Linking Farmers with Markets in Rural South Africa: Rural Development and Poverty Alleviation through Supply Chain Management

The growing demand for high-value food commodities is opening up opportunities for farmers, especially smallholders to diversify towards commodities that have strong potential for higher returns to land, labour and capital. However, there is an apprehension about the capability of smallholder farmers to participate in the market-oriented production due to their lack of access to markets, capital, inputs, technology, and extension services. In this paper, possibilities have been explored of linking smallholder farmers to markets through such institutions as cooperatives, growers’ associations and contract farming that reduce marketing and transaction costs and alleviate some production constraints. The study also attempted to identify critical factors for success and preconditions for scaling up successful interventions. The results of this study show that interventions that target farmers’ collective knowledge and experience by developing enterprises that farmers have been engaged in for many years are more successful than introducing new commodities. Evidence has shown that smallholder farmers do participate and make a sizeable contribution to the production of high-value food commodities, but their links to markets are not strong. Though market institutions like cooperatives, contract farming and growers’ associations do not altogether ignore smallholder farmers, some policy support is imperative to strengthen their linkages with the markets. The study uses communal livestock farmers and small-scale wool growers (sheep farmers) in KwaZulu-Natal and the Eastern Cape as case studies. 1 Senior Researcher, National Agricultural Marketing Council (NAMC), Market and Economic Research Centre (MERC), 4 th Floor, Meintjiesplein Building, 536 Schoeman Street, Arcadia, Pretoria; and University of Stellenbosch, Department of Agricultural Economics; E-mail: [email protected]; [email protected].