The Role of Cooperatives in Improving Smallholder Participation in Agri-Food Value Chains: A Case Study of One Local Municipality in Eastern Cape, South Africa

Abstract

Increases in demand for food, product development, and agribusiness growth provide new opportunities for smallholder farmers in the developing world. Yet, the smallholder farming sector is still confronted by numerous constraints, including low quality and lower levels of produce. Agricultural cooperatives and other farmer organisations have been identified as crucial vehicles to link smallholder farmers with the evolving food systems. However, little is known about their contribution to enhancing their members’ participation in sustainable agri-food chains. This paper aims to explore the effectiveness of agricultural cooperatives in empowering smallholder farmers to participate in sustainable agri-food chains in Eastern Cape, South Africa. In achieving this, the study adopted a multi-stratified sampling procedure to select 119 cooperative members in the study area. Data were analysed using descriptive statistics and a binary regression model. Our findings revealed that the majority (70%) of cooperatives were participating in crop production. Most (75%) of the cooperative members were old, with a mean average of 52 years. Additionally, the majority (93%) of members reported that agricultural cooperatives contributed positively to their livelihoods. The results of the probit model established that quality, quantity, level of education, and access to information influenced the level of participation in storage, processing, and distribution levels at different levels of significance. Although the findings of this research reported a positive contribution of cooperatives to their members, the study identifies a greater need for cooperatives to be inclusive of young people and improve government support. Also, the study recommends a blended financing model that will cater to smallholder farmers who do not have collateral. Finally, the study recommends that the current extension and advisory services be tailored to cater to the training needs of smallholder farmers.