South Africa's Rural Poor in the Era of Supermarkets: The Role of Commercial Farmers in Adaptive Organizational, Institutional and Technological Responses to Access and Compete in Dynamic Markets

By David Neven, Thomas Reardon, Dave Weatherspoon and Rose Hopkins.

Presented at 103rd EAAE Seminar "ADDING VALUE TO THE AGRO-FOOD SUPPLY CHAIN IN THE FUTURE EUROMEDITERRANEAN SPACE" Barcelona April 23rd - 25th, 2007

Abstract

Using the case of South Africa, with its unique policy environment, this paper addresses the following research question: are business models driven by commercial farmers more successful than business models driven by NGOs in terms of integrating the rural poor in modern dynamic food supply chains?

The analysis is based on four detailed case-studies of farmer groups who have been successful (to a varying degree) in linking with supermarkets and other food industry firms in South Africa. These four cases reflect three basic organizational formats in which the rural poor are integrated in modern food supply chains: (1) farmer groups, where each farmer has his/her own land; (2) community land farming, where the farm land is fully owned by a community or farmer group; and (3) equity share schemes, where farm workers without land have become shareholders in commercial farms.

Two key findings emerged. First, the analysis provides support for the hypothesis that  the degree of commercial farmer involvement is positively correlated with the  economic success of the model. Second, the case-studies reveal that economic  success does not automatically imply social success.

These two primary findings lead to the hypothesis that the success of a business model from a development perspective (i.e., one with economic and social  dimensions) requires at least three elements: (1) a partnership approach between experienced commercial farmers (or alternative sources of managerial capacity), NGOs and the rural poor; (2) the organizational and governance structures of the business model must balance business and development goals; and (3) business models aimed at integrating the rural poor in modern food supply chains imply a process and as such require a more holistic, long term  approach with a strong focus on knowledge transfer.

Available for download at http://www.medcon.creda.es/Posters/Neven.pdf [1]

Also available at http://www.montpellier.inra.fr/moisa/moisa/download/S%E9minaires/Article_4.pdf [2]