Rural household sources of income, livelihoods strategies and institutional constraints in different commodity contexts - Institutional Constraints to Small Farmer Development in Southern Africa - page 42

2.9.1 Infrastructure
Lack of marketing facilities imposes a serious constraint on the marketing of livestock
(Mahabile et al. , 2002). Most of the beneficiaries are located in areas remote from major
markets, where there is a serious lack of both physical and institutional infrastructure
(NDA, 2005). This partly explains the poor livestock supplies to formal market outlets by
small-scale farmers (USAID, 2003). In communities that have marketing facilities, they are
either in poor state or non-functional because farmers do not have funds to maintain them
(Frisch, 1999). The most important physical infrastructural weaknesses for the communal
Nguni cattle producers are related to transport and holding facilities (Bailey et al. , 1999).
In South Africa, lack of marketing facilities such as sale pens and loading ramps are some
of the numerous factors that impose a serious constraint on small-scale farmers' ability
to market their cattle (NERPO, 2004). On the contrary, Fidzani (1993) reported that
poor infrastructure does not influence livestock marketing since in most cases buyers
provide their own loading and transport services. Comparatively, NERPO (2004), states
that apart from the distance to formal markets, the poor state of road networks in South
African communal areas imposes a serious constraint. It affects the farmers' ability to attract
many buyers in their areas since bad road network systems are associated with very high
transport costs. There is need for community members and all stakeholders to collaborate in
constructing and maintaining community infrastructures. The involvement of community
members can instil some sense of ownership and responsibility and enable them to maintain
their infrastructure.
2.9.2 High transactional costs
Transactional costs are barriers to the efficient participation of farmers in different markets.
Producers will not use a particular channel when value of using that channel is outweighed by
the costs of using it. The remote location of most communal cattle producers, coupled with
poor road networks, result in high transactional costs (especially transport costs) reducing
the price that traders are prepared to pay for the cattle (Musemwa et al. , 2007). Makhura
(2001), Mahabile et al. (2002) and Nkhori (2004) noted that even if farmers are in areas
with good road linkages, the distance from the markets tends to influence transaction costs.
The further away the farmers are from markets, the higher the transport costs they incur.
In addition, farmers' incur extra transport costs to obtain transporting and selling permits
from the police station and veterinary offices, respectively. It is a statutory requirement
that when purchasing or selling cattle, they must have valid identification certificates and
transporting permits (NDA, 2005). These restrict farmers' participation in distant markets.