By: Anna Majavu
SMEs in the vegetable industry are planting the least lucrative vegetables, often because they do not have the funds to invest in on-farm infrastructure such as greenhouse tunnels and shade nets, and inputs to maximise production. New research by the University of Johannesburg’s Centre for Competition, Regulation and Economic Development (CCRED) in partnership with Oxfam has found that the price of cauliflower, green beans, lettuce, cucumbers and tomatoes increased “significantly” over the last 10 years.
But the SMEs surveyed did not benefit from this price increase because they grew spinach, cabbages, onions, and carrots – “products with the least growth in average prices”. The Agriculture and Agro-processing Master Plan (AAMP) aims to increase the share of black ownership and contribution of small vegetable producers from 1% of total output in 2019 to 20% in 2030 and expand the area planted from 400 hectares to 11,000 hectares.
But SME vegetable farmers needed more access to finance for this to happen, the researchers said.
Some of this finance is needed to set up cold storage facilities, drying facilities and juice pressing machines, which will reduce the number of wasted vegetables by an estimated 5%, the research found.
CCRED researcher Shingie Chisoro and economist Karissa Moothoo Padayachie interviewed 30 SME farmers from Gauteng and Limpopo.
“While smallholder vegetable farmers have diverse local markets in which they can sell their produce, the challenges of accessing reliable and consistent high-return markets means that they are not profitable and sustainable even within their current activities. This creates a vicious cycle where smallholder vegetable farmers are locked in low-value economic activities with limited opportunities for growth and upgrading into higher-value activities,” Chisoro and Moothoo Padayachie wrote. SME vegetable farmers also cannot employ more workers and pay decent wages, even though vegetable farming is very labour-intensive.
About half the farmers interviewed received some form of government assistance in the form of land, land preparation, irrigation, or boreholes, but this support was also limited and did not cover weather-related crop damages, the research found. Because of unhelpful government officials and the red tape involved in applying for government funding, SME vegetable farmers had to fund their businesses by borrowing from friends and family, using their savings, from the proceeds of other businesses, or through income from full-time jobs. This left the vegetable SMEs with “limited time to focus and grow the farm business”, the researchers said.