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Entrepreneurship and Efficiency of Smallholder Maize farmers: The Case of Eastern Cape Province of South Africa

. Douglas Kibirige Department of Agricultural Economics and Management, University of Eswatini, Eswatini (Swaziland), P.O. M205, Luyengo, Eswatini


Abstract

The South African government has invested substantial amounts of funds to improve the entrepreneurial environment for economic growth and rural development through development programmes. Among the beneficiaries of this support include the smallholder agricultural sector through government’s provision of input subsidies, farm implements, land retribution programmes and revitalization of smallholder irrigation schemes. Despite the interventions, less impact has been realized and this partly explains the fact that South Africa is still ranked among countries with the lowest successful entrepreneurial activity. Therefore, this study identified a need to establish the level of entrepreneurial spirit, determinants of entrepreneurial spirit and its impact on production efficiency among smallholders. The study was conducted at Qamata and Tyefu irrigation scheme. Primary data was collected using a well-designed structured questionnaire. The total sample size of smallholder farmers interviewed was 108, and descriptive statistics, factor analysis, and stochastic frontier analysis were among the methods used to achieve the set objectives.

 

This study established that there is low entrepreneurial spirit among smallholder farmers, and most of them being risk averse. The factor analysis method yielded three principal components related to farmers’ entrepreneurial spirit and these included risk taking, innovativeness and recognition of farm business opportunities.  Farmer/farm characteristics related to farmers’ entrepreneurial spirit included farmer’s age, education level, major occupation, farming experience, farm incomes, remittances, social grants and pension, source of irrigation water, and location of the irrigation scheme. The results of this study indicated that smallholders are technically inefficient at 44% in maize production. Farmer/farm characteristics responsible for this inefficiency included crop incomes, farming experience and location of the irrigation scheme. Considering the entrepreneurial spirit, smallholder farmers exposed to high risks with less recognition of opportunities are more likely to be technically inefficient. The key policy recommendations for improved entrepreneurial activity and technical efficiency include improved human capital through farmer trainings in efficient farm production and business management, expansion of the irrigated farm land, and more investments in forward and backward linkages in the agribusiness sector.  

 

Keywords: Entrepreneurship; technical efficiency; smallholders; smallholder irrigators; stochastic frontier analysis.

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