Small-Scale Farmers in South Africa: Can Agricultural Cooperatives Facilitate Access to Input and Product Markets?

Gerald F. Ortmann and Robert King

No 13930, Staff Papers from University of Minnesota, Department of Applied Economics

Abstract: Small-scale (communal) farmers in South Africa have limited access to factors of production, credit and information, and markets are often constrained by inadequate property rights and high transaction costs. The objective of this research is to investigate whether agricultural cooperatives - considered by the South African (SA) government as organizations that could help promote community and economic development - can facilitate smallholder access to input and product markets that could enhance their development. This paper initially discusses the principles of cooperation, and briefly describes the history and development of agricultural cooperatives in developed and less-developed countries, with an emphasis on the United States and South Africa. A new Cooperatives Act, based on international principles of cooperation, was promulgated in South Africa in August 2005. The theory of cooperatives, and new institutional economics theory (NIE) (including transaction cost economics, agency theory, and property rights theory) and its applicability to the cooperative organizational form, are also presented, as are the inherent problems of traditional cooperatives, namely free-rider, horizon, portfolio, control, and influence cost problems caused by vaguely defined property rights. An analysis of the future of cooperatives in general, based on a NIE approach, suggests a life cycle for cooperatives (formation, growth, reorganization or exit) as they adapt to a changing economic environment characterized by technological change, industrialization of agriculture, and growing individualism.

Keywords: Agribusiness; Farm Management (search for similar items in EconPapers)
Pages: 74
Date: 2006
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
https://ageconsearch.umn.edu/record/13930/files/p06-04.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ags:umaesp:13930

DOI: 10.22004/ag.econ.13930

Access Statistics for this paper

More papers in Staff Papers from University of Minnesota, Department of Applied Economics Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().