choosing forms
of research methodology for the following phases of the research. As the
research area is found in the Amathole District, the researcher included
information gained from consultation with the Amathole Economic Development
Agency which is owned by the Amathole District Municipality. This agency had
been involved with developing markets within the context of regeneration
programmes which involved working with socially and economically
disadvantaged groups in the Eastern Cape. Through this consultation the
researcher could gain insight into the existing emerging farmer programmes in
the district. After obtaining a broad view of the industry and possible limitations
of the study, the researcher was able to focus on the appropriate research
methodology.
31
2.4 EXPLORATIVE INVESTIGATION
According to Saunders and Lewis (2012:110), the depth of knowledge of the
respondent on the topic can have a significant influence on findings. Welman
and Kruger (2001:161) suggested that semi-structured interviews are usually
considered when the respondents come from divergent backgrounds or there
was an unfamiliarity of the area being entered. For this reason, the
semi-structured interview was the main research instrument for this explorative
investigation. The initial investigation was to gain familiarity about the ostrich
supply chain. There are three products that are derived from ostrich production,
namely, leather, meat and feathers. As the ostrich leather product line has been
the most sustainable of the three products since 1950, it has consistently been
exported since the inception of the deregulated market in 1994. Ostrich leather
has become the pillar of stability in the industry (Kriek, 2012:1), but this
commodity is dependent on high-technological know-how and has a small
domestic market. As this processing aspect and limited markets would be the
most challenging for emerging farmers, more focus was applied to this
commodity. The ostrich leather industry has also been supportive in the
processing divisions during recurring European Union ostrich meat bans (KKI,
2012:3), but little information has been published about the production,
processing and marketing of ostrich leather. This explorative investigation
consisted of two phases, namely, a situational analysis of the ostrich industry
and semi-structured explorative interviews with Eastern Cape ostrich industry
role players.
32
2.4.1 Situational analysis of ostrich industry
A situational analysis of the ostrich industry was conducted using several
methods to identify trends and forces that influence the ostrich industry. The
situational analysis involved the following methods and studies:
Content analysis of ostrich-industry literature
Micro environment influences
Macro environment influences
Stakeholder interviews
A PESTEL framework which categorise environmental influences was used to
investigate the macro environment influences. The PESTEL format as
recommended by Johnson, Scholes and Whittington (2008:55) is a technique
used to examine a wide range of influences and determine their potential future
impact in the business environment. The technique involves the analysis of the
political, economic, socio-cultural, technological, environmental and legal forces
(Paul, Yeates and Cadle, 2010:42). During the stakeholder interviews the aim
was to uncover unknown information regarding the ostrich industry. The
research was explorative in nature and utilised qualitative informal surveying
methods to understand the association between the exotic industry and
international markets. Industry case studies, programmes, industry processes,
activities and events were included in this study to validate new findings.
Interviews were conducted with role players and influential actors in the trade
relating to the exotic leather market. Based on information from the Shoes and
Views Leather Directory (2010:2-17), skin merchants, abattoirs, agents and
tanneries of four Eastern Cape companies were chosen for the interviews.
These four companies represented the majority of the Eastern Cape exported
ostrich product value and/or are strongly integrated with the supply chain,
namely, processing facilities, tanneries and marketing.
33
The purposive sampling technique was used to identify individuals who could
provide some understanding on the level of the ostrich industry. According to
Saunders and Lewis (2012:138), individuals should be selected because of
their knowledge and experience, and it is their opinions that are important in
addressing the objectives of the research. Four key respondents were selected
that represented the Eastern Cape ostrich enterprises according to the
following criteria: having over five years’ experience in ostrich markets, having
exhibited at international leather trade shows and having traded and
represented their companies in international exotic markets. The semi-
structured questionnaire contained both closed-ended questions and open-
ended discussion. The explorative interviews with role players were conducted
in order to gain insight into the supply chain relationships, industry and market
forces.
The following topics were explored in the explorative interviews:
ostrich farming and production
ostrich products
intermediary agents
marketing channels
threats to the industry
34
2.5 MULTIPLE CASE STUDIES
The comparative case study design was the main qualitative research
instrument for this study. It is the researcher’s hypothesis that the spatial
variation in transactions costs to geographic location leads to cross-sectional
heterogeneity in farming systems and market access. Therefore multiple
case-studies were selected to elaborate on the Eastern Cape emerging ostrich
farmer environment and the influences on their participation. Normally, in
hypothesis-testing research, regular deduction is used. In case studies, it is
directed towards understanding uniqueness and idiosyncrasies of particular
cases. When investigating a group, fieldwork is conducted in order to measure
natural circumstances on the spot (Welman and Kruger, 2001:183). According
to Welman and Kruger (2001:184), three aspects are important. These aspects
were applied in this case study:
Boundaries should be determined.
Techniques to collect data should not merely be used to describe but
should be used to search in an inductive manner for recurring patterns.
Triangulation research methods are used to discern patterns.
Comparable cases were selected to attempt to predict similar results or predict
contrasting results for expected reasons. As a first step, the case studies were
selected within the Eastern Cape region of South Africa. All the case studies
had been recognised and supported by the South African Department of
Agriculture and had been supported as an emerging farmer programme
initiative. A further selection criterion was that the cases had participated
directly or indirectly with the commercial ostrich-industry supply chain. With
reference to the delimitations discussed in Chapter 1, the case study selection
was from farmers that were from predominately disadvantaged communities. To
the best of the researcher’s knowledge no other emerging ostrich farmers were
found and the sample represented the majority of the emerging ostrich farmer
programmes in the Eastern Cape.
35
2.5.1 Research localities
The fieldwork was undertaken at the sites of the following five Eastern Cape
smallholder programmes (Figure 2.1):
Peddie Ostrich Programme near Peddie (Amathole District)
Rockhurst Ostrich Programme near Grahamstown (Cacadu District)
Hlumani Co-operative farm near Bathurst (Cacadu District)
Zamukwanda Ostrich farm near Pearston (Cacadu District)
Mimosadale Ostrich farm near Graaff-Reinet (Cacadu District)
Figure 2.1 Eastern Cape research area
36
2.5.2 Peddie Ostrich Programme
Figure 2.2 Map of Peddie Ostrich farm
The Peddie Ostrich Programme is the largest and longest-lasting AgriBEE
ostrich farmer programme in South Africa. There are 20 beneficiaries who are
involved with the rearing of ostrich chicks. The farm is on commonage land
which belongs to the Pikoli community. The farm is situated in the Amathole
District and the closest market is at the town Peddie which is approximately 20
km away. The main source of water is from the Great Fish River.
37
2.5.3 Rockhurst Ostrich Programme
Figure 2.3 Map of Rockhurst farm
The Rockhurst farm is situated in the Cacadu District Municipality and the
closest market is Grahamstown which is approximately 35 km away. The
4 126ha farm was purchased for R13 million by the provincial Department of
Rural Development and Land Reform in 2006. Figure 2.3 indicates the portion
of the farm dedicated to the ostrich project. The ostrich farm is run by seven
beneficiaries and their families who were former employees of the farm. The
farm also has over 700 angora goats and is supported by the Mohair
Empowerment Trust. The beneficiaries have a lease arrangement for the land
from the Department of Land Affairs. The main source of water is from the
Great Fish River.
38
2.5.4 Hlumani Co-operative farm
Figure 2.4 Map of Hlumani Co-operative farm
Hlumani Co-operative farm near Bathurst was established by 10 beneficiaries
from the Bathurst Township. After they had been awarded 76 ha of land, the
beneficiaries requested support from the Bathurst Social Development
Department for farming goats. The land was assessed by officials from the
Department of Agriculture, who decided that the farm was better suited for
feedlot ostrich farming. The Social Development Department constructed
ostrich chick pens, feedlot camps and a livestock loading ramp. The main
source of water is from a borehole.
39
2.5.5 Zamukwanda Ostrich farm
Figure 2.5 Map of Zamukwanda Ostrich farm
The Zamukwanda Ostrich farm is situated in the Cacadu District Municipality
and the closest market is Pearston which is approximately 5 km away. In 2005
six youths from the Pearston community received 6 ha of land on the farm
Moolenhof to lease from the Blue Crane Route Municipality. In 2007 the
Department of Agriculture supplied six farming units with four camps for ostrich
chick rearing, the sheds and water facilities, as well as accommodation. The
main source of water on the farm is from a borehole.
40
2.5.6 Mimosadale Ostrich farm
Figure 2.6 Map of Mimosadale Ostrich farm
The Mimosadale Ostrich farm is in the Cacadu District Municipality and is
approximately 19 km to the south-west of Graaff-Reinet. The land was
purchased by the municipality to supply Graaff-Reinet with water from the
boreholes. The municipality made it available to emerging farmers as
commonage land. The farm is an out-grower programme for local commercial
farmers in Graaff-Reinet and is managed by one farmer. There are three
boreholes that provide water on this farm.
41
2.6 QUESTIONNAIRE
After being adapted from a literature review on a variety of studies conducted
on determinants of smallholder participation (Table 2.2), a questionnaire
containing six components was constructed. The questionnaire employed
methods that were helpful to apply and considered important in the emerging
farmer sector. However, the variables were not uniform because farmers face
different transaction costs, agricultural potential and farming systems.
Therefore smallholder farmers or their enterprises can be differentially
integrated into the supply chain because of variances in capacity or capability.
In the questionnaire market participation was measured mainly according to
transaction costs, human capital and market feedback. According to Van
Tilburg and Van Schalkwyk (2012:35), “market access includes the ability to
obtain necessary farm inputs and farm services and the ability to deliver farm
products to the buyers”. In the survey market access was measured mainly
according to constraints, state of the roads, transport and the proportion of the
households with access to electricity and mobile phone ownership. It is
hypothesised that farmers with access to electricity, good roads and mobile
phones would need these to undertake basic business activities and influence
capacity to participate. The degree of market access was measured according
to distance to the nearest town and preferred market channel.
42
Table 2.2 Researched determinants on smallholder participation in literature
FACTORS DETAIL STUDY
Marketing channels with focus on high
transactions costs
Proximity to collection points (p. 9).
Staal, Delgado and Nicholson (1997).
Smallholder dairying under transaction costs
in East Africa. World Development
Co-operatives serve to reduce transactions costs (p. 11).
Market participation and
growth opportunities with
focus on high transaction costs
Access to assets: To provide an incentive for increased
productivity (p 169). Delgado (1999).
Sources of growth in smallholder agriculture in sub-Saharan Africa:
The role of vertical integration of
smallholders with processors and
marketers of high value-added items.
Access to information: Principal-agents need to share production
and marketing information (p. 169).
Access to services: Institutions should share the risks of service
delivery (p. 169).
Access to remunerative markets: Institutions should overcome
economies of scale in processing and marketing of high value goods (p. 169).
Market participation and
capacity to participate
Household endowment: Size of arable land, value of livestock
owned, pensions, earnings, non-farm earnings, ownership of vehicle or tractor (p. 103).
Makhura (2001). Overcoming
transaction costs barriers to market
participation of smallholder farmers in the Northern Province
of South Africa
Access to information: Farming learnt through extension,
average household education, distance to nearest town and
road conditions (p. 103).
Household characteristics: Gender of household head, age
of household head and household size (p. 103).
Interaction factors: Proximity and road conditions to nearest town, average education and non-farm
income (p. 103).
43
Market participation and
sales
Transaction costs: Distance to roads, markets and towns,
transport availability, labour, and population density (p. 4-5). Ehui, Benin and Paulos
(2003). Policy options for improving market
participation and sales of smallholder livestock
producers: A case study of Ethiopia.
Human capital: Age, education, gender, extension training
(p. 4-5).
Physical capital: Number of
livestock, producing stock, farmland (p. 4-5).
Financial capital: Crop income, non-farm income, credit (p. 4-5).
Marketing channels with focus on high
transactions costs
Observable and unobservable costs associated with arranging and carrying out a transaction
(p. 320).
Alene, Manyong,
Omanya, Mignouna, Bokanga and
Odhiambo (2008). Smallholder market participation under transaction costs: Maize supply and
fertiliser demand in Kenya.
Market participation with
focus on socioeconomic,
education and institutional
Variable measured: distance, cooperative membership, family
size, education, supportive infrastructure, transportation costs, high dependency ratio
and age (p 23).
Gani and Adeoti
(2011). Analysis of Market Participation and Rural Poverty among Farmers in Northern Part of
Taraba State, Nigeria.
Ability to participate in
markets
Require extension, support to initiate group action, mentorship
alliances are needed to strengthen the human and social capital base of smallholders (p
39).
Van Tilburg and Van Schalkwyk (2012).
Strategies to improve smallholders’ market access. In Unlocking
markets to smallholders.
44
Table 2.3 Summary of questionnaire
SECTION TITLE TOPICS
A Demographic details Farmer profile and household
composition
B Human capital Education and training
C Farming and agro-
pastoral
Records, labour, number of animals,
mortalities and other sources of
income
D Constraints Disease, feed, water, distance and
weather
E Marketing and market
access
Market channel, transport and market
information
F Institutional support Role player, extension and industry
H Other income Income from informal activities and
other crops or livestock
45
2.7 FOCUS-GROUP DISCUSSIONS
The main findings and themes in the questionnaires were carried over to the
focus groups. Focus groups were used to examine the opinions and
perceptions of participants since they have certain advantages that other
participatory research methods may not have. Stewart, Shamdasani and Rook
(2007:42) claim that focus groups often accomplish responses that would not
have been achieved through individual interviews or quantitative methods.
Since the farmers gave feedback in a group, they built upon one another’s
answers and the researcher was able to gather more information in a short
time. Seeing that not all information may have been available from the
emerging farmers, further information may have been available from external
participants and stakeholders. Therefore there was a mix of farmers and other
relevant stakeholders invited for the focus-group discussions, namely, mentors,
extension officers, programme managers and representatives from the
Department of Agriculture. Generally, different stakeholders see different
aspects of the problem and/or have different perceptions of it. Focus-group
discussions involved an interactive group discussion on particular topics within
a permissive, non-threatening environment. The data produced by participants
was captured, coded and analysed using computer-assisted qualitative data
analysis software (Atlas.ti).
46
2.8 DEVELOPMENT OF PARTICIPATION CAPACITY INSTRUMENT
A participation capacity instrument was developed to assist in articulating and
then assessing the potential of intensive ostrich farming projects. The data
used in the instrument was collected from the researcher’s observations,
questionnaires and focus groups. This explorative investigation into developing
an instrument has potential value for other emerging farmer programmes. The
instrument could benefit other similar programmes to help determine potential
mobility for supply chain participation. The instrument was also used as a
capacity indicator of emerging ostrich farmer programmes in the final chapter.
The instrument consists of the four Indexes in each case study which that were
hypothetically weighted, namely, Local Vulnerability Index, Human Capacity
Index, Agrarian Capacity Index and Market-Access Capacity Index.
47
2.9 OPERATIONALISATION AND ANALYSIS OF QUALITATIVE DATA
According to Bălan (2009:315) qualitative research raises four potential quality
limitations.
• Qualitative research methods rely on open-ended questions that are
answered by respondents in their own words. These answers require
constant monitoring of the quality of the data collected.
• The quality of the information obtained depends on a human factor, that is
the person collating the data or the moderator that is co-ordinating the focus
groups.
• The sample sizes may be small and susceptible to the problem of
non-representative cases. Quality is therefore diminished if improper
selection of respondents occurs.
• The analysis and interpretation of the data may cause challenges to the
quality of the information collected.
To overcome the above-mentioned limitations the researcher gathered on-site
data in a participatory observation manner. This means that the researcher
joined the setting as an outsider participating marginally in the activities. During
the interviews and focus groups, notes were written about each possible
operational indicator. When the question saturation points were reached the
notes were converted to documents and each primary document represented
the final unit coded. Each of the primary documents was loaded into computer-
assisted qualitative data analysis software (Atlas.ti) to perform the analysis on
emerging themes and concepts. Categories were allocated that represented a
topic or theme from the primary documents. The data was cleaned and similar
conceptual types were pulled together under a category set, which was done by
grouping similar themes together. The initial coding exercise was repeated so
that codes were aligned and refined. The process of achieving consistent
coding allocation and validity required that the researcher refined applied
qualitative codes.
48
Codes and themes were tabulated in order to measure frequency and
popularity. A network view was produced to express relationships and structure
by connecting sets of similar elements together in a visual diagram.
The network view is used to assist and represent complex information by
intuitively accessible graphic means (Friese, 2011:99). The process is
summarised in Figure 2.7.
Figure 2.7. Qualitative data coding and analysis process
Source: Researcher’s own construction, modelled on Egan (2002:281)
49
2.10 LIMITATIONS OF THE STUDY
A study of this nature has a number of potential limitations. The limitations that
were encountered in this study are briefly discussed below.
Firstly, the researcher has had some direct personal involvement in the ostrich
industry which was an advantage as the researcher knew who the main
stakeholders and key participants in the industry were. The disadvantage was
that during surveying information might have been omitted due to assumptions
based on the researcher’s knowledge of various relevant topics. Under such
circumstances, the researcher had to include a detailed and structured array of
questions to ensure that all applicable information was captured and had to
remain conscious of potential personal biases that could interfere in the
research.
Secondly, to overcome the limitations of small sample sizes and selection bias,
the researcher had to ensure that to the best of his knowledge the majority of
the programmes in the Eastern Cape were included in the study. However, not
all these programmes were active and some farmers were not available for
surveying.
Thirdly, owing to the isolated nature of the ostrich industry, little published
information was available regarding the supply chain and markets. The
researcher used popular magazines and corporate reviews for reference in this
study. Information regarding the ostrich leather markets and marketing
channels was particularly limited and therefore led the researcher to conduct
preliminary surveys with the main stakeholders. Despite the lack of information,
the researcher consistently ensured that any findings, propositions and/or
conclusions made were backed up by findings and based on sound and
objective judgment.
50
Fourthly, some of the participants required translation of questions into their
home language, isi-Xhosa. The researcher arranged for a translator to be
present for all the surveying and prepared and discussed possible difficult
terms with translators prior to surveying. All surveying and group work had
more than one multilingual participant to confirm the accuracy of translations.
Finally, since the participation capacity instrument was a prototype and had not
been empirically researched, its predictive capacity has not been validated. The
instrument did, however, provide a mechanism for interpretation and could be
further developed for measurement of participation capacity for emerging
farmer areas across other agricultural sectors.
2.11 ETHICAL CONSIDERATIONS
The researcher attempted to ensure that the privacy and rights of the
participants were protected. Blaxter, Hughes and Tight (2010:85) stated that to
be ethical is to conform to the standard of conduct of a given profession. There
are various ethical considerations to adhere to in conducting research. Ethical
considerations applicable to this study are discussed below.
2.11.1 Voluntary participation
All the participants participated voluntarily in the study and it was clearly stated
that the participants were permitted to withdraw at any time they wanted to.
This was discussed with the participants in both English and isiXhosa prior to
embarking on the research study.
2.11.2 Informed consent
The aims of this research were thoroughly explained to all participants and they
were provided with information about their role within the project. After
participants had been given the necessary information about the project they
were given the option to become involved in the research. Approval to carry out
the research was obtained from the Ethics Committee of Nelson Mandela
Metropolitan University.
51
2.11.3 Permission to conduct research
Permission to conduct the research at the farming programmes was obtained
from the farmers, the various stakeholders and mentors prior to embarking on
the research.
2.11.4 Anonymity
Anonymity refers to keeping individuals nameless in relation to their
participation and ensuring that they will remain unknown in the study. In the
study, anonymity was maintained by allocating a reference code to the
participants so that no names of the participants were disclosed.
2.12 SUMMARY
In Chapter 2 the nature and composition of the research methodology was
discussed. Owing to the wide array of stakeholders involved in the production
and market system, namely, farmers’ organisations, civil society and the public
and private sectors, a predominately interpretive framework was adopted in this
study. In this framework a variety of data and different sources were used to
attain validity. A variety of measuring instruments will be used in order to
capture all the measurable components and representation of industry and
participants. The next Chapter will be an overview of the emerging farmers’
rural environment in the Eastern Cape and introduce the setting where the case
studies were undertaken (see Figure 2.8)
52
Figure 2.8 Process of research design and structure of research
REFERENCES
53
CHAPTER 3
OVERVIEW OF THE RURAL EASTERN CAPE:
AN AGRARIAN POINT OF VIEW
3.1 INTRODUCTION
3.2 AGRO-ECOLOGICAL ENVIRONMENT
3.3 HISTORICAL FACTORS AFFECTING AGRICULTURAL
PARTICIPATION OF BLACK FARMERS
3.4 LOCATION AND SOCIO-ECONOMIC DESCRIPTION
3.5 ECONOMIC OVERVIEW OF THE EASTERN CAPE
3.6 RURAL DEVELOPMENT AND SOCIAL SUPPORT INTERVENTIONS
3.7 RELATED RESEARCH ON EMERGING FARMER PROGRAMMES
3.8 CONCLUDING REMARKS
54
CHAPTER 3
OVERVIEW OF THE RURAL EASTERN CAPE:
AN AGRARIAN POINT OF VIEW
3.1 INTRODUCTION
The Eastern Cape Department of Agriculture and Rural Development (ECRDS,
2010:5) defines rural as “the space where human settlements and infrastructure
occupy only small patches of the landscape, most of which is dominated by
open pastures, woods and forest, water, mountain and desert; it is where
people usually live in farmsteads or settlements”. According to Arowolo
(2012:43) “the key elements in the term ‘rural‘ are social, economic, cultural
and spatial, with ‘rural’ characterizing a variety of contexts, which a rural
development strategy in a country or in a province needs to take into
consideration”.
After 1948 the South African Nationalist government instituted draconian
apartheid laws which prevented ownership of land by black farmers, blocked
access to necessary resources and prevented black farmers from progressing
beyond subsistence farming (Schirmer, 2000:143). It was hoped that black
farmers would be able to recover and progress once the apartheid laws were
repealed but perceptions were unrealistic since it depended on a superficial
understanding of the past and it was far too optimistic about the government’s
ability to change historical atrocities. It is from this view that the present chapter
will introduce an overview of the past of the emerging farmers in the Eastern
Cape. The intention is to provide a discourse on the environment where these
farmers operate, namely, historic background, vulnerability, resilience,
dependency on social security and extent of survivalist behaviour. These are
topics which need to be reflected on to decide on emerging farmers’ capacity to
participate. The chapter outlines the agro-ecological environment, socio-
economics and historical background to what led to marginalization of black
farmers and decline of participation in agriculture.
55
The attention shifts to a brief examination of the rural realities, support
interventions and social dynamics that the present black rural populations in the
Eastern Cape face. This literature review focus has been on the two
researched areas of the Eastern Cape, namely, Amathole (including former
Ciskei and Transkei areas) and Cacadu District. The chapter concludes with a
synopsis of related emerging farmer studies conducted in the Eastern Cape
and findings from an interview with the Amathole rural development agency. As
part of the literature review, topics related to the study are analyzed,
synthesized and summarized from these documents. This section forms part of
the between-study literature analysis which involves comparing topics from two or
more literature sources.
3.2 AGRO-ECOLOGICAL ENVIRONMENT The information for the following overview of agricultural and demographic
conditions in the Eastern Cape with focus on the Western areas, has mainly
been sourced from comprehensive research conducted by Lent, Scogings and
Van Averbeke (2000:9-11). In addition to this research on the agro-ecological
environment other references are cited to contribute additional information.
3.2.1 Geology and Soils
The sedimentary rocks found in the Eastern Cape consist mostly of mudstone
and sandstone. The soils show a clay fraction consisting mainly of quartz, mica
and kaolinite (Mandiringana, Mnkeni, Mkile, Van Averbeke, Van Ranst and
Verplancke, 2005:2444). The Eastern Cape Province has severe erosion in the
form of gorges and gullies as a result of land degradation, which are mainly
found in the communal lands (Kakembo, Xanga and Rowntree, 2009:1). The
agricultural potential has also been limited by soil alkalinity in the Western part
of the Eastern Cape. Other causes of the low plant-production potential for the
province are soil compaction, low infiltration rates, phosphorus deficiency and
shallow soil depths. Water availability and fertility status are important factors in
cultivated soils, but they were found to be at low levels in the communal regions
due to inadequate nutrient inputs (Mandiringana et al., 2005:2444).
56
3.2.2 Topography
The topography of the Eastern Cape is generally precipitous and approximately
a third of the province consists of mountain regions and only a few parts of the
Eastern Cape consist of relatively level plains and river valleys.
3.2.3 Climate and water resources
The Eastern Cape climate is diverse, both in terms of temperature and rainfall.
Although temperatures are rarely a problem for agriculture, 85 percent of the
province falls within the semi-arid and arid zones. Rainfall increases from
Western to the Eastern regions. The coastal areas and most areas South
spreading roughly East to West, experience bimodal distribution of rainfall with
the highest precipitation occurring in early and late summer. The Eastern
coastal strip is frost-free; but the scarcity of water is the main cause of limited
plant growth owing to low rainfall and high rates of possible evapotranspiration.
The Eastern Cape is situated between 30oS and 34oS, which receives high
levels of radiation during most of the year. There are no natural freshwater
lakes of noteworthy size in the province. The Eastern Cape has been prone to
drought cycles and according to Nel and Davies (1999:256), crop farmers in the
Eastern Cape have adopted supplementary enterprises such as ostrich-rearing
as a hedge against drought. Recent research by Advancing Capacity to
Support Climate Change Adaptation (2007:5) found that dry areas like the
Eastern Cape were ecologically, politically and socially marginalized and
lagging behind on most economic indices and areas like this were more
vulnerable to climate change than other areas (Verchot et al, 2007:901).
57
3.3 HISTORICAL FACTORS AFFECTING AGRICULTURAL PARTICIPATION
OF BLACK FARMERS
The colonial history of the Eastern Cape originated in the town of
Grahamstown, which was founded in 1812 as a military base spearheading
British colonial expansion over the Xhosaland border. Grahamstown at this time
was not agriculturally thriving and its farms were relatively small. Its role was
more as a position for the support of the frontier development and not for
agriculture (Peires, 2011:46). In 1820 the Cape accommodated 5 000 British
settlers, whose presence assisted with expansion, cross-border trade and land
speculation (Peires, 2011:46).
In the town of King William’s Town, merchant houses such as JW Weir, WM
Savage and Dyer and Sayer established relations with the local peasants of
Middledrift and Keiskamma and acted as agents for export. These merchants
were linked directly with the wool traders of London and also dealt in hides,
skins, horns and other rural products. These merchant houses capitalised on
the rural trading stations and advanced them goods and credit in return for
game and livestock merchandise (Peires, 2011:51). When domestic wool
production in Britain dropped and the demand of British manufacturing for raw
wool had doubled, the town of Port Elizabeth experienced strong economic
transformation as it was ideally situated to control the wool trade to this British
market. By 1840 more than half the ships leaving Port Elizabeth for Britain
sailed directly from Algoa Bay, bypassing Cape Town (Kirk, 1980:48). In the
1850s the South African Cape Colony’s exports and imports through Port
Elizabeth exceeded exports and imports through Cape Town for the first time
(Peires, 2011:44).
58
In 1910 the British Cape Colony lost control to the greater colonial entity called
the Union of South Africa (Peires, 2011:43). Soon after this, the new Land Act
of 1913 denied rural black farmers purchase or lease of land outside the
homeland reserves. According to Coles (1993:712), “this law had the greatest
impact on the lives of non-white South Africans”. In 1936, the Native Trust and
Land Act of 1936 prohibited blacks from engaging in land transactions or
holding any rights to land except in released areas, or with permission of the
Minister. During 1952 the government stipulated that in the Bantu Authorities
Act the chiefs became remunerated servants of the government. Then the
Group Areas Act of 1956 was introduced to enable residential segregation of
races in South Africa. A historic turning point in South Africa during the policy of
apartheid in the 1970s was when the Transkei and the Ciskei were created as
‘national states’ or ‘homelands’ (ECRDS, 2010:11, Ruiters, 2011:19). These
homelands were established to isolate the black nation and provide a source of
low-cost migrant labour for the expanding mines in the Northern areas of South
Africa (Mariotti, 2012:2). From inception there was little economic development
and social infrastructure development implemented by the government in these
homelands, with the result that they became internationally unrecognized and
diplomatically isolated (PGDP, 2004:80). According to the National Department
of Agriculture (2001:para. 4), the area contained three million black farmers
surviving mostly on a subsistence basis on less than seventeen million
hectares of unfertile land. The separate development of the homelands left
lasting negative legacies, the destruction of rural livelihoods, including
landlessness, poverty, infrastructure backlogs, underdevelopment and
unsustainable local economies. In the Eastern Cape this has been manifested
in a divided economy, resulting in massive inequality between livelihoods in the
Eastern and Western regions, with large infrastructural development backlogs
occurring (ECRDS, 2010:11).
59
By 1984 the Abolition of the racially-based Land Measures Bill would come into
effect and the Land Acts of 1913 /1936 and the Group Areas Act of 1966 were
repealed and all legislative race restrictions on land tenure were removed. In
1994 the Ciskei and Transkei homelands were incorporated into the Cape and
formed the new province called the Eastern Cape Province. The exposure to
free and open borders meant that emerging farmers were seeking access to
markets when they still did not have sufficient experience to operate in a
competitive and free market environment. Although interventions of support and
basic service infrastructure received review during 1994 to 2002 from the new
government, major backlogs in infrastructure and services still persisted
(PGDP, 2004:56). According to Mabhena (2011:17), the de-agrarianisation
period after 1994 in the former Transkei was responsible for much of the
disempowerment of tribal authorities, dismantlement of agricultural extension
services and downgrading of the rural poor to a non-agrarian community.
3.4 LOCATION AND SOCIO-ECONOMIC DESCRIPTION
Administrative and political factors have had a strong influence on land-use
change in the Eastern Cape. The levels of poverty differ depending on where
people live in the province and/or the predominance of race or gender.
The type of poverty also differs within the province and is considerably
influenced by factors relating to gender, race and spatial location. The
large-scale spatial variability is a result of the contrasting land-use practices
due to socio-economic systems (Lent et al., 2000:9). The Eastern Cape is
situated in the South-Eastern part of South Africa. The Province has two ports,
at East London and Port Elizabeth. The Province is divided into six districts
which have their own local municipalities. Five out of the six district
municipalities include the former homelands of Transkei and Ciskei. The
districts of the Eastern Cape are: Chris Hani, Alfred Nzo, Amathole, OR Tambo,
Ukhahlamba and Cacadu. The province consists of seven different plant
biomes, namely, succulent Karoo, fynbos, forest, subtropical thicket, Nama
Karoo, savanna and grassland (DEDEAT, 2003:177).
60
According to Hoffman and Todd (2000:743), the Eastern Cape is one of the
most environmentally degraded provinces in South Africa as only over eight
percent of the land in the Eastern Cape is cultivated. The province is faced
with considerable resource-utilsation pressures, particularly around the coastal
zones (Griffiths and Dowling, 2011:180).
Many of the Eastern Cape inhabitants rely on hand-outs, state pensions and
migrant labour payments for household survival (Nel and Davies, 1999:7).
Fewer than one percent of black rural inhabitants can be regarded as full-time
commercial farmers (Bembridge, 1987:246). Thus agriculture became regarded
by the Eastern Cape Provincial Growth and Development Plan (PGDP,
2004:67) as an important focus and an activity to address the needs of poverty-
stricken rural communities. The Eastern Cape Provincial Growth and
Development Plan initiated interventions in the form of support programmes for
small-scale black farmers and the provision of infrastructure. This infrastructure
development also aims to deal with agrarian transformation by improving the
access to roads, electricity and water.
There has also been a major transformation in the livestock farming sector as
many farmers are converting to game farming (Eastern Cape Development
Corporation, 2013b:para. 4, CDMIDP, 2000:42). According to Langholz and
Kerley (2006:1), game farming has been identified as a substitute for livestock
farming especially in semi-arid regions of the Eastern Cape. This is particularly
viable where low rainfall is problematic for plant production and livestock
production is marginal. The focus of the Eastern Cape Provincial Growth and
Development Plan on the game eco-tourism sector is considered to have good
potential for the Eastern Cape Province (Edwards, 2006:6). The former
“homelands”, Transkei and Ciskei, are found in the Amathole district and,
according to Sulzer (2008:4), are mainly rural, experiencing deep-rooted
poverty. The Amathole District is situated along the coastline of the South-
Eastern part of the Eastern Cape Province. The poverty levels in the Amathole
region are at forty-four percent which is higher than the Eastern Cape’s forty-
three percent and the National picture of thirty-seven percent (State of the
District State Address Amathole, 2013:3).
61
The economy of the Amathole District Municipality (ADM) consists mainly of a
community services sector which contributed 33 percent to the Gross
Geographic Product (GGP) of ADM in 2009. Agriculture (less than 1 percent of
the GGP) is characterized by low productivity, high farmer indebtedness, lack of
access to finance by historically disadvantaged farmers, declining capital
investment and an aging farmer population. According to the Amathole District
Municipality (ADM, 2008:27), the prospects of agriculture in the Amathole
district look dim because of the lack of inputs, resources and a lack of interest
from the youth.
The Cacadu District in the Eastern Cape has low rainfall in the Northern and
Western areas, whereas the district’s coastal areas experience high rainfall,
and its South-Eastern parts experience moderate rainfall. In the Northern parts,
around the town of Graaff-Reinet there are pockets of Eastern Mixed Nama
Karoo and Valley Thicket. Pockets of Succulent Thicket are found in the
Eastern parts. A mixture of Thorn Bushveld, Valley Thicket and Coastal Forest
is found in the South-Eastern parts around Alexandria, Bathurst and
Grahamstown (PGDP, 2004:56). Agriculture, which is the Cacadu municipality’s
main economic activity, contributes 28 percent of all value-adding products and
41 percent of employment. Small-stock farming dominates in the dry Karoo
interior while dairy farming and cattle dominate around the Grahamstown,
Alexandria, Cookhouse and Humansdorp areas (CDGDSA, 2007:28). In 2007
the Cacadu municipality included ostrich-leather manufacturing in their sector
development for manufacturing. Together with Ostrimark the Makana
Municipality they jointly lobbied for funding to develop an ostrich-leather
processing plant in Makana.
62
3.5 ECONOMIC OVERVIEW OF THE EASTERN CAPE
In 2010 the Eastern Cape produced 7.8 percent of the South African GDP,
although some 13.5 percent of South Africans resided in the province. The per
capita gross value added is therefore among the lowest in South Africa
(ECSECC, 2012:6). The economy is characterised by levels of irregular
development which is apparent in the contrasting developed urban industrial
manufacturing nodes and the poverty-stricken rural regions of the Eastern
Cape. This is particularly evident in the former homeland areas (PGDP,
2004:21). The Human Development Index in the Eastern Cape has been
lower than South Africa’s Human Development Index since 1995 and has
dropped from 0.582 (1995) to 0.513 (2010), exhibiting a downward trend for
the past fifteen years (ECSECC, 2012:3). A report by Statistics South Africa
(2002:20) on the survey of large and small-scale agriculture, found that in the
former homelands, the participants’ houses had the highest value (44,3
percent), followed by their land (22,7 percent) and then livestock, poultry and
other animals (19,7 percent). However, for the rest of South Africa, agricultural
land had the highest market value (40,7 percent) followed by livestock (10,7
percent) and life insurance (9,4 percent). A report by the Eastern Cape
Provincial Growth and Development Plan 2004–2014 (PGDP, 2004:23)
indicated that the Cacadu district accounted for more than one third of Gross
Value Added in the primary sector. The transport sub-sector accounted for
just over one quarter in the secondary sector while the tertiary sector was
organised around education.
63
The agricultural sector only contributed just over 2 percent to the gross value
added, however it is an important sector that feeds into the food-manufacturing
industry (ECSECC, 2012:7). According to the Eastern Cape Provincial Growth
and Development Plan (PGDP, 2004:56) the former homelands constitute
about 30 percent of the total area of the Eastern Province, but are home to 67
percent of the population and provide about 45 percent of the arable land. The
highest number of poultry-keeping and cattle operations were those found in
the Transkei and Ciskei areas (Aihoon, Gideon, Mukwene and Mukwene,
2009:2). The Eastern Cape currently has 436 000 people engaged in small-
scale and subsistence farming and 70 000 farmworkers employed on
commercial farms. The Eastern Cape has high levels of livestock compared to
other provinces of the country, which represents 21 percent of South Africa's
cattle, 28 percent of sheep and 46 percent of goats (Eastern Cape
Development Corporation, 2013a:para. 1). The Eastern Cape economy differs
structurally from the rest of the other provinces in terms of absence of a mining
sector and having a larger tertiary sector. There has been a general downward
trend in agriculture since the 1990s and most growth within the primary sector
has come from fishing and forestry (PGDP, 2004:21).
64
3.6 RURAL DEVELOPMENT AND SOCIAL SUPPORT INTERVENTIONS
The foreign direct investment in South Africa has remained weak which has
resulted in a declining urban economy in South Africa over the past decade.
This has influenced increased movement of unemployed people back to the
rural sector (Ainslie, 2005:130). The rural economies have become dependent
on off-farm payout interventions from the government’s welfare programme
leading to a survivalist application of natural resources (Andrew, Ainslie and
Shackleton, 2003:2). This reliance on sources of income derived from outside
includes old-age, disability, pensions, child support grants, and grants for
people infected with HIV/Aids. During 1994 the Reconstruction and
Development Programme was developed for post-election economic and social
policies. The main aim in developing and implementing the Reconstruction and
Development Programme was to address the socio-economic problems
brought about by the apartheid regime. However, according to the Eastern
Cape Provincial Growth and Development Plan (PGDP, 2004:37), a growing
lack of resources has failed to address infrastructure and services backlogs in
the Eastern Cape. The Reconstruction and Development Programme set out
policy programmes to achieve meeting of basic needs, developing human
resources, building the economy and democratizing the state and society
(African National Congress, 1994:8). However, the inequalities remain in rural
areas and many development programmes have not yet had the desired
results. As a result rural development emerged as a national policy priority as
large numbers of South Africans live in rural areas. According to Rooyen,
Groenewald, Ngqangweni and Fenyes (1998:17), the Reconstruction and
Development Programme scantily refers to agricultural issues and rather
focuses on redistribution of inhabited land to those previously deprived of
access and compensation for those who lost land due to the apartheid regime.
Other rural development interventions include the Agrarian Transformation and
Rural Development system which became an important development strategy
to reduce poverty in rural areas (ECRDS, 2010:9).
65
In South Africa’s Provincial Growth and Development Plan, the core section
was the agrarian transformation programme aimed at strengthening household
food security through agricultural production, employment and incomes of the
poorest households, particularly in the former Ciskei and Transkei areas
(DARD, 2009:27). The South African Government programmes assembled
mainly around three areas of involvement, namely
• promoting food security through increased smallholder production;
• increasing the asset base of the poor through land tenure reform; and
• increasing the use of land for commercial agriculture in the former
homelands.
Poverty and inequality in the Eastern Cape have become serious and
extensive. The majority of the poor in the Eastern Cape are black and live in the
former homeland rural areas of the province. The Nelson Mandela Metro and
Cacadu District are the only municipalities in which fewer than 50 percent of
households live in poverty. Social grants have contributed considerably to
reducing poverty in South Africa since 1994. Approximately R12 billion in social
grants was to be paid out to EC beneficiaries in the 2007/2008 financial year
(Mkhize, 2011:238). It is estimated that 64 percent of households are
dependent on grant recipients (ECSECC, 2012). From 1996 the right to social
security was provided for in section 27(1) of the Constitution, which states:
"Everyone has the right to have access to social security, including if they are
unable to support themselves and their dependants, and appropriate social
assistance".
66
Since its inception the social grant system has experienced problems in the
Eastern Cape (Joseph 2005, cited in Mkhize, 2011:240) due to poor service
levels and failure at delivery sites (Overy and Zuma, 2004:5). Access to
pay-points for grants from rural areas were challenging due to lack of
infrastructure which meant that rural recipients did not have full access to
amenities at pay-points (Mkhize, 2011:247), indicating poor administration of
the social grant systems in the Eastern Cape. The South African Ministry of
Public Service and Administration highlighted the extent of administrative
incapacity in the Eastern Cape, reporting that strategic planning at provincial
level was weak and poorly implemented (Niekerk, 2011:71). According to
Baden and Harvey (2011:2), rural areas have for a long time suffered from lack
of investment in infrastructure and essential basic services which has not only
denied poor rural people and their families basic rights, but has also limited the
capacity of poorer farmers to participate fully in development. Poor rural people
are also often the most vulnerable to crises and impacts of climate-related
risks. The shift of power in the agricultural sectors toward large businesses and
the decrease of donors that support the smallholder farmer has left the
smallholder farmers in a susceptible position.
67
3.7 RELATED RESEARCH ON EMERGING FARMER PROGRAMMES
The approach to this section of study was twofold: firstly, the section provides
a brief synopsis on related emerging farmers programmes in the Eastern Cape
and concludes with a study conducted by Oxfam’s Global agricultural scale-up
initiative (GASUI). Secondly, it describes findings from consultation with the
Amathole Economic Development Agency (Aspire). Aspire are involved with
developing markets and regeneration programmes for socially and
economically disadvantaged groups in the Eastern Cape. This part of the
chapter was intended to assist formulation of questionnaires, to synthesize
results and to provide final discussions related to the study. The synopsis
included evaluation on farming systems, paying particular attention to
constraints and barriers that could potentially influence participation. Below is a
summary of relevant information found from the case histories of the emerging
farmers and the consultation with Aspire.
3.7.1 Technical constraints on market access
What follows is an outline from a study by Obi and Pote (2012:107-109) on the
technical constraints to market access for crop and livestock farmers in
Nkonkobe Municipality. The following key findings and recommendations were
identified:
Farmers were unable to access the credit needed for inputs such as fertilisers and mechanical technologies;
Access to the appropriate information was lacking;
The farmers required more production capacity to enhance market participation;
There was a need to identify strategic partners for agricultural support; and
Farmers should avoid exploitation and possible conflicts of interests on the part of the strategic partners.
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3.7.2 Challenges and recommendations in emerging farmer co-operatives
An outline follows from a study by the Co-operative and Policy Alternative
Centre (COPAC, 2010:21-99) on the main challenges and recommendations
from a multi- case study on twenty co-operatives in the Amathole District.
3.7.2.1 Challenges
The main challenges identified in the study were the following:
Need for education and training, particularly in financial management,
business management and on how co-operatives work;
Insufficient commitment and buy-in from the young members of the families;
Disagreements and conflict between beneficiaries;
Poor communication from management;
Lack of supporting infrastructures;
Delays of payment from buyers resulting in irregular payment of salaries;
Expensive and high electricity consumption;
Shortage of nearby processing facilities and value-adding facilities;
High mortalities of livestock;
Programmes were conceived in a top-down approach and there was a dependency on government for opportunities;
Inability to break into appropriate markets;
Crime affecting production;
Absence of effective agricultural extension services;
Climate change affecting rainfall patterns and water sources;
Lack of a coherent set of co-operative practices by farmers;
Fraudulent activities and embezzling of finances from members;
Short-term contracts with customers resulted in insufficient time to accumulate reserves; and
High level of informality in the operations and instituting arrangements.
69
3.7.2.2 Findings
Strategic partners were important for support;
Income should be sufficient to cover debt, running costs and provide attractive salaries;
There should be access to working capital and agricultural equipment;
Transparent cash-flow management is essential;
Exposure to new and appropriate information to assist farming;
Need to provide for community and generate local employment;
Building relationships with support institutions is important;
Membership size dimension can be advantageous and also be a constraint;
Financial support from government grants is crucial for start-up, but exit strategies need to be built in too;
Proper organisation in decision-making process is required;
Building up of internal reserves is crucial for sustainability;
Marketing strategies and feasibility studies should be in place before initiation; and
Sufficient operational capital and profitability are necessary to utilise land fully.
70
3.7.3 Contract farm modelling
An outline follows from a study by Koranteng (2010:54-57) on a contract
farming model of financing smallholder farmers at the IDC-Kat River citrus
development scheme. Owing to the long-term financial return required for
citrus, it took this model seven years for return on investment to be reached.
The farm required bridging loans in order to assist with the long-term debt and
lack of salaries in the initiating years. Farmers were not content with salaries
received for the programme, as they did not sustain their household needs.
Diversification was encouraged in order for the farmer to have another source
of income. Incentives were required to reward farmers whose performance
exceeded expectations. The farmers preferred direct communications with their
sponsors in order to have a direct channel to lay grievances. There was a lack
of transparency in usage of funds and farmers required simplified financial
statements in order to understand the farm finances.
3.7.4 Development planning
An outline follows from a study by Dirwayi (2010:119-122) on the application of
the sustainable livelihoods framework to the analysis of the provincial growth
and development plan at Nkonkobe and Buffalo City. The study found that the
following had a strong influence on participation: training, the area farmed, size
of household, amount of income obtained from livestock sales, length of time of
residence in the area, production of other agricultural crops, educational level
and age of the farmer. The grants and pensions were important sources of
livelihoods and agricultural activities were a secondary source of income. The
staple food, maize, was purchased using pension and grants, thus farming
activities concentrated on vegetable crops. The main production constraints
were lack of fertilizer, herbicides and absence of fences to prevent livestock
feeding on crops. Training and education was found to be crucial for the
development of the programme. Farmers were encouraged to sell produce in
the local community to assist learning and development of marketing skills.
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3.7.5 Influences on market aspects
An outline follows from a study conducted by Nkonki (2006: 54-58) on the
diversity of smallholder wool production at Xume. According to the researcher
the entrepreneurial opportunities were suppressed owing to the fact that they
had been excluded from the commercial stream. The main areas of influence
on this enterprise were transport, financial record-keeping, extension services,
training and access to pricing information.
Transport was a problem for the producers and affected to whom they could sell to;
Proper financial record-keeping was central to monitoring profits;
Extension services were an important aspect for the improvement of quality;
Skills come as a result of experience and are reinforced through training. This was important for maintaining quality of the product; and
Access to pricing information was important to facilitate making the correct selling decisions.
3.7.6 Linking emerging farmers with markets
An outline follows from a study conducted by Mkhabela (2010:1-12) on linking
farmers with markets in rural South Africa. The study was to assist linking
smallholder farmers to markets through supporting institutions, namely,
cooperatives, growers’ associations and contract farming. The researcher
found that linking farmers to intermediaries and appropriate markets, especially
export markets, was important for long-term sustainability. The collaboration
between government and the private sector provided the greatest potential for
value chain participation. The dissemination of information was important to
improve the availability of technologies to small-scale farmers and processors.
The government played an important role helping to identify future
vulnerabilities, build farming capacities and improve infrastructure
(transportation and communication). The study also identified that scaling-up
farmers was an essential part of the programme interventions.
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3.7.7 Scaling-up farmers
The researcher was led to further investigation into global scaling-up of farmers’
initiatives following the review of the study conducted by Mkhabela (2010:1-12).
The Oxfam’s Global agricultural scale-up initiative (GASUI) (Cano, 2011:17)
was reviewed to give a larger platform of understanding on international
programmes with small farmers’ intervention on organization and positioning in
markets.
Through this smallholders can gain greater power in the markets and can
increase their ability to access and participate in markets (Baden and Harvey,
2011:4). The initiative has been used to demonstrate to governments, donors
and development actors how agriculture can contribute to economic
development and reduction of poverty. Research done on a GASUI case study
in Honduras by Cano (2011:23-24) showed that the success of empowering
smallholders required a strategy which included the following attributes:
Securing financial resources from other actors at community, regional,
and national levels and access to credit, which contributed to training
and education of farmers, while funds were transparently managed to
ensure future investments; and
Establishing and strengthening community, municipal, and regional
institutions, with the intention of building alliances with municipal
authorities while mobilizing of civil society remained central to the
success of this campaign.
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3.7.8 Consultation with Amathole Economic Development Agency
The following are the highlights from a consultation conducted with Amathole
Economic Development Agency (Aspire). This agency had been involved with
working with socially and economically disadvantaged groups in the Eastern
Cape. The programmes initiated by Aspire in the Eastern Cape have been
location-specific so that produce was in nearby proximity to processing and
cold-storage facilities. This is especially important if produce is targeted for the
export market. According to Aspire, one of the major problems with the Eastern
Cape was the lack of carrying capacity for livestock. Other programme
challenges were insufficient economics of scale and developing
“kitchen-based” processing units into larger commercial processing units on the
farms. The lack of agricultural processing facilities is a problem in the Eastern
Cape and owing to transport limitations farmers have been unable to deliver to
these facilities. The small-scale farming also did not justify the efforts of
participating with main commercial processors. Up-scaling home gardens has
been challenging and one of the main reasons was that farmers lacked
business skills to be able to take their enterprises to the next level of
commercial farming. Some of the programmes had succumbed to imbalance of
“over investing” and producing an inefficient amount of produce. Large
emerging farmer programmes have not been able to procure skilled
beneficiaries to manage the dimensions of large-scale enterprises. These
programmes have resulted in poor-quality produce with small profit margins.
74
The main constraints for the emerging farmer programmes have been access
to markets, too small a quantity of produce and inability to provide constant
volumes. According to Aspire, the farmers require support in terms of
scheduling production and transporting produce to market. Some farmers in the
programme were not fully aware of input costs as these had been masked by
external financial support. The farmers had been unable to continue with
projects when funders retracted financial support which led to reduction in
profits and meagre salaries. According to the Aspire, the farmers prefer ‘farm
gate sales’ and the greatest opportunity for development lies in linking small
growers from this point with processing and markets.
3.8 CONCLUDING REMARKS
Rural areas are regarded as having inferior infrastructure, poor site conditions,
low earnings, poor access to health services and unreliable water sources. The
rural Eastern Cape is not only underdeveloped but also has high levels of
unemployment and poverty and has experienced a history of exclusion and
marginalization (Edwards, 2006:13). The land suffers from ecological
degradation due to topsoil erosion and overgrazing, which has made the land
unproductive. According to Nel and Davies (1999:268), the Eastern Cape’s low
rainfall and poor soil quality necessitate a reliance on extensive stock-farming,
with areas of fewer than 1 000 ha not often regarded as an economic unit.
Some communal areas are on the brink of ecological collapse due to
overstocking (Ainslie, 2002:1). Interventions to promote agriculture have been
many, but have fallen short of meeting their objectives. Although the South
African government has provided agrarian transformation and grant
programmes aimed at reducing poverty, there is a trend of declining donor and
government interventions. Government programmes have not adequately
included a way for rural people to enter the market economy in any sustainable
way. According to (Mabhena, 2011:17), agricultural production is in a declining
state because lack of support has made rural people unmotivated to participate.
Rural households in South Africa are confronted by high risks resulting in
income volatility.
75
According to Obi, Van Schalkwyk and Van Tilburg (2012:25), small-scale
farmers in the Ciskei area delivered small output to diverse and informal
outlets, often with the absence of adequate co-ordination and transport. Small
farmers face challenges of lack of infrastructure in delivering produce to
markets. The profile of the majority of the small-scale farmers in the Ciskei area
is limited education, poorly resourced in terms of capital and land and lack of
access to credit or technical support (Monde, 2003:188-189). The marginal
conditions and prevalent complexities in which agriculture is practiced in the
Eastern Cape will require costly intervention. Chapter 3 has contributed to an
understanding of the Eastern Cape rural environmental influences on emerging
ostrich farmers. The next chapter will provide an introduction to rural livestock
farming in the Eastern Cape (see Figure 3.1).
Figure 3.1 Process of research design and structure of research
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CHAPTER 4
RURAL LIVESTOCK FARMING IN THE EASTERN CAPE
4.1 INTRODUCTION 4.2 REVIEW OF RURAL LIVESTOCK FARMING IN THE EASTERN CAPE 4.3 ANTHROPOLOGICAL OVERVIEW OF THE ROLE OF CATTLE. 4.4 OVERVIEW OF LIVESTOCK MARKETING-CHANNEL AND
INTERVENTIONS TO ASSIST PARTICIPATION 4.5 CONCLUDING REMARKS
77
CHAPTER 4
RURAL LIVESTOCK FARMING IN THE EASTERN CAPE
4.1 INTRODUCTION
The previous chapter reviewed the environment of the rural emerging farmers
in the Eastern Cape. The present chapter provides an overview of rural
livestock farming. Although extensive studies have been conducted on livestock
farming in the Eastern Cape, little empirical research has been done on ostrich
livestock farming by emerging farmers. A literature review of rural livestock
farming in the Eastern Cape was conducted in order to synthesize results and
discussion related to the study on rural black emerging ostrich farmers. In order
to understand the role of livestock for emerging farmers, the chapter starts with
a review of rural livestock farming in the Eastern Cape and is then narrowed
down to a review on the anthropological role of cattle in an African cultural
context. Focus has been placed on the former Transkei and Ciskei areas in
order to clarify the rural livestock environment in which Eastern Cape emerging
farmers are embedded. Then finally this chapter discusses the market
participation factors influencing smallholder farmers. This literature review
intends to facilitate insight into potential factors involved with introducing an
exotic livestock venture into an African rural context.
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4.2 REVIEW OF RURAL LIVESTOCK FARMING IN THE EASTERN CAPE
Only 14 percent of the Eastern Cape homelands (Transkei and Ciskei) are
arable enough to be suitable for livestock production. Livestock production is a
major resource and component of agricultural production because
approximately 84 percent of the areas can potentially be used only for grazing
(Bembridge, 1987:74). According to Nel and Davies (1999:269) many of the
stock farms surrounding the Transkei and Ciskei areas are in excess of 1 000
ha in size, which suggests that extensive farms are required to generate
income in these rural areas. The relative importance and potential of livestock
production in these areas is illustrated by the fact that in 2002 over 80 percent
of livestock operations in South Africa were found in the former Transkei and
Ciskei areas. It is interesting to note that although the Eastern Cape Province
has one of the highest livestock production rates, the ostrich sector represents
a smaller percentage than those of the other provinces. According to
Bembridge (1987:74), the relative importance and potential of livestock
production in the homelands areas is illustrated by the fact that 35 percent of
the cattle, 57 percent of the goats and 10 percent of the sheep population are
run in the less developed areas of southern Africa.
Livestock farming in the former homelands contributes very little to the cash
economy in terms of sales for slaughter to the market. One of the reasons for
this may be the high level of herd mortality, low reproduction rates and herd
off-take. However, the situation is similar to that found in the other less
developed countries of Africa (Bembridge, 1987:75). Livestock kept by South
African smallholders in a developed country should be seen against a
background in which both history (discussed in Chapter 3) and anthropological
influences play an important role, having had an influence on utilisation,
keeping methods and marketing of produce (Groenewald and Jooste,
2012:113). Although natural pasture is the main feed source for grazing (Suttie,
Reynolds and Batello, 2005:77) the poor utilization has had a marked influence
on land degradation in rural parts of South Africa (Nel and Davies, 1999:13).
79
Perret, Carstens, Randela and Moyo (2000:37), who researched three different
typologies in the Eastern Cape, with differentiated communities, showed how
they related to livestock farming: 5 to 15 percent were very poor households,
mostly headed by females; 15 to 20 percent were non-farming pensioners; 10
to 40 percent were adult-headed households with off-farm incomes; 12 to 25
percent were stock-keeping pensioners; 13 to 18 percent stock-keepers with
off-farm sources of income and 4 to 30 percent full-time farmers. Research
conducted by Ainslie (2002:105) on the cattle-owning households in Peddie
area found that the average age of the household heads in the survey was 61.4
years old. He states that the rural demographics in the category of 65 years old
and over, constitute some 8 percent of the rural population of Peddie district.
There are cattle-owning household heads that are particularly advanced in age
(over 80 years) and who have generally ‘retired’ from urban-based
employment. The age group from 41 to 52 years showed the least number of
cattle per household of all the age groups in the research findings, which may
have been an indication that in this group, owing to lack of state grant support,
the farmers are dependent on higher turnover of sales of cattle for livelihood
expenses. Ainslie (2002:105) confirmed the important role that social grants
played, noting that 61 percent of the households received one or more grants.
The average household size for the sample which was 6.6 people, had moved
at least twice before settling (each move resulting in loss of livestock). Only two
cases of absentee owners were recorded. None of the respondents made sales
to butchers in the Peddie district and butchers were reluctant to purchase meat
from rural farmers due to unknown health status. Livestock sales have been
mainly to auctions and white commercial enterprises in the area. Livestock is
also marketed at informal markets and to speculators. The livestock sold in
informal markets is characterised by seasonality and poor market feedback
pertaining to prices and quality requirements. Other problems experienced are
that in dealing with speculators farmers sell their livestock below market value
due to poor timing and they are usually in a weak bargaining position
(Groenewald and Jooste, 2012:123).
80
4.3 ANTHROPOLOGICAL OVERVIEW OF THE ROLE OF LIVESTOCK In terms of the monetary value, livestock is an important form of investment for
the rural households (Kepe, Ntsebeza, Ntshona and Turner, 2002:2). According
to Fafchamps, Udry and Czukas (1998:2) livestock transactions do not offer a
consumption buffer for income shortages due to village-level shocks alone
(droughts and floods) but function rather as repositories of economic utility and
act as stores or icons of cultural value (Ainslie, 2005:132).
An analysis of herd ownership in the Eastern Cape homelands by Bembridge
(1987:75) revealed that most farmers owned fewer than eight livestock units,
which he considered the minimum number necessary for primary needs of
survival and subsistence, as well as for sociological reasons. He added that the
use of manure, milk and draught animal power was important in the rural
context. According to Ainslie, Kepe, Ntsebeza, Ntshona and Turner (2002:40),
about 30 percent of families were without cattle in the late 1940s which
changed to 50 percent in the early 2000s. In addition inhabitants employed in
towns were expected to make their cattle available to contribute to their rural
homes. According to Obi (2012:203), the role of livestock in the Amathole
district in the Eastern Cape ranged from their use for draught animal power,
consumption as food and sales to raise cash for use in African traditional
ceremonies. A variety of livestock products was identified in this study, namely,
beef, chicken, eggs, mutton, pork, bacon, dairy products, wool and mohair. It is
interesting to note that no ostrich products were found in these studies. A
further study conducted by Ainslie (2005:135) on cattle ownership and cultural
politics in the Peddie district of the Eastern Cape showed that barriers to entry
into cattle ownership were reasonably low. Inhabitants were acquiring cattle not
only by purchase but by inheritance or by bride-wealth, and by 2005, 30
percent of households in the Peddie area owned cattle and nearly 54 percent
had between one and six animals. The average cattle-holding number per
household was approximately nine and Ainslie noted that households headed
by men accounted for around 79 percent of the cattle-owning households.
81
More recent research by Muchara (2011:79), into Mbozi and Ciko villages in
Mbashe Local Municipality of Eastern Cape, has shown that most livestock
farmers used livestock for domestic consumption. Forty-four percent of the
respondents keep livestock for consumption and 12 percent produce for both
marketing and consumption. Muchara did, however, find that 50 percent of the
respondents indicated their eagerness to scale up their livestock production.
Research by Mahanjana (2003) cited in Olivier (2004:31) highlights the
importance of livestock in African societies. He states:
“The communal farmers see cattle as a measure of wealth and, in some
instances cattle are regarded as their ‘children’. They therefore seldom sell
calves or oxen at livestock auctions for additional income.”
Communal cattle farming is therefore pursued mostly for their own use or for
the needs of their extended families and is largely outside the main cattle
industry of South Africa.
82
4.4 OVERVIEW OF LIVESTOCK MARKETING-CHANNEL AND
INTERVENTIONS TO ASSIST PARTICIPATION
Starting from 1910, a series of legislative policies had a restrictive effect on
black agriculturalists and commercial markets in South Africa. The Marketing
Act passed in 1937, which over the years was amended a few times, provided
support to commercial farmers; but, according to Groenewald and Jooste
(2012:113), did not support subsistence farmers. In South Africa all schemes
under the act were administered by commodity boards. The board members
were not elected but appointed by the Minister of Agriculture. According to
Groenewald and Jooste (2012:116), under the Marketing Act, most commercial
livestock holders suffered under discrimination on the main markets. The
position was a greater challenge for stockholders in the former homeland
areas. This started a dependency on speculators who bought animals in their
areas and resulted in farmers becoming price takers, and the speculators
becoming monopolists. The racial discrimination and price distortions in South
Africa were not sustainable and the pressures on South African policy makers
for a reversal of these polices began to mount during the 1980s (Vink and
Kirsten, 2000:11). This act was eventually abolished to be replaced by the
much less drastic Agricultural Products Marketing Act in 1996. The South
African Marketing Act of the 1990’s is said to have catered for the interests of
white commercial farmers to the detriment of black farmers who were left out.
The degree of monopolisation engendered and entrenched by the Marketing
Act was a source of concern (Kassier and Groenewald, 1992:22). Substantial
policy changes took place from 1995 to 1997 and in 1995 government started a
process of liberalisation of the agricultural sector which saw the abolishment of
the single-channel marketing systems.
83
A study on smallholders in the Kat River Valley, Eastern Cape by Jari and
Fraser (2012:61) showed that marketing channels were a challenge for
smallholder farmers. Before choosing a marketing channel, the smallholder
considers the costs associated with transportation, proceeds, knowledge of the
markets and level of trust among the available brokers. Jari and Fraser also
found that farmers marketed their produce through low-price channels either
because they lacked market understanding or had difficulties in accessing
rewarding markets. With reference to Figure 4.1, most produce from
smallholder farmers in South Africa is sold locally, with only a small amount
exported. Smallholder farmers need to make use of market intermediaries in
order to participate in international markets.
Figure 4.1 Marketing channels for produce from smallholder farmers
Source: Jari and Fraser (2012:61)
84
According to Ainslie (2002:121) variations of agro-ecological conditions may
render certain areas unsuitable for livestock ventures. The spatial position in
respect of infrastructure is significant, as good access to roads and markets
influences integration into a production system or supply chains. The
macro-economic profile of an area also needs to be considered. Some areas
have been disadvantaged or neglected due to political issues or have been too
time-consuming for extension service providers. According to Ainslie, some
areas however have been favoured and have been provided with
advantageous interventions of sponsored infrastructures and linkages to
livestock markets.
A study done on why smallholder farmers participated in the goat market in the
Eastern Cape (Mahanjana and Cronje, 2000:152), showed that the reasons for
sales were to pay debts or save money in 45 percent of the cases and in 27
percent of the cases was to buy other foodstuffs. The majority of sales took
place during the summer months (December and January) and the buyers used
the goats mainly for traditional ceremonies, weddings and funerals. According
to Groenewald and Jooste (2012:119), livestock farmers will sometimes sell
more livestock in years characterised by lower prices than in years with higher
prices due to weather variability. Drought years are characterised by
deterioration in natural pastures and hence a short supply of feed for the
livestock. This affects the condition of the livestock and farmers are forced to
sell the animals in order to save them from starving and release finance for
feed for the remaining animals. This results in an increased supply of livestock
and results in falling prices. According to Lent, Scogings and Van Averbeke
(2000:15), livestock farming forms part of a mixed-farming system practised by
homeland inhabitants, namely, crop production, vegetable production (home
gardens) and livestock production (mainly cattle).
85
Today many of the livestock land settlement patterns in use by the inhabitants
of the Eastern Cape homelands have been influenced by past government
interventions referred to as 'Betterment Planning’. According to Scogings and
Goqwana (1996:39), the attempts to establish ‘Betterment Planning ‘ were not
sustainable and were met with resistance which resulted in (i) the fences
dividing the camps being removed and reverting to continuous grazing; (ii)
stock-management decisions being left to the individual livestock owners; and
(iii) herders keeping animals in designated grazing areas.
4.5 CONCLUDING REMARKS
Part of this literature review was to gain a basic background understanding and
flag possible issues for developing a framework to initiate ostrich farming
opportunities into the rural environment of the Eastern Cape. Cattle are
repositories of economic utility and stores or icons of cultural value. This
chapter explored why ostrich farming has not been embraced by rural farmers
as much as cattle and goats. The reasons are a) ostriches which are a non-
traditional livestock that offer three products which require processing in order
to receive full value, namely, meat, leather and feathers b) the leather and meat
have almost equal value for the farmer c) ostriches are farmed intensively for
high-value markets which require stringent biosecurity measures d) ostrich
farmers have strong dependency on intermediaries in order to participate in
international markets e) ostriches are unable to offer households with milk and
draught animal power and thus they do not offer the range of possibilities for
self-use and consumption. The worth of ostrich production for emerging farmers
lies mainly in the higher returns which are achieved only through the export
markets. However, an ostrich’s water economy is similar to that of other desert
animals and has potential for production in the semi-arid areas of the Eastern
Cape. The next chapter will discuss this topic further and elaborate on the
intensive ostrich industry and the potential of ostrich husbandry on low-potential
arable land (see Figure 4.2).
86
RFigure 4.2 Process of research design and structure of research
87
CHAPTER 5
AN INTRODUCTION TO THE OSTRICH INDUSTRY
5.1 INTRODUCTION
5.2 OVERVIEW OF THE SOUTH AFRICAN OSTRICH INDUSTRY
5.3 SOUTH AFRICAN OSTRICH INDUSTRY HISTORY
5.4 CONTENT ANALYSIS OF OSTRICH RESEARCH INTEREST
THROUGH TEXT-MINING METHOD
5.5 OVERVIEW OF OSTRICH HUSBANDRY
5.6 CONCLUDING REMARKS
88
CHAPTER 5
INTRODUCTION TO THE OSTRICH INDUSTRY
5.1 INTRODUCTION
The previous chapter introduced the emerging livestock farmer in the
context of the Eastern Cape environment. This chapter introduces the
background and development stages of the ostrich industry. The aim of this
chapter is twofold: to attempt to understand what have been the main
ostrich research interests and what are the main components of ostrich
farming. It is the researcher’s hypothesis that the focus of ostrich research
has been driven by the ostrich industry challenges and threats. As part of
the literature review the text-mining method of examination of a wide range
of research articles related to ostriches will be reviewed. This will serve as
an indicator for what the industry has focus on and also review what
research, if any, has been conducted on emerging ostrich farmers. Owing to
the copious amounts of information available on ostriches, the text-mining
method will also be used to indicate topics and narrow down an overview on
husbandry aspects pertaining to this study that have hypothetically the
strongest influence on emerging ostrich farmers. This section forms part of
within-study literature analysis which involves analyzing the contents of a
specific topic (Onwuegbuzie, Leech and Collins, 2012:2).
89
5.2 OVERVIEW OF THE SOUTH AFRICAN OSTRICH INDUSTRY
History records indicate that during the early Saharan Neolithic period
(ca. 8800 to 6800 BC) ostrich eggshells were used as water containers. The
use of ostrich feathers can be traced back to the pharaohs of ancient Egypt
(ca. 1332 to 1323 BC), during which time ostriches were also hunted for
their meat and the skins were used to make protective clothing
(Shanawany, 1995:3, Manlius, 2001:245). The South African ostrich,
Struthio c. australis, was indigenous to the Cape Province and it was during
1838 that South Africa recognized the great potential value of ostrich
feathers and started to export them to Europe for the fashion industry
(NAMC, 2003:14).
The domestication of the ostrich had an important impact on ostrich farming
and by 1913 ostrich feathers were one of the most important economic
commodities for South Africa, ranked fourth on the list of South African
exports following wool, diamonds and gold (Schutte, 2008:1). These
feathers which were highly prized for ladies’ high-fashion clothing and
appealed to the wealthy (Stein, 2007:778); but the feather industry
collapsed during 1913 and only at the end of the Second World War did the
ostrich industry recover (NAMC, 2003:14). In the mid-1970s the first ostrich
tannery was built (KKI, 2003:3, Hoffman, 2008:1270). The tanning of ostrich
leather grew into a strong and high-quality focused industry from to the mid-
1990s. During this period the industry procured, processed and exported
ostrich leather successfully through a single-channel marketing system
(NAMC, 2011:7). Through this monopoly the industry developed into an
intensive agro-processing supply chain supported by select overseas
agencies that became gatekeepers to high-fashion brands. The ostrich
industry in South Africa progressed into a multi-processing business,
producing three main commodities, namely, leather, meat and feathers.
Other by-products include ostrich eggs and fat.
90
The trade in ostrich leather was greatly influenced by the worldwide luxury
market (Kriek, 2009:para. 1). This exotic leather supply chain consists of
complex production systems which include livestock husbandry, industrial
processes and marketing structures. The industry focuses on exotic leather
and meat being farmed simultaneously, resulting in an all-encompassing
production with attention focused on maximising animal weight and skin
size and preventing skin damage and diseases. The ostrich industry is
predominately export-focused with meat sold predominately into Europe
and leather sold to Europe, United States and Japan. The contribution of
the ostrich industry towards export earnings and balance of payments was
estimated at R1,2 billion per annum, representing approximately 5 percent
of the total of the South African exports (Brand and Jordaan, 2011:1).
In 2002 South Africa had 588 registered export farms (453 farms in the
Western Cape, 102 in the Eastern Cape and 33 farms in the rest of the
country) and produced approximately 340 000 slaughter birds. During this
time there were ten export-approved abattoirs (for European Union
purposes) and 15 tanneries (NAMC, 2011:5). Total employment in the
production and processing sectors of the ostrich industry was just below
20 000 workers (Cohen, 2012:1). By 2006 South Africa was continuing to
dominate production on world markets and was producing 200 000
slaughtered ostriches per year, followed by China (100 000), Brazil (50
000), Australia (22 500) and Zimbabwe (20 000) (Carbajo and Veterinarian
3rd, 2006:24). Owing to a poor economic climate, protectionist policies and
avian influenza the trade in the ostrich industry has declined so that by 2013
there were only approximately 260 registered export ostrich farms in South
Africa (du Plessis, 2013:12).
91
5.3 SOUTH AFRICAN OSTRICH INDUSTRY HISTORY
Prior to the 1860s, ostriches ran wild in large numbers in Africa. In South
Africa, the birds were hunted and killed for their feathers by Khoisan and
European settlers. According to KKI (2003:2), commercial ostrich farming
started in 1864 between the Outeniqua and Swartberg mountain ranges. In
1867, the invention of the ostrich-egg incubator in Grahamstown made
mass rearing of ostriches possible (Van der Walt, 1990:193). By the 1900s
ostrich feathers were in high demand amongst the European wealthy
(Smith, Cilliers, Mellett and Van Schalkwyk, 1995:175). The main expansion
of the ostrich industry occurred in the Cape colony (Douglas, 1906:47),
particularly around the town of Oudtshoorn, in the Western Cape region of
South Africa (Sales, 1999:6).
The value of property grew dramatically in Oudtshoorn, leading wealthier
farmers to engage in seizing land which in turn led to a rise in tenant
farming in the district (Buirski, 2001, cited in Stein, 2007:778). As a result of
their success, personal wealth increased in the Oudtshoorn region. By 1913
the ostrich-feather market reached its peak (KKI, 2003:2) and several
countries had joined the global ostrich production, namely, Egypt, Australia,
Algeria, Tunis, Sudan, Madagascar and the U.S.A (Cooper, Mahrose, El-
Shafei and Marai, 2008:349).
But some of the inhabitants in the Oudtshoorn area were economically
marginalized by this surging ostrich industry. As the ostrich industry
consumed unproductive agricultural land and other less productive
commodities, large numbers of Boers who had once worked on local
vineyards became unemployed. The unemployment was aggravated by the
fact that relative to other crops, ostriches required little labour
(Buirski, 2001, quoted by Stein, 2007:778).
92
During the economic depression of 1914 the demand for ostrich feathers
collapsed in Europe. According to KKI (2003:2) this was attributed to poorly
co-ordinated marketing and excessive supply of feathers. According to
research conducted by the National Agricultural Marketing Council
(2003:15) the main causes for this feather market collapse were that:
the European market was affected by World War I;
shipping lines could no longer access overseas markets; and
the advent of the open-top motor cars did not suit the fashion of
womens’ wide-brimmed hats.
By 1930 the ostrich population had dropped from 770 000 to 23 000
(SAOBC, 2004:para. 1), but from the 1930s the ostrich industry declining
trend turned and it started to grow steadily with the newly introduced
production systems in the agricultural industry as land became encamped
and more farming became capital-intensive. The revival of the industry
began with the forming of the Klein Karoo Agricultural Co-operative (KKC)
in 1945 and by 1959 the single-channel marketing system for ostrich
products was formed (KKI, 2003:2).
At this time the ostrich industry became very important to Oudtshoorn and
surrounding area for income and job creation. In 1964 the first ostrich
abattoir was established in Oudtshoorn, followed later by a supporting
tannery and feather plant (Wessels, 2003:40). The industry began
processing ostrich leather, which became prized for its quality and
resilience (Cloete, Van Schalkwyk, Hoffman and Meyer, 2004:80). Ostrich
skins were marketed as exotic leather to the fashion industry for their
distinctive leather nodule patterns which contributed to its novelty value.
The products for this exotic leather fashion market consist mainly of luxury
handbags, boots and small leather goods.
93
The ostrich single-marketing channel provided a protected market presence
that allowed Oudtshoorn to dominate domestically and in the global ostrich
product arena. The regulated quantity of ostrich skins from South Africa
enabled the agencies to corner the market. The single-marketing channel
co-ordinated the quantity of ostrich skins sold to the market, which
facilitated an ideal equilibrium between supply and demand for a high-value
product. This control allowed the industry to develop a strong association
with European fashion brands (Kriek, 2010:9). Other exotic leathers such as
elephant (Loxodonta africana), hippopotamus (Hippopotamus amphibius)
and African buffalo (Syncerus caffer) used in the leather industry was not
established through a single-marketing channel, but usually shared the
ostrich-processing facilities and marketing channels.
There was an increasing demand for ostrich meat at the beginning of 1990
due to the low fat, low-cholesterol and high-protein characteristics of the red
meat. The handling and processing of meat follows stringent requirements
that have to conform to the safety requirements of the EU food supply.
Farming ostriches under free-range conditions enabled the meat to be
marketed as an eco-friendly alternative to feedlot produced meat (Cooper
and Horbanczuk, 2002:167). The disadvantage of the increased demand for
meat however is that trading a perishable commodity that is eaten rather
than worn by customers, created new challenges for South African
marketers and exporters (Mather and Marshall, 2011:155). In 1993 the
single-marketing channel was deregulated and the KKC monopoly was
abolished. The KKC lost control over the ostrich industry and domestic
supply and new South African farmers entered the industry with the effect
that ostrich numbers doubled and exceeded the demand for skins
(Wessels, 2003:40).
94
The range of activities related to ostrich farming spread from the
Oudtshoorn area into the rest of the Western Cape, Free State, Gauteng,
Limpopo, Mpumalanga and Eastern Cape (Greibenow, 2003:4). In 1998 the
South African Ostrich Business Chamber was founded to promote co-
operation between stakeholders and to facilitate funding for generic
marketing. Generic material was freely exported and eggs, chick and
breeders were widely sold to international buyers. South Africa still
maintained its lead as no ostrich industry in the world had developed the
value chain from farming to slaughtering to deboning to tanning to
marketing (Greibenow, 2003:6). However, from 2001 the South African
industry faced decline and ostrich slaughter figures are decreasing due the
serious challenges to the industry, namely, producer competition and avian
influenza (Figure 5.1). The avian influenza resulted in farmers not being
able to export ostrich meat to Europe and renewed dependence on ostrich
leather to fill a void to maintain the survival of the ostrich industry (Kriek,
2012:1). The total number of ostrich farms in South Africa has dropped from
over 800 in 2011 to fewer than 400 in 2013 (du Plessis, 2013:9).
Figure 5.1 South African ostrich slaughter figures
Source: du Plessis (2013:8)
0
50000
100000
150000
200000
250000
300000
350000
400000
95
Avian influenza was detected in 2004 on an ostrich farm in the Eastern
Cape Province which resulted in euthanasia of many ostriches (Abolnik,
2010:37). This had a serious consequence for the abattoirs and tanneries in
the Eastern Cape and resulted in the main processing plants in
Grahamstown and Port Elizabeth facing closure.
5.4 CONTENT ANALYSIS OF OSTRICH RESEARCH INTERESTS
THROUGH TEXT-MINING METHOD
5.4.1 Introduction
The literature review included the text-mining method on the first 1000
ranked literature sources on Google Scholar search engine, which provides
searches across many disciplines and sources. Google Scholar grades
documents through weighing each document according to where it was
published, who it was written by, as well as how often and how recently it
has been cited in other research literature (Google, 2013:para. 1). Google
Scholar provides searches across many disciplines and sources. The
keyword search “ostrich struthio” was selected for this text-mining exercise.
The scientific name of the ostrich is Struthio camelus and ‘Struthio’ was
used as part of the search keyword in order to filter out general or
inappropriate research referring to the ostrich. It is through this technique
that the researcher broadly searched appropriate literature related to many
disciplines. This includes theses, articles, books, abstracts, professional
societies, online repositories and universities.
96
The first 1000 literature-ranked pieces were captured from the Google
Scholar search and the titles and abstract were then sorted into categories
and date clusters. These categories were ranked on a graph to determine
what main topics had been cited and to establish trends of research in the
ostrich industry. After the research studies had been collected, they were
refined by removing outliers and inappropriate research that had no direct
association with ostriches. The titles and abstracts that remained were then
coded according to common research themes.
5.4.2 Findings
The themes were sorted according to the amount of themed researched
literature found displayed in Table 5.1 and Figure 5.2.
Table 5.1 Findings of most popular research topics on ostriches
TOPIC Number of themed
research literature - N
Number of citations in other articles-
Means
Number of citations - Std.Dev.
epidemiology 145 23.76552 82.6334
eggs 108 21.12963 28.46184
physiology 91 16.38462 27.75479
reproduction 63 11.03175 8.1041
hematology 56 21.42857 31.60659
feed 48 20.02083 27.52368
historic 32 25.40625 31.47232
stomach 27 14.07407 14.93814
hydration 26 31.11538 32.00666
meat 24 16.625 13.53839
97
98
No research on emerging ostrich farmers was found in this analysis
and the research topics centred mainly on production practices and
animal health. The following is a summary of the main themes and topics
classified, sorted from most to least interest on Google Scholar search
engine.
epidemiology (Newcastle disease, avian influenza, inoculation),
egg characteristics (colour, recognition, morphology, hatchability,
fertility and incubation,),
physiological characteristics (physical functions, mechanics,
locomotion, muscle movement, axial skeletal),
reproduction (breeding, courtship behaviour, gender and group size),
hematology (immunoglobulin, red cell, antibodies, electrolyte
concentrations),
feed (dry-matter intake, growth rate, nutrition),
historical (fossils and Palaeolithic sites).
stomach (gastric, digestive tract, impaction, colon),
hydration (thermoregulation and water consumption),
meat (muscles make up and physical characteristics).
The themes were then compared to when and how often they had been
cited in other scholarly literature articles. A standard deviation was
determined to show variation or dispersion from the average and measure
confidence so that any extreme citations could be filtered out. The
categories were sorted onto four date clusters, namely, 1991 to 1995, 1996
to 2000, 2001 to 2005 and 2006 to 2010. The date clusters showed the
following noteworthy results (Figure 5.3):
The studies on aetiology were relatively consistent with slightly higher
interest during the 1996 to 2000 period.
The studies on ostrich eggs increased mainly during the 2001 to 2005.
99
100
The main research articles and literature conducted in the epidemiology
theme concerned the avian influenza virus. The most popular articles in this
theme were:
Alexander, D. J. (2000). A review of avian influenza in different bird species.
Veterinary microbiology, 74(1), 3-13. [CITED 966].
Leigh Perkins, L. E., & Swayne, D. E. (2002). Pathogenicity of a Hong
Kong-origin H5N1 highly pathogenic avian influenza virus for emus, geese,
ducks, and pigeons. Avian diseases, 46(1), 53-63. [CITED 204].
Kirkwood, J. K., & Cunningham, A. A. (1994). Epidemiological observations
on spongiform encephalopathies in captive wild animals in the British Isles.
Veterinary Record, 135(13), 296-303. . [CITED 119].
Zhou, E. M., Chan, M., Heckert, R. A., Riva, J., & Cantin, M. F. (1998).
Evaluation of a competitive ELISA for detection of antibodies against avian
influenza virus nucleoprotein. Avian diseases, 517-522. [CITED 103].
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5.5 OVERVIEW OF OSTRICH HUSBANDRY
5.5.1 Epidemiology
Epidemiology is the study of patterns and determinants of disease
distribution in populations. It focuses on groups rather than individuals and
often takes a historical perspective in order to identify control strategies.
According to Douglas (1906:47), the rapid increase of ostrich production in
the 1800s had been due to the freedom from disease that the ostrich had
shown under domestication, while other livestock in South Africa had
required more intensive disease management under intensive conditions.
However, a disease capable of causing high mortality in birds was first
indentified in 1878 and was known as `fowl plague' (Alexander, 2000:3).
The ostrich industry also experienced high bird losses due to an unknown
epidemic in 1888 (Van der Walt, 1990:193). Since then the highly
pathogenic avian influenza (HPAI) and velogenic Newcastle disease (ND)
have been identified and have become the main devastating diseases of
poultry (Abolnik, 2007:2). It is the HPAI that has been particularly
disastrous for the ostrich industry. HPAI is on the World Organisation for
Animal Health’s list of modifiable diseases. The ostrich industry has been
susceptible to HPAI outbreaks which occurred in 2004, 2006 and 2011
(Van Helden, Grewar, Visser, Dyason and Koen, 2012:11). The dramatic
outbreak of 2004 had a considerable effect on the industry which resulted in
the culling of nearly 30 000 birds in the Eastern Cape. These losses were
particularly unfortunate as they had affected a group of farmers who had
made the first attempt to free the South African industry from the
monopolistic environment.
102
According to research by Huchzermeyer (2002:271) the avian influenza
virus is highly variable and normally carried and spread by wild birds. The
strains differ in pathogenicity among different avian species and are
classified according to the pathogenicity of poultry. However, HPAI might
not have been new to South Africa as in the late 1970s, ostrich farmers in
South Africa began reporting a disease associated with respiratory
problems, excretions from the nose and eyes and fluorescent green urine
(Mather, 2011:155). According to Mather (2011:155) the ostriches
succumbed to this disease mainly during late winter when the weather was
colder and wetter. Only in the early 1990s the syndrome associated with
green urine was brought to the attention of researchers. Analysis conducted
on infected ostriches confirmed that the cause was a low-pathogenic strain
of HPAI. According to Allwright, Burger, Geyer and Terblanche (1993:63),
the rapid spread of this disease in the ostrich population can be attributed to
the strong trade in ostrich chicks as well as the severe drought in the
Oudtshoorn area.
The isolation of a strain of HPAI resulted in a set of policy requirements and
obligations for South Africa’s National Department of Agriculture. Countries
affected by HPAI are restricted from trading any poultry products. In order to
regain ‘disease-free’ status, countries are obliged to prove the reliability and
effectiveness of their reporting, surveillance and eradication systems
(Mather and Marshall, 2011:158).
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Since the disease outbreaks in the ostrich industry could have had
devastating effects on the poultry industry, DAFF was quick to deal with
HPAI outbreaks. About 320 000 ostriches were slaughtered worldwide
between 2010 to 2011, of which about 211 000 were slaughtered in South
Africa. Recently South Africa has experienced a drop in slaughtering due to
the detection of the HPAI in April 2011, which led to a ban on ostrich meat
exports (DAFF, 2012:63). However, according to Benson (2004:49) , the
Eastern Cape producers immediately euthanizes on farm all infected
ostriches, which affected a large number of breeder birds. The same
requirements were not applied to the producers in the Western Cape, the
majority of whom supply the KKI. According to a Western Cape Department
of Agriculture annual report (2012:9) the avian influenza outbreak since
April 2011 caused a complete standstill of the R1.2 billion-a-year ostrich
industry. The meat export ban losses were amounting to R108 million per
month. In accordance with EU regulations forced slaughtering is required on
farms testing positive for the avian influenza virus and more than 40 000
ostriches were culled in the Oudtshoorn area. The National Minister of the
DAFF approved compensation to farmers for forced culled birds to the
amount of more than R50 million.
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5.5.2 Genetics
According to Benson and Holle (2004:7) “the right genetics are critical in
any livestock programme and are key areas to cut the costs of production”.
The South African Black-neck (S.c. domesticus), which is the main type of
ostrich farmed in South Africa, is a cross between the Southern African
native Blue-neck sub-species (S.C. australis) and the North African Red-
neck subspecies (S.c. camelus). This strain has double the amount of barb
feathers along the ribs (Shanawany and Dingle, 1999:169). Research on
the Zimbabwe Blue (ZB) and the South African Black (SAB) showed
differences in their physical but not in sensory meat characteristics
(Hoffman, 2008:1273). Moreover, there are clear strain differences between
the SAB and ZB in live weight traits in favour of the ZB and reproduction in
favour of the SAB (Hoffman, Brand, Muller and Cloete, 2008:257). The SAB
has probably been domesticated for a longer period and may therefore
handle slaughter stress better than its contemporaries of the other strains.
5.5.3 Breeding
Ostriches are generally regarded as seasonal breeders, with the breeding
season coinciding with an increase in photoperiod (Ipek and Şahan,
2004:643). The breeding cycles therefore have an impact on yearly egg and
chick availability. This then determines how the supply of the season’s stock
is going to affect the logistics of production at abattoirs and tanneries. The
flow of meat and leather then require strict co-ordination between
processors and international orders. But these orders for fashion or apparel
cycles do not necessarily synchronize with the production cycle and may
affect stock levels and availability.
105
According to Brand (2012:5), there are different structured breeder systems
used on commercial ostrich farms. Eighty percent of the national ostrich
breeding population is maintained in breeding colonies, ranging from
50 - 100 birds at a ratio of 5 - 6 males for every 10 females. Under a
pen-breeding regime, breeding duos, or preferably trios, would be kept on
0.25 ha. The pen-breeding system requires higher capital and management
costs for pen construction than other methods.
5.5.4 Incubation and rearing of chicks
The production of ostriches starts at artificial incubation, which has become
an integral part of any commercial poultry enterprise (Badley, 1997:53).
Despite substantial advances in incubator design and incubation techniques
since the ostrich industry began in South Africa during the 1800s, problems
with embryonic mortality during artificial incubation is still one of the main
constraints to the development of the ostrich industry worldwide (Deeming
and Ar, 1999:159). As with other species of birds, the physiological
requirements of the developing ostrich embryo can be met during artificial
incubation by providing an appropriate temperature (Van Schalkwyk, Brand,
Cloete and Brown, 1999:155), the correct gaseous environment (Van
Schalkwyk, Brown and Cloete, 2002:122) and the proper turning of eggs in
automatic incubators (Van Schalkwyk, Cloete, Brown and Brand, 2000:47).
The four main ostrich production activities are breeding, rearing chicks,
raising birds and producing them for slaughter. Research conducted by
Brand (2012:2) found that methods of incubation and chick rearing were
among the most important limitations on the development of the ostrich
industry.
106
Extensive research has been conducted on determining the influence of
genetics on mortality. Combinations of South African Black (SAB) male
ostriches crossed with Zimbabwean Blue (ZB) female ostriches experienced
losses of 45.7 percent. Losses experienced in SAB or ZB breeding birds
subjected to pure breeding was around 33 to 34 percent, but embryonic
mortality decreased in eggs produced by ZB males and SAB female
crosses (27 percent). Female age had a significant effect on the proportion
of chicks pipped, as well as on early and late embryonic mortalities. High
chick mortality affects the whole value chain adversely and can be
financially threatening for both the farmer and the processor. Stages of
production are usually divided into sub-stages, namely, hatching of eggs
and rearing of chicks to 3 months, 6 months or 8 months. Producers have
an option to contract rearing of chicks out to other producers that specialise
or have better facilities. These "out-growers" generally raise day-old chicks
to 13 weeks (3 months). This time of rapid growth of the ostrich chicks is
ensured with "grower rations" to optimise feed conversion.
5.5.5 Feed management
According to Brand and Jordaan (2011:4) the feed costs normally
contributes 75 to 80 percent of the total cost of ostrich production. As with
other livestock development strategies feed and nutrition are important
factors in animal growth. Nutrition, feed management, farm management
and genetics all work together and in that order to influence feed
conversion. Good animal husbandry is essential to the quality of products
throughout the supply chain. Ostrich feed is mainly made up of mixes of
lucern, grain and oilseed products. Finisher rations are of very low nutrient
density as they are low production rations (Benson and Holle, 2004:7).
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According to the National Agriculture Marketing Council report there have
been shortcomings in the specifications for ostrich production feed
requirements (NAMC, 2003:33). These requirements should be reviewed to
enable ostrich production to be more cost-effective.
Nutrition and feed are important inputs for growth (Kritzinger, 2011:32).
South Africa was one of the few countries to have slaughtered ostriches on
a commercial basis before 1993, but after deregulation many countries
attempted to compete with the South African standards in the farming of
ostriches, which was known to have the best feed-to-weight-gain ratio
(NAMC, 2003:15). Although ostriches are extensively farmed on the land
(Brand and Gous, 2006:144), they are fed optimally so that they attain the
ideal slaughter weight for the meat market (Aganga, Aganga and Omphile,
2003:60).
5.5.6 Animal behaviour
Meyer, Cloete, Brown and Van Schalkwyk (2002:193) identified the
following categories of behavior: inactive, locomotion, ingestive, ground
pecking, object pecking, preening, aggressive forms of hissing, chest
ramming and kicking. Of these behaviours aggression is a farmer’s main
concern. Although ostriches have been domesticated for over a century
they still react or behave aggressively which makes handling and
management of skin quality challenging (Douglas, 1906:50). This
aggression can be manifested toward other ostriches or the producer, such
as when one bird will intensely pursue and attempt to kick another bird
which is most frequently observed with the onset of puberty (Samson,
1996:412).
108
5.5.7 Farming systems
There are three stages of ostrich farming, namely, hatching chicks, raising
chicks till 5-6 months and growing the ostrich birds to slaughter weight
(Olivier, 2012:12). There are three types of ostrich farming systems used in
ostrich production, namely, extensive, semi-intensive and intensive. The
type of system used is determined by land value, scale of production, labour
and feed costs. Extensive farming systems (> 40 ha) are generally on large
farms with birds raised on natural habitat and hatching their own eggs.
According to Shanawany and Dingle (1999:38) in the semi-intensive
farming systems (20 to 60 ha), the ostriches are kept in small camps with
their feeding requirements supplied from pastures. Supplementary feeding
is provided to ensure that the nutritional requirements of the birds are met.
The cost of intensive farming systems (<20 ha) are higher and capital
investment is greater. More than 80 percent of ostrich farming is not done
on high-potential arable land (du Plessis, 2013:18). Thus the production of
ostriches is mainly based on the feedlot system (intensive farming system).
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5.6 CONCLUDING REMARKS
Chapter five has contributed to gaining an increased understanding of the
ostrich industry. The main influences on the ostrich industry have been the
loss of the feather market, deregulation of the industry and the ostrich-meat
ban due to avian influenza. The chapter explained the influences and
reasons for decline in the industry.
The text-mining study showed that past research conducted on ostriches
was predominantly on epidemiology and avian influenza. The research on
epidemiology increased in 1996 to 2000 which may have been attributed to
the outbreak of Newcastle disease which was of great concern to the
ostrich industry in the 1990s (Alexander, 2000:96). However, during this
period Verwoerd (2000:638) stated that the scientific knowledge of ostrich
diseases is incomplete and information on diagnostics is absent in many
cases. The ostrich diseases have had the most impact on the industry and
require continuous prevention, monitoring and control. During 2001 to 2005
the research focus on ostrich egg characteristics increased, which was
influenced by the start of the open market for egg exports and increased
global reproduction after the deregulation of the South African industry. The
results from the text-mining study led the researcher to do further literature
reviews on the main ostrich husbandry topics of production, namely,
epidemiology, genetics, breeding, incubation and rearing, feed
management, animal behaviour and farming systems.
110
The literature review highlighted the relationship between genetics and
production. The husbandry section also gave a brief review of the intensive
pen-breeding and incubation systems. There were two main findings from
this chapter, namely, ostrich feed is a noteworthy factor in ostrich
production costs and ostriches can be farmed in an intensive environment
on low-potential arable land, which makes this farm animal an important
alternative form of extensive livestock farming. In the next chapter the
exotic-leather supply chain will be discussed with focus on the importance
of governance in the ostrich-industry supply chain and an overview of
ostrich production and processing (see Figure 5.4).
Figure 5.4 Process of research design and structure of research
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CHAPTER 6
REVIEW OF THE OSTRICH INDUSTRY SUPPLY CHAIN AND
INTRODUCTION TO THE CASE STUDIES
6.1 INTRODUCTION 6.2 INTRODUCTION TO SUPPLY CHAINS 6.3 GOVERNANCE IN SUPPLY CHAINS 6.4 LIVESTOCK FARMING SUPPLY CHAINS IN THE DEVELOPING
WORLD 6.5 THE OSTRICH INDUSTRY SUPPLY-CHAIN RELATIONSHIP MAP 6.6 OSTRICH INDUSTRY SERVICE PROVIDERS 6.7 OSTRICH PRODUCTION AND PROCESSING IN SOUTH AFRICA 6.8 EASTERN CAPE OSTRICH PRODUCTION 6.9 BACKGROUND TO EMERGING FARMER CASE STUDIES 6.10 RELATIONSHIP MAPPING OF CASE STUDIES 6.11 CONCLUDING REMARKS
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CHAPTER 6
REVIEW OF THE OSTRICH INDUSTRY SUPPLY CHAIN AND
BACKGROUND TO THE CASE STUDIES
6.1 INTRODUCTION
Since animal skins and leather are generally by-products of breeding livestock
for meat consumption, hides and skins are mainly received as by-products from
abattoirs or farms. Because the leather industry depends on the receipt of skins
from livestock, the supply of skins depends on the available numbers of
animals and size of the skin recovered. However, exotic leather, unlike other
livestock leather, is not a by-product of meat production, but forms part of an
interdependent relationship between leather and meat which is simultaneously
farmed with production focused on both commodities. The previous chapter
described the history of the ostrich industry and what ostrich husbandry
entailed. This chapter explores the exotic leather supply chain which consists of
complex production systems which include incubation, phases of weight gain,
industrial processing and export logistics. The chapter starts with an
introduction to supply chains, governance in the supply chain and European
retailer supply chains. Following this section is an overview of the livestock
supply chains in a developing world context and then a discussion on the
leather and meat industry in South Africa. There is limited information
describing the ‘current state’ of how the whole supply chain and the structures
support the ostrich industry, ‘from egg to fork’; but this information is essential
in order to suggest potential collaboration opportunities that can be identified for
new farmers. It is therefore a prerequisite to understand the scope of the
processes, participation of different role players and service providers and
which companies or institutions are part of the networks and linkages. The
chapter concludes with the description of the case studies and supply chain
linkages in the Eastern Cape.
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6.2 INTRODUCTION TO SUPPLY CHAINS
According to Maloni and Benton (2000:3), “the concept of logistics has evolved
since the 1970's as the strategic coordination of traditional corporate cost
centres such as purchasing, manufacturing, transportation and warehousing.
The objective of such co-ordination is to recognize functional synergies within
the firm to fulfill customer requirements better”. Logistics and supply-chain
research during this time focused on alignment initiatives with the overall
business strategy of a company. Then in the 1980s supply chain management
emerged to manage the flow of goods from suppliers to the ultimate end user
(Feller, Shunk and Callarman, 2006:3). La Londe and Masters (1994:35)
defined the supply chain as a group of firms that passed materials forward. It
included several independent firms involved in manufacturing a product and
placing it in the hands of the customer. Lambert, Stock and Ellram (1998), as
quoted by Verma and Seth (2011:6), defined a supply chain as the alignment of
firms that brings products or services to market. Chopra, Lovejoy and Yano,
(2004:13) described the supply chain as “the management of all aspects of
providing goods to a consumer, from extraction of raw materials to end-of life
disposal and recycling, including manufacturing, physical logistics, and
after-sale service and warranty issues”. Supply chains therefore have a focus
more on operational issues and provision of raw materials, while value chains
have been more focused on innovation, product development, marketing and
on customer requirements (Feller et al., 2006:2). Value chains integrate
supply-chain activities to position organizations in the supply chain to achieve
the highest possible levels of customer satisfaction and value while
manipulating the abilities of all the entities in the supply chain (Handfield and
Nichols, 2002:12). Supply chains are susceptible to environmental change in
the global arena and today the supply-driven ostrich industry is reliant on the
EU demand.
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6.3 GOVERNANCE IN SUPPLY CHAINS
Farmers and producers in developing countries are involved in the earlier
stages of international supply chains. The current trend of globalisation required
that companies to pursue flexibility, lowest raw material prices and cheap
labour which is in some cases to the detriment of small producers (Traidcraft
Exchange, 2005:1) and contributed to increasing poverty (UNCTAD, 2004:123).
The influence and capability of different forces to exercise power in supply
chains differ considerably according to the sources of their power as well as
structural constraints (Fuchs and Glaab, 2011:1). Hess (2008:452) defined
‘power’ as a ‘centred’ concept, which allowed the capacity of some individuals,
institutions and actors to dominate others. The changing power asymmetries in
supply chains have also been a cause for concern among African agricultural
exporters (Rich, Ross, Baker and Negassa, 2011:214). The inequities in power
relationships based on the governance of the supply chain have highlighted
potential points of entry or exclusion for smallholders (Hess, 2008:452).
The focus in value chains has been on increasing competitiveness and
performance, and on providing effective technologies. While governments have
the ability to determine trade regulations, agricultural subsidies or market
access, private actors manipulate these public regulations to suit their own
ends or create rules and standards which suit themselves (Clapp and Fuchs,
2009:109). The area of governance in value chains to smallholder producers
has not received much attention. “Good governance in value chains, however,
harbours a significant potential for capacity building of smallholders within the
value chain through lead actors which will allow small producers to strengthen
their position in value chains” (Dietz, 2012:1). In a concentrated processing
sector for high value goods, oligopoly power can be at the origin of the produce
and on the other hand the downstream firms can act as oligopsonists in
procuring produce from farmers, intermediaries and processors (Moir, 2006:1).
Farmers and especially smallholders that are price takers can often be victims
of this scenario. These actors can influence prices downwards and upwards to
enhance profit at the expense of players that have less leverage in the chain.
115
With reference to Figure 6.1, Gereffi, Humphrey and Sturgeon (2005:90-94)
differentiate five value chains by governance systems. In the Market Model the
thin lined arrows represent exchange based on price while the thicker arrows in
the Relational Model represent larger flows of information and governance. In
the case of modular global value chains, wider information flows are narrowed
down leaving each partner to manage unstated information within its own
enterprises boundaries. The Relational Model occurs when buyers and sellers
rely on multifaceted information that is not easily transmitted, and where rapid
changes may be required. Close working partnerships with suppliers are
important for sustainability in turbulent environments. The Captive Model
identifies small suppliers as those that are dependent on a few buyers who
influence by power and control. Such models are frequently characterized by a
high degree of monitoring and control by the buyer. The Hierarchical Model
defines chains as those that are characterized by vertical integration that
develops and manufactures products in-house. It is the researcher’s view that
due to complex ostrich out-grower regulations the ostrich industry is moving
towards a Hierachical Model, which will be discussed further in Chapter 11.
Figure 6.1 Typology of governance systems in value chains
Source: Gereffi et al. (2005:89)
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6.4 LIVESTOCK FARMING SUPPLY CHAINS IN THE DEVELOPING WORLD
The livestock sector is characterized by long market chains that employ at least
1.3 billion people globally and directly support the livelihoods of 600 million poor
smallholder farmers in the developing world (Thornton, 2010:2853). Livestock is
vital to the economies of many developing countries for the animals are a
source of food, income and employment. For the poor, livestock serves as a
symbol of wealth and provides draught power and fertilizer (Pica-Ciamarra,
2005:1). The total meat production in the developing world tripled between
1980 and 2002, from 45 to 134 million tons (World Bank, 2009:1-2). This
growth was concentrated in developing countries that experienced rapid
economic growth and focused on farming poultry and pigs. According to Jones
and Thornton (2009:427) the impacts of climate change are expected to have a
substantial influence on agriculture in many areas of sub-Saharan Africa. The
warming may reduce crop yields between 10 to 20 percent by 2050 which is
why livestock is becoming an alternative to cropping.
The ostrich’s tolerance to aridity makes it a strong livestock candidate for the
future drying landscapes of sub-Saharan Africa (Shanawany, 1995:8). African
producers face increasing competition from low-cost farmers in India and South
America that have low-cost production systems, economies of scale and highly
sophisticated supply chains for the distribution of a diversity of different
products (Swanepoel, Stroebel and Moyo, 2010:157). According to Lynam and
Theus (2009:10), value chains are often aimed towards more formalised,
vertically integrated supply chains, suggesting that effective coordination and
organisation within the value chain are crucial for success.
117
Small livestock on South African rural farms is usually farmed in close proximity
to the farmer’s home and therefore the farmer and family have substantial
contact with the livestock. Research conducted by Randolph et al (2007:2788)
on the role of livestock in human nutrition and health for relieving poverty in
developing countries, indicated the risk livestock farmers faced of transmission
of zoonic diseases. This concern is particularly applicable to rearing ostrich
chicks close to homes and the potential these birds have to transmit avian
influenza to the farmer or other poultry. This was a concern expressed by the
South African Department of Agriculture, Forestry and Fisheries and National
Directorate of Animal Health in 2012. When the standards for the requirements,
registration and maintenance of registration and official control of ostrich
compartments in South Africa were enforced (VPN/04/2012-01, revision 6.0),
this meant that ostrich farmers could no longer keep the ostrich chicks near to
their homes and were required to have compartments separate from chickens
(backyard poultry). These bio-security measures have had an impact on the
farm management and have intensified the supply chain. Whether the rural
farmer will be willing to adopt these requirements and efforts in his supply chain
is still to be determined.
6.5 THE OSTRICH INDUSTRY SUPPLY-CHAIN RELATIONSHIP MAP
In order to understand which actors are involved in the process, and what
relationship they have with one another it is helpful to construct a relationship
map to understand the flow among the groups and players (Handfield and
Nichols, 2002:44). A relationship map provides a useful model for
conceptualising the performance of various parts of the ostrich industry within
the context of South Africa’s entry into the global economy. The map does not
consider specific activities, but concentrates on linkages between main groups.
The ostrich-industry supply chain can be defined as a wide range of activities
required to bring products (leather, meat, feathers and eggs) to the final
consumer.
118
It is an integration and linkage of suppliers, manufacturing, distribution and
customers in which raw material runs from suppliers to processors who prepare
them for the customer’s requirements. The linkages are becoming more
complex in global supply chains, while the standardisation and food-safety
requirements imposed are making it increasingly difficult for emerging farmers
to participate in the supply chain. Transformation and development
interventions are required from all the stakeholders if emerging farmers are to
successfully participate in these changing agri-food supply chains (Louw et al,
2008:305).
With reference to the ostrich-industry relationship map (Figure 6.2), the ostrich-
industry supply chain starts with the hatching of chicks on the farm (F). As
discussed in Chapter 5, the ostrich chicks are reared till 3 or 6 months of age
and then moved to a phase of growing to ideal slaughter weight. It is at this
point that farmers sell the chicks to other farmers or continue to grow for
themselves. Once the birds have reached ideal weight the birds are taken to
the abattoirs (A), which should be in close proximity in order to prevent damage
to the skins. In Figure 6.2, t1 represents the transportation of birds to abattoir
and t2 represents the transport for export. DAFF has restricted movement
during these points of the supply chain. The abattoir signifies the beginning of
the processing phase of removing the skins, meat and feathers. The skins are
then tanned and the feathers dyed and these processes occur in separate
venues. Once the carcases have been deboned the meat goes to be heat
treated.
The leather, meat and feathers are then packed and distributed by agencies or
cooperatives. The majority of the ostrich skins and leather supplied are co-
ordinated by account managers of cooperatives or agencies for export markets.
The orders, co-ordination and logistics for ostrich exports are run by a handful
of account managers in South Africa. The small-volume by-products are
derived mainly from the processing plant and distributed amongst local
markets, crafts and ecotourism. The supply chain includes a traceability system
and has to comply with regulations stipulated by the British Retail Consortium
and International Food Standards (KKI, 2013:para. 6).
119
Eighty percent of ostrich products are exported to manufactures or
wholesalers/supermarkets before reaching the end customer. In Figure 6.2 the
left column represents the main commercial transactions, namely, technical
value which is the resource value (Tv), organisational value which includes
reliability (Ov), brand, company reputation and the personal value which are the
relationships that are involved with exchange of resources (Pv) (Feller et al.,
2006:2).
Each of these commercial transactions represents the main areas where value-
adding takes place. The darker shade of the left column indicates increased
value-adding. The thicker arrows in the map demarcate where there is
increased vertical integration in the industry. The darker circles indicate where
the governance of the supply chain lies. The primary infrastructure on the left
hand side represents where the main capital is required for production and
processing.
Key for Figure 6.2
Skins (Sk) Meat (Me) Feathers (Fe)
Tanned (Tn) Local (L) Buyer (Buy)
Auction (Au) Dyed (Dy) Transport (t1 / t2)
Heat treated (Ht) Agencies (Ag) End customer (EC)
By-products (By) Manufacturers (M/F) Wholesaler/Supermarket (W/SP)
Incubation (in) Chick-rearing (Ck) Ostriches at full weight (Gr)
Resource value (Rv) Eco-tourism (Eco) Personal value (Pv)
Technical value (Tv)
120
121
The EU supermarket chains have a strong market share in all but three EU
countries, namely, Spain, Greece and Italy (Baas, Van Potten and
Zwanenberg, 1998:25-27). Since the establishment of the first South African
ostrich abattoir in 1965, South Africa began with marketing and export of ostrich
meat into Europe (Wessels, 2003:40). France and Belgium were two of the first
countries to consume ostrich-meat on a noteworthy scale (Shanawany and
Dingle, 1999:148) and these countries developed into South Africa’s main
ostrich meat trading partners (DAFF, 2011b:9). South Africa has also benefited
from a preferential tariff rate when exporting to these EU countries. The multiple
European retailers such as Tesco and Marks & Spencer adopted ostrich meat
as one of their alternatives to red meat; but in order to gain access to these
European markets, South African ostrich farmers have to adhere to strict food-
safety regulations and requirements. Food safety is closely linked to traceability
requirements and often requires further stronger linkages with the value-chain
members (Grunert, 2005:371).
The traceability and food-safety assurance are monitored at all critical points
(HACCP). Ostrich meat processors have ostrich specialist veterinarians, fully
equipped laboratories, microbiologists and food technologists that maintain
traceability and food safety. The ostrich-industry supply chain has become
increasingly dependent on the European market for leather and meat sales.
According to Shanawany and Dingle (1999:147), the EU offers the best export
market for ostrich meat because the large populations and sophisticated eating
patterns suggest that ostrich meat has great potential, but transparency and
understanding of the environment of supply chains need to be understood by
all the role players for fair governance and mutual benefit. There is a lack of
supply-chain analysis to help decision-makers evaluate the impact that the EU
regulations and export policies have had on the ostrich industry and specifically
on how this has affected the emerging farmer’s potential for entry into the
market.
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6.6 OSTRICH INDUSTRY SERVICE PROVIDERS
This section is an outline of the influences affecting supporting role players and
their interaction in shaping the ostrich industry and value chain (Figure 6.3).
Fig 6.3 South African Ostrich Business Chamber linkage to stakeholders
Sourced from South African Ostrich Business Chamber (2013)
6.6.1 The South African Ostrich Business Chamber (SAOBC):
The SAOBC, which was established in 1998 in Oudsthoorn, is regarded as the
umbrella body for the South African ostrich industry. The SAOBC is a ‘Section
21 Company’ which represents the interests of the South African ostrich
industry. Its main function is to ensure the sustainability and profitability of the
industry. The SAOBC represents two main member organizations, namely, the
South African Ostrich Producers Organisation (SAOPO) and National Ostrich
Processors of South Africa (NOPSA). There is no emerging ostrich farmer
association in the SAOBC stakeholder linkage chart.
123
The SAOBC has been instrumental in co-ordinating veterinary services,
European export protocols, a biodiversity management unit and AgriBEE
model. The ostrich is regarded as a game animal and therefore the meat is
referred to as game meat (Fajardo, González, Rojas, García and Martín,
2010:409).
The objectives of the SAOBC include the following:
promoting, co-ordinating, supervising and securing the interests of all
registered businesses involved in the production and processing of ostriches
and ostrich products;
fostering proficiency of production;
fostering and promoting relations between the roleplayers in the industry;
encouraging a code of conduct;
contributing towards the creation of an international environment suitable for
export;
communicating with government, government agencies and other
directly affected groups;
identifying and promoting initiatives aimed at improving the status of the
ostrich industry;
securing solidarity of the organisations in the ostrich industry;
providing a discussion forum;
supporting or opposing any proposed legislation; and
administering fees for the purpose of carrying out the objectives of the ostrich
industry.
The South African Ostrich Business Chamber has been authorised by DAFF to
enforce movement control of ostriches and provide authorization when
ostriches require movement (DAFF, 2012:28).
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6.6.2 National Ostrich Processors of South African: (NOPSA)
NOPSA was established in 1995, its role being to unite the interests and efforts
of processors. It has 21 members and has existed since 1995. The objectives
of the NOPSA include:
promoting the interests of the ostrich processing industry;
approaching Government to coordinate any matter directly or indirectly;
affecting the affairs of the ostrich processing industry;
collecting and circulating market information and statistics;
serving as a forum for constant dialogue amongst its members; and
promoting public interest in ostrich products by way of advertising and
marketing assistance.
NOPSA has the following members:
Camexo SA Ltd.: Graaff-Reinet (meat)
Klein Karoo International (PTY) LTD: Oudtshoorn ( meat, leather and
feathers)
Ostriswell (Pty) Ltd: Swellendam (meat, leather and feathers)
Gondwana Marketing: Magaliesburg (Oryx Game and Ostrich Abattoir)
Mosstrich Ltd. : Mossel Bay (meat )
Rancho las plumas: Oudtshoorn (feathers)
South Cape Ostrich Tanning: Mossel Bay (leather)
Swartland Volstruise: Somerset West (meat and leather)
None of these processes represents full AgriBEE ownership and the majority of
the processes were established before deregulation.
125
6.6.3 South African Ostrich Producers Organisation (SAOPO) The South African Ostrich Producer’s Organisation which is represented by
seven provincial members works along provincial lines. Ostrich producers
throughout South Africa register as members through their respective provincial
ostrich-producer organizations.
6.6.4 South African Ostrich Breeders Association The Ostrich Breeders’ Association was established in 1995 and registered with
the South African Stud Book and Livestock Improvement Association. The
South African Ostrich Breeders’ Association has been instrumental in the
ostrich industry with developing the definitions on Norms of Excellence in
Ostrich Breeding.
6.6.5 Department of Agriculture, Forestry and Fisheries (DAFF/NDA)
DAFF and Provincial Departments of Agriculture fulfill the roles of responsible
functioning and auditing as outlined in the Meat Safety and Animal Health Acts
and the Constitution of South Africa. They are responsible for the slaughter of
animals within approved abattoirs through its Sub-directorate of Veterinary
Public Health and for import and export control of meat. The Department of
Health, through its Directorates of Food Control and Environmental Health, is
responsible for the control of meat once it leaves the abattoir. The role of a
central veterinary office is to liaise and coordinate with importing countries, as
well as with international regulatory organisations, such as the Organisation
International des Epizooties (OIE).The Veterinary Animal Health and Disease
Control is an important part of the ostrich supply chain as veterinary export
certification is a necessity for all exports and trade with ostrich meat with the
European Union. The meat-quality assurance mechanisms are put in place in
order to comply with traceability and the HACCP programme. State Veterinary
services are responsible for the disease surveillance programme and that it is
kept in place.
126
The provincial veterinary services represent the veterinary services of South
Africa and the correct protocol and appointment of state veterinarians at export
abattoirs is important for ensuring South Africa’s export status.
The veterinary services are to prevent and control animal diseases, facilitate
the exports of animals and animal products, render veterinary diagnostic
services and ensure the safety of meat and meat products. This is governed by
the Meat Safety Act (Act 40 of 2000) and the Animal Diseases Act (Act 35 of
1984).
6.6.6 National Residue Monitoring Programme (NRMP)
The NRMP has a service contract for the residue-monitoring programme with
the Onderstepoort Veterinary Institute to ensure reliability of the system.
6.6.7 EU Agricultural attaché (ATTC)
The responsibility of the EU Agricultural attaché is to collect and act on
information on agriculture, agribusiness, food and other related spheres in a
foreign country supporting trade negotiations and is instrumental in mediating
or representing EU regulations and policies.
127
128
6.7 OSTRICH PRODUCTION AND PROCESSING IN SOUTH AFRICA
Commercial ostrich farming became an important component of South Africa’s
livestock industry. The growth of the industry has been through increases in
numbers of the ostriches and the development of infrastructure to support the
industry. By 2010 South Africa had seven EU abattoirs for the export of ostrich
meat. The dominant player is Klein Karoo International (KKI) with abattoirs at
Oudtshoorn, Swellendam and Graaff-Reinet. According to a study conducted
by the National Agricultural Marketing Council (NAMC, 2010:5), KKI had a
throughput estimated at 140 000 ostriches per year with a slaughter capacity of
200 000. Other approved EU abattoirs are at Makwe, Grahamstown and
Mossel Bay. The ostrich abattoir at Mossel Bay has the second largest capacity
of 70 000 birds per year.
Figure 6.5 Spatial distribution of primary ostrich production and
processing in South Africa
Source: Researcher’s own construction
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6.8 EASTERN CAPE OSTRICH PRODUCTION
According to the South African Department of Agriculture, Forestry and
Fisheries (DAFF, 2011b:5), 17 percent of the South African ostrich industry is
found in the Eastern Cape (see figure Fig 6.6). In 2009 there were 102
registered farms for export in the Eastern Cape (total 588 nationwide). The
Eastern Cape has exported between 9 and 21 percent of South African ostrich
meat in the 2001 to 2010 period. The transport and export routes are further
apart in the Eastern Cape than those in the Western Cape, as most exports are
done via Cape Town and Johannesburg. The Eastern Cape has the largest
black ostrich empowerment project in South Africa, the AgriBEE project which
formed part of Integrated Meat Processors of the Eastern Cape and which had
a focus on community development and also providing otriches for the
Grahamstown ostrich-processing hub. Approximately 100 small-scale rural
black farmers participated in this programme.
Figure 6.6 Ostrich production per province
Source: (DAFF, 2011a:5)
130
In 2009 the Eastern Cape Ostrich industry had 38 000 birds in production of the
total of 220 000 birds in commercial ostrich production. According to the East
London Agro-processing report (Ettmayr, 2009:42), the Eastern Cape exported
170 000 skins in 2009. This figure does not correspond to the total number of
ostriches in production of the area. The following scenarios could be
contributing to the Eastern Cape Industry exporting more than the Province is
producing.
• The high stock levels of the past have been sold;
• imported skins have contributed to this number;
• the Eastern Cape industry is procuring from other farmers in other provinces;
and
• the total skin number could be including body skins and leg skins.
The Eastern Cape Ostrich industry was concentrated around two ostrich
infrastructure processing hubs, namely Graaff-Reinet and Grahamstown. In
Grahamstown the infrastructure consisted of an EU abattoir, deboning plant,
tanneries and marketing offices. In Graaff-Reinet the facilities included an EU
abattoir and meat deboning factory. Because of the EU meat requirements
most of the meat was exported via the above abattoir value chain. According to
the South African Shoes and Views Leather Directory in 2010 the following
were the main ostrich enterprises in the Eastern Cape: Woods Tanning cc,
Ostrich Emporium SA, Exotan, IMPEC Integrated Meat, Ostrimark SA (Pty)
Ltd, Philippe Exotic Leathers (Pty) Ltd and Camdeboo Meat processors (Shoes
and Views Leather Directory, 2010:2-17).
Avian influenza was detected in 2004 on an ostrich farm in the Eastern Cape
Province which resulted in the implementation of control measures and
euthanasia of 30 000 infected and in-contact ostriches (Abolnik, 2010:37). This
had a negative effect on production in the abattoirs and tanneries in the area.
The Eastern Cape did not recover and experienced closure and buy-outs of its
main ostrich abattoirs and tanneries from 2004-2010.
131
The following changes occurred: The Camexo SA Ltd group was purchased by
KKI (Leather International, 2005:para.1). Ostrimark in Grahamastown was
purchased by Jonker Holdings (Oudtshoorn) and the Philipe Tannery faced
closure. The closure of IMPEC Ostrich and Grahamstown Ostrich Abattoir
resulted in only one EU abattoir remaining in the Graaff-Reinet area which was
part of the Camdeboo Meat Processors (Sipondo and King, 2012:1). Woods
tanning was reduced to small volumes and diversified more into game skins.
These changes in the Eastern Cape ostrich industry resulted in the Eastern
Cape no longer being independent of the Western Cape ostrich industry. The
last remaining tannery (Ostrimark) was now under the management of the
Oudsthoorn company, Jonker Holdings and Camdeboo ostrich abattoir was
owned by KKI and the Eastern Cape emerging ostrich farmer programme was
being co-coordinated by KKI and Agri Klein Karoo Business Centre (head office
in Oudtshoorn).
6.9 BACKGROUND TO EMERGING FARMER CASE STUDIES
6.9.1 Peddie Ostrich Programme Salem Agribusiness Mentorship Company (SAMC) initiated a pilot ostrich
programme in 2002 at Pikoli and Ndlambe villages in the Great Fish River
Valley, Amathole District. SAMC forms part of the larger networks of the
organisation Khula Sizwe, which is a Christian development organisation that is
active in Zimbabwe and Mozambique in promoting rural development through
mentorship. Since 2004 the programme has received support from the Eastern
Cape Rural Financing Corporation (Uvimba Finance) and the Departments of
Agriculture and Land Affairs. The programme started with 12 farmers, each
raising 100 ostriches from day-old to six months at their homes. Uvimba
Finance committed R12 million in production loans to the farmers for this
programme.
132
During this time the Khula Sizwe small‐scale Ostrich Farmers’ Participation
Incentive (KSSSOFPI) Trust was awarded a grant from the National AgriBEE
Fund of R9.3 million, which became 49 percent of the equity shareholding in
the R19 million Integrated Meat Processors of the Eastern Cape (IMPEC), 49
percent of the Philippe Leather Tannery as well as 44 percent of the
Grahamstown Ostrich Export Abattoir (Fick, 2009a:11). The first deboning trial
was done in January 2009. The KSSSOFPI Trust IMPEC joint venture, the
IMPEC de-boning plant and the leather tannery became important additions to
the existing Grahamstown ostrich abattoir. This ostrich-processing sector
became an important facility for all the Eastern Cape ostrich producers as they
could be independent from the Western Cape in processing meat and leather.
The Peddie ostrich programme production was an important contributor to the
volume of throughput for the Grahamstown ostrich sector. The programme
planned to reach an output of 10 000 ostriches in early 2009. Planning for the
final phase was done in collaboration with the Provincial Department of
Agriculture during 2009-2010 (Fick, 2009b:18).
However, in 2009 due to a change in the oversight at the financing corporation,
the Peddie programme no longer received financial support from Uvimba
Finance. Owing to this cessation of funds the next phases to increase the
programme and establishment of more EU-registered feedlots was not
possible. The programme target number of farmers was 170 and the number of
ostriches (20 000) was thus not achieved (PLAAS, 2013:5). The Peddie
programme formed part of the Amathole District Municipality (ADM) 2012 to
2017 integrated development plan and R1 million was allocated for this plan
from the ADM. In 2012 the Eastern Cape Rural Development and Agrarian
Reform allocated a further R3.6 million to the Peddie Ostrich Programme to
improve production and management (SAGI, 2013:para. 5). Owing to the
outbreak of avian influenza the new VPN04 bio-security protocols had to be
applied to the programme. The farmers could no longer farm the ostriches from
their homes and the ostriches had to be relocated to feedlots as per the
requirements of the new bio-security protocol (Figure 6.7).
133
All the ostriches in the programme were placed in 20 adjoined ostrich feedlot
camps. The bio-security measures were strictly adhered to in order to comply
with the regulations for EU export (PLAAS, 2013:6). Avian influenza blood tests
were regularly conducted by the state veterinarian during the avian influenza
outbreak and the country’s meat ban period. This avian influenza outbreak
caused a decline in the number of ostrich farmers causing the Grahamstown
processing facility to become unsustainable due to a lack of sufficient
throughput (PLAAS, 2013:5). The closure of the IMPEC Ostrich meat processor
as well as the Grahamstown Ostrich Abattoir in 2011 resulted in this
programme being isolated from the Eastern Cape ostrich supply chain (Sipondo
and King, 2012:1). In 2011 KKI adopted the programme as an AgriBEE
programme (KKI, 2012:7) and supplied it with chicks and medicine and also
assisted with market access.
Figure 6.7 Ostrich compartments at Peddie Ostrich Programme
6.9.2 Rockhurst Ostrich Programme
In 2006 the Rockhurst farm near Grahamstown, was transferred to seven
beneficiaries and their families. The beneficiaries, who had a lease
arrangement for the land with Land Affairs, were all former employees of the
farm, and had been involved in ostrich farming. The farm’s primary production
was for beef and mohair.
134
During 2008 the Makana Municipality initiated a programme for the women on
the farm and donated R350 000 to assist them in starting an ostrich-egg-laying
programme. In 2010 the farm had 50 ostriches, 1 586 sheep, 985 angora goats
and 67 boer goats. The women, who had acquired ostrich rearing experience
under the previous owner, were responsible for 50 ostrich breeders for egg-
laying. The Department of Agriculture arranged for a mentor who assisted with
inoculating, feed, sales, transport and monitoring of diseases. This mentor had
been involved with the Peddie Ostrich Programme and had over 10 years of
experience in the ostrich industry. In 2010 the Department of Social
Development in the Eastern Cape Province donated an additional R500 000 to
the programme, which was used to purchase 50 more ostrich breeders for the
programme. The production system required that eggs be collected from the
ostrich breeders, then hatched with incubators and the day-old chicks sold to
other farmers.
The chicks were sold to two farming enterprises, namely, a Cradock farmer and
the Hlumani Co-operative in Bathurst. The programme had successfully reared
a total of 300 chicks and the mortalities that occurred were mainly due to
deformities and heat exposure. Lucerne was not grown on the Rockhurst farm
and the farmers made an arrangement with one of their clients to supply feed in
return for ostrich chicks. By 2010 the total number of breeders on the farm was
96 (28 were male and 68 female). It was then realised that the number of eggs
produced was not sufficient to cover the running costs of the programme. The
mentor arranged for a larger incubator so that more eggs could be produced
(Figure 6.8), but the electricity infrastructure was unable to cope with the
demand of the larger incubator and the Department of Agriculture supplied a
diesel generator. During this time some of the beneficiaries indicated that they
were no longer interested in participating in the programme. When the mentor’s
contract expired, the farmers had not fully acquired the knowledge and skills
needed to run the programme on their own. There was no leadership structure
put in place to co-ordinate and direct the group and to conduct day-to-day
business.
135
The programme was discontinued in 2010 when finances and commitment from
the participants dwindled. The fencing around the breeder camps was no
longer maintained and the ostriches escaped onto the open land. One of the
beneficiaries subsequently used the facilities to start a
small-scale poultry enterprise.
Figure 6.8 Rockhurst ostrich-egg electronic incubators
6.9.3 Hlumani Ostrich Co-operative
In 2009 the Hlumani Co-operative Bathurst programme in the Cacadu District,
was initiated by two beneficiaries from the Bathurst area who involved a further
eight people from the Bathurst Township so that sufficient numbers would
qualify them to receive the LRAD grant. According to the two initiators, the
other eight beneficiaries did not have an interest in farming but were interested
in participating and benefiting from the programme. The Department of Social
Development provided ostrich pens, feedlot camps and a livestock loading
ramp (Figure 6.9). The Department of Agriculture arranged for a mentor on a
three-year contract. The mentor’s responsibility was to arrange feed,
medication, delivery of chicks and sale of ostriches. The ostrich chicks were
purchased from the Rockhurst Ostrich Programme and were received during
the December-January period.
136
In 2009, when a high mortality rate of 30 percent was experienced in the first
year’s production, the participants commented that they felt that they had
received third-grade chicks as they were in poor condition. The second batch of
ostriches experienced 19 percent mortality and the third batch 13 percent
mortality. During the fourth year the farmers failed to gain market access to sell
their ostriches. At this time the avian influenza outbreak had resulted in the
DAFF enforcing restrictions on movement of ostriches. The farmers had not
kept sufficient records of inoculation and the state veterinarian was not
permitted to issue them with a livestock movement permit. This led to an
extended feeding cycle and the programme did not have sufficient funds to
continue farming. The Port Alfred SPCA issued several warnings to the farmers
to feed the starving ostriches and fix the fencing. In 2012 the Port Alfred
magistrate issued a court order to euthanize the suffering ostriches. The area
veterinarian commented, "I have been a vet for 18 years and I have never seen
a case of chronic malnutrition like this.” High levels of atrophy were found in the
muscles indicating that the ostriches had gone without food for more than six
weeks (Macgregor, 2012:para. 1). The farmers had started with 150 ostriches
in January 2012 and the final 25 adult ostriches were culled on 22 August
2012. The ostrich programme discontinued, but the two original farmers still
occupied the farm house in 2013 and had started small scale poultry farming.
Figure 6.9 Bathurst ostrich chick raising structures
137
6.9.4 Zamukwanda Ostrich Programme
In 2005 the Somerset Municipality received an application from six youths for
the lease of agriculture land near Pearston, Cacadu District. It was arranged
that one of the Grahamstown ostrich processes would support the initiative as
an AgriBEE initiative. In 2007 the Department of Agriculture spent R2 million on
the construction of six ostrich camps, storage containers, watering facilities and
accommodation (Figure 6.10). Blue Crane Route Municipality built a staff house
for the beneficiaries, supplied river sand and constructed a livestock loading
ramp, but the Grahamstown ostrich enterprise was unable to partner with this
project and the programme was decommissioned. DAFF then later initiated an
out-growers programme with a local commercial ostrich farmer and mentors.
The mentors provided the equipment (feeders, water troughs, rings, bedding,
sacks, blankets and medication). The beneficiaries received 758 ostrich chicks
in total for the programme and achieved a mortality rate of 19 percent. In 2010
the first batch of 74 chickens averaged a weight of 52 kg and the group sold
them for R15 000 (R202.70 per ostrich). The programme had the potential to
provide the beneficiaries with an income of R22 828 per annum at an average
of R1 900 per month over a twelve-month period.
Figure 6.10 Pearston ostrich compartments
138
One of the arrangements for this joint venture was that the group would have a
timetable to do daily or weekly duties, would compile reports and attend weekly
meetings with mentors. The mentors were given liberty to use the beneficiaries
as labour. The perception of the beneficiaries was that they were partners and
not labourers. This misunderstanding resulted in conflict between mentors and
beneficiaries. The beneficiaries were supposed to be available after hours or at
weekends, but unfortunately owing to the distance from their homes their farm
attendance and punctuality were sometimes compromised. The commercial
farmers were unable to accommodate this tardy commitment and decided to
decline renewal of the out-growers contract. In 2011, when the ostrich
programme was discontinued, the beneficiaries still had a contractual
agreement for use of the land and infrastructure. No other form of farming
commenced after the end of this ostrich programme.
6.9.5 Mimosadale Ostrich Farm
A German development agency and Eyethru Small Farmers’ Association
supported previously disadvantaged Graaff-Reinet communities to set up
farming programmes. One beneficiary was assisted in setting up a 4 ha ostrich-
rearing operation on commonage ground, supported by local commercial
farmers and an area extension officer. The municipality contributed by
constructing a shed for the chicks for the out-grower programme. Commercial
farmers supplied day-old chicks and then purchased the ostriches after three
months. Owing to high mortalities and problems with payment from one of the
farmers, the programme changed the farming system to rearing ostriches
starting at three months old. The ostriches were then sold directly to the ostrich
abattoir in Graaff-Reinet. The abattoir provided technical advice and assisted
with bio-security requirements.
139
One of the main constraints experienced was that the prices were not
negotiable and the farmer did not have any other market to sell to. In 2009 the
stricter EU restrictions and protocols became too difficult for the beneficiary to
comply with and he decided to terminate ostrich farming and shifted his focus to
small livestock farming.
6.10 RELATIONSHIP MAPPING OF CASE STUDIES Figure 6.11 shows the linkages between programmes during inception. Initially,
Rockhurst (Rock) was Hlumani Co-operative’s main supplier of ostrich chicks.
The Grahamstown processors were instrumental in setting up the Hlumani,
Peddie and Zamukwanda (Zamu) programmes with the intention of these
programmes becoming part of their supply chain. Mimosadale (Mimosa) initially
supplied ostriches directly to commercial Graaff-Reinet farmers in the area.
Due to the closure of the Grahamstown ostrich industry and KKI’s purchase of
Camexo, the Oudtshoorn ostrich industry had taken ownership over the main
vertical ostrich set-up in the Eastern Cape. Thus, Hlumani Co-operative, Peddie
and Zamukwanda formed part of the new Oudtshoorn / Graaff-Reinet ostrich
industry supply chain. Mimosadale shifted from supplying Graaff-Reinet
commercial farmers to supplying directly to the Graaff-Reinet abattoir (Figure
9.6). Peddie is the only surviving programme and was integrated into the
Oudtshoorn ostrich industry supply chain in 2011.
140
Figure 6.11 Programmes linkage to supply chain during initiation.
Figure 6.12 Programmes linkage to supply chain on final year of production
141
6.11 CONCLUDING REMARKS Chapter 6 contributed to the understanding of the ostrich supply chain which
requires a wide range of activities to bring products to the final consumer. This
chapter presented an overview of the different supporting service providers in
the supply chain. The Eastern Cape’s ostrich supply chain has undergone
radical changes in the past five years and the integration and linkage of
suppliers, manufacturing and distribution is almost non-existent. The “current
state” of the Eastern Cape supply chain leaves limited collaboration
opportunities in the Eastern Cape for new farmers. Therefore under these
conditions the Western Cape ostrich industry is more likely to “adopt” the
Eastern Cape emerging ostrich farmer producing for international markets. This
chapter has contributed to giving a background on the case studies and
research localities. The next chapter focuses on how the emerging ostrich
farmer programmes have achieved participation and integration into the supply
chain, with special attention to AgriBEE initiatives (see Figure 6.13).
Figure 6.13 Process of research design and structure of research
142
CHAPTER 7
BLACK ECONOMIC EMPOWERMENT STIMULUS
IN THE OSTRICH INDUSTRY
7.1 INTRODUCTION 7.2 INTRODUCTION TO BLACK ECONOMIC EMPOWERMENT 7.3 INTRODUCTION TO BLACK ECONOMIC EMPOWERMENT IN
AGRICULTURE
7.4 COMMODITY PROJECT ALLOCATION COMMITTEE FOR THE
OSTRICH INDUSTRY 7.5 OVERVIEW OF THE NATIONAL FRAMEWORKS
UNDERPINNING LEGISLATION AND POLICY FRAMEWORKS OF THE OSTRICH INDUSTRY
7.6 OSTRICH INDUSTRY AGRIBEE INITIATIVES 7.7 CONCLUDING REMARKS
143
CHAPTER 7
BLACK ECONOMIC EMPOWERMENT STIMULUS
IN THE OSTRICH INDUSTRY
7.1 INTRODUCTION
During the explorative investigation the extent of influence that the Black
Economic Empowerment programmes (BEE) and other economic
empowerment incentives had on the ostrich industry became apparent. It
was found that intervention from CASP and Eastern Cape Rural Finance
Corporation has been instrumental in the development in the Peddie
Ostrich Programme (Amathole District Municipality, 2012:192) and three
of the five programmes identified for this study had benefited from the
governmental LRAD scheme. Thus these findings led the researcher to
review how the South African government BEE agricultural schemes have
been used as interventions for participation of emerging ostrich
programmes in the ostrich industry.
South Africa’s previous regime before 1994 orchestrated a bimodal
agricultural system that was characterised by an apartheid state.
According to Lepheane (2007:6), this agricultural system offered subsidies
mainly to the white minority population to the detriment of the majority of
the black population. To address the atrocities of the past and bridge the
gap of the bimodal agricultural system, the South African government has
initiated and enforced reform programmes for the “historically
disadvantaged”. BEE initiatives concerning land reform made use of
Agricultural Broad-based Black Economic charter programmes (AgriBEE)
and Land reform for Agricultural Development (LRAD) in the agriculture
sector. The AgriBEE was intended to enable black South Africans to
participate actively in the country’s agriculture sector.
144
The South African government has had a long history of efforts to uplift the
black population socially through the farmers’ support programmes which
were intended to improve economic and market development, ensure
sustainable on-farm incomes and promote economic progress and change
in the agricultural sector (United Nations, 1992:5). The role of AgriBEE
was primarily to redistribute land back to black South Africans. The LRAD
scheme differs from AgriBEE in that it requires beneficiaries to make their
own contribution in order to qualify for a certain grant amount (Richards,
2011:30).
7.2 INTRODUCTION TO BLACK ECONOMIC EMPOWERMENT
Owing to apartheid, most South African firms were owned and run by the
white population and in 1990 the black population occupied fewer than 3
percent of management positions (Gray and Karp, 1993:1). According to
Esterhuizen, Doyer and Van Rooyen (2008:1), the exclusion of black
people from the South African economy was a process that restricted
prosperity creation, resulted in underdevelopment and took advantage of
the black population to ensure that they were available as a supply of
low-cost labour. Since the end of apartheid in South Africa, enterprises
have been stimulated to participate in the governmental objective of
increasing participation of the black population through black economic
empowerment (BEE). According to Southall (2005:457), BEE centres
around "a sociological perspective which focuses on the increase of black
ownership, control and management of state, parastatal and private
economic activity in the formal sector". In 2003, the Broad-based Black
Economic Empowerment Act (BBEE) was initiated to address the
segregation of black South Africans from participation in business.
145
The BBEE Codes of Good Practice were published in the Government
Gazette in 2007 and then implemented in all sectors of the South African
economy in 2008. The BBEE has been seen as an integrated socio-
economic development that will contribute to the transformation of South
Africa and to promote increased numbers of black people into
management and ownership and at the same time correct the restrictive
policies of the past. However, according to Hall (2004:220) agricultural
land has not been a top priority for BBEE programmes and the reform has
been more actively pursued in the high value sectors of the economy such
as mining.
7.3 INTRODUCTION TO BLACK ECONOMIC EMPOWERMENT IN
AGRICULTURE
The Broad-based Black Economic Empowerment programme directed the
development of the AgriBEE Charter which has linkages with the Strategic
Plan for South African Agriculture. The charter is designed to address the
following challenges:
constrained global competitiveness,
low profitability,
skewed participation,
low investor confidence,
inadequate support and delivery systems and
poor and unsustainable management of natural resources.
146
This AgriBEE charter’s function was to ensure increased access to, and
participation in, the agricultural sector by introducing initiatives to include
black South Africans at all levels of agricultural business and activities
through:
promoting access and participation in value chains;
de-racialising land and enterprise ownership;
unlocking the full entrepreneurial skills and potential of black people;
facilitating structural changes in support systems and development
initiatives;
socially uplifting and restoring the dignity of black South Africans;
increasing the extent to which communities, workers, co-operatives and
other collective enterprises owned and managed agricultural
enterprises ;
empowering rural and local communities to have access to agricultural
economic activities, land, agricultural infrastructure, ownership and
skills;
improving living and working conditions and promoting decent living
and working conditions for farm workers; and
improving protection and standards of land rights and tenure security
for labour tenants, farm workers and other vulnerable farm
stakeholders.
In South African enterprises’ AgriBEE status is measured against a
‘Scorecard’ and if the enterprise’s score is not high enough the enterprise
may be excluded from access to government business or contracts
(Williams, 2005:12). The ‘Scorecard’ consists of evaluation of the
following seven key elements: ownership, management control,
employment equity, skills development, preferential procurement and
enterprise development.
147
The AgriBEE inception was intended to apply to the entire agricultural
value chain, including activities relating to the provision of inputs, services,
farming, processing, distribution, logistics and supporting services
(Commission for Gender Equality, 2009:66). According to Esterhuizen,
Doyer and van Rooyen (2008:3), the main obstacles to implementation of
AgriBEE were management control, employment equity and preferential
procurement. Other obstacles to AgriBEE implementation were: inability to
find qualified female and disabled staff, finding suitable BEE senior
managers and sourcing equity partners who had sufficient funding. What
was also highlighted in the findings of Esterhuizen et al (2008:3) was that
there was still confusion in the agricultural sector around the AgriBEE
scorecard due to it not aligning itself with the needs of the agricultural
sector.
7.4 COMMODITY PROJECT ALLOCATION COMMITTEE FOR THE
OSTRICH INDUSTRY
The role of the Commodity Project Allocation Committee (CPAC) of the
Western Cape Ostrich Industry is to consult and make recommendations
in terms of the project implementation and allocation of project funds to
enable new farmers to achieve their goals within the broader commodity
partnership with the Department. This committee has been supported by
the Cape Agency for Sustainable Integrated Development in Rural Areas
(CASIDRA).
The CPAC Committee was represented by
the South African Ostrich Business Chamber,
the South African Ostrich Producers’ Association,
the National Ostrich Processors of South Africa,
the Emerging producers / labour,
the Department of Agriculture: Western Cape, and
Casidra implementing agency.
148
7.5 OVERVIEW OF THE NATIONAL FRAMEWORKS UNDERPINNING
LEGISLATION AND POLICY FRAMEWORKS OF THE OSTRICH
INDUSTRY
7.5.1 Comprehensive Agricultural Support Programme
The Broadening of Access to Agriculture Trust (BATAT), which was
initiated in 1994, has focused on agricultural development in the Rural
Development Programme (RDP) and was “intended to kick-start a shift
away from white dominance in agriculture and attempted to assess the
needs of black agriculture, existing and new black farmers, and identify
development priorities and strategies to improve their access to
agriculture” (Oettle and Britain, 1998:50).
Unfortunately BATAT had not met its objectives and so corrective action in
the form of the Comprehensive Agricultural Support Programme (CASP)
was proposed. CASP, which was implemented during 2004, included six
joint working groups focusing on the six areas of: on-farm and off-farm
infrastructure; advisory and regulatory services; capacity building;
information and training; market development; and financial services
(Department of Agriculture, 2006:6). While BATAT was aimed at ‘black
farmers’ in general, CASP intended to focus on land reform beneficiaries
(Vink, van Rooyen and Karaan, 2012:1). The deterioration of support
service programmes for farmers left agriculture in the rural areas of the
former homelands (Eastern Cape) in a precarious position. Despite
dedicated government funding there was still an inability of the provinces
to implement CASP (Vink et al., 2012:1). The Financial Service pillar of
CASP is the Micro-Agricultural Financial Institutions of South Africa
(MAFISA) which provides loans to appropriate farmers (Parliamentary
Monitoring Group, 2012:1).
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7.5.2 Land and Agrarian Reform Project
In 2007, the South African government recognised the need to devise
initiatives that would impact on the reduction of poverty, job creation and
economic growth, with special focus on vulnerable groups (women and
children). The Land and Agrarian Reform Project (LARP) was formulated
to provide a structure for alliance with land reform and agricultural support
to quicken the rate of transformation. The objectives of the Land and
Agrarian Reform Project are the following:
redistributing agricultural land to new agricultural producers;
increasing black entrepreneurs in the agribusiness industry;
providing access to agricultural support services for the new
producers;
increasing agricultural production on unproductive land; and
increasing agricultural trade.
7.5.3 Comprehensive Rural Development Programme
The Comprehensive Rural Development Programme (CRDP) is a rural
development programme that develops through the Medium Term
Strategic Framework and the government’s Programme of Action. The
CRDP consists of three units, namely, agrarian transformation, rural
development and land reform. The agrarian transformation is to provide
fast transformation in the areas of land, livestock, cropping and community
(MRDLR, 2009:3). The rural development focus was on improving the
standard of living of communities in non-urban areas. The focus is
generally on small populations of inhabitants in wide open spaces and
where agricultural activities are noticeable. In these areas economic
activities relate mainly to subsistence farming.
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The Rural Development Programme is aimed at “enabling rural people to
take control of their destiny, thereby dealing effectively with rural poverty
through the optimal use and management of natural resources” (MRDLR,
2009:14). CRDP has contributed to the BEE mandate by ensuring a more
equitable dissemination of the benefits of economic growth and reduction
of inequality.
7.5.4 Strategic Plan for South African Agriculture
The Strategic Plan for South African Agriculture initiated in 2001 was an
agreement between the government and the agricultural sector which
hoped to address reduction of profitability and growth of the agricultural
sector. It also aimed to address the fact that the majority of South Africa’s
population was still marginalised from conventional agriculture
(Sebakwane, 2009:4). The Strategic Plan for Agriculture is regarded as
the key to success for agricultural development. Of the strategic goals,
increased contribution to economic growth and development pertains
mostly to the BEE policy (DAFF, 2013:19). The South African Strategic
Plan for Agriculture has however drawn criticism that the Plan had no
mechanism in place to organize the implementation. This has been as a
result of lack of a dedicated structure responsible for administration of the
plan (Sebakwane, 2009:11).
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7.5.5 Eastern Cape Rural Development Strategy
According to the Eastern Cape Rural Development strategy (RDS), the
hundreds of years of colonial and apartheid policies have resulted in an
enduring environment of underdevelopment in the Eastern Cape Province
(ECRDS, 2010:13). The province is characterised by infrastructure and
service backlogs which are most severe in the rural areas of the former
homelands. This underdevelopment has been deepened by the current
economic downturn which has resulted in limited economic options. It is
through the RDS that sustainable growth and development for improved
quality of life for the rural communities in the Eastern Cape is hoped to be
achieved. The RDS strategy has the following sections:
land reform,
agrarian transformation and food security,
non-farm rural economy,
infrastructure,
social and human development and
providing an empowering environment.
7.6 OSTRICH INDUSTRY AGRIBEE INITIATIVES
The South African ostrich industry has been instrumental in complying
with the aims of Broad-Based Black Economic Empowerment. In order to
comply with the AgriBEE guidelines, the South African Ostrich Business
Chamber (SAOBC) established an OstriBEE scheme that focused on the
ostrich value chain. The programme identified and implemented its two
potential entry levels for new participants as producers or processors.
Through this initiative the ostrich industry was aiming to increase
participants’ income and standard of living, giving access to capital and
natural resources.
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The programme wanted to increase the number of black managers and
supply skills-training through artisans’ opportunities at ostrich abattoirs
and ostrich tanneries, mentorship programmes and various development
programmes. Black economic empowerment initiatives in the ostrich
industry have been supported by the private and public-sector, the
government, SAOBC and industry. The following initiatives have been
allocated a reference number illustrated on a spatial distribution map in
Figure 7.1.
7.6.1 Western Cape
Klein-Karoo Agri-Business Centre (1) in Oudtshoorn is a project that
was initiated and sponsored by ABSA, Land Bank and the Klein-Karoo
Group. The purpose of this project was to create an information centre
for business plans and provide support with funding applications.
Klein-Karoo Feather-sorting Project (2) in Dysselsdorp is an
independent project which is run by its members and which employs
100 people in the Dysselsdorp area. The programme involves grading
and sorting of feathers which are sold to KKI.
De Hoop Craft Project (3) in de Hoop consists of a feather and eggshell
craft programme run by women.
Klein Karoo Leather Goods Project (4) in Oudtshoorn initially started as
a small business leather-goods manufacturing centre using low value
raw material, but this has developed through mentorship, into the
manufacturing of high-quality leather goods for the export markets. The
products are being sold by the Klein Karoo Boutique in Oudthoorn. This
project employs 15 people from previously disadvantaged groups.
Mossel Bay Leather Goods (5) in Mossel Bay is an initiative launched
by Southern Cape Ostrich Tannery (SCOT) through which unemployed
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women in the Mossel Bay area are trained in the manufacture of leather
articles which are sold in the tourism industry.
Mosstrich BEE Trust in Mossel Bay (6) offers 6000 shares representing
6.5 % of the issued share capital to the 250 employees. The employees
share annually in the company’s profits.
Chandelier ostrich show farm (7) is involved with developing black tour
guides and co-ordinates a BEE craft facility that decorates ostrich eggs.
Olienhoutskloof BEE (8) farm near Dysselsdorp transferred 49% of its
ownership to farm workers. The enterprise provides training and
support and extends help to other small farmers.
7.6.2 Northern Cape
The Kuruman project (9) is run by a group of 30 black farmers that have
started an ostrich farming venture.
The de Aar Ostrich-rearing Project (10) is a project involved in the
raising of day-old birds. The programme is run by women, who also
own their feed mill and source feed from Oranje.
7.6.3 Eastern Cape
Rockhurst ostrich project (11) is an ostrich incubation project run by
fifteen women on the farm. Day-old chicks are sold to surrounding
commercial ostrich farmers.
Hlumani Co-operative (12) in Bathurst was established by ten
beneficiaries. The project involves growing ostrich chicks to 8 months
for Grahamstown ostrich enterprises.
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The Zamukwanda Ostrich project (13) farm near Pearston was
established by six beneficiaries. The project involves growing ostrich
chicks to 8 months for the Grahamstown abattoir.
Mimosadale Ostrich Growers (14) is run by a manager and two staff
members. The project involves growing ostrich chicks to 8 months for
the Graaff-Reinet abattoir.
Peddie ostrich project (15) in the Eastern Cape is focused on
community development. There are sixty-two black farmers who are
raising ostriches from day-old chicks.
Integrated Meat Processors of the Eastern Cape (IMPEC) is a BEE-
compliant enterprise (16) that employs previously disadvantaged
individuals and supports the Salem ostrich project by processing and
marketing their ostriches.
Camexo, who are suppliers of game industry products in Graaff–
Reinet area (17), initiated an ostrich programme and gave 400
ostriches to a group of black producers who function on their own as
independent producers.
With reference to Figure 7.1, the AgriBEE programmes (numbered 1 – 17)
have been concentrated around the main ostrich-processing hubs,
namely, Oudsthoorn, Mossel Bay and Grahamstown. One of the main
drivers for the programmes has been that they provide localized poverty
relief, job creation and economic growth around these hubs. Sourcing of
raw material such as tanned leather and feathers can be procured more
easily when in close proximity to the processing plants. The craft and
tourism businesses are centred around the Oudtshoorn area and have
benefited from the strongly developed ostrich tourism route.
155
Figure 7.1 Spatial distribution of AgriBEE projects in the ostrich industry in
2010
Source: Researcher’s own construction
156
7.7 CONCLUDING REMARKS
The land reform policy in South Africa has been focused on land
distribution, land tenure and land restitution. These three programmes
have mainly dealt with readdressing injustices of the past, relieving
poverty and contributing to the economy. According to Williams
(2005:476) “empowering the poor is a slow and difficult process because it
is easier to assist the rich selectively or to enable a small number to
become rich”. The BEE programmes are intended to provide a vehicle of
support for black South Africans to enable them to participate actively in
the country’s agricultural sector. However, there has been deliberation on
the way BEE has been applied, as some researchers feel that it has
assisted transfer of ownership of enterprises without addressing the
economic emancipation of the majority of black disadvantaged people.
Some enterprises in South Africa view the BEE programme as an
increased cost and risk factor. South African international corporations
had to meet these BEE requirements with increased challenges posed by
an extremely competitive, globalised environment while at the same time
coping with the economically disadvantaged black population (Southall,
Daniel and Lutchman, 2005:455). Further to this, companies have
engaged in practices known as ‘fronting’ and the deliberate circumvention
of the provisions of the Broad Based Black Economic Empowerment,
which has been recently recognised as a form of fraud in South Africa
(Cohen, 2013:para 3).
157
This chapter acknowledged the main interventions on how emerging
ostrich farmers and other related BEE programmes achieved participation
into the ostrich industry supply chain. It has been identified that BEE
serves as an important pro-poor policy to accelerate emerging ostrich
farmers into participation into a well-established ostrich industry. As
discussed in Chapter 3, intervention from the private sector and
governmental supporting services is also an essential part of supporting
the emerging farmers’ development. The next chapter presents the results
and findings from a situational analysis of the ostrich industry (see Figure
7.2).
Figure 7.2 Process of research design and structure of research
158
CHAPTER 8
SITUATIONAL ANALYSIS OF THE OSTRICH INDUSTRY
8.1 INTRODUCTION
8.2 CONTENT ANALYSIS OF INDUSTRY ARTICLES
8.3 MICRO ENVIRONMENT INFLUENCES
8.4 MACRO ENVIRONMENT INFLUENCES
8.5 STAKEHOLDER INTERVIEWS
8.6 CONCLUDING REMARKS
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CHAPTER 8
SITUATIONAL ANALYSIS OF THE OSTRICH INDUSTRY
8.1 INTRODUCTION
A situational analysis is a collection of methods to identify trends,
forces and conditions with the potential to influence the performance of
a business (AMA, 2013:para. 22). The aim of this chapter is to report
on the present state of the ostrich industry using several dimensions of
analysis. Firstly, the chapter examines findings from content analysis
of a sample batch of ostrich-industry magazine articles. The objective
of this analysis was to examine main topics of interest on the ostrich
industry which was to serve as an indicator of key industry issues.
Secondly, the chapter defines the micro influences in the ostrich
industry using Porter’s (2008:29) ‘Typical Steps in Industry Analysis’
process. The third section presents a comprehensive analysis of the
ostrich industry through reviewing macro environmental influences
through PESTEL analysis (political, economic, social, technological,
legal and environmental). Finally the chapter concludes with an
analysis of explorative interviews with key stakeholders in the Eastern
Cape ostrich industry. This study has several dimensions in order to
attempt to profile the ostrich industry and forms the preamble to the
research on the Eastern Cape emerging ostrich farmer case studies.
160
8.2 CONTENT ANALYSIS OF INDUSTRY ARTICLES
8.2.1 Introduction
Content analysis provides an empirical starting point for generating
new research evidence about the nature of communications (Kolbe
and Burnett, 1991). Owing to limited research information about the
South African ostrich industry, a sample frame of 100 magazine
articles was selected for content analysis from three popular ostrich-
industry communication contributors between 2005 and 2013. The
main communication contributors selected were the SAOBC website,
the South African Farmer’s Weekly magazine and the Shoes and
Views magazine. These three magazines have been the most prolific
with communicating pressing issues in the ostrich industry. The
study’s aim was to illustrate key influences in the ostrich industry
through this process. After the articles had been collated, they were
refined by removing outliers and inappropriate articles that had no
direct bearing on the ostrich industry. Seventy-three remaining articles
were then coded according to common themes.
8.2.2 Synopsis of main themes from content analysis
The themes found in the literature were sorted according to popularity
(Figure 8.1). Seven main themes were identified as central topics in
the ostrich industry, namely, avian influenza, European export
protocols, government involvement, ostrich products, new markets,
industry scale and AgriBEE.
161
Table 8.1 Main themes from content analysis of magazine articles
related to the ostrich industry.
Themes Number of
articles
Avian influenza 14
European export protocols 7
Government involvement 7
Ostrich products 7
New markets 6
Industry scale 5
AgriBEE 3
Biodiversity management 2
Competition 2
Conservation 2
Genetics 2
Global economy 2
New products 2
Processors 2
Production 2
Tourism 2
Bio-security 1
Customer preference 1
Disease 1
Feeding 1
Exchange rate 1
Research 1
Grand total 73
8.2.2.1 Avian influenza
Avian influenza was found to be the most popular theme for articles
written about the ostrich industry. Within this theme the outbreak
updates and control of the problem were main topics of discussion.
162
8.2.2.2 European export protocols
The avian influenza outbreak and meat ban led to further articles on
the European meat protocol requirements and industry strategies to
maintain exports.
8.2.2.3 Government involvement
Most of the articles related to the South African government were on
export ban updates and the importance of cohesion between the
ostrich industry and the government.
8.2.2.4 Ostrich products
This theme included ostrich products advancements, such as ostrich
leather product developments, new leather markets and pre-heating
meat programmes.
8.2.2.5 Industry scale
The theme related to industry scale was found in articles that
discussed the declining numbers of South African ostriches and the
need for ostrich farmers to restock.
8.2.2.6 AgriBEE
The AgriBEE articles’ main themes were on new programmes and
success stories in the industry.
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8.3 MICRO ENVIRONMENT INFLUENCES
8.3.1 Introduction
Porter (2008:29) contends that “defining the industry in which
competition actually takes place is important for good industry
analysis, not to mention for developing strategy and setting business
unit boundaries”. Porter also described these competitive forces as the
micro environment influences. Porter’s ‘Typical Steps in Industry
Analysis’ framework was used in the current study to explore the micro
environmental influences in the ostrich industry as follows:
To define the products in the industry and to determine the
geographic importance and scope of competition; and
To assess the underlying drivers of each competitive force such as
the threat of new entrants, the threat of substitute products, the
bargaining power of customers, the bargaining power of suppliers
and the intensity of competitive rivalry.
8.3.2 Industry product characteristics
8.3.2.1 Ostrich leather
The production of leather finds itself at the end of the farming livestock
value-chain, which is divided into animal husbandry, the procurement
of hides from farms and processing of the skins into leather at
tanneries. This requires substantial technology know-how and
equipment, the manufacturing of ostrich leather products in factories or
workshops and the marketing and distribution of the end products.
164
Tannery throughput is vital to achieve volumes for competitive
production costs. In the ostrich industry there is a strong export-
orientation of the commodities rather than for finished ostrich leather
goods. The value of ostrich leather is based on its uniqueness (exotic
nature) and only during the 1930s did producers start to realise this.
During the feather boom and the export of feathers to Europe, feathers
were attached to raw ostrich skins. Some European traders
recognised the leather potential, so limited numbers of these skins
were being tanned in England and the Netherlands for the leather
market. The market was negligible as supply was irregular and skins
contained defects which required high pigmented tanning (Gast,
2012:pers. comm.,16 October ).
After deregulation the ostrich industry changed from a demand-driven
to a supply-driven leather industry, resulting in greater trade and
pricing vulnerability. In the ostrich industry the export classification of
ostrich leather includes the ostrich body skins and ostrich leg skins.
Both of these are finished in different tanning stages of wet blue,
chrome crust or tanned finish. According to DAFF ostrich leather is
seven times stronger than bovine hide (DAFF, 2011b:4) and has been
predominantly marketed to the fashion industry for its distinctive quill
patterns and novelty value. The quill pattern on the ostrich skin has a
unique diamond-shaped pattern which spreads from the neck and
down to the wings and the flank areas. According to SCOT
(2011:para. 1) for the ostrich leather grading system the skin is divided
into four quarters, which are each approximately 25 cm wide. The
vertical line runs from the base of the neck between the wings. The
horizontal line runs between the widest parts of the skin from either
side of the crown area.
165
The extent of damage with reference to the size and position in these
quadrants determines the grade and ultimately the price of the ostrich
leather. The ostrich leather prices are also affected by nodule size and
shape (Kritzinger, 2011:21). According to SCOT (2013:para. 5) a high
grade is recommended in order to cover a large areas (grades 1 to 2)
and if you need to cover a smaller areas then a lower grade (grades 3
to 5) is adequate.
The nodules that form the pattern are the result of the removal of the
feather quills from the skin which gives it the exotic appearance.
Nodules are also the factor that distinguishes ostrich leather from
competing "flat leathers". Although no formal standards are available,
the size, shape and distribution of the nodules and pattern have an
influence on the marketability of the leather (Cloete, Van Schalkwyk,
Hoffman and Meyer, 2004:80). Research conducted by Van
Schalkwyk, Hoffman, Cloete and Engelbrecht (2010:3) showed that
grading of ostrich skins had undergone drastic changes over the last
decade due to changes in the ostrich production industry. Today the
requirement for ostrich leather is that it is free from defects and
damage in order to merit the full price.
It is this changing grading system that makes the price of ostrich
leather subjective and payments to farmers inconsistent. The price can
vary dependant on the buying graders’ perception and the intended
end product. The different nodule sizes on the ostrich skin can also
have an influence on how customers purchase according to design
and vamp placement for end-product cutting. The exotic leather
fashion market consists mainly of luxury handbags, boots and small
leather goods. Exotic animal leather makes up approximately 10
percent of the total revenue from handbag sales for luxury brands
(Kew and Roberts, 2013:para. 3). It is the ostrich quill or nodules on
the luxury items which defines ostrich leather as exotic. Recent
research shows that the ideal quill shape and size could be achieved
at 11 months of age (Van Schalkwyk, 2008:4).
166
The thicker ostrich skins tend to produce larger nodules which are
more sought after for the cowboy boot market. The thinner skins are
more sought after by the garment manufacturers as they are more
pliable and also have better tanning colour consistencies than the
thicker skins.
Research conducted by Van Schalkwyk et al. (2010:20) observed
increased incidence of tick marks, white spots and pitting over the
years. The aetiology of pitting and white spots in the industry is poorly
understood. Any marking on skins has an effect on downgrading of
skins which a result in lower prices for the farmer. This also includes
damage from farm fencing or thorny vegetation.
The age of slaughter has important cost implications for the meat and
leather. Skin damage increases with age which results in severe
downgrading of skins when they reach 14 months old. Farmers who at
times delayed slaughter in the hope of obtaining better prices have
borne the consequences of more damage to the skins. Van Schalkwyk
et al. (2010:21) also showed that there is a marked variation in skin
value between producers, which suggested that better farm
management resulted in better quality leather.
What is relevant for marketing channels is that exotic leather is
purchased in “lots” of leather and has a grading percent spread such
as 20/30/40/10 (grade1/2/3/4/5). The European buyers opt mainly for
grades 1 and 2 (the top grades), which leave marketers with the
dilemma to find markets for the remaining low grades. This situation
has led to overstocking of low grades and required flushing out or
“closeouts” sales. However, when exotic leather was in limited supply,
priority was given to higher return markets. Sales were concentrated
around these markets and sometimes this was to the detriment of low-
end customers and the domestic market.
167
With reference to Figure 8.1 South Africa currently exports ostrich
leather to the following countries: Korea, USA, Europe, Mexico, China
and Japan.
Figure 8.1. South African ostrich leather exports by destination.
Source: SARS (2012:1)
8.3.2.2 Ostrich meat
The genetics of ostriches have had a influence on meat value.
According to Hoffman, Brand, Muller and Cloete (2008:257) the South
African Black ostriches had the lowest live and carcass weights,
compared to Zimbabwean Blue Necks. The crossbred birds resembled
Zimbabwean Blue Necks more closely with preferable meat traits.
According to Wessels (2003:60), ostrich meat has a wide selection of
meat cuts. The prime cuts of the meat are obtained from the
drumstick, neck and the rump. De-boned cuts are used for cold meats
and lower quality meat serves mainly for the domestic inexpensive
market. The cured meat is also very popular especially because of
their low fat content.
0%
5%
10%
15%
20%
25%
30%
35%
40%
KOREA USA EUROPE MEXICO CHINA JAPAN
2008
2009
2010
2011
168
According to Benson and Holle (2004:15) some of the factors
influencing the value of ostrich meat are:
Yield – The increasing meat yield will improve the total revenue per
ostrich for the producer while reducing the bird processing costs at
the same time;
Muscle size - Optimum muscle size is required by processors in
order to prevent loss of revenue;
Grade – Quality inputs and management affect the quality of meat,
namely, colour, flavour and aroma, tenderness, pH, water-holding
capacity and drip loss, shelf-life and microbial load, cold shortening
and cooking losses.
The ostrich meat industry has had a strong focus on the European
market who perceive ostrich meat to be of high value due to low levels
of cholesterol (Cooper, 1999:389). Europe is currently the biggest
world market for ostrich meat, importing it mainly from South Africa,
Israel and even Australia (Horbanczuk, Tomasik and Cooper,
2008:65).
During the second outbreak of Bovine spongiform encephalopathy in
Europe in 2000, the demand for ostrich meat increased significantly
(Hoffman, 2008:1270) as the consumption of beef in Europe at that
time declined and consumers started to look for alternative kinds of
red meat. The multiple European retailers began to stock vacuum-
packed ostrich steak cuts. Tesco, Britain’s largest supermarket chain,
which pioneered the introduction of ostrich meat, carried the product in
300 stores across the UK. Marks and Spencer supermarkets, however
did not sell ostrich meat as according to them there was insufficient
demand to make ostrich meat a profitable product.
169
The South African domestic meat market has become an important
alternate offloading outlet and a long-term strategy is required to
develop this market as repeated international meat bans due to avian
influenza impact negatively on stability in ostrich meat sales. In 2012
the domestic sales of raw meat were approximately 15 tons a week,
70 percent more than in 2010 while the optimum according to KKI was
30 to 40 tons a week (Stumpf, 2012b:1). Ostrich meat is now sold
through 1 041 chain retail outlets in South Africa and 541 wholesalers
and other outlets. KKI has the most comprehensive meat distribution
operation in the South African domestic market.
During Europe’s ostrich meat ban after 2011, KKI succeeded in local
market sales through a combination of new marketing strategies,
increased number of outlets and downward adjustment of prices to a
more competitive level with beef (KKI, 2012:3). The ostrich industry
initiated heat treating or par-cooked the ostrich meat in order to export
the meat. This was done in an effort to stop the fluctuation in exports,
because the risk of relying on raw meat exports was too high. Many
ostrich farmers do however not agree with this strategy because heat-
treated ostrich meat sells at a discount due to the operational costs
and yield-losses in the treatment. This method results in the farmer
receiving approximately R1 000 for the ostrich, which some say is still
not viable (Payne, 2012:sec. 4). The standards of processing of South
African ostrich abattoirs are the same as or even higher than those for
high-quality other livestock. South Africa was one of the first countries
that were granted authorisation to export ostrich meat into Europe
(NAMC, 2003:34).
170
Figure 8.2 South African ostrich meat exports by destination.
Source: NAMC (2011:10-11)
8.3.2.3 By-products
The ostrich by-products (feathers, eggs, pet food and fat) provide the
farmer with a way of spreading the dependency risk on the primary
products (ostrich leather and meat). The understanding of the
interdependency relationship between the primary products and its by-
products is important in order to facilitate changes in market and
prices. Ostrich feathers have a wide variety of applications used in the
domestic market, namely, feather dusters, automobile manufacturing,
fashion accessories and decoration for interiors. Ostrich feathers are
also exported to the South American costume markets for the carnival
in Rio de Janeiro. The empty egg-shells are purchased primarily for
art work, decoupage and tourism items. The Graaff-Reinet ostrich
abattoir has established a dog food ostrich line from meat waste and
bones to pets. The ostrich fat is used by the cosmetic industry and
there has also been limited interest in the use of ostrich fat for bio-fuel.
0%
5%
10%
15%
20%
25%
30%
35%
40%
2007
2008
2009
2010
171
8.3.2.4 Relationship between ostrich products
The main determinants of profitability in the ostrich production are:
Feed conversion to live weight, Yield of meat at slaughter, High quality leather, and Yield of feathers.
In 1993 ostrich meat was primarily the by-product of ostrich processing
as it accounted for only between 10 to 15 percent of the income from
an ostrich (Wessels, 2003:40). With reference to Figure 8.2, from 2002
to 2003 this percentage reached between 30 percent and 45 percent
and between 2007 and 2008 accounted for more than 50 percent of
the income from an ostrich. According to a ratite feeding specialist
(Benson and Holle, 2004:1), “the South African ostrich industry is
moving from a controlled skin supply market to a market-driven
livestock production industry, which includes the marketing of high-
quality meat”.
Figure 8.3: Ostrich product earnings 2003 - 2013
Source: Du Plessis (2013:6)
R ‐ R 200 R 400 R 600 R 800
R 1 000 R 1 200 R 1 400 R 1 600
01/2003
06/2003
11/2003
04/2004
09/2004
02/2005
07/2005
12/2005
05/2006
10/2006
03/2007
08/2007
01/2008
05/2008
11/2008
04/2009
09/2009
02/2010
07/2010
12/2010
05/2011
10/2011
03/2012
08/2012
01/2013
Meat Feathers Skins
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Ostrich farming has been attractive because of its higher and faster
financial returns as compared to those of traditional livestock. A cow
produces a calf which reaches marketing weight after 654 days from
conception (yielding approximately 250 kg of meat) while an ostrich
can produce up to 40 chicks annually that reach marketing age after
only 407 days from conception (42 days of incubation and 365 days of
age) and yield 1 800 kg of meat (Shanawany and Dingle, 1999:141).
The farming process from egg laying to slaughter takes approximately
10 months. The tanning process takes approximately a further eight
weeks after slaughter at the abattoir. The delay in payment for skins is
one of the reasons why farmers prefer farming mainly for meat as they
receive the payment faster than for the leather sales.
A balance exists between meat and skins, as developing a market for
meat without developing an improved market for leather could result in
oversupply of leather and thus fail to maintain the exclusivity of the
exotic leather. Some role players in the industry have indicated that an
ostrich should be slaughtered at the optimum feed conversion stage of
between eight and nine months of age and not at the slaughter age of
eleven months. The optimal slaughter weight can be achieved through
quality feeding programmes and genetic selection (Van Schalkwyk,
2008:77).
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8.3.3 Geographic competitive considerations
The ostrich industry competitive market strength originates from its
historic monopolistic position in the global market and that it had
exclusive control over the ostrich farming sector in South Africa. The
following section discusses how the ostrich-industry competitiveness
evolved in the Oudtshoorn area. Today the infrastructures in
Oudtshoorn consist of multi-million Rand tanneries, abattoirs,
deboning plants, feather sorting and dying, craft factories, marketing
and co-operative and tourism outlets. As with most agricultural
commodities, ostrich farming is influenced by the climatic environment.
Wessels (2003:47) stated that there is a correlation between droughts,
floods and other extreme climatic conditions and the numbers of
ostriches offered for market. Usually extreme weather can have an
effect on the following year’s ostrich numbers.
Oudtshoorn lies at an altitude of 314 m above sea level and receives
an average annual rainfall of 239 mm. The low rainfall has contributed
to the Klein Karoo having a semi-arid climate. The irrigation water in
most areas around Oudtshoorn contains brak water, which means that
the extensive cultivation of crops is not feasible (SAOBCBU, 2009:37).
As there is a limitation on land livestock capacity, ostrich farming has
become the main livestock farmed in the areas and the largest
contributor to the economy of the Klein Karoo and the private sector
has become reliant on it for economic growth and job creation
(SAOBCBU, 2009:8).
One of the main reasons why farming ostriches in this region was
considered, was because of its tolerance to heat. The high summer
temperatures reach a maximum average of 31 °C around Oudtshoorn.
The ostrich has a remarkable ability to withstand air temperatures of
up to 56 °C without undue stress. Heat is expelled by rapid panting via
the well-developed air sac system that avoids over-ventilation and
dehydration, therefore ostriches can thrive is a dry and warm climate
(Jones, 1982:1411).
174
The biological survival mechanism of the ostrich allows it also to adapt
to extremely fluctuating environmental conditions. Therefore it can
withstand the cold winters in the region together with the heat of
summers. Since ostriches have a preference for open land with short
grasses, and semi-arid regions they survive in places that are prone to
water scarcity (Cooper, Mahrose, Horbańczuk, Villegas-Vizcaíno,
Sebei and Mohammed, 2009:1675).
The Oudtshoorn area has been prone to drought since the 1860s
(SAWRC, 2010:20) and the semi-arid environment has made pastoral
farming reliant on farm dams and efficient irrigation methods. Other
environmental factors that contributed to Oudtshoorn being an ostrich
farming district, were the fact that the soils were well suited for
farming lucern. According to Evans quoted by Stein (2007:781) the
levels of lime in the alluvial soil of the region’s river valleys presented
ideal conditions for lucern, which in turn provided superb nourishment
for ostriches and allowed for intensive farming.
Important transport infrastructure was provided to the Oudtshoorn area
which contributed to its development, namely, the Meiringspoort
cutting in 1857 provided access to the main route to the North and the
railway line to George was completed in 1913 (Van Der Walt,
1990:194). Later with the onset of the growing overseas markets for
meat and leather the international airports of George and Cape Town
were conveniently accessible for cold storage and timeous transport.
175
The ostrich production in the southern Cape relies heavily on the
availability of pastures as an affordable source of roughage (Van
Schalkwyk et al., 2010:22), the state-sponsored Kamanassie irrigation
scheme was initiated in 1913 with the emphasis on Oudtshoorn’s
vulnerability to drought and the need for more lucerne-bearing land
However, according to a 1913 Agricultural Journal of the Union of
South Africa quoted by Stein (2007:780), the dry Oudtshoorn climate
allowed ostrich farmers to pluck feathers from birds three times in two
years in Oudtshoorn, but this frequency of feather harvesting was not
possible in other areas with higher rainfall such as Grahamstown
where ostriches are farmed.
During the feather boom of the 1900s Oudtshoorn was in the
convenient position of using two of the main ports in South Africa,
namely, Port Elizabeth and Cape Town. However, Port Elizabeth was
a dominant trading port for wool during the late 1800s, which also
contributed to the building of the Feather Market Hall which became
an important venue for public auctions for ostrich feather merchants
(Müller, 2000:37, Pudney, 2013:para. 1).
8.3.4 Competitive forces in the ostrich industry
Only South Africa, Namibia, Zimbabwe and Israel achieved the full
ostrich production chain from eggs to abattoir and processors (NAMC,
2003:36). The strength of the South African ostrich industry lay in its
ability to establish a minimal competitive environment domestically and
internationally. In 1937 the South African Marketing Act established
control boards that had the authority to regulate the marketing of the
relevant agricultural products, but in 1959 the Oudtshoorn ostrich
producers felt that they were not fully benefiting from the protection
provided by the 1937 Marketing Act. The South African ostrich industry
requested that government support the compulsory delivery and
control of a product through a designated co-operative, thus the
establishment of a one-channel marketing system from Oudtshoorn.
176
In 1959 when the Klein Karoo Co-operative (KKC) single-channel
marketing system for ostrich feathers was formed all the other ostrich
products were included. Farmers motivated for KKC sole marketing
rights in order to protect the ostrich industry and give Oudtshoorn
exclusivity from the rest of South Africa. Further to that, exclusivity was
also strengthened by the fact that the ostrich farmers also had to
operate under the restrictive provisions of Section 17 of the Livestock
Improvement Act that prohibited the export of any ostrich breeding
material (NAMC, 2003:36). This assisted with restricting the
introduction of bred ostrich strains introduced to overseas markets and
maintaining South Africa's position as the number one ostrich farming
sector. This monopolistic ostrich industry became vital for the income
and job creation in the remote Oudtshoorn area.
According to NAMC (2003:25) the South African agricultural marketing
system proved to be financially and economically unsustainable. The
new marketing of Agricultural Products Act (Act 47 of 1996) was then
instituted and strived to build on the previous Act through improving
market access to all market participants, promotion of efficient
marketing of agricultural products, optimisation of export earnings from
agricultural products and enhancing the viability of the agricultural
sector.
In terms of the 1996 Act, all the schemes of the 1968 Act had to be
abolished by the start of 1998. Section 241 (3) of the Co-operatives
Act (Number 91 of 1981) was withdrawn in 1993 (NAMC, 2003:18).
This ended the single-channel marketing system in the South African
ostrich industry and introduced an unregulated and free market
system. From the early 1900 to 1993 the ostrich industry was exposed
to limited ostrich product competition. From 1993 ostrich products
were no longer marketed and exported through a single-channel
marketing system.
177
Since deregulation nine new abattoirs were built, namely, Mosstrich,
Grahamstown Ostrich Abattoir, Swartland Ostriches, Camdeboo Meat
Processors Ltd, Exon, Marowe (Pty) Ltd, Philippe Genuine Ostrich
Products and Camexo (DAFF, 2011b:7). However, the South African
ostrich industry in 1995 was still able to dominate 82 percent of the
world ostrich slaughter figures.
The ostrich industry has been dependent on the export of the ostrich
leather as one of its main incomes. However, since the economic
down-turn in 2008, leather manufactures have been finding alternative
ways to substitute cost effective materials for exotic leather in their
product ranges (KKI, 2012:4). Exotic leather consumers exercise other
choices to other exotics due to unavailability of products. These
circumstances could result in permanent lower demand and loss of
shelf space. During 2008, the prices for handbags from luxury
designers fell by 20 percent and producers of main labels are finding
other means to reduce costs (Kapner, 2009:12). One of the ways is by
replacing genuine leather with faux leather which is also perceived as
a “green” alternative. According to Shane (2003:26), the market for
ostrich hides has been impacted by alternate exotic leathers,
especially from African buffalo (Syncerus caffer) and elephant
(Loxodonta africana) which are procured from culling programmes
operated from South African national game parks.
178
The ostrich leather is under constant threat of substitution, unless
there is active marketing and promotions offered to the designers of
fashion houses. Fashion houses which drive the fashion in Europe
have an influence on the U.S and Far East markets. In order for
certain textiles to be used, the textile suppliers need to enter into
productive relationships with fashion designers (De la Haye, 1997:13).
Every year the high fashion designers have to create new collections
which are designed and produced according to the customer requests.
Western Wear and the Far East market sector have particular needs
to meet style requirements and are more price-sensitive.
According to Kriek (2007:6), overseas tanneries aggressively bought
raw material directly from abattoirs and farmers in South Africa. The
South African tanneries could not compete with certain European
market prices due to the high quality or finishes required, which did not
warrant the cost of production. This allowed low-cost and low-quality
tanneries to offer cheaper exotic leather, which had a negative impact
on leather prices and on South African sales, especially in upmarket
exotic leather markets.
179
The South African tanneries have experienced increasing processing
competition from Mexican and Korean tanneries. The Mexican and
Korean exotic leather tanneries have the following competitive
advantages:
They are closer to main global exotic leather markets, namely
Japan and the United States. Japan and the United States are the
largest importers of tanned ostrich skins. Japan at one stage was
importing 120,000 skins per year (Kriek, 2009b:6);
They have fewer environmental restrictions imposed on them,
which makes them very competitive. The repeated failure to control
effluent from leather tanneries in the León, Mexico, for example,
became an environmental problem during the 1980s and 1990s
(Blackman, 2008:22);
Throughput is the primary input parameter on which cost
calculations of tanneries are based (Botes, Jacobs and Pienaar,
2006:9). The Mexican and Korean tanneries are highly competitive
on the cost of processing and do not exclusively tan ostrich, but
also crocodile and snake. This means that the tanneries have
more throughput and reduced unit cost.
Since deregulation of the South African ostrich industry, competition
grew substantially and a large number of independent players joined
the ostrich industry. Wessels (2003:60) found that on the export
markets each role-player sold ostrich products independently of others
which led to the undercutting of prices in order to procure and gain
market share. According to Rayner (2005:1) all newcomers simply
went to established markets and sold at lower prices. No ‘new
markets’ were developed. Owing to this, the ostrich industry initiated a
programme called Ostrivision in 2004 to develop increased
participation of industry stakeholders for sustainable global
competitiveness (Jonker, 2008:14).
180
After deregulation, quality standards were no longer monitored by a
single-channel marketing system and standards in South Africa
became inconsistent which resulted in optimum income levels not
being realized (Wessels, 2003:60). According to a report by the South
African Marketing Council, this local competition had an especially
detrimental effect on the ostrich leather market through price
undercutting in markets resulting in lowered demand (NAMC,
2003:32). One of the largest consequences of the 2004 avian
influenza out-break was the closure of Camexo which was the largest
ostrich tannery in the Eastern Cape. The purchase price was ZAR
1.00 plus the debt, which indicated the difficulties Camexo faced in the
wake of the avian influenza outbreak. The purchase of Camexo gave
KKI the largest vertical ostrich set-up in the Eastern Cape (Leather
International, 2005:para. 1).
Although the ostrich activities spread from the Oudtshoorn area into
the rest of South Africa after deregulation (Greibenow, 2003:4), the
ostrich industry processing took a long time to establish in other areas.
Due to the constraints faced in the industry many of these processing
plants were not sustainable. The industry was limited to only a few
surviving processing plants after 2010. Thus it developed into an
oligopolistic environment in which a particular industry is controlled by
a small group of stakeholders.
The European Union (EU), a key market for the South African ostrich
industry, is progressively being eroded due to the relaxing of bilateral
agreements and the EU shifting towards new trading partners. There
is a growing tendency of increased regulation and selective limitations
of the use of chemicals which are difficult for farmers to adhere to. In
the ostrich industry, prior to 1993, the monopoly created by the single
marketing channel provided the impetus for the ostrich industry which
developed into an intensive agro-processing value chain supported by
select overseas agencies that became gatekeepers to high-fashion
brands.
181
The regulated quantity of ostrich skins from South Africa enabled the
agencies to corner the market which allowed the industry to develop a
strong association with European fashion houses and brands (Kriek,
2010:9). Kriek also stated that “The importance of fashion brands is
that they create a pull effect and industry efforts are focused to
achieve this for ostrich leather. Tanneries should, in their respective
marketing strategies, complement industry activities by working with
fashion brands and the other way around. It is therefore important that
contact with fashion brands should be absolutely professional and that
an image of ostrich leather as a niche product should be built. It is
important to have a relationship with the decision makers within the
fashion organisations rather than with a shop assistant or the person
in the warehouse taking the deliveries.
According to studies on the Jewish community in the Oudtshoorn area,
Stein (2007:784) found that during 1940, 90 percent of Oudtshoorn’s
ostrich feather merchants were from Jewish origin and that articles in
London’s Jewish Chronicle reported on Jews’ ascendancy in the trade,
noting that “this business is almost entirely in the hands of the Jews.” It
can be said that the Jews had played an important role in developing
and introducing South African ostrich feathers to Europe.
182
This was the first grounding relationship that the ostrich industry had
fostered with the European market. The South African ostrich industry
led the world in terms of production, market share and as well as in the
value-adding process. According to NAMC (2003:3), from 1993 to
2002 the South African market share in the world declined from 85
percent in 1993 to about 60 percent in 2002. With reference to Figure
8.3, the ostrich slaughter figures are in decline, but this trend is
favourable to the South African industry as this level of supply will
assist with the ostrich leather retaining its exclusivity.
Figure 8.4 Comparison of KKI and other South African production
Source KKI (2012:2)
183
No literature was found which discusses the rivalry between the
Eastern and Western Cape ostrich industries. It is the researcher’s
view that the competitive rivalry between the two provinces for markets
and farmers existed since the start of South Africa’s ostrich industry.
With reference to Figure 8.5, the evolution of the ostrich industry
originated with involvement from both Eastern Cape and Western
Cape farmers. At the start of ostrich production the main product
derived from ostrich farming was the ostrich feathers, followed then by
the leather and finally the meat. The main export transportation form
was by sea when the industry started and then changed to air cargo.
Owing to the establishment of the single-channel marketing, the
Eastern Cape was excluded from export participation from the 1950s.
Only in 1993 owing to deregulation, the Eastern Cape and other
provinces were able to again participate in the ostrich industry.
However, the outbreak of avian influenza in the Eastern Cape has
reduced the industry’s production to less than 20 percent of the
original registered farms of which today many are not exporting.
184
Figure 8.5 Provincial evolution of the South African ostrich industry
Source: Researcher’s own construction
185
8.4 MACRO ENVIRONMENT INFLUENCES
8.4.1 Introduction
Changes in the macro environment indirectly affect industries and
have an influence on performance. The PESTEL analysis, which is
also referred to as PEST analysis, is a strategic management tool to
track the environment or conduct macro environmental scanning. It
also assists in identifying the main influences: political, economic,
social, technological, environmental and legal. According to Johnson
and Scholes (2008:102), the PESTEL framework also contributes to
the future impact of environmental factors. These macro
environmental factors are continually changing and the following
section explores their impact and influence on the future performance
of the ostrich industry.
8.4.2 Political influence
8.4.2.1 Supporting governmental services
The following supporting governmental services have been identified
as playing important supportive roles for the exotic livestock industry:
state veterinary services, import and export control, tariff codes and
taxes, the European Agricultural Attaché, regulatory and controlling
bodies, nature conservation, Threatened or Protected Species
(TOPS), the Convention on International Trade in Endangered
Species (CITES), international policy and representation officers. In
terms of other specialised livestock farming, the national government
and most of the provinces have incorporated the ostrich industry’s
norms and standards into the legislation for the exotic livestock
farming industry. To sell protected and exotic livestock products,
movement permits and CITES permits are required.
186
The Department’s allocation of veterinary posts since 2001 at abattoirs
in South Africa has not been up to standard. During an European
Union inspection visit, it was found that several veterinary posts in
South Africa, which were budgeted for in April 2000, had as yet not
been filled. The EU inspection team expressed concern about the
inability of the NDA to coordinate between national and provincial
executive functions. The European Commission viewed this in an
extremely serious light (NAMC, 2003:50). This situation may have
been a “red flag” for Europe and led them to initiate extra caution
towards the South African ostrich industry in order to accommodate
poor application of EU standards and requirements. According to the
Western Cape Department of Agriculture (2012:39), the new
requirements for ostrich farm registrations and auditing currently
implemented for avian influenza will increase the workload of animal
health officials. The current personnel establishment is not adequate
to meet this demand.
The support, co-ordination and prompt certification of export
administration from governmental departments are vital for export-
oriented enterprises. When the European Union banned ostrich-meat
imports in 2004, following the avian influenza outbreak, it cost the
ostrich industry over R600 million in exports and resulted in the
euthanasia of about 26 000 ostriches. While many farmers recovered,
the effect of the current ban may be felt in the long term (Cohen,
2012:2). Another problem is that there is no confidence among the
farmers and breeders because they are insecure about the current AI
control strategy of DAFF. The latest detection of AI in the Southern
Cape did not come about because of movement of birds, as the
affected farms have very good bio-security measures.
187
South African ostrich farmers have stated that they have no
confidence in DAFF because they are insecure over the current AI
control strategy. During a recent meeting between a SAOBC
delegation and DAFF, Piet Kleyn, the acting CEO of the SAOBC noted
that there was still a significant gap between SAOBC and DAFF, but
that there had been progress: "We didn’t have high expectations of our
meeting with DAFF, but I think that we’re moving in the right direction".
Although considerable efforts have been made to contain and reduce
movement of ostriches, Piet Kleyn stated:
Incidences of AI antibodies have continued to surface, and
the last 3 positive tests for highly pathogenic H5N2 have
been on ‘closed units’ – farms where the affected birds were
hatched and raised. While there have been instances where
exposure to the virus was from birds that had been moved,
we believe the evidence now is that most incidences are
caused by the disease entering farms from the wild, and
specifically from waterfowl, which appear to be the reservoir
of the disease.
This situation is such that the ostrich industry is governed and
controlled by government disease procedures. These laws may not be
the solution to the continued outbreak of avian influenza. According to
Mpho Maja, the minister of animal health in the Department of
Agriculture, “Progress on the side of the industry is, however,
disappointing: the re-registration of farms is stalling, the farming
practice has not changed, or at least we have not seen the proposed
changes and how they intend implementing them” (Cohen, 2012:1).
188
8.4.2.2 The credibility of the South African Department of Agriculture
with the European Union (EU)
The South African government played a crucial role in the identification
and isolation of the avian influenza outbreak, which is on the list of
notifiable diseases of the World Organisation for Animal Health (Law,
2006:227). DAFF requires that the country’s credibility as an exporter
of safe food to the EU be maintained. When the first outbreak of avian
influenza occurred in 2004, DAFF notified the World Organisation for
Animal Health immediately that an avian influenza virus had been
isolated. It was insinuated that the DAFF had been to blame, but the
minister refuted allegations that the EU ban was the result of
negligence by the Department of Agriculture. In an effort to preserve
the country’s international credibility, the DAFF enforced a ban on all
poultry exports from South Africa. This was later enforced by the EU
which demanded accurate monitoring of the disease circumstances
and the measures taken to eradicate the disease.
8.4.2.3 Agricultural Broad-based Black Economic charter (AgriBEE)
The AgriBEE programmes offer little participation downstream in the
ostrich-industry value chain, namely, abattoirs, meat processing,
marketing, agencies and distribution. This participation is found in the
incubation, growing of chicks, breeders, eco-tourism, manufacturing
crafts and shareholding capacity in an ostrich tannery. It is not implied
that there is no BEE beneficiaries in these areas or that the farms are
not BEE compliant, but according to the explorative interviews and
literature study there is only a modest degree of BEE ownership and
independence of ostrich enterprises or processes. As discussed in
Chapter 7, large co-operatives in South Africa view the BEE
programme as an increased cost and risk factor. Interventions are
required to reduce insecurity which undermines the industry’s
competitiveness.
189
8.4.2.4 Land reform policy
As discussed in Chapter 7, the land reform policy in South Africa has
been focused on land distribution, land tenure and land restitution.
These three drivers have mainly dealt with readdressing injustices of
the past, relieving poverty and contributing to the economy. According
to Vink (2013) cited in Erasmus (2013:para. 1), land reform has been a
failure. The problems associated with land reform have resulted in an
increase in popularity of farm worker equity-sharing schemes in South
Africa (Gray, Lyne and Ferrer, 2004:377). The land reform scheme
has not been fully implemented in the ostrich industry and has
potential as an intervention for increased emerging ostrich farmer
participation.
8.4.3 Economic influence
8.4.3.1 Farmers’ reaction to global economic downturn
Eighty percent of all processed products from the South African ostrich
industry is exported (Kriek, 2005:13). Therefore only a small amount is
destined for the domestic market, which demonstrates how much the
ostrich leather industry relies on the international market. Any
pressures experienced in the global trade have an influence on
demand, a situation that was experienced during the worldwide
recession during 2008/2009 when ostrich leather was exposed to the
discretionary income of consumers. Another factor that has had an
influence was the ZAR exchange rate. Towards the end of 2009 the
Rand firmed by more than 20 percent against the US dollar. Farmers
overreacted to these economic uncertainties and have not made
sufficient investment in new breeding livestock. This will result in a
declining stock of ostriches for the industry. With reference to the
content analysis of articles on the ostrich industry, two of the articles
were found to be encouraging famers to increase breeding stock on
the farms.
190
8.4.3.2 Leather customers’ reaction to the economic downturn
Research conducted by Thorbjarnarson (1999a:469) on the American
alligator (Alligator mississippiensis) market also indicated a
relationship between a market downturn in the East and market
demand, which resulted in a reduction in the crocodile leather prices.
Woodward (1994:5) suggests that in times of economic downturn
customers are likely to delay or stop purchasing expensive exotic
leathers and substitute more affordable exotic leathers. According to
Du Plessis (2011:4), the luxury goods are susceptible to economic
cycles in the short term, but over a long period have shown economic
growth.
8.4.3.3 Volatile markets
Du Plessis (2011:6) found that, in the crocodile sector, farmers tended
to keep large stock holdings to ease impact volatility. Thus the
marketing of exotic leather for the fashion industry necessitated a
certain amount of forecast-driven supply. Research conducted by
Woodward (1994:8) revealed that, during poor crocodile market
conditions and because of the cost of maintaining stock and the need
for cash flow, farmers were forced to slaughter and market skins which
resulted in a downward pressure on the sale of skins. When the
ostrich industry was deregulated, it resulted in wider participation from
other countries, producers, exporters and agents. Buying agencies
started to withdraw from the South African single-channel marketing
system which caused reduced market retention. The ostrich industry
changed from a demand-driven to a supply-driven industry, resulting in
an ostrich leather trade that became vulnerable, with an inelastic
supply chain for an elastic market.
191
8.4.3.4 Foreign exchange
In 2002, the increasing farming input costs, together with the
strengthening of the Rand compared to other foreign currencies,
continued to erode profits in the ostrich industry. This saw the start of
the ostrich processing and producers leaving the industry because of a
combination first of market conditions and then later the outbreak of
avian influenza. According to Wessels (2003:57) although the industry
developed ostrich meat as an exotic meat with a type of exclusive
niche market, it still had to compete against other commercial meats
such as beef and poultry. When the outbreak of bovine spongiform
encephalopathy was contained, the consumers in Europe turned back
to cheaper meat consumption. One of Europe’s leading supermarkets,
Tesco, subsequently failed to develop a regular ostrich meat demand
following the recovery of the beef sales and ceased carrying ostrich
meat, while other supermarkets like Sainsbury succeeded in
establishing a regular low demand (Adams and Revell, 2003:para. 5).
This state of affairs brought about a drop of 30 percent in ostrich
prices between 2002 and 2003. At the same time the exports
experienced a recovering Rand against the euro while the US dollar
also strengthened dramatically. Both these factors had a negative
impact on the shelf space and market.
192
8.4.3.5 Scale of industry
The marketing of ostrich leather was easily regulated before the
deregulation of the industry, but after deregulation the production of
ostriches increased substantially from 160 000 per annum to more
than 286 000 ostriches per annum in 1997 NAMC (2008:31). This
sudden increase in exported ostrich skins disrupted the structured
distribution channels to the extent that leather prices dropped from
$40/square foot in 1993 to below $22/square foot during the mid-
nineties. During 1997 the ostrich leather industry faced its first crisis
and this was mainly due to the overproduction of ostrich leather. The
overproduction led to lower prices and farmer liquidations in 1998 led
to reduced slaughter volumes in 1999. The drop in volumes stabilised
the markets, hence the ostrich leather price started to recover (NAMC,
2003:31).
During the outbreak of bovine spongiform encephalopathy and foot
and mouth disease in Europe in 2000, the European demand for
ostrich meat exceeded supply. According to Wessels (2003:54) this
resulted in an increase of 40 percent in ostrich meat prices between
December 2000 and September 2001. However, during this same
period ostrich leather prices dropped by 38 percent. The ostrich
leather prices battled to recover and were still around USD10 per
square foot at the beginning of 2003. This may be an indication that
the industry tried to gain a meat market share at the expense of over-
producing the exotic leather (Kriek, 2009b:6).
193
The ostrich slaughter levels today are at the same levels as they were
during deregulation in 1993. According to KKI (2012:3) the day-old
chick production for the 2013/2014 slaughter year indicates a trend
that ostrich slaughter figures may drop below 150 000 per annum. In
2009 Klein Karoo International stated:
In the medium-to-long term KKI is correctly positioned to
perform well. If worldwide stock levels for exotic leather are
analysed, it appears that ostrich leather stocks are at their
lowest. KKI believes that the market development focus, as
discussed above, will contribute further towards stimulating
demand for ostrich leather” (KKI, 2009:5).
According to Benson and Holle (2004:1) ostrich production should
never become a mass livestock production industry for the meat but
should rather remain focused on skins as the primary product.
8.4.3.6 Domestic market
In research conducted on ostrich meat by Wessels (2003:44),
interviews with South African wholesale meat companies indicated
that South Africans’ meat consumption preferences do not favour
ostrich meat. The respondents in this research suggested that the
South African market prefers beef and there appeared to be a growing
tendency towards poultry meat.
194
Another finding based on some of the participants’ responses in the
above-mentioned research, was that the domestic markets need a
constant supply and that ostrich meat suppliers found it difficult to
maintain such a supply. Wessels (2003:50) found that the availability
of ostrich meat in the months between March and November was not
a problem. Owing to the seasonal slaughtering of birds, most abattoirs
operate in a cycle of full capacity between November and March.
However, during the rest of the year large overseas contracts have to
be honoured and no regular supply of meat can be guaranteed for the
domestic market. In introducing ostrich meat to other African countries
like Egypt, it was found that the Egyptian market preferred the cheaper
meats like chicken and beef (Cooper, Mahrose, El-Shafei and Marai,
2008:350).
8.4.3.7 Increasing input costs
In 2001 the input costs for ostrich production were R155.00 for
bringing an ostrich to the age of three months. This cost had escalated
within the same year to above R180.00, the main contributor of the
cost being the price of maize, which increased within 12 months from
R690/ton to R2 000/ton (NAMC, 2003:33). According to Vink (2013)
cited in Erasmus (2013:para. 1) the labour cost accounts for about 25
percent of total production costs, and added to this South African
agriculture is facing an increase in unemployment among the lowest
skilled workers. The declining profitability due to increasing input costs
will make entry for emerging farmers difficult and only those farming
with a higher scale of output will be able to withstand this increasing
burden.
195
8.4.4 Socio-cultural influence
8.4.4.1 Fashion demand
According to Burger (2003:4) market trends are affected by changes in
customer desires and fashion which influence buying behaviour.
Belleau, Marquette and Summers (2004:53) found that the exotics
were primarily found in other upmarket products such as boots, belts,
handbags and other small goods. Use of exotic leather for luxury
goods started in the 1920s when the fashion house Louis Vuitton
made their luxury goods range from crocodile leather and snakeskin.
Louis Vuitton has continued to produce exotic leather goods for the
European middle class (Quilleriet, 2004:130) and the European market
for South African exotic leather is still the same. The exotic leather
market is fuelled by fashion demand (Belleau, 2002:65) for it is the
fashion houses that drive fashion in Europe.
8.4.4.2 Luxury market
According to Kriek (2009b:1) thirty percent of ostrich leather is sold to
luxury brands, which are recognised for their exotic leather ranges and
high quality. This is a sought-after market where quality matters more
than the price. Since ostrich leather demand is greatly determined by
the luxury market, future research is required to understand the
fashion trends of this luxury market and what the determinants of
these fashion cycles are in terms of ostrich leather. The luxury supply
chain is complex as demand for exotic leather goods is not based on
necessity but rather on fashion (Stumpf, 2011:4). Exotic leather is an
important segment of the global leather industry, but ostrich leather is
not the only preferred exotic leather and competes with reptile leathers
used in the luxury product line (Thorbjarnarson, 1999b:469).
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The most critical prerequisite for supplying into the luxury market is
quality. Strict delivery dates need to be adhered to and tardy supply
can lead to materials not meeting the intended purpose in a highly
sophisticated European production line. This therefore results in skins
losing value or processors losing contracts if the above is not met.
During the economic down-turn in 2008, researchers indicated that the
luxury market would be negatively affected although less so than the
rest of the retail market. According to Kriek (2009b:1), the luxury
market was the slowest to be affected by this economic downturn and
during the upturn in the economy the luxury market quickly recovered.
8.4.4.3 Health-conscious market
The market for ostrich meat is mostly in Europe where the product is
highly appreciated as an alternative to other red meat because it is
considered to be a healthy choice. When compared to beef, ostrich
meat has a satisfactory fatty acid profile and a low fat and cholesterol
content (Sales, 1999:262). Ostrich meat has increased market
potential as consumers become more aware of its health benefits and
nutritional quality (Hoffman, Joubert, Brand and Manley, 2005:45).
8.4.5 Technological influence
8.4.5.1 Leather processing
The processing of the skins into leather in the tanneries requires
substantial technological know-how and equipment. In the tannery
beam-house, the hides are sorted, trimmed and cured. The processes
include soaking, liming, fleshing and splitting. The tannery operations
consist of de-liming, bating, pickling and tanning. Post-tanning
operations involve dyeing with dyestuffs, fat liquoring and drying. The
final stage in the process is the finishing operation, the aim of which
process is to treat the upper grain leather surface. It is during this
phase that leather gains most of its value in the value-chain.
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8.4.5.2 Meat processing
Prior to the ostrich-meat ban, the meat produced in South Africa was
exported to the European Union as chilled meat at between -2°C and
-4°C (Schutte, 2008:1). However, owing to meat export restrictions the
market risk for ostrich meat has been removed due to a heat-treated
process.
The EU meat-ban excludes meat that has been heat treated at 70°C
(Stumpf, 2012a:1). This heat-treated meat for export requires
substantial technological know-how and equipment. The heat-treated
meat process represents the future for the ostrich meat industry as it
provides defence against disease outbreaks and supports long-term
development of export markets. KKI expansion of meat heat treatment
capacity from 2 000 to 3 000 tons per year was done in order to
reduce stock build-up and to accommodate the ban on fresh meat
(KKI, 2012:3). However, this facility is limited to farmers who supply
through certain marketing channels for export.
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8.4.6 Environmental influence
8.4.6.1 Pollution reduction
While animal husbandry requires considerable water consumption and
energy expenditure, producing leather requires further intensive
industrial chemical and tanning processes. Crocodiles are raised and
farmed in confined intensive livestock operations in order to maximise
skin growth. This kind of production is typical of industrial agriculture
using technoscientific methods and with large numbers of livestock
being farmed on limited areas of land. Operations are strictly regulated
by the relevant authorities. Since both the ostrich and the crocodile
agro-processing industries produce large amounts of hazardous and
toxic waste, they require mechanisms to facilitate stringent monitoring.
Tanneries require waste disposal and effluent treatment plants in order
to comply with environmental legislation. Since 2004, more stringent
regulations have been imposed by authorities in Europe for the proper
management of effluent plants of ostrich leather tanneries in South
Africa (Schoeman, 2007:14). There are also several organisations
(Greenpeace) that exert pressure on the leather industry for its
environmental practices. This increases demands on the sale of
leather goods by fashion brands and they retaliate against the
tanneries by introducing more stringent environmental and safety
specifications (Kriek, 2011:parar. 12).
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8.4.6.2 Conservation
Research conducted by the Food and Agriculture Organization of the
United Nations, showed that the animal agriculture sector is
responsible for 18 percent of human-induced greenhouse gas
emissions. According to Humane Society International (HSI, 2010:1),
the livestock production sector is the single largest anthropogenic user
of land, contributing to soil degradation, dwindling water supplies and
air pollution. Furthermore, it has a detrimental effect on rural and
urban communities, public health and animal welfare. Livestock
farming is largely underestimated and environmental impact on global
warming and climate change is still largely unknown.
The SAOBC obtained a grant of UD$120 000 from the Critical
Ecosystem Partnership Fund in the USA for a project to promote the
sustainability of the ostrich industry in a sensitive biodiversity region by
developing farm-level best practice guidelines and providing extension
and advisory support to ostrich farmers.
According to the Conservation of Agricultural Resources Act (No 43 of
1983), the management practices and stocking rates on all ostrich
farms should be compatible with sustainable agriculture. As the
sensitive natural veld is susceptible to the feeding habits and trampling
effect of ostriches, farmers are required to apply for permission should
they decide to use natural veld for grazing or breeding of ostriches.
Farming ostriches on natural veld necessitates that camps be well
planned to prevent soil erosion and to ensure the ecological
preservation of biodiversity.
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A biodiversity management strategy have been implemented in the
industry and it focuses on pen breeding as the preferred alternative as
this method encourages continuous genetic improvement through
proper record-keeping and selection and shows huge potential for
increased production. The rationale behind promoting pen-breeding is
to decrease the pressure on the natural veld. If a farmer can achieve
increased production using a pen-breeding system, the ostriches will
be taken off the natural veld for breeding in pens. However, many
ostrich farmers show resistance to switching from flock breeding to
pen-breeding for various reasons, namely, lack of knowledge, costs of
pen construction and resistance to changing from the current style of
farming based on history.
8.4.6.3 Animal rights
The rearing of animals for the commercial processing and trade of
their skins is seen by some groups as an unethical activity.
Irrespective of the present situation, however, producers and suppliers
need to be aware of the potential impact of ethical trading issues
(UNIDO, 2004:48). Although the People for the Ethical Treatment of
Animals (PETA) focus is on several areas that it identifies as animal
abuse, PETA chooses to concentrate mainly on factory farms,
laboratories, the clothing trade, and the entertainment industry (Julius,
2012:44). It is the growing sensitivities towards the use of animal skin
for the clothing trade that has the greatest influence on the future of
the exotic leather trade.
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8.4.6.4 Climate change
As early as 1994, Dean and Macdonald (1994:281) highlighted that
the production potential of drylands had decreased markedly in semi-
arid and arid rangelands throughout the Savannah, Nama-Karoo and
succulent-Karoo biomes of the Cape Province (Dean and Macdonald,
1994:281). As ostrich farming occurs predominantly in semi-arid areas
in the Western and Eastern Cape, it will continue to be under
continuous pressure for water and feed resources due to climate
change. However, according to Jones and Thornton (2009:427), the
impacts of climate change is expected to reduce crop yields between
10 and 20 percent in Africa. Therefore, marginal land for crop
production will become increasingly marginal, and livestock may
provide an alternative to cropping. Farming with ostriches which are
well suited to semi-arid areas provides an alternative option.
8.4.7 Legal influence
8.4.7.1 Veterinary Procedural Notice requirements (VPN04)
The large volume of meat exported to Europe leaves the ostrich
industry vulnerable to adjustments in the EU regulations. In 2012,
South African authorities enforced veterinary procedural standards for
the registration, maintenance of registration and official control of
ostrich compartments in South Africa (DAFF, 2012). This protocol was
issued mainly in response to the avian influenza outbreak in 2011.
According to Section 9 of the Animal Diseases Act, 1984 (No 35 of
1984), the Minister of Agriculture prescribed control measures relating
to keeping and movement of ostriches as published in the Government
Gazette No. R.29320. The VPN04 defines all ostriches “that are
reared for the production of meat or eggs for consumption, for the
production of other commercial products, for restocking supplies of
game or for breeding these categories of birds” as poultry.
202
Legally the veterinary procedural notice is authorised to enforce the
following requirements on ostrich farmers:
keeping of ostriches in approved ostrich compartments;
registration of approved ostrich compartments;
official control of registered ostrich compartments;
restricting movement of ostriches between registered ostrich
compartments;
additional requirements for the export of ostrich meat to the EU;
action to be taken in the case of disease outbreaks or suspected
disease outbreaks; and
specific disease prevention and control measures for avian
influenza to prevent as far as possible the introduction as well as
the spread of avian influenza amongst the national ostrich
population.
It is the researcher’s view that adhering to the VPN04 requirements
has assisted with maintaining exports, however, it has increased the
barriers to entry into the export industry and burdened the intensive
production system and administration.
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8.5 STAKEHOLDER INTERVIEWS
The predetermined semi-structured interviews provided a platform for
open ended question discussion. Four interviews were conducted
with main role players that are active or have strong ties to the
Eastern Cape ostrich industry. Two participants represented larger
companies in the industry which had been involved in one channel
marketing prior to deregulation (Large_M and Large_O) and the other
two participants represented smaller companies not involved in one
channel marketing prior to deregulation (Small_P and Small_G). The
interviews were captured by audio recording and typed as transcripts
in ATLAS.ti manager. Code labels were allocated to the participants’
discussion and then these were sorted and allocated sub category
codes. All coding was grouped into so-called Code Families. Codes
were added to a data base and frequency and the linkages to other
codes were measured, for example "supply demand parameters (23-
3)" means that the code was used 23 times (grounded) for coding
and it is associated with three other codes (density). High frequencies
indicate that a high number of quotations under these code labels
have been allocated and are good candidates for a closer
examination. In Figure 8.5 the codes have been sorted according to
the frequency of use.
The following topics were broadly discussed in the explorative
interviews:
ostrich farming and production;
ostrich products;
intermediary agents;
marketing channels; and
threats to the industry.
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8.5.1 Ostrich farming and production
When the participants were asked about the intensity of the ostrich
industry all of them agreed that it was very intensive (coded as
farming_intensive and production_intensive). The animal husbandry
requires significant attention and producing leather requires intensive
industrial tanning processes. Some comments extracted from the
transcript described the industry as:
“Too complicated and intensive farming livestock” ; and
“Very intensive form of agriculture, high density chick pens requires
checking on the chicks”.
8.5.2 Ostrich products
According to the participants, ostrich leather which is today the main
product is primarily used for the following luxury goods: handbags,
boots and small leather items (coded as Market_handbags,
Market_EU and Market_fashion house brands).
This confirmed findings by Belleau et al. (2004:53) that the exotics
were primarily found in other upmarket applications, namely boots,
belts, handbags and other small goods. The high quality skins are
being exported to Europe and low quality skins to Mexico and Korea.
Also discussed was that exotic leather industry should be working in
closer co-operation with the fashion house buyers in order to stream-
line the value chain and to mitigate fashion changes.
205
The importance of working with recognised and high value brands
was emphasised. Some comments extracted from the transcript
explained the product environment as follows:
“The handbag market is important”;
“Handbags were part of the high level market”;
“50 % of skins for handbags to Europe and 30% for the boot market
in the US.”; and
“That leather was the largest growth generator in the leather divisions
in the European fashion houses”.
8.5.3 Intermediary agents structure
The establishment of partnerships with suppliers will increase the flow
and exchange of information and the transfer of technology. However,
Memedovic (2008:515) stated that the involvement of intermediary
agents who controlled international trade skins resulted in long lead
times and increased costs. It also prevented direct contact with the
customer. The stakeholders agreed that agent structure setup by the
single-channel marketing was vital for the ostrich industry (coded
market_agent system, market_protection and market_experience).
After deregulation the market agencies started to withdraw from the
South African single-channel marketing system which resulted in
reduced market retention.
206
Some comments extracted from the transcript explained the market
agent system as:
“best distribution network of relationships in the world”;
“strong agent system”;
“Germany agency was very strong”;
“agents had control of supply”; and
“deteriorating agent structure”.
8.5.4 Marketing channels
The stakeholders explained that deregulation of the ostrich single-
channel marketing system in 1993 had a substantial effect on the
value chain on which farmers depended for market access (coded
deregulation_change). Prior to deregulation the single marketing
channel co-ordinated the quantity of ostrich skins sold to the market,
which facilitated industry equilibrium between supply and demand
(coded supply demand parameters). Deregulation influence on
changing the governance in the value chain from South Africa to
Europe was also discussed (coded value chain governance). Some
comments extracted from the transcripts gave the following views of
the influence of deregulation:
“Before deregulation, risk was different. There was only a debtors
book only for South African clients”;
“After deregulation the competition sold direct to manufacturers at
lowest price….. this resulted in many losing money after
deregulation”;
“Only after deregulation the power of the agent structure was
realised”;
“after deregulation more farmers farmed outside the Oudtshoorn
area”; and
“before deregulation the industry did not know what competition was”.
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8.5.5 Threats to the industry.
The stakeholders were not in agreement about the main threats in
the ostrich industry (coded market threats and risk). One participant
felt that the meat ban would not have such a negative impact as it
would bring down the number of skins produced which may result in
a shortage and therefore high skins prices, which the industry thrived
on before deregulation. Other main threats discussed were an over-
supply of skins and the global economic down-turn.
8.5.6 Network View
In Figure 8.6 the conceptual framework displayed in the Network
View shows the relationships between main codes as a visual format.
The codes are linked together to indicate relationship and influence.
Due to deregulation (coded deregulation_change) the main grounded
codes, namely, market protection (coded market_change), value
chain governance (coded value chain_governance) and supply
parameters (coded Supply Demand parameters), which have been
influenced by the changes in the market agent system (coded
market_agent system). The market agent system provided an
important function for market penetration (coded market_penetration)
and market experience (market_experience) into the European
fashion house market (coded market_fashion house brands). There
has been criticism of the present market structures, which have not
been able to duplicate what the industry had before deregulation
(coded market_SA method criticism).
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Figure 8.6 List of main grounded and density of codes
Code Grounded Density
Figure 8.7 Network view of axial coding with relational linkage
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8.5.7 Analysis of Code Families
The codes were grouped to form the following main code families from
the interviews:
Farming;
Market;
Government;
Production; and
SA industry
The code families were tabled (Table 8.2) and counted to determine
frequency and significance. The stakeholders from the larger
companies (Large_M and Large_O) provided more detailed
information on markets and production. This was an indication that the
participants from larger companies had more experience and
exposure in the export value chain. However, one of the smaller
companies (Small_G) showed more emphasis on the importance of
government involvement in the ostrich industry and governmental
mediation for international issues. This was an indication of the
reliance smaller processors have on governmental support in the
ostrich industry.
Table 8.2 Analysis of Code Families between respondents
P 1:
Large_MP 2:
Large_O P 3:
Small_P P 4:
Small_G TOTALS:
Farming 4 3 1 0 8
Market 19 16 6 4 45
Government 0 2 0 7 9
Production 5 15 4 3 27
SA industry 4 8 4 8 24
TOTALS: 32 44 15 22 113
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Findings from these interviews highlighted the limited information available in literature and research on the following ostrich-industry influences:
Ostrich agent system;
Industry focus on handbags market; and
Shift in market protection.
8.6 CONCLUDING REMARKS
This chapter presented a situational analysis on the ostrich industry.
The information gathered was analysed with the view to gain insight
into the present state of the ostrich industry. The following sources of
information and analysis were used: ostrich-industry magazine
articles, Porters’ Typical Steps in Industry Analysis, PESTLE analysis
and explorative interviews with key stakeholders.
Seven main themes were identified in industry magazines, namely,
avian influenza, European export protocols, government involvement,
ostrich products, new markets, industry scale and AgriBEE. It was also
found that the production and establishment of the ostrich industry in
the Oudtshoorn areas has been influenced by a supportive
environment of: veterinary and extension services, research,
development of irrigation systems and agro—processing
infrastructure. However, South Africa’s technical know-how in terms of
farming, finishing and marketing ostrich products has resulted in its
global competitive edge.
211
As the majority of South African ostrich products are being exported,
the EU regulations and the role of intermediary agencies are becoming
important factors influencing entry into the high end markets in
Europe. South African government intervention and the government’s
role in alleviating bio-security concerns have become vital to maintain
the open European market. Other forces that have had an impact on
the industry have been the lack of new markets and the global
economic downturn. The deregulation of the single-channel marketing
system in the ostrich industry had a strong effect on the industry. One
of the main recurring issues that have been highlighted is the
importance of the demand and supply equilibrium to maintain the
exotic value for the ostrich leather.
This confirms the findings by the National Agricultural Marketing
Council that “although the difference in volumes may seem irrelevant,
the international supply and demand volumes are delicately balanced
and 50 000 skins difference from the previous year has a significant
impact and there was not enough done to assist with this
transformation” (NAMC, 2003:3).
Other findings from the explorative interviews highlighted that the
deterioration of the intermediary agent structure had reduced market
penetration and protection. As discussed in Chapter 3, South Africa
has used merchant houses or agents for European trade since the
1800s. The Jewish community network had a role in grounding the
ostrich industry with the European market, which was an important
step in the founding of the ostrich industry. The agents have a great
influence in the entire international supply chain which includes
specifications, the process and the implementation of quality systems.
It is the researcher’s view that the European intermediary agents are
vital to the process of gaining new markets and to maintain
relationships and this is especially required in the sophisticated
fashion markets and highly restrictive EU food networks.
212
The change in the value chain governance after deregulation brought
about a change from a demand-driven to a supply-driven chain, which
subsequently resulted in the industry being more susceptible to the
demands of the EU. The following main drivers have been identified
as having the most impact on the ostrich industry:
Governmental support;
Land reform;
Disease (bio-security and avian influenza);
Geographic competitive considerations;
Intensive farming practices;
Pre-heating of meat;
Feed inputs;
European Union;
Economic downturn;
Intermediary agents;
Volatile markets;
Scale of industry; and
Market channels.
A relational messy map in Figure 8.6 has integrated the main
production practices identified in Chapter 5 and combined the industry
products, driving forces, micro, macro influences and findings from the
interviews. The map assists synthesis and summaries the linkage
between influences and driving forces in the ostrich industry. Due to
the numerous dimensions of this study, a word cloud format was used
to give greater prominence to words that appear more frequently from
sources of this study. The outer circles represent the main macro
influences and the inner section represents the micro influences.
213
214
This chapter has contributed to providing an understanding of the
complexity of the ostrich-industry environment and serves as a
backdrop for the study on the emerging ostrich farmers in the Eastern
Cape. It is the researcher’s hypothesis that the most pressing issues in
the industry have been highlighted in the yellow segments in Figure
8.6. These issues will be main areas of focus for the following
chapters. The findings will assist with identifying critical influences that
require interventions for emerging farmers in the ostrich-industry
supply chain. The next chapter will discuss the findings from emerging
ostrich farmer case studies in the Eastern Cape (see Figure 8.9).
Figure 8.9 Process of research design and structure of research
215
CHAPTER 9
PRESENTATION OF FINDINGS:
EASTERN CAPE EMERGING OSTRICH PROGRAMMES
9.1 INTRODUCTION
9.2 QUESTIONNAIRE FINDINGS
9.3 FINDINGS FROM FOCUS GROUPS
9.4 FINAL DISCUSSION
216
CHAPTER 9
PRESENTATION OF FINDINGS:
EASTERN CAPE EMERGING OSTRICH PROGRAMMES
9.1 INTRODUCTION
The previous chapter presented the findings from the situational analysis
on the ostrich industry and its supply chain in order to set the scene for the
analysis of the emerging ostrich farmer case studies.
The objective of this chapter is to gain a greater understanding about the
emerging farmers and their participation in the ostrich industry. This
chapter presents the findings from the questionnaires administered and
focus groups conducted at the emerging ostrich farmer programmes.
9.2 QUESTIONNAIRE FINDINGS
The data collected from the questionnaires gives a brief synopsis of
demographic information, biographical information, human capital
endowments, farming systems, market access and institutional support
services. Frequency counts, percentages and descriptive statistics were
used to present the results. The questionnaires were administered to five
ostrich programmes at Peddie, Rockhurst, Hlumani Co-operative,
Zamukwanda and Mimosadale. Not all the farmers participated at Hlumani
and Zamukwanda and where possible, missing information was provided
by farmers who were present.
217
9.2.1 Profile of farmers and socio-economic aspects of programmes
The study shows that 60.9 percent of the surveyed farmers were women
while 39.1 percent were men (Table 9.1). This mean was anticipated due
to the fact that the Rockhurst programme had been primarily initiated for
women. However, the Peddie and Hlumani programme also shows that
there was more interest from women than from men to participate. Table
9.2 shows that the majority of the farmers were married and not household
heads.
Table 9.1 Farmers’ gender
Peddie Hlumani Zamu Rock Mimosa Total
N % N % N % N % N % N %
Male 10 50.0 4 40.0 3 50.0 0 0.0 1 100.0 18 39.1
Female 10 50.0 6 60.0 3 50.0 9 100.0 0 0.0 28 60.9
TOTAL 46 100 Source: Questionnaire data (2013)
Table 9.2 Farmers’ marital status
Peddie Hlumani Zamu Rock Mimosa Total
N % N % N % N % N % N %
Married 12 60.0 0 0.0 2 100.0 8 88.9 1 100.0 23 67.6
Unmarried 8 40.0 2 100.0 0 0.0 1 11.1 0 0.0 11 32.4
TOTAL 34 100 Source: Questionnaire data (2013)
Table 9.3 shows that the average age of participants for all the
programmes was 45 years old. The Pearston programme was the only
one in which the participants were under 40 years old. According to Kinsey
and Binswanger (1993:19), those under 45 years old were generally the
most successful. This was probably due to greater physical vigour and
better state of health. According to research conducted by Weir (1999:25),
it was found that the older farmers became less productive as they aged.
218
The age also has an impact on managerial experience as well as attitudes
toward modernisation and risk-taking in agriculture. However, Van
Rooyen and Njobe-Mbuli (1998:129) stated that when farmers were
nearing 50 years old they might have dependants who could be involved
and which might improve the labour source. The older aged farmers
probably have their children working away from home and caring for
grandchildren, which may explain the high number of child support grants
per home (see Table 9.9).
Table 9.3 Average age of farmers
Groups Count Sum Mean Variance Min MaxPeddie 20 1002 50.1a__ 147.989474 21 64Hlumani 10 505 50.5 a_ 189.611111 21 69Zamu 6 195 32.5 b_ 9.5 28 36Rockhurst 9 393 43.7 ab 135 26 58Mimosa 1 52 52.0 ab
P-value F 0.02628311 3.0796634 46.67
Means sharing a common letter are not different at 5 percent level significance
Table 9.4 Age groups of farmers
Peddie Hlumani Zamu Rock Mimosa Total
N % N % N % N % N % N %
18-30 yrs 2 10.0 1 10.0 1 16.7 1 11.1 0 0.0 5 10.9
31- 45 yrs 4 20.0 1 10.0 5 83.3 4 44.4 0 0.0 14 30.4
> 45 yrs 14 70.0 8 80.0 0 0.0 4 44.4 1 100.0 27 58.7
TOTAL 46 100 Source: Questionnaire data (2013)
Table 9.5 shows that the average period of residence for all the
programmes was 36 years. In Zamukwanda and Mimosadale there was
an association between period of residence and age, meaning that the
farmers had settled in the area from birth and had shown little migrancy.
219
Table 9.5 Average period of residence
Groups Count Sum Mean Variance Min MaxPeddie 20 797 39.9 166.3 19 64Hlumani 2 46 23.0 578.0 6 40Zamu 6 195 32.5 9.5 28 36Rockhurst 9 305 33.9 246.1 9 58Mimosa 1 52 52.0
P-value F 0.251695644 1.411872 36.7
Source: Questionnaire data (2013) Table 9.6 shows that the mean household size was 4.9. According to
Roberts (2001:20), rural households in South Africa that have a household
size between 5.01 and 4.93 are not classed as being chronically poor,
therefore the farmers participating in these programmes did not reflect
high poverty backgrounds. However, there were some of the households
in Peddie, Zamukwanda and Rockhurst that had high household sizes.
Van Rooyen and Njobe-Mbuli (1998:129) stated that the economic
performance of households has a strong association with the number of
family members who are able to work. According to Lapar, Holloway and
Ehui (2003:207), the household size affects both the participation and
sales decisions due to increased responsibilities for risk bearing.
Table 9.6 Farmers household size
Groups Count Sum Mean Variance Min MaxPeddie 20 95 4.8 3.7 1 8Hlumani 2 5 2.5 4.5 1 4Zamu 6 35 5.8 8.6 2 9Rock 9 48 5.3 3.8 3 9Mimosa 1 4 4.0
P-value F 0.371151567 1.103854 4.9
Source: Questionnaire data (2013)
220
Table 9.7 shows the contribution of the social security systems to
household income. Each of the farmer’s households had access to one
social grant which confirms findings by Andrew, Ainslie and Shackleton
(2003:2) that the majority of South Africa’s poor rural residents derive their
livelihoods from off-farm sources. Table 9.8 shows that the majority of the
grants were child support grants. According to Booysen (2004:54), the
child support grants have the lowest value of the social grants and are not
sufficient to enable households to escape poverty. The lack of available
grants may have led to the interest of these farmers in participating in the
ostrich programmes.
Table 9.7 Number of social grants in the farmer’s household
Groups Count Sum Mean Variance Min MaxPeddie 20 31 1.6 1.9 0 5Hlumani 2 3 1.5 4.5 0 3Zamu 2 0 0.0 0.0 0 0Rock 9 11 1.2 0.4 0 2Mimosa 1 0 0.0 0 0
P-value F 0.40521137 1.036722 1.32
Source: Questionnaire data (2013)
Table 9.8 Number of child support grants in the farmer’s household
Groups Count Sum Mean Variance Min MaxPeddie 20 24 1.2 1.1 0 4Hlumani 2 3 1.5 4.5 0 3Zamu 2 0 0.0 0.0 0 0Rock 9 8 0.9 0.6 0 2Mimosa 1 0 0.0 0 0
P-value F 0.404331363 1.038525 1.03
Source: Questionnaire data (2013)
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9.2.2 Human capital endowments Table 9.9 shows that most of the farmers who participated in the
programme had a secondary education. Most of them had completed the
lower standards of secondary education and less than 5 percent had
completed the final year of secondary education. The younger Rockhurst
group of farmers who all had recently completed secondary education
were the highest educated of those in the case studies. According to Van
Rooyen (1995), the majority of black people in South Africa were denied
access to educational institutions and particularly agricultural institutions
during the apartheid era and therefore, the older farmers would have been
negatively influenced by these education policies. According to Evenson
(1988:25), higher levels of education are linked to better farming
performance. What was not measured was the standard of education
received and whether the education had given the farmers the required
managerial aptitude for farming.
Table 9.9 Farmers level of education
Peddie Hlumani Zamu Rock Mimosa Total
N % N % N % N % N % N %
Illiterate 2 10.0 0 0.0 0 0.0 1 11.1 0 0.0 3 7.9
Primary 9 45.0 1 50.0 0 0.0 2 22.2 0 0.0 12 31.6
Secondary 9 45.0 1 50.0 6 100.0 6 66.7 0 0.0 22 57.9
Tertiary 0 0.0 0 0.0 0 0.0 0 0.0 1 100.0 1 2.6
TOTAL 38 100.0Source: Questionnaire data (2013)
222
Table 9.10 shows that most of the farmers did not have access to
transport. According to Porter (2002:6), remote villages in rural areas are
disadvantaged in terms of both service provision and access to transport,
and such a state of affairs has an impact on livelihood opportunities.
Bailey, Barrett, Little and Chabari (1999:28) found that the most important
physical infrastructural weaknesses for the livestock marketing system
were related to transport and holding facilities. Without transport, it would
require that buyers and/or sellers need to come to the farm, which
increases dependency and creates low bargaining power for the farmer.
The closer the farmers are to the mainstream markets, the higher the
tendency for small-scale farmers to sell in the markets. Lack of transport
limits the farmers’ attendance at functions like auctions and delivery to
abattoirs. The dependency on feed companies for delivery may also limit
frequency of delivery and require minimum volumes delivered.
Table 9.10 Farmers’ access to transport
Peddie Hlumani Zamu Rock Mimosa Total
N % N % N % N % N % N %
Yes 3 15.0 0 0.0 0 0.0 0 0.0 1 100.0 4 11.8
No 17 85.0 2 100.0 2 100.0 9 100.0 0 0.0 30 88.2
TOTAL 34 100 Source: Questionnaire data (2013)
Table 9.11 shows that the majority of the farmers had access to electricity.
Electricity is not only an important resource for agricultural production and
processing but it also determines the extent of levels of technology the
farm can utilise. Furthermore, Omiti et al. (2009:63) point out that
electricity is an important determinant of market access. Rural areas often
suffer shortages of electricity and, according to Gustavsson and Ellegård
(2004:1060), in the rural areas of Sub-Saharan Africa the access to
electricity is approximately only at 1–2 percent. Households with access to
electricity, good roads and mobile phones can undertake basic processing
of farm output and can access markets conveniently
223
Table 9.11 Farmers’ access to electricity
Peddie Hlumani Zamu Rock Mimosa Total
N % N % N % N % N % N %
Yes 18 90.0 1 50.0 2 100.0 9 100.0 1 100.0 31 91.2
No 2 10.0 1 50.0 0 0.0 0 0.0 0 0.0 3 8.8
TOTAL 34 100 Source: Questionnaire data (2013)
9.2.3 Farming period and activities
Table 9.12 shows that the farmers farmed ostriches for 2.18 before
discontinuation. Although the Peddie programme had been initiated in
2002 very few farmers persisted with farming ostriches beyond three
years.
Table 9.12 Years of farming ostriches
Groups Count Sum Mean Variance Min MaxPeddie 20 51.2 2.56 15.0772632 0 11Bathurst 2 6 3 0 3 3Zamu 6 5.4 0.9 0.012 1 1Rockhurst 9 18 2 0 2 2Mimosa 1 2.5
P-value F 0.795703582 0.416215 2.18
Source: Questionnaire data (2013)
Table 9.13 shows that the household economy of smallholders is often
multi-sectoral and the farm income is supplemented not only by social
grants but by other farming activities such as poultry, goats and small-
scale vegetables. Female farmers at Rockhurst were not involved in other
farming activities and the main reason why the ostrich programme was
introduced to the farm was to facilitate employment for the women.
224
Table 9.13 Farmers engaged in other farming activities
Peddie Hlumani Zamu Rock Mimosa Total
N % N % N % N % N % N %
Yes 13 65.0 1 50.0 0 0.0 0 0.0 1 100.0 15 44.1
No 7 35.0 1 50.0 2 100.0 9 100.0 0 0.0 19 55.9
TOTAL 34 100 Source: Questionnaire data (2013)
9.2.4 Comparison of various variables between the case studies
Table 9.14 shows that the farmers had very little training in ostrich farming
(3-30 days) and according to the researcher’s observations and according
to findings from the questionnaires, the farmers also had very little other
experience with other livestock farming (less than 5 percent of the
respondents). As early as 1954, Lewis stated that in order to have success
in new agricultural development, the selection of the right beneficiary is
important (Lewis, 1954:4). Groenewald (2004:6) argues that success is
dependent on experience, knowledge of farming, similar social
background, sufficient capital and managerial aptitude. In programmes at
Rockhurst and Pearston beneficiaries were selected for involvement and
not out of interest in farming. Andrew, Ainslie and Shackleton (2003:21)
defined this as a ‘rent a crowd’ syndrome, meaning that beneficiaries
encourage others to sign up in order to qualify for the required grant.
According to Manie (2003:113), many of the South African farm land
beneficiaries of land reform do not necessarily want to farm. The Hlumani
Co-operative and Zamukwanda programmes have fallen victim to land
“straddling”, meaning that the farms are lying dormant and the
beneficiaries are not utilising the resources for any agricultural purposes
after the closure of the ostrich programme. Andrew et al. (2003:20)
explained that ‘straddling’ means land reform beneficiaries do not abandon
previous occupation to settle on the newly acquired land. This results in
unused land having ownership and the beneficiary having both resources
to enhance their livelihood strategies.
225
Owing to this form of ‘straddling’, both Hlumani Co-operative and
Zamukwanda programmes have become susceptible to vandalism and
deterioration of infrastructures. The only surviving ostrich programme for
emerging farmers in the Eastern Cape was the Peddie programme. The
avian influenza and bio-security requirements had an adverse influence on
all the emerging ostrich farmer programmes. After the mentors had
completed their contracts at Rockhurst, Hlumani Co-operative and
Zamukwanda the farmers were not sufficiently mentored to maintain
farming. The mentors had taken sole responsibility for procuring chicks,
medicating, arranging feed and selling of the ostriches. The farmers in
these three programmes had very limited experience in these business
dealings outside the farm programmes.
226
Table 9.14 Comparison of various variables between the case studies
Peddie Hlumani Zamu Rock Mimosa
Training Ostrich training received 3-5 days 5 days 30 days + 6 days 0 days
Farming and production
Type Chick
rearing Chick
rearing Chick
rearing Egg
incubation Chick
rearing
No. of farmers 20 10 6 9 1
Year initiated 2002 2009 2009 2008 2005
Year ceased Active 2012 2011 2010 2009 Famers with
other livestock 12 1 0 0 1 Total years
active Still active 3 yrs 2 yr 2 yrs 4 yrs Farming
system Individual / collective Shared Shared Shared Single
Land tenure system Communal Owned Leased Leased Leased
Farm area used 10 ha <1 ha 6 ha <1 ha 4 ha
Farm records kept Yes No Yes Yes Yes
Distance from farmer's home 2- 4 km 5.5 km 3.2 km 0.5 km 14 km
Distance from chick supplier +600 km 544 km 76 km NA < 20 km
Market access Distance to nearest tar road 5.2 km 3.5 km < 1 km 6.5 km < 1 km Distance to nearest town 22 km 7 km 3 km 31 km 15 km Livestock turnover pa +/- 3000 +/- 200 +/- 2000 + 500 60 -150
Buyer Abattoir Farmers Farmers Farmers Farmers / Abattoir
Distance to nearest EU abattoir 353 km 306 km 85 km 265 km 19 km
Institutional support
Mentorship yes yes yes yes no Industry
linkage yes no no no yes Commercial
farmer linkage yes no yes no yes
Source: Observations and questionnaire data (2011,2012 and 2013)
227
9.2.5 Frequency of key topics from questionnaires
Table 9.15 shows frequency of responses received in farming, financial,
production, management and open-ended question sections in the
questionnaire. The list is sorted according to response topics mentioned
more than once and from highest to lowest during the interviews. The
respondents were reluctant to disclose problems or issues about the
programmes during the one-to-one interviews. However, during the focus
groups the respondents were more confident about expressing their
opinions. The researcher found that owing to the high production
co-ordination from the mentors, the farmers were unable to contribute to
the detailed production questions in the interviews.
As indicated in table 9.15, the question of finance received the most
responses and the farmers stated that a lack of cash flow was problematic
and that the payment for sold ostriches took too long. Farm expenses
were run on separate accounts and deducted from the farmer’s income at
the end of the season. The income was calculated on the final weight of
the ostrich and therefore, the farmers had no income or cash-flow during
the cycle of the programme (January/February to October/November).
However, DAFF did arrange a stipend to assist famers with cash flow until
payments were received. Due to the high supervision required for the
farming, some of the farmers opted to arrange shifts with members of the
family. This was mainly evident with the older farmers who could not work
long hours or handle the larger ostriches. Some of the farmers also found
that the distance from their homes to the feedlots was too great. In the
evenings the farmers were unable to attend to the ostriches which left the
ostriches vulnerable to unexpected adverse weather changes. The
mentors also complained that some of the farmers were not available after
hours or when they were required to put in extra time at weekends. Before
the VPN04 requirements were enforced, farmers were permitted to keep
ostriches near to their homes. They found that this farming system was
more convenient because it enabled them to care for the livestock in close
proximity to their homes.
228
This arrangement also made greater family involvement possible and
having the ostriches close to home resulted in less mortalities. None of the
five farm programmes in the case studies had experienced avian
influenza, but the farmers were required to conform to VPN04
requirements. VPN04 requirements were essential if the farmers planned
to supply into the export supply chain. The ostriches had to be kept away
from other livestock in separate ostrich compartments. At Peddie, owing to
the long distances, some farmers had to sleep at the feedlot camps to care
for very young ostrich chicks.
On the Mimosadale farm, the farmer engaged labourers to care for his
ostriches because of the long distance from his home. Chicks were
normally received in January and February; which was during the peak
heat of summer. The Peddie programme farmers commented that the
infrastructure did not provide enough shade and they requested for more
covering to be erected. The farmers explained that it was during the hot
weather that water is essential for the ostriches and some farmers
commented that the water pump system was sometimes problematic,
putting the ostriches’ health at risk. According to some of the farmers the
heat may have contributed to the high mortalities experienced in the first
week after receiving the chicks. As shown in Table 9.14 the chicks were
transported over long distances which may have contributed to the
increased stress levels, making them susceptible to sickness and
exposure.
229
The farmers at Zamukwanda did not reside on the farm but lived in the
informal township in Pearston, which made it difficult to attend to the
ostriches immediately when required. When asked about what importance
the ostrich programmes had for the community, the farmers indicated that
the programme had brought employment to the area and that people from
the local villages had assisted with building the infrastructure. The older
male farmers explained that the programme had helped them as it had
been difficult for them to find employment in the rural areas if they had
been retrenched or resigned from jobs in nearby cities or mines. The
farmer at Mimosadale used his severance package to start farming and no
longer had a permanent job. Some of the farmers commented that the
ostrich programmes kept them busy and active.
Negative feedback on the community question was received at the Peddie
programme. The ostrich compartments were established on communal
land which had previously been used for growing maize for the village.
Some of the farmers felt that the community should also be remunerated
for the use of the land. It was suggested that the land rather be rented out
to a neighbouring tomato farmer who at times offered more seasonal
employment. With reference to market information received, most of the
farmers stated that they had not received information from the market.
However, there were some that had heard that their ostrich skins had been
good quality and the ostriches had achieved good body weights. Most of
the outside market and business communication was conducted by the
mentors on behalf of the farmers.
The farmers at Peddie also commented that the DAFF extension services
had paid little attention to or assisted in their programme after it had been
established. During the time of the interviews the departmental agricultural
services in Grahamstown and Bathurst were having problems with the
pool vehicle system and the researcher fetched them from the local DAFF
offices. The main topics identified during the individual interviews were
carried forward to the focus groups.
230
Table 9.15 Frequency of main topics raised in the farming, production, management and open ended question sections (blank cell indicates non-participation or no comment).
Qu
esti
on
nai
re
refe
ren
ce
cod
e Main topics
Ped
die
Hlu
man
i
Zam
u
Ro
ck
Mim
osa
N=20 N=2 N=2 N=9 N=1
E15.6 Lack of cash flow or delay in income
7
1 1 1
H2 Importance of family involvement
7
1
E3
Ostriches did not have sufficient protection from heat and/or heavy rainfall
6
1
H1 Conflict over communal land use 6
E15.9
Farming ostriches is more intensive than farming with other livestock
5 1
1
H1 Ostrich programmes keeps people active
5
E16 Ostrich farm too far from home 5 1
1
H1
There were other better options of employment than farming ostriches
4
F5
Feedback indicated that the ostriches had good market related weight
3
G2 Not sufficient government support after establishment
3
G1 Conflict between farmer and management or mentor
3 1 1
E15.1 / E10 Water supply problematic 3
E3 High chick mortality 3
E15.6 Ostrich payment method or arrangement vague
3
H1 / E14 Ostrich programme offers employment
3
H2
Programme helped purchase furniture for home / assist with school expenses
2
E15.9 Farming ostriches gave attractive income
2
Source: Questionnaire data (2013)
231
9.3 FINDINGS FROM FOCUS GROUPS
A summary of the participants involved in the focus groups is detailed in
Table 9.16. Further group discussions were held on main topics revealed
in the questionnaires. To protect the confidentiality of the participants,
names have been withheld. Five separate focus groups, consisting of a
total of 41 participants, were arranged. Focus group attendance at
Hlumani and Zamukwanda was hampered as farmers who left the
programmes had no interest in participating in discussions. The focus
groups included other stakeholders who were invited as key informants
(Table 9.16). Each participant was allocated with a reference code to
assist with discussion referencing from the focus groups.
Table 9.16 Detail of focus group participants.
Programme Reference code No Role / affiliation
Peddie
P:1 19 Farmers
P:2 1 Mentor
P:3 1 Manager/farmer
Hlumani H:1 2 Farmers
H:2 3 Department of Agriculture
Zamukwanda Z:1 2 Farmers
Rockhurst R:1 9 Farmers
R:2 2 Department of Agriculture
Mimosadale M:1 1 Farmer
M:2 1 Eyethu Farmers Association
TOTAL PARTICIPANTS 41
232
9.3.1 Source of feed and feeding system constraints
According to the focus group discussions, feeding the ostriches was one of
the major constraints for the programmes (H:1, M:1, R:1). According to
Aganga, Aganga and Omphile (2003:60) and Brand, Squizzato, Hoffman
and Dalle Zotte (2013:520), the cost of feeding ostriches is the largest
expenditure of ostrich production. The feed costs face consistent upward
pressure due to competition between humans and ostriches for the
primary feed ingredients (including maize and fish meal). Some of the
programmes were dependent on feed companies delivering from over 200
km away. In all the programmes the ostriches were fed mainly pellets,
which made use and handling easier. The farmers had not adopted any
coping strategies for feed shortages such as growing and harvesting their
own forages. In the natural wild condition the ostrich chick learns to feed
by imitating their parents’ feeding behaviour. In the programmes it was
required that the farmers teach the young chicks how to feed (P:1, Z:1),
which increases the handling intensity of the chicks. The farmers stated
that the ostriches needed to be fed continuously and in some cases
farmers had to stay at the camps and were unable to leave the ostrich
compartments during the day (P:1). One of the farmers stated that
constant feeding cycles were important for the ostrich feed intake (M:2).
The feed costs for the breeders were to the detriment of the Rockhurst
programme. The profitability was determined by the proportion of fertile
eggs laid by each female, but due to the small number of egg sales the
income was insufficient to provide for the feed expenses. The Hlumani
programme was unable to maintain the feeding requirements and during
the avian influenza outbreak the ostriches could not be relocated, which
resulted in the ostriches starving. At the Peddie programme the feed
storage room was over 200 m away from the ostrich compartments and
some of the women farmers were unable to carry the 50 kg bags every
day (P:1). Some of the programmes were also prone to pests in the feed
storage facilities (P:1, R:1).
233
The farmers did not have facilities to formulate rations in order to provide
adequate balanced ration and fibre levels. According to ostrich feed
consultants, ostriches become market-ready at a younger age if good
feeding programmes are in place (Erasmus, 2011:para. 3; Benson, 2013:
pers. comm., 25 July). However, according to Erasmus (2011:para. 5),
accelerating ostrich growth through intensive feeding systems is only
successful if all ostriches are highly productive and from good genetic
stock, which is not always the case. Another issue that was raised was
that farmers were suspected of stealing the donated ostrich feed for resale
or for feeding other livestock at home (P:1).
9.3.2 DAFF’s contribution to the ostrich programmes A common theme highlighted by farmers was the important role DAFF had
played in the establishment and support of the ostrich programmes in the
Eastern Cape (P:1, H:1, Z:1, R:1, M:1). The emerging ostrich farmer
programmes were instigated and supported by DAFF primarily during the
2008/2009 period (H:2, R:2). This support from DAFF was essentially in
establishing infrastructures, providing equipment, procuring mentors and
feed supply (P:1, H:1, Z:1, R:1, M:1). The Mimosadale farmer received
valuable assistance from the area extension officer, but after the mentor
immigrated the farmer did not receive the same technical assistance from
replacements (M:1). With reference to the questionnaire findings, some of
the farmers commented that the extension officer rarely visited them after
the programmes had been developed (P:1). This may have been because
of the strong mentorship presence.
234
The farmers commented that when the programmes were considered,
DAFF had encouraged the farming of ostriches (H:1, M:1, Z:1). During the
establishment of the Hlumani programme, DAFF informed them that land
capability was not suited for goat farming and that one of the
Grahamstown ostrich processors had recommended that the land rather
be used for intensive ostrich farming (H:1). At Zamukwanda the ostrich
programme was the preferred livestock programme because the poultry
programmes in the area had reached saturation (Z:1). However, one of the
farmers stated that the government was reconsidering continuing support
for the ostrich programmes in view of the finances spent on the avian
influenza outbreak (Z:1). This was because during the 2011 avian
influenza outbreak, DAFF had paid out R17.078 million for culling
ostriches in the Oudtshoorn district (Western Cape Department of
Agriculture, 2012:102).
9.3.3 Intensity of ostrich farming constraints
Members of the community had warned the farmers that ostrich farming
was intensive and that it would take time to develop the skills required for
this type of husbandry (P:1, M:1, Z:1). The high chick mortalities were a
main concern for the farmers (P:1, H:1, M:1). The farmer at Mimosadale
commented that the acceptable mortality rate was unknown. According to
the questionnaires the main problems experienced with mortalities were
stress caused by the transportation of ostrich chicks over long distances,
leg deformities, lack of functional development of the digestive tract and an
inability to adapt to the rearing environment. When the ostrich chicks
received, they had to be encouraged to be feed. Farmers used different
techniques to encourage appetite such as mixing feed with cabbage off-
cuts. The first few days after receipt was the most intensive time and skill
was required to handle the chicks at this vulnerable stage (P:1, Z:1). Few
of the farmers had received training in feeding day old ostrich chicks and
required instruction from the mentors (P:3). Some of the women famers
explained that they were unable to do some of the tasks and needed
assistance from male farmers in handling the aggressive ostrich breeders
(R:1).
235
According to Jefferey (1999:2) and Malecki, Cloete, Gertenbach and
Martin (2005:163), the adult male ostriches become territorial and may
become aggressive, which is dangerous during capture. The ostrich egg
hatcheries were technically complex and expensive (R:1, M:2). The
electricity at Rockhurst was not sufficient to run the new hatchery. The
farmers stated that they received the new egg hatchery but then resorted
to continuing with the original one that was on the farm. Ostrich incubators
require intensive supervision as they are operated at 36 °C and
24 percent relative humidity in order to limit evaporative water loss of
approximately 15 percent. The eggs are also turned hourly (Van
Schalkwyk et al 2000:47).
9.3.4 Financial constraints
The income for rearing ostrich chicks was received at the end of each
season. It would take four to six months to rear ostriches before they were
at the ideal weight to sell to the next farmer for the ‘finishing stage’ or to
the abattoir for culling. The farmers were therefore only paid at the end of
each cycle. If the buyers supplied feed and medication, they deducted the
relevant costs from the final payment for the ostrich chick. The farmers ran
the risk of high mortalities and therefore it was possible that no payment
would be received at the end of the cycle. This financial arrangement
resulted in weak income for some farmers whose ostriches had not
achieved good weight, had used excessive feed or experienced high
mortalities (H:1, R:1). Some of the farmers questioned the method of
payments and were also apprehensive that the mentor was receiving the
money on their behalf (P:1, H:1). In the Rockhurst case, the farmers got
very little income and only drew funds once or twice a year during holiday
time (R:1). According to the farmers at Hlumani, each farmer had only
received R2 000 for the full cycle (year). The farmers complained about
the delay in monthly stipend payments and stated that they had at times
looked after the ostriches for months without any income (P:1, H:1, R:1).
The farmer at Mimosadale stated that he had not received payment from
the farmer to whom he sold his ostriches (M:1).
236
Farmers that managed to sell directly to the abattoir stated that payments
took long (> 90 days) and they were unhappy about the prices received for
the meat (M:1, M:2). One of the DAFF representatives commented that he
felt that the farmers who were involved in the ostrich programme should
rather be paid wages and incentive bonuses to assist them with cash flow
(R:2). During periods when they did not receive any income the farmers
were dependent on other income such as grants and income from other
livestock. According to Barrett, Clark, Clay and Reardon (2005:14),
dependency on non-farm income is a typical scenario of agro-ecologies of
lowest potential.
9.3.5 Mentors and leadership
The researcher observed that four out of the five programmes revealed
tension between the mentors and the farmers. At one of the focus group
meetings, the programme mentor chose not to participate in the
discussions. At two of the programmes the mentors had their own ostrich
compartments alongside the farmers. This situation led to tension because
the farmers felt that it was unfair to receive income as a mentor and also to
benefit as farmer (P:1, Z:1). The Pearston programme experienced the
highest disagreements between the mentor and the farmers (Z:1). This
situation eventually led to the withdrawal of the supporting commercial
farmer. Some of the farmers at Peddie stated that the manager and
mentor did not respond adequately to their complaints or needs. A DAFF
representative advised that mentors or managers should be selected from
outside of the community as it was difficult for the farmers to receive
instruction from people from their own community (R:2).
237
9.4 FINAL DISCUSSION
The question arises: what criteria differentiates the Peddie programme
from the other programmes and makes it successful? Firstly, each of the
farmers at Peddie was each given his/her own flock of ostriches to
manage (between 100 and 200 chicks each). Therefore each farmer was
responsible for feeding and caring for his/her own ostriches. The farmers’
income was dependent on how many ostriches he/she had and what
weight the ostriches were after eight months. The other ostrich
programmes shared the flock of ostriches and this resulted in ‘free riders’
(where one or more members did not do their fair share of the work on the
farm). In a shared system there was no accountability if problems or
losses arose. On the Mimosadale farm, the farmer was left to his own
devices and did not have the collective benefits of working with a group.
However, he did have the benefit of a commercial farmer and extension
officer assisting him, but he did not have a full-time mentor assisting on the
farm. In the Peddie programme, although the farmers were responsible for
their own ostriches they worked collectively to arrange feed, equipment
and transport. Secondly, the Peddie ostrich programme had a full-time
mentor, as well as support from industry and commercial farmers. The
next chapter will explore an instrument to measure and improve the
potential of emerging farmer programmes to participate in intensive ostrich
farming (see Figure 9.1).
238
Figure 9.1 Process of research design and structure of research
239
CHAPTER 10
THE DEVELOPMENT OF A PARTICIPATION CAPACITY INSTRUMENT
10.1 INTRODUCTION
10.2 INSTRUMENT FORMULATION
10.2 LOCAL VULNERABILITY INDEX FINDINGS
10.3 HUMAN CAPACITY INDEX FINDINGS
10.4 AGRARIAN CAPACITY INDEX FINDINGS
10.5 MARKET-ACCESS CAPACITY INDEX FINDINGS
10.6 CONCLUDING REMARKS
240
CHAPTER 10
THE DEVELOPMENT OF A PARTICIPATION CAPACITY INSTRUMENT
10.1 INTRODUCTION
The participation capacity instrument was developed to assist in
articulating and then assessing the potential of programmes for emerging
farmers to participate in intensive ostrich farming. This chapter contributes
to answering the main research problem pertaining to what interventions
could improve and sustain supply-chain participation for the Eastern Cape
emerging ostrich farmers. The data used in the instrument was collected
from the researcher’s observations, questionnaires and focus groups. The
objective of this explorative investigation was to develop an instrument that
has potential value for other emerging farmer programmes. This is not a
scientifically developed and validated measurement instrument but acts as
a step towards measuring emerging farmers’ likelihood of sustained
participation in the supply chain. It will contribute to understanding of what
interventions are required to improve and sustain supply-chain
participation. The instrument, which was used to compare between case
studies, was adapted from the Agrarforschung, Koenig, Blatt, Brakel,
Kloss, Nilges and Woellert (2008:143) calculation of scoring methods used
in research of market-driven development and poverty reduction in the
value chain analysis of fresh vegetables in Africa. The instrument consists
of a number of indexes which together form a total score representative of
the farmers’ capacity to participate. Each of these indexes was
hypothetically weighted according to a pre-determined rating of influence.
241
Because this instrument has the potential to be evaluated at regular
intervals, it has potential to plot out the path of progress across different
indexes over a period of time. The simple instrument design is such that it
can be easy to administer and analyse by a wide range of users. An
instrument of this nature may allow donors or government policy to focus
support more appropriately on high scoring or resilient farming
programmes. The instrument could assist in determining potential mobility
for supply chain participation.
The instrument was also used as a capacity indicator of emerging ostrich
farmer programmes in the final chapter. The instrument consists of the
four Indexes in each case study which were hypothetically weighted,
namely, Local Vulnerability Index, Human Capacity Index, Agrarian
Capacity Index and Market-Access Capacity Index.
The following key capacity indexes were selected to compare capacity
between the four case studies:
Local Vulnerability Index;
Human Capacity Index;
Agrarian Capacity Index; and
Market Access Capacity Index.
242
10.2 INSTRUMENT FORMULATION
10.2.1 Local Vulnerability Index
This Local Vulnerability Index (LVI) was primarily a risk measurement of
geographic position influence on industry participation. Naudé, McGillivray
and Rossouw (2008:9) constructed potential relevance vulnerability on a
sub-national level using the following indicators: size of the local
economy, structure of the local economy, international trade capacity,
peripherality or remoteness, development level of a district, income
volatility, demography and health, governance, environment and
geographical matters. The LVI is a point of reference for remoteness and
environmental fragility of the programmes. Each case study was allocated
the LVI of the nearest recorded index available. According to the research
done by Naudé, McGillivray and Rossouw (2008:9) the lowest vulnerability
rating that can be achieved is 354.
10.2.2 Human Capacity Index
The Human Capacity Index (HCI) was intended to measure the emerging
farmers’ productivity and capacities to participate. The criteria listed below
were adapted from research conducted by Kinsey and Binswanger
(1993:19) on resettlement programmes and the Rooyen et al (1998:129)
productive weighing system. The electricity score represents the potential
for economic development. The farmer’s age is considered to represent
physical vigour and state of health. The agricultural and educational
experience is used to predict potential performance. The Senior Certificate
Examination (SCR) is a uniform national set of examinations in key
subjects set by the Department of Education and is therefore given a
separate score.
Electricity: yes = 4, otherwise = 0
Age: 17-28 yrs old and > 45 yrs old = 1, 30-45yrs old = 2
Agricultural experience: 1-2 yrs = 1, 3–4 yrs = 2, > 4 = 3
Education level: Illiterate=0, primary/secondary = 1, SCR= 2, tertiary = 3
243
10.2.4 Agrarian Capacity Index
The Agrarian Capacity Index (ACI) consisted of indicators which were
constructed from sustainable agriculture research conducted by Allen, Van
Dusen, Lundy and Gliessman (1993:1). The following key themes were
deliberated: environmental soundness, economic viability and social equity
(access to livelihood, resources participation in the community; and
self-determination in meeting fundamental needs.). Each indicator was
measured by the criteria listed below. The ratings were as follows:
weak (score = 1); moderate (score = 2); strong (score = 3).
Institutional support;
Scale of production required for sector;
Independence from mentorship;
Training programme;
Supply chain engagement;
Land agricultural capability;
Economic strength of the post-farm gate;
Influence on decisions post-farm gate;
Contractual linkages with value chain;
Community acceptance;
Collective action;
Independence from donor assets;
Dependence on government or extension involvement;
Access to credit;
Independence from non-farm income;
Governance on the supply chain;
Price leverage;
Farm record keeping;
Programme leadership;
Home-to-farm distance; and
Programme income
244
10.2.5 Market Access Capacity Index
The Market Access Capacity Index (MACI) was constructed from literature
research conducted on determinants on smallholder participation in
Chapter 2. The criteria and scoring are listed below.
Sufficient infrastructure: yes = 1, otherwise = 0
Sufficient equipment: yes = 1, otherwise = 0
Owns transport: yes = 1, otherwise = 0
Owns a mobile phone: yes = 1, otherwise = 0
Engaged with market channel: yes = 1, otherwise = 0
Market information feedback: yes = 1, otherwise = 0
Distance to market: >100 km = 1, 21–100 km = 2, 0-20 km = 3
Distance to nearest town: >100 km = 1, 21–100 km = 2, 0-20 km = 3
Agricultural experience: 1-2 yrs = 1, 3–4 yrs = 2, > 4 = 3
Education level: illiterate=0, primary= 1, secondary = 2, tertiary = 3
Collective action: yes = 1, otherwise = 0
Access to information: yes = 1, otherwise = 0
245
10.3 LOCAL VULNERABILITY INDEX FINDINGS
With reference to the research of Naudé et al. (2008:8) on the
classification of a South African Local Vulnerability Index, the case studies
were rated from lowest to highest vulnerability. According to Table 10.1,
the Peddie and Zamukwanda case studies showed the highest
vulnerability in terms of remoteness and environmental fragility. In
contrast, it is the researcher’s observation that Rockhurst’s remoteness
could have been higher as it was situated furthest from the closest town
and had the longest dirt road to access the farm. Peddie and
Zamukwandu were also below the LVI 177; but they were not as remote
as Rockhurst and their index was influenced by their proximity to small
rural towns with low growth potential.
The employment profile of the area or district is often a function of its
relative proximity to nearby towns or cities. The upward mobility potential
and economic opportunities that people have can influence the
participation and commitment to new ventures (Ainslie, 2002:121).
Table 10.1 Local Vulnerability Index for case studies
Case Studies LVI
Max (354)
Mimosadale (Graaff-Reinet LVI) 264
Hlumani Co-operative (Bathurst LVI) 256
Rockhurst (Bedford LVI) 119
Peddie (Peddie LVI) 109
Zamukwanda (Pearston LVI) 91
Source: Naudé et al. (2008)
246
10.3 HUMAN CAPACITY INDEX
According to Table 10.2, the Rockhurst farm showed the greatest human
capacity for ostrich farming, while Peddie and Hlumani had the weakest
aptitude for farming in this index. These two programmes had been
disadvantaged due to older age group of the farmers, lack of previous
livestock experience and low educational level.
Table 10.2 Calculation of human capacity scoring
Criteria
Max
imu
m
Ped
die
Hlu
man
i
Zam
u
Ro
ck
Mim
osa
Electricity 4 4 4 4 4 4
Age 2 1 1 2 2 1
Agricultural experience 3 1 0 0 3 0
Educational level 3 1 1 2 1 3
TOTAL 11 7 6 8 10 8
Source: Researchers own outline
247
10.4 AGRARIAN CAPACITY INDEX
According to Table 10.3, the Peddie and Mimosa programmes showed the
strongest agrarian capacity. In Peddie’s programme, the main criteria
contributing to this index were the strong institutional support, scale of
production and strong collective action. However, Peddie exhibited the
highest disharmony from its community regarding the use of land. The
Peddie and Mimosa case studies both showed strength in contractual
linkages with the value chain, farm record-keeping and programme
leadership. However, the programmes all exhibited an index scoring of
less than 60% for the hypothetical agrarian capacity. The excessive
dependency on mentors also made the programmes vulnerable in the
following capacities, namely, weak supply-chain engagement, influence on
decisions post-farm gate and price leverage. Most of these functions were
conducted by the mentor on behalf of the farmers programme.
The agricultural capabilities of the land and home-to-farm distances are
predetermined and will therefore always have bearing on the capacity to
farm. At a macro level, the influences of economic strength from post-farm
gate, access to credit and governance in the supply chain will take time to
establish. The farmers do not have any value-adding processing facilities
and will always be dependent on external processing and marketing
channels. These are weak areas within the agrarian capacity and could be
accelerated by political intervention and agricultural business development
services. Institutional development services are important to strengthen
linkages and operational systems, while financial services play a critical
role in assisting in the credit and financial development (Miller and Jones,
2010:24).
248
Table 10.3 Calculation of agrarian capacity scoring
Criteria
Max
imu
m
Ped
die
Hlu
man
i
Zam
u
Ro
ck
Mim
osa
Institutional support (industry) 3 3 1 1 1 3
Scale of production required for sector
3 3 1 1 2 2
Independence from mentorship 3 1 1 1 1 3
Training programme 3 1 1 2 1 1
Supply chain engagement 3 1 1 1 1 1
Agricultural capabilities of the land
3 2 1 1 2 2
Economic strength post-farm gate
3 1 1 1 1 2
Influence on decisions post-farm gate
3 1 1 1 1 1
Contractual linkages with value chain
3 3 1 1 1 2
Community acceptance 3 2 3 3 3 3
Collective action strength 3 3 1 1 2 1
Independence from donors 3 1 1 1 1 1
Access to credit 3 1 1 1 1 1
Independence from non-farm income
3 1 1 1 1 1
Governance on the supply chain 3 1 1 1 1 1
Price leverage 3 1 1 1 1 1
Farm record-keeping 3 3 1 3 3 3
Programme leadership 3 3 2 2 2 3
Home-to-farm distance 3 1 1 1 3 1
Programme income 3 2 1 2 1 2
TOTAL 60 35 23 27 30 35
Source: Researcher’s own outline
249
10.5 MARKET-ACCESS CAPACITY INDEX
Rockhurst’s shortage of electricity resulted in the inability to hatch more
ostrich chicks and affected programme growth and economics of scale.
The lack of independent transport for all the programmes resulted in
programmes that were dependent on external service providers to procure
chicks, ostrich medicine and feed. Without transport these programmes
have transactional dependency which puts them in a “captive” position.
Another criterion which requires improvement is access to market
information. Access to market information assists the farmer in
determining when and how to participate. According to Steinfeld
(2003:4058), lack of market information increases the business’s
transactional costs. The dependency on the mentors has made the
programmes vulnerable to lack of market engagement and receiving
market information.
Table 10.4 Calculation of market access scoring
Criteria
Max
imu
m
Ped
die
Hlu
man
i
Zam
u
Ro
ck
Mim
osa
Sufficient infrastructure 1 1 1 1 0 1
Sufficient equipment 1 1 1 1 0 1
Owns transport 1 0 0 0 0 0
Owns a mobile phone 1 1 1 1 1 1
Engaged with market 1 0 0 0 0 1
Market information feedback 1 0 0 0 0 1
Distance to market 3 1 1 1 1 1
Distance to nearest town 3 3 3 3 3 3
Agricultural experience 3 1 0 0 3 0
Educational level 3 1 1 2 1 3
Collective action present 1 1 1 1 1 0
Access to market information 1 0 0 0 0 1
TOTAL 20 10 9 10 10 13
250
10.6 CONCLUDING REMARKS
Figure 10.1 and Table 10.5 show a summary of data comparing the
different indexes between the case studies. Almost all of Mimosa indexes
scored over 60 percent and this programme indicated the most promising
representation for capacity.
Figure 10.1 Bar chart comparison between five case studies
Table 10.5 Percentage comparison between five case studies
Ped
die
Hlu
man
i
Zam
u
Ro
ck
Mim
osa
Local Vulnerability Index 31% 72% 26% 34% 75%
Human Capacity Index 64% 55% 73% 91% 73%
Agrarian Capacity Index 58% 38% 45% 50% 58%
Market Access Capacity Index 50% 45% 50% 50% 65%
0%
20%
40%
60%
80%
100%
Peddie Hlumani Zamu Rock Mimosa
% LVI
% HCI
% ACI
% MACI
251
Each of these indexes has an ideal score and in Table 10.6 the ideal
accumulative index score as been calculated. The researcher has
indicated a predetermined hypothetical ideal capacity score for
comparison against the case studies. According to the hypothetical ideal
capacity score, it is the researcher’s theory that none of the programmes
has sufficient capacity for sustainable ostrich farming and will require
considerable inputs to make them viable. Without appropriate interventions
it is therefore unlikely that these programmes will reach full commercial
farmer status.
Table 10.6 Accumulative percentage comparison between five case studies
LVI + HCI + ACI + MACI
Mimosa 75% 148% 206% 271%
Hlumani 72% 127% 165% 210%
Rockhurst 34% 125% 175% 225%
Peddie 31% 95% 153% 203%
Zamukwanda 26% 99% 144% 194%
Hypothetical ideal capacity 50% 150% 225% 300%
The data is represented as five radar charts in Figure 10.2 to articulate
and assess the four indexes’ multivariate data. The radii represent each
Index and the length of a spoke represents the proportion in percentage. A
line is drawn connecting the data values for each radius to display area in
a star like shape. The radar charts represent the following:
Similarity between case studies;
Identification of outliers;
Measurement of relative strength and weakness; and
Potential integration into the supply chain.
252
Figure 10.2 Radar chart comparison between five case studies
Source: Researcher’s own outline
253
In Figure 10.2, the larger the star area is, the greater the hypothetical
capacity for intensive ostrich farming and mobility into the supply chain.
Peddie, Rockhurst and Mimosadale showed the strongest total of human,
agrarian and market access indexes (above 50%). However, for Peddie
and Rockhurst the local vulnerability index indicates negative influence
due to remoteness and environmental fragility. The larger star shape area
for Mimodadale represented the highest potential for mobilisation into the
ostrich supply chain. The Mimosadale farm’s environment, location and
farmer’s managerial aptitude indicated the most potential and resilience
towards intensive ostrich farming.
Chapter 10 indicated how the participation capacity instrument has the
potential to measure the likelihood of sustained participation. In the same
way this intervention can be used to measure and evaluate programmes at
regular intervals to assist in progress across different indexes over a
period of time. An instrument of this nature may allow donors or
government policy to focus support more appropriately on high scoring or
resilient farming programmes. The next chapter will present the summary,
conclusions and recommendations of the research (see Figure 10.3).
Figure 10.3 Process of research design and structure of research
253
CHAPTER 11
MAIN FINDINGS, CONCLUSION AND RECOMMENDATIONS
11.1 INTRODUCTION
11.2 SUMMARY OF MAIN FINDINGS
11.3 FINAL DISCUSSION
11.4 RECOMMENDED INTERVENTIONS
11.5 OPPORTUNITIES FOR FURTHER RESEARCH
11.6 CONCLUSION
254
CHAPTER 11
MAIN FINDINGS, CONCLUSION AND RECOMMENDATIONS
11.1 INTRODUCTION
The main hypothesis of this study was that participation in the mainstream
supply chain for emerging ostrich farmers in the Eastern Cape is currently
unsustainable. If any meaningful solution or proposed development path were
to be modelled, the first step would be to gain an understanding of the present
ostrich industry and then to place the emerging farmers in the context of this
environment. Through this understanding a contribution to the body of
knowledge would be achieved by providing mechanisms for Eastern Cape
emerging farmers to participate in the South African ostrich industry.
The main thrust of this chapter was to explore interventions for the participation
of emerging farmers in the Eastern Cape ostrich-industry supply chain. These
interventions are to facilitate the transition from subsistence to commercial
ostrich farming for high-value export markets for the rural ostrich farmers. The
study adopted two approaches to answer this question, namely, to determine
the required capacity to participate in the supply chain and to determine
what mechanisms would support emerging ostrich farmers in integrating
successfully into the ostrich-industry supply chain. Few studies, if any,
have specifically examined what opportunities Eastern Cape emerging farmers
have to participate in the South African ostrich industry. This chapter provides a
brief overview of the main findings of each of the previous chapters,
followed by conclusions and then finally recommendations for proposed
emerging ostrich farmer interventions.
255
11.2 SUMMARY OF MAIN FINDINGS
11.2.1 Livestock farming in the rural environment of the Eastern Cape
This study commenced by examining the semi-arid environment of the Eastern
Cape and the study showed the important roles that livestock has played
socially and economically in the rural context. Examination of the history of
South Africa and monopolistic market channels were identified as possible
reasons why emerging farmers have been marginalised in the ostrich supply
chain. The findings that follow answer the main research questions pertaining
to the environmental influences affecting emerging ostrich farmers and why
ostrich farming has not been embraced by Eastern Cape emerging farmers.
The main rural Eastern Cape agrarian limitations derive from limiting soils and a
variable climate. Agro-climatic conditions, social security, local economy and
environment have had a challenging influence on the capacity of emerging
farmers to farm in the Eastern Cape. The formation of the Ciskei and Transkei
homelands compounded problems due to land degradation, lack of arable land,
poverty, infrastructure backlogs, underdevelopment and unsustainable local
economies.
The new South African legislation that was implemented in the first decade of
the 21st century had little influence to improve the position of emerging farmers
in the Eastern Cape. However, the grant support system intervention to the
rural economy has become a regular and reliable provider into the rural
economy and constitutes a critical component that underpins the rural
livelihoods. Ostrich livestock operations represent a smaller percentage of
livestock farming in the Eastern Cape than in some of the other provinces. The
potential contribution of the small-scale intensive livestock in the Eastern Cape
has generally been neglected. Marketing livestock has been a challenge for
black emerging farmers who have little access to support and to markets.
256
Although livestock plays an important role in terms of draught animal power,
consumption as food, sales to raise cash and use in African traditional
ceremonies, the ostrich does not have the equivalent cultural importance and
relevance in rural ownership. The series of national legislative policies had a
restrictive effect on black agriculturalists and commercial markets in the
apartheid era and only after 1995 did the process of liberalisation of the
agricultural sector start. Owing to apartheid and market isolation the emerging
farmers have been handicapped in dealing with this liberal market environment
and they have also been by-passed by globalisation.
11.2.2 The present state of the ostrich industry
The following findings answered the main research question pertaining to what
is known about the ostrich industry. Today the ostrich industry has complex
production systems which include livestock husbandry, industrial processes
and marketing structures. Ostrich farming has been an attractive form of highly
intensive agriculture as it offered higher and faster financial returns as
compared to those of traditional livestock. As a predominantly export-focused
industry, it has been susceptible to poorly co-ordinated marketing and bull-whip
supply chains. In the past the industry relied strongly on a one-channel market
system that protected market presence. This resulted in domination in domestic
business and in the global ostrich export arena. Producers of other South
African exotic leathers and game skins benefitted from using the ostrich-
processing facilities and marketing channels. The SAOBC in Oudtshoorn is an
important stakeholder which assists in mediating and controlling operations
between stakeholders, government and farmers. The intensive ostrich
production necessitated continuous genetic improvement through proper record
keeping, intensive egg incubation methods, high-maintenance chick rearing
and ostrich handling, while minimising feed costs throughout this process. The
enforcement of recent VPN04 regulations and control of movement of ostriches
has intensified management and record-keeping requirements for the ostrich
farmers.
257
Global ostrich research themes concentrated mainly on production practices
and animal health. Diseases, reproduction and feed were the main topics on
which ostrich research focused in the past. The studies on aetiology were of the
greatest interest and other main studies concentrated on reproduction after
deregulation of South Africa’s ostrich industry. Domestic articles in magazines
focused on avian influenza, European export protocols, government
involvement, ostrich products, new markets, industry scale and AgriBEE. The
Oudtshoorn district is South Africa’s main ostrich-producing area. This semi-
arid area has very low rainfall and the pastoral farming is dependent on reliable
water sources and irrigation for lucern production. Over the past century the
state contributed to developing Oudtshoorn with strong transport infrastructure
which assisted the ostrich industry. The ostrich farming and processing industry
has such an economic impact that it has become vital for income generation
and job creation in this region.
The ostrich-processing industry has developed into an intensive
agro-processing value chain which is supported by select overseas agencies.
The ostrich industry has been dependant on strong networks and relationships
to deal with the European market. Without linkage into this value chain it is
challenging to gain entry into the European markets. The industry was initially
established by the Jewish community in Oudtshoorn who had strong ties to
Europe. After the feather boom, the ostrich leather became dependent on a
network of agencies in Europe for distribution and networking with the fashion
houses. The recent meat exports have seen a growing dependency on the
DAFF and the veterinary relationship with their European counterparts for the
unbanning of ostrich meat during the avian influenza outbreaks.
258
The South African government departments played a crucial role in identifying
and isolating avian influenza outbreaks in South Africa. The way in which this
situation was dealt with had a major impact on the extent of the market ban.
After deregulation many of the farmers left the industry because of a
combination of market conditions, increased domestic competition, the slow
establishment of new markets which led to market cannibalism, and finally an
outbreak of avian influenza. The ostrich industry has changed from a demand-
driven to a supply-driven industry, resulting in an ostrich leather trade that has
become vulnerable, with an inelastic supply chain for an elastic market.
Leather processing and meat treatment requires considerable know-how and
technical inputs. South African ostrich abattoirs are required to adhere to bio-
security requirements, and their standards of processing are high. The
processing of the leather and meat produces large amounts of hazardous and
toxic waste, so these processes require monitoring and stringent disposal
mechanisms. The disposal of such waste is expensive and requires capital-
intensive systems to reduce environmental contamination.
The South African ostrich industry is one of the few agricultural sectors in which
South Africa has achieved dominance and a considerable market share in the
global arena. Although the South African industry dominates the global market,
the market share has shown a downward trend. The industry faces
overproduction, lower prices and farmer liquidations, which are all resulting in
lower slaughter volumes. However, lower volumes have stabilised markets and
improved prices in the past, but the ostrich leather is under constant threat of
substitution from other leathers or exotic materials. The South African tanneries
have also experienced increasing processing competition from other low-cost
global tanneries. Quality standards are no longer monitored by a single-channel
marketing enterprise and lower grades have led to lower prices and increasing
volumes. The ostrich-processing plants face severe constraints which have
resulted in many not enduring the post-deregulation era. The industry was
limited to only a few surviving processing plants after 2010 and this resulted in
an oligopolistic processing and marketing environment.
259
The ostrich leather industry is greatly influenced by the export luxury and
fashion markets in Europe. The ostrich meat industry has also focused strongly
on the European market which is aware of the health benefits of the meat. In
the South African domestic market, the promotion of ostrich meat has become
an important long-term strategy, but ostrich leather has limited scope. The
domestic market is still small in comparison to the 80 percent share being
exported. There is a sensitive balance between meat and skins, as developing
a market for meat without developing an outlet market for the leather leads to
oversupply of leather, making it impossible to maintain the exclusivity of the
exotic leather.
The predetermined semi-structured interviews showed that ostrich husbandry
required substantial management input and the processing of ostrich products
required intensive industrial capacity. The participants agreed that the ostrich
leather was primarily used for luxury goods and closer co-operation with the
fashion house buyers was required. The participants also agreed that the
intermediary agent network developed by the single-channel marketing system
was vital for the ostrich industry. A schematic Network View indicated a strong
relationship between deregulation and a change in market protection, value
chain governance and supply parameters. This meant that deregulation had
influenced market protection for producers, affected the demand and supply
equilibrium and the governance in the value chain changed from South African
role players to European buyers and consumers. These changes took place as
a result of the deteriorating market-agent structure. The participants were not in
agreement about the main threats to the ostrich industry as some felt that the
meat ban would not have such a negative impact as it would cause a shortage
of skins which might result in high prices. Others felt that an over-supply of
skins and the global economic downturn were the industry’s greatest threats.
260
11.2.3 Ostrich-industry supply chain
The following findings answered the main research questions pertaining to what
is known about the ostrich-industry supply chain. The ostrich-industry supply
chain can be defined as a wide range of activities required to bring products to
the final consumer. The supply chain requires strong integration to
manufacturing, distribution and customers in which raw material runs from
suppliers to processors who prepare them for the customer’s requirements. The
current bio-security and food safety requirements are making it increasingly
difficult for emerging farmers to participate in the supply chain. In order to
participate and offer food-safety assurance, institutions require veterinarians, a
fully-equipped laboratory, microbiologists and food technologists in order to
maintain traceability and food safety. The supply chain requires strong linkages
with supporting institutions and role players, namely, the SAOBC, the National
Ostrich Processors of South Africa, the South African Ostrich Producers’
Organisation, the South African Ostrich Breeders’ Association, DAFF, the
National Residue Monitoring Programme and the EU Agricultural attaché. The
ostrich-industry supply chain in the Eastern Cape is concentrated around two
ostrich infrastructure processing hubs, namely Graaff-Reinet and
Grahamstown. Since the outbreak of avian influenza the ostrich-industry supply
chain in the Eastern Cape has deteriorated and is almost non-existent. Most of
the commercial farmers are no longer farming ostriches commercially and the
processing hub around Grahamstown has been acquired by Western Cape
ostrich enterprises. The current state of the Eastern Cape supply chain leaves
limited collaboration opportunities for new farmers. As concluded in Chapter 6,
the Western Cape ostrich industry is now the dominant recipient of all produce
from ostrich farmers in the Eastern Cape.
261
11.2.4 Present emerging ostrich-farmer interventions for participation in the
ostrich industry
The following findings answered the main research questions pertaining to what
is known about the ostrich industry interventions and what have been the most
influential interventions. The AgriBEE programmes gave previously
disadvantaged South African citizens opportunities to participate in various
areas of the ostrich industry supply chain, namely, incubation, growing of
chicks, breeders, eco-tourism, manufacturing crafts and shareholding capacity
in an ostrich tannery. However, the AgriBEE programmes had little participation
downstream in the value chain, namely, abattoirs, meat processing, marketing,
agencies and distribution. There were only two ostrich-farming AgriBEE
programmes listed with the SAOBC, namely, the Peddie and Kuruman ostrich
programmes. However, the Kuruman programme was not successful and left
the Peddie programme as the only remaining emerging ostrich-farmer
programme with full ownership in the Eastern Cape and possibly the only one
in South Africa.
The ostrich AgriBEE programmes have been concentrated around the main
ostrich-processing hubs, namely, Oudtshoorn, Mossel Bay and Grahamstown.
The main reason for the close proximity between farm and processor has been
that materials were procured more easily and that participants were able to
benefit from the indirect opportunities such as tourism and the need for labour
intensive processes. Out of the seventeen AgriBEE programmes, seven had
been discontinued by 2013. Most of these failed programmes were emerging
ostrich farmers who had not been able to comply with the standards or sustain
the farming activities through constraints or had been insufficiently equipped to
become independent. However, the Peddie ostrich programme has become
one of the most successful emerging farmer programmes in South Africa. It has
recently been integrated into the KKI supply chain and is a recognised AgriBEE
programme for South Africa’s main ostrich processor. There are, however, few
ostrich AgriBEE programmes that are involved with the main value chain and
have independent ownership.
262
11.2.5 Synopsis regarding the emerging ostrich farmers in the Eastern Cape with emphasis on main constraints
This section of the study contributed to the main research problems pertaining
to what is known about the emerging farmers in the ostrich industry and what
the main constraints are that prevent them from participating. The following is a
summary of the main characteristics of the case studies with emphasis on the
main barriers influencing sustainable participation.
11.2.5.1 Peddie Programme
In 2002 the Peddie ostrich out-grower programme was initiated by a Christian
organisation from Zimbabwe. The intention was to replicate the successful
emerging ostrich-farm models that were running at Bulawayo. The programme
started with twelve participants, each raising 100 ostriches from day-old to 6
months at their homes. By 2009 over 70 emerging farmers were producing over
5 000 ostriches. The beneficiaries, who were from local villages, consisted
mainly of elderly and unemployed people with access to off-farm income
sources or pay-outs from the government’s welfare programmes. As part of the
state’s initiatives for economic development and reduction of poverty the
Peddie programme was strongly supported and became a flagship for the
Amathole District. The programme also formed part of the government-
sponsored Integrated Meat Processors in Grahamstown.
The programme’s main constraints included lack of transport, weak Local
Vulnerability Index, dependency on feed supply and land disputes. In 2008,
owing to changes in the governmental leadership, the programme was no
longer supported under the new governance and the sponsorship was not
renewed, but the strengths of the Peddie programme were that it was strongly
supported by the Salem Agribusiness Mentorship Company and the
Grahamstown ostrich-processing hub. The avian influenza outbreak in 2011 in
the Western Cape resulted in the suspension of poultry meat exports from
South Africa.
263
The avian influenza outbreak and DAFF’s self-imposed poultry ban on
exporting meat to Europe was one of the reasons that three ostrich-related
businesses in Grahamstown faced closure. DAFF imposed new VPN04 bio-
security protocols on the ostrich farmers and these changes required that
ostriches had to be removed from home camps and set up away from the
farmers and other livestock. The changes in the requirements for farming
ostriches resulted in the farming programme being reduced to twenty farmers
and the camps were clustered together on nearby communal land. The
changes in the system of farming resulted in many of the original emerging
farmers no longer participating in the farming programme. In 2011 South
Africa’s largest commercial exporter of ostrich products in Oudtshoorn adopted
the programme as an AgriBEE initiative and this was to a large extent the
critical linkage for its survival.
11.2.5.2 Rockhurst Ostrich Programme
In 2006 the Rockhurst mohair farm was transferred to seven beneficiaries and
their families. The programme’s value was to provide employment for women
on the remote farm outside Grahamstown. The beneficiaries stayed on the farm
and consisted mainly of elderly and unemployed people receiving off-farm
income sources and pay-outs from the government’s welfare programmes. The
farming system consisted of 97 ostrich breeders and one ostrich-egg electronic
incubator. It formed part of the supply chain of ostrich chicks to the emerging
farmer programme at Bathurst and nearby commercial farmers. However, the
egg production did not produce enough income to cover the feed costs of the
ostrich breeders. After the mentor’s contract expired and the farmers were
unable to manage the newly installed incubator, the programme ran out of
funds and it was eventually terminated.
264
The main constraints of the programme included conflict between the
beneficiaries, weak economics of scale, insufficient electricity for operating
equipment, dependency on the mentorship and feed supply, weak Local
Vulnerability Index and lack of transport. However, the programme had the
necessary support from the farm’s community and had a high Human Capacity
Index due to past ostrich rearing experience with the previous farmer.
11.2.5.3 Hlumani Ostrich Co-operative
In 2009 the Hlumani programme was initiated by two individuals from the
Bathurst community who formed a co-operative with eight others from the local
community to apply for benefits from the Land Distribution for Agricultural
Development programmes (LRAD). The programme’s value was predominantly
to provide a form of livestock farming on the sponsored land. The beneficiaries
consisted of mainly elderly and unemployed people. The group was awarded a
LRAD grant for land near the Bathurst township and was supported by
Department of Social Development with structures, feedlot camps and a
livestock loading ramp. DAFF co-ordinated the linkage between the ostrich out-
grower farming system and the Grahamstown processor. DAFF also arranged
a mentor and procurement of ostrich chicks from the Rockhurst ostrich
programme. During 2011 the avian influenza outbreak caused a restriction on
all movement of ostriches in South Africa. The group was unable to produce the
necessary records to allow ostriches to be transported off the farm. Owing to
no sales the co-operative had no income and was unable to provide feed for
the ostriches. This resulted in the ostriches starving and led to euthanasia
intervention by the Bathurst Society for the Prevention of Cruelty to Animals.
265
The main constraints of the programme were that the beneficiaries lacked
agricultural experience (low Agrarian Capacity Index), there was conflict
between the group (some did not participate), the management of finances
lacked transparency, distances between farm and beneficiaries’ homes were
great, there was weak industry linkage, weak Market Access Capacity Index
and poor record keeping. The programme did have strong leadership and the
geographical position near the coastal tourist route may have made it possible
to expand into eco-tourism. This was because the farm was near a coastal
resort with linkage to a nearby agriculture and tourism hub of economic activity
(preferable score on the Local Vulnerability Index).
11.2.5.4 Zamukwanda Ostrich Programme
The programme was initiated in 2009 by six individuals from the town of
Pearston. The group applied for and was awarded a long-term land contract on
nearby farm land at Pearston. The beneficiaries consisted of mainly local
youths who had been well educated at a nearby secondary school. The
programme’s value was to provide employment and predominantly to initiate a
form of livestock farming on a dormant piece of municipal land outside
Pearston. DAFF assisted with setting up an out-growers system and arranged
linkage with the Grahamstown ostrich processing hub. The proposed linkage
with Grahamstown did not materialise, so DAFF arranged for local commercial
farmers to run the programme. The commercial farmers nominated their own
mentors to supervise and train the beneficiaries of the programme. The chicks
were supplied by the commercial farmers and the equipment by the mentors.
The mentors were given liberty to use the beneficiaries as labour. Conflicts
occurred between the mentors and labourers on the working arrangements and
resulted in the commercial farmers not renewing their contract with the
beneficiaries. The limitations of the programme were low Local Vulnerability
Index, conflict between farmers and mentors and weak industry linkage.
However, the programme had potential for high production due to the
secondary education of all the beneficiaries.
266
11.2.5.5 Mimosadale Ostrich Farm
In 2005 a business man was assisted by the Graaff-Reinet Municipality and by
DAFF to set up an out-grower operation on commonage ground outside Graaff-
Reinet. DAFF provided technical support and feed for the ostriches. The
Municipality contributed by constructing a shed and making provision for water.
During production the farmer experienced problems with payments from buyers
and high chick mortalities. The farmer altered the farming system to growing
ostriches from three months old and then sold directly to the Graaff-Reinet
abattoir. In 2009 the farmer decided to terminate farming ostriches and the
main reasons for ending was that the ostrich prices were not negotiable,
making the farmer a price taker and the stricter EU restrictions where becoming
difficult to adhere to. The main programme constraint was that the farmer was
often absent from the farm and he had to rely on inadequate labour, which may
have contributed to the high ostrich mortalities. Although the farmer was
relatively close to Graaff-Reinet, he functioned on his own and not as a co-
operative. This may at some time have been a limitation when the farm needed
to increase the scale of farming. The farmer had to rely on a particular
extension officer and his resignation from the local office may have contributed
to reducing the farmer’s access to technical know-how. The strengths of the
programme were that it rated high on most of the indexes, namely, Human
Capacity Index, Agrarian Capacity Index and Market Access Capacity Index.
267
11.2.6 Contributory value of programmes
The programmes have offered the following contributory value to the ostrich
industry and the agriculture sector:
Through the programmes it was established that ostriches have potential
for the semi-arid Eastern Cape environment and can play a role in small-
scale land redistribution programmes. The ostrich’s water economy
enhances the potential for production in the semi-arid areas of the
Eastern Cape and it is evident that ostrich farming is possible in small
areas on low-potential arable land. The ostrich farming model could be a
vehicle for promoting economic development in the Eastern Cape and
amongst land reform beneficiaries where other agricultural commodities
could not be possible.
Most of the ostrich programmes studied can be categorised as
infrastructural projects and it was planned that spontaneous
development would arise due to the inputs. The programmes have not
been focused on farming ostriches but rather vehicles for poverty
reduction and job creation in the rural areas.
It was found that most of the emerging ostrich-farming systems
established in the Eastern Cape had been out-grower systems. This is
an intensive part of the supply chain and the farming system requires
high levels of labour. Many commercial ostrich farmers in the Western
Cape rely on external contract farmers to fulfil this segment. As
discussed in Chapter 2, the three stages of ostrich production are
hatching, raising chicks and growing ostriches to slaughter weight. It is
the second stage which is demanding to manage in order to reduce
mortalities and maintain the good animal health required in the initial
years for optimum growth rate. In this second stage small-scale farmers
can participate and be of value to commercial farmers.
268
11.3 FINAL DISCUSSION
Findings from this study provide evidence to accept the hypothesis that
participation in mainstream supply chain for emerging ostrich farmers in
the Eastern Cape is currently unsustainable.
The economic and social environment, the agrarian constraints and bio-security
protocols have contributed powerfully to ruling out participation by black
emerging ostrich farmers. The formation of the Klein Karoo Agricultural
Co-operative played an important part in unifying commercial ostrich farmers
mainly in the Western Cape. Since 1945 the farmers’ co-operation has been
recognised in the ostrich industry as a strong mechanism of improving access
to agricultural services and market orientation for selected farmers. This study
highlights the complexity of the ostrich industry and the importance of breeding,
nutrition and animal health which contribute to intensive ostrich production.
However, the requirements of VPN04 bio-security and disease control demand
a higher level of record-keeping for EU markets and are prohibitively
expensive for poor rural emerging farmers in the Eastern Cape.
Today the ostrich-industry slaughter numbers are declining and the number of
ostrich farms in South Africa have halved from 2011 to 2013. Many of the
remaining ostrich farms are not actively trading in ostrich products in the supply
chain. The industry is heavily dependent on the existing Western Cape
oligopolistic market channels for export. These marketing channels are co-
ordinated by a few employed individuals who are not ostrich farmers or have
limited long-term vested interest in the value chain.
The ostrich leather export is influenced mainly by, and susceptible to, the
vagaries in the fashion industry and economic climate, and ostrich meat
production is predominantly influenced by, and susceptible to, avian
influenza outbreaks and bio-security regulations.
269
Further research is needed to determine whether the EU meat ban was
imposed as a result of human health concerns or whether it was influenced by
EU protectionist economic policies. Since the first recorded South African
ostrich avian influenza outbreak in 2004 no ostrich-to-human transfer of avian
influenza has been recorded. The outbreak of avian influenza has not only
been a major constraint for the emerging farmers but also for the industry
as a whole.
The ostrich industry started investing in a value-adding process to pre-heat
ostrich meat in order to maintain export and EU shelf space. However, this
facility is only available to farmers who conform to VPN04 and have officially
registered farms with the SAOBC in Oudtshoorn. Although DAFF has
undertaken an intensive epidemiological investigation to determine the origin of
avian influenza, this has still not been determined, thus the risk of outbreaks will
continue to be a problem for the industry. The relationship between the ostrich
industry and government is becoming a central issue to export sustainability.
The South African authorities are highly protective of the South African poultry
industry which has led to serious restrictions on movement of ostriches. This
has hindered small ostrich-chick farmers from trading freely and the larger
commercial farmers have resolved to adopt this out-grower segment into their
farming programme. Thus it could be said that VPN04’s influence on the supply
chain has resulted in the commercial ostrich farmers and processors
becoming more vertically integrated into a Hierachical Model to the
detriment of the smaller out-grower ostrich farmers.
Based on the researcher’s pilot study, it is estimated that there are fewer than
10 emerging farmer ostrich programmes in Southern Africa participating in the
export supply chain. From the five case studies it was found that the main
impetus for three was not farming ostriches but land ownership and job
creation. The case studies showed that the participants were not originally
ostrich farmers as such and only one of the cases had participants with past
livestock experience. The programme beneficiaries in two out of the five case
studies were not interested in participating in any agricultural activities after the
ostrich programmes were discontinued.
270
The main driver for three of these case studies was land ownership and
that ostrich farming was a recommended means of activity for income on
the awarded land. Therefore most of the ostrich programmes studied can be
categorised as humanitarian projects with the main aim of alleviation of
immediate deprivation (Botha and Lombard, 1992:283).
Many emerging farmers had agreed to farm due to hearsay that ostrich farming
had strong returns. It is the researcher’s observation that the beneficiaries did
not know the true extent of the intensity of management inputs required when
farming ostriches. DAFF, which has a mandate to act in accordance with the
Strategic Plan for Supporting Smallholder Producers to improve the success
and number of smallholder producers, recognised that the Eastern Cape ostrich
processes needed throughput. Thus from 2008 to 2009 ostrich farming
provided an alternative use for small pieces of agricultural land in the Eastern
Cape. The emerging ostrich farmer programmes required tremendous
intervention from actors, namely, municipalities, government, social
development, commercial farmers, mentors, infrastructure developers,
processors, extension officers and feed companies. However, it is the
researcher’s opinion that in some cases the service providers may have
benefited more than the emerging farmers who were participating in these
programmes.
The formation of co-operatives will assist emerging farmers in achieving
the economics of scale required for integrating into the ostrich-industry
supply chain. However, as seen in some of the case studies, the promotion of
large groups for increased volume may be to the detriment of group cohesion.
The establishment of co-operatives for emerging ostrich farmers will assist with
pooling resources, establishing processing operations and coping with the
capital intensity of the industry. Capital can become a binding constraint which
may influence the success at the development stages. However, emerging
farmers with little available land, sponsored infrastructure and low risk-
bearing ability may be able to adopt capital-intensive ostrich farming
more easily.
271
The benefits of economies of scale have built up a stronghold which
provides the Oudtshoorn ostrich industry node with a possible indefinite
competitive advantage over all future new players. In the past the parastatal
marketing boards assisted with developing capacity and international trade
networks for a few selected farmers and the structures have long excluded the
emerging ostrich farmers from participating. Duplicating a separate processing
node with market channels for emerging ostrich farmers would not be possible
as it would require considerable capital. Therefore emerging farmers could be
susceptible to being price-takers in an oligopolistic industry with intensive
processing and market-controlled products. In this market environment it is
not only required to compete on price, but also on factors such as
product quality, livestock weight and volume.
This research confirms the statement by the SAOBC (2010:para. 5) that access
to land, capital, disease control and slow return are the main entry barriers for
emerging ostrich farmers. The high entry costs into the industry, through
intensive agriculture, high capital investments, VPN04 bio-security regulations,
processing know-how and EU relations tend to limit the industry’s competition
and profits. Furthermore, the introduction of EU heat-treated ostrich meat
has increased the complexity of the value chain and restricted export by
those who do not have access to this facility.
11.4 RECOMMENDED INTERVENTIONS
One of the objectives of this study was to devise a development path for
improved smallholder participation in the ostrich industry. The endogenous
development path is intended to contribute to planning and give direction for
emerging farmers. A sustainable design is essential in order to plot progress to
empowerment and participation in the supply chain. The following section
introduces a proposed development path with interventions to facilitate the
transition from subsistence to commercial ostrich farming (Figure 11.1).
272
The initial phase of the path requires impetus to overcome entry-level
constraints identified in this study, namely, dependency on mentors or DAFF,
limited knowledge of the supply chain, financial security and limited training and
market information. This is a decisive phase in which the private sector and
government can play an important role to help the farmers progress over the
threshold into the commercial farming arena. This phase is where government
legislation and black economic empowerment can provide the impetus for
programmes in the commercial industry. The Local Vulnerability Index provides
an indication of the scale of inputs and resources required. As discussed in this
study, the AgriBEE vehicle plays an important part in unlocking access to and
participation in supply chains and promoting entrepreneurial skills of black
people.
In Figure 11.1 the secondary axis represents the accumulative percent
according to the capacity instrument. The orange dotted line represents the
ideal capacity required for supply chain participation. This ideal capacity is the
total percentage of the four indexes, namely, LVI, HCI, ACI and MACI. The
greater the total of the index, the greater the potential capacity for participation
in the supply chain. The LVI and HCI are often in most cases difficult to change,
however the ACI and MACI indexes have the greatest opportunities for
improvement from interventions. With appropriate and timeous interventions
applied to the ideal capacity trajectory the farmers should develop and be
empowered to achieve the commercial farming arena.
273
274
The following interventions have been identified to empower emerging ostrich
farmers and to address the main forces on the development path:
11.4.1 Feasibility study of programmes and review of location selection
before initiation
In a rural environment the Local Vulnerability Index will have an influence on
required financial input for the establishment of emerging ostrich-farmer
programmes. Furthermore, modernisation is important if the farmers are to be
economically competitive while applying environmentally-sustainable farming
systems. The geographical considerations and industry development had an
important influence on the development of the ostrich industry. The processing
facilities, such as the abattoir, de-boning plant and tannery have been critical in
the development of the industry as a world leader. The network of farming
infrastructure, the agro-processing node, supporting enterprises, eco-tourism
and institutional support from a co-operative are worth billions of Rands. There
is only one processing node for ostrich products in the Eastern Cape, namely,
Graaff-Reinet, which is not in close proximity to the emerging farmers who
consequently face the detrimental effects of travel stress on skins and meat.
11.4.2 Providing supportive interventions for programme start-ups
None of the five case studies researched had received any support from the
ostrich industry for land and infrastructure development. Out-growers had
received their own infrastructure and feed from sponsors, which gave them a
competitive advantage which in turn resulted in a competitive product for
commercial farmers. Owing to the recent increase in labour wages in South
Africa, out-growers may also provide an alternative labour cost-saving for
commercial farmers. The governmental involvement and supporting service
providers had been central in initiating and maintaining the programmes.
However, few of the emerging ostrich farmers in these programmes have
managed to engage independently with the private sector.
275
DAFF facilitated most of the linkages with public-private partnership. This
intervention from both the governmental and the private sector is an important
part of facilitating the development process by involving investors so that they
can assist, identify and provide confidence in the programmes.
11.4.3 Improved selection of programme beneficiaries
According to LADR (2011:41), “farmers assisted should be selected on merit,
as not all farmers have the ability or desire to succeed”. More effort is required
to develop capacity and preparedness amongst candidates that have no
intention to participate or have little farming experience. The question is why
applicants in the cases studied have not been able to find employment and if
there have been limitations in their capabilities, whether these beneficiaries
have the capacity for intensive ostrich farming.
It is the researcher’s observation that in some cases studied the land
applications were primarily done to meet the procedural requirements for
access to finance. In three out of the five case studies the land beneficiaries
chose ostrich farming as a livestock option for land use, it was never the
intention to farm ostriches as a first option. The right selection of farmers is an
important start to programmes as it determines the abilities, knowledge,
leadership and the type of beneficiaries that will be able to overcome the high
entry costs. Intervention mechanisms such as the participation capacity
instrument have value in aiding the selection of candidates and could contribute
towards programme sustainability. The lower the farmer rating is on the
capacity instrument, the harder it will be for government and the private sector
to promote emerging farmers over the threshold into the advanced farming
arena.
276
11.4.4 Improved structure of emerging farmers’ co-operatives
Emerging farmers in a co-operative who face the same constraints will have a
greater advantage in approaching solutions to their common constraints
through collective action. Through an association they can pool resources and
benefit from shared market-orientation and supply chain governance. However,
it was found that with larger memberships, decision making was problematic
and the lack of cohesion increased the level of informality in the operations. It is
recommended that smaller groups should rather be formed and that a
constitution be adopted to govern procedures dealing with community issues
such as, finances, conflict and eviction of non-participating farmers. The
leadership of the programmes has had a strong influence on record-keeping,
financial decisions, budgeting and personnel co-ordination. The case studies
found that it was difficult for the farmers to receive instructions from people from
their own community. It was suggested that leadership within the co-operative
environment should originate from outside the community.
11.4.5 On-going and appropriate training for emerging ostrich farmers
Farming of ostriches is intensive and farmers require continuous guidance,
training and development in order to overcome constraints and achieve
independence from mentors and government interventions. Key areas for
ostrich farming discussed in this study that require strong understanding have
been: production records, financial records, breeding stock, disease prevention
and control, ostrich handling and feeding. The extent and level of training will
depend on the level of Human Capacity Index (discussed in Chapter 10). It is
recommended that farmers receive training in accordance to their capacity to
receive and apply the new knowledge or skills.
277
11.4.6 The role of government and mentors needs to be defined
The case studies suggested that the emerging ostrich farmers had a strong
dependence on mentors and DAFF and were unable to run the programmes
independently. It is at this threshold that emerging ostrich farmers need to
become independent and find a way to manage the bio-security requirements
on their own. This is vital if emerging farmers were to aspire to reach a
sustainable and advanced form of farming. In order for farmers to move away
from dependence they need to feel that they have ownership and are part of
the decision-making process. It is suggested that the mentors and DAFF need
to recognise the importance of timing in releasing emerging farmers into
sustainable independence and that this exit phase needs to be clearly defined
and communicated. In the pre-1994 period the ostrich industry built on strong
governmental market-protective policies, a highly-regulated agricultural industry
and the provision of state-sponsored irrigation schemes for a challenging
pastoral agro-ecosystem. It is the researcher’s observation that it would be
impossible to duplicate elsewhere the sizeable ostrich industry found in the
Oudtshoorn area in South Africa today.
The ostrich farming system is capital-intensive with high entry costs. Most of
the case studies revealed that the high entry costs had been sponsored by
local municipalities, social development and DAFF. However, it is the
researcher’s observation that this was not sufficient to enable farmers to reach
the advanced farming phase and achieve sustainable linkage to high-end
markets.
278
11.4.7 Reducing feed costs
Ostrich production is feed-based and will struggle to maintain profitability due to
increasing feed costs. Feed and nutrition are important influential factors in
animal growth. Since 70 percent of ostrich-farming costs are attributed to feed
inputs there is a need for further research into alternative feeds. Benson
(2013:1) claims that it is possible to develop feeds that farmers can produce on
their farms, but the farmers will need to be trained on how to utilise the crops to
ensure that they mix the rations correctly and that the rations are appropriate
for each ostrich growth cycle. The most appropriate type of product in this case
would be a supplement that includes the protein and the necessary vitamins
and minerals to mix with the lucern and maize produced on the farm.
11.4.8 Establishing programmes linkages to informal markets and
facilitating increased self-consumption
Since emerging ostrich farmers are largely dependent on the South African
ostrich industry oligopolistic market structures, interventions are needed to
provide further outlets for farmers to trade in the informal market. As a result of
the main ostrich industry a mature level of tourism has developed around the
Oudtshoorn area and the ostrich tourism industry has become an important
contributor to the local economics. Yet none of the cases studied had
diversified into this opportunity for eco-tourism income. Rural citizens who lack
skills or education or who are unable to engage in strenuous labour can benefit
by tapping into the potential that the ostrich-related arts and crafts have for job
creation and employment. It is suggested that further research be conducted on
opportunities for emerging farmers to exploit the tourist market by means of arts
and crafts.
279
An arts and crafts industry will provide further trade opportunities and improved
cash flow for the farmer. Important aspects of rural livestock tradition are the
ability to barter, the value of sales and self-consumption of livestock. In the
case studies there was no report of self-consumption of ostriches or use of any
of the ostrich by-products by the farmers. The ostriches were sold live to
commercial farmers or abattoirs without any consumption of products by the
farmer. This is contrary to the anthropological tradition of farming livestock in
rural areas. The dependence on distant marketing channels and export markets
with no domestic outlet has placed the rural farmer in a vulnerable position. It is
recommended that the emerging farmers involved in contract-farming
arrangements be given the option of benefiting from the by-products.
Furthermore, they should have facilities to produce products that can be sold at
informal markets, such as, biltong, feather crafts and eggs, but training and a
development platform will be required to stimulate this.
11.4.9 Developing new export markets
The bio-security requirements to export to Europe may be too far-reaching for
some of the emerging farmers. The results of the study indicated that most of
the farmers were not aware of the VPN04 regulations and it was not a main
topic of concern. The farmers were more aware of the consequences of the
VPNO4, namely, restricted ostrich movement, record-keeping, keeping
ostriches isolated from homes and sanitation requirements. However, it is the
researcher’s view that the influence of VPN04 may result in larger commercial
farmers no longer contracting to out-growers due to the restrictions and
cumbersome administration. This will see an increase in vertical integration
from hatchery to growing the birds to slaughter weight and increased exclusion
of emerging farmers. Stronger partnerships and interventions between out-
growers and commercial farmers are needed. There is a dependency on the
European market and alternative markets such as the BRICS nations, should
be considered, as some do not require the stringent bio-security measures or
pre-heating of high-risk meat. This will make marketing conditions easier for the
emerging ostrich farmers.
280
11.4.10 Alternative finance for the no-income months
One of the main constraints found in this study was the lack of cash flow for the
emerging farmers. Development funds assisted with establishing infrastructure,
however, the farmers were not accountable for the debt for the capital outlay. It
was noted that with no consistent monthly income, the emerging farmers found
it challenging to cover the costs between each production cycle. The out-
grower emerging-farmer system was unable to provide finance for the day-to-
day rural needs. The onus was on the farmers to plan financially for the five no-
income months and this situation was challenging for some farmers who were
financially illiterate. Therefore some of the farmers were dependent on grants or
non-farm income. Income interventions are therefore required to assist out-
grower farmers to bridge the gap from day-old ostriches to final payment. It
would also be advisable for farmers to diversify into other farming operations in
order to have proceeds for the lean months. It is also recommended that the
mentorship facility also act as an advisory institution to render financial advice
to the farmers.
11.4.11 Alternative marketing channels to export markets
Owing to the complex production systems, industrial processes and marketing
structures, ostrich farming is considered a highly intensive form of agriculture.
The production and process involved require a higher level of sophistication
and experience than those smallholder farmers were capable of. The ostrich
industry has been dependent on strong market channels and relationships to
deal with the European market. The EU protectionist economic policies have
limited the development of the agricultural sector by restricting market access
and this state of affairs has been detrimental to rural development (ICTSD,
2011:14). Owing to the limited ostrich-processing facilities in South Africa, the
emerging ostrich farmers will be dependent on the oligopolistic market channels
and will have to prove their efficiency and ability to produce quality products in
order to gain entry into these supply chains.
281
11.4.12 Representation of emerging farmers in the ostrich-industry
leadership structures
As discussed in Chapter 6, the emerging farmers do not have strong
representation in the SAOBC stakeholder structures. The emerging farmers
require a co-ordinating body that can serve as a mouthpiece in the greater
context. During the monopoly era the strategic decisions were taken by one
enterprise. After deregulation the entry of new role players and wider
participation resulted in loss of control in pursuing this agenda. A collective
approach of all the players (emerging and commercial) is required to maintain
the intellectual capital of the ostrich industry and share the national strategies
and risks, such as the bio-security requirements.
11.5 OPPORTUNITIES FOR FURTHER RESEARCH
Given the gaps identified by this study, the following areas for further research
and development have been identified:
New approaches in prevention and treatment of avian influenza;
Cost effective methods of pre-heating ostrich meat for export;
Alternative feed and reducing feed costs for ostriches;
Investigating reasons for the EU ostrich bans;
Opportunities for emerging farmers to exploit the tourist market by
means of arts and crafts;
Further testing of the participation instrument developed in this study
and refining of the ideal percent thresholds; and
Development of new markets for the South African ostrich industry.
282
11.6 CONCLUSION
The aim of the study was to explore interventions that could support the
transition from subsistence to commercial ostrich farming for high-value export
markets. According to the data from five case studies using a conceptual
participation capacity instrument, the ostrich farming programmes did not
achieve a high level of capacity to participate fully in the ostrich-industry supply
chain. The data showed that the emerging ostrich farmers had limited farming
knowledge, weak supply-chain leverage and had received limited training in
ostrich husbandry. Other constraints included; poor selection of beneficiaries,
conflict between participants, a lack of feasibility planning, weak economies of
scale, dependency on mentors and high feed costs.
The constraints were revealed using the participation capacity instrument
indexes developed by the researcher, namely, the Human Capacity, Agrarian
Capacity and Market-Access Capacity Indexes. The main forces which had an
influence on participation were the weak Local Vulnerability Index, high entry
costs, bio-security requirements, market conditions, limited marketing channels
and economic conditions. The case study programmes were discontinued when
the emerging farmers were unable to overcome certain constraints and/or
forces. It is the researcher’s view that the farmers in the five case studies
investigated did not overcome the initial phase of development and did not
progress to the commercial farmer stage. The private sector, commercial
farmers, mentors and DAFF played an important role in helping to overcome
the high entry costs and weak Local Vulnerability Index.
283
The following is a summary of the interventions suggested from this study:
Feasibility study of programmes and review of location selection before
initiation;
Providing supportive interventions for programme start-ups;
Improved selection of programme beneficiaries;
Improved structure of emerging farmers’ co-operatives;
On-going and appropriate training for emerging ostrich farmers;
The role of government and mentors needs to be defined;
Reducing feed costs;
Establishing programmes linkages to informal markets and facilitating
increased self-consumption;
Developing new export markets;
Alternative finance for the no-income months;
Alternative marketing channels to export markets; and
Representation of emerging farmers in the ostrich-industry leadership
structures.
The development path mapping and participation capacity instrument were
introduced as mechanisms for developing emerging farmer programme growth
and empowerment. The developmental path would facilitate and assist planning
through the ostrich-industry constraints and forces. As discussed, the capacity
instrument has the potential to measure the likelihood of sustained participation
in other agricultural sectors. In the same way this intervention can be used to
measure and evaluate programmes at regular intervals to assist in progress
across different programmes over a period of time
284
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