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«JM Thamaga-Chitja March 2008 Submitted in fulfilment of the requirements for degree: Doctor of Philosophy (Food Security), African Centre for Food ...»

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Despite the above constraints, an increasing volume of organic produce from developing countries is entering the European Union, but data on imports are currently scarce and unreliable (Barret et al, 2002). Many projects that aim to improve organic exports are underway in Kenya, Tanzania and Uganda (Barret et al, 2002). These programmes include government programmes, fair trade organisations, business partnerships, and co-operation with certification bodies. An example of such a programme is the EPOPA (Export Promotion of Organic Products from Africa) programme initiated by the Swedish International Development Agency for exporting produce (coffee and cotton) to countries such as the Netherlands (Barret et al, 2002).

The International Federation of Organic Agriculture Movements (IFOAM) has a set of principles for organic agriculture, which countries should use to develop their own standards. Table 2.4 contains a list of basic principles that organic production and processing should work towards, according to IFOAM.

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Unlike conventional farming, there is an additional annual cost incurred in organic farming to retain the status for trading organic products. It is important to understand the implications of annual organic certification costs, especially for resource poor farmers. The cost of certification depends on many factors, including the use of local certification bodies versus international bodies; the history of chemical application;

farm size; and, the distance travelled by the inspector to the farm. Initial group certification in South Africa can be as high as R16 000, with annual costs ranging from R 16 000-R 20 000 to remain certified (BDOCA, 2006). For example, the Ezemvelo Farmers’ Organisation (the first group to achieve group certification in South Africa) paid R9 000 for its first certification, R10 000 for annual certification in 2004 and R15 000 for training internal inspectors in 2003 (Modi, 2004). Without the sponsorship received to cover these costs, this group would not have been able to afford certification in 2003 (Modi, 2004).

Government interventions, such as subsidised organic certification and facilitation of group certification among smallholder farmers, is vital to promote local organic production. Smallholder farmers have an opportunity to implement indigenous farming techniques for commercial purposes. However, government intervention and support is required for the entire supply chain, which includes extension support for organic production, packaging and labelling produce, quality assurance and marketing. Appropriate government assistance with marketing should include extension training in production skills to ensure product quality, market identification, and facilitation of contracts between farmers and buyers. It must be noted that some government interventions should be only on a short term basis to ensure that farmers become self-reliant and that systems are developed to support them without perpetual government involvement.

2.7 The size of the organic market in South Africa The sale of organic foods in supermarkets was launched formally in South African 1999 by Woolworths Supermarket. Pick ’n Pay, Shoprite Checkers and Spar supermarkets followed suit in subsequent years. Since 1999, South Africa has 24 experienced an increasing consumer demand for healthier foods, including organic foods (Business Times, 2004). In 2004, Woolworths reported sales of R1 million a week (Business Times, 2004). This figure was 20 times higher than the figure of R50 000 reported three years earlier. Two other supermarkets – Checkers and Pick’n Pay reported a doubling of sales in 2003 and a “steady growth”, respectively (Business Times, 2004).

The demand for organic food products in South Africa far outstrips supply (Business Times, 2004). In 2004, organic products represented five percent of Pick ’n Pay’s total food turnover. Based on international trends, this figure may grow by 10 to 15% between 2005 and 2009. The demand for a larger range of organic products, including clothing and wine, has also increased in recent years. Stellar Organic Winery in Cape Town experienced a 400% increase in sales in the first half of 2005 (Business Day, 2005).

According to Organics South Africa, total land certified as organic in South Africa amounted to 515 000 ha in 2004 but, as is typical in developing countries, this figure was difficult to verify (Willer & Yussefi, 2007). A large percentage (more than 77%) was certified between 2000 and 2004, an indication of the rapid growth of the industry. A large proportion of the certified land is owned by previously conventional large-scale commercial farmers, mostly due to their greater access to start-up costs for production, conversion and accreditation.

A study commissioned by EPOPA (Export Promotion of Organic Products from Africa) on the South Africa organic market survey revealed that information (especially financial records) was difficult to get hold of. However, the study revealed that crop production revenue from the production season of 2004 amounted to R 17 868 896 equivalent to $ 2 179 134 in 2008. Livestock figures were not available (Epopa, 2006).

Despite the great potential for organic farming, very few smallholder farmers participate in the South African market. Matungul (2002) stresses that the reason for the lack of participation in the market is due to a deficiency of assets, market information and training. Mnkeni (2001) asserts that farmers are faced with 25 constraints related to marketing due to the lack of pertinent information. Farmers do not have any information on what type of products to grow, which markets to sell to, what distribution channels to choose, the effects of competition, and how to gain access to markets (Mnkeni, 2001). In addition, farmers are located far from markets and have poor access to infrastructure, which increases their transaction costs (Makhura, 2001).





2.8 Decision-making for smallholder organic farming

Decision-making can be defined as the process of choosing a course among alternatives to achieve a desired result. Effective decision-making requires good information, sound judgment and flexibility. Resource-limited farmers in South Africa lack appropriate production information and successful farming experience to make sound judgments regarding production (Poulton, 2004). For farmers to specify realistic alternatives, they must be aware of all aspects of the decision-making process. Risk aversion or risk-taking is informed by the presence of constraints (e.g.

available credit) that may limit alternatives. In many parts of the developing world, including South Africa, farmers have limited or no access to alternatives such as credit for the purchase of production inputs, which reduces their choice of alternatives (Sligh & Christman, 2007).

Farmer decision-making is complex and is influenced by on- and off-farm factors, including the availability of off-farm employment, which is often perceived as less risky than farming (FAO, 2006). The need to understand crucial farm management decisions is important for appropriate extension and development strategies to assist in reducing farmer risks, especially when considering adopting and/or scaling up organic agriculture.

Farming is inherently risky, owing to unpredictable factors such as climatic and market factors. Organic farming presents an even more pronounced risk due to the fact that agrochemicals, such as pesticides, are not allowed in certified organic farming. Many decisions will have to be taken in addition to those of conventional farming. Established commercial organic farmers have better structures to support decision-making with regard to organic production. Lack of access to information,

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2.8.1 Access to knowledge and information Due to the knowledge-intense nature of organic farming, access to such knowledge is critical for the success of organic farming and in creating local critical mass (Scialabba, 2007). Farmers require access to information to expand their current knowledge. There is a need for sufficient and appropriate information to help smallholder farmers make better decisions in farming and risk management (FAO, 2006). Access to knowledge and information is one of the critical stumbling blocks when conversion to organic agriculture is considered (Scialabba, 2007). Lack of experience and appropriate extension and training exacerbate the situation of new organic farmers.

The availability of and access to good information is important in decision-making.

Due to historical factors, there is a lack of adequate information to support smallholder farmers (Aliber et al, 2006). There is a need for information that allows smallholders to decide if organic production is a sound choice for commercialisation.

Critical issues such as markets for organic products and relevant organic farming policy are often absent in developing countries to support the growth of the smallholder organic industry (Willer & Yussefi, 2007).

Only a small proportion of smallholder farmers have access to written information on farming (Bembridge, 1997). There is a sizable volume of printed agricultural information for farmers in South Africa. Despite this, access to such information by smallholders is hindered because many producers of agricultural information fail to meet the true information needs of smallholder farmers in South Africa (Stefano, 2004). Those tasked with the collation and dissemination of agricultural information should consider literacy levels and the appropriateness of information.

Many assumptions are made about what information is required and there is a lack of understanding of how smallholder farmers use information (Stefano, 2004). Most government extension information is not context-specific to smallholder farmers and

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2.8.2 Use of information by smallholder farmers Although information exists, it is not always accessible or used, for various reasons.

A study by Stefano (2004) discussed information use propositions by smallholder organic farmers. The study explains that information use is dependent on several factors, including need and user awareness. For information to be used, farmers need to be aware of its existence and it should be the kind of information they need. On the other hand, farmers use information because it is accessible, credible and understandable (Stefano, 2004). Non-use of information may be attributed to personal conditions (e.g. lack of motivation); low literacy levels; lack of effort to find what information exists; and, lack of competence in the use of the literature. To support farmer decision-making information should be context-specific, appropriate for the level of literacy, and delivered through the appropriate channels.

In the developed world, government intervention has focused on market facilitation, certification, cost-sharing assistance, funded market research, and subsidised conversion to organic farming systems as a way of facilitating the environmental benefits of organic production (Green & Kreemen, 2003). In most of Africa, transport infrastructure development; relevant training; extension services; skills training;

market facilitation; increased local consumer awareness; and, facilitation of access to export opportunities in Europe and the United States are important to support growth in the organic industry.

In summary, organic farming is a young industry with a promising future, driven by a fast-growing international and local demand. African smallholder farmers stand a good chance of benefiting from commercial organic agriculture for the following reasons: lower input costs; similarities in production systems; access to land with limited exposure to agrochemical use; favourable climatic conditions; growing for 28 niche markets; and, organic practices being environmentally sustainable practices.

Yet African farmers face production, management, financial, and institutional challenges. Therefore, there is an urgent need to capacitate smallholder farmers to overcome current problems. Long-term investment in capacity building to increase knowledge of organic farming is of paramount importance for the success of organic farming. Practical solutions to overcoming barriers to technical and financial information and institutional barriers, such as accessing loans and meeting certification costs, are also urgently needed for smallholder farmers. However, careful attention should be given to the fact that perpetual external support is not good for sustainable organic farming. Therefore, empowerment of farmers is important so that reliance on external support is minimised.

The elimination of pesticides, fertilisers and herbicides in organic farming poses a challenge for pest and disease management and capacity to meet the required yields, but this may create a much-needed demand for labour in areas of high unemployment.

The identification of suitable crops for smallholder agro-ecological conditions could support more profitable farming. Research is required to identify suitable crops with accessible niche markets. Appropriate information and resources are important to minimise risks and to enable better decision-making in order to improve productivity for smallholder farmers.

The growth of the South African and African organic industry requires supportive policies to cultivate a conducive environment for smallholder farmers. Policy considerations may include market facilitation; funded market research; advisory centres; certification cost-sharing; farmer training; extension services, such as information dissemination to users; local consumer awareness; and, access to export opportunities.

29

CHAPTER 3: STUDY BACKGROUND AND GROUP

CHARACTERISTICS

Farming forms an important part of livelihood strategies for most rural communities in South Africa and cannot be ignored in the development of rural areas (Delgado, 1999). Agriculture is promoted widely as a strategy to overcoming poverty and food insecurity in South Africa, and the KwaZulu-Natal province in particular (Hendriks, 2005; Singh, 1999). Moreover, organic production is promoted as a means of income generation among smallholder farmers in the province (Vezi, 2005). Yet, few comprehensive studies have been undertaken to investigate the feasibility of organic production among smallholder farmers in South Africa, including in KwaZulu-Natal.



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