Contract farming in developing emerging farmers in South Africa : exploring the Gledhow Mansomini Sugarcane Scheme
Thesis (MBA) -- Stellenbosch University, 2011.
Extensive literature exists on the challenges that hinder the growth and development of small-scale farmers in agriculture. These small-scale farmers’ challenges can be broadly classified into financial, technical and market challenges. Despite the awareness and the debate that favours progressing small-scale farmers from subsistence agriculture to commercial agriculture, financiers consider this group of farmers as of high risk and low returns. The emergence of contract farming as a mechanism to integrate small-scale farmers with agribusiness firms, agro-industrial companies, supermarket chains, and processors of agricultural produce has rescued the small-scale farmers from going into oblivion. Contract farming promises benefits for both the farmers and the contract sponsors. In the face of the benefits that contract farming hold, the concept has been critiqued as being an exploitative mechanism that contract sponsors use on the growers. This research evaluates the contract farming arrangement between Gledhow Sugar Company and Mansomini Farmers’ Cooperative. The study assesses how the scheme plays a part in the provision of access to finance, technical support and a guaranteed market access for the small sugarcane farmers. It explores how Gledhow Sugar Company’s structures manage to reduce the associated risk in providing finance to the small-scale farmers. The analysis of findings from the interviews confirms that the structure provides the small-scale sugarcane farmers with finance, technical support and a guaranteed market. However, for Gledhow Sugar Company to continuously achieve its aim and simultaneously develop the farmers there is a need for Gledhow Sugar Company to provide the farmers with more clarity on their role in the arrangement and to make the farmers embrace the long-term vision of the contractual arrangement.