Fresh efforts are being made to increase the share of black ownership in South Africa’s agricultural sector. This follows decades of missteps and badly designed interventions that have failed to significantly change the ownership patterns in the sector.
However, farming is a capital and resource intensive business, which requires access to sufficient finance. In a recent study we looked at the funding challenges facing smallholder farmers in the vegetables value chain. A smallholder farmer is someone engaged in agricultural activities on a small scale, generally farming less than 10 hectares of land, selling part of their crop and farming for subsistence.
How financing is offered affects who gets to farm Farming needs substantial investment in on-farm infrastructure and equipment. This includes fencing, farming tools, tractors, boreholes and pumps, irrigation systems, shade nets and greenhouse tunnels. The issue of financing is particularly concerning given that smallholder farmers are self-financed or have limited access to debt finance.The problem why farmers are collapsing and exiting the vegetable farming business is because farmers get a loan to start farming and they make losses in the first years which means that they can’t re-pay the loan, so they start selling farm assets to repay the loan.
Government support does not cover weather and climate change related risks. These are increasingly affecting smallholder farmers who still practise open field farming. This will safeguard the participation of smallholder farmers by allowing them to access more reliable and consistent markets. It will also benefit consumers through better quality produce and avoid potential food shortages in the wake of high inflation and the energy crisis in South Africa.