Department of Agricultural Economics

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Browsing Department of Agricultural Economics by browse.metadata.advisor "Anseeuw, W."

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    Analysis of smallholders’ farm diversity and risk attitudes in the Stellenbosch local municipal area
    (Stellenbosch : Stellenbosch University, 2015-04) Tshoni, Simphiwe; Van Rooyen, C. J.; Anseeuw, W.; Stellenbosch University. Faculty of Agrisciences. Dept. of Agricultural Economics.
    ENGLISH ABSTRACT: The objective of this study was to consider whether smallholders operate within homogenous or differentiated farming systems i.e. a similar “‘one type”’ system or a system that could be described as a smallholder typology consisting of a number of farming types. The enquiry firstly described and analysed farm diversity and then developed risk attitude profiles of smallholder farmers in the Stellenbosch local municipal area in the Western Cape province of South Africa. The problem statements, directing this study is that there is a general misconception that smallholders are all “‘the same’” and that they all operate within one ‘“representative farming model”’; and that the majority of smallholders are risk averse. These views also argue that all smallholder farmers are not primarily directed at profit objectives, but that social considerations are most relevant and that different social orientations are shaping farming systems. These views are investigated in this study and the hypotheses directing this analysis is that smallholders in the study area are not a homogenous group; rather types within a broader farming typology, with different orientations and objectives and with different risk attitude profiles. The study originated as part of an international collaborative investigation – the South African Agrarian Diagnoses project, a joint research project of the Agro Paris Tech/Agence Francaise de Development, the Standard Bank Centre for Agribusiness Development and Leadership, Stellenbosch University and the University of Pretoria in to farmer diversity and farmer typologies in South Africa. This investigation looked at smallholder farming in different agrogeographical areas in South Africa, with this particular study focussing on potential smallholder farmer diversity in the Stellenbosch local municipal area. The Stellenbosch local municipality and Western Cape Department of Agriculture provided logistical support, information to this investigation and participated in focus group sessions. Smallholder activity in this study was defined to include both small scale farming activities and the mobilisation of smallholders/farm workers in so-called ‘“farm worker equity schemes’” – a type not included in the other regions. Data was collected from eight smallholders’ farming communities and the four different farm workers’ equity share schemes through surveys and interviews. The following towns and hamlets: Franschhoek, Kylemore, Lanquedoc (Herbal View and Spier Corridor), Pniel, Jamestown, Raithby, Lynedoch and Koelenhof; and four farm workers’ equity share schemes were: Swartrivier vineyard project, Koopmanskloof vineyard project, Enaleni Trust and Poker Hill vineyard project. Personal interviews and focus group discussions were conducted and cluster analysis was used for the diversity (typology) analysis and the Likert scale was employed to measure risk attitude profiles. A non-probability sampling approach was used to select a sample size of 49 respondents. The reason for using non-probability sampling technique was that when one wants to do the diversity analysis, one must try to include many respondents in the sample and the farmers that are included must be representative of the population from which they are selected. The variables selected as determinants of farm diversity included information about: demographics and households, land ownership and occupation, farming activities, farming objectives, agricultural inputs, labour, equipment, farming constraints, access to markets, financial support services, educational and training services, extension services and reasons for quitting farming activities. From this, different farming types and typologies were identified, described and structured. Preference indications for different risk management strategies were then used to measure and describe the risk attitudes of different types of smallholder farmers using the Likert risk attitudinal scale. The results and findings confirmed the study hypotheses relating to diversity in smallholder farming in the target area, namely that smallholders in this geographical area are not a homogenous group and rejects the stated hypotheses that most smallholder farmers are risk averse. A Stellenbosch smallholder typology, with six different farming types were established viz: type 1 – farmland-occupying but non-farming households (10.2% of the sample), type 2 – pensioner – livestock farmers (16.3% of the sample), type 3 – part-time cattle farmers (14.3% of the sample), type 4 – commercial equity share farmers (16.3% of the sample), type 5 – retirement planning crop producers (20.4% of the sample), and type 6 – commercial crop producers (22.5% of the sample). With regard to risk profiles, risk attitudes varied between these types and also within each type, hence risk attitudes for smallholders are also not found to be similar. The results revealed that those smallholder farmers moving on a development path towards commercial agriculture (types 4, 5 and 6) were risk preferring; less commercially orientated farm types (types 1, 2 and 3), showed risk averse and risk neutral orientations. The risk profile percentages of farmers interviewed were 43.2%, 34.1% and 22.7%, respectively for risk preferring, risk neutral and risk averse; this finding rejects the stated hypotheses. From these results, a number of issues, relevant to development support programmes, were proposed for further agricultural economic research. The most important of these are related to: appropriate development support strategies related to farm types and the potential development paths for each type; and the structuring of appropriate ‘“risk management instruments”’ for each type, in particular to support smallholder farmers; with a development trajectory towards commercial farming, i.e. to support emerging commercial farmers – an important category of farming listed in current government policy and in the National Development Plan.