Entrepreneurial development pathways for smallholder irrigation farming in KwaZulu-Natal : typologies, aspirations and preferences.
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Date
2017
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Abstract
Smallholder irrigation in South Africa is strategically recognized as an important sector
in addressing rural poverty, food insecurity and rising youth unemployment. However,
despite the government’s efforts and huge investment, the sector has failed to make a
meaningful contribution to overcoming these challenges. The poor performance has
been attributed to the failure of the existing programmes to develop the human and
social capital to manage the schemes and effectively engage in market-oriented
agricultural production. This has resulted in the inability of smallholders to utilize the
opportunities availed through irrigation farming.
South Africa’s national policies identify entrepreneurship as an appropriate
intervention strategy for improving the performance of smallholder irrigation.
However, to unlock entrepreneurship, a better understanding is required regarding
smallholder farmer behaviour vis a vis the relevance/application of the concept to
smallholders, and their aspirations, heterogeneity and preferences for irrigation water
management. Thus, the objectives of the study were: to assess the validity and
applicability of the mainstream concept of entrepreneurship to smallholder irrigation
farming in South Africa and identify avenues of adaptation to make it relevant; to
identify sources of smallholder heterogeneity and determine the farmer typologies in
smallholder irrigation, accounting for psychological capital; to examine aspirations of
smallholder farmers to expand irrigation crop production; and assess farmer preferences
for managing irrigation water resources and their willingness to pay for irrigation water.
The data for the study came from a stratified random sample of 328 smallholders in and
around Makhathini and Ndumo-B irrigation schemes in Jozini, KwaZulu-Natal, South
Africa. The data were collected through a household questionnaire survey and focus
group discussions. The study employed literature review, descriptive analysis and
several empirical approaches (Principal Component Analysis, Cluster Analysis,
Heckman two-step selection model and choice experiment modelling). The research
uniquely introduced and integrated the concept of psychological capital to the
Sustainable Livelihoods Framework literature to enhance understanding of
entrepreneurship among smallholder farmers.
The findings showed that smallholders do not conform to the mainstream definition of
entrepreneurship which is mainly the result of the neoclassical economics paradigm.
This does not, however, mean that such farmers cannot be entrepreneurial, but it
highlights the need for redefining the concept to suit their context. A paradigm shift is
required to improve the performance of smallholder irrigation and unlock
entrepreneurial spirit, putting smallholder behaviour at the centre for which the
concepts of psychological capital and behavioural economics are expected to play a
bigger part. There is also a need to embrace indigenous knowledge, the multipurpose
nature of smallholder farming, heterogeneity and creating an enabling environment. In
the end, the study proposed a contextualized definition of entrepreneurship for
smallholders which places more significance on the willingness and ability of
entrepreneurial smallholders, through their own initiatives, to address their challenges,
even in the midst of constraints.
The study revealed five farmer typologies in smallholder irrigation in South Africa:
elderly and uneducated, cautious and short-sighted, financial capital and psychological
capital endowed, social grant reliant, and land endowed rainfed farmers. Heterogeneity
in these typologies is observed regarding psychological capital endowment, market
access, collective action and access to credit. The results affirm the fact that the ‘one
size fits all’ approach to agricultural policy and support is not appropriate.
Heterogeneity among smallholders should be accounted for in future agricultural and
rural development programmes. However, accounting for this heterogeneity is a
double-edged sword. On one side it complicates tailor-made policy formulation and on
the other side, if there is capacity, it makes the portfolio of policies and strategies
impactful and relevant. Th study identifies psychological capital as important and
recommends its recognition and nurturing as a key livelihood asset.
The findings suggest that farmers’ willingness to expand irrigation farming activities is
affected by positive psychological capital, access to markets, access to credit, land
tenure security and membership to social groups. Their ability to achieve their
aspirations is determined by asset ownership, access to markets and local resource use
conflicts. This evidence further demonstrates the importance of developing positive
psychological capital among smallholders. The priority areas for improving access to
agricultural credit and markets include, among others, value chain financing, reforming
the existing agricultural credit schemes and investment in road and transport
infrastructure. Smallholders’ ability to achieve their aspirations and make better use of
irrigation schemes should be enabled through improving access to physical capital
assets, addressing land security concerns, and supporting institutions that promote
social interaction and learning.
The findings from the choice experiment demonstrate that valuing and recognizing the
scarcity of irrigation water is essential for its sustainable use. The results suggest the
need for irrigation water pricing to reflect irrigation intensity. They also show that
improving agricultural production and productivity, with market access can enhance
farmers’ willingness and ability to pay for irrigation water. The study reveals the need
to consider multiple uses of irrigation water, while a focus on women smallholders has
positive implications for sustainable management and use of irrigation water. It also
recommends a shift towards volumetric water pricing at the farm or plot level in the
irrigation schemes.
In sum, the study has shown why it is of critical importance to take the mindset and human behaviour as the locus of interventions to improve the performance of
smallholder irrigation schemes. It recommends a psychological and behavioural
economics approach to understanding farmers’ decisions and behaviour and to provide
the road map to realize the returns on investment in the smallholder irrigation sector.
Agricultural extension approaches need to target for developing the psychological
capital and entrepreneurial spirit of smallholders and supporting cooperatives deliver
their mandate effectively. Furthermore, policies should assist in creating an
environment that nurtures farmer entrepreneurial spirit, and that is supportive of
smallholder entrepreneurs. This includes, but not limited to, encouraging and
incentivizing own effort rather than embracing a culture of dependency.
Description
Doctor of Philosophy in Agricultural Economics. University of KwaZulu-Natal, Pietermaritzburg, 2017.