The socio-economic benefits of Mohair Trust- LED Agrarian transformation projects: a case study of smallholder farmers in the Eastern Cape Province of South Africa

Abstract

Agriculture plays a crucial role in the socio-economic growth and development of many developing countries, particularly in the areas of job creation, stabilisation of rural incomes and contribution to gross domestic product (GDP). One of the trinkets in South Africa’s agricultural crown is its mohair industry, largely concentrated in the Eastern Cape Province. The climatic conditions in South Africa and more specifically the Eastern Cape allow Angora goats to grow their fleeces all year round, giving South Africa its reputation as the largest and most consistent source of mohair in the world. As a result, South Africa has a comparative advantage in its ability to consistently meet export demand. Countries such as Lesotho and Argentina are, by comparison, less consistent due to sub-optimal climatic conditions, irregular shearing time frames and lower numbers of Angora goats being shorn. Moreover, the general demand for goat meat, considered a healthy alternative to beef, for example, is on the rise in many parts of the world. Angora goat farming therefore has the potential to greatly improve the livelihoods of smallholder farmers in South Africa ‒ particularly if they can maintain reasonable size herds and engage in production arrangements that ensure consistent quality and quantities of mohair from one year to the next. Yet existing and aspirant smallholder farmers in the Eastern Cape face many challenges which are impeding their development. These include a lack of access to finance, to land, to adequate equipment and shelter for their herds, and insufficient knowledge about sorting, classing and other processes. As a result, these farmers are unable to put the necessary investment into their operations and their growth and profitability prospects remain stunted. Inadequate governance and implementation of agricultural policies at the local and national government level have exacerbated the plight of smallholder farmers in the Eastern Cape. This has contributed to slow transformation and intensification in the sector, highlighted by the slow absorption of labour in rural communities. In an attempt to address some of these challenges, the mohair industry in the Eastern Cape, represented by the Mohair Trust, launched a number of Black Economic Empowerment (BEE) initiatives which are aligned to government policies and priorities, and address problems such as income and gender inequality, unemployment and food insecurity. Broadly labelled as transformation initiatives, they have the potential to alleviate the problems faced by smallholder Angora goat farmers. Until now the success (or otherwise) of such initiatives has remained unknown. The primary purpose of this study was therefore to determine the benefits of agrarian transformation initiatives and projects that have been devised and rolled out by the mohair industry in the Eastern Cape Province of South Africa. The secondary objectives of the study were (a) to conduct a literature review that would guide the methodological approach; (b) to provide an overview of the mohair industry and study region; (c) to measure the impact of socio-economic variables on enterprise and capacity development; (d) to analyse the effectiveness of the enterprise development initiatives of the Mohair Trust and evaluate the capacity development spin-offs of these initiatives for smallholder farmers; (e) to analyse the value chain linkages of smallholder enterprises created through the Mohair Trust; and (f) to draw conclusions and formulate recommendations from the results. The study focused on a sample of 150 small-scale mohair farmers, which was representative of the total population, and was conducted in five well-known mohair production regions in the Eastern Cape. The Ordinal Logistic Regression (OLR) model was employed to determine different attributes of the farmer in relation to capacity and enterprise development and to measure the impact of socio-economic variables on enterprise/capacity development. This was done to provide selection criteria to guide the establishment and implementation of future initiatives, such as those of the Mohair Trust. The OLR model used in the study employed descriptive statistics using graphs, tables, means and standard deviations. Of the six variables included in the OLR model to predict enterprise development (Y), only four (i.e. age, education, market access and income) were deemed to have a significant impact. On the other hand, of the eight variables included in the model to predict capacity development (Y), only five (i.e. age, land ownership, income, training and record-keeping) were deemed significant. The above-mentioned variables were regarded as key factors to consider in the establishment and implementation of future transformation initiatives. The empirical evidence produced by the study indicated that participants that did not pass Grade 12 (matric) and earned less that R25 000 per annum showed a positive change in terms of enterprise development after the transformation initiatives were introduced, compared with those with a degree or postgraduate degree. The results further revealed that the older participants tended to have benefitted more in terms of various enterprise-related aspects of the initiatives compared with the younger participants. Furthermore, participants with a title deed benefitted more in terms of capacity development, following the introduction of the initiatives, compared with those without a title deed (e.g. they had a lease arrangement). Consequently, the introduction of transformation initiatives has the potential to improve the livelihoods of smallholder mohair farmers in the Eastern Cape. The results of the study have the potential to contribute both to the agricultural policy and BEE landscapes in South Africa, providing important insights into government priorities vis-à-vis the smallholder Angora farming community in the Eastern Cape as well as a broad methodology that the mohair industry can use in refining and/or expanding its transformation strategies and projects into the future. Furthermore, the findings from this study could make a significant contribution to the success of agricultural transformation in South Africa as a whole and in doing so help address government imperatives such as inequality, food insecurity and unemployment.