Profitability and market performance of smallholder potato enterprises in the Eastern Cape Province, South Africa

Abstract

Potato (Solanum tuberosum) is one of the major staple crops and cash crops in sub-Saharan Africa. Its reputation continues to rise due to the increase in human population and the demand for potatoes is predictable. Potato-produce has a good market reputation and is the major source of household income in developing countries, especially South Africa. However, the increase in potato enterprise comes with its share of challenges that need to be addressed. Smallholder farmers in South Africa are still facing challenges in accessing and participating in lucrative and agro-food value chains, hence their farm returns are very low. There are very few research studies that have assessed the profitability and market performance of potato enterprises. Therefore, this study aimed to investigate the profitability of smallholder potato enterprises in the Eastern Cape Province. A multi-stage sampling procedure was employed to select 160 potato farmers. Primary data were collected using a structured questionnaire. Descriptive statistics, gross margin analysis, benefit-cost ratio and marketing margin analysis were used to analyze the data. The study results reveal that the potato enterprise is profitable and contributes to farmers' well-being. Farmers and sellers determined the price of potatoes. The reason for this market conduct is due to the weak characterization of smallholder farming. Performance analysis established that the total gross marketing and profit margins were highest when farmers sold potatoes to consumers and the lowest when farmers sold to middlemen and retailers. The study recommends that policymakers and government invest in improving infrastructure and educational training of farmers in terms of marketing and taking farming as agribusiness. The study further recommends that policymakers and farm organizations must strengthen institutions that take reliable and timely market information; established potato markets close to the farmers, especially those residing in rural areas. There must be a partnership established between research institutes and universities so that they constantly contribute by releasing high-yielding and disease-resistant varieties to advance the production and productivity of the vegetable sector. The study suggests that there is a need for government involvement to create strong market relations between farmers and consumers and to give suitable training to agricultural extension agents. Key words: Eastern Cape, Food security, Gross margin, Potato enterprise