An analysis of the economic competitiveness of green maize production in smallholder irrigation schemes : a case of Makhathini flats irrigation scheme in KwaZulu-Natal, South Africa.

Abstract

Recent assessments of smallholder irrigation schemes indicate that their success has been limited. Factors that contributed to their modest performance were poor infrastructure, limited knowledge of crop production among smallholders, lack of reliable markets and ineffective credit services. However, studies have not looked at the economic competitiveness of different crops grown under irrigation and efficiency in the allocation of farm resources. Different crops are grown in the irrigation schemes, but there is no economic criteria employed for analysing the economic competitiveness of the crops grown and on how choices are selected to maximise farmers’ profits. The aim of the study was to conduct an analysis of the household level characteristics on decisions to grow green maize and on the proportion of land allocated to it by smallholder farmers in Makhathini Flats irrigation scheme. A random sample of 150 farmers was drawn from a population of 314 irrigation farmers. The Heckman two-step regression model was used for assessing determinants of the decision to grow green maize. The results reveal that age, household size, plot size, extension and green maize gross margins significantly affect the decision to grow green maize, while gender, marital status, plot size, credit, gross margin of cabbages and green maize significantly affect the proportion of land allocated to green maize production. The study also sought to determine the economic competitiveness of green maize production as compared to alternative crops grown in the scheme using gross margin budget analysis and LP model. The gross margins analysis reveals that cabbage is the only crop with higher gross margins than green maize. The LP results also paint the same picture, indicating green maize competitiveness to other crops except cabbages. A factor contributing to the competitiveness of green maize is being an enterprise with low production costs compared to other enterprises. Farmers indicated that they lack capital to finance large pieces of land for crops with high production costs and the study concluded that availing credit to farmers could increase farm profits from enterprises with high production costs. Farmers indicated that they also produce for subsistence. This means that certain crops are not grown based on their economic viability, but rather on their contribution to household food security. More often than not, these goals are conflicting. The study recommends formulating a multi-criteria decision-making model that aims at allocating farm resources efficiently by optimising a set of important socio-economic objectives.