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Institutional and governance factors influencing the performance of selected smallholder agricultural cooperatives in KwaZulu-Natal

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  • Chibanda, M.
  • Ortmann, Gerald F.
  • Lyne, Michael C.

Abstract

This paper evaluates the impact of institutional and governance factors on the performance of 10 smallholder agricultural cooperatives in KwaZulu-Natal (KZN). Five of the cooperatives grow and market vegetables, three produce and market poultry, one is a beef production cooperative and another operates a bakery. The results of a cluster analysis suggest that the performance of the selected smallholder cooperatives is influenced by institutional and governance problems. Institutional problems give rise to low levels of equity and debt capital, reliance on government funding, low levels of investment, and subsequent loss of members. Governance problems are strongly linked to the absence of secret ballot, low levels of education, lack of production and management skills training, weak marketing arrangements and consequent low returns to members as patrons or investors. The conclusion is that appropriate institutional arrangements and good governance are important to the performance of enterprises initiated by groups of smallholders. South Africa’s new Cooperatives Act prevents smallholder cooperatives from adopting good institutional arrangements. Alternative ownership structures such as close corporations and private companies offer better institutional arrangements and opportunities for equity-sharing partnerships.

Suggested Citation

  • Chibanda, M. & Ortmann, Gerald F. & Lyne, Michael C., 2009. "Institutional and governance factors influencing the performance of selected smallholder agricultural cooperatives in KwaZulu-Natal," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 48(3), pages 1-14, September.
    • Handle: RePEc:ags:agreko:55132
    DOI: 10.22004/ag.econ.55132
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    References listed on IDEAS

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    Cited by:

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    4. Thembi Xaba & Nyankomo Marwa & Babita Mathur-Helm, 2018. "Efficiency and Profitability Analysis of Agricultural Cooperatives in Mpumalanga, South Africa," Journal of Economics and Behavioral Studies, AMH International, vol. 10(6), pages 1-10.
    5. Amiquero, K. (Katty) Sanchez & Wubben, E.F.M. (Emiel) & van Dam, Y.K. (Ynte) & Trienekens, J.H. (Jacques), 2023. "Success and failure factors in agricultural cooperatives," International Journal on Food System Dynamics, International Center for Management, Communication, and Research, vol. 14(01), January.
    6. Faridzah Jamaluddin & Norman Mohd Saleh & Azizah Abdullah & Mohamat Sabri Hassan & Noradiva Hamzah & Romlah Jaffar & Sarah Aziz Abdul Ghani Aziz & Zaini Embong, 2023. "Cooperative Governance and Cooperative Performance: A Systematic Literature Review," SAGE Open, , vol. 13(3), pages 21582440231, September.
    7. Latynskiy, Evgeny & Berger, Thomas, 2016. "Networks of Rural Producer Organizations in Uganda: What Can be Done to Make Them Work Better?," World Development, Elsevier, vol. 78(C), pages 572-586.
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    10. Ravi, S.C. & Umesh, Kotrakere Basegowda & Murthy, P.S. Srikantha & Chandrakanth, M.G., 2021. "Institutional Interventions and Governance for Equity: Impact and Policies from Tank Irrigation in Central Dry Zone of Karnataka," 2021 Conference, August 17-31, 2021, Virtual 315209, International Association of Agricultural Economists.
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    12. Jordaan, H. & Grové, B., 2013. "PR - Smallholder Farmers Participating In Commercial Agri-food Chains: Learning From Eksteenskuil Raisin Producers," 19th Congress, Warsaw, Poland, 2013 345674, International Farm Management Association.

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