The costs and benefits of providing agricultural support services to rural households in the developing areas of South Africa

Abstract

The Farmer Support Programme was introduced specifically to deal with the constraints faced by smallholder farmers in the former homeland areas of South Africa. These farmers operate largely outside an effective organisational support network, while white commercial farmers, who produce 90 per cent of the total value added production in South Africa, have access to a range of support services. This article attempts to shed some light on the costs and benefits of improving these small farmers' access to basic agricultural services such as extension, credit, inputs, mechanisation and markets. The calculations and arguments presented here show that the benefits of support programmes are much greater than the capital outlays and recurrent costs of the implementing agent, resulting in financial rates of return for the programmes significantly higher than the opportunity cost of capital.