Peter P.T. Pote & Ajuruchukwu Obi Department of Agricultural Economics & Extension, University of Fort Hare, 20

1. TECHNICAL CONSTRAINTS TO SMALLHOLDER AGRICULTURE AND THEIR IMPLICATION FOR MARKET ACCESS: CASE STUDY OF NKONKOBE MUNICIPALITY, EASTERN CAPE,SOUTH AFRICA (S.A). Peter P.T. Pote & Ajuruchukwu Obi Department of Agricultural Economics & Extension, University of Fort Hare, 2007

2. OUTLINE OF PRESENTATION • INTRODUCTION • FRAMEWORK FOR MARKET ACCESS • DETERMINANTS OF MARKET ACCESS • OBJECTIVES • MATERIALS AND METHODS • RESULTS AND DISCUSSION

3. INTRODUCTION-Background Information to Smallholder Agriculture in S.A • S.A agriculture is characterised by: • Dualism-highly capitalized commercial sector co-existing with a traditional, low-technology and small-scale communal sector • unequal distribution of land, economic assets, support services, market access, infrastructure and income • extreme disparities in income distribution • OUTCOME:high degree of uncertainty, low profitability, and lack of ability to meet the ever-changing necessities of final markets.

4. FRAMEWORK FOR MARKET ACCESS IN SOUTH AFRICA • Regulation of agricultural marketing in S.A meant: • marketing was done via control boards that monopolized the marketing process • monopolistic stance taken by control boards meant lack of competitiveness to enhance efficiency • PROBLEM:a disincentive for farmers to acquire marketing skills due to lack of practical opportunity to do so.

5. 1997- Free Market Dispensation • The market deregulation process resulted in: • closure of all control boards, removal of price controls, and disappearance of a single marketing channel • declining of S.A’s market distortions to levels more or less similar to those of countries with lowest levels such as Australia and New Zealand • The free market environment yielded positive outcome as evidenced by the increased entrance to the marketing value chain • PROBLEM: As the Directorate: Marketing (2005) put it“…there are still some obvious market access gaps created by either lack of access to marketing infrastructure, lack of access to marketing information and training, etc.”

6. DETERMINANTS OF MARKET ACCESS IN SOUTH AFRICA (1) • Understanding the supply chain structure ongoing activities: • changing consumer demand in terms of taste, health and safety, sustainability among others • other drivers of change: technological advances such as production technology and information and communication technology (ICT). • supply chain management

7. DETERMINANTS OF MARKET ACCESS IN SOUTH AFRICA (2) • Reviewing some of market access requirements: • Extension and other farmer support services • Value Addition • Credit • Marketing Information • Physical Infrastructure • Market Infrastructure • Asset Ownership • Farming type

8. OBJECTIVES • Describe and assess the main technically related characteristics of the smallholder farm sector in Nkonkobe municipality. • Identify key technical constraints faced by smallholder farm sector and assess their impact on market access. • Assess the interaction of technically related production and marketing constraints in smallholder agriculture.

9. MATERIALS AND METHODS • A sample of 80 farming households was drawn from three towns in Kat river valley of Nkonkobe municipality • Nkonkobe municipality is in Eastern Cape province of S.A • Sample characteristics- crop and livestock smallholder farmers • Situation survey, questionnaire (in-depth interviews) Focus groups • Descriptive statistics and logistic regression modeling

10. Study Area – Kat River valley • Location – NE of Grahamstown, former Ciskei, at the foothill of Winterberg and Amatole mountains • Agricultural potential – existence of Kat Dam and water along the valley has prompted commercial citrus production and small-scale farming. • Historical background – complex, contest over control for the settlement has been going on throughout decades.

11. Sampling Method- Probability sampling Total farming population Random selection Sample (Purposive)

12. The Model and Analytical Framework(1) ρ (Y=1) = ………………….……………………..(1) ρ (Y=0) = 1 - = …………………….....(2) Logit ……………...(3) θ = logit transformation of the odds ratio α = the intercept term of the model β = the regression coefficient or slope of the individual predictor (or explanatory) Yi = variables modeled χi = the explanatory or predictor variables.

13. The Model and Analytical Framework (2) A goodness-of-fit test, following Hosmer-Lemeshow, was conducted by examining the Pearson Chi-square outcomes calculated from the table of observed and expected frequencies as follows: ………………………….. (4) where: Ni = the total frequency of the items in the ith group, Oi = the total frequency of obtaining particular event outcomes in the ith group, πi = the average estimate of the probability that a particular event outcome in the ithgroup would be realized.

14. Table 1: Definition and units of measurements of key variables modeled *

15. Summary statistics of demographic and socio-economic variables (n=80)

16. Number of households as a proportion of total number of households(n=80)

17. Correlation analysis showing the relationship between the socio-economic variable.

18. Results of logistic regression analysis

19. Summary of Logistic Regression (1) Log(unsoldproduce) = -7.64 + 4.174(Information) + 4.209(TotalAsset) + 2.768(TotalIncome) + Farmingtype:Crops-dryland(1.325) + Farmingtype:Crops-irrigation(-1.0010) + Extensionassistance (0.6298) Log(Y) = -7.64 + 4.174 X1 + 4.209 X2 + 2.768 X3+ 1.325 X4 + -1.0010X5 + 0.6298X6 …………(5)

20. Summary of Logistic Regression (2)

21. Conclusions • The descriptive analyses of a range of demographic, asset ownership, resource use, production, and marketing data confirm serious livelihoods challenges still remain. • The evidence is that access to information, total asset ownership, income, extension and farming type proxies are the most important factors influencing market access. • Equipment use, public infrastructure, and market distance did not seem as important. • In the absence of adequate information about marketing and profitable opportunities, factors such as infrastructure and market distance are meaningless.

22. Recommendations • Much of the problems that smallholders confront have to do with knowledge about how to produce, what to produce, and where to sell what has been produced. • Mentorship alliances are alternative arrangements for improving information access and enhancing technical knowledge and experience where public sector institutions are incapable of pitching in in the short-term. • Smallholder groups need training, support services and facilitating services to be able to connect with markets

23. Thank you *******