Small-scale farming has been a focus of government policy in South Africa since at least the 1930s. The commercialisation of small-scale farming includes supplying supermarkets with fresh produce and establishing value chains through processing and packaging. Profitability is an issue for most small-scale farmers. Insufficient production, high costs and low marketing prices are some challenges faced by them. Lack of access to finance is another major challenge faced by most small-scale farmers.
What is small-scale farming?
Small-scale farmers are understood to mean small-scale farmers in South Africa who operate on a scale that is very small making it a challenging task to attract services. Most of these farmers are black and disadvantaged because they do not have access to loans.
- Agriculture small and medium enterprise (SME) development has been a focus of government policy in South Africa since at least the 1930s.
- The Department of Agriculture was created in 1932, with the first minister being Dr J. B. M. Hertzog, who saw it as part of his mandate to help small-scale farmers develop their businesses and farms by providing them with loans and other financial assistance.
- The Department of Rural Development was also created in 1932, with its goal being to improve rural living conditions through education, infrastructure development and increasing occupancy rates on farms which could not be subdivided further because of a lack of farmland available for purchase or rent agreement terms being too expensive for most people who wanted to live on them (and even some wealthier individuals).
The commercialisation of small-scale farming includes supplying supermarkets with fresh produce and establishing value chains through processing and packaging. The benefits of doing so are that it will increase your income, improve the quality of your product, create jobs and provide access to markets. However, there are also challenges with this such as generating enough revenue to cover costs, producing sufficient quantities at competitive prices, managing risks associated with production processes and delivering products on time.
Problems small-scale farmers in South Africa face.
- Small-scale farmers are less profitable than commercial farms. In South Africa, for example, small-scale farmers have an average gross annual income of R215 000 (US$18 025), while commercial farmers earn R2.2 million (US$175 000) per year on average.
- The high cost of production is one of the challenges faced by small-scale farmers. They also receive less help from government agencies and other stakeholders than larger-scale farms do because they do not produce enough goods to warrant such support.
Lack of access to finance is another major challenge faced by most small-scale farmers.
The majority of the rural population in South Africa relies on subsistence farming as their main source of income, with little or no chance of making a profit from it. Lack of access to finance is one of the key reasons these people find themselves trapped in poverty and unable to improve their lives.
Fortunately, there are some effective tools that can help overcome this problem. One such tool is micro-finance, which provides small loans at affordable rates that farmers can use for whatever they need: irrigation systems, crop seeds and fertilizers, livestock feed etcetera. For example, the KwaZulu-Natal province has set up its own micro-finance programme called Vukani Shakaland Fund which offers small loans between R1000 – R50 000 at interest rates below 20%. This means that if you take out a loan for R3000, then the repayment period would be 5 years with monthly instalments varying from R250 -R550 depending on how much money you borrow and what your credit rating is like (the lower your credit rating means higher monthly payments).
The commercialisation of small-scale farming
While small-scale farming is usually done as a hobby, it can also be a profitable business. By commercialising your farm and making an income from it, you can help yourself compete better and generate more customers.
Commercialisation is simply making money from your small-scale farming business. You can do this by increasing your production capacity or raising the quality of what you produce so that people will want to buy it at higher prices. This means that if there are more people wanting to buy your product than there are products available, then there will be competition between customers for this limited supply which increases its price on the market because no one knows they will produce again!
Conclusion
In conclusion, small-scale farming is still an important part of the South African economy and by commercialising it we can help farmers compete better.
