Scenario simulation of small farms’ production efficiencies in the Eastern Cape Province, South Africa

Abstract

Smallholder agriculture is not achieving its pivotal role of attaining food security in developing countries like South Africa. In rural areas, smallholder farmer’s efficiencies have always been hindered mostly by some factors beyond their control such Agro-ecological factors. The challenge is how agriculture can be a key component of the drivers of rural economic development. This article presents a scenario simulation of small farms’ production efficiencies in the Eastern Cape Province, South Africa in three major agro-ecological zones namely; Grassland, Savannah and Karoo. A combination of pedo-climatic and socio-economic data in the selected villages were collected from 223 respondents in the three major agro-ecological zones: 77 in the Grassland zone, 73 in the Savannah and Karoo zones respectively. The Stochastic Frontier Analysis (SFA) in the Cobb-Douglas functional form was used to model technical efficiency of the integrated small farms under different productive scenarios. The stochastic frontier analysis revealed a declining impact of soil fertility status but improved efficiency under climate variability. Overall, integrated small farms in the study areas are inefficient in their production exercise but comparatively, they are efficient under climate condition than other productive environments. There is potential for smallholder farmers to increase efficiency levels and thus total output by raising yields per hectare. In the short-term, the use of more intensive land-augmenting inputs such as fertiliser and irrigation in medium and low soil fertility agro-ecological zones can enhance productivity. In the long run, output can rely on improvements in technical efficiency.