Determinats of market participation and profitability for smallholder nguni livestock farmers : implications for food security and livelihoods in the Limpopo Province

Abstract

Livestock production is the most important sub-sector in agriculture in South Africa. It contributes a very large proportion to the agricultural gross domestic product. It has been identified as the sub-sector that has potential in improving food security and livelihoods of the rural people. The current study analyses the determinants of market participation and profitability of IDC Nguni smallholder farmers in the Limpopo Province, South Africa. The aim of the study was to contribute to the body of knowledge that exist in the study area, particularly of Limpopo Province livestock marketing by analysing determinants of market participation and profitability.

The primary data were collected using structured questionnaires. All IDC Nguni Project beneficiaries (62 famers)were included in the survey. Descriptive data were analysed using Version 23 of SPSS. The logistic regression was used to analyse market participation data, multiple regression was used for profitability data and livelihood model for assessing the contribution of the project to livelihoods. The models were analysed using Stata 14.

The results revealed that 59% of the respondents participated in the market and 41% of respondents did not participate. The study revealed that 54% of the respondents indicate that market access was easy and only 38% of respondents indicated that market access was not easy and 8% of respondents revealed that they do not know how the market access was because they were not yet selling. Seventy percent of the farmers perceived their livelihoods being improved after joining IDC Nguni Cattle Project whereas 23% of the farmers perceived their livelihood not improve after joining IDC Nguni Cattle Project. Gross margin computation showed that 52% of the farmers made gross margins ranging between R2 000 and R481 200 during the 2015 production/marketing season. The overall gross margins showed that 46% of the farmers made loss ranging from R7 300 to R170 500 during the 2015 marketing season, and 2% of the smallholder farmers were operating break-even point. The average gross margin for Community Property Associations was R6 031 while for individual farmers it was R16 082. The decision making process, for example to sell vii

livestock, may be complex in the CPAs and hence a higher gross margin results for individual farmers than for CPAs. Thirty-six percent of CPAs made a loss, while 49% of individual farmers also made loss during 2015.

The results of logistic regression showed that marital status, education level, loan repayment, price of an animal and household income were all significant factors (at various probability levels and with different signs), influencing market participation in the study area. A multiple regression model revealed that empirically the herd size, farm size and distance travelled to the market were significant at various probability levels and with different signs influencing profitability in the study area. Livelihood model results revealed that recent increase in farm income and farm size were all significant at different probability levels and with different signs influencing smallholder farmers' livelihood improvement in the Limpopo Province.

The study identified some challenges faced by smallholder farmers in Limpopo Province. The major ones were inadequate access of market information, high transactional costs, poor conditions of the animals and poor access to markets.

Policy makers should come up with policies that support the smallholder farmers with formal training, seminars and workshops to improve profitability of the farmers. Basic training of production and marketing may enable the smallholder farmer to increase profits. Other recommendations were formation of farmers' organisations, access to financial resources and private-public collaboration to establish central selling points.