Collective smallholder farming has been widely promoted as a vehicle for smallholder agricultural development in South Africa. As a result, agricultural co-operative registrations in South Africa are increasing. However, research suggests that South African co-operatives have generally not been effective, successful and functional. This study investigated the elements constituting an effective and functional primary agricultural co-operative among three smallholder agricultural co-operatives. It is expected that identification of these elements may enable institutions that offer support to co-operatives make better decisions to improve smallholder farming through primary agricultural co-operatives. Understanding of these elements could inform the efforts for members of co-operatives to achieve their set objectives and thus improve smallholder agriculture profitability. Three rural agricultural co-operatives in the Local Municipalities of Mooi-Mpofana, Mkhambathini, and Richmond in the Umgungundlovu District Municipality were purposively selected for the study because they were registered agricultural co-operatives. Inyamvubu Co-operative (from Mooi-Mpofana) was larger in membership, and well established compared to Umphumela (from Mkhambathini) and Ingwe-Mndeni (from Richmond). The sample included the purposively selected members and non-members of agricultural co-operatives to explore the differences and provide insight to the knowledge, opinions and perceptions of collective farming. A framework for analysing the effectiveness of agricultural co-operatives was developed using literature of objectives of agricultural co-operatives, success factors of smallholder agriculture and organisational effectiveness. This framework was used to analyse the effectiveness of the three co-operatives. Focus group discussions, Force Field Analysis and a survey were used for data collection. The study revealed that the three co-operatives have clearly defined group objectives aligned to those set out by the South African government. The main identified objectives of farming for the three co-operatives included; creation of employment and income generating activities, improving access to funding, strengthening market access and strengthening human and community development. Activities carried out by the three co-operatives took advantage of opportunities in the value chain including production, marketing, and transportation of produce to markets. However, farmers’ activities were hampered by a number of constraints. Production capability of the three co-operatives was hampered by resource constraints such as lack of access to land, machinery and equipment, finances and information relevant to production. Marketing, transportation and financial management capability of the three co-operatives was hampered by poor networking skills, poor infrastructure and low literacy levels. Management capability in the three co-operatives was challenged by complex group dynamics characterised by conflict of opinions and issues related to free-rider, horizon, and portfolio problems. Low capability of the three co-operatives to mobilise resources, use the limited resources available and low capability to manage institutional arrangements rendered the co-operatives ineffective in achieving their set objectives. The study recommends strategies for ensuring the effectiveness of agricultural co-operatives. These include strategies for addressing internal and external issues affecting the co-operatives. Direct intervention from government was recommended to improve production through revising land allocation systems, improving extension services and strict monitoring of effective use of government resources provided to farmers. Government should improve access and training to relevant technologies to improve the processing and packaging capabilities of co-operatives. Marketing and management activities should be supported through provision of improved infrastructure and relevant training. Farmers themselves should consider pooling resources for market rental of crop land, engage in value added activities, and develop informed marketing programs and cost-effective distributing mechanisms. Farmers should elect an effective board of members that will ensure enforcement of agreements and constitution.

Thesis (M.Agric.)-University of KwaZulu-Natal, Pietermaritzburg, 2010.