Literature

Baiyegunhi and Fraser (2014) highlighted that some of the factors considered when lenders issue loans
to smallholder farmers include household demographics, socioeconomic and farm characteristics.

According to Baiyegunhi and Fraser (2014), the age of a smallholder farmer, as well as educational level
of a farmer applying for credit are considered to be very important. Credit institutions prefer lending to
farmers who fall within the economically active age group.
Baiyegunhi and Fraser (2014) highlighted that some of the factors considered when lenders issue loans
to smallholder farmers include household demographics, socioeconomic and farm characteristics.
According to Baiyegunhi and Fraser (2014), the age of a smallholder farmer, as well as educational level
of a farmer applying for credit are considered to be very important. Credit institutions prefer lending to
farmers who fall within the economically active age group. On the other hand, education gives insight to
credit providers of productive opportunities available to the farmer, as well as capacity to understand
loan evaluation procedures. According to Baiyegunhi and Fraser (2014), in the Eastern Cape of South
Africa, smallholder farmers have got an average 8 years of schooling. Smallholder farmers who can
access loans, generally, have at least 10 years of education, while those who cannot access loans have
got an average of 4 years of schooling. Credit providers and insurance firms are not keen to deal with
smallholder farmers, because they pose covariant risk due to factors, like adverse weather conditions,
moral hazard and anti-selection. These factors force lending companies to be extra vigilant during
monitoring of clients, and, in the process, incur higher transaction costs (Poulton et al., 2010).
Baiyegunhi and Fraser (2014) also argue that conducting many small credit transactions for smallholder
farmers, like checking for credit worthiness, collateral verification and monitoring of loan repayments,
implies extra expenses which cannot be justified by sum total borrowed by these smallholders
(Baiyegunhi and Fraser, 2014). Van Schalkwyk et al (2012) suggest that, although smallholder farmers in
South Africa were given access to land, no title deeds were issued to the same farmers for the pieces of
land they are farming. As a result, the smallholder farmers face difficulties when they apply for loans to
invest on their farms due to lack of collateral.
The South African government liberalized the marketing environment when it introduced the Marketing
of Agricultural Products Act of 1996 (Mudhara, 2010). Satgar (2011) argues that, although liberalization
of the markets was meant to create equal opportunities for all players in the agricultural industry, this
goal was never realized. Monopolistic businesses which operated under the guise of farmers’
cooperatives increased in structural power after markets were liberalized. Another development which
resulted from liberalization of markets was that farmers’ cooperatives converted themselves into
private and public companies. An example given by Satgar (2011) is the National Cooperative Dairies
(NCD), which was founded in 1898. After liberalization of the market, the NCD became more powerful
when it formed joint ventures with companies like Danone and Fonterra. Environmental Economics,
Volume 7, Issue 2, 2016 42 Van Schalkwyk et al. (2012) also argue that, in South Africa, market
liberalization was a major drawback for smallholder farmers, as the inexperienced farmers found
themselves competing for market share in an extremely competitive environment. According to Van
Schalkwyk et al. (2012), smallholder farmers also found themselves incurring high transaction and
transport costs to access markets after liberalization of the market. According to the Department of
Agriculture, Forestry and Fisheries (2012), smallholder farmers lack reliable markets. As a result of this
development, the farmers end up selling their produce at “give away prices” at their farm gates or local
markets.
Godfray et al. (2010), however, suggest that, although per capita food production capacity has increased
by at least 1.6-fold in Asia, China and Latin America, Africa’s per capita food production has not changed
much over the past 50 years. Godfray et al (2010) attribute this lack of progress to factors like lack of
technical knowledge and skills required to increase production, as well as finances. For that reason,
African governments and agricultural research institutes are concerned about food security in their
respective countries. In South Africa, the government also committed itself to the 2003 Maputo
Declaration on Agriculture and to food security in the continent. South Africa, through its Department of
Agriculture and Forestry (DAFF), adopted a smallholder development program as a short term strategic
plan to increase food production and trade
Siyao (2012) reported that there is a direct relationship between access to relevant and effective
information and agricultural development. Masuki et al. (2010) also added that access to agricultural
information can help small scale farmers to improve production capacity, as well as to access better
remunerative markets. IFAD (2012) reported that rural communities urgently need basic education on
farming. Schools also need to start teaching agriculture in the context of sustainability, in order for
learners’ knowledge to be relevant and compatible with community development initiatives.
Vigneshwara Varmudy (2011) studied “untapped potential of brinjal” stated that, poor marketing
system, non availability of disease free and resistant varieties to the farmers, absence of training to the
farmers on pre and post harvesting practices, non availability of cold storage facilities for strong at the
production and marketing centers are the major problems faced by the farmers.
Zivenge and Karavina, et.al. (2012) recommended that, farmers should develop effective mechanisms
for collaboration and linkages, invest in market intelligence, and create a sea change in thinking and
practice, and building trust. This will enable them to enhance their bargaining power on prices
H.Adanacioglu and N.Adanacioglu (2016) explained that, Farmers marketing products directly to
consumer’s faces many challenges. In a survey conducted with New York direct marketing vegetable
farms, respondents were asked the top barriers or problems facing their direct marketing operations.
The survey results showed that competition in a saturated market and labor related challenges were the
top barriers to success in many direct marketing operators’ minds. Concerns include competition from
supermarkets, discount stores, import goods, and other farm markets, and labor related challenges
including lack of labor pool and hard-to-find seasonal help, difficulty in finding good labor and keeping
qualified labor, and high costs of labor. Other top barriers were location, limited resources (capital, land
and products), changing market and consumer demand (one - stop shopping and year-round supply),
and regulations and community development pressure
According to Mike Cordes (2016) stated that, “among the many benefits of ensuring a continual supply
to the market is the development of buyer loyalty. If the quality is right and the product regularly
available, buyers develop an attachment to that brand. Eventually, they feel confident enough to buy it
unseen, as they know that the quality can be assured”. Maintaining and building of loyalty customer is
important and that reduces the market risk. The loyalty buyer will focus on different parameters like
quality, price, attractive selling, packaging and regular practice.
REFERENCES
Adanacioglu H. and Adanacioglu Hungarian N., 2016. “Use of Direct marketing strategies by farmers
in Izmir, Turkey: a case study of artichoke growers”, Journal of Agricultural Engineering, 29:32-35.
Mike Cordes (2016), “Continuity of

supply to the
markets” retrieved on 22
nd
Jan (2017) from
(http://www.farmersweekly.co.za/crops/
vegeta
bles/continuity-of-supply-to-the-
markets).
supply to the
nd
Jan (2017) from
vegeta
markets).
supply to the
nd
Jan (2017) from
vegeta
markets).
Mike Cordes (2016), “Continuity of supply to the markets” retrieved on 22nd Jan (2017) from
(http://www.farmersweekly.co.za/crops/vegetables/continuity-of-supply-to-the-markets).
Vigneshwara varmudy (2011)
“Untapped Potential of
Brinjal”, Facts for you, February,
31(5):18:20.Zivenge, E. and Karavina,
C.,
(2012) "Analysis of Factors
Influencing
Market Channel Access by Communal
Horticulture Farmers in Chinamora
District,
Zimbabwe", Journal of Development
and
Agricultural Economics, 4(6):147-150.
Vigneshwara varmudy (2011) “Untapped Potential of Brinjal”, Facts for you, February,
31(5):18:20.Zivenge, E. and Karavina, C., (2012) "Analysis of Factors Influencing Market Channel
Access by Communal Horticulture Farmers in Chinamora District, Zimbabwe", Journal of
Development and Agricultural Economics, 4(6):147-150.

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Baiyegunhi and Fraser (2014) highlighted that some of the factors considered when lenders issue loans

to smallholder farmers include household demographics, socioeconomic and farm characteristics.

Mike Cordes (2016), “Continuity of

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