The effect of ICT use in enhancing market participation and household welfare outcomes among smallholder farmers in the Eastern Cape province of South Africa.

Abstract

Enhancing the ability of smallholder farmers to actively engage in markets is one of the most pressing development challenges in sub-Saharan Africa. Despite being deemed significant contributors towards the production of various commodities, smallholder farmers have weak linkages to the markets. They are poorly equipped to make sound marketing decisions, partly due to a lack of access to market information. As the agricultural sector becomes more knowledgeintensive, due to the availability of the new information technology there is a greater need for a good information flow and sharing among all agricultural stakeholders. Therefore, since Information and Communication Technologies (ICTs) are emerging as key source of information on new production technologies, they could contribute immensely to the amelioration of the dearth of information among the poor smallholder farmers along the value chains and could thus link them to profitable markets. The number of mobile phone subscribers in South Africa is increasing daily and most rural households currently own ICT tools. However, the extent to which rural households utilize these technologies for agricultural activities remains unexplored. Therefore, this study adds to the existing literature on the use of ICT amongst smallholder households by examining the effects of its use in enhancing market participation and the household welfare outcomes among smallholder farmers in the Eastern Cape Province of South Africa. Data were collected by using a questionnaire survey from 246 randomly selected smallholder farmers in the Port St John’s Local Municipality. The first objective was to investigate factors influencing the use of ICT by smallholder farmers for accessing market information, by using binary logistic regression. The second objective was to examine the effects of ICT-use on smallholder market participation and the quantity of green mealies sold, by using the double-hurdle model, while the third objective was to assess the effect of market access on the welfare outcomes of smallholder farmers, by using propensity score matching. The results from the descriptive statistics showed that 78% of the sampled population used ICT for accessing market information, which was mostly accessed by using mobile phones. The results also showed that only 2% of the population was familiar with agricultural farming applications, with the mostly used applications being Leaf Snap, Plantix and Agri-assistant apps. Based on the

empirical results variables such as age, household income, access to electricity, and quality network coverage, are positively and statistically significant in influencing the use of ICT by smallholder farmers for accessing market information, while farm size was negatively and statistically significant in influencing the use of ICT by smallholder farmers for accessing market information. Among the variables tested against market participation and the quantity of green mealies sold the farm-level characteristics that were found to be statistically significant for market participation included gender, being a member of a farmer’ organization, access to extension services and the use of ICT. The age, gender, farm size, and ICT use of those participating in markets were found to be statistically significant in relation to the quantity of green mealies sold. Furthermore, those variables tested with regard to market access, marital status, being a member of a farmers’ organization or group, and access to market information were negatively and statistically significant in relation to market access, while access to extension services, was positively and statistically significant in relation to market access. Based on the results, the study concludes that farmers in the study area are using ICT to access market information. However, the use of ICT for accessing market information seems to be ineffective for enhancing the market participation of smallholder farmers and their welfare outcomes. This is shown by the negative effect on the use of ICT on both smallholder market participation and on the quantity of green mealies sold. Therefore, the study recommends that an awareness should be created focusing on the potential advantages of ICT applications and services on agricultural marketing and that this should be accomplished through training. The supply of marketing information alone to farmers is not sufficient for transforming their produce marketing. Therefore, the study also recommends that farmers should be trained in how to interpret marketing information.