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22 February 2022 | Story Leonie Bolleurs | Photo Leonie Bolleurs
smallholding symposium
Talking about the future of smallholder farming in South Africa, were from the left: Prof Linus Franke, Prof Philippe Burger, Dr Qinisani Qwabe, and Prof Ken Giller.

On 17 February 2022, the Department of Soil, Crop, and Climate Sciences at the University of the Free State (UFS) presented a symposium on the future of smallholder farming in South Africa on its Bloemfontein Campus. Head of the department, Prof Linus Franke, says with this symposium they aim to contribute to a change in the conversation about smallholder farming. 

Prof Philippe Burger, Pro-Vice-Chancellor: Poverty, Inequality and Economic Development at the UFS, presented on The forgotten: South Africa’s former Bantustans today. He believes in 30 years – although the first democratically elected government introduced new labour legislation, abolished the Bantustans, and created a single non-racial education system – not much has changed for the former Bantustans.

“Communal land in South Africa, mostly the former homelands such as the Transkei, Ciskei, and Bophuthatswana, is today trust land that are managed by traditional leaders. With the 2011 census, it was found that a large part of the population is still living on traditional land (32%),” he says.

According to his data, the number of people depending on subsistence farming has increased from 1 767 000 to 2 285 000 in the past ten years. 

The deeply poor, traditional leaders, and tenure rights

He says he does not believe that South Africa is only two nations in one, as was stated by former President Thabo Mbeki, but three. “There are the rich and poor in cities, with the poor still being predominantly black, and then there are the people living in what is euphemistically called deep-rural areas, basically the former homelands. There, the poor are even poorer than in the cities and they are virtually all black. And the ones who benefit in these deep-rural areas, are the traditional leaders.”

He believes that the poverty we see in communal areas can be largely linked to the lack of tenure rights. “People live and work on the land, but even though the constitution states that they should have tenure rights, they do not have tenure security. Thus, they cannot use tenure rights to leverage themselves to a better financial position,” he explains. 

The literature on tenure reforms, according to Prof Burger, boils down to one of three options. Firstly, individual titling of land where individuals farm on pieces of communal land allocated to them or their families, but without a title deed to the land. 

In the scenario of individual titling, it is impossible for people to sell land or to use it as collateral to obtain investment loans. He says in the Mystery of Capital, Hernando de Soto proposes the allocation of title deeds to individuals, thereby allowing them to use the land as capital to improve their lives. “It is, however, not the best solution because of overlapping use rights,” he states.

The other two options are a combination of communal ownership and small-scale farming, and a combination of communal ownership and large-scale commercial farming. Prof Burger says the two-tier system of titling is a better solution. “Here, the land is communal and the use rights to the land are recognised in the law. With recognised use rights, small-scale farmers can offer future income from their land as security to get loans,” he adds. 

However, according to him, what is also needed is the design of an economic ecosystem within which small-scale farmers can operate, proper education for the youth can take place, and extension services and training of farmers can be provided. “Government, the private sector, and universities can play a role.”

He also believes that democratising control over communal land – taking power from the chiefs and putting it in the hands of the community – will take away control from the chiefs, without denying them their constitutional right to have a role in society. “They will have a role in terms of tradition, belief, and culture, while control of the land will then reside with the people living on the land.”

“It is time that we bring the everyday life of the people living on communal land also into democratic South Africa. It needs to be done in such a way that it will improve their well-being,” Prof Burger concludes. 

A food security conundrum and small-scale commercial farmers 

Taking a step back to talk about smallholder farmers in sub-Saharan Africa, was Prof Ken Giller from the Department of Plant Production Systems at Wageningen University in the Netherlands. The title of his presentation, Smallholder farmers in Sub-Saharan Africa: Stepping up, stepping out and hanging in, refers to the different aspirations and livelihood strategies that smallholder farmers in sub-Saharan Africa pursue.

By 2030, the population is estimated to have grown by an extra billion people, with sub-Saharan Africa experiencing the most rapid growth. “As the population numbers rise fast, there is an urgent need to increase production of food,” says Prof Giller, who sees an opportunity for smallholder farmers in the challenge.

Defining a living income as the net income that a household will need to earn to enable it to make a decent living, he says in sub-Saharan Africa, 37% of households are food insecure. Given the small areas of land to which smallholder farmers have access, even a drastic increase in productivity per unit area will not be sufficient for many smallholders to make a living from farming. Nevertheless, agricultural development has proven to be the most effective way to reduce poverty and hunger among the poorest rural households.
To address hunger and poverty, a continued focus on food production in Africa is needed, as global food production for Africa cannot achieve zero hunger. – Prof Ken Giller

He says to address hunger and poverty, a continued focus on food production in Africa is needed, as global food production for Africa cannot achieve zero hunger (Sustainable Development Goal 2). 

Prof Giller believes a drastic rethink of policy is needed to support agriculture in Africa in order to achieve zero hunger, acknowledging the wide diversity of agro-ecologies, socio-economic situations, and farmers’ livelihood strategies. 

“Action is needed to rethink the future of farming. It is, however, a food security conundrum – achieving on the one hand cheap, nutritious, and affordable food for all, including the urban poor, and at the same time providing appealing livelihoods for smallholder farmers, with them receiving decent prices for their agricultural products,” he says. 

Speaking on the topic, Tackling sustainability through small-scale commercial farming, was Dr Qinisani Qwabe, Lecturer in the UFS Department of Sustainable Food Systems and Development. 

He believes that small-scale farmers see themselves as commercial farmers on a relatively small scale. They actively contribute to the market. Dr Qwabe suggests that most farmers who are considered emerging farmers do not like this term themselves, as it seems to put a label on them. 

Talking to small-scale commercial farmers, he learned that there are some hard realities they need to overcome on a daily basis. Some of the challenges they are encountering, include poor infrastructure, lack of capital, water restrictions, operational cost, access to markets due to poor roads in the area, and discrimination if you are a woman. 

News Archive

Producers to save thousands with routine marketing strategies, says UFS researcher
2014-09-01

 

Photo: en.wikipedia.org

Using derivative markets as a marketing strategy can be complicated for farmers. The producers tend to use high risk strategies which include the selling of the crop on the cash market after harvest; whilst the high market risks require innovative strategies including the use of futures and options as traded on the South African Futures Exchange (SAFEX).

Using these innovative strategies are mostly due to a lack of interest and knowledge of the market. The purpose of the research conducted by Dr Dirk Strydom and Manfred Venter from the Department of Agricultural Economics at the University of the Free State (UFS) is to examine whether the adoption of a basic routine strategy is better than adopting no strategy at all.

The research illustrates that by using a Stochastic Efficiency with Respect to a Function (SERF) and Cumulative Distribution Function (CDF) that the use of five basic routine marketing strategies can be more rewarding. These basic strategies are:
• Put (plant time)
• Twelve-segment pricing
• Three-segment pricing
• Put (pollination)(Critical Moment in production/marketing process), and
• Pricing during pollination phase.

These strategies can be adopted by farmers without an in-depth understanding of the market and market-signals. Farmers can save as much as R1.6 million per year on a 2000ha farm with an average yield.

The results obtained from the research illustrate that each strategy is different for each crop. Very important is that the hedging strategies are better than no hedging strategy at all.

This research can also be applicable to the procurement side of the supply chain.

Maize milling firms use complex procurement strategies to procure their raw materials, or sometimes no strategy at all. In this research, basic routine price hedging strategies were analysed as part of the procurement of white maize over a ten-year period ranging from 2002–2012. Part of the pricing strategies used to procure white maize over the period of ten years were a call and min/max strategy. These strategies were compared to the baseline spot market. The data was obtained from the Johannesburg Stock Exchange’s Agricultural Products Division better known as SAFEX.

The results obtained from the research prove that by using basic routine price-hedging strategies to procure white maize, it is more beneficial to do so than by procuring from the spot market (a difference of more than R100 mil).

Thus, it can be concluded that it is not always necessary to use a complex method of sourcing white maize through SAFEX, to be efficient. By implementing a basic routine price hedging strategy year on year it can be better than procuring from the spot market.

Understanding the Maize Maze by Dr Dirk Strydom and Manfred Venter (pdf) - The Dairy Mail


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