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Partnerships for enhanced engagement in research (PEER)
Cycle 4 (2015 Deadline)

Promoting community and regional food systems in the Eastern Cape, South Africa

PI: Michael Aliber (, University of Fort Hare
U.S. Partner: Stephen Ventura, University of Wisconsin-Madison
Project Dates:

Project Overview

The goals of this project are to (1) better understand the current market failure characterizing the ex-Bantustans of the Eastern Cape, South Africa, whereby, despite significant production capacity, food consumption depends relatively little on food production within these areas; and (2) determine the extent to which innovations pursued in the United States and elsewhere can address this market failure. There is little acknowledgement in the South African literature of the above-mentioned market failure, because the literature is overwhelmingly focused on a different market failure, namely small-scale farmers’ inadequate access to formal markets outside of the ex-Bantustans . This perspective ignores the fact that effective food demand within the former homelands is large (within the Eastern Cape, over half of all food expenditure accrues to households in the ex-Bantustans), and yet it is mainly catered for by large-scale commercial farmers situated outside these areas. The reasons for this situation have been left virtually unexplored. This project will help fill this gap through a range of fieldwork activities, which will be enriched by comparing and contrasting marketing arrangements for different commodities, and within and between ex-Bantustans, commercial farming areas, and urban areas. Project researchers will examine strategies that have been successfully applied, such as the promotion of farmers’ markets, aggregation, innovative use of third-party logistics operators, etc., and determining their applicability to South Africa’s ex-Bantustans.

The ex-Bantustans are currently home to the majority of South Africa’s food insecure population, despite there being large amounts of unused but potentially productive arable land, together with reasonably large numbers of unemployed prime-age adults (BFAP, 2011). One consequence is that food prices in these areas are relatively high (NAMC, 2013), and diets are poor (Shisana et al., 2013), but government policy has tended to focus on how to improve small-scale farmers’ access to external markets, generally to little effect. Only recently has the government begun to appreciate the potential advantages of promoting food economies within the ex-Bantustans, but it has experienced much difficulty in doing so. Indeed, to the extent government has invested in agro-processing and market infrastructure in the ex-Bantustans, it has been with conspicuously disappointing results. The development goal of this project is to contribute to strengthening community and regional food economies in the ex-Bantustans, which in turn should lead to improved household-level food security, land utilization, and rural economic development.

Summary of Recent Events

The main aims of these project was first, to try to understand the agro-food economies of ‘areas’, generally meaning a town and its ‘shopping radius’; not that these areas are self-contained economies (far from it), but they provide a useful unit of
analysis in their own right because different areas have different compositions of retailers and other intermediaries, different types of small-scale farmers, and different relationships to the broader economy outside. And second, to try to anchor the study by means of considering the three-way relationship between farmers, intermediaries (eg agro-processors and retailers), and consumers; this implied collecting primary data from each of these categories at each of the main research sites, complemented by secondary
information in the form of existing value chain analyses and published survey data on consumption patterns and participation in farming.

The overwhelming majority of consumers prefer in principle to buy from small-scale farmers, specifically 73%, versus 16% who would prefer to buy from large-scale farmers, and 10% who have no preference. Among those who prefer the idea of buying from small-scale farmers, the main reason (64%) is because they want to support black farmers and the development of their local economy; other consumers, however, are of the view that buying from small-scale farmers implies cheaper and/or fresher produce, or that the close
proximity of small-scale farmers is more convenient. Thus it is deeply ironic that little of the food expenditure of black consumers ends up with small-scale farmers, because expenditure on food is overwhelmingly concentrated on formal shops in the nearest town; many of these shops belong to national chains, either as fully owned branches or as franchises (more on this below). The other important finding in respect of consumer behavior is that the vast majority of shopping is concentrated at the end or beginning of the month – at the end of the month for those receiving wage income, and at the beginning of the month for those receive social grants. Most of those receiving social grants literally receive the grant on the 1st of the month, and most of these collect the grant and do their major monthly shopping on the same day; however, about 20% of these grant-receiving households prefer to shop on the 2nd or 3rd of the month, because they are deterred by the long queues at the shops.

The area-based studies involved a number of interviews with retailers, distinguishing between 3 main types, namely supermarkets, independent shops, and petty traders (‘hawkers’), although recognizing that in practice this typology is highly imperfect/simplistic. The interviews sought to understand: i) who the retailers regard as their target market(s), ii) from whom they procure their food products (distinguishing between 9 different food groups, eg red meat, white meat, vegetables, fruit, etc.); and iii) the specific advantages and disadvantages experienced or perceived in dealing with small-scale farmers. Prior to the beginning of the research, one hypothesis was that small-scale farmers find it easier to sell to independent shops and hawkers, because both are or tend to be informal, and they would thus have fewer challenges in terms of interacting with one another. This turned out to be incorrect, in fact it proved impossible to discern much in the way of clear patterns as to which kinds of retailers or other intermediaries small-scale farmers are able to do business. As a gross generalization, about half of all retailers do business with small-scale farmers, and these are as likely to be supermarkets as hawkers, although at some sites, hawkers are the least likely to procure their stock from small-scale farmers. The one general pattern that emerges from the data however is that where a particular retailer does tend to procure from small-scale farmers, they use these farmers as a ‘secondary source’, i.e. to fill in the gaps left on occasion by their main suppliers. One advantage for example of small-scale farmers is that they’re willing to deliver over weeks, moreover their produce tends to be fresher than what is typically purchased from more distant sources. The problem however is the age-old one associated with small-scale farmers, namely that one cannot depend on them for the regular volumes that larger retailers need.

Overall however the PI reports that the results are encouraging, in that the challenges that appear to prevent small-scale farmers from doing more business with local retailers – and which discourage retailers from relying to a greater extent on local farmers – can to some extent be addressed through appropriate interventions, and/or from undoing inappropriate interventions. A good example of both is the promotion of co-operatives, which have traditionally and successfully been used to enable small-scale farmers to overcome the ‘disadvantages of smallness’, that is, by collaborating in marketing, thereby collectively overcoming the problem of inadequate and inconsistent supply; the problem however is that provincial and local government in South Africa almost entirely promotes ‘production cooperatives’, which tend to cause more problems than they solve. (The importance of proper marketing coops is not only to address the challenges of quantity and consistency, but also the challenge of communication; another finding from the interviews was that many retailers are not even aware of the small-scale farmers in their area, many of whom are desperately lacking in marketing skills and/or means; the survey of farmers revealed that few have their own transport.)

In this project, the PI interviewed farmers. The purpose of interviewing farmers was to appreciate their experiences as to marketing and their perspectives as to their advantages and disadvantages associated with different types of markets. Given that the vast majority of black farmers in the Eastern Cape are subsistence-oriented, an effort was made to only interview those black farmers who produce mainly for the market, however even so this small minority of
farmers turns out to vary significantly in size. The prevailing narrative in South Africa is that a key challenge faced by small-scale farmers is ‘lack of access to markets’, which is short-hand for lack of access to formal markets. The underlying assumption is that formal markets are more ‘lucrative’. Based on the interviews conducted, there is some truth to this perspective, however it is also only a partial truth. The general finding is that most farmers are reasonably happy selling directly to other villagers or to hawkers, because the demand is consistent, the prices are reasonable, little or no transport costs are incurred, and payment is usually immediate. Selling to supermarkets in town is sometimes advantageous, especially if ones harvest is greater than can be quickly absorbed by the local informal market. Indeed, the main distinction to be drawn is that farmers can rarely expand beyond a certain point unless and until they a able to become consistent suppliers to formal markets, which few are able to do, and most accept that they cannot.

The PEER project has ended, however, the PI reports that they need to complete the current research project rather than continue with the research as such. Thereafter their focus will be on publishing as much of the it as possible, through a combination of a comprehensive monograph and a series of related articles. And then they will continue to focus on the implementation aspects. Apart from the farmers' market idea, which they have described at length above, there are other interventions that they are contemplating. The one is to see if they can unlock the potential of existing incentive schemes so that appropriate local entrepreneurs are empowered to invest in appropriate forms for agro-processing. (To this effect they are in discussions with an East London-based company called NKAMS who have relevant experience with infrastructure incentives but who lack knowledge of agricultural markets.) And another is to revisit the conventional approaches to addressing the 'disadvantages of smallness'; given how badly co-ops have been compromised, one possibility will be some kind of cluster development agent approach; the reality is that supermarkets in rural towns are here to stay, thus it will remain imperative to seek ways of improving their ability to interface with small-scale farmers. 

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