MSINGATHI SIPUKA | Rethink model of promoting market access for small-scale farmers

I recently read an interesting piece where the author was applauding an initiative of connecting small holder farmers to commercial value chains.

Of course we can substitute "commercial value chains" with a simpler concept of the big chain stores that dominate the food retail sector in the country. I appreciated the value of the intervention for the intended beneficiaries, but questioned the transformative nature of the project for the aggregated sector of small holder farmers, not to mention small traders.

Almost in every African country you are confronted with the reality of an abundant and low-skilled labour profile that exists in a context of low matured secondary and tertiary sectors.

This economic configuration limits the capacity of most economies across the continent to absorb, in a meaningful way, the labour profile  above. Often resulting in the twin problem of high unemployment and poverty levels. It is in this context that the agricultural sector, in particular small-scale farming, are seen as critical channels to address the labour absorption question confronting most of our economies, including SA. Enhancing the role of the small holder farmer becomes vital from that perspective.

This essentially entails strategies to enhance the production capabilities of small-scale farmers while simultaneously addressing the distribution channels required to move products to the customer. It is within the distribution side where initiatives such as the "connecting small holder farmers to commercial value chains" enter the fray in SA. It is interesting to note that the route to market for small holder farmers in most African countries is far less complicated than in SA.

The SA case is essentially complicated by the formal character of the retail sector, which sees customers primarily utilising the formal retail chain stores as their point of purchase. That is why  the SA context requires interventions linked to the so-called commercial value chains to bolster the prospects of these small-scale farmers.

Despite the presence of institutions like the Competition Commission to curb anti-competitive behaviour in the market, the marginal role of social institutions like local markets and small traders relative to the big retailers continues to be the reality. In truth, the design of the competition policy is not oriented towards addressing this fundamental question of the relationship between the monopoly players and the small trader, which is central to addressing economic opportunity and sustaining livelihoods at the lower spectrum. This is quite different from the market dynamics across the continent.

What can be done? First, while we may appreciate the reforms within the existing context of the big retailers being the dominant supply chain we have to look beyond it. This means looking to the African experience of a more prominent role for local markets and strengthening the role of the small-scale traders. This will require actions from public institutions, changes in social or customer behaviors and using technology to support small-scale producers. Some of these include: Investments by local authorities for creation of vibrant market places that have the adequate infrastructure to secure the longevity, and freshness of products. This is for the benefit of both the customer and seller.

As communities we need to change our customer behaviours and adopt a social solidarity mentality, shifting our buying patterns from the big enterprises to the small-scale farmers providing their products through local markets. Supporting small traders with technological solutions that can improve their efficiencies in moving their product to the customer.

The public purse remains a potentially transformative instrument, especially from a procurement perspective. The challenge with the current model of public procurement is that it remains largely elitist and removed from small traders. It is not a technical problem of procurement rules but an overachieving challenge of conceptual orientation and approaches to development.

We would rather a system that creates 10 individual millionaires than one that ensures and sustains the livelihoods of say 1,000 households. Our conceptual limitations then directly translate into the untransformative policies we design. We have to fix it in our minds that the apex problem in our society is unproductive labour that leads to different forms of alienation, social, economic, mental, etc. 

 As things stand, what we have are private aggregators who coordinate among small-scale farmers to ensure adherence to certain standards as required by the big retailers. They then proceed to purchase from the small-scale farmers and they supply to the retailer.

At face value this appears to be the necessary mechanism to ensure coordinated market access for these small holder farmers. However, the private nature of the aggregators poses a pricing challenge for the small-scale farmer as the aggregator needs to recoup their cost and still make a significant profit when selling to the retailer. In effect, it's the classic case of private actors coming in to fulfill critical functions that should be played by the state as part of its developmental role.

These interventions would go a long way in addressing one of the most pertinent challenges for small-scale farmers in SA. Namely the commercialised distribution channel and its over-reliance on big retailers. 

• Dr  Sipuka is chief of staff at the African Union Development Agency – Nepad (A-NEPAD). He writes in his personal capacity.