An analysis of the value chain participation and profitability of smallholder irrigators in KwaZulu-Natal, South Africa.

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.