Thesis (MDF)--University of Stellenbosch, 2010. / The constraints that impede the growth of smallholder farmers have been attributed to lack of
access to markets and technical expertise. This has led to mainstream banks classifying
smallholder farmers as high risk and therefore unwilling to finance smallholder farmers. Contract
farming has developed as a model that may be able to link smallholder farmers with
agribusinesses who have the expertise and have built marketing channels that can be utilised by
the smallholder farmers. Despite its potential to bring smallholder farmers into the mainstream
agriculture industry, literature on contract farming has indicated that contract farming can be
skewed in favour of the agribusiness due to their superior bargaining power and information
asymmetry in favour of the agribusiness.
This study examines the Industrial Development Corporation (IDC)’s Kat River Development
Scheme to finance nine farmers through a contract farming arrangement with Riverside (Pty) Ltd.
More particularly, the study examines how this financing model contributes to improved access to
finance, markets and technical expertise for the farmers. It also examines how the arrangement
contributes to reducing the risk of financing smallholder farmers for IDC.
The empirical analysis indicates that, despite the fact that the farmers are able to obtain access to
finance, market and technical expertise, the ability for the scheme to meet its objectives in the long
term is dependent on improving transparency between the agribusiness and the farmers, providing
appropriate incentives for the farmers to apply the required effort and the farmers buying into the
long term strategic aim (or “big picture”) of the scheme.
| Identifer | oai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:sun/oai:scholar.sun.ac.za:10019.1/8579 |
| Date | 12 1900 |
| Creators | Koranteng, Kweku Yeboah |
| Contributors | Aziakpono, Meshach, University of Stellenbosch. Faculty of Economic and Management Sciences. Graduate School of Business. |
| Publisher | Stellenbosch : University of Stellenbosch |
| Source Sets | South African National ETD Portal |
| Language | en_ZA |
| Detected Language | English |
| Type | Thesis |
| Rights | University of Stellenbosch |
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