Factors affecting technical efficiency of small-scale raisin producers in Eksteenskuil

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Date
2012-01
Authors
Khaile, Phofolo Marvin Emmanuel
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Publisher
University of the Free State
Abstract
English: Growing per capita income and changing consumption patterns have led commercial retailers to restructure their marketing techniques with the aim of obtaining a greater market share of the consumer’s pocket. Retailers have focussed more on bulk procurement and consistent supply of quality produce from a few large food producers. Consequently, small-scale farmers are either excluded from the commercial markets or the few that participate in commercial markets are struggling to meet the stringent requirements from retailers. However, some scholars advise that support is needed for small-scale farmers to participate in commercial markets. FairTrade (FT) is one of the organisations that have provided an opportunity to small-scale farmers in developing countries to participate in commercial markets. Eksteenskuil raisin producers are among the farmers that have been given the opportunity to participate in commercial markets. Despite the support, Eksteenskuil raisin producers are unable to meet market requirements such as stipulated raisin volumes of adequate quality. Hence, this study estimated the level of technical efficiencies and assessed factors affecting efficiencies of Eksteenskuil raisin producers. The farming operation of Eksteenskuil raisin farmers is divided into two production levels, production and quality. Consequently, a Two-stage Data Envelopment Analysis (DEA) Model was used to understand the level of technical efficiencies in each production level. Due to a small sample size and a large number of independent variables used, degrees of freedom were identified as a problem. A Tobit Principal Component Regression (PCR) was used to reduce the dimensionality of the variables without losing important variables that explain inefficiencies. Primary data was used to obtain technical efficiency estimates and factors hypothesised to influence efficiency. Primary data was obtained through a structured questionnaire and personal interviews. A sample of 28 raisin producers in Eksteenskuil was used. A similar sample of 28 large-scale farmers was also conducted to be used for benchmarking with small-scale farmers. The empirical results revealed that production efficiencies of small-scale farmers are relatively high although farmers are struggling to increase raisin volumes. When small-scale farmers are benchmarked against each other the mean production efficiency of 81% was estimated. This means that on average small-scale farmers have the potential to operate on the efficient frontier if the mean production efficiency increases by 19 percentage points. On the other hand, the results of a benchmark of both small-scale and large-scale farmers revealed a mean production efficient of 69% and 85% respectively. This implies that small-scale farmers are less efficient relative to large-scale farmers in producing maximum possible raisin volumes with available inputs. Variables that were identified to increase the level of production efficiency are: farmer’s age, formal education, farming experience, land tenure, formal credit, record keeping, timely pruning, entrepreneur index, and Middle Island (soil fertility). Thus farmers who are located on the efficient frontier display a number of the variables mentioned above in their characteristics. On the other hand family labour, social capital and area harvested were also hypothesised to either increase or decrease the level of production efficiency. Hence, a positive or negative sign was expected. Results on the second stage of the two-stage DEA model revealed a mean quality efficiency of 97% for small-scale farmers when benchmarked against each other. The results indicate that small-scale farmers have the potential to increase their mean efficiency by three percentage points to operate on the quality efficient frontier when benchmarked against each other. A benchmark of both small-scale and large-scale raisin producers revealed a mean quality efficiency of 79% and 88% respectively. The scope of variations between the quality efficiency scores of small-scale farmers was recognised to be limited. Due to limited variations, none of the hypothesised variables were found to be significant. Policy implication highlighted from this study is that education and training should be prioritised by policy makers in the study area. Existing support from various stakeholders involved with small-scale farmers in Eksteenskuil should be intensified in order to prevent poverty from becoming an epidemic in the community
Afrikaans: ‘n Groei in per kapita inkomste en verandering in verbruikerspatrone het tot gevolg gehad dat kommersiële vervaardigers bemarkingstegnieke moes verander sodat hulle ‘n groter markaandeel kon beding. Verkopers het hoofsaaklik op grootmaat aankope en ‘n konstante voorraad kwaliteitprodukte vanaf ‘n paar groot voedselprodusente gekonsentreer. Dus word kleinskaalse boere of heeltemal uitgesluit uit die kommersiële mark, of die wat reeds deel is van die mark sukkel om aan die streng vereistes van kleinhandelaars te voldoen. Daar word egter voorgestel dat met meer ondersteuning kleinskaalse boere ‘n beter kans sal staan om suksesvol te wees in kommersiële markte. FairTrade (FT) is een van die organisasies wat kleinskaalse boere in derde wêreldlande ‘n kans gee om in kommersiële markte te kompeteer. Die rosyntjieboere van Eksteenskuil is van die kleinskaalse boere wat die geleentheid gekry het om in die kommersiële mark te kompeteer. Ten spyte van die ondersteuning wat hulle alreeds kry, kan die boere van Eksteenskuil egter nie aan die vereistes soos kwaliteit en hoeveeheid, van kommersiële markte voldoen nie. Die doel van hierdie studie is dus om die tegniese doeltreffendheid en die faktore wat doeltreffendheid van die Eksteenskuil rosyntjie-boer beïnvloed, te bestudeer. Die boerdery op Eksteenskuil kan in twee produksievlakke verdeel word nl. produksie en kwaliteit. ‘n Two-stage Data Envelopment Analysis (DEA) model is gebruik om die vlak van tegniese doeltreffendheid van elke produksievlak te ontleed. As gevolg van ‘n klein steekproef en die groot aantal onafhanklike veranderlikes wat geïdentifiseer is, was die vryheidsgrade problematies. ‘n Tobit Principal Componenent Regression (PCR) is gebruik om die hoeveelheid veranderlikes te verminder sonder om die belangrike veranderlikes, wat die ondoeltreffendheid bepaal, te verloor. Primêre data is gebruik om die geskatte tegniese doeltreffendheid en die faktore wat die doeltreffendheid beïnvloed te bepaal. Hierdie data is deur gestruktureerde vraelyste en persoonlike onderhoude ingesamel. ‘n Steekproef is gebruik om die 28 kleinskaalse rosyntjie produsente in Eksteenskuil te kies. ‘n Soortgelyke steekproef van 28 kommersiële boere is geneem om ‘n vergelyking te trek met kleinskaalse boere. Die empiriese resultate het getoon dat produksiedoeltreffendheid van kleinskaalse boere relatief hoog is, alhoewel die boere sukkel om die volume rosyntjies wat geproduseer word, te verhoog. Wanneer kleinskaalse boere met mekaar vergelyk word, was die berekende produksiedoeltreffendheid 81%. Dit beteken dat kleinskaalse boere die potensiaal het om doeltreffend te produseer, mits die berekende doeltreffendheid van produksie vermeerder met 19 persentasiepunte. Die resultate vir kleinskaalse en grootskaalse boere het egter getoon dat die berekende produksie doeltreffendheid tussen 69% en 85% was. Dit impliseer dat kleinskaalse boere nie doeltreffend genoeg is, in vergelyking met grootskaalse boere nie, as dit kom by die produksie van maksimum rosyntjies met die beskikbare insette. Veranderlikes wat produksiedoeltreffendheid verhoog is: boer se ouderdom, formele onderrig, werksondervinding, eiendomsreg, kredietwaardigheid, rekordhouding, effektiewe besnoeiing, entrepreneurindeks, Middel Eiland (grondvrugbaarheid) en die area wat geoes word. Die boere dus wat op die optimale funksie produseer, toon meer van die veranderlikes wat hierbo gelys word. In teenstelling hiermee, is die hipotese ook gebruik dat familie-arbeid, gemeenskapsbetrokkenheid en die gebied wat verbou word, die vlak van produksiedoeltreffendheid kan verhoog of verlaag. Dus kon’n positiewe of negatiewe teken verwag word. Die resultate in die tweede deel van die Two-stage DEA model wys ‘n kwaliteitsdoeltreffendheid van 97% vir kleinskaalse boere. Die resultate dui aan dat kleinskaalse boere hulle berekende doetreffendheid met drie persentasiepunte moet kan verhoog om op die kwaliteitdoeltreffendheidsgrens te wees. Die beginpunt vir beide kleinskaalse en kommersiële rosyntjie produsente is ‘n volhoubare kwaliteit doeltreffendheid tussen 79% en 88% onderskeidelik. Die variasie in kwaliteitsdoeltreffendheid van kleinskaalse boere was beperk. As gevolg van hierdie beperktheid was geen van die gehipotetiseerde veranderlikes in die regressie betekenisvol nie. Deur hierdie studie word dus afgelei dat formele onderrig ‘n prioriteit moet wees by beleidformuleerders van hierdie spesifieke studiearea. Die volhoubare ondersteuning van die rolspelers wat betrokke is by die kleinskaalse boere in Eksteenskuil is ook belangrik omdat dit kan voorkom dat armoede problematies vir die gemeenskap word.
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Keywords
Farm mechanization -- South Africa -- Northern Cape, Raisins -- South Africa -- Northern Cape, Production planning, Production management, Raisins -- Quality -- South Africa -- Northern Cape, Benchmark, FT, Two-stage DEA, Large-scale farmers, Small-scale farmers, Eksteenskuil, Tobit PCR, DEA, Quality Efficiency, Production Efficiency, Technical efficiency, Dissertation (M.Sc.Agric. (Agricultural Economics))--University of the Free State, 2012
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