AFRIKAANS: Die 21 ste eeu word deur invloedryke dryfkrragte wat die landboubedryf tot nuwe dimensies dwing gekenmerk. Veranderende omstandighede vereis nuwe vaardighede in bestuur ten einde toenemende uitdagings aan te spreek. Die vermoë van die bestuurder was nog altyd 'n belangrike parameter in landbou. Bestuur se optrede bepaal die sukses of ondergang van enige ondememing, insluitende die boerdery-ondememing. Min studies fokus op die strategiese bestuur van die boerdery-onderneming. Strategiese bestuur is bykans 'n vergete hulpbron. Hierdie studie stel ondersoek in na strategiese bestuur in die boerdery-onderneming. Die fokus is op die sewe bestuurstake van strategiese bestuur: <ul> 1. Formuleer 'n visie en missie. 2. Stel doelwitte. 3. Analiseer die eksteme omgewing. 4. Analiseer die interne omgewing. 5. Formuleer 'n strategie. 6. Implementering en uitvoering van die strategie. 7. Evalueer die prestasie en inisieer regstellende optrede.<br></ul> Hierdie studie is hoofsaaklik onderneem om ondersoek in te stel na die mate waarin die kommersiele boer sy boerdery-onderneming strategies bestuur. Ondersoek word ook ingestel of die kommersiële boer oor voldoende kennis van strategiese bestuur beskik. Hierdie ondersoekende studie van strategiese bestuur in die boerdery-onderneming word deur 'n omvattende literatuurstudie sowel as 'n empiriese ondersoek gerugsteun. Die literatuur gee ' n oorsig oor die landboubedryf se interne omgewing en eksteme omgewing. Strategiese bestuur kom daama onder die soeklig. Vir die doel van hierdie ondersoek is vraelyste en persoonlike onderhoude in die empiriese studie gebruik. Respondente is persoonlik op die plase besoek. Tydens die voltooiing van die vraelyste het die respondente vrae aangaande strategiese bestuur beantwoord. In die persoonlike onderhoude is konsepte verhelder en die bestuursprobleem is gevolglik beter in die persoonlike onderhoude ondervang. Die opname is onder 70 kommersiële boere in die Loskopskema: Marble Hall-streek gedoen. Bevindings dui daarop dat bestuurders me willens en wetens 'n strategie formuleer me. Die strategie kom inkrementeel tot stand. Boere volg 'n meer informele en minder omvattende rigting in die formulering van 'n strategie. Moontlike oorsake vir 'n meer informele strategie is die onstabiele omgewing van die landboubedryf en 'n tekort aan kennis van strategiese bestuur. Daar word aanbeveel dat strategiese bestuur as 'n riglyn gebruik word om by die veranderende omgewing van die landboubedryf aan te pas. Bestuur van die ondememing moet beter beheer en ontwikkel word ten einde by nuwe strategiese rigtings wat ontstaan aan te pas. Die sukses van 'n onderneming word nie deur die implementering en uitvoering van 'n goeie strategie verseker me. Die verantwoordelikheid berus by die bestuur om by veranderende omstandighede aan te pas. 'n Verdedigende strategie moet ondemeem word om teenspoed die hoof te bied. Die logiese grond vir die gebruik van strategiese bestuur is gevolglik dat dit tot beter prestasie sal lei. ENGLISH: Powerful forces are propelling the agricultural industry toward new dimensions for the 21st Century. Changing circumstances in the agricultural sector require new skills to address these challenges. Managerial ability has always been regarded as an important parameter in agricultural production. Managerial behavior is the determining factor that causes a business, including a farm business, to prosper or fail. Few studies have focused on the strategic management of a farm business. Strategic management is almost a forgotten resource. This study is designed to appraise the background of strategic management in a farm business. The emphasis was placed on seven interrelated managerial tasks of strategic management: <ul> 1. Forming a strategic vision and mission. 2. Setting objectives. 3. Analyse the external environment. 4. Analyse the internal environment. S. Crafting a strategy. 5. Implementing and executing the chosen strategy. 6. Evaluating performance and initiating corrective adjustments.<br></ul> The study's main objective is to examine the degree to which the farm business is using a strategic management process effectively in managing its business. At the same time this study investigates if the commercial farmers have sufficient knowledge of the concept of strategic management. This study is investigative of strategic management and is backed by a comprehensive literature review and empirical study. The literature gives an overview of the internal environment and external environment of agriculture and the field of study strategic management is also introduced. The empirical study consists of a questionnaire and personal interviews. Each of the respondents was subsequently visited, and questionnaires were completed regarding aspects of strategic management. Depth and detail of information was secured by a personal interview. The survey involves 70 commercial farmers in the Loskop scheme: Marble Hall-region. Die results of the research indicate that managers do not follow a deliberate strategy but rather an emergency strategy. Strategic direction is not controlled through setting prior, widely shared intention and monitoring outcomes. A possible reason for this phenomenon is the instability of the agricultural environment and the lack of knowledge of strategic management. Recommendations are made on how managers must seek to provoke around the instability of the environment and pressing challenges by using strategic management as a guideline. Managers have to adopt a form of control and development that enables new strategic direction to emerge. Effective strategy combined with effective strategy execution doesn't guarantee the success of a company. It is the responsibility of a company's management to adjust to unexpectedly tough conditions by undertaking strategic defenses and business approaches that can overcome adversity. The rationale for using strategic management is therefore compelling: the better conceived a company's strategy and the more competently it is executed, the more likely it is that the company will be a standout performer and exhibit enviable business practices. / Dissertation (MCom (Business Management))--University of Pretoria, 2005. / Business Management / unrestricted

Thesis (PhDAgric) -- Stellenbosch University, 2006. / ENGLISH ABSTRACT: This dissertation is a sojourn into institutional economics and its application to contemporary economic and development issues in South Africa. Economic development initiatives in agribusiness have much to gain from the theories and approaches advanced by the new institutional economics. Institutions are considered essential to the functioning of economies, markets and organizations, despite its neglect in neoclassical economics The study intends to prove that 'institutions matter', especially when social and economic transformation is necessary. The cases studied exhibit how institutions matter and shape economic outcomes. The theoretical basis established in this thesis was applied to economic development challenges such as contracting, organizational innovation, economic empowerment, land reform, building social capital, organizational design, supply chain management, entrepreneurial development, and modes of constructive engagement. The thesis is a compilation of academic papers applied to the various selected developmental challenges prevalent in South African agriculture. The study begins by delving into the more popular New Institutional Economics literature and specifically transaction cost economics. Somewhat unexpectedly, this leads to a greater appreciation for the insights generated by the Old Institutionalists in investigating the nature of institutions. Hence, the old institutional economics gains prominence in the latter part of this work, contrary to contemporary approaches followed in agricultural economics. The acknowledgement given to aspects like social capital and embeddedness is consistent with Williamson's proposed framework for the economics of institutions and this is used as the conceptual framework in this thesis. Whereas the new institutional economics was found to be useful in yielding knowledge through analysis and remediable outcomes, the old institutional economics retains its advantage in promoting understanding of problems especially in the face of complexity. This inclination has influenced the thesis in two ways. First, it diverted the latter part of the work towards the old institutional economics and the role of social capital in shaping institutions and economic behaviour. Second, it reverts to theories on the nature of the firm that complements the transaction cost approach. The transaction costs approach is thus only used where it is found most effective i.e. analysing vertical integration between firms and the relevant ex ante incentives and the ex post governance aspects Most studies are motivated by a general recognition of the role of institutions in framing economic outcomes and end up in the new institutional economics and subsequently transactions cost economics. This favouring of the transaction cost approach has found appeal due to its ability to predict structural and organisational outcomes such as the efficient boundaries of firms, internal organisation, contractual relations, incentives, etc. Methodologically, it enables analysts to employ the empirical and mathematical rigour that has become a feature, but too often the purpose, of economic research. Three papers are devoted to this approach and elicit organisational designs that best contend with identified transaction costs. The study confirms that several aspects matter in institutional analysis when applied in an economic developmental context such as South Africa. Historical context is acknowledged as a critical facet of institutional analyses in the sense that institutions are shaped by the forces of history. Social capital is established as an important component of institutional economic analysis and particularly relevant in situations where social capital has been eroded by political economic manipulations. Attending to social capital require (inter alia) insight into the nature of the societal context, implied path dependency, the extent of trust, enforcement mechanisms, and agency relations. Three of the papers attend to these aspects. / AFRIKAANSE OPSOMMING: Die proefskrif bevat 'n toepassing van institusionele ekonomie op kontemporere ekonomiese- en ontwikkelingskwessies in Suid Afrika. Die nuwe institusionele ekonomie het veel te hied tot ekonomiese ontwikkelingsinisiatiewe vera! in agribesigheid. Institusies word beskou as essentieel tot die funksionering van die ekonomie, markte en organisasies, ongeag, die nalaat daarvan in die neoklassieke ekonomie. Die studie poog om te bewys dat 'institusies geld', vera! wanneer sosiale en ekonomiese transformasie noodsaaklik is. Die teoretiese basis wat gevestig is in die proefskrif, vind toepassing op ekonomiese ontwikkelingsuitdagings wat insluit kontraktering, organisatoriese innovasie, ekonomiese bemagtiging, grondhervorming, bou van sosiale kapitaal, organisatoriese ontwerp, waardeketting bestuur, entrepreneurskap ontwikkeling, en modes vir konstruktiewe omgang. Die studie begin met teoretiese 'n ondersoek in die meer populere nuwe institusionele ekonomiese literatuur, en spesifiek transaksie koste ekonomie. Dit lei later tot 'n onverwagse waardering vir die insigting wat die ou institusionele ekonomie genereer, wanneer die aard van institusies bestudeer word. Gevolglik, verkry die ou institusionele ekonomie prominensie in die latere deel van die studie, in teenstelling met die landbou ekonomiese benaderings wat deesdae bespeur word. Die erkenning aan sosiale kapitaal en institusionele ingeworteldheid is in tred Williamson se voorgestelde raamwerk vir die ekonomie van institusies is word gebruik as die konseptuele raamwerk in die tesis. Waar die nuwe institusionele ekonomie nuttig is in die werwing van kennis, is die ou institusionele ekonomie nuttig in die kweek van insig en verstaan van probleme en kompleksiteit. Die proefskrifword op twee maniere hierdeur beinvloed. Eerstens, leun die latere deel van die werk meer na die ou institusionele ekonomie en die rol van sosiale kapitaal in die vorming van institusies en ekonomiese gedrag. Tweedens, verskaf dit 'n fokus op die teoriee oor die aard van die firma wat komplimenter staan tot transaksie koste ekonomie. Die transaksie koste benadering word aangewend in die ontleding van vertikale integrasie tussen firmas en die relevante ex ante insentiewe en ex post strukture, waar dit vera! nuttig is. Meeste studies erken die invloed van institusies op ekomiese uitkomste en gebruik hoofsaaklik die nuwe institusionele ekonomie en transaksie koste ekonomie. Hierdie vooroordeel ten opsigte van transaksie koste ekonomie, vind byval as gevolg van die vermoe om strukturele en organisatoriese uitkomstes te voorspel soos die doeltreffendheidsdrumpel van firmas, interne orgasnisasie, kontrakte, insentiewe, ens. Metodologies, moedig dit empiriese en wiskundige benaderings tot ontleding aan, wat ongelukkig a! die doe! geword het in vele ekonomiese ondersoeke. Drie van die referate wat in die proefskrif vervat word, behels die identifisering van toepaslike organisatoriese ontwerpe wat geskoei is op die transaksie kostes wat geldentifieer is. Die studie bevestig dat sekere aspekte van belang is in institusionele ondersoeke, vera! in 'n ekonomiese ontwikkelingskonteks soos Suid Afrika. Historiese konteks, word erken as a kritieke faktor in institusionele ontledings, in die sin dat institusies onontbeerlik deur geskiedkundige kragte gevorm word. Sosiale kapitaal word ook erken as 'n belangrike komponent in institusionele ekonomiese ontledings, vera! in omstandighede waar sosiale kapitaal verweer het as gevolg van polities ekonomiese manipulasies. Dit veries dat aandag geskenk work aan, ( onder and ere) sosiale konteks, gelmpliseerde koers afhanklikheid, vertoue, afdwingbare meganismes, en agentskap verhoudings. Drie van die referate word hieraan gewy.

M.Com. (International Accounting) / This minor dissertation assesses the extent to which South African public companies that are engaged in agricultural activities are complying with the recognition, measurement and disclosure requirements of IAS 41, Agriculture, as well as whether they are providing any additional voluntary disclosures about their biological assets. Sixteen large South African public companies with material holdings of biological assets in their statements of financial position were selected for analysis. The study used the last published annual financial statements for reporting periods beginning before 1 January 2013 in order to assess compliance with IAS 41 prior to the implementation of IFRS 13. The financial statements of these companies were analysed to identify the existence of both the compulsory disclosures listed in IAS 41, as well as the extent of any voluntary disclosures relating to their biological assets. The results of the analysis show that the majority of South African agricultural companies are using fair value to measure their biological assets at initial recognition as well as at the end of each reporting period. None of the companies, however, is using the quoted price in an active market as the fair value for these assets, implying that companies need to incur additional costs to obtain fair valuations which comply with the requirements of IAS 41. While companies also state that they are using fair value to value their agricultural produce, none of them is providing any further information on how the fair values for their agricultural produce ar e calculated. Most of these companies are complying with the compulsory disclosure requirements of IAS 41, and are also providing certain of the recommended disclosures listed in IAS 41. In total, companies with material holdings of plants as biological assets are complying more fully with the compulsory disclosure requirements of IAS 41 than those with livestock. These companies are also providing more detailed voluntary disclosures about their biological asset holdings than the companies with material holdings of livestock as biological assets. The study concludes that the measurement methods used by companies to value their biological assets and the nature and extent of both compulsory and voluntary disclosures of these assets are sector-specific. This is consistent with the findings of previous research. This study contributes to the existing literature by providing a baseline on the financial reporting of agricultural entities in South Africa prior to the implementation of IFRS 13.

Please read the abstract in the 00front part of this document / Thesis (DCom (Agricultural Economics))--University of Pretoria, 2007. / Agricultural Economics, Extension and Rural Development / unrestricted

The world agricultural industry, despite numerous supply and demand challenges, has to significantly increase its production capacity to satisfy the increased demand for food and successfully address the issues surrounding food security. Access to credit is however a key enabler in this regard, while a lack of it limits the adaptive capacity of agricultural producers. The financing needs of agricultural producers however vary and are influenced by the different production systems which have different investment, revenue and risk patterns. The sector is unique in that the risk and uncertainty in agriculture are increased by the nature of agricultural production systems, which is in many cases driven by unpredictable external factors such as adverse weather conditions. In addition agricultural production systems also function within the total food system which consists of a number of interrelated subsystems, each presenting agricultural producers with a unique set of risk factors that need to be taken into account. The development of new and innovative financing solutions for the sector therefore requires a thorough understanding of the multidimensional nature of agriculture and the unique characteristics of the sector. The purpose of this study was to contribute to the development of new and innovative financing solutions for the agricultural sector in South Africa.

Supply chain management is emerging as an important source of competitive advantage for agribusinesses globally and in South Africa. The objective of this study was to describe and analyse the emerging governance structures in agribusiness supply chains. Governance structures are the formal and informal institutions that prohibit, permit, or require certain actions and provide the incentives for exchange. Agribusiness managers can choose from a continuum of governance structures which include spot or cash markets, specifications contract, relation-based alliance, equity-based alliance and vertical integration. These structures are distinguished by the composition of market and managed control of the transaction processes. In this study the constructivist and positivist inquiry paradigms were adopted to address the complexity and interrelation of factors involved in the choice of governance structure. The study was conducted in two stages. The first stage entailed a survey of agribusiness managers to elicit their opinions and perceptions on the strategic direction, preferred present and future coordination mechanisms, strategic focus, the future shape of the agro-food industry and the major factors driving these trends in the South African agribusiness complex. These were compared with global trends. This section was conducted in the positivist paradigm to extend the validation and generalisation of the second stage which was conducted in the constructivist paradigm. The second stage entailed the analysis of three case studies to identify the drivers for supply chain formation and the expression of these drivers, strategic considerations and transaction characteristics in appropriate governance structures. The choice of governance structure is influenced by the drivers of change, product characteristics, processes of the supply chain, transaction characteristics and costs. The most significant drivers of change were company competency, consumer behaviour and technology. The perishable nature of most agricultural products, in particular, requires special control and traceability systems to ensure chain transparency in order to certify and assure consumer safety and product quality. These drivers, product characteristics and systems determine the characteristics of the required transaction to facilitate the creation of customer value. Key concepts that emerged in the description of transaction costs are bounded rationality, opportunism, asset specificity and information asymmetry. The optimal governance structure maximises desired transaction requirements while minimising the costs of exchange. The analysis of the case studies showed that these factors cannot be considered in isolation. In each of the cases a different factors was instrumental in the determination of the optimal governance structure. The study identifies a six step decision process for agribusiness managers and researchers to relate drivers of competitiveness to appropriate governance structures. The emergence of supply chains is driven by evolving consumer demands and societal values on the one hand and the need for agribusiness and inter-agribusiness competency to transform these needs and values into consumer value on the other hand. South African agribusiness are employing technology and closer vertical coordination to improve production processes, quality assurance, traceability and process transparency. In line with global trends South African agribusiness will have to establish ever more sophisticated systems to satisfy consumer needs and societal values as these evolve to include less tangible needs and values such as environmental and ethical concerns. / Thesis (PhD ( Agricultural Economics))--University of Pretoria, 2005. / Agricultural Economics, Extension and Rural Development / unrestricted

In the literature there are mixed results on the link between credit and agricultural output growth. Some authors argue that credit leads to growth in agricultural output. Others view growth as one of the factors that influence credit supply, thus growth leads and credit follows. By and large, studies have not endeavoured to establish the short-run impact of agricultural credit on output. They are generally limited in establishing the long-run relationship between credit and agricultural output and thus present a research gap in this respect. This study contributes to the existing body of literature by focusing on the finance-growth nexus at sectoral level as a departure from extant literature that has focused on the macroeconomic level. Using South African data, the study investigated the causal relationship between the supply of credit and agricultural output as well as whether the two are cointegrated and have a short-run relationship. The study found that bank credit and agricultural output are cointegrated. Using the error correction model (ECM), the results showed that, in the short-run, bank credit has a negative impact on agricultural output, reflecting the uncertainties of institutional credit in South Africa. However, the ECM coefficient shows that the supply of agricultural credit rapidly adjusts to short-term disturbances, indicating that there is no room for tardiness in the agricultural sector. The absence of institutional credit will immediately be replaced by availability of other credit facilities from non-institutional sources. Conventional Granger causality tests show unidirectional causality from (1) bank credit to agricultural output growth, (2) agricultural output to capital formation, (3) agricultural output to labour, (4) capital formation to credit, and (5) capital formation to labour, and a bi-directional causality between credit and labour. Noteworthy and significant for South Africa is that for the agricultural sector, the direction of causality is from finance to growth, in other words supply-leading, whereas at the macroeconomic level, the direction of causality is from economic growth to finance, in other words, demand-leading. Applying a structural equation modelling approach to survey data of smallholder farmers, the positive relationship between bank credit and agricultural output observed from analysis of secondary data was confirmed. / Business Management / DCOM (Business Management)

In the literature there are mixed results on the link between credit and agricultural output growth. Some authors argue that credit leads to growth in agricultural output. Others view growth as one of the factors that influence credit supply, thus growth leads and credit follows. By and large, studies have not endeavoured to establish the short-run impact of agricultural credit on output. They are generally limited in establishing the long-run relationship between credit and agricultural output and thus present a research gap in this respect. This study contributes to the existing body of literature by focusing on the finance-growth nexus at sectoral level as a departure from extant literature that has focused on the macroeconomic level. Using South African data, the study investigated the causal relationship between the supply of credit and agricultural output as well as whether the two are cointegrated and have a short-run relationship. The study found that bank credit and agricultural output are cointegrated. Using the error correction model (ECM), the results showed that, in the short-run, bank credit has a negative impact on agricultural output, reflecting the uncertainties of institutional credit in South Africa. However, the ECM coefficient shows that the supply of agricultural credit rapidly adjusts to short-term disturbances, indicating that there is no room for tardiness in the agricultural sector. The absence of institutional credit will immediately be replaced by availability of other credit facilities from non-institutional sources. Conventional Granger causality tests show unidirectional causality from (1) bank credit to agricultural output growth, (2) agricultural output to capital formation, (3) agricultural output to labour, (4) capital formation to credit, and (5) capital formation to labour, and a bi-directional causality between credit and labour. Noteworthy and significant for South Africa is that for the agricultural sector, the direction of causality is from finance to growth, in other words supply-leading, whereas at the macroeconomic level, the direction of causality is from economic growth to finance, in other words, demand-leading. Applying a structural equation modelling approach to survey data of smallholder farmers, the positive relationship between bank credit and agricultural output observed from analysis of secondary data was confirmed. / Business Management / D. Com. (Business Management)

Thesis (M.Sc. ( Agricultural Economics )) --University of Limpopo, 2005 / The deregulation of agricultural markets in South Africa led to the establishment of a futures market for agricultural products, which was opened in January 1995. The marketing of Agricultural products act No. 47 of 1996 was passed at the end of 1996. The new Marketing of Agricultural Products Act (Act No. 47 of 1996) in South Africa has created an environment in which farmers, traders and processors are able to react positively to transparent prices that are market related. Agricultural futures markets serve several important functions, such as price risk management, price discovery and forward pricing. Economists around the world have studied vertical and spatial price relationships, and the behaviour of price changes in futures markets using asymmetry tests. Price asymmetry results in futures markets have a number of important implications. Firstly, traditional models in time series may be slightly biased when forecasting future prices, because they assume price symmetry. Secondly, asymmetry results may imply that the weak-form efficient markets hypothesis appears to be contradicted, thus indicating that past prices do affect current prices and do contain information. Lastly, if persistent asymmetry is found in futures markets, market regulators and policy makers may wish to use asymmetric information to improve the functioning and stability of futures markets through improved price limit and margin policies. Implementing policies iv accounting for asymmetric behaviour may help avoid market crashes and sudden unexpected price adjustments adversely affecting market participants. This study tests the existence of price asymmetry in South African futures markets for white and yellow maize, wheat and sunflower seeds using a dynamic price asymmetry model. The sum of coefficients test and the speed of adjustment test are used to determine whether or not prices move up in the same fashion as they move down, over daily and weekly data frequencies. Out of the four commodity futures markets studied over varying data frequencies, only daily wheat is price asymmetric. Wheat daily prices respond faster to price decreases than to price increases. The implication of the results is that past prices do affect current prices and contain information. Hence, the weak-form efficient market hypothesis appears to be contradicted for wheat futures market. Another important implication of the results is that implementing policies accounting for asymmetric behavior through price limit and margin policies will improve the functioning and stability of wheat futures market in South Africa. / National Research Foundation, and the University of Limpopo

The spread of contract farming in South Africa in recent years has provoked an ideological debate in literature. Linking small-scale vegetable farmers with lucrative agricultural markets through agribusiness value chains is seen as one of the foremost emerging agricultural practices to develop the subsistence farming sector into a mainstream economic sector – thereby revitalising the rural economy and alleviating poverty levels in the developing rural areas of South Africa. However, the challenges agribusiness and small-scale farmers experience in contract farming engagement and the prospects for enhancing the inclusion of small-scale farmers into modern value chains remain open to debate – two decades after transition to democracy. Yet the factors and mechanisms influencing the effective application of contract farming in the transition to commercial farming by small-scale farmers have not been thoroughly explored in South African research. Despite the efforts and the substantial investments made and the various policies and initiatives instigated to fast-track the linkages of small-scale farmers into high-value markets, the success stories of previously disadvantaged farmers operating in commercial agri-food chains are rare. Given the millions of small-scale farmers in former homelands alone, the negligible number of small-scale farmers successfully operating in commercial agri-food chains shows that the objectives to enable small-scale farmers to improve their livelihoods through participation in commercial agri-food chains have not yet been met. The broad objectives of the study were therefore to investigate the agribusiness challenges inherent in contract farming and the conditions and incentives required by agribusiness firms to engage small-scale vegetable farmers in contract farming programmes. Furthermore, the study examined the role played by the South African government to reduce the high transaction costs incurred by agribusinesses when engaging small-scale farmers in contractual arrangements. The Amathole and Sarah Baartman (formerly Cacadu) district municipalities in the Eastern Cape Province of South Africa were chosen as the composite survey area for this study. A predominantly qualitative research approach was applied to gather data on the phenomena under study. The following methodologies and research instruments and tools were selected. Firstly – as the secondary component of the research – a systematic review of literature to date was conducted to guide the empirical research and primary methodology. Secondly, the empirical component of the study comprised a questionnaire survey, unstructured interviews and focus group discussions. The questionnaire survey was used to collect data from the agribusiness firms in the area surveyed concerning the following aspects: the significant determinants of contract farming, the incentives required by the agribusiness firms to engage small-scale vegetable farmers in their contract farming programmes and the challenges faced by agribusiness firms in their interaction with small-scale farmers in contractual arrangements. Unstructured interviews were used to gather data from officials at each of the three levels of government – the Department of Rural Development and Land Reform nationally, Department of Agriculture and Land Reform provincially and (at local government level) two district municipalities – on the role played by government to reduce the high transaction costs incurred by agri-firms when procuring agricultural raw materials from small-scale vegetable farmers. Focus group discussions were conducted with small-scale farmers regarding their perspective on working with agribusiness firms and to establish the distinguishing characteristics of small-scale farmers in the area surveyed. Relevant policy documents collected from two of the three representative groups of the study population, i.e. agribusiness personnel and government officials, provided the essential context. The study revealed a limited number of contract farming business linkages between small-scale vegetable farmers and agribusiness firms in the survey area. Those that do exist are problematic to both the agribusiness firms and the small-scale farmers. It emerged that the contract farming environment in the area surveyed is highly polarised and characterised by a fundamental conflict of interest between agribusiness and farmer. Among the divergent key factors inhibiting contract farming engagement were a lack in terms of quality seeds, trust, entrepreneurial skills and formal contract agreements. Asset endowment (both land and non-land assets) was found to be significant pre-selection determinants in the farmer’s capacity to be contracted. Access to innovative technology, as well as government incentives such as production inputs, were found to be critical to agribusiness firms to engage smallscale farmers in their contract farming programmes. Government assistance in terms of high transaction costs to agribusiness firms working with large groups of small-scale farmers was found to be essential but inadequate under current policy. This impacts directly on the effectiveness and promotion of contract farming. Furthermore, the current results corroborate the findings of numerous South African studies in the vast body of worldwide research. Firstly, lack of land and non-land assets continue to be major impediments to the direct participa-tion of small-scale farmers in contract farming programmes and, secondly, the transaction and market information costs incurred by agribusiness prevent the participation of less endowed farmers in contract farming programmes. Conducted within the interpretivist paradigm, the explorative research identified wide-ranging challenges in the relationship between agri-business and small-scale farmers which directly impact the effective-ness of contract farming as a development and agrarian reform strategy. Despite their problematic relationship, however, agribusiness and small-scale contract farmers were in agreement that the government needs to expand its support for agri-firms to incentivise greater numbers of small-scale farmers having the opportunity to achieve commercial status through contract farming. The study therefore recommends a collaborative partnership between private firms and government, with state support through revised policies and development programmes. These amendments are crucial to enhancing the engagement of small-scale vegetable farmers in lucrative agri-food chains.