Evaluating the efficacy of the New Generation Cooperative business model in uplifting smallholder farmers: A case study.

Abstract

Smallholder farmers are afflicted by various social ills such as poverty, hunger and poor remuneration. Other factors that affect their ability to operate efficiently and hinder them from capitalising on the prevailing opportunities, are a lack of skills, knowledge and education, limited access to agricultural inputs, credit, mechanisation, marketing services, and poor institutional and infrastructural support. Worldwide, governments use agricultural cooperatives as a mechanism for improving the performance of smallholder farmers because of their bargaining power in competitive conditions and shared services of skills and resources, which increase smallholder farmers’ efficiency and the efficient use of their available resources. Unfortunately, a majority of agricultural cooperatives in South Africa have still not been able to yield enormous socio-economic benefits for smallholder farmers and communities, and they face similar challenges as those confronted by smallholder farmers. In the quest to promote smallholder farmers, the first New Generation Cooperative (NGC) was established in Vhembe District Municipality, Limpopo Province, South Africa, to improve the productivity, entrepreneurial capacity and marketing capabilities of smallholder farmers. The NGC also seeks to leverage cooperation and exchange of information among stakeholders, refrains from farmer￾free rider behaviours, supports smallholder farmers as entrepreneurs, and provides them with the necessary skills and access to knowledge. While conducting this study, little was known about the piloted NGC's positive impact. This study aims to evaluate the efficacy of the piloted NGC Business Model in uplifting smallholder farmers in Vhembe District Municipality and to discern whether or not the government should replicate the model for all the smallholder farmers across South Africa.

This study is a qualitative case study, blended with exploratory research design to engage in a constructivist social interaction and constructionism to elicit critical in￾depth, real-world insights from smallholder farmers and the NGC implementing partners about all the dimensions of NGC implementation in Limpopo and South Africa at large. All sixteen smallholder farmers that constituted the NGC pilot project and two implementing partners were included in the sample population. The collected two qualitative data sets were subjected to data analysis accomplished using the Morse and Field approach, Atlas.ti.8 qualitative data analysis software was used to analyse the data. Despite limitations, the narratives of most of the smallholder farmers and NGC implementers signify that the NGC assists smallholder farmers with inputs provision, linkages with largescale commercial farmers and integration in the larger agribusiness value chains. They explained that the NGC created both the backward and forward links for them. Improved smallholder farmers’ marketing capabilities, food security, employment creation and poverty alleviation among smallholder farmers and the surrounding communities indicate that, if given time, an NGC can contribute significantly to uplifting smallholder farmers.

Unfortunately, even if that is the case, it still emerged from the findings that a range of different challenges still mars NGC’s efficacy in uplifting smallholder farmers. These challenges are poor farming skills, land dynamics and complexities, insufficient operational capital, NGC governance and management deficiencies and poor linkage with government agencies and other critical actors in the agricultural input and output markets. Hence, if the NGC is to be adopted and replicated across South Africa, these constraints could be ameliorated and new measures for improving NGC efficacy in uplifting smallholder farmers in South Africa be recommended. The study’s contribution, therefore, offers the Eight Steps Business framework for NGC implementation that the government can replicate across South Africa. The framework encompasses Step 1: Determine the need for a cooperative and its potential for success, Step 2: Members’ Recruitment into NGCs, Step 3: Designation of Standard Operating Rules and Regulations, Step 4: Coordination and Collaboration of Network Support, Step 5: Funding Mechanisms, Step 6: Mentoring Agricultural Cooperatives and Smallholder Farmers, Step 7: Measuring and Improving Performance of Agricultural Cooperatives for Smallholder Farmers, Step 8: Restructuring Choice. For future research, it is recommended that the implementation of this framework in a new NGC must be evaluated and tested to better the framework if necessary. In addition to the framework, policy development recommendations to the South African government are: to include women and youth in agricultural development programmes, to consider the transformation of land ownership policies and laws to enable women to hold land ownership to improve efficiencies and to boost the productivity of the agricultural sector, to consider giving incentives such as tax reduction to agro-processing companies and largescale commercial farmers that mentor NGC smallholder farmers, and to establish a central information system that updates farmers on current affairs related to market trends, disease and climate change forecasts and solutions.