Assessing the impact of primary agricultural co-operative membership on smallholder farm performance (crops) in Mnquma Local Municipality of the Eastern Cape Province

Abstract

When the issue of economic growth and development of a developing country is raised, one has to take into account the performance of the smallholder farmers, especially where the agricultural sector is an important employer of labour and source of livelihoods. Reducing the challenges they are facing and utilizing their potentials can help to accelerate the transformation of the agricultural sector and economic development of the country as a whole. Agricultural cooperatives are ideal means for self-reliance, higher productivity and promotion of agricultural development. Therefore, the major concern of this study is assessing the impact of cooperative membership on farm performance in Mnquma Local Municipality. In order to address these issues a structured questionnaire was used to interview 100 farmers. Farmers were divided into two groups, one group consisting of fifty members of agricultural cooperatives and the other fifty non-members of cooperatives; all these farmers were randomly selected from Ngqamakhwe, Butterworth and Centane in Mnquma. The study investigated and profiled the socio-economic situation of the farmers. It also undertook a comparison of the members and non-members of the co-operatives in terms of their production and marketing activities. To analyze the data, descriptive and inferential statistics were used to explain some measures of central tendency and dispersion as well as test the hypothesis that there is a difference in performance between members and non-members of cooperatives. In addition, a simple linear regression model was used to assess the impact of cooperative membership on farm performance. To avoid selection bias that arises from the use of the simple linear regression model, the propensity score matching was also used to test the effect of different treatments on the sample. The expected results were that members of cooperatives perform better in terms of farm revenues, incomes and value of inputs used than non-members. In addition, the expectation was that members of cooperatives have larger plots of land, high crop yields hence generating high revenues per unit sold. The results from the field survey indicated that cooperative membership is positively related to performance (including revenue, farm income and value of inputs used), although some development programmes are needed to enhance performance of these farmers. Members of cooperatives produce and sell large quantities of output compared to non-members. This could be attributed to the fact that cooperative members receive farm inputs and extension support. Because of the frequent visits by extension officers, members of cooperatives have high access to market information. The results further confirm the hypothesis that membership in a cooperative has a positive impact on farm performance. The results from the first regression model indicated that membership in a cooperative has a positive and significant influence (p=0.004) on farm income, and (p=0.124) on revenue. The second regression model indicated that membership of cooperatives has a positive and significant influence of (p=0.007) on farm income, (p=0.138) on revenue. With regards to value of inputs, membership was found not significant at 1%, 5% and 10% levels. The age of household head, number of years spent in school, land size, access to information, type of market and ward in which these farmers are situated significantly influence farm performance at 1%, 5%, and 10% levels. Propensity score matching also confirms this hypothesis that membership was significant in respect to farm income (p=0.006) although not necessarily so in respect to revenue (p=0.088). While the study confirms the positive contribution of cooperatives, it is clear that more needs to be done to achieve greater inclusivity and make livelihoods improvements more sustainable. This calls for interventions from government and NGOs to motivate individual farmers to join cooperatives and operate within the framework of organized groups. The support could be provided in terms of credit to farmers, extension services and infrastructure development to serve smallholder farmers. In terms of further research, the study suggests that research on cooperative membership impact on farm performance in all forms of cooperative would yield immense insights for policy. Also, the present study was limited to only one municipality and it is necessary to conduct similar studies in other parts of