Role of

Agriculture
GEOG 220
Importance of Agriculture
Agriculture integral to the African economy.
 It provides livelihood to more than 70% of the population in some
African countries and contributes an estimated 25% to GDP
(Alliance for a Green Revolution in Africa (AGRA) – 2016)
 GDP- refers to the total value of all goods and services produced
within a country during a given year (Fouberg et al,2012).

Agriculture is important however its potential is underutilised due to

low productivity
Importance of Agriculture
Agriculture encompasses the entire supply chain, from production to
consumption.

Farming, however, focuses more on the on-ground activities and

practices involved in crop cultivation and livestock rearing.
The failures of development and
financing institutions
1. Fewer than 10% of producers have access to credit
2. Food production sectors have the least access to finance
3. Agricultural risks are high, and are thus the primary barrier to
investment
4. No investment without effective public-private riskhedging systems
Importance of Agriculture
 low use of mechanisation and quality inputs,
 fragile environments and
 increasing land pressure.
However, Africa’s agricultural sector attracts less than 5% of the lending
from formal financial institutions thus leaving farmers and agricultural
enterprises starved of the capital they need to operate and grow their
enterprises (Snyder, 2016)
 Limited financial investment in African agriculture can be attributed to many factors such as:

 high risk profile of smallholder farmers unviable due to international

competition and the growing complexity of supply-chains for both
domestic and foreign markets,
 low productivity and low returns,
 inadequate infrastructure,
 unclear property rights and uncertainties around land
tenure,
 weak policy and
 unregulatory environment.
5 Practices will be discussed
Subsistence Farming

Commercial Farming

Contractual Farming

Cooperative Agriculture

Smallholder agriculture
Subsistence Farming
Subsistence agriculture is a self-sufficiency farming system in which the farmers
focus on growing enough food to feed themselves and their entire families.

The output is mostly for local requirements with little or no surplus trade.

The typical subsistence farm has a range of crops and animals needed by the
family to feed and clothe themselves during the year.

Planting decisions are made principally with an eye toward what the family will
need during the coming year and not towards market prices.
Poverty alleviation
• Subsistence agriculture can be used as a poverty alleviation strategy,
specifically as a safety net for food-price shocks and for food security.
• Poor countries are limited in fiscal (is the use of government revenue
collection and expenditure to monitor and influence a nation's economy
such as taxes) and institutional resources (such as welfare facilities or
subsidised housing) that would allow them to contain rises in domestic
prices as well as to manage social assistance programs, which is often
because they are using policy tools that are intended for middle and
high-income countries.
Challenges of Subsistence
Farming

The productivity is quite low (poor access to

productive resources and improved inputs)

Not using the correct high yielding crops

Badly functioning input and output markets

Commercial Farming
Commercial farms are often larger than regular
family farms because of the competitiveness.
Commercial farms regularly employ outside
help due to the level of work required.
 Family members can also be involved, but a
key factor that differentiates commercial
farming is that hired help is used.
Commercial farms also tend to make use of
new technologies in order to increase output
and create competitive advantages where
possible.
Challenges with Commercial
Challenges of Commercial
Farming
Farming
•Deforestation

•Pesticides, herbicides and fertilizers, can

contaminate both land and water

•Weather events can destroy massive yields

•Soils can be depleted through overuse

 Contractual Farming
Contract farming involves agricultural production being carried out on the basis of
an agreement between the buyer and farm producers.
Sometimes it involves the buyer specifying the quality required and the price, with
the farmer agreeing to deliver at a future date.
 More commonly, however, contracts outline conditions for the production of farm
products and for their delivery to the buyer’s premises.
The farmer undertakes to supply agreed quantities of crop or livestock based on
the quality standards and delivery requirements of the purchaser.
 In return, the buyer, usually a company, agrees to buy the product, often at a price
that is established in advance.
The company often also agrees to support the farmer through such as supplying
inputs, assisting with land preparation, providing production advice and transporting
produce to its premises.
Challenges
Challengesof Contractual
with Contractual
Farming
Farming
•Contract not being respected by one of the parties

•Side selling by farmers to competing buyers

•Contractors also may default by failing to pay

agreed prices or by buying less than the pre-
agreed quantities
 Cooperative Agriculture
Where farmers pool their resources in certain areas of activity
There are two primary types of agricultural service cooperatives,
supply cooperative and marketing cooperative
They provide an opportunity for farmers to share risk and to
control managerial decision-making for their direct benefit.
 Cooperative agriculture
Cooperatives can help farmers
benefit from economies of scale
to lower their costs of acquiring
inputs or hiring services such as
storage and transport.

Agricultural cooperatives also

enable farmers to improve
product, service quality and
reduce risks.
Challenges associated with Cooperative agriculture:
 Marketing
 transportation,
poor infrastructure
• the age of the elderly cooperative members
• and issues related to ‘free-rider’ syndrome.
Smallholder agriculture
Smallholder farmers are also defined as those
farmers owning small-based plots of land on
which they grow subsistence crops and one or
two cash crops relying almost exclusively on
family labour.
Smallholder agriculture
One of the main characteristics of production systems of smallholder
farmers are of simple, outdated technologies, low returns, high
seasonal labour fluctuations and women playing a vital role in
production.
Smallholder farmers can play an important role in livelihoods creation
amongst the rural poor.
Even though smallholder production is important for household food
security, the productivity of this sub-sector is quite low.
Challenges to Smallholder agriculture
 Lack of access to land.
Most smallholder farmers are located in rural areas and mostly in the
former homelands. The lack of both physical and institutional
infrastructure limits their expansions. (the right policies and programs
can ensure that existing infrastructure is efficient, provides quality
services and is used to the optimal capacity).
For example: lack of access to proper roads limits the ability of a farmer
to transport inputs, produce and also access information.
Lack of assets, information and access to services hinders smallholder
participation in potentially lucrative markets.
Challenges to Smallholder agriculture
Lack of reliable markets has also been found to be one of the main constraints faced
by smallholder farmers.
Many of these farmers receive low prices for their products by selling them at their
farm gate or local markets.
Lack of human capital has also been found to be a serious constraint for smallholder
farmers.
They are often illiterate with poor technological skills, which can be serious obstacles
in accessing useful formal institutions that disseminate technological knowledge.
The majority of smallholder farmers are not capacitated with financial and marketing
skills and are unable to meet the quality standards set by fresh produce markets and
food processors. Lack of production knowledge leads to lower quality in production.
Challenges to Smallholder agriculture
Inconsistency in production coupled with lack of bargaining power is
also a major challenge faced by smallholder farmers.
Globalisation hinders produce in terms of food safety issues.
 Role of Agriculture in rural areas:
The positive impact that agriculture has on rural development was
found in countries were small farms are practicing agriculture (Diao et
al.2010).
‘Conventional wisdom’ supports agriculture in African development.
Question arises whether agriculture can contribute to the growth in
Sub-Saharan Africa?
Investment needs to be focused on rural infrastructure and agricultural
technology to catch-up to productivity levels of other developing
countries.
Globalisation-determines food prices rather than domestic supply.
 Imports enter the country freely which means that there is less of a
need to invest in domestic agriculture.
Role of Agriculture in rural areas:
 Agriculture’s Skeptics- tend to be pessimistic in investing in African
industry suggesting that mining and manufacturing may offer a viable
alternative for growth.

 Agricultural Skeptics -Rural population should diversify incomes away

from agriculture and migrate to urban areas.
• HIV/AIDS burden.
 Food security and livelihoods
o According to Maslow’s hierarchy of needs,
food is a basic need which is essential for
survival

Q: What is food security?

A: Every person has the right to physical and
economic access to food that is nutritious,
meets their dietary needs and will allow them
to lead a healthy, active lifestyle at all times.
The four dimensions of food security
Utilisation Food availability

Food security

Stability Food access

Food security is built on four pillars

Food availability: sufficient quantities of food available on a consistent

basis.
Food access: having sufficient resources to obtain appropriate foods
for a nutritious diet.
Food use: appropriate use based on knowledge of basic nutrition and
care, as well as adequate water and sanitation.
Food stability: You may have food today however you are still food
insecure if you have inadequate access to food on a periodic basis
which can risk a deterioration of your nutritional status. Adverse
weather conditions, political instability or economic factors such as
unemployment, rising food prices may impact your food security status
(AGRA,2016).
 Levels
of
food
insecurity
Levels of food insecurity
Levels of food insecurity
 Agriculture and Rural Areas
Finance is the biggest industry in Gauteng and the
Western Cape. Mining dominates in Limpopo,
Mpumalanga, North West and the Northern Cape.
KwaZulu-Natal’s major industry is manufacturing. In the
Eastern Cape and Free State, it’s government services.

https://southafrica-info.com/infographics/animation-economic-sectors-of
-south-africas-provinces/