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An economic analysis of the contribution of water use to value chains in agriculture
Expanded Title:Actual achievements where emerging farmers are successfully operating in commercial agri-food chains are scarce. The small number of success stories means that the objective to allow farmers to improve their livelihoods through irrigated agriculture is not met. It is noted that access to agricultural water plays a necessary role in increasing productivity, but access to water alone is not a sufficient condition to enhance productivity and alleviate poverty. Given the scope of the analysis that was required to meet the objectives of this study, the conceptual framework that was used consists of a problem tree analysis and an integrated New Institutional Economics (NIE) and Structure-Conduct-Performance (SCP) analysis of the three levels (micro, macro and meso) that comprise the value chain within which the emerging farmers are participating. The nature of the conceptual framework requires both qualitative and quantitative analyses. Within the application of the SCP framework, qualitative analyses were used to investigate the physical environment (structure) within which the farmers operate, the way they behave in the physical environment (conduct), and the level of performance in terms of production volumes and income generated. The analysis of the resource allocation level within the NIE framework consists of quantitative analyses of the levels of efficiency with which production inputs are used to generate income. The integrated NIE and SCP framework was applied to three case studies: the case of raisin producers from Eksteenskuil in the Northern Cape Province, the case of vegetable producers from Zanyokwe Irrigation Scheme, and the case of maize and vegetable producers from Thabina Irrigation Scheme. The results from the analyses of the distribution of water use along the value chains show that the bulk of all of the water that is used along the value chain is used at farm level to produce the food products. Efforts to increase the efficiency with which water is used along the value chain thus should focus the attention on water use at farm level. A number of key success factors were also identified from the results of the study that prove to have great potential to contribute towards the successful participation of emerging farmers in commercial agri-food chains. The key success factors include, amongst others, effective support to emerging farmers; effective collective action among emerging farmers; actions to minimise the potential negative impact of cultural activities on the performance of the farm businesses; secure tenure; tailor made financing schemes; and coordinated efforts to overcome stumbling blocks. The results from this study show that emerging farmers have great prospects to increase their production levels by using their production inputs more efficiently and thereby substantially improve their cash flow positions. It is important to note that the farmers can increase their production at current input levels and within their existing technology set. Based on the findings from the three case studies, recommendations are made for emerging farmers to enhance their ability to successfully participate in commercial agri-food chains, for policy makers to formulate new policies and to adjust some of the existing policies to enhance the successful participation of emerging farmers in commercial agri-food chains, and for future research that needs to be conducted to contribute to the topic of the optimisation of economic beneficial water use by the integration of emerging farmers into the main stream of the economy.
Date Published:01/10/2012
Document Type:Research Report
Document Subjects:Agricultural Water - Commercial irrigation
Document Format:Report
Document File Type:pdf
Research Report Type:Standard
WRC Report No:1779/1/12
ISBN No:978-1-4312-0386-4
Authors:Jordaan H; Grové B
Project No:K5/1779
Organizations:Department of Agricultural Economics University of the Free State
Document Size:4 404 KB
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