Entrepreneurial development pathways for smallholder irrigation farming in KwaZulu-Natal : typologies, aspirations and preferences.

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.