INSTITUTIONAL INNOVATIONS LINKING SMALL-SCALE FARMERS TO PRODUCE MARKETS IN SOUTH AFRICA

Abstract

The importance of linking small-scale farmers to lucrative markets to improve livelihoods and food security in developing countries is well established (Singla et al., 2011). Increased agricultural productivity by small-scale farmers contributes to household food security while marketed surplus sustains livelihoods and contributes to food security in both rural and urban areas. Market access, however, remains a major impediment for most small-scale farmers in developing countries (Chamberlin and Jayne, 2011). Promoting horticultural production and marketing is widely seen as an effective strategy for improving income and nutrition for smallholder farmers with relatively modest investments. The objective of this chapter is to analyze alternative institutional mechanisms that strengthen smallholder horticultural farmers' access to lucrative markets in South Africa.First, the chapter provides a rationale for intervention within South Africa's food security and development objectives. Against this background, the chapter discusses the socioeconomic, structural and historic challenges faced by small-scale farmers trying to access lucrative markets. Not unique to South Africa, the challenges include low volumes, poor quality, seasonality in supply, poor food safety and traceability, high transportation costs, limited value addition, lack of business culture, poor market information and limited track record. Evaluating solutions, the chapter classifies institutional innovations that improve market access for smallholder farmers into two distinct categories: push versus pull strategies. Focusing primarily on the farmer, push strategies (such as micro finance institutions, collective action, training and extension) primarily seek to address the challenges faced by smallholder farmers at farm-gate level while taking the market as given. By contrast, pull strategies (such as market information systems, contract farming, alternative food networks fresh produce markets and preferential procurement) focus on creating lucrative opportunities in the market. The chapter maps the market access challenges against the institutional innovation in the South African context.To illustrate the above, the chapter employs three case studies of institutional innovations — Abalimi Bezekhaya (Western Cape), Umbumbulu Agri-Hub (KwaZulu-Natal) and Westfalia Estate (Limpopo) — each offering alternative business models that link farmers to markets. Using two criteria, rural–urban linkages and uniqueness of mechanism, the cases were chosen to demonstrate different market access strategies that were recently implemented in South Africa. Successful mechanism to sustain smallholder's market access in South Africa requires a combination of both push and pull strategies. This chapter closes with a look at these three peripheral issues that are important to smallholder market access in South Africa.