Analyzing Smallholder Farmers Performance - Farmer Typology, Technical Efficiency, Market participation, Policies and Management Practices Evidence from Limpopo Region of South Africa
by Sara Yazdan Bakhsh
Date of Examination:2023-09-28
Date of issue:2024-02-22
Advisor:Prof. Dr. Jan-Henning Feil
Referee:Prof. Dr. Bernhard Brümmer
Referee:Prof. Dr. Xiaohua Yu
Persistent Address:
http://dx.doi.org/10.53846/goediss-10370
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Abstract
English
Sub-Saharan Africa's population is projected to grow to almost double its population by mid- century, leading to more demand for food and agricultural products. As the main source of food and livelihood, the agricultural sector is amongst the most important economic sectors in African countries. Yet, it is challenged by the need to provide sufficient food for a teeming population with limited resources and faced with accelerating climate change. Addressing the demand for food and agricultural products requires sustainable development of agricultural production systems and policy reforms to transform agricultural production systems to meet the SDGs of the United Nations Development Program with the main objective of ending poverty and hunger, attaining food and nutrition security, and sustaining natural resources. Small-scale farmers constitute the vast majority of farmers in RSA and have the potential to significantly contribute to rural development and, more generally, food security and poverty reduction in rural areas by providing food for own consumption and a growing urbanized population, generating employment and income. Therefore, these farmers are the potential elements in transforming Southern Africa’s agricultural and food system and the transition to sustainability. Despite various national and provincial government supports for small-scale farmers in RSA to enhance the agricultural sector in recent decades, these farmers are still vulnerable to diverse agricultural risks and perform below their potential production capacities with low productivity. In this respect, considering the prominent role of small-scale farmers in the development of the agricultural sector and rural economic growth in RSA, this dissertation aimed to investigate the main fundamentals of rural transformation to support designing and implementing efficient and effective policies to improve agricultural productivity and efficiency levels of farmers, as well as enhancing market orientation to ensure the economic performance of small-scale farmers and food security. Small-scale farmers, in general, and particularly in RSA, are highly heterogeneous regarding farm characteristics, ranging from socio-economic features to resource endowments and agro-ecological dimensions, as well as farmer characteristics such as risk attitude and their perceptions from different sources of risks, which result in diverse types of farming, levels of technology adoption, and degree of commercialization. Such heterogeneous types of small-scale farming systems require different forms of government interventions, depending on the objectives and characteristics of each group. To design accurate and effective policy measures, a crucial pre- requisite is understanding the structure and context of these heterogenous small-scale farmers comprehensively. In this regard, the first essay focused on the typology of small-scale farmers based on a wide range of variables regarding their personal, farm, and context characteristics, which support an effective, target-group-specific design and communication of policies. An unsupervised machine learning approach, PAM, was applied to the survey data. According to the results, the small-scale farmers were classified into four different groups: subsistence- oriented, semi-subsistence-livestock-oriented, semi-subsistence-crop-oriented, and market- oriented farmers. The key factors in the farming system diversity were the farmer characteristics such as education and risk attitude, farm performance such as agricultural production, diversification, market-oriented, as well as access to finance. Moreover, these heterogeneous farmers had diverse perceptions of risks depending on their main farming goals and typologies. Accordingly, climatic risks were perceived as the primary source of risk for subsistence-oriented and semi-subsistence farmers. In contrast, market and price risks were considered substantial for market-oriented farmers. Following an understanding of the structure and context of small-scale farmers in rural communities of RSA, the second essay investigated the main drivers of the transition within the types of small-scale farmers towards commercialization and more contribution to local and national food system. In this regard, the sequential bivariate probit selection model was employed to identify the main determinants of the transitions from subsistence to the market-oriented farming system while controlling for the endogeneity and selectivity problems that may arise due to correlation of unobserved heterogeneity and observed explanatory variables. The results emphasize the importance of adopting new technologies (e.g., drip irrigation system), transport asset ownership, farmer organizations and cooperatives with other farmers, and market information as the main drivers of the transition to market-oriented farming. Considering maize as the most prevalent agricultural crop in the smallholder farming system, this dissertation's third essay focused on the small-scale farmers' maize production efficiency by explicitly considering current and future perceived production risks. A single-step SFA considering double heteroscedasticity in both the efficiency and idiosyncratic terms was applied. The results highlighted the significant effects of drought and pests on the level and variability of maize production. Furthermore, our findings underlined the importance of irrigation on maize productivity. At the same time, credit access, social grants, being a member of an agricultural organization, extension agent support, access to agricultural markets, and owning cattle positively impacted TE. Finally, the results of the three essays in this dissertation provided policymakers and farm households insights into the main underlying factors that influence the performance of small-scale farmers in order to develop some risk management options considering different farm types. These insights can be used to reform and adjust current policies and to create new initiatives to stimulate farmers The research was conducted in the Limpopo province, one of the least developed provinces in RSA, compounded by an acute population growth rate and poverty. A large share of the population live in rural areas and farming is their main occupation. Five study areas were selected from this province based on their climatic aridity differences, demography and socioeconomic factors. A structured questionnaire was conducted between April and July 2019 in selected villages to interview in person with the farm household heads or the persons responsible for farm management. The purpose of the survey was to collect information on socioeconomic, demographic, farm and household characteristic as well as information on resource endowment and agricultural activities during 2018-19 crop seasons. Moreover, the information regarding risk attitude and risk perception of different sources of risks were collected from each farmer. Using a purposive random sampling procedure, data was collected from 212 small-scale farm households across the five selected villages in Limpopo.
Keywords: small-scale maize farmers; Technical efficiency; Market-oriented transition; farmer typology; production risks
