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Connecting Small-Scale Farmers in Grabouw, South Africa to Formal Markets: an Assessment of the Key Constraints

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Connecting Small-Scale Farmers in Grabouw, South Africa to Formal Markets: an Assessment of the Key Constraints Connecting small-scale farmers in Grabouw, South Africa to formal markets: an assessment of the key constraints Supervisor: Dr. CJP (Kees) Burger Martijn Hendriks Master Thesis Development Economics Group International Development Studies Course code: DEC 80433 December 2014 MSc Thesis Martijn Hendriks 2014 Abstract In South Africa, small-scale farmers are often not connected to (formal) markets and sell their production inefficiently. Extensive research has been conducted to find the constraints faced by the South-African farmers to connect to markets. However, in general little progress has been observed that enabled the small-scale farmers to connect to the markets. This thesis aims to establish the main constraints that limit the small-scale vegetable farmers in Grabouw, South Africa, to connect to the Cape Town Market. Data were collected during two months fieldwork in Grabouw, both observations and interviews were conducted. The findings are compared to prior studies among small-scale farmers and market connections. The recommendations resulting from this thesis are compared to earlier recommendations in a similar South-African case. Transport costs are identified as a key constraint for the farmers in Grabouw, other important constraints are language barriers, illiteracy, the self-consumption of the production, and a preference for quick (but smaller) profits. The main recommendations resulting from this study are organizing cooperative transport between the farmers and enabling value-adding activities such as grading and packing vegetables. Key words: Small-scale farmers, market connection, vegetable farming, economic development, Grabouw, South Africa, Image cover page: farmers connected to the Elgin Learning Foundation in Grabouw, South Africa. From http://www.elf1.co.za/csi.php i MSc Thesis Martijn Hendriks 2014 Table of Contents Abstract .................................................................................................................................................... i 1. Introduction & background information ............................................................................................. 1 Introduction ......................................................................................................................................... 1 1.1 Sector information ........................................................................................................................ 1 1.2 Area of interest .............................................................................................................................. 2 1.3 Demographics ................................................................................................................................ 3 2. Problem statement .............................................................................................................................. 5 3. Research methodology & background ................................................................................................ 6 3.1 Research location & background................................................................................................... 6 3.2 Qualitative Data Analysis ............................................................................................................... 7 3.2.1 Sources ................................................................................................................................... 7 3.2.2 Methods ................................................................................................................................. 7 4. Literature findings about market connection for small-scale farmers............................................ 9 4.1 Economies of scale and farming .................................................................................................... 9 4.2 Farming opportunities ................................................................................................................. 12 4.3 Conclusion ................................................................................................................................... 14 5. Small scale farming in Grabouw: preliminary information ....................................................... 15 5.1 General information .................................................................................................................... 15 5.2 Farmer’s markets ......................................................................................................................... 18 5.3 Cape Town Market “Epping” ....................................................................................................... 20 6. Production in Grabouw ................................................................................................................. 23 6.1 Production yield .......................................................................................................................... 23 6.2 Inferior Farm locations ................................................................................................................ 24 6.3 Lacking agriculture inputs & investments ................................................................................... 25 6.4 Lacking (basic) agriculture knowledge ........................................................................................ 26 6.5 Produce opportunity costs .......................................................................................................... 27 6.6 Farm Intrusion ............................................................................................................................. 28 6.7 Weather extremities ................................................................................................................... 30 6.8 Summary...................................................................................................................................... 31 7. Behavioral aspects ............................................................................................................................. 32 7.1 Knowledge transfer ..................................................................................................................... 32 7.2 Language barrier.......................................................................................................................... 33 ii MSc Thesis Martijn Hendriks 2014 7.3 Entrepreneurship attitude ........................................................................................................... 34 7.4 Procrastination ............................................................................................................................ 35 7.5 Other behavioral factors ............................................................................................................. 36 7.6 Summary...................................................................................................................................... 36 8. Marketing influences on small-scale farmers ................................................................................... 38 8.1 Transport costs ............................................................................................................................ 38 8.2 Marketing knowledge .................................................................................................................. 40 8.3 Transaction methods ................................................................................................................... 42 8.4 Summary.......................................................................................................................................... 43 9. A case study comparison .................................................................................................................. 44 9.1 Relevance .................................................................................................................................... 44 9.2 Literature discussion ................................................................................................................... 45 9.3 Conclusion ................................................................................................................................... 49 10. Discussion ........................................................................................................................................ 50 Reference list ......................................................................................................................................... 52 iii 1. Introduction & background information Introduction Small-scale farmers in Grabouw have minimally evolved during the previous century. Their production output has increased minimally and new marketing techniques are not applied. The produce is sold on informal markets in Grabouw, which mainly consists of neighbouring households. Commercial farmers however, have greatly evolved and currently maintain a sophisticated marketing and production system and is supported by quality infrastructure. Their produce is supplied to various formal markets, including the Cape Town Market, which is the largest fruit-and vegetable market in South Africa. Therefore, questions arise if opportunities exist for small-scale farmers in Grabouw to supply their products to this market as well and which obstacles withholds them from supplying? This first chapter contains the background information, including information about the
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