| Summary: | The main objective of this research was to develop and apply an integrated framework that will
allow researchers to comprehensively investigate agri-food chains within which emerging
farmers operate to identify potential leverage points that will contribute towards improving the
financial performance and hence the livelihoods of emerging farmers. An integrated value chain
(VC)-New Institutional Economics (NIE)-Structure-Conduct-Performance (SCP) framework was
developed to allow for considering the constraints associated with institutional failure, high
transaction costs, and the lack of support structures that typically exclude emerging farmers
from participating in commercial agri-food chains, but also vertical coordination and collective
action that contribute to the successful participation of emerging farmers in commercial agrifood
chains. The integrated VC-NIE-SCP framework allows for a comprehensive analysis of the
behaviour and performance of emerging farmers in their social, physical and institutional
environment.
The integrated VC-NIE-SCP framework was applied to the case of emerging raisin producers
from Eksteenskuil who export raisins via the fairtrade initiative. Correctly aligned incentives
through the Fairtrade initiative (price premium for good quality raisins) incentivised the farmers
to comply with the strict rules of Fairtrade, but also to establish additional rules by registering
the EAC to improve their ability to meet the strict rules and regulations of the fairtrade initiative.
The incentives through fairtrade also incentivised the support structures to actively support the
farmers to comply with the strict rules and regulations. Support structures, especially the board
of directors of EAC, play a major role in the operations of the farmers from Eksteenskuil in the
fairtrade value chain. Correctly aligned incentives thus have a major influence on the behaviour
of the farmers and other role-players that may support them to meet the strict requirements of
participating in commercial agri-food chains.
The technical and cost efficiency levels of the respondents were examined to gain insight into
their current performance and the scope for improving their performance in their current
technology set. A cash flow optimisation model was also developed to model the potential
impact of recommended changes on the financial performance of the farmers from
Eksteenskuil. The results show that there is major scope to improve the financial performance of
the raisin producers from Eksteenskuil by improving the levels of efficiency with which they use
their production inputs. The current incentive structure, however, is not conducive to improving
the efficiency levels of the farmers. The lack of secure land tenure means that the farmers do
not have the primary incentive to invest in their land. Insecure tenure also contributes to the lack
of cash flow which is central to most of the stumbling blocks that constrain the behaviour, and
hence the performance, of emerging farmers. Land tenure reform has to be concluded promptly
to contribute to an enabling environment for emerging farmers to allow them to improve their
livelihoods through irrigated agriculture. Emerging farmers need effective support, extension and education to successfully operate in
the liberalised market environment. Providing such support to emerging farmers, however,
should not be the sole responsibility of government. The private sector has a major contribution
to make in this regard. Key role-players in agri-food chains exhibit the necessary skills to
successfully operate in the chain. Government should rather focus on creating incentives for
such role-players to get involved with emerging farmers to develop the necessary skills of the
farmers. Correctly aligned incentives that create a vested interest for such firms in the
performance of emerging farmers may convince the private sector to effectively support the
farmers. Such a vested interest may convince the key role-players to enter into vertical
coordinated relationships (i.e. strategic alliances) with emerging farmers, giving farmers access
to the accompanying benefits of effective support, and a ready market for their produce.
Government then can focus on meeting its responsibility of providing the farmers with an
enabling environment.
The main conclusion from this research is that the integrated VC-NIE-SCP framework provides
a holistic approach to identify workable solutions that may improve the financial performance of
emerging farmers, and hence the livelihoods of emerging farmers. By understanding the social
and institutional dynamics in the system within which the emerging farmers operate, the
incentive structure can be adjusted accordingly to effectively guide the behaviour of all parties
involved to contribute towards the successful participation by emerging farmers in the
mainstream of the economy. Each case, however, needs to be assessed comprehensively to
ensure that recommendations will optimise the benefits for the farmers under consideration.
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