A Typology of the Level of Market Participation among Smallholder Farmers in South Africa: Limpopo and Mpumalanga Provinces

Smallholder farmers face several challenges that limit their access to markets and prevent them from taking advantage of market opportunities. This study sought to provide observed information on households’ involvement in the output market and to analyse the determinants of the level of market participation among smallholder farmers in South Africa. Data (secondary) for this study were collected from a total of 1520 respondents who were selected through stratified random sampling. Descriptive statistics, t-test and a double-hurdle model were used to analyse factors influencing smallholder farmers’ decisions regarding participation in the agricultural market. The first-hurdle equation of the double-hurdle model showed that gender of the household, family member working on the farm, wealth index, and agricultural assistance had a positive significant impact on the decision of smallholder farmers to participate in the market, while household age and family member with HIV had a negative significant impact. The results of the second-hurdle model showed marital status, educational level of household, wealth index, and access to agricultural assistance had a negative significant effect on the extent of market participation among smallholder farmers, while household size, household age, and family member with HIV had a positive significant impact. The suggestions emanating from the results as to what factors need to be addressed to encourage smallholder farmers to participate in the market indicate that there is a need for government to hire sufficient and skilled extension workers who understand the market related issues. With the help of extension workers and policymakers, government need to organize smallholder farmers into groups that are easy to manage, train, and support. Smallholder farmers’ groups should have their farmers registered, visible, and easily accessible for coordinated government support services. They also need to do more workshops in rural areas to encourage young people to be involved in agriculture. This will lead to sustainable production, alleviation of poverty, improvement of the economy, and food security.