A framework for the improved competitiveness of resource poor farmers
Thesis (MScEng (Industrial Engineering))--University of Stellenbosch, 2009.
South Africa has a two-fold agricultural sector consisting of large-scale, industrialised, commercial farmers, as well as small-scale, resource poor subsistence farmers. One of the aspirations of the post-1994 South African Government is to rectify the imbalances in South African agriculture, where less than 20% of the farmers produce more than 80 % of total national agricultural products. In an attempt to improve supply from previously disadvantaged farmers, a land redistribution programme was launched with the goal of transferring 30% of total agricultural land to black farmers by 2014. However, farmers that are beneficiaries of the land transformation and redistribution programme often struggle to sustain the previous levels of productivity of the land. This is due to inexperience in macro-agriculture as well as a lack of resources. In such cases the beneficiaries revert back to subsistence type farming on previously productive and successful commercial farms. This phenomenon can have a devastating effect on the country’s food security, Gross Domestic Product, unemployment rates and the farmer’s prosperity and development opportunities. By reverting to small-scale farming, access to formal marketing chains is also restricted because of the economies of scales required to sustain a competitive supply to these markets. Urgent strategies are therefore required to improve the competitiveness of farmers who farm on a small scale due to restricted resources and inexperience. In this regard two proven theories to analyse industries for improved competitiveness exist, namely value chain analysis and clustering. Both are investigated in this study in order to determine their suitability for application in the emerging farming sector of South Africa. Value chain analysis has been widely applied to production and manufacturing industries (including agricultural production and agri-food manufacturing) to scrutinise production processes. Valuable insight into an industry’s strong and weak points can be gained by studying various factors. These include the inputs required for the manufacturing of the final product, the steps or processes required in the chain of events, the value added in each step, the contributors in the chain, as well as the linkages between the contributors. Knowledge is also gained regarding chain and process optimisation potential for improved competitiveness. The clustering of small firms to improve their ability to compete in formal markets has received a significant amount of academic interest over the past 100 years. In this regard it is important to determine the factors that influence competitiveness, and to develop strategies to improve the potential of small-scale manufacturing firms to compete with larger scale enterprises. The clustering or grouping of small firms to co-operate with each other and to compete against larger firms – as opposed to competing against each other – has resulted in improved competitiveness for many small firms across the world. A number of common key success factors for improving the competitiveness of smallscale, resource poor farmers are identified in this study through the investigation of a host of case studies. The results from these case studies also provide adequate evidence that the analysis and upgrading of value chains, as well as the promotion of collective action by small farmers, are key components for improving competitiveness and market access. This study focuses on the development of a framework to guide the development of strategies for improving competitiveness amongst small-scale, resource poor farming industries, including a production cost analysis sheet to calculate the competitiveness of farmers in this sub-sector. The Framework is also evaluated for its functionality by looking at the implementation thereof amongst a group of emerging farmers in the Western Cape.