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Agricultural cooperatives II: Can they facilitate access of small-scale farmers in South Africa to input and product markets?

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  • Ortmann, Gerald F.
  • King, Robert P.

Abstract

The objective of this research is to investigate whether agricultural cooperatives can facilitate smallholder farmer access to input and product markets. Farmers in two case study communal areas of KwaZulu-Natal face high transaction costs as reflected primarily in their low levels of education and literacy, lack of market information, insecure property rights, poor road and communication infrastructure, and long distances to markets. Analysis of the reasons why cooperatives were originally established in various parts of the world suggests that most of the causes (such as poverty, market failure and high transaction costs) also apply to the study farmers, as do the seven international principles of cooperation. Smallholder farmers in both case study regions have the potential to grow high-value crops such as vegetables, fruit and cut flowers. In the supply chain from farm to market, the optimum boundary for each organization involved in the chain (e.g. cooperative and investor-oriented firm) depends on the minimum operational and transaction costs for each business.

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Bibliographic Info

Article provided by Agricultural Economics Association of South Africa (AEASA) in its journal Agrekon.

Volume (Year): 46 (2007)
Issue (Month): 2 (June)
Pages:

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Handle: RePEc:ags:agreko:10124

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Web page: http://www.aeasa.org.za/
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Related research

Keywords: Agricultural cooperatives; small-scale farmers; high-value crops; transaction costs; South Africa; Agribusiness;

References

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  1. Holloway, Garth & Nicholson, Charles & Delgado, Chris & Staal, Steve & Ehui, Simeon, 2000. "Agroindustrialization through institutional innovation: Transaction costs, cooperatives and milk-market development in the east-African highlands," Agricultural Economics, Blackwell, vol. 23(3), pages 279-288, September.
  2. Holloway, Garth & Nicholson, Charles & Delgado, Chris & Staal, Steve & Ehui, Simeon, 2000. "Agroindustrialization through institutional innovation Transaction costs, cooperatives and milk-market development in the east-African highlands," Agricultural Economics: The Journal of the International Association of Agricultural Economists, International Association of Agricultural Economists, vol. 23(3), September.
  3. Trechter, David D. & King, Robert P. & Walsh, Laura, 2002. "Using Communications to Influence Member Commitment in Cooperatives," Journal of Cooperatives, NCERA-210, vol. 17.
  4. Fulton, Murray E. & Ketilson, Lou Hammond, 1992. "The Role of Cooperatives in Communities: Examples from Saskatchewan," Journal of Agricultural Cooperation, National Council of Farmer Cooperatives, vol. 7.
  5. Reardon, Thomas & Barrett, Christopher B., 2000. "Agroindustrialization, globalization, and international development: An overview of issues, patterns, and determinants," Agricultural Economics, Blackwell, vol. 23(3), pages 195-205, September.
  6. Kirsten, Johann F. & Sartorius, Kurt, 2002. "Linking Agribusiness And Small-Scale Farmers In Developing Countries: Is There A New Role For Contract Farming?," Working Papers 18025, University of Pretoria, Department of Agricultural Economics, Extension and Rural Development.
  7. Iliopoulos, Constantine & Cook, Michael L., 1999. "The Internal Organization of the Cooperative Firm: An Extension of a New Institutional Digest," Journal of Cooperatives, NCERA-210, vol. 14.
  8. Fulton, Joan R. & Popp, Michael P. & Gray, Carolyn, 1996. "Strategic Alliance and Joint Venture Agreements in Grain Marketing Cooperatives," Journal of Cooperatives, NCERA-210, vol. 11.
  9. Ortmann, Gerald F. & King, Robert P., 2007. "Agricultural Cooperatives I: History, Theory and Problems," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 46(1), March.
  10. Royer, Jeffrey S., 1999. "Cooperative Organizational Strategies: A Neo-Institutional Digest," Journal of Cooperatives, NCERA-210, vol. 14.
  11. Piesse, Jenifer & Doyer, Tobias & Thirtle, Colin & Vink, Nick, 2005. "The changing role of grain cooperatives in the transition to competitive markets in South Africa," Journal of Comparative Economics, Elsevier, vol. 33(1), pages 197-218, March.
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Cited by:
  1. Mabuza, Majola Lawrence & Ortmann, Gerald F. & Wale, Edilegnaw Zegeye, 2012. "Collective action in commercial mushroom production: the role of social capital in the management of informal farmer groups in Swaziland," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126764, International Association of Agricultural Economists.
  2. Mujawamariya, Gaudiose & D'Haese, Marijke F.C. & Burger, Kees, 2010. "Influence of interlocked transactions on gum arabic production and marketing in Senegal," 2010 AAAE Third Conference/AEASA 48th Conference, September 19-23, 2010, Cape Town, South Africa 96826, African Association of Agricultural Economists (AAAE);Agricultural Economics Association of South Africa (AEASA).

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