Agriculture Reference
In-Depth Information
develop agricultural production in the communal areas of South Africa is the use of low
level technology among the farmers in the former 'independent homelands' of the country
where inadequate infrastructure, knowledge and skills constrain the use of improved inputs
and methods in farming (Van Schalkwyk et al., 2004). A similar point has been made for
several sub-Saharan African countries, notably Swaziland (Magagula and Faki, 1999;
Mashinini, 2004; Mkhabela and Mashinini, 2005). The situation has persisted despite
the large amount of research efforts and results currently available and the indisputable
evidence of the important role of improved technologies in agricultural development.
As is already clear from the foregoing, smallholder farmer problems are both production
and marketing related, and the situation in Southern Africa is no different from what
obtains in the rest of Africa. In relation to markets, two equally serious problems can be
identified. One is market failure in which the markets that exist are so severely weakened
that they are unable to perform the signalling function of markets in a way that serves as
positive incentives to producers. The reason for this could be that the state system considers
that the markets need to be assisted to perform their role, leading to various degrees of
intervention by the state. In such a situation, prices do not bear a clear relationship to the
value of goods and services because they either carry heavy subsidies or have been inflated
by taxes. This is a serious problem wherever it exists.
The other problem is that the markets simply are not there. The development literature
has generally attributed this phenomenon of missing markets to things like externalities,
coordination failure, technological development, transactions costs, and failure of trust
and information (Arrow, 1969; Hart, 1980; Makowski, 1980; Durlauf, 1992; Makowski
and Ostroy, 1995; Heller, 1997, among others). A practical situation that has elements
of the concepts outlined above is probably one in which physical product has dwindled
to levels that are insufficient to motivate exchange or there is no cash in the economy
and producers are unsure that their output will be paid for, leading to a termination of
market participation. Are there cases that can be used to illustrate the concepts in the case
of Southern Africa? A country like Zimbabwe has experienced both market failure and
missing markets and details of how these situations develop and manifest can be examined
to see what lessons can be drawn for policy.
Naturally, concerns about market development are an integral part of the efforts to develop
smallholder farmers. When the international development community, notably the World
Bank, decided on Structural Adjustment Programmes (SAP) in the 1980s, the idea was to
tackle the problem of market failure. The market liberalization prescriptions were aimed
to achieve this goal as explained in the previous section. But when markets are not there at
all, it becomes a lot more complicated. There are many reasons for this, and economists as
temporally distant as Hodder and Ukwu (1969), Obi (1984) and Gabre-Madhin (2006)
have long recognized that much of the difficulty in addressing market development in Africa
Search WWH ::




Custom Search