Most people involved in the agricultural sector will tell you that farming is hard and what you require above all, is passion. However, running a farm is still a business and a successful business is one that makes money. As one of the few sectors in the country that has grown in the last few years, agriculture seems to be where the money resides.
Elton Greeve, trade and engagement manager at Tridge, says that there are numerous opportunities for small-scale farmers across the agricultural sector.
He adds that there is a general assumption that smallholder farmers cannot be profitable, something which he finds to be far from reality. “Small scale farmers have massive opportunities out there. [They just need to] to exploit them effectively.”
Greeve says that very often, small-scale farmers work in silos. He recommends that smallholder farmers form cooperatives, thereby increasing their buying power.
He also encourages new and aspiring farmers to look at which commodities are supported by agricultural organisations, which market they are serving, and the kind of returns that the commodities they already produce, bring in.
“Small-scale farmers, or farmers in general, should look at whatever they produce as an investment, and that investment must bring you returns. I know that currently in South Africa there’s a large move towards the fruit sector, but that’s not the only one. It all depends on the area that you are in, the scope that you have, the resources that you have at hand and what your farm can do.”
Leona Archary, CEO of the Agricultural Development Agency (Agda), agrees. She explains that the difference between “mega farmers” and small farmers is access.
“One of the differences between the mega farmers and the small farmers is the efficiencies of scale that your mega farmer is getting. Even in terms of how they can access inputs on the market, and the markets themselves that they make sure they’ve got before they actually begin to engage in a particular commodity,” she says.
For small-scale farmers, says Archary, profitability is hindered by higher input costs, more limited access to credit, limited access to markets and even the kind of commodity they can potentially consider.
“If smaller farmers begin to aggregate, begin to come together, that’s when they begin to see the efficiencies in terms of scale and begin to lower their costs which then increases their profitability and increases their ability to get to better profit margins earlier.”
Invest in a niche market
Greeve says that new farmers should look at producing affordable niche commodities based on the area they farm in. “If you are in an area that can produce strawberries, fruit, berries – whatever fruit that is affordable to do – that is the kind of niche market that you can go into. Bee keeping is becoming a niche market, especially with the requirement for genuine organic South African honey.”
He explains that new farmers need to do their research before selecting the niche market they want to produce for, and that research needs to include market research, engaging with other producers in the area, looking at what is already being produced there and what is not being produced there.
“Quite often we go into an area and it becomes livestock or cropping or that kind of thing, and we don’t realise that we could actually go into a niche market.”
Agri-economist Conce Moraba highlights herb gardening as an important and potentially lucrative niche market. She says that South Africa’s smaller farmers need to look at farming with niche produce that is more in demand.
“Things like herb gardening is very big. You could really just be planting in a small space, [with] different varieties. Things like your basil, origanum, cilantro. There’s a whole niche market going into candle making, aromatherapy essences, going into your teas, etc.”
Macadamia nuts are another niche market many farmers are keen to look at, given how high the returns are on exports. Moraba explains that, while South Africa is in the top three macadamia-producing countries, the commodity requires a high investment amount and years of patience.
“I really wouldn’t say it’s not viable, but it’s definitely going to take a lot of years before you start to see the fruits of your labour. So, if you’re going into that market, you need to have a bit of capital to start with and you definitely need to have a bit of patience because you only start seeing your full production around year six or year seven.”
Archary adds that establishing macadamia nut trees costs more than one million rand per hectare, which is why it requires a more creative approach. She encourages farmers to partner with commercial partners in their area in order to access the industry.
“I know in Agda, for example, we have a number of commercial partners in the Northern Cape and in KwaZulu-Natal, who have been engaging and looking to engage with communal area farmers as well as farmers who have access to land but don’t have the necessary financial ability to get those lands under macadamia farming.”
Consider the whole value chain
To Greeve, the term “small-scale” farmer is problematic. “I don’t really like the term small-scale farmer because the only thing small is your ability and mindset. You can push yourself to [new] limits so, I think the first step for me, even before you look at the value chain, is to say, ‘what do I want to do? What can I do? And how much am I going to put into doing it?’”
Greeve says that farmers need to look at more than just the growing element of farming, but they also need to consider value adding. He says that small-scale farmers need to be thinking about making money, and that there’s lots of opportunity for money making along the value chain.
“For example, with fruit you are looking at fresh fruit, dry fruit, frozen fruit. You are looking at the logistics element of it. What is your input? And where can you actually find opportunities in there? You’ve got to look at what are the opportunities in the processing element of it,” he says.
“Quite often, farmers in general get a farm [gate] price and that’s it. Yet their product goes into so many different more elements. It’s the export, local market, frozen market, dried fruit market, oriental market. It’s all within your limits. It’s how you want to see your scope.”
Diversify
Farming is often a hazardous business, with any number of unforeseeable disasters awaiting the unsuspecting farmer. This is why, Moraba says, diversification is so incredibly important. “As a small producer, you could be [practicing] herb gardening, but you could also be planting vegetables on the side and planting other herbs to keep away pests.”
She says that no farmer should be putting all their eggs in one basket, and that diversifying your crops means you need to have access to a diverse market. “I think [diversification] is something you should already be thinking about the minute you get into business, because you need to be strategic when you get into farming. You don’t just [work] day to day and hope for the best. You must really think about it as a business.”
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