Browsing by Author "Mkhabela, Lonhlanhla Samantha"

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    Comparison of technical efficiency between cooperative member and non-member farmers : a case of small-scale sugarcane farmers in the Nkomazi Local Municipality, Mpumalanga province, South Africa
    (Stellenbosch : Stellenbosch University, 2023-03) Mkhabela, Lonhlanhla Samantha; Punt, Cecilia; Stellenbosch University. Faculty of AgriSciences. Dept. of Agricultural Economics.
    ENGLISH SUMMARY: The aim of the study was to determine whether cooperative membership improved technical efficiency for small-scale sugarcane farmers in the Nkomazi Local Municipality, in order to test the relevance of the motivation surrounding cooperative formation. The study analysed technical efficiency of small-scale sugarcane farming in order to identify the potential increase in sugarcane output using the available inputs and to determine if cooperative membership reduces technical inefficiency, in order to improve farming activities. 100 small-scale sugarcane farmers in the Nkomazi Local Municipality were selected and telephonically interviewed with regard to the 2018/19 sugarcane production season. The Stochastic Frontier Approach (SFA) was employed for data analysis. Results indicated that technical efficiency of cooperative member farmers ranged from 19.81 % to 93.10% with the mean technical efficiency of 70.77%. For non-member farmers’ technical efficiency ranged from 14.08% to 95.76% with a mean of 69.57%. From the empirical results it was concluded that there is no statistically significant difference in mean technical efficiency between cooperative member farmers and non-member farmers in the Nkomazi Local Municipality. The results from the Cobb-Douglas stochastic frontier production model confirmed that an increased use of inputs increases sugarcane output, because the coefficients of all the explanatory variables (farm size, permanent labour and fertiliser) were positive. Only farm size and permanent labour were found to be statistically significant. The results of the inefficiency sub-model showed that only farmers’ experience had a statistically significant (at 10%) contribution in increasing technical efficiency. Results further indicated that being a member of a producer cooperative reduces technical inefficiency in sugarcane production, but the estimated coefficient was not statistically significant. Hence, one can conclude that being a member of an agricultural cooperative in the study area does not serve as a beneficial factor to increase technical efficiency. This finding is in line with the work of Ortmann and King (2007a) who argue that agricultural cooperatives serving small-scale famers in South Africa did not contribute to improving agricultural development and the economic well-being of its members. However, it contrasts with work of Jaime and Salazar (2011) who stated that participating in cooperatives improves technical efficiency. This suggests that cooperatives’ quality and ability to respond to market failures should also be taken into account. Given that the experience of small-scale sugarcane farmers was found to increase technical efficiency, the study recommends that new entrants should learn from the older farmers before the latter exit, in order for them to gain practical farming knowledge. The study further recommends that those farmers that achieved high sugarcane output as well as high technical efficiencies, can be used to demonstrate the benefit of good agricultural practices in reducing the gap between actual and potential sugarcane output. The results show that there is an opportunity to increase sugarcane output with current input use and technology. Given the result that cooperative member farmers were not found to be significantly more technically efficient compared to non-members, cooperatives in the Nkomazi Local Municipality should carefully consider how they can improve their service to their members.