Integration of emerging cotton farmers into the commercial agricultural economy

[摘要] English: The broad objective of the study was to generate information that will facilitate theintegration of small-scale emerging agriculture into the South African economy.The specific main objectives were to:- Identify the constraints to market participation and commercialorientation of the small-scale emerging farmers;- Identify potential successful and unsuccessful farmers;- Assess the potential role of joint venture initiatives as acommercialization model;- Assess the impact of market participation to farmers' livelihoods andtheir welfare in general;- Analyse both the structure and performance of the cotton industry aswell as the profitability of the cotton crop;- Discuss the implications of the findings for policy and possibly additionalresearch necessary to improve small-scale agriculture.The study was conducted in two cotton growing regions of the MpumalangaProvince, namely Moutse and Nkomazi. A sample of 177 small-scale cottongrowers was drawn from emerging cotton growers. The basis for analysing andunderstanding of the major factors behind the success or failure of small-scalefarmers' commercialisation lies within the New Institutional Economics school ofthought. Contract farming is an institutional marketing arrangement widely used bysample farmers to reduce transaction costs. Its main advantage is that it offersfarmers a guaranteed market. For processing companies (ginners) the advantageis that production is more reliable and guaranteed than open market purchases.As a result of guaranteed market, cotton has the highest commercialisation indexof 0.99 and 1 in Moutse and Nkomazi respectively. The main challenge facing thecontinuation of contract farming is the non repayment of loans with a resultantdecline in the level of support that farmers receiveCotton plays an important role in the farmers' livelihood in terms of employment,income, household gender relations and food security. The role of cotton in ruraldevelopment is, however, constrained both by external and internal factors. Lowinternational prices arising mainly as a result of subsidy policies in the wealthycountries constitute the greatest limiting factor to cotton farmers in developingcountries.Profitability analysis shows a gross margin of R1 072 per hectare in Moutse whichis 52% higher than Nkomazi gross margin. Three main critical variables thatinfluence the profitability of cotton production are production levels, costs and priceas influenced by the quality of seed cotton produced. Break-even analysis revealsthat when price is set at R3.65/kg, the break-even yield for Moutse and Nkomazi isestimated to be 1 073kg and 917kg per hectare of seed cotton respectively. Whenthe seed cotton price declines larger quantities of seed cotton have to be producedto break-even.Cluster analysis revealed two main groups of farmers categorised according totheir entrepreneurial skills, namely very successful and less successful farmers.The very successful group is dominated by a group of relatively young farmers with a high level of entrepreneurial skills. In addition, this group has a relativelyhigh percentage of risk takers (10%) compared to 2% for less successful farmers.The hypothesis that transaction costs and other closely related factors influencecommercialisation was empirically tested using logistic regression. Statisticallysignificant factors were found to be age, ability to speak English, region, ownershipof transport, access to market information, distance to market, dependency ratio,trust, ownership of livestock and land size. The results do not support thehypothesis that the level of commercialisation increases with land size. A unitincrease in land size decreases the probability of commercialisation by 17%.In view of these findings, the following policy proposals are suggested: There is aneed to develop a typology of small-scale cotton producers in order to operatedifferent kinds of credit schemes based on farmers' level of production, yield andperceived risk. Secondly, contract farming is the future of agricultural productionand marketing and should therefore be promoted. In this regard, there is a needfor a well developed and efficient legal system in which the government has a roleto play. Thirdly, consolidation of farmers' organisation is critical. If well developed,banks should, inter alia, consider group lending through working with effectivefarmers organisations.Finally, successful integration of small-scale agriculture relies heavily on theselection of beneficiaries. Future research studies should take cognisance of nonhomogeneityof small-scale farmers and their aspirations. There is a need for astudy that focuses on attributes of a successful entrepreneur and such attributesshould be used for the selection of land reform beneficiaries.

[发布机构] University of the Free State