An analysis of the value chain participation and profitability of smallholder irrigators in KwaZulu-Natal, South Africa.
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Date
2021
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Abstract
Smallholder irrigation farming is perceived as a transformative approach to poor rural
households as it improves livelihoods and alleviates poverty. However, most smallholder
irrigators are characterized by poor value chain participation because they lack market
information and infrastructures such as bridges, good roads, and storage. Therefore, these
constraints end up affecting their profitability. The study's objectives were: to identify actors
involved in the value chain of smallholder irrigators, determinants of smallholder irrigators in
the agricultural value chain, and level of participation, and to identify factors affecting the
profitability of smallholder irrigators. Probability sampling involving a simple random
sampling technique was employed to select 243 respondents from two irrigation schemes,
namely, Tugela Ferry and Mooi River Irrigation Schemes (TFIS and MRIS) located in Msinga
Local Municipality, KwaZulu-Natal Province, South Africa. The data were analysed using
descriptive statistics, Multivariate probit model, Double-hurdle model, gross margin statistics,
and multiple regression model. The study used STATA and SPSS computer software to process
the data.
The study identified seven actors involved in the smallholder irrigators value chain: input
suppliers, producers, collectors/hawkers, wholesalers, retailers, consumers, and value chain
supporters. Value chain activities that farmers primarily performed were cleaning and sorting.
The multivariate probit model results indicated that educational level, household size, transport
reliability, market information, and farming experience significantly influence farmers' choice
of market outlets for their produce. Further, econometric results showed that age, access to
credit, extension service, access to roads, and livestock ownership significantly determine
smallholder irrigators' value chain participation. Further, age, livestock ownership, land size,
labour, credit access, and exchange of produce significantly influenced the extent of
smallholder irrigators' value chain participation. The study's profitability results show a
positive result for gross margin, indicating that smallholder irrigators generate sufficient
income' on average' to sustain their livelihoods.
The multiple linear regression analysis results revealed that age, land size, access to credit,
extension service, packing cost, and tractor hire had a direct relationship with the profitability
of smallholder irrigators. The study recommends the improvement of the input supply system,
creation of organisations or groups in order to facilitate marketing of produce surplus,
strengthening the linkage/interaction among producers value chain actors, training of farmers
through workshops, seminars, strengthening extension services, demonstration farm plots is
essential and expanding the accessibility of market infrastructure and supportive institutions.
Description
Masters Degree. University of KwaZulu-Natal, Pietermaritzburg.