Entrepreneurship framework for the economic commercialisation of smallholder farming in South Africa

Abstract

The agricultural sector in South Africa could be categorized into two main farming sub-groupings, that is commercial farming [a farming sector that is perceived as sophisticated with advanced technologies and systems, who owns vast hectares of land (87% of agricultural land)] and smallholder farming which are perceived to have limited or little access to land (13% of agricultural land) with low technological systems. The latter farming sector has limited entrepreneurial performance, obscured entrepreneurial leadership, minimal competitive advantage and commercialization because of historical marginalization. Consequently, the sector was often operated to achieve household livelihood relative to economic gains. Through a variety of the government interventions (such as Land Redistribution for Agricultural Development (LRAD), Comprehensive Agricultural Support Programme (CASP), Micro Agricultural Financial Institutions of South Africa (MAFISA) Proactive Land Acquisition Strategy (PLAS), Agricultural Black Economic Empowerment (Agri-BEE), Operation Phakhisa, etc., the South African government sought to transform this sector to be economically viable such that it could be instrumental in reducing unemployment, poverty, and inequality by increasing their entrepreneurship in poverty-stricken rural areas. v Increasing their entrepreneurial performance implies that these farmers could achieve financial and non-financial benefits by increasing their market shares, profitability, sales growth and return on investment, entrepreneurial information, knowledge, and capacity. The global experience seems to suggest that small and medium enterprises (SMEs) positively impact the economic growth and competitiveness of different countries because of their flexibility and adaptability to market changes. SMEs have moreover been credited with their impact on employment and knowledge sharing. Although smallholder farming enterprises in South Africa fall within the categories of SMEs, their contribution to employment creation has been limited due to their lack of intellectual and social capital, entrepreneurship, commercialization, and competitiveness. An important limitation of smallholder competitiveness has been identified from their limited information regarding their households and production systems. To address the afore-said challenges, a comprehensive study that sought to develop the entrepreneurship framework for the economic commercialization of smallholder farming in South Africa was conducted. The study involved two phases. During phase one, secondary research investigating theories of smallholder farming enterprises, entrepreneurship, leadership, and commercialization was investigated. Participatory research involving focus group discussions and personal interviews with farmers was used. Phase two comprised of government officials and non-governmental institutions. The sample size was determined based on the cluster randomized sampling techniques, resulting in 1115 participants. The procedure used to identify the study participants was possible because of the cooperation with the National Agricultural Marketing Council (NAMC) and Provincial Departments of Agriculture (PDAs). Only six provinces formed part of the study. The study results were presented in terms of the research objectives in subsequent chapters. The results of the study that sought to determine the entrepreneurial performance of the smallholder farming sector revealed that for smallholder farming (that has failed to commercialize its production for several decades) to evolve into a high-performance sub-sector will require industrial knowledge, human relations, and managerial skills to be economically viable. vi Additional factors that could affect the entrepreneurial competitiveness of the smallholder farming sector in contemporary South Africa are a unique product and service features, the price value of the products, and consumer experience significantly influencing the entrepreneurial competitiveness of this sector. The study established strong evidence of a relationship between social capital and identified factors such as credibility, farming culture, market agency, expertise, leadership readiness, and creativity. The factors that affect entrepreneurial leadership in the smallholder farming sector in South Africa, such as growth, mentorship, government support, and effective communication, were found to affect the entrepreneurial leadership of smallholder farming significantly. Lastly, the results of the study, which aimed at developing a commercialization model for the smallholder farming sector of South Africa, showed that entrepreneurial leadership, social capital, and competitive advantage play an essential role in ensuring the enterprise performance of smallholder farming which in turn mediate for commercialization of the enterprises in this sector. The overall results of the current study have practical implications for the present and future smallholder farming sector in South Africa. Firstly, the study identified crucial factors that could affect entrepreneurial performance, competitiveness, social capital, leadership, and commercialization. Secondly, the study also contributed to an entrepreneurship framework for the commercialization of this sector. The framework proposed has the potential to transform this sector to be economically viable so that it can contribute to reducing the socio-economic challenges.