Large-Scale Farming and Land Reform Beneficiaries in South Africa: Lessons From a Case Study in Limpopo Province

Abstract

The South African government intends to improve rural livelihoods through land and agrarian reform. However, in doing so the government is enforcing large-scale production in the land reform projects with little regard for the beneficiaries’ background or capabilities, which are not suited to large-scale production. The article demonstrates how large-scale farming is negatively affecting land beneficiaries’ production by undermining their ability to produce the quality products (and adequate quantities) that satisfy the standards in the increasingly concentrated markets dominated by agribusiness.

Keywords

Agribusiness model land reform agriculture agricultural markets South Africa

Introduction

The South African government’s intention to improve rural livelihoods through the implementation of land and agrarian reform is affected by several factors, with the enforcement of large-scale production in the land reform projects among the key problems. Large-scale production is promoted despite many beneficiaries’ backgrounds and capabilities not being suited to this form of production. The beneficiaries’ struggles with large-scale farming are complicated – or are exacerbated – by the increasing quality and volume demands (standards) in formal markets, which make it difficult for those products deemed unsatisfactory to access the markets, thereby affecting their income.

The article utilises a case study to highlight how large-scale farming negatively affects the beneficiaries’ ability to produce products that satisfy the grades and standards in the concentrated markets controlled by agribusiness. It shows that apart from complications emanating from large-scale production the markets themselves sometimes work in ways that marginalise products from those farmers without adequate resources to monitor the marketing of their products. Thus, land beneficiaries are affected by both production and market factors. Although the findings cannot be used to generalise about all beneficiaries of land reform, they are of wider significance to land reform, as anecdotes from other studies show similar challenges (Aliber et al., 2013; Lahiff et al., 2012).

The enforcement of large-scale production, in the context of land reform in South Africa, is discussed first. This is followed by a presentation and discussion of a case study from Limpopo province to highlight the experiences of the land beneficiaries in large-scale production and how that has affected their ability to access lucrative markets.

Consolidation of production and marketing in the era of the agribusiness model

The challenges that land reform beneficiaries in South Africa face should be understood in the context of the disruptions emanating from the current entrenchment of the agribusiness model as the mainstream model of agrarian capitalism. By the agribusiness model we are referring to how ‘[a] class alliance was formed between the bourgeoisie of the transnational corporations, bankers (financial capital), the bourgeoisie of owners of mass media companies, and large landowners in order to control the production and circulation of commodities (standardized agricultural goods)’ (Movement of Rural Landless Workers, 2013: 9). We are pointing to the continued consolidation in the control and ownership of land (and commercial agriculture) and produce markets in the hands of agribusiness with inter-linked interests in agricultural production, upstream and downstream agricultural activities (Rusenga, 2017). Agribusiness dominates and/or controls agricultural production, agricultural inputs, processing and the marketing of agricultural produce.

Of course some agribusinesses specialise in certain phases of the agricultural value-chain: agricultural production, processing or marketing. However, others have footprints across different elements of the value-chain. One local example, Letaba Citrus Processors (LCP), owned by African Realty Trust in Tzaneen, Limpopo province, comes to mind. LCP extracts, concentrates, processes and blends citrus and other subtropical fruits (Hilton-Barber, 2011). It produces nearly 65,000 tons of citrus and bananas annually on over 1,500 hectares. The company processes close to 100,000 tons of fruits per year, meaning that it also procures fruit from the neighbouring farmers, making it a market.¹ The products are supplied to local and international markets.

In the South African context the deregulation of commercial agriculture, started in the 1980s and continued post-1994 (Vink and Van Rooyen, 2009), committed the government to greater market-oriented reforms including the phasing out of subsidies to commercial farmers. The policies sought to create competitive markets and foster domestic and foreign trade in agrifoods (Jacobs, 2011). The Marketing of Agricultural Products Act No. 47 of 1996 extended the scope of deregulation and liberalisation to all spheres of the agricultural sector. The Act set up the National Agricultural Marketing Council (NAMC), tasked with dismantling the marketing control boards and controlling and monitoring state intervention in the sector (Vink and Van Rooyen, 2009). The result was a ‘free market in the marketing of agricultural products and exposed the sector to global markets’ (Rusenga, 2017: 66).

The above reforms prepared conducive conditions for the emergence of agribusiness and its dominance of agricultural value chains in South Africa (Bernstein, 2013). Additionally, the problems emanating from deregulation and trade liberalisation (resulting in limited state support) caused many farmers to become insolvent and exit commercial agriculture (Hall, 2009). Land consolidation caused the number of commercial farm units, which totalled 116,848 in 1950 (Marcus, 1989), to decrease to fewer than 35,000 currently (Cousins, 2015) leaving the sector increasingly under the dominance of large farmers and agribusiness. Even in terms of agricultural income, Hall (2009) noted that 51% of the farming units earned a gross income below R300,000 a year in the first decade of this century while eight agribusiness companies had a turnover of over R1 billion a year. Thus, about 80% of all marketed produce in South Africa is produced by the top 20%, about 7,000 large farmers (Cousins, 2015). Indeed, the sector is dominated by a decreasing number of large farmers and agribusiness.

The introduction of land reform in 1994, seeking to redistribute commercial farmland to poor households (initially through the Settlement and Land Acquisition Grant (SLAG)) (Department of Land Affairs, 1997), seemed contrary to the liberalisation and deregulation trends espoused in agricultural policy. Contrary in the sense that liberalisation of agricultural policy was opening the sector for land consolidation and dominance by rich farmers and agribusiness, while land reform promised to redistribute commercial land which entailed, at least in rhetoric, the parcelling out of such land for smallholder production (Hall and Ntsebeza, 2007).

There is near-consensus that land reform has not been successful. Key factors affecting land reform include lack of and/or limited post-settlement support (extension, marketing and access to credit, etc.), unsuitable project design, economically unfeasible projects (large groups), unsuitable land and inherent group problems (Aliber et al., 2013; Anseeuw and Mathebula, 2008). However, with the government not implementing subdivision of the purchased large farms before allocation to beneficiaries, large farm sizes are maintained in the context of land reform. The new farm owners have to adapt to production on a large scale, especially where they are allocated farms with large-scale land uses. Adapt, because the majority of land beneficiaries do not have background in large-scale production given the historical legacy of land expropriations that left the black majority with limited access to land. Although blacks utilised land to produce for household consumption and marketing in the past (Bundy, 1972), most did not do so on large farms. With increasing proletarianisation of black Africans since the turn of the 20th century (Wolpe, 1972), many combined land with wage income for agricultural purposes (Mabandla, 2015), but on a small scale.

Until the middle of the first decade of the 21st century large-scale commercial farmers and agribusinesses played a limited role in the land reform programme. The commercial agricultural sector was fast consolidating under the influence of agribusiness (Bernstein, 2013). A few of the commercial farmers, including agribusinesses, were involved in land reform as business partners for land beneficiaries on large commercial farms redistributed through the land restitution programme (Mayson, 2003). However, the state’s market-assisted approach to land reform and the government’s liberal macroeconomic approach, Growth, Employment and Redistribution (GEAR), limited its support to agriculture, thereby presenting partnerships with commercial farmers or corporate entities as an option available for many beneficiaries to make use of their land.

From 2005 large corporates and commercial farmers increasingly got involved in land reform, especially in Limpopo, Mpumalanga and the Eastern Cape provinces. This was partly facilitated by the current Proactive Land Acquisition Strategy (PLAS) instituted in 2006, which allows the government more influence on transferred land (which it registers in the name of the state before leasing to beneficiaries); the influence which it uses to facilitate the participation of private-sector entities in the land reform projects (Hall and Kepe, 2017). The introduction of the Recapitalisation and Development Programme (RADP) (supporting all sorts of land reform projects) also increased the use of the private sector in post-settlement support. The government invites agribusinesses and large white commercial farmers to partner land beneficiaries in the land reform projects. Those assuming roles of mentors are expected to transfer knowledge to beneficiaries to facilitate viability and improved production (Nkwinti, 2010). The strategic partners, in joint ventures, are investors whose purpose is to link beneficiaries with the resources and markets boosting land use and production (Department of Rural Development and Land Reform, 2013). The objective, according to the government, is to rekindle ‘the class of black commercial farmers destroyed by the 1913 and 1936 Land Acts’ (Department of Rural Development and Land Reform, 2013: 11).

According to Hall and Kepe (2017: 123) since 1994 land reform has shifted ‘away from state-assisted land purchase and transfer of title to beneficiaries’ to a state leasehold model ‘which empowers state officials to buy farms on the open market and allocate them to selected beneficiaries’ under PLAS. The PLAS projects have precarious tenure as the un-subdivided large commercial farms are owned by the state. To receive support through RADP, beneficiaries are required to enter into strategic partnerships as a precondition. The strategic partners are usually farming or agribusiness companies. Hall and Kepe (2017: 128) noted that in some cases the government ‘concluded leases with the strategic partners (i.e. agribusiness companies), rather than with “beneficiaries” themselves, who therefore neither own the land nor lease it, but remain workers on state farms, working for strategic partners’. The beneficiaries lack control over land, capital and production in such cases. Some strategic partners use land reform projects to supply produce to their downstream processing and packing factories, enabling transfer pricing. Agribusinesses also partner beneficiaries under the land restitution programme, as studies by Aliber et al. (2013) and Lahiff et al. (2012) show. Against this backdrop the government enforces an agribusiness model in land reform where corporate entities are expected to fill the gap left by the state as providers of post-settlement support.

The dominance of agriculture and land reform by agribusiness aligned the South African agricultural sector to the global movement towards large agricultural systems dominated by agribusiness. That trend emerged towards the end of the 20th century when large agribusiness complexes rapidly expanded while dominating the agricultural sectors of many developing countries, including international trade in food products (Abbey et al., 2006). The process is also encouraged by some countries lacking confidence in international markets as sources of food supply. They outsource food production and buy farmland in the global south. Even investment funds are hedging ‘their assets against inflation, particularly in a context in which the stock markets remained unreliable and were providing at best low returns on investment’ (De Schutter, 2011: 151). McMichael (2011) locates the interest in global south land in the general accumulation crisis globally, expressed through the conjunction of food, energy and financial crises, which make agriculture a relatively safe investment haven for the relatively long term. The resultant scramble for farmland in the global south has been described by others as land grabbing (Cotula et al., 2009), as in some cases governmments dispossess the poor in order to provide land to international investors.

The increased influence of agribusiness in South African land and agricultural sectors means that agricultural production (including in land reform projects), agricultural markets and agricultural inputs are dominated and/or controlled by agribusiness. For instance, South Africa’s non-genetically modified seed market is dominated by six seed companies, namely, Pannar, Monsanto, Syngenta, Du Pont/Pioneer, Hi-Bred and Sakata Seed, with Pannar being the biggest (African Centre for Biosafety, 2009). In the marketing of agricultural products, Shoprite, Pick n Pay, Spar and Woolworths control 50–60% of food retail in South Africa (Louw et al., 2007). Thus, commercial agriculture, including downstream and upstream activities, have become integrated and increasingly dominated by agribusiness. We are in the era of the agribusiness model.

The implication, therefore, is that land beneficiaries are expected to use land in the manner historically utilised by large-scale white commercial farmers. The World Bank (2011: 32) argued that ‘as markets for agricultural inputs and outputs often are highly concentrated, large operators are reported to be able to reduce cost on either side of the market by 10–20%, giving them an edge in highly competitive global markets’. The suggestion is that large farmers have better chances of survival in a globalised capitalist system than smallholder farmers.

The challenge, though, is that many beneficiaries do not have background in large-scale production nor the capabilities required to succeed given the extreme costs of large-scale production. Many operate in environments of limited post-settlement support due to state deregulation and liberalisation of economic policies. Mafeje (2003) argued that large-scale production requires more capital than small-scale production, which requires modest investment to improve production. The small-scale model can allow even those with their own off-farm income to produce with better efficiency given its limited cumulative costs. The best way for beneficiaries to survive competition from large producers is to produce within models that suit and enhance their capabilities, such as the small-scale model. Indeed, findings by Scoones et al. (2011) that the smallholder A1 model farmers in Zimbabwe were more successful than the medium- to large A2 farmers is evidence that beneficiaries can succeed better in models such as the small-scale model. Even earlier studies such as those of Kinsey (1999), also in Zimbabwe, have shown that when post-settlement support was availed production improved immensely in the A1 model. This shows that the state has an important facilitative role in agricultural development in Africa. Its roles include development of infrastructure, water resources and energy, human capital development, extension services, introduction of appropriate technology and marketing, inter alia (Cousins, 2015; Mafeje, 2003).

How does the misfit between landholdings and the beneficiaries’ background and capabilities impact on production and income generation? The case study, presented below, illustrates the challenges that beneficiaries face in large-scale production and how that negatively affects their access to lucrative markets, thereby undermining agricultural income.

Background to the case study

The Elangeni project, which is 165 hectares in size, is located in the Deerpark area of Greater Tzaneen Municipality in Mopani District, Limpopo province. An analysis of the land reform database for Mopani District shows that the allocation of large farms, including those with high-value crops, is not unique to the Elangeni project. The database shows that 91 projects were allocated (under land redistribution) between 1994 and 2011 through SLAG, land redistribution for agricultural development (LRAD) and PLAS, with 54 projects redistributed through LRAD (Department of Rural Development and Land Reform, 2011). The total hectarage redistributed amounted to 15,275 hectares – with the average farm size being 168 hectares. Even if the projects are categorised according to the redistribution strategy (SLAG, LRAD and PLAS), the average farm sizes remain high (PLAS – 137; LRAD – 186; SLAG – 157). Thus, the Elangeni project size is consistent with the average high farm sizes in Mopani District. This data, together with findings by Aliber et al. (2013) and Lahiff et al. (2012) in Limpopo province confirms that the government allocates large farms to beneficiaries.

Large farms are allocated to beneficiaries without consideration of their background and capabilities. For instance at Makhamotse project in Molemole Municipality, Aliber et al. (2013) observed that 121 applicant households were mobilised from the neighbouring Sekgopo community ‘in order to make up the asking price’ demanded. The farm itself was 1,391 hectares in size. Similar findings were made in several projects throughout Limpopo province (see Anseeuw and Mathebula, 2008; Lahiff et al., 2012). The general trend in the majority of the projects was that of failure by beneficiaries to continue or sustain capital-intensive production for markets. It becomes important to point out that this mismatch between the project features and the beneficiaries’ capabilities does undermine their ability to produce quality products that can access the standards-driven markets.

The Elangeni project and beneficiaries’ profiles

Although beneficiaries lack a background in agriculture, let alone in high-value large-scale subtropical fruit production, they were allocated portion 40 of Grey Stones 469 LT (165 hectares), a farm with approximately 10,000 mango trees on 17 hectares and about 3,000 avocado trees on 10 hectares (Elangeni Family Trust, 2013a). About 130 hectares of grazing land has never been used because the beneficiaries do not have livestock (Elangeni Family Trust, 2013b). The beneficiaries added 4 hectares of organic vegetables to generate income for investment in the capital-intensive production of subtropical fruits. Vegetables were introduced as a response to challenges with capital-intensive subtropical fruit production.

Despite other beneficiaries’ struggles with large-scale production elsewhere (Aliber et al., 2013; Anseeuw and Mathebula, 2008; Lahiff et al., 2012) the government wanted the beneficiaries at Elangeni to embrace large-scale production. An official of the Limpopo Department of Agriculture (LDA) (Tzaneen office) emphasised the need for beneficiaries to continue with capital-intensive land uses. He argued that ‘they are running commercial farms. That is why we try to appoint the people who are skilled’ (Mr M, personal interview, 2 July 2012). Another official from the Department of Rural Development and Land Reform (DRDLR), Victor M, expressed the same sentiments, arguing that ‘once someone is there you would want to up production on the farm. But where a farm has actually been on a commercial basis before transfer we would like to maintain that standard, the commercial basis’ (personal interview, 22 May 2013).

The farm was first allocated to the Elangeni Family Trust in December 2007 on a lease under PLAS terms before being fully transferred to beneficiaries in December 2009 under LRAD terms. Its title deed number is T82954/2009. The Elangeni Family Trust was established in 2004 as the vehicle to facilitate beneficiaries’ application for a farm under the LRAD programme. Sophie M, a retired schoolteacher in Tzaneen, wanted to acquire a farm to grow and supply products to markets. She thought of upgrading her business from a small fruit and vegetable shop she had opened at Mooketsi, near Tzaneen, soon after her retirement from teaching in 1999.

Upon approaching the then Department of Land Affairs (now DRDLR) she was encouraged to apply together with her household members instead of her preferred partner, a lady pastor from her church. It seems the department wanted to avoid problems associated with group projects (Hall and Ntsebeza, 2007). Whereas under SLAG beneficiaries were encouraged to ‘rent the crowds’, the emphasis on family-based projects was tantamount to asking applicants to ‘rent their families’. Not all members of the household had expressed interest in land, but the department encouraged her to mobilise them as applicants. The Elangeni Family Trust was formed in that context, comprising Sophie M, her husband Samuel M (retired college lecturer), their six children and Sophie M’s elderly mother.

Sophie M and her husband are the only full-time resident members on the farm. Their children have professional jobs in towns while her mother passed away in 2009. The children’s professions are bank official, tax lawyer, marketing official at Bidvest, pastor, chartered accountant and auditor at the Department of Mineral Resources. From the beginning, the membership of the Elangeni Family Trust did not allow all members to reside on the farm. Nevertheless, the inclusion of the children is important in that their salaries, together with the parents’ pension, contribute to production capital at Elangeni. In 2010 the children created a forum called the ‘Task Team’ which coordinates their involvement in the project. They contribute funds that are used to support production in cases where the farm cannot sustain itself. All members are equal and decisions are reached through consensus. Off-farm income is an important capital investment at Elangeni.

Large scale affects product quantity and quality

Farmers’ success is partly influenced by their ability to satisfy the standards enforced in the markets. The standards specify technical characteristics of a product, specific processes and producing methods, quality traits and safety (Bolwig et al., 2011). They emerged from concerns by rich consumers, especially in the northern hemisphere, who demanded the guaranteeing of product quality and safety and the introduction of private standards. However, greater investments are required to comply with the standards. Production in the era of the agribusiness model is required to mainstream the market standards’ demands.

The farmers’ successful production of quality products influences their access to the lucrative markets. Even the beneficiaries at the Elangeni project are aware of this fact. While explaining why her project supplied its mangoes primarily to achar processors, Sophie M said that ‘if you want to supply international markets then there are quality challenges. The quality mango satisfies your eyes and does not have worms inside it. Even when you hold it you can see that this is quality. With that one you have to work on them’ (personal interview, 5 June 2013).

By ‘working on them’ Sophie M alludes to the different activities that are central to producing subtropical fruits. These include weeding the orchards, pruning the trees and spraying. Highlighting the importance of pruning, Marius P argued that without leaves the tree cannot produce fruits, even if flower development takes place.² He said:

Before the flowering season comes in April you prune them back. You put the windows in there . . . Pruning is not you just cutting them down, but you have to prune them healthy. A mango works like this . . . You do not farm mangoes but you farm leaves. The more leaves that are there, the more fruits you will have. (Personal interview, 27 August 2013).

The spraying requirement, if not addressed, can make it difficult for farmers to access lucrative markets. There are certain diseases that cannot be ignored as they can destroy the whole crop if not controlled. Marius P said:

If you look at the basic spraying programme for mangoes, there are certain things that you can obviously ignore . . . What is very important is the addressing of the flowering stage and to get it right. Diseases such as powdery mildew . . . you have to spray and you know you have your crop viable because we [agribusiness markets] can only work with fruit that is of a good quality. (Personal interview, 27 August 2013).

Nkhetheni B of Granor Passi said:

There is a disease called powdery mildew. If you do not control that disease now while the mangoes are still at flowering stage, that disease destroys all the flowers. And if the flowers are destroyed you will not get the fruit because the fruits come from the flowers. (Personal interview, 16 August 2013).³

The spraying requirement is enforced by agribusiness to farmers seeking entry into their markets. The argument of Nketheni B clearly illustrates this point. He said:

If a farmer is complying with Global GAP standards they can automatically supply to Granor Passi. Or if they are packing at export accredited packhouses they can supply to Granor Passi. But our main focus we need Global Gap accredited products because our concentrates are mainly for export. On the side of Granor Passi we say the market is available. What you need to do is to comply with our standards. (Nkhetheni B, personal interview, 16 August 2013).

On behalf of LCP, Marius P said:

You cannot spray pesticides that are not registered. You cannot bring to us rotten fruit or green fruit. These are things that we have to adhere to, to play the game right. You cannot come here with something that has not been sprayed right . . . We adhere to the standards that have been set for many, many years and have been set by the national laws and by-laws. For that, we have international standards and international laws and things like that . . . We need to do things all right, otherwise, we will close the doors. (Personal interview, 27 August 2013).

Thus, it becomes imperative that farmers develop the capacity to produce the required quality products for them to access the lucrative markets. However, that ability is negatively affected by the higher costs associated with large-scale production enforced by government in the projects. Table 1 shows the cost projections for some of the basic activities that Elangeni beneficiaries need to fund when producing mangoes. The activities are important especially where the target is to supply markets controlled by agribusiness. R13,349 was required to produce a hectare of mangoes in 2006, with the 17 hectares at the Elangeni project requiring around R226,933 (Subtrop, 2013). Of course these costs are higher now, given that the South African rand has depreciated in value over the years. Although the average costs may be less depending on what farmers may prioritise, or the type of farming activity, production on a large scale has higher costs (Mafeje, 2003). Like many beneficiaries elsewhere (Aliber et al., 2013; Anseeuw and Mathebula, 2008; Lahiff et al., 2012) the lack of significant resources needed affected production at Elangeni.

Table 1.

Production cost projections per hectare of mangoes.

Activity	Cost (in rand)/hectare	Total cost for 17 hectares of mangoes (R)
Labour	3,850
Weedicide	322
Tractor cost	3,000
General orchard activities	1,288
Pest control	2,500
Fertiliser	78
Pruning	1,150
Harvesting	1,161
Total	13,349	226,933

Source: Adapted from Subtrop’s mango production costs, 2013.

With 10 more hectares under avocado production, the beneficiaries at the Elangeni project require significant resources to support and/or sustain fruit production. The average cost per hectare may not be much different even though a hectare of avocados has fewer trees compared to one for mangoes. Nonetheless, the cumulative production cost for 27 hectares of subtropical fruits is way higher than what most beneficiaries can mobilise in a context of limited external post-settlement support. Although the beneficiaries have access to off-farm income from pensions and salaries, it is inadequate to allow them to produce quality products that can satisfy the quality and volume standards demanded in the lucrative markets.

Organic vegetables were introduced in 2008 on 4 hectares as a response to problems with large-scale production. The aim was to generate operational capital to complement the off-farm resources in fruit production (Sophie M, personal interview, 15 August 2013). In 2008 the beneficiaries generated R48,000 through the sale of green beans alone (Elangeni Family Trust, 2013c). Other vegetables are produced, but green beans are the main organic vegetable produced at Elangeni. Despite these efforts, the resources were not adequate to fully support fruit production on a large scale – thereby affecting the quality of the products produced. In turn, this negatively affected their access to those markets that paid better prices.

Besides the quality, the beneficiaries also struggled to produce quantities capable of having better impact on their income. Record-keeping at the Elangeni project is poor. However, Sophie M argued that while quantities vary from season to season, on average the project produced 20 tons of mangoes. The mango output at the project suggests that the beneficiaries were not successful in large-scale production. For instance, in the 2008/9 season the beneficiaries supplied 26,360 kg of mangoes to achar processors and 14,000 kg to the juice processors (Elangeni Family Trust, 2013c). This translates to an average of 2.4 tons per hectare. The 2008/9 season was one of Elangeni’s best seasons in terms of quantities marketed. Although Elangeni also supplies the informal market, whose records are not available, its main markets are the achar and juice processors.

According to Marius P, the average commercial yield projection for 1 hectare is between 25 and 30 tons of mangoes per season (personal interview, 27 August 2013). The South African Subtropical Growers’ Association’s (Subtrop) yield and income assumptions data for commercial mango farms, presented in Table 2, back Marius P’s output projections.

Table 2.

Commercial yield assumptions per hectare for mangoes.

Tree age (years)	2	3	4	5	6	7	8	9–11	12	13–27	28	29	30
Tons per hectare	1.6	3.2	6.6	11	16	21	27	30	27	25	24.6	24.3	24

Source: Adapted from Subtrop’s yield and income assumptions data, 2013.

Table 2 shows a peak yield of 30 tons per hectare. Subtrop’s data covered a 30-year period with a peak yield of 30 tons per hectare for trees between 9 and 11 years of age. From year 12 the yields decrease slightly to reach 24 tons per hectare by year 30. The output data for mangoes at Elangeni makes a strong case that the beneficiaries were not successful in large-scale production.

The output for avocados also paints a picture that is not impressive, although record-keeping is poor. The beneficiaries produce the Fuerte cultivar. Allemann and Young (2006) argued that good average yields for the Fuerte cultivar in South Africa range between 8 and 10 tons per hectare. However, the records show, for instance, that 8.7 tons were produced in 2009. Avocados are grown on 10 hectares with 3,000 trees. That means that on average 0.87 tons were produced per hectare. Although the output figures for 2009 cannot be taken as the absolute total avocado output, the figures show that the beneficiaries struggled with large-scale fruit production.

Samuel M explained the challenges beneficiaries experience as a result of large-scale farming and lack of resources, saying:

We have challenges with machines for pruning these fruit trees. It is very expensive to hire the guys with the machines for pruning the trees. It is R300 per hour. For this row from here to there he will take 6 hours. Already it is R2,000, one day. When he finishes the whole farm it will be over R100,000. The trees need pruning for them to produce the quality fruits . . . Pruning takes time because they [workers] have to climb the tree. They will be using a hacksaw. By the end of the day, you will have pruned only three trees. I tried to prune the avocados there. We pruned some trees. Many of the trees are not producing anything. They need to be pruned. It is very difficult. (Personal interview, 2013 August 15)

Lack of resources does not only affect those on large farms. However, the cumulative costs on large-scale farms are higher than on small-scale farms (Mafeje, 2003). The capital demands of fruit production at Elangeni make their off-farm resources woefully inadequate, contributing to a very low output of poor quality. The outcomes of land reform in this project are similar to findings by Aliber et al. (2013), Anseeuw and Mathebula (2008) and Lahiff et al. (2012), also in Limpopo province.

The beneficiaries’ struggles with mobilising adequate production capital shows the importance of post-settlement support in the success of land reform. It also indicates that the state has an important role in ensuring the success of land reform through providing support and the requisite infrastructure needed. Indeed, the history of agrarian capitalism in South Africa shows that until the 1980s capitalist agriculture depended heavily on state support and political intervention which the current beneficiaries lack (Morris, 1976; Morton, 1994). However, large-scale, capital-intensive production is not suited for many beneficiaries given its cumulative costs of production. It is expensive even for the state to provide support in this domain. For instance, Lahiff et al. (2012: 18) have shown that in Ravele restitution project in Levubu Valley, Limpopo province, the state spend R52.5 million inclusive of the Development Assistance Grant (R10.3 million) and a Settlement Planning Grant (R470,000). Despite this huge outlay of resources the project failed to contribute to the livelihoods of beneficiaries or generate profits. Supporting farmers in the large-scale model requires billions of rand that the South African state does not have. Against this backdrop, models such as the small-scale model with low cumulative costs allowing those with their own off-farm resources are desirable and needed. Even state support can achieve much in this domain. It remains a paradox that despite problems with large-scale farming the government continues to implement large forms of production in the projects (Hall and Kepe, 2017).

Poor product quality affects market access

Poor product quality affects the beneficiaries’ access to lucrative markets such as those dominated and/or controlled by agribusiness. The beneficiaries supplied their products to those markets where standards are either flexibly enforced or non-existent. The main market for the mangoes were the achar processors. There are 9–10 achar processors in Tzaneen. Elangeni supplied its mangoes to Dando Achar. Achar processors were preferred because they did not apply strict standards, such as the spraying requirement. According to Nkhetheni B, many African farmers in Tzaneen preferred the achar processors for the same reasons (Personal interview, 16 August 2013).

Every year Samuel M negotiated a fixed price with Dando Achar to avoid price fluctuations. The processors require first-grade mangoes. However, they rarely turn back suppliers with second-grade mangoes even though they fetch lower prices. David N of Magic Achar⁴ processors explained:

The first-grade mango does not have a seed inside. It is the mango which you can cut right through the middle using a knife. Even a child can cut it through the middle . . . The second-grade mango, you cannot cut it through the middle as the knife can resist going in. It has a seed. It is not suitable for the achar product. Instead of telling people that we do not want it, we decided to make it the second grade. We do not have our own farms. You cannot be choosy when you do not have your own mangoes. We look at two things only. The mango should be green and not ripe. The rest is on us. (Personal interview, 18 August 2014).

To generate better income from achar markets a farmer should know the optimal time for supplying mangoes when the quality is best. The season for the achar mangoes is very short, starting in October and ending in November. The beneficiaries needed to sell within that period to get better returns. Prices were determined by demand and supply. After November the mangoes’ quality begins to deteriorate.

The farm records show that the beneficiaries sold their mangoes to Dando late in the season. In 2007, the supplies started on 20 November and ended on 14 December.⁵ Mangoes were marketed from 27 October to 18 December in 2008 and from 30 October to 23 November in 2009 (Elangeni Family Trust, 2013c). Although the farm was occupied late in 2007, the trend shows that the beneficiaries started supplies late in the season. They missed the window when the prices were better. According to David N some farmers waited until the mangoes were big as they associated size with more revenue instead of product quality (personal interview, 18 August 2014). That affected the income generated as quality deteriorates as mangoes ripen.

The average prices per ton over those three years were R780, R1,130 and R1,500, respectively. Table 3 presents data on mango prices in various markets in South Africa. The data was collected by Subtrop. Of the four markets (dried fruit, juice, achar and fresh produce markets (FPMs)), the achar processors paid the lowest prices per ton. Although the achar processing market was more accessible, the low prices affected the beneficiaries’ income. The beneficiaries might have liked to supply markets with better prices. However, complications with large-scale production (especially the high costs and limited state support) affected their ability to satisfy the complex standards in those markets.

Table 3.

Mango prices per ton in various markets (rand).

Year	Dried	Achar	Juice	Fresh produce markets
1999/2000	1,000	650	900	2,490
2000/2001	1,000	750	900	2,742.50
2001/2002	1,000	750	900	2,737.50
2002/2003	1,350	500	1,200	3,822.50
2003/2004	1,350	1,000	1,200	3,735
2004/2005	1,500	600	1,350	3,767.50
2005/2006	1,200	750	1,000	4,150
2006/2007	1,400	750	1,200	3,427.50

Source: Prepared by author from Subtrop’s production data for mangoes, 2013.¹

The data for FPMs show prices per 4 kg carton rather than prices per ton. A ton has 1000 kg, that is 250 × 4 kg cartons. The author multiplied the price of the 4 kg carton by 250 for each year to get the price for the ton.

The juice processing market has great potential. If exploited it can improve the beneficiaries’ income. However, it is not as easily accessible as the achar market. The beneficiaries were required to keep spraying records for pest and disease control. Granor Passi provided them with a chemical record sheet on which they recorded information such as block number, crop, active ingredient in a chemical, chemical volume per hectare, justification for application, method of application, justification for change in spraying programme, the person responsible and his/her signature (Granor Passi Chemical Record Form, 2013). At LCP, beneficiaries were required to declare whether they sprayed or not when they delivered the fruits. Each load delivered was allocated a number with the load linked to the sprayed or not sprayed records. LCP recorded where the mango load went, on which day, and to which drums. When something is detected in the juice, that information is used to trace the fruit back to the grower. Normally, a sample is taken from the farmer’s first delivery to test for compliance.

The spraying of fruit trees was not a key priority at the Elangeni project. The rationale was that the crops were grown organically, hence there was no need to apply chemicals. With limited capital available to invest, the beneficiaries only sprayed copper to control worms in mangoes and black spots on avocados. In 2010, the Task Team spent R22,500 on 625 kg of copper (Elangeni Family Trust, 2013c). There were few bags still left in mid-2013. The failure to adequately spray the trees reduced the beneficiaries’ ability to access markets with strict market standards. As a result, the beneficiaries ended up relying largely on markets such as achar processors, street hawkers and bakkie operating hawkers.

The failure to spray the mangoes does not stop them from being supplied to the juice processors, though. The beneficiaries need to guard against pest and disease infections. However, Nkhetheni B stated that:

If you do not spray at all it is a big challenge because your crops will be infected by diseases and pests. And those things are not needed in any market including the local market. People will not buy your fruits . . . Most black farmers are not spraying and they cannot supply their fruits to us . . . If you want to supply to Russia and Russia do not want black spot, whatever, we also need to make sure farmers do not supply mangoes to us which have black spot and the like. If we want to supply China and China says they do not want this or that, we also want to do the same. (Personal interview, 16 August 2013).

The standards (both local and global) in the juice market are part of the reason why beneficiaries primarily supply mangoes to achar processors. Their inability to sustain large-scale production negatively affects their compliance with the market standards. The problem is exacerbated by the perishability of the ripe mangoes, which further undermines the quality and access to the markets for the resource-constrained farmers. For instance, the beneficiaries’ ripened mangoes perished on the farm in January 2008 due to bad weather and resource constraints. Sophie M stated that ‘we struggled without a tractor and our mangoes got rotten here on the farm. It rained and we failed to take the mangoes to the market. There was high demand for mangoes at that time but we could not take the mangoes to the market’ (personal interview, 5 June 2013). The stringent standards in the juice markets restrict access and that is further complicated by beneficiaries’ problems with large-scale production.

The beneficiaries preferred the retail supermarkets, but faced many entry barriers in this market. The supermarkets offered stable prices, especially under contract farming. The beneficiaries joined a local cooperative for organic farmers, called Nkomamonta, to market their products together with fellow farmers. Nkomamonta had a standing growers’ contract with Woolworths between 2008 and 2011. In 2012 the cooperative signed a contract with Pick n Pay to supply fresh produce. At the beginning of each season, Nkomamonta negotiates new prices with the supermarket for its members.

Nkomamonta farmers produce their products organically. The products were expected to abide by the standards applied to organic products when supplying the markets. The orchards at Elangeni were given three years to transform into organic products. Seven years after occupying the farm the fruits had still not been supplied to retail supermarkets. Woolworths did not include the fruits in the contract. However, even if fruits were included in the Woolworths contract the market was small. Despite Nkomamonta farmers’ capacity to supply more, combined, Woolworths had only granted them an allocation of one product (green beans) and a combined small volume of 1 hectare products to supply. Sophie M said:

The Woolworths market is small and their planting programme gives us a few products while at Pick n Pay they gave us many products. Woolworths gave us less planting programme. We were given 1 hectare, the 15 of us [Nkomamonta farmers combined]. It is for all of us, 1 hectare. It is too small. That is why we went to the Pick n Pay market. (Personal interview, 18 July 2012).

On 16 January 2009 Sophie was part of a Nkomamonta delegation that unsuccessfully negotiated with Woolworths officials at Westfalia (in Tzaneen) for an increase of the allocated volume. As a result on 20 and 27 March and 24 April 2009 some produce was turned back because the volume had been exceeded (Elangeni Family Trust, 2013c).

But even after Pick n Pay included the fruits in the contract, the production challenges affected the marketing of fruits to supermarkets. Access to the supermarkets required beneficiaries to abide by the following conditions. Firstly, they needed to commit to supply the agreed volumes on agreed timelines. Secondly, products had to be packaged at a packhouse before being supplied. In 2014, packaging costs ranged between R10.35 and R11.00 excluding VAT per 4 kg box. The cost covered the carton (approximately R4), pallet strappings, stickers/labels, electricity, labour and any chemicals (Julia T, email correspondence, 15 January 2014).⁶ Where transport was hired from Limpopo to Pretoria, each 4 kg carton was charged at R5 excluding VAT. Thus, around R15 was required per 4 kg carton when transport was hired. Lastly, where products were sold as organic, certification of the farm and production process was needed. The certification process, carried out by an organic certification agent, ensures conformity with set organic standards. All Nkomamonta members were covered under one certificate which was issued to the cooperative.

The beneficiaries supplied some of their avocados to the Tshwane Fresh Produce Market (FPM). Products supplied to the FPM were required to observe various standards before being sold. The requirements include sorting, grading, packaging (for traceability purposes), and clean and hygienic delivery conditions under specific temperatures to avoid spoilage, and maintaining the freshness of the produce. The produce was required to be delivered before the market closed (Louw et al., 2013) and is usually sold out two or three days after delivery.

The FPMs are open for any farmer. The beneficiaries were charged a market fee of 5% and a market agent commission of 7–9%. The fees were deducted from the income generated (Gjalt H, personal communication, 11 November 2014).⁷ These charges, together with the packaging costs, added to the beneficiaries’ overall production budget. The demands by the middlemen in the agricultural value chains reduced the beneficiaries’ revenues.

The principle at the FPMs is that the product belongs to the farmer until it is sold. The principle absolved the agents from taking responsibility for the products under their care, while creating a risk for the beneficiaries. To benefit they require agents who are trustworthy. It becomes a challenge for those suppliers without adequate resources to monitor the sale of products.

While the Tshwane FPM’s quality standards were not as strict as those of the retail markets, the beneficiaries experienced problems with the market agents. On one occasion, in 2010, they supplied 300 x 4 kg boxes of first-grade avocados through one of the two market agents they worked with. The beneficiaries marketed their avocados through either DW Fresh Market Agents or Noordvaal Market Agents. At the time, one box cost between R90 and R100. The beneficiaries expected to generate between R27,000 and R30,000 from the avocados. They received only R1,500. The agent told them that their avocados had been rotten.

The beneficiaries’ experiences with the market agents suggest the need for them to constantly monitor their products at the FPM. The position of the farmer, especially one without adequate resources, is precarious as the product belongs to him/her until sold. Although it is possible that the products perished, this case highlights the challenges the beneficiaries have when supplying the FPMs. Such loses of possible income negatively affect production and income generation.

Conclusion

Global agriculture is moving towards large systems and concentrated markets implementing standards under agribusiness (Rusenga, 2017). In countries such as South Africa land beneficiaries are required to preserve the large-scale land uses of the former white farmers. Ironically, they are expected to succeed in large-scale production without or with little state support. Because of the high cumulative production costs associated with large-scale farming, land beneficiaries struggle to produce effectively. This in turn affect the quantity and quality of their products, thereby negatively affecting their access to the standards-driven lucrative markets dominated and/or controlled by agribusiness. The experiences of the beneficiaries point to the importance of the role of state in post-settlement support. However, the article argues that while post-settlement support is important, it cannot override the challenges associated with large-scale farming – particularly its high cumulative production costs (Mafeje, 2003). Further, it makes the point that large-scale farming is costly even for the state to provide post-settlement support in this domain. Consequently, alternative models such as small-scale production should be promoted. The small-scale model has fewer cumulative costs and production can be improved through modest investment. This means that even those with their own off-farm income can use it to produce with better efficiency (Rusenga, 2017).

Footnotes

Funding

The author received no financial support for the research, authorship, and/or publication of this article.

ORCID iD

Clemence Rusenga

Interviews

Mr M, interviewed in Tzaneen on 2 July 2012.

Victor M, interviewed in Polokwane on 22 May 2013.

Sophie M, interviewed at Elangeni on 5 June 2013 and 15 August 2013.

Nkhetheni B, interviewed in Nkowankowa on 16 August 2013.

David N, interviewed in Nkowankowa on 18 August 2013.

Marius P, interviewed in Nkowankowa on 27 August 2013.

Samuel M, interviewed at Elangeni on 15 August 2013.

Conversation with Gjalt H, at the University of Pretoria on 11 November 2014.

Email correspondence with Julia T, on 15 January 2014.

Notes

Author biography

Clemence Rusenga is a postdoctoral fellow at the Centre for African Studies, University of Cape Town, under the National Research Foundation (NRF) Chair on Land Reform and Democracy in South Africa. His research interests include land reform, agricultural models, political economy and livelihoods in Africa.

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