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EXPLORING INTERVENTIONS FOR PARTICIPATION OF EMERGING FARMERS IN THE EASTERN CAPE

OSTRICH-INDUSTRY SUPPLY CHAIN

T.M. PITTAWAY

2013

EXPLORING INTERVENTIONS FOR PARTICIPATION OF EMERGING FARMERS IN THE EASTERN CAPE

OSTRICH-INDUSTRY SUPPLY CHAIN

By

TIMOTHY PITTAWAY

Submitted in fulfilment of the requirements for the degree of Doctor Technologiae to be awarded at the Nelson Mandela

Metropolitan University

December 2013

Promoter/Supervisor: Prof P. VAN NIEKERK

Co-promoter/Co-supervisor: Dr J. VANSTEENKISTE

I

DECLARATION

I, Timothy Pittaway 9320652, hereby declare that the thesis for the degree of Doctor

Technologiae to be awarded is my own work and that it has not previously been

submitted for assessment or completion of any postgraduate qualification to another

University or for another qualification.

…………………………………………

Timothy Pittaway

Port Elizabeth

December 2013

II

DEDICATION

To God and my wonderful wife Renè Ann Flanagan Pittaway

Philippians 4:13

III

ACKNOWLEDGEMENTS

I would like to sincerely express my appreciation to the following:

Professor Pieter van Niekerk for his guidance, patience and making this work

possible.

Dr Vansteenkiste for her continuous, empathic support and motivation.

Dr Jacques Pietersen for his assistance with the statistical analysis.

Rosemary Batchelor for her many hours of proof reading and providing valuable

input.

Professor Andrew Leitch for his support and encouragement.

The NMMU Research Office and Research Capacity Development, Belinda du

Plooy, her support and assistance.

Financial support from Nelson Mandela Metropole University (NMMU) and

National Research Foundation (NRF).

My friends and colleagues at the Department of Agriculture and Game Ranch

Management at NMMU.

My students, Yandisa Msindo, Vuyokazi Mxoli and Sive Mbangiswano for their

assistance with data collection.

Vernon and Leanne Naidoo, Grant Dryden, Grant and Karen Weyer for their

encouragement, support and prayer.

Professor Enver Motala and Dr Andrew Krajewski for their inspiration.

My mom and dad: Ethel and Mike for their love and support during this study.

Thank you for providing a foundation to make this possible.

My sister, Carrie for her support and her daily Dr jokes.

My parents-in-law: Norma and Terry for their support.

My wife, Renè, and children Cameron and Olivia, for believing in me and for

giving me the space needed to complete this study.

IV

TABLE OF CONTENTS

DECLARATION I

DEDICATION II

ACKNOWLEDGEMENTS III

CONTENTS IV

ABSTRACT XI

LIST OF FIGURES XV

LIST OF TABLES XVII

CHAPTER 1

INTRODUCTION AND ORIENTATION OF RESEARCH

1.1 INTRODUCTION TO THE RESEARCHER 2

1.2 INTRODUCTION TO THE RESEARCHED AREA 3

1.3 PROBLEM STATEMENT 5

1.4 SUB-PROBLEMS 6

1.5 HYPOTHESIS 7

1.6 RESEARCH OBJECTIVES 8

1.7 DELIMITATION OF THE RESEARCH 8

1.7.1 Emerging ostrich farmer programme 8 1.7.2 Ostrich industry stakeholders 9 1.7.3 Other stakeholders and role players 10 1.7.4 Geographical demarcation 10

1.7.5 Livestock 11

1.8 RESEARCH METHODS 12

1.9 RESEARCH DESIGN AND DATA COLLECTION 14

1.10 SOCIO-ECONOMIC SIGNIFICANCE AND RATIONALE OF THE RESEARCH 17

1.11 DEFINITION OF CONCEPTS 18

1.11.1 Exotic livestock 18 1.11.2 Market access 18 1.11.3 Opportunities for participation 19 1.11.4 Supply chain versus value chain 19 1.11.5 Industry 19 1.11.6 Registered Ostrich Compartment 20 1.11.7 Ostrich out-grower 20

V

1.12 STRUCTURE OF THE RESEARCH 20

CHAPTER 2

RESEARCH METHODOLOGY

2.1 INTRODUCTION 25

2.2 LITERATURE REVIEW 28

2.2.1 Literature database review 28 2.2.2 Content analysis 29

2.3 PILOT STUDIES 30

2.4 EXPLORATIVE INVESTIGATION 31

2.4.1 Situational analysis of ostrich industry 32

2.5 MULTIPLE CASE STUDIES 34

2.5.1 Research localities 35 2.5.2 Peddie Ostrich Programme 36 2.5.3 Rockhurst Ostrich Programme 37 2.5.4 Hlumani Co-operative 38 2.5.5 Zamukwanda Ostrich farm 39 2.5.6 Mimosadale Ostrich farm 40

2.6 QUESTIONNAIRE 41

2.7 FOCUS-GROUP DISCUSSIONS 45

2.8 DEVELOPMENT OF PARTICIPATION CAPACITY INSTRUMENT 46

2.9 OPERATIONALISATION AND ANALYSIS OF QUALITATIVE DATA 47

2.10 LIMITATIONS OF THE STUDY 49

2.11 ETHICAL CONSIDERATIONS 50

2.12 SUMMARY 51

CHAPTER 3

OVERVIEW OF THE RURAL EASTERN CAPE: AN AGRARIAN POINT OF VIEW

3.1 INTRODUCTION 54

3.2 AGRO-ECOLOGICAL ENVIRONMENT 55

3.2.1 Geology and Soils 55 3.2.2 Topography 56 3.2.3 Climate and water resources 56

3.3 HISTORICAL FACTORS AFFECTING AGRICULTURAL PARTICIPATION OF BLACK FARMERS 57

3.4 LOCATION AND SOCIO-ECONOMIC DESCRIPTION 59

VI

3.5 ECONOMIC OVERVIEW OF THE EASTERN CAPE 62

3.6 RURAL DEVELOPMENT AND SOCIAL SUPPORT INTERVENTIONS 64

3.7 RELATED RESEARCH ON EMERGING FARMER PROGRAMMES 67

3.7.1 Technical constraints on market access 67 3.7.2 Challenges and recommendations in emerging farmer co-operatives 68 3.7.3 Contract farm modeling 70 3.7.4 Development planning 70 3.7.5 Influences on market aspects 71 3.7.6 Linking emerging farmers with markets 71 3.7.7 Scaling-up farmers 72 3.7.8 Consultation with Amathole Economic Development Agency 73

3.8 CONCLUDING REMARKS 74

CHAPTER 4

RURAL LIVESTOCK FARMING IN THE EASTERN CAPE

4.1 INTRODUCTION 77

4.2 REVIEW OF RURAL LIVESTOCK FARMING IN THE EASTERN CAPE 78

4.3 ANTHROPOLOGICAL OVERVIEW OF THE ROLE OF CATTLE 80

4.4 OVERVIEW OF LIVESTOCK MARKETING-CHANNEL AND INTERVENTIONS TO ASSIST PARTICIPATION 82


CHAPTER 5

AN INTRODUCTION TO THE OSTRICH INDUSTRY

5.1 INTRODUCTION 88

5.2 OVERVIEW OF THE SOUTH AFRICAN OSTRICH INDUSTRY 89

5.3 SOUTH AFRICAN OSTRICH INDUSTRY HISTORY 91

5.4 CONTENT ANALYSIS OF OSTRICH RESEARCH INTEREST 95 THROUGH TEXT-MINING METHOD

5.4.1 Introduction 95 5.4.2 Findings 96

5.5 OVERVIEW OF OSTRICH HUSBANDRY 101

5.5.1 Epidemiology 101 5.5.2 Genetics 104 5.5.3 Breeding 104

VII

5.5.4 Incubation and rearing of chicks 105 5.5.5 Feed management 106 5.5.6 Animal behavior 107 5.5.7 Farming systems 108


CHAPTER 6

REVIEW OF OSTRICH INDUSTRY SUPPLY CHAIN AND INTRODUCTION TO CASE STUDIES

6.1 INTRODUCTION 112

6.2 INTRODUCTION TO SUPPLY CHAINS 113

6.3 GOVERNANCE IN SUPPLY CHAINS 114

6.4 LIVESTOCK FARMING SUPPLY CHAINS IN THE DEVELOPING WORLD 116

6.5 THE OSTRICH INDUSTRY SUPPLY-CHAIN RELATIONSHIP MAP 117

6.6 OSTRICH INDUSTRY SERVICE PROVIDERS 122

6.6.1 The South African Ostrich Business Chamber 122 6.6.2 National Ostrich Processors of South African 124 6.6.3 South African Ostrich Producers Organisation 125 6.6.4 South African Ostrich Breeders Association 125 6.6.5 Department of Agriculture, Forestry and Fisheries 125 6.6.6 National Residue Monitoring Programme 126 6.6.7 EU Agricultural attaché 126

6.7 OSTRICH PRODUCTION AND PROCESSING IN SOUTH AFRICA 128

6.8 EASTERN CAPE OSTRICH PRODUCTION 129

6.9 BACKGROUND TO EMERGING FARMER CASE STUDIES

6.9.1 Peddie Ostrich Programme 131 6.9.2 Rockhurst Ostrich Programme 133 6.9.3 Hlumani Ostrich Co-operative 135 6.9.4 Zamukwanda Ostrich Programme 136 6.9.5 Mimosadale Ostrich Farm 138

6.10 RELATIONSHIP MAPPING OF CASE STUDIES 139


CHAPTER 7

BLACK ECONOMIC EMPOWERMENT STIMULUS IN THE OSTRICH INDUSTRY


7.2 INTRODUCTION TO BLACK ECONOMIC EMPOWERMENT 144

7.3 INTRODUCTION TO BLACK ECONOMIC EMPOWERMENT IN

VIII

AGRICULTURE 145 7.4 COMMODITY PROJECT ALLOCATION COMMITTEE FOR THE OSTRICH INDUSTRY 147

7.5 OVERVIEW OF THE NATIONAL FRAMEWORKS UNDERPINNING LEGISLATION AND POLICY FRAMEWORKS OF THE OSTRICH INDUSTRY

7.5.1 Comprehensive Agricultural Support Programme 148 7.5.2 Land and Agrarian Reform Programme 149 7.5.3 Comprehensive Rural Development Programme 149 7.5.4 Strategic Plan for South African Agriculture 150 7.5.5 Eastern Cape Rural Development Strategy 151

7.6 OSTRICH INDUSTRY AGRIBEE INITIATIVES 151

7.6.1 Western Cape 152 7.6.2 Northern Cape 153 7.6.3 Eastern Cape 153


CHAPTER 8

SITUATIONAL ANALYSIS OF THE OSTRICH INDUSTRY


8.2 CONTENT ANALYSIS OF INDUSTRY ARTICLES 160

8.2.1 Introduction 160 8.2.2 Synopsis of main themes from content analysis 160

8.3 MICRO ENVIRONMENT INFLUENCES 163

8.3.1 Introduction 163 8.3.2 Product characteristics 163 8.3.3 Geographic competitive considerations 173 8.3.4 Competitive forces in the ostrich industry 175

8.4 MACRO ENVIRONMENT INFLUENCES 185

8.4.1 Introduction 185 8.4.2 Political influences 185 8.4.3 Economic influences 189 8.4.4 Socio-cultural influences 195 8.4.5 Technological influences 196 8.4.6 Environmental influences 198 8.4.7 Legal influences 201

8.5 STAKEHOLDER INTERVIEWS 203

8.5.1 Ostrich farming and production 204 8.5.2 Ostrich products 204

IX

8.5.3 Intermediary agents structure 205 8.5.4 Marketing channels 206 8.5.5 Threats to the industry 207 8.5.6 Network View 207


CHAPTER 9

PRESENTATION OF FINDINGS: EASTERN CAPE EMERGING OSTRICH PROGRAMMES


9.2 QUESTIONNAIRE FINDINGS 216

9.2.1 Profile of farmers and socio-economic aspects of programmes 217 9.2.2 Human capital endowments 221 9.2.3 Farming period and activities 223 9.2.4 Comparison of various variables between the case studies 224 9.2.5 Frequency of key topics from questionnaires 227

9.3 FINDINGS FROM FOCUS GROUPS 231

9.3.1 Source of feed and feeding system constraints 232 9.3.2 DAFF’s contribution to the ostrich programmes 233 9.3.3 Intensity of ostrich farming constraints 234 9.3.4 Financial constraints 235 9.3.5 Mentors and leadership 236

9.4 FINAL DISCUSSION 237

CHAPTER 10

THE DEVELOPMENT OF A PARTICIPATION CAPACITY INSTRUMENT


10.2 INSTRUMENT FORMULATION 241

10.2.1 Local Vulnerability Index 241 10.2.2 Human Capacity Index 241 10.2.4 Agrarian Capacity Index 242 10.2.5 Market Access Capacity Index 243

10.2 LOCAL VULNERABILITY INDEX FINDINGS 244

10.3 HUMAN CAPACITY INDEX FINDINGS 245

10.4 AGRARIAN CAPACITY INDEX FINDINGS 246

10.5 MARKET-ACCESS CAPACITY INDEX FINDINGS 248


X

CHAPTER 11

MAIN FINDINGS, CONCLUSION AND RECOMMENDATIONS


11.2 SUMMARY OF MAIN FINDINGS 255

11.2.1 Livestock farming in the rural environment of the Eastern Cape 255 11.2.2 The present state of the ostrich industry 256 11.2.3 The ostrich supply chain 260 11.2.4 Present interventions for participation for emerging ostrich- farmer in the ostrich industry 261 11.2.5 Synopsis on the emerging ostrich farmers in the Eastern Cape with emphasis on main constraints 262 11.2.6 Contributory value of programmes 267

11.3 FINAL DISCUSSION 268

11.4 RECOMMENDED INTERVENTIONS 271

11.4.1 Feasibility study of programmes and review of location selection before initiation 274 11.4.2 Providing supportive interventions for programme start-ups 274 11.4.3 Improved selection of programme beneficiaries 275 11.4.4 Improved structure of emerging farmers’ co-operatives 276 11.4.5 On-going and appropriate training for emerging ostrich farmers 276 11.4.6 The role of government and mentors needs to be defined 277 11.4.7 Reducing feed costs 278 11.4.8 Establishing programmes linkages to informal markets and facilitating increased self-consumption 278 11.4.9 Developing new export markets 279 11.4.10 Alternative finance for the no-income months 280 11.4.11 Alternative marketing channels to export markets 280 11.4.12 Representation of emerging farmers in the ostrich-industry leadership structures 281

11.5 OPPORTUNITIES FOR FURTHER RESEARCH 281

11.6 CONCLUSION 282

REFERENCE LIST 284

XI

ABSTRACT

The changing agricultural environment (dualistic agricultural landscape, land

reform programme, market liberalisation and globalisation) has caused emerging

ostrich farmers to become increasingly isolated. Governmental agriculture

reforms and public sector interventions have been insufficient to address all the

challenges faced by rural ostrich farmers in the Eastern Cape. Participation in the

ostrich supply chain for emerging farmers in the Eastern Cape is currently

unsustainable as a result of avian influenza, control and registration protocols for

ostriches (VPN04), structural barriers in marketing, technical constraints and a

lack of market participation.

People in the rural areas of the Eastern Cape are challenged by inferior

infrastructure, poor site conditions, low earnings, poor access to health services

and unreliable water sources. The marginal conditions and prevalent

complexities in which agriculture is practised require costly resource intervention.

Intensive ostrich production necessitates continuous genetic improvement,

methodical record keeping, intensive egg incubation methods and high-

maintenance chick rearing and ostrich handling while minimising feed costs

throughout this process. Rural farmers have not embraced ostrich farming in the

same way as they have done with other livestock farming because it does not

offer the anthropological functions that traditional livestock farming provides. The

ostrich supply chain requires a wide range of activities to bring products to the

final consumer. The worth of ostrich production lies mainly in the higher returns

which are achieved only through the export markets. Today the ostrich industry

has become vulnerable to market cannibalism, a lack of market development,

unregulated numbers of ostriches and recurring international meat bans.

XII

The deregulation of the ostrich single-channel marketing system had a

substantial effect on the value chain on which farmers depended for market

access and market protection. As the majority of ostrich products are being

exported to the European Union, the role of intermediary agencies is becoming

an important factor influencing entry into the high-end markets. This agent

structure that represents the South African ostrich industry is vital for the

distribution, market penetration and regulation of the ostrich products. The

ostrich leather, which is today the main product line, is primarily used for luxury

goods and is susceptible to economic downturn and over-supply. The ostrich

meat industry has been severely influenced by outbreaks of avian influenza and

processors now pre-heat the meat in order to maintain export. However, this pre-

heating meat facility is only for export produce and available to farmers who

conform to VPN04 and have officially registered farms. The relevant South

African government departments played a crucial role in identifying avian

influenza outbreaks and liaising with the European Union about avian influenza

isolation strategies.

No previous studies have been conducted on the participation of emerging

farmers in the Eastern Cape ostrich-industry supply chain and on the

interventions required to address the multiple constraints and forces in this

sector. This led to a study with research emphasis on the required capacity for

supply-chain participation and the supporting mechanisms that would be required

for emerging ostrich farmers to integrate successfully into this supply chain. An

exploratory research approach was chosen for the investigation, as no earlier

research has been undertaken that could serve as a source of reliable data or

reference. A triangulation research methodology using both the quantitative and

the qualitative approach was applied. The qualitative research entailed an

interpretive approach associated with using grounded theory and content

analysis for interpreting data.

XIII

The comparative case study design was the main qualitative research instrument

for the multiple-case studies on emerging ostrich farmers in the Eastern Cape.

The study was undertaken at five different sites, namely, the Peddie Ostrich

Programme, the Rockhurst Ostrich Programme, the Hlumani Co-operative farm,

the Zamukwanda Ostrich farm near Pearston and the Mimosadale Ostrich farm.

The quantitative methods were applied to capture all the measurable

components and representations of the stakeholders and participants, through

interviews, questionnaires and focus group interviews. The quantitative study

also included an experimental instrument to measure the capacity of emerging

farmer programmes for supply chain participation.

It was found that the main driver for three of the case studies pertained to land

ownership and that ostrich farming was incidental and only seen as means of

activity for income. These three humanitarian farming projects had limited

capacity for intensive management requirements for ostrich farming. It was found

that the VPN04 bio-security protocols and disease control require a higher level

of record keeping for EU markets and is prohibitively expensive for poor rural

emerging farmers. The study established that the emerging ostrich farming

programmes contributed value to the industry and government rural development

in land redistribution programmes, vehicles for reduction of poverty and job

creation in the rural areas and by acting as out-grower programmes for

commercial farmers. The researcher’s observation is that through strategic

interventions the programmes have potential to become commercial players in

the industry.

XIV

The following interventions were recommended from this study:

Feasibility study of programmes and review of location selection before

initiation.

Providing supportive interventions for programme start-ups.

Improved selection of programme beneficiaries.

Improved structure of emerging farmers’ co-operatives.

On-going and appropriate training for emerging ostrich farmers.

The role of government and mentors needs to be defined.

Reducing feed costs.

Establishing programmes linkages to informal markets and facilitating

increased self-consumption.

Developing new export markets.

Alternative finance for the no-income months.

Alternative marketing channels to export markets.

Representation of emerging farmers in the ostrich-industry leadership

structures.

Keywords: emerging ostrich farmer, supply chain, interventions, market channel, EU regulations, bio-security, avian influenza, pre-heated meat, VPN04, participation capacity measuring instrument, development path mapping, Eastern Cape.

XV

LIST OF FIGURES

Figure 1.1 The research circle 13

Figure 1.2 Process of research design and structure of research 23

Figure 2.1 Eastern Cape research area 35

Figure 2.2 Map of Peddie Ostrich farm 36

Figure 2.3 Map of Rockhurst farm 37

Figure 2.4 Map of Hlumani Co-operative farm 38

Figure 2.5 Map of Zamukwanda Ostrich farm 39

Figure 2.6 Map of Mimosadale Ostrich farm 40

Figure 2.7 Qualitative data coding and analysis process 48



Figure 4.1 Marketing channels for produce from smallholder farmers 83


Figure 5.1 South African ostrich slaughter figures 94

Figure 5.2 Categories of researched literature on ostriches 97

Figure 5.3 Categories of ostrich researched literature in date clusters 99


Figure 6.1 Typology of governance systems in value chains 115

Figure 6.2 Relationship map of the ostrich supply chain with supporting service providers 120 Figure 6.3 South African Ostrich Business Chamber linkage to stakeholders 122

Figure 6.4 Relationship map of the ostrich supply chain with supporting service providers 127 Figure 6.5 Spatial distribution of primary ostrich production and processing in South Africa 128

XVI

Figure 6.6 Ostrich production per province 129

Figure 6.7 Ostrich compartments at Peddie Ostrich Programme 133

Figure 6.8 Rockhurst ostrich-egg electronic incubators 135

Figure 6.9 Bathurst ostrich chick raising structures 136

Figure 6.10 Pearston ostrich compartments 137

Figure 6.11 Programmes linkage to supply chain during initiation 140

Figure 6.12 Programmes linkage to supply chain on final year of production 140


Figure 7.1 Spatial distribution of AgriBEE projects in the ostrich industry in 2010 155


Figure 8.1 South African ostrich leather exports by destination 167

Figure 8.2 South African ostrich meat exports by destination 170

Figure 8.3: Ostrich product earnings 2003 - 2013 171

Figure 8.4 Comparison of KKI and other South African production 182

Figure 8.5 Provincial evolution of the South African ostrich industry 184

Figure 8.6 List of main grounded and density of codes 208

Figure 8.7 Network view of axial coding with relational linkage 208

Figure 8.8 Ostrich farming relational messy map 213



Figure 10.1 Bar chart comparison between five case studies 249

Figure 10.2 Radar chart comparison between five case studies 251


Figure 11.1 Emerging ostrich farmer development path 273

XVII

LIST OF TABLES

Table 2.1 Summary of research methodology 27

Table 2.2 Researched determinants on smallholder participation in literature 42

Table 2.3 Summary of questionnaire 44

Table 5.1 Findings of most popular research topics on ostriches 96

Table 8.1 Main themes from content analysis of magazine articles related to the ostrich industry 161 Table 8.2 Analysis of Code Families between respondents 209

Table 9.1 Farmers’ gender 217

Table 9.2 Farmers’ marital status 217

Table 9.3 Average age of farmers 218

Table 9.4 Age groups of farmers 218

Table 9.5 Average period of residence 219

Table 9.6 Farmers’ household size 219

Table 9.7 Number of social grants in the farmer’s household 220

Table 9.8 Number of child support grants in the farmer’s household 220

Table 9.9 Farmers level of education 221

Table 9.10 Farmers’ access to transport 222

Table 9.11 Farmers’ access to electricity 223

Table 9.12 Years of farming ostriches 223

Table 9.13 Farmers engaged in other farming activities 224

Table 9.14 Comparison of various variables between the case studies 226

XVIII

Table 9.15 Frequency of main topics raised in the farming, production, management and open ended question sections 230 Table 9.16 Detail of focus group participants 231

Table 10.1 Local Vulnerability Index for case studies 244

Table 10.2 Calculation of human capacity scoring 245

Table 10.3 Calculation of agrarian capacity scoring 247

Table 10.4 Calculation of market access scoring 248

Table 10.5 Percentage comparison between five case studies 249

Table 10.6 Accumulative percentage comparison between five case studies 250

1

CHAPTER 1

INTRODUCTION AND ORIENTATION OF RESEARCH

1.1 INTRODUCTION TO THE RESEARCHER 1.2 INTRODUCTION TO THE RESEARCHED AREA 1.3 PROBLEM STATEMENT 1.4 SUB-PROBLEMS 1.5 HYPOTHESIS 1.6 RESEARCH OBJECTIVES 1.7 DELIMITATION OF THE RESEARCH 1.8 RESEARCH METHODS 1.9 RESEARCH DESIGN AND DATA COLLECTION 1.10 SOCIO-ECONOMIC SIGNIFICANCE AND RATIONALE OF THE

RESEARCH 1.11 DEFINITION OF CONCEPTS 1.12 STRUCTURE OF THE RESEARCH

2

CHAPTER 1

INTRODUCTION AND ORIENTATION OF RESEARCH 1.1 INTRODUCTION TO THE RESEARCHER Research is required to embrace multiple standards of quality, such as

credibility, validity, rigour, reliability and trustworthiness. According to Schutt

(2011:5) researchers engage in one or more of the following processes when

investigating the social world: observing, generalising, reasoning and

re-evaluating.

Stating who the researcher is in the context of environment and background is

an integral part of the process of reasoning and evaluation. The values of the

researcher can influence what is observed and the researcher’s underlying

biases may influence the actions taken while conducting research.

Acknowledgement of being a South African, white, English-speaking male

remains the starting point from which the researcher approached this research.

The foremost part of this study lay in interpreting the history, cultures, agrarian

systems and sociological environment in a post-apartheid era. In the case of

this study the researcher attempted to embed himself in the rural farming

community in an effort to understand the perspective and agricultural activities.

The researcher has over 10 years’ experience in the exotic livestock industry

and disclosure of potential influence and social position on interpretations may

not be the norm for others. Therefore the researcher acknowledges his

theoretical post-positivism role in the research study.

3

1.2 INTRODUCTION TO THE RESEARCHED AREA The South African emerging black farmers originate from the group of

disadvantaged smallholder farmers who were previously excluded from

conventional markets and economies (Makhura, 2008:4; Senyolo, Chaminuka,

Makhura and Belete, 2009:208). Access to commercial farming for emerging

farmers has been inhibited with policy regulations, structural barriers, technical

constraints and a lack of market participation (Pote, 2008:9; Groenewald and

Jooste, 2012:133). Interventions have been insufficient and have failed to

address all the challenging areas faced by emerging ostrich farmers. The

reluctance on the part of South African agribusiness to accommodate small-

scale farmers into supply chains has resulted in limited participation of

emerging farmers (Sartorius and Kirsten, 2006:5). It is essential that

participation and empowerment of emerging farmers be included in the whole

process if poverty alleviation programmes are to be sustainable and have a

desired pro-poor growth (IFAD, 2004:116). The emerging farmers in the former

homelands in the Eastern Cape have been characterised mainly by poor

market access and deteriorating infrastructure and support services (Van Zyl,

Binswanger and Kirsten, 1996:3).

The livestock supply chain consists of a full range of activities that are required

to bring leather and meat to the final consumers. Each necessitates different

phases of production, processing and delivery. The global trade chains are

becoming more complex while the regulation and food safety requirements are

making it increasingly difficult for poor livestock farmers to participate

(Rota, 2010:4). Apart from environmental challenges, the participation of small-

scale farmers in the marketing of livestock is impeded by the fragmented and

discrepant infrastructure available in rural areas (Coetzee, Montshwe and

Jooste, 2006:91). From 1996 the ostrich industry started to initiate ostrich

production programmes for the Eastern Cape emerging farmers in order to

boost livestock numbers and production throughput. Prior to that, small-scale

emerging farmers in South Africa faced limited opportunity to participate

effectively in the ostrich industry value chain and were confronted with

considerable isolation.

4

Ostrich farmers are consistently faced with market instability which is influenced

by global market forces. In the exotic livestock production the risks and market

exposure are higher than in other livestock sectors as the products are prone to

price volatility due to their veblen nature (commodities whose demand is

proportional to their price). The emerging ostrich farms have mostly been run

as out-growers’ programmes and are in contrast to the more common

large-scale farming operations found in the Western Cape. The emerging

farmers’ lack of participation in the ostrich industry is compounded by limited

participatory foresight (Jonker, 2008:4) and inadequate marketing information

(NAMC, 2003:54; Carbajo, 2006:24). The Western Cape Province has domi-

nated the ostrich industry in South Africa since the early 1900s. Approximately

90 percent of the industry’s primary production output emanates from the

Oudtshoorn and Mossel Bay areas.

It is estimated that the total value of investments to the emerging ostrich farmer

programmes in the Eastern Cape since 2003 has amounted to over R15 mil-

lion. Since then the Eastern Cape ostrich industry has been heavily plagued by

avian influenza (AI) which was one of the reasons that led to ostrich-based op-

erations in Grahamstown closing in 2011 (Sipondo and King, 2012). This has

led to inadequate support and a shortage of ostrich-processing facilities for the

Eastern Cape farmers and many of the emerging farmer programmes have

faced closure and isolation from international markets.

5

1.3 PROBLEM STATEMENT

A major challenge for rural agricultural development in South Africa is the

limited capacity of emerging farmers to access international markets which offer

high financial returns. The barriers and constraints facing emerging farmers are

acute when they are farming exotic livestock requiring intensive management

practices for a high-value market. The introduction of ostrich farming into rural

Eastern Cape areas has met with severe production constraints and failure.

Furthermore, the ostrich industry has been governed by monopolistic and

excessive corporate concentration in processing and global marketing in the

Western Cape. The South African ostrich industry has been severely influenced

by cyclic market demand, global economic volatility, disease outbreaks and

strict bio-security protocols.

Against this background it is clear that emerging farmers are finding it difficult to

participate in the ostrich-industry supply chain. The main research question for

the study is therefore:

What interventions are required for participation of emerging farmers in

the Eastern Cape ostrich-industry supply chain?

6

1.4 SUB-PROBLEMS

In this study the interventions required to address multiple influences and

forces will be explored. The study adopted two main focus areas, namely, to

determine what the required capacity is for supply chain participation and to

determine what supporting mechanisms would be required for emerging

ostrich farmers to integrate successfully into the ostrich supply chain. The

following sub-problems were identified to address and answer the main

problem statement:

What is known about the rural environmental influences affecting

emerging ostrich farmers in the Eastern Cape region?

Why has ostrich farming not been embraced by emerging farmers to

the same extent as other livestock in the Eastern Cape region?

What is known about the present state of the ostrich industry and the

ostrich-industry supply chain?

What interventions have been available for emerging ostrich farmer

programmes to have participation into the ostrich-industry supply

chain?

What is known about the emerging farmers in the ostrich-industry

supply chain and what are the main constraints that prevent them

from participating?

What value does the emerging ostrich farmer provide for the ostrich

industry and South Africa’s agriculture and rural development?

7

1.5 HYPOTHESIS

It is the researcher’s hypothesis that participation in the mainstream

supply chain for emerging ostrich farmers in the Eastern Cape is

currently unsustainable. Interventions are required for the transition from

subsistence to commercial ostrich farming for high-value export markets

for the rural ostrich farmers.

The Eastern Cape economic and social environment, the agrarian constraints

and bio-security protocols have contributed powerfully to ruling out participation

in the ostrich-industry supply chain by black emerging ostrich farmers. The

growing polarisation between the commercial ostrich industry and emerging

farmers is resulting in a reduction in programme outcomes due to

incompatibility with market structures. The deterioration of the ostrich industry

in the Eastern Cape owing to avian influenza has resulted in the segregation of

emerging ostrich farmers from the industry’s supply chain and reduced

opportunities to participate in export.

It is the researcher’s point of view that through an understanding of the ostrich

industry and the determinants that influence emerging ostrich farmers’ position,

improved participation can be reached for the emerging ostrich farmers in the

Eastern Cape.

8

1.6 RESEARCH OBJECTIVES

The objectives of the study are to:

increase understanding of the ostrich industry and its supply chain;

describe and assess present participation of emerging farmers in the

Eastern Cape ostrich industry;

investigate participation determinants and develop an instrument to

evaluate participation capacity for emerging farmers; and

devise a development path for improved smallholder participation in

the ostrich industry.

1.7 DELIMITATION OF THE RESEARCH

1.7.1 Emerging ostrich farmer programme

According to Rother, Hall and London (2008:104), emerging farmers are “black

farmers who are operating in disadvantaged circumstances compared with their

white counterparts, regardless of their intention of engaging in large-scale

commercial production”. Rother et al’s approach to defining emerging farmers

was used to classify the representative sample for this study including:

those actively involved with ostrich husbandry in the Eastern Cape;

those who have their operations located in agro-ecological zoning areas with

climatic characteristics that represent the Eastern Cape; and

those who have an association with the ostrich industry and/or are receiving

support from the extension service of the Department of Agriculture, Forestry

and Fisheries (DAFF) extension services and who are participating in the

ostrich-industry supply chain.

9

The DAFF Eastern Cape regional offices and the South African Ostrich

Business Chamber were contacted to determine what emerging ostrich projects

existed and were being supported. Forty-six emerging ostrich farmers from five

separate enterprises met the above criteria in the Eastern Cape. These farmers

formed part of the following five programmes: Rockhurst Ostrich Programme

near Grahamstown, Hlumani Ostrich Co-operative near Port Alfred, Peddie

Ostrich Programme near Peddie, Zamukwanda Ostrich Programme near

Pearston and Mimosadale Ostrich Farm near Graaff-Reinet. According to the

DAFF, the Peddie Ostrich Programme is the largest emerging ostrich farmer

programme in the Eastern Cape and possibly in South Africa. There was a

group of emerging ostrich farmers in the Jansenville area that had received

training for ostrich farming, but because they had not received any ostriches

and had not actively commenced farming, they were excluded from the

research sample.

1.7.2 Ostrich industry stakeholders

The following Eastern Cape tanneries or processing plants were identified as

recognised and influential role players in the Eastern Cape ostrich industry:

African Hide Trading (Pty) Ltd, Exotan division of Camexo, Gondwana

Marketing (Pty) Ltd, Klein Karoo International (Pty) Ltd, Ostrimark SA, Saag

Jonker Holdings, Phillippe Exotic Leathers, South Cape Ostrich Tanning (Pty)

Ltd division of Mosstrich group, Swartland Ostriches and Ostrich Emporium SA.

The list was derived from studies conducted on the South African ostrich-

industry value chain by the National Department of Agriculture, members of the

National Ostrich Processors of South Africa and the South African Shoes and

Views 2010 Leather Directory (Shoes and Views Leather Directory, 2010:2-17).

10

1.7.3 Other stakeholders and role players

Cappelen (2004:1) identified two criteria for classifying stakeholders. The first is

the relationship approach, in which stakeholders have a relationship if

obligations arise between individuals or groups. The second approach of

identifying stakeholders is the assignment approach which claims that

obligations only arise if a particular relationship exists between the company

and a group. The following stakeholders were identified using the above

approaches and selected to contribute to this study: mentors, programme

managers, DAFF extension officers, the Society for the Prevention of Cruelty to

Animals, supply-account managers, industry researchers and international

traders.

1.7.4 Geographical demarcation

The researched area falls within the national borders of South Africa between

32°15′07″ S and 34 22' 31” S. The empirical component of this study was

limited to farmers and role players operating within the Eastern Cape. The

emerging ostrich programmes were concentrated in the Cacadu and the

Amathole Districts. The following economic information about these two

districts was obtained from the Eastern Cape Department of Economic

Development, Environmental Affairs and Tourism (DEDEAT, 2013:para. 4).

Cacadu District consists of an area of 9,786 square kilometres and has a

population of 450,600, covering 34% of the entire Eastern Cape Province's land

area. About 6% of the population of the Eastern Cape live in the Cacadu district

which makes a 1.4% contribution to the agriculture, forestry and fishing sector

of the South African economy, but its contribution is 21.8 percent to the Eastern

Cape sector. The Cacadu economy is dependent on the agricultural sector

which has a high prevalence of game farming which is seen as one of the

district’s major industries. The unemployment rate stood at 17 percent in 2010.

The selected farms in this study are found around Grahamstown, Graaff-Reinet

and Pearston, which have been the main supporting centres in terms of ostrich-

product processing infrastructures and extension services in this district.

11

The Amathole District consists of an area of 3,607 square kilometres and has a

population of 892,600. Two-thirds of the district is made up of the former

homeland areas of Transkei and Ciskei. The district makes a 0.71 percent

contribution to the agriculture, forestry and fishing sector of the South African

economy. The unemployment rate is 28 percent. In 2010 it contributed 0.68

percent of the South African economy and 8.7 percent to the Eastern Cape

economy. The selected farms in this study are found near Peddie on the

northern banks of the Great Fish River.

1.7.5 Livestock

Other livestock will be used as points of reference in this study due to limited

information on ostrich farming in a rural context. The focus of the study was

limited to the main commercially farmed ostrich species called the South

African Black-neck, S.c. domesticus. Discussion will also include Nile crocodile,

Crocodylus niloticus, which provides one of South Africa’s main types of exotic

leather. It is interesting to note that both these species are oviparous (egg-

laying).

12

1.8 RESEARCH METHODS

The research applied a mixed method approach of both qualitative and

quantitative paradigms. According to Johnson and Onwuegbuzie (2004:17),

“mixed methods research is formally defined here as the class of research

where the researcher mixes or combines quantitative and qualitative research

techniques, methods, approaches, concepts or language into a single study.”

The quantitative research methodology provided insight into demographics,

biographical information, production and the participation capacity of the

emerging ostrich farmers. The data from the quantitative results were also used

to establish a profile of the emerging ostrich farmer involved in the ostrich

programmes. The qualitative research methodology applied to interviews and

focus groups provided insight into emerging farmers’ and stakeholders’

opinions, perceptions and concerns. Focus groups were arranged to

accommodate a variety of participants and to re-evaluate survey findings.

Owing to the unstructured nature of this method, the researcher was able to

probe for new information.

According to Guion, Diehl and McDonald (2011:1), the mixed method

triangulation research reduces ambiguity through transforming perceptions into

pre-structured and quantifiable categories. This triangulation method involves

using different sources of information in order to increase the validity of a study.

Information from surveys, interviews and focus groups was compared against

each other to see if similar results or themes were found. If similar points of

information across the methods occurred, then validity was established.

Other sources of information and evidence included stakeholders in a

programme, mentors, management and other community members. During the

analysis stage, information was compared to determine areas that

corresponded as well as any areas of divergence.

13

Although extensive research has been conducted on market integration, market

access and value chains, an exploratory research was conducted as no earlier

studies had been undertaken on emerging ostrich farmers that could serve as a

source of reliable data or reference. Exploratory research assisted in the

development of the hypothesis, as well as in gaining insights into the problem

area (Nunamaker and Chen, 1990:91). This type of triangulation is particularly

well suited to unexplored areas of information and phenomena (Hussein,

2009:8). The topic of ‘emerging ostrich farmers’ is relatively new and has not

been previously researched; therefore it conforms to the requirements of an

exploratory study.

The inductive research approach was applied in this study, which entailed

starting with the data or from observation of empirical reality (Schutt, 2011:45).

Therefore the researcher started with the data and empirical observations and

let the theory emerge from the data. In addition, the observations were based

on the researcher’s personal experience in the ostrich industry. Inductive

research was better suited to this qualitative data as it started from a

description of the case studies and then moved towards an explanation (Figure

1.1).

Figure 1.1 The research circle

Source: Adapted from Schutt (2011:42).

14

This study includes emphasis on relational embeddedness (nature of

relationships), market orientation and influences on market participation. The

qualitative study included the case study format as it provided a strong

contextual analysis of the farmers’ environment and constraints. Yin (1984:23)

defines the case study research method as “an empirical inquiry that

investigates a contemporary phenomenon within its real-life context; when the

boundaries between phenomenon and context are not clearly evident; and in

which multiple sources of evidence are used”.

1.9 RESEARCH DESIGN AND DATA COLLECTION

Blanche, Blanche, Durrheim and Painter, (2006:50) define research design as

“plans that guide the arrangement of conditions for collection and analysis of

data in a manner that aims to combine relevance to the research purpose with

economy in procedure”. In preparation for the study and owing to the limited

research on emerging ostrich farmers a literature review was initially

conducted. Fink (2010:2) explains that a literature review “describes the content

of knowledge already available and presents the significance of previous work”.

According to Kekälede, de Weerd-Nederhof, Cervai and Borelli (2009:73), as

an academic piece the literature review cannot simply echo the subject matter;

but should contribute to the work in a twofold approach of examining the

available material and offering critique. Only in providing both these functions

does a literature review meet the requirements of rigour (Okoli and Schabram,

2010:4). The sources used in this study included literature in industry

magazines, as well as annual and technical reports.

15

An explorative investigation overlapped the literature study to uncover the

present state of the emerging farmers’ environment, market dynamics and

influences on the ostrich supply chain. This investigation included a pilot study,

analysis into the South African ostrich industry and collation of secondary data

from case studies, programmes, industry processes and events. The pilot study

involved interviews with stakeholders in the ostrich industry, a preliminary

review of the research area and identifying suitable case studies. The pilot

study also included the development of the instrument for emerging farmer

capacity measurement. The ostrich farmer programmes were evaluated in

order to determine the application of research methods. After obtaining a broad

view of the limitations and delimitations of the programmes, the researcher was

able to select the appropriate research methodology.

The literature study followed a chronological design focusing on five areas that

had influence on the problem statement, namely, the Eastern Cape, rural

livestock farming, the ostrich industry, ostrich supply chain analysis and black

empowerment programmes in South Africa. The exploratory investigation then

focused on the ostrich industry to gain insight and information related to the

industry and its supply chain.

The data-collection process commenced at examining of the ostrich industry,

defining the ostrich supply chain and identifying the emerging ostrich

programmes. This phase was followed by research using a multiple-case study

design. Case study methodology included focus groups and face-to-face

interviews with emerging farmers in the Eastern Cape. The respondents were

from a less developed rural environment and the use of other approaches such

as mailed questionnaires and telephone surveys would have caused difficulties

because of the unreliable communication infrastructures in rural areas. The

researcher believed that respondents might uphold some aspects of the

traditional culture and language in Xhosa and would therefore be unable to

read English questionnaires. Additional advantages of face-to-face interviews

are that interviewers can observe the surroundings of their respondents and

observe non-verbal communication.

16

The researcher was of the opinion that the emerging farmers might not have

made an accurate evaluation of market constraints and that it was required to

include external programme participants and stakeholders that could contribute

and understand additional constraints. Farmers and stakeholders were

organised into smaller groups for focus-group discussions (FGDs). The

participants included the mentors, extension officers, programme managers,

and representatives from the Department of Agriculture. A participatory

approach was applied to encourage collaboration with the farmers and to

attempt to understand the systems used on the farms. The final phase of the

research design included the application of an experimental farmer’s capacity-

measuring instrument. The capacity-measuring instrument was used to

synthesise qualitative and quantitative insights from the data collection and

compare characteristics between case studies.

The field assistants recruited to assist with data collection were students from

the Department of Agriculture and Game Management at the Nelson Mandela

Metropolitan University in Port Elizabeth. The students were selected on the

basis that they were familiar with the study area and that they would also be

able to assist with interpretation and data collection. Being members of the

university community they were able to relate to the requirements of research.

The field assistants’ role was to accompany the researcher for the interviews

and focus groups and provide translating between Xhosa and English when

required. Prior to the interviews, the researcher explained and outlined the

questions to confirm that translations were correct.

17

1.10 SOCIO-ECONOMIC SIGNIFICANCE AND RATIONALE OF THE RESEARCH

The total investment in the ostrich industry in South Africa exceeds

R1.2 billion and employs 20 000 people. It exports 90% of products in the form

of feathers, leather and meat (Cooper, Tomasik and Horbanczuk, 2007:87;

Department of Agriculture, 2011:87). The industry has been established and

developed mainly for international markets with a limited contribution from

emerging black farmers. According to Fick (2009:1), “the ostrich business in

South Africa has been a limited entrants only industry for more than a century.

Small-scale emerging farmers in rural South Africa have never had real

ownership nor have they had the opportunity for participation in the whole

industry value chain.” There appears to be a general reluctance on the part of

agribusiness to include black small-scale farmers in supply chains because of

the incremental transaction cost (Sartorius and Kirsten, 2006:3). This has been

compounded by the globalisation standards and strict bio-security requirements

(Henson and Loader, 2001:100).

Avian influenza (AI) has been one of the main impediments to the ostrich

industry and according to the South African Department of Agriculture, Forestry

and Fisheries the AI outbreaks have been caused mainly by lapses in bio-

security measures (Kleyn, 2012:1). DAFF compels all ostrich farmers to comply

with a set of bio-security requirements, as well as registration and maintenance

of registration of ostrich compartments in South Africa, also referred to as

VPN04. The Eastern Cape emerging ostrich farmers have faced other limiting

factors including access to land, overly capital-intensive agriculture, climate and

agro-ecological potential constraints and limited entry to supply chains.

Knowledge with regard to the emerging ostrich farmers’ required capacity and

how they can integrate into the ostrich industry successfully will contribute to

the livestock farming sector, job creation and poverty reduction in the Eastern

Cape.

18

1.11 DEFINITION OF CONCEPTS

1.11.1 Exotic livestock Commercially raised exotic livestock includes animals of the families bovidae,

cervidae, antilocapridae, birds of the ratite group, and reptiles. Exotic livestock

farmed for their leather are usually farmed intensively. The hides and skins

from these animals receive higher prices in the market and unlike other farmed

livestock the meat is sold as a by-product. Trade of products from these types

of exotic livestock is usually restricted because of conservation, sustainability

and protection against over-exploitation.

1.11.2 Market access According to Vorley (2001:4), market access for producers to supply chains

does not have much to do with classical notions of ‘efficiency’; but is a feature

of the ability to exploit marketing advantage, meeting large processor and

supermarket demands for consistency of supply, as well as compliance with

standards. IFAD (2003:9) describes market access as concerning physical

access to markets (roads and costs), market structures (relationships and

market intermediaries) and the level of farmer’s human capital (skills and

training). According to Van Tilburg and Van Schalkwyk (2012:35), market

access is the ability to obtain necessary farm inputs and farm services resulting

in the ability to deliver farm products to the buyers. In this study market access

was measured with a focus on measuring market channels and structures,

human capital, transport and market information.

19

1.11.3 Market integration

Market integration is where separate markets for the same product become one

single market. This situation is influenced by socioeconomic and institutional

factors such as cost of doing business and trade liberalizations (Adekambi,

Ingenbleek & Van Trijp, 2013:2). According to Fafchamps (1992:98), market

integration in context of third world agriculture, progressively diminishes the

need for food self-sufficiency.

1.11.4 Opportunities for participation

Emerging farmer participation takes place primarily upstream in the ostrich

supply chain. This includes chick rearing and animal husbandry. According to

Delgado and Siamwalla (1997:166), promoting growth in smallholder

agriculture in Africa through increased participation for high-value items would

require significant vertical integration of smallholders into processing and

marketing firms. Makhura (2001:101) states that market participation is

measured by the probability and the value of output sold in the market; however

market participation occurs only after market access has been achieved. In this

study the focus is mainly, but not exclusively, on supply and how emerging

farmers integrated and linked with processors, market intermediaries or

markets.

1.11.5 Supply chain versus value chains

According to Feller, Shunk and Callarman (2006:4) supply chains take into

consideration costs and efficiency of supply, including the flow of materials from

sources to final destinations. Supply chains therefore focus on operational

matters and the provision of raw materials, while value chains focus more on

innovation, product development and marketing and, to a greater extent, on

customer requirements. Although this study is on the ostrich supply chain other

areas of processing and marketing will be discussed.

20

1.11.6 Industry

Johnson and Scholes (2008:110) defines an industry as a group of firms

producing the same principle product or a group of firms producing products

that are close substitutes for each other. The industry is made up of number of

role players and service providers and due to convergence, overlapping

industries and service providers will be also included in this study.

1.11.7 Registered Ostrich Compartment

The Registered Ostrich Compartment is a property consisting of one single,

contiguous piece of ground where ostriches are kept and where such premises

and ostriches comply with the requirements of South African Ostrich Veterinary

Procedural Notice (VPN04).

1.11.8 Ostrich out-grower

An out-grower scheme is a contractual partnership between the grower and a

commercial farmer for the production of ostriches. The grower agrees to

provide certain numbers at a certain age. In turn, the commercial farmer

commits to purchase the ostrich, at a pre-determined price. The out-grower

schemes can vary in the extent to which inputs, costs and benefits are shared

between growers and the commercial farmer. Another term often used to refer

to out-grower is contract farming. According to Maertens, Miet, Swinnen and

Johan (2009:20), there is potential for rural households to benefit from gains in

high-standard export chains. However, it has been argued that large agro-

industrial firms can exploit the unequal power relationship in out-grower

arrangements.

21

1.12 STRUCTURE OF THE RESEARCH

The structure of the thesis is discussed below and summarised in Figure 1.2

Chapter 2 explains the research methodology implemented in this research by

elaborating on the chosen sample, measuring instruments and method of data

collection. The data analysis and statistical techniques used are also described.

The empirical results of the reliability and validity analysis of the measuring

instrument are discussed.

Chapter 3 is an overview of the emerging farmers’ rural environment in the

Eastern Cape. The intention of this chapter is to set the scene in the

environment where the case studies were undertaken. The chapter outlines the

agro-ecological environment, socio-economics and historical background to

what led to the marginalisation of black farmers and the decline of participation

in agriculture in general.

Chapter 4 reviews livestock farming in the context of the rural Eastern Cape

environment. This chapter sets the scene on the livestock practices for rural

emerging farmers. The chapter starts with a review of rural livestock farming in

the Eastern Cape and is then narrowed down to a review on the

anthropological role of cattle in an African cultural context

Chapter 5 explains the background of the ostrich industry and how it

developed. An overview of ostrich husbandry is provided and the main aspects

of production that require attention for small-scale ostrich production are

identified.

Chapter 6 provides an overview of supply chains and explains the role of

governance within these chains. This chapter includes the relationship map of

the ostrich industry supply chain with service providers. Finally, the present

state of ostrich production in the Eastern Cape Province and selection of case

studies is reviewed.

22

Chapter 7 is a review of black economic empowerment (BEE) in South African

agriculture. The intention of this chapter is to set the scene on how BEE is used

as a vehicle to facilitate participation. The discussion is then narrowed down to

how the ostrich industry has facilitated the participation of smallholder farmers

through ostrich industry AgriBEE initiatives referred to as OstriBEE.

Chapter 8 presents the results and findings from a situational analysis of the

ostrich industry. Several dimensions of research were investigated in order to

profile the ostrich industry and explore entry points into the supply-chain for the

emerging ostrich farmers.

Chapter 9 discusses the results and findings regarding the emerging ostrich

programme case studies. Several dimensions of research were explored in

order to profile the emerging ostrich farmers, namely, relationship mapping,

surveys and focus groups.

Chapter 10 presents the formulation and findings from the experimental farmer-

capacity measuring instrument which presents an index comparison between

the case studies.

Chapter 11, which is the final chapter of the study, presents the findings,

conclusions and recommendations of the research. The contributions and

possible limitations of the study are discussed and interventions for future

emerging farmer ostrich programmes are proposed.

23

Figure 1.2 Process of research design and structure of research

Source: Researcher’s own construction

24

CHAPTER 2

RESEARCH METHODOLOGY 2.1 INTRODUCTION 2.2 LITERATURE REVIEW 2.3 PILOT STUDIES 2.4 EXPLORATIVE INVESTIGATION 2.5 MULTIPLE CASE STUDIES 2.6 QUESTIONNAIRE 2.7 FOCUS-GROUP DISCUSSIONS 2.8 DEVELOPMENT OF PARTICIPATION CAPACITY INSTRUMENT 2.9 OPERATIONALISATION AND ANALYSIS OF QUALITATIVE DATA 2.10 LIMITATIONS OF THE STUDY 2.11 ETHICAL CONSIDERATIONS 2.12 SUMMARY

25

CHAPTER 2

RESEARCH METHODOLOGY

“Methodology refers to the coherent group of methods that complement one

another and have the ‘goodness of fit’ to deliver data and findings that will

reflect the research question and suit the research purpose”

(Henning, 2011:36).

2.1 INTRODUCTION The following chapter provides the reasoning behind and description of the

design, operationalization, limitations and ethical considerations followed in this

research. Research methodology is an important part of the research

procedure which determines how the research project should be undertaken

(Saunders, Saunders, Lewis and Thornhill, 2011:43). This chapter elaborates

on the introduction to the previous chapter by discussing the approaches used

to collect and analyse data. An exploratory cross-sectional study (comparative

study at a single point in time) was applied to investigate the ostrich industry

and emerging ostrich farmer programmes in the Eastern Cape. Both the two

main research approaches, namely the quantitative approach and the

qualitative approach, were applied; however, more of an interpretive approach

was used to collect data describing not only as objective, but also observing

aspects of human behaviour (Lee, 1991:347). In this study the term ‘interpretive

approach’ also refers to qualitative procedures associated with hermeneutics

and phenomenology and case studies (Roth, 2007:360).

By using quantitative methods the researcher aimed to capture all the

measurable components and representations of the participants, the variables

being measured according to how the different farms and farmers related to

one another. The quantitative research methodology focused on a survey

design to provide insight into demographics, human capital endowments,

farming production, marketing channels and supporting institutional information

of the emerging ostrich farmers and programmes.

26

The literature review formed part of the design logic primarily to gain

information related to the ostrich industry, as there is little published information

about the ostrich supply chain. The literature review focused on three main

themes, namely, the Eastern Cape, the ostrich industry and emerging farmers,

in order to contextualise the study. However, it became apparent that

understanding was also needed in the area of Black Economic Empowerment

(BEE) and supply chains. The literature review formed an integral part of the

initial study to synthesize results and discussions related to interpretation of the

inquiry. The literature review was also integrated into the pilot study which was

conducted on the ostrich industry, the main commodities and present emerging

farmer programmes in the Eastern Cape. As discussed in Chapter 1, the pilot

study included identifying case studies, a review of researched areas and the

development of a capacity instrument. The study then progressed to an

explorative study on the ostrich supply chain with focus on the ostrich leather

industry. This was to gain broad insight into information on the supply chain and

markets. It was at this point that the collection of data commenced. The final

phase involved conducting qualitative research on the present Eastern Cape

emerging ostrich farmers in the form of comparative case studies and focus

groups (participation research). Owing to limited availability and the complexity

of emerging ostrich farmer programmes, the case-study research approach

was chosen. A phenomenological approach required that the researcher be

imbedded in the rural farming community in an effort to understand the

perspective and capacity of the people involved. The aim was not only to

describe the cases for the sake of description, but also to identify phenomena,

interaction and dynamics that could influence the farmers’ participation. A

comparative study approach was applied to five case studies to explore farming

systems and emerging programme models.

27

Focus group meetings in which the farmers participated to share experiences

and farming constraints were arranged. Content analysis was performed to

explore emotional, cognitive and motivational factors. Throughout the

interviews and focus-group meetings, grounded theory analysis was applied to

expedite qualitative data collection and analysis to gain further insight into

situations facing emerging ostrich farmers. The three stages of grounded theory

as set out by Corbin and Strauss (2008:195) were applied, namely, open

coding, axial coding and selective coding. To perform this analysis, the

narratives produced by participants were entered and coded using Computer

assisted Qualitative Data Analysis Software. Then, finally, empirical data was

used to develop an instrument to measure emerging farmer participation

capacity potential. This instrument was intended to develop, measure and

determine what potential the emerging farmers had of successfully

participating. A summary of the research methodology applied in this study is

presented in Table 2.1.

Table 2.1 Summary of research methodology

Research approach Qualitative and qualitative

Process logic Inductive

Quantitative research methods Frequency counts, percentages and

descriptive statistics

Qualitative research methods

Content analysis and Grounded

theory analysis: Comparison of

coding, themes and categories

Type of case study design Multiple-case design

Sources of literature data Multiple sources: Industry reports,

and research articles.

Data collection instruments Surveys, focus groups, capacity

instrument and interviews.

Source: Researcher’s own construction, modelled from Burger (2003:86)

28

2.2 LITERATURE REVIEW A literature review is intended to anchor the rest of the research findings. It

describes the content of knowledge already existing and highlights the

importance of previous work studied (Fink, 2010:2). For academic writing, the

literature review cannot only repeat the subject matter, but should contribute to

explain and compare with similar studies elsewhere (Kekälede, Weerd-

Nederhof, Cervai and Borelli, 2009:75). By providing both these functions, the

literature review contributes to the requirement of rigour (Okoli and Schabram,

2010:20). The literature review was conducted to provide theoretical

background for future research, learn the range of research on the topic and

understand what existing research has to say on the matter. However, the

literature review can constitute an original and valuable work of research of

itself (Okoli and Schabram, 2010:1). The literature study consisted of two

phases: a literature search on research databases and an analysis of research

literature using the text-mining method.

2.2.1 Literature database search

A comprehensive literature search was conducted which included a search to

determine if research similar to this study had been undertaken earlier. Limited

research was undertaken by the National Agricultural Marketing Council South

Africa on ostrich industry deregulation and black participation. The databases

searched include EBSCOhost, LexisNexis, LexisNexis Academic, NEXUS,

Sabinet Online, Science Direct, Scopus, BioOne and Wiley Online Library. As

far as could be established, no research had been conducted on interventions

for participation of emerging ostrich farmers in the Eastern Cape. The following

screening search keywords and wildcard searches were used in order to

achieve comprehensiveness and consideration:

emerging farmers: profile, beneficiary selection, establishment, constraints,

participation, dependency, livestock systems, land reform schemes,

programmes, collective marketing, market access, contract farming, rural

livelihoods, sociology, smallholder, out-growers, marketing systems and

participation schemes;

29

Eastern Cape: history, reform, support programmes, poverty, economy,

environment, agro-processing, livestock, policies, land tenure, rural,

homelands, reconstruction and development; and

ostrich industry: historical overview, supply chain, production, participants,

markets, avian influenza, husbandry, processes and future direction.

2.2.2 Content analysis

Delen and Crossland (2008:1709) stated that “researchers conducting

searches and reviews of relevant literature have faced an increasingly complex

and voluminous task; and that in extending the body of relevant knowledge, it

has always been important to work hard to gather, organize, analyse, and

assimilate existing pieces from the literature, particularly from the researcher’s

‘‘home discipline”. According to Hsieh (2005:1277) there are three approaches

to content analysis, namely, conventional, directed, or summative.

In this study a directed approach has been taken using existing prior research

and literature to identify key topics as theme categories. The themes are used

to interpret meaning from the content, hence, it was susceptible to the

naturalistic paradigm (multiple possible interpretations). However, the

researcher has strived for trustworthiness through comparing other forms of

research methodology to validate findings.

30

2.3 PILOT STUDY

According to De Vos, Delport, Fouché and Strydom (2011:211) a pilot study

involves four aspects, namely, a literature study, interviews with experts,

exploring the actual research area and intensive study of strategic units. The

main aim of the pilot study was to determine the best and most effective

research methods and instrument design for further use in a full scale study.

The pilot study involved a literature study and was the preliminary exploratory

study into the ostrich industry. This included a broad array of approaches,

namely, international leather shows, consultations and visits to the research

area. Owing to the researcher’s past involvement in the ostrich industry, the

preliminary review and references are based on attendance at international

leather shows, the Lineapelle in Italy (2008) and the National Western Stock

Show in the USA (2009). Between 2009 and 2010 consultations were

conducted with two main ostrich industry stakeholders, namely, Jonker

Holdings in Oudtshoorn and South Cape Ostrich Tanning in Mossel Bay. The

Peddie emerging ostrich farmer project was visited in 2011 and the

characteristics of the project were evaluated in order to assist in choosing forms

of research methodology for the following phases of the research. As the

research area is found in the Amathole District, the researcher included

information gained from consultation with the Amathole Economic Development

Agency which is owned by the Amathole District Municipality. This agency had

been involved with developing markets within the context of regeneration

programmes which involved working with socially and economically

disadvantaged groups in the Eastern Cape. Through this consultation the

researcher could gain insight into the existing emerging farmer programmes in

the district. After obtaining a broad view of the industry and possible limitations

of the study, the researcher was able to focus on the appropriate research

methodology.

31

2.4 EXPLORATIVE INVESTIGATION

According to Saunders and Lewis (2012:110), the depth of knowledge of the

respondent on the topic can have a significant influence on findings. Welman

and Kruger (2001:161) suggested that semi-structured interviews are usually

considered when the respondents come from divergent backgrounds or there

was an unfamiliarity of the area being entered. For this reason, the

semi-structured interview was the main research instrument for this explorative

investigation. The initial investigation was to gain familiarity about the ostrich

supply chain. There are three products that are derived from ostrich production,

namely, leather, meat and feathers. As the ostrich leather product line has been

the most sustainable of the three products since 1950, it has consistently been

exported since the inception of the deregulated market in 1994. Ostrich leather

has become the pillar of stability in the industry (Kriek, 2012:1), but this

commodity is dependent on high-technological know-how and has a small

domestic market. As this processing aspect and limited markets would be the

most challenging for emerging farmers, more focus was applied to this

commodity. The ostrich leather industry has also been supportive in the

processing divisions during recurring European Union ostrich meat bans (KKI,

2012:3), but little information has been published about the production,

processing and marketing of ostrich leather. This explorative investigation

consisted of two phases, namely, a situational analysis of the ostrich industry

and semi-structured explorative interviews with Eastern Cape ostrich industry

role players.

32

2.4.1 Situational analysis of ostrich industry

A situational analysis of the ostrich industry was conducted using several

methods to identify trends and forces that influence the ostrich industry. The

situational analysis involved the following methods and studies:

Content analysis of ostrich-industry literature

Micro environment influences

Macro environment influences

Stakeholder interviews

A PESTEL framework which categorise environmental influences was used to

investigate the macro environment influences. The PESTEL format as

recommended by Johnson, Scholes and Whittington (2008:55) is a technique

used to examine a wide range of influences and determine their potential future

impact in the business environment. The technique involves the analysis of the

political, economic, socio-cultural, technological, environmental and legal forces

(Paul, Yeates and Cadle, 2010:42). During the stakeholder interviews the aim

was to uncover unknown information regarding the ostrich industry. The

research was explorative in nature and utilised qualitative informal surveying

methods to understand the association between the exotic industry and

international markets. Industry case studies, programmes, industry processes,

activities and events were included in this study to validate new findings.

Interviews were conducted with role players and influential actors in the trade

relating to the exotic leather market. Based on information from the Shoes and

Views Leather Directory (2010:2-17), skin merchants, abattoirs, agents and

tanneries of four Eastern Cape companies were chosen for the interviews.

These four companies represented the majority of the Eastern Cape exported

ostrich product value and/or are strongly integrated with the supply chain,

namely, processing facilities, tanneries and marketing.

33

The purposive sampling technique was used to identify individuals who could

provide some understanding on the level of the ostrich industry. According to

Saunders and Lewis (2012:138), individuals should be selected because of

their knowledge and experience, and it is their opinions that are important in

addressing the objectives of the research. Four key respondents were selected

that represented the Eastern Cape ostrich enterprises according to the

following criteria: having over five years’ experience in ostrich markets, having

exhibited at international leather trade shows and having traded and

represented their companies in international exotic markets. The semi-

structured questionnaire contained both closed-ended questions and open-

ended discussion. The explorative interviews with role players were conducted

in order to gain insight into the supply chain relationships, industry and market

forces.

The following topics were explored in the explorative interviews:

ostrich farming and production

ostrich products

intermediary agents

marketing channels

threats to the industry

34

2.5 MULTIPLE CASE STUDIES

The comparative case study design was the main qualitative research

instrument for this study. It is the researcher’s hypothesis that the spatial

variation in transactions costs to geographic location leads to cross-sectional

heterogeneity in farming systems and market access. Therefore multiple

case-studies were selected to elaborate on the Eastern Cape emerging ostrich

farmer environment and the influences on their participation. Normally, in

hypothesis-testing research, regular deduction is used. In case studies, it is

directed towards understanding uniqueness and idiosyncrasies of particular

cases. When investigating a group, fieldwork is conducted in order to measure

natural circumstances on the spot (Welman and Kruger, 2001:183). According

to Welman and Kruger (2001:184), three aspects are important. These aspects

were applied in this case study:

Boundaries should be determined.

Techniques to collect data should not merely be used to describe but

should be used to search in an inductive manner for recurring patterns.

Triangulation research methods are used to discern patterns.

Comparable cases were selected to attempt to predict similar results or predict

contrasting results for expected reasons. As a first step, the case studies were

selected within the Eastern Cape region of South Africa. All the case studies

had been recognised and supported by the South African Department of

Agriculture and had been supported as an emerging farmer programme

initiative. A further selection criterion was that the cases had participated

directly or indirectly with the commercial ostrich-industry supply chain. With

reference to the delimitations discussed in Chapter 1, the case study selection

was from farmers that were from predominately disadvantaged communities. To

the best of the researcher’s knowledge no other emerging ostrich farmers were

found and the sample represented the majority of the emerging ostrich farmer

programmes in the Eastern Cape.

35

2.5.1 Research localities

The fieldwork was undertaken at the sites of the following five Eastern Cape

smallholder programmes (Figure 2.1):

Peddie Ostrich Programme near Peddie (Amathole District)

Rockhurst Ostrich Programme near Grahamstown (Cacadu District)

Hlumani Co-operative farm near Bathurst (Cacadu District)

Zamukwanda Ostrich farm near Pearston (Cacadu District)

Mimosadale Ostrich farm near Graaff-Reinet (Cacadu District)

Figure 2.1 Eastern Cape research area

36

2.5.2 Peddie Ostrich Programme

Figure 2.2 Map of Peddie Ostrich farm

The Peddie Ostrich Programme is the largest and longest-lasting AgriBEE

ostrich farmer programme in South Africa. There are 20 beneficiaries who are

involved with the rearing of ostrich chicks. The farm is on commonage land

which belongs to the Pikoli community. The farm is situated in the Amathole

District and the closest market is at the town Peddie which is approximately 20

km away. The main source of water is from the Great Fish River.

37

2.5.3 Rockhurst Ostrich Programme

Figure 2.3 Map of Rockhurst farm

The Rockhurst farm is situated in the Cacadu District Municipality and the

closest market is Grahamstown which is approximately 35 km away. The

4 126ha farm was purchased for R13 million by the provincial Department of

Rural Development and Land Reform in 2006. Figure 2.3 indicates the portion

of the farm dedicated to the ostrich project. The ostrich farm is run by seven

beneficiaries and their families who were former employees of the farm. The

farm also has over 700 angora goats and is supported by the Mohair

Empowerment Trust. The beneficiaries have a lease arrangement for the land

from the Department of Land Affairs. The main source of water is from the

Great Fish River.

38

2.5.4 Hlumani Co-operative farm

Figure 2.4 Map of Hlumani Co-operative farm

Hlumani Co-operative farm near Bathurst was established by 10 beneficiaries

from the Bathurst Township. After they had been awarded 76 ha of land, the

beneficiaries requested support from the Bathurst Social Development

Department for farming goats. The land was assessed by officials from the

Department of Agriculture, who decided that the farm was better suited for

feedlot ostrich farming. The Social Development Department constructed

ostrich chick pens, feedlot camps and a livestock loading ramp. The main

source of water is from a borehole.

39

2.5.5 Zamukwanda Ostrich farm

Figure 2.5 Map of Zamukwanda Ostrich farm

The Zamukwanda Ostrich farm is situated in the Cacadu District Municipality

and the closest market is Pearston which is approximately 5 km away. In 2005

six youths from the Pearston community received 6 ha of land on the farm

Moolenhof to lease from the Blue Crane Route Municipality. In 2007 the

Department of Agriculture supplied six farming units with four camps for ostrich

chick rearing, the sheds and water facilities, as well as accommodation. The

main source of water on the farm is from a borehole.

40

2.5.6 Mimosadale Ostrich farm

Figure 2.6 Map of Mimosadale Ostrich farm

The Mimosadale Ostrich farm is in the Cacadu District Municipality and is

approximately 19 km to the south-west of Graaff-Reinet. The land was

purchased by the municipality to supply Graaff-Reinet with water from the

boreholes. The municipality made it available to emerging farmers as

commonage land. The farm is an out-grower programme for local commercial

farmers in Graaff-Reinet and is managed by one farmer. There are three

boreholes that provide water on this farm.

41

2.6 QUESTIONNAIRE

After being adapted from a literature review on a variety of studies conducted

on determinants of smallholder participation (Table 2.2), a questionnaire

containing six components was constructed. The questionnaire employed

methods that were helpful to apply and considered important in the emerging

farmer sector. However, the variables were not uniform because farmers face

different transaction costs, agricultural potential and farming systems.

Therefore smallholder farmers or their enterprises can be differentially

integrated into the supply chain because of variances in capacity or capability.

In the questionnaire market participation was measured mainly according to

transaction costs, human capital and market feedback. According to Van

Tilburg and Van Schalkwyk (2012:35), “market access includes the ability to

obtain necessary farm inputs and farm services and the ability to deliver farm

products to the buyers”. In the survey market access was measured mainly

according to constraints, state of the roads, transport and the proportion of the

households with access to electricity and mobile phone ownership. It is

hypothesised that farmers with access to electricity, good roads and mobile

phones would need these to undertake basic business activities and influence

capacity to participate. The degree of market access was measured according

to distance to the nearest town and preferred market channel.

42

Table 2.2 Researched determinants on smallholder participation in literature

FACTORS DETAIL STUDY

Marketing channels with focus on high

transactions costs

Proximity to collection points (p. 9).

Staal, Delgado and Nicholson (1997).

Smallholder dairying under transaction costs

in East Africa. World Development

Co-operatives serve to reduce transactions costs (p. 11).

Market participation and

growth opportunities with

focus on high transaction costs

Access to assets: To provide an incentive for increased

productivity (p 169). Delgado (1999).

Sources of growth in smallholder agriculture in sub-Saharan Africa:

The role of vertical integration of

smallholders with processors and

marketers of high value-added items.

Access to information: Principal-agents need to share production

and marketing information (p. 169).

Access to services: Institutions should share the risks of service

delivery (p. 169).

Access to remunerative markets: Institutions should overcome

economies of scale in processing and marketing of high value goods (p. 169).


capacity to participate

Household endowment: Size of arable land, value of livestock

owned, pensions, earnings, non-farm earnings, ownership of vehicle or tractor (p. 103).

Makhura (2001). Overcoming

transaction costs barriers to market

participation of smallholder farmers in the Northern Province

of South Africa

Access to information: Farming learnt through extension,

average household education, distance to nearest town and

road conditions (p. 103).

Household characteristics: Gender of household head, age

of household head and household size (p. 103).

Interaction factors: Proximity and road conditions to nearest town, average education and non-farm

income (p. 103).

43


sales

Transaction costs: Distance to roads, markets and towns,

transport availability, labour, and population density (p. 4-5). Ehui, Benin and Paulos

(2003). Policy options for improving market

participation and sales of smallholder livestock

producers: A case study of Ethiopia.

Human capital: Age, education, gender, extension training

(p. 4-5).

Physical capital: Number of

livestock, producing stock, farmland (p. 4-5).

Financial capital: Crop income, non-farm income, credit (p. 4-5).

Marketing channels with focus on high

transactions costs

Observable and unobservable costs associated with arranging and carrying out a transaction

(p. 320).

Alene, Manyong,

Omanya, Mignouna, Bokanga and

Odhiambo (2008). Smallholder market participation under transaction costs: Maize supply and

fertiliser demand in Kenya.

Market participation with

focus on socioeconomic,

education and institutional

Variable measured: distance, cooperative membership, family

size, education, supportive infrastructure, transportation costs, high dependency ratio

and age (p 23).

Gani and Adeoti

(2011). Analysis of Market Participation and Rural Poverty among Farmers in Northern Part of

Taraba State, Nigeria.

Ability to participate in

markets

Require extension, support to initiate group action, mentorship

alliances are needed to strengthen the human and social capital base of smallholders (p

39).

Van Tilburg and Van Schalkwyk (2012).

Strategies to improve smallholders’ market access. In Unlocking

markets to smallholders.

44

Table 2.3 Summary of questionnaire

SECTION TITLE TOPICS

A Demographic details Farmer profile and household

composition

B Human capital Education and training

C Farming and agro-

pastoral

Records, labour, number of animals,

mortalities and other sources of

income

D Constraints Disease, feed, water, distance and

weather

E Marketing and market

access

Market channel, transport and market

information

F Institutional support Role player, extension and industry

H Other income Income from informal activities and

other crops or livestock

45

2.7 FOCUS-GROUP DISCUSSIONS

The main findings and themes in the questionnaires were carried over to the

focus groups. Focus groups were used to examine the opinions and

perceptions of participants since they have certain advantages that other

participatory research methods may not have. Stewart, Shamdasani and Rook

(2007:42) claim that focus groups often accomplish responses that would not

have been achieved through individual interviews or quantitative methods.

Since the farmers gave feedback in a group, they built upon one another’s

answers and the researcher was able to gather more information in a short

time. Seeing that not all information may have been available from the

emerging farmers, further information may have been available from external

participants and stakeholders. Therefore there was a mix of farmers and other

relevant stakeholders invited for the focus-group discussions, namely, mentors,

extension officers, programme managers and representatives from the

Department of Agriculture. Generally, different stakeholders see different

aspects of the problem and/or have different perceptions of it. Focus-group

discussions involved an interactive group discussion on particular topics within

a permissive, non-threatening environment. The data produced by participants

was captured, coded and analysed using computer-assisted qualitative data

analysis software (Atlas.ti).

46

2.8 DEVELOPMENT OF PARTICIPATION CAPACITY INSTRUMENT

A participation capacity instrument was developed to assist in articulating and

then assessing the potential of intensive ostrich farming projects. The data

used in the instrument was collected from the researcher’s observations,

questionnaires and focus groups. This explorative investigation into developing

an instrument has potential value for other emerging farmer programmes. The

instrument could benefit other similar programmes to help determine potential

mobility for supply chain participation. The instrument was also used as a

capacity indicator of emerging ostrich farmer programmes in the final chapter.

The instrument consists of the four Indexes in each case study which that were

hypothetically weighted, namely, Local Vulnerability Index, Human Capacity

Index, Agrarian Capacity Index and Market-Access Capacity Index.

47

2.9 OPERATIONALISATION AND ANALYSIS OF QUALITATIVE DATA

According to Bălan (2009:315) qualitative research raises four potential quality

limitations.

• Qualitative research methods rely on open-ended questions that are

answered by respondents in their own words. These answers require

constant monitoring of the quality of the data collected.

• The quality of the information obtained depends on a human factor, that is

the person collating the data or the moderator that is co-ordinating the focus

groups.

• The sample sizes may be small and susceptible to the problem of

non-representative cases. Quality is therefore diminished if improper

selection of respondents occurs.

• The analysis and interpretation of the data may cause challenges to the

quality of the information collected.

To overcome the above-mentioned limitations the researcher gathered on-site

data in a participatory observation manner. This means that the researcher

joined the setting as an outsider participating marginally in the activities. During

the interviews and focus groups, notes were written about each possible

operational indicator. When the question saturation points were reached the

notes were converted to documents and each primary document represented

the final unit coded. Each of the primary documents was loaded into computer-

assisted qualitative data analysis software (Atlas.ti) to perform the analysis on

emerging themes and concepts. Categories were allocated that represented a

topic or theme from the primary documents. The data was cleaned and similar

conceptual types were pulled together under a category set, which was done by

grouping similar themes together. The initial coding exercise was repeated so

that codes were aligned and refined. The process of achieving consistent

coding allocation and validity required that the researcher refined applied

qualitative codes.

48

Codes and themes were tabulated in order to measure frequency and

popularity. A network view was produced to express relationships and structure

by connecting sets of similar elements together in a visual diagram.

The network view is used to assist and represent complex information by

intuitively accessible graphic means (Friese, 2011:99). The process is

summarised in Figure 2.7.

Figure 2.7. Qualitative data coding and analysis process

Source: Researcher’s own construction, modelled on Egan (2002:281)

49

2.10 LIMITATIONS OF THE STUDY

A study of this nature has a number of potential limitations. The limitations that

were encountered in this study are briefly discussed below.

Firstly, the researcher has had some direct personal involvement in the ostrich

industry which was an advantage as the researcher knew who the main

stakeholders and key participants in the industry were. The disadvantage was

that during surveying information might have been omitted due to assumptions

based on the researcher’s knowledge of various relevant topics. Under such

circumstances, the researcher had to include a detailed and structured array of

questions to ensure that all applicable information was captured and had to

remain conscious of potential personal biases that could interfere in the

research.

Secondly, to overcome the limitations of small sample sizes and selection bias,

the researcher had to ensure that to the best of his knowledge the majority of

the programmes in the Eastern Cape were included in the study. However, not

all these programmes were active and some farmers were not available for

surveying.

Thirdly, owing to the isolated nature of the ostrich industry, little published

information was available regarding the supply chain and markets. The

researcher used popular magazines and corporate reviews for reference in this

study. Information regarding the ostrich leather markets and marketing

channels was particularly limited and therefore led the researcher to conduct

preliminary surveys with the main stakeholders. Despite the lack of information,

the researcher consistently ensured that any findings, propositions and/or

conclusions made were backed up by findings and based on sound and

objective judgment.

50

Fourthly, some of the participants required translation of questions into their

home language, isi-Xhosa. The researcher arranged for a translator to be

present for all the surveying and prepared and discussed possible difficult

terms with translators prior to surveying. All surveying and group work had

more than one multilingual participant to confirm the accuracy of translations.

Finally, since the participation capacity instrument was a prototype and had not

been empirically researched, its predictive capacity has not been validated. The

instrument did, however, provide a mechanism for interpretation and could be

further developed for measurement of participation capacity for emerging

farmer areas across other agricultural sectors.

2.11 ETHICAL CONSIDERATIONS

The researcher attempted to ensure that the privacy and rights of the

participants were protected. Blaxter, Hughes and Tight (2010:85) stated that to

be ethical is to conform to the standard of conduct of a given profession. There

are various ethical considerations to adhere to in conducting research. Ethical

considerations applicable to this study are discussed below.

2.11.1 Voluntary participation

All the participants participated voluntarily in the study and it was clearly stated

that the participants were permitted to withdraw at any time they wanted to.

This was discussed with the participants in both English and isiXhosa prior to

embarking on the research study.

2.11.2 Informed consent

The aims of this research were thoroughly explained to all participants and they

were provided with information about their role within the project. After

participants had been given the necessary information about the project they

were given the option to become involved in the research. Approval to carry out

the research was obtained from the Ethics Committee of Nelson Mandela

Metropolitan University.

51

2.11.3 Permission to conduct research

Permission to conduct the research at the farming programmes was obtained

from the farmers, the various stakeholders and mentors prior to embarking on

the research.

2.11.4 Anonymity

Anonymity refers to keeping individuals nameless in relation to their

participation and ensuring that they will remain unknown in the study. In the

study, anonymity was maintained by allocating a reference code to the

participants so that no names of the participants were disclosed.

2.12 SUMMARY

In Chapter 2 the nature and composition of the research methodology was

discussed. Owing to the wide array of stakeholders involved in the production

and market system, namely, farmers’ organisations, civil society and the public

and private sectors, a predominately interpretive framework was adopted in this

study. In this framework a variety of data and different sources were used to

attain validity. A variety of measuring instruments will be used in order to

capture all the measurable components and representation of industry and

participants. The next Chapter will be an overview of the emerging farmers’

rural environment in the Eastern Cape and introduce the setting where the case

studies were undertaken (see Figure 2.8)

52


REFERENCES

53

CHAPTER 3

OVERVIEW OF THE RURAL EASTERN CAPE:

AN AGRARIAN POINT OF VIEW

3.1 INTRODUCTION

3.2 AGRO-ECOLOGICAL ENVIRONMENT

3.3 HISTORICAL FACTORS AFFECTING AGRICULTURAL

PARTICIPATION OF BLACK FARMERS

3.4 LOCATION AND SOCIO-ECONOMIC DESCRIPTION

3.5 ECONOMIC OVERVIEW OF THE EASTERN CAPE

3.6 RURAL DEVELOPMENT AND SOCIAL SUPPORT INTERVENTIONS

3.7 RELATED RESEARCH ON EMERGING FARMER PROGRAMMES

3.8 CONCLUDING REMARKS

54

CHAPTER 3

OVERVIEW OF THE RURAL EASTERN CAPE:

AN AGRARIAN POINT OF VIEW

3.1 INTRODUCTION

The Eastern Cape Department of Agriculture and Rural Development (ECRDS,

2010:5) defines rural as “the space where human settlements and infrastructure

occupy only small patches of the landscape, most of which is dominated by

open pastures, woods and forest, water, mountain and desert; it is where

people usually live in farmsteads or settlements”. According to Arowolo

(2012:43) “the key elements in the term ‘rural‘ are social, economic, cultural

and spatial, with ‘rural’ characterizing a variety of contexts, which a rural

development strategy in a country or in a province needs to take into

consideration”.

After 1948 the South African Nationalist government instituted draconian

apartheid laws which prevented ownership of land by black farmers, blocked

access to necessary resources and prevented black farmers from progressing

beyond subsistence farming (Schirmer, 2000:143). It was hoped that black

farmers would be able to recover and progress once the apartheid laws were

repealed but perceptions were unrealistic since it depended on a superficial

understanding of the past and it was far too optimistic about the government’s

ability to change historical atrocities. It is from this view that the present chapter

will introduce an overview of the past of the emerging farmers in the Eastern

Cape. The intention is to provide a discourse on the environment where these

farmers operate, namely, historic background, vulnerability, resilience,

dependency on social security and extent of survivalist behaviour. These are

topics which need to be reflected on to decide on emerging farmers’ capacity to

participate. The chapter outlines the agro-ecological environment, socio-

economics and historical background to what led to marginalization of black

farmers and decline of participation in agriculture.

55

The attention shifts to a brief examination of the rural realities, support

interventions and social dynamics that the present black rural populations in the

Eastern Cape face. This literature review focus has been on the two

researched areas of the Eastern Cape, namely, Amathole (including former

Ciskei and Transkei areas) and Cacadu District. The chapter concludes with a

synopsis of related emerging farmer studies conducted in the Eastern Cape

and findings from an interview with the Amathole rural development agency. As

part of the literature review, topics related to the study are analyzed,

synthesized and summarized from these documents. This section forms part of

the between-study literature analysis which involves comparing topics from two or

more literature sources.

3.2 AGRO-ECOLOGICAL ENVIRONMENT The information for the following overview of agricultural and demographic

conditions in the Eastern Cape with focus on the Western areas, has mainly

been sourced from comprehensive research conducted by Lent, Scogings and

Van Averbeke (2000:9-11). In addition to this research on the agro-ecological

environment other references are cited to contribute additional information.

3.2.1 Geology and Soils

The sedimentary rocks found in the Eastern Cape consist mostly of mudstone

and sandstone. The soils show a clay fraction consisting mainly of quartz, mica

and kaolinite (Mandiringana, Mnkeni, Mkile, Van Averbeke, Van Ranst and

Verplancke, 2005:2444). The Eastern Cape Province has severe erosion in the

form of gorges and gullies as a result of land degradation, which are mainly

found in the communal lands (Kakembo, Xanga and Rowntree, 2009:1). The

agricultural potential has also been limited by soil alkalinity in the Western part

of the Eastern Cape. Other causes of the low plant-production potential for the

province are soil compaction, low infiltration rates, phosphorus deficiency and

shallow soil depths. Water availability and fertility status are important factors in

cultivated soils, but they were found to be at low levels in the communal regions

due to inadequate nutrient inputs (Mandiringana et al., 2005:2444).

56

3.2.2 Topography

The topography of the Eastern Cape is generally precipitous and approximately

a third of the province consists of mountain regions and only a few parts of the

Eastern Cape consist of relatively level plains and river valleys.

3.2.3 Climate and water resources

The Eastern Cape climate is diverse, both in terms of temperature and rainfall.

Although temperatures are rarely a problem for agriculture, 85 percent of the

province falls within the semi-arid and arid zones. Rainfall increases from

Western to the Eastern regions. The coastal areas and most areas South

spreading roughly East to West, experience bimodal distribution of rainfall with

the highest precipitation occurring in early and late summer. The Eastern

coastal strip is frost-free; but the scarcity of water is the main cause of limited

plant growth owing to low rainfall and high rates of possible evapotranspiration.

The Eastern Cape is situated between 30oS and 34oS, which receives high

levels of radiation during most of the year. There are no natural freshwater

lakes of noteworthy size in the province. The Eastern Cape has been prone to

drought cycles and according to Nel and Davies (1999:256), crop farmers in the

Eastern Cape have adopted supplementary enterprises such as ostrich-rearing

as a hedge against drought. Recent research by Advancing Capacity to

Support Climate Change Adaptation (2007:5) found that dry areas like the

Eastern Cape were ecologically, politically and socially marginalized and

lagging behind on most economic indices and areas like this were more

vulnerable to climate change than other areas (Verchot et al, 2007:901).

57

3.3 HISTORICAL FACTORS AFFECTING AGRICULTURAL PARTICIPATION

OF BLACK FARMERS

The colonial history of the Eastern Cape originated in the town of

Grahamstown, which was founded in 1812 as a military base spearheading

British colonial expansion over the Xhosaland border. Grahamstown at this time

was not agriculturally thriving and its farms were relatively small. Its role was

more as a position for the support of the frontier development and not for

agriculture (Peires, 2011:46). In 1820 the Cape accommodated 5 000 British

settlers, whose presence assisted with expansion, cross-border trade and land

speculation (Peires, 2011:46).

In the town of King William’s Town, merchant houses such as JW Weir, WM

Savage and Dyer and Sayer established relations with the local peasants of

Middledrift and Keiskamma and acted as agents for export. These merchants

were linked directly with the wool traders of London and also dealt in hides,

skins, horns and other rural products. These merchant houses capitalised on

the rural trading stations and advanced them goods and credit in return for

game and livestock merchandise (Peires, 2011:51). When domestic wool

production in Britain dropped and the demand of British manufacturing for raw

wool had doubled, the town of Port Elizabeth experienced strong economic

transformation as it was ideally situated to control the wool trade to this British

market. By 1840 more than half the ships leaving Port Elizabeth for Britain

sailed directly from Algoa Bay, bypassing Cape Town (Kirk, 1980:48). In the

1850s the South African Cape Colony’s exports and imports through Port

Elizabeth exceeded exports and imports through Cape Town for the first time

(Peires, 2011:44).

58

In 1910 the British Cape Colony lost control to the greater colonial entity called

the Union of South Africa (Peires, 2011:43). Soon after this, the new Land Act

of 1913 denied rural black farmers purchase or lease of land outside the

homeland reserves. According to Coles (1993:712), “this law had the greatest

impact on the lives of non-white South Africans”. In 1936, the Native Trust and

Land Act of 1936 prohibited blacks from engaging in land transactions or

holding any rights to land except in released areas, or with permission of the

Minister. During 1952 the government stipulated that in the Bantu Authorities

Act the chiefs became remunerated servants of the government. Then the

Group Areas Act of 1956 was introduced to enable residential segregation of

races in South Africa. A historic turning point in South Africa during the policy of

apartheid in the 1970s was when the Transkei and the Ciskei were created as

‘national states’ or ‘homelands’ (ECRDS, 2010:11, Ruiters, 2011:19). These

homelands were established to isolate the black nation and provide a source of

low-cost migrant labour for the expanding mines in the Northern areas of South

Africa (Mariotti, 2012:2). From inception there was little economic development

and social infrastructure development implemented by the government in these

homelands, with the result that they became internationally unrecognized and

diplomatically isolated (PGDP, 2004:80). According to the National Department

of Agriculture (2001:para. 4), the area contained three million black farmers

surviving mostly on a subsistence basis on less than seventeen million

hectares of unfertile land. The separate development of the homelands left

lasting negative legacies, the destruction of rural livelihoods, including

landlessness, poverty, infrastructure backlogs, underdevelopment and

unsustainable local economies. In the Eastern Cape this has been manifested

in a divided economy, resulting in massive inequality between livelihoods in the

Eastern and Western regions, with large infrastructural development backlogs

occurring (ECRDS, 2010:11).

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By 1984 the Abolition of the racially-based Land Measures Bill would come into

effect and the Land Acts of 1913 /1936 and the Group Areas Act of 1966 were

repealed and all legislative race restrictions on land tenure were removed. In

1994 the Ciskei and Transkei homelands were incorporated into the Cape and

formed the new province called the Eastern Cape Province. The exposure to

free and open borders meant that emerging farmers were seeking access to

markets when they still did not have sufficient experience to operate in a

competitive and free market environment. Although interventions of support and

basic service infrastructure received review during 1994 to 2002 from the new

government, major backlogs in infrastructure and services still persisted

(PGDP, 2004:56). According to Mabhena (2011:17), the de-agrarianisation

period after 1994 in the former Transkei was responsible for much of the

disempowerment of tribal authorities, dismantlement of agricultural extension

services and downgrading of the rural poor to a non-agrarian community.

3.4 LOCATION AND SOCIO-ECONOMIC DESCRIPTION

Administrative and political factors have had a strong influence on land-use

change in the Eastern Cape. The levels of poverty differ depending on where

people live in the province and/or the predominance of race or gender.

The type of poverty also differs within the province and is considerably

influenced by factors relating to gender, race and spatial location. The

large-scale spatial variability is a result of the contrasting land-use practices

due to socio-economic systems (Lent et al., 2000:9). The Eastern Cape is

situated in the South-Eastern part of South Africa. The Province has two ports,

at East London and Port Elizabeth. The Province is divided into six districts

which have their own local municipalities. Five out of the six district

municipalities include the former homelands of Transkei and Ciskei. The

districts of the Eastern Cape are: Chris Hani, Alfred Nzo, Amathole, OR Tambo,

Ukhahlamba and Cacadu. The province consists of seven different plant

biomes, namely, succulent Karoo, fynbos, forest, subtropical thicket, Nama

Karoo, savanna and grassland (DEDEAT, 2003:177).

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According to Hoffman and Todd (2000:743), the Eastern Cape is one of the

most environmentally degraded provinces in South Africa as only over eight

percent of the land in the Eastern Cape is cultivated. The province is faced

with considerable resource-utilsation pressures, particularly around the coastal

zones (Griffiths and Dowling, 2011:180).

Many of the Eastern Cape inhabitants rely on hand-outs, state pensions and

migrant labour payments for household survival (Nel and Davies, 1999:7).

Fewer than one percent of black rural inhabitants can be regarded as full-time

commercial farmers (Bembridge, 1987:246). Thus agriculture became regarded

by the Eastern Cape Provincial Growth and Development Plan (PGDP,

2004:67) as an important focus and an activity to address the needs of poverty-

stricken rural communities. The Eastern Cape Provincial Growth and

Development Plan initiated interventions in the form of support programmes for

small-scale black farmers and the provision of infrastructure. This infrastructure

development also aims to deal with agrarian transformation by improving the

access to roads, electricity and water.

There has also been a major transformation in the livestock farming sector as

many farmers are converting to game farming (Eastern Cape Development

Corporation, 2013b:para. 4, CDMIDP, 2000:42). According to Langholz and

Kerley (2006:1), game farming has been identified as a substitute for livestock

farming especially in semi-arid regions of the Eastern Cape. This is particularly

viable where low rainfall is problematic for plant production and livestock

production is marginal. The focus of the Eastern Cape Provincial Growth and

Development Plan on the game eco-tourism sector is considered to have good

potential for the Eastern Cape Province (Edwards, 2006:6). The former

“homelands”, Transkei and Ciskei, are found in the Amathole district and,

according to Sulzer (2008:4), are mainly rural, experiencing deep-rooted

poverty. The Amathole District is situated along the coastline of the South-

Eastern part of the Eastern Cape Province. The poverty levels in the Amathole

region are at forty-four percent which is higher than the Eastern Cape’s forty-

three percent and the National picture of thirty-seven percent (State of the

District State Address Amathole, 2013:3).

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The economy of the Amathole District Municipality (ADM) consists mainly of a

community services sector which contributed 33 percent to the Gross

Geographic Product (GGP) of ADM in 2009. Agriculture (less than 1 percent of

the GGP) is characterized by low productivity, high farmer indebtedness, lack of

access to finance by historically disadvantaged farmers, declining capital

investment and an aging farmer population. According to the Amathole District

Municipality (ADM, 2008:27), the prospects of agriculture in the Amathole

district look dim because of the lack of inputs, resources and a lack of interest

from the youth.

The Cacadu District in the Eastern Cape has low rainfall in the Northern and

Western areas, whereas the district’s coastal areas experience high rainfall,

and its South-Eastern parts experience moderate rainfall. In the Northern parts,

around the town of Graaff-Reinet there are pockets of Eastern Mixed Nama

Karoo and Valley Thicket. Pockets of Succulent Thicket are found in the

Eastern parts. A mixture of Thorn Bushveld, Valley Thicket and Coastal Forest

is found in the South-Eastern parts around Alexandria, Bathurst and

Grahamstown (PGDP, 2004:56). Agriculture, which is the Cacadu municipality’s

main economic activity, contributes 28 percent of all value-adding products and

41 percent of employment. Small-stock farming dominates in the dry Karoo

interior while dairy farming and cattle dominate around the Grahamstown,

Alexandria, Cookhouse and Humansdorp areas (CDGDSA, 2007:28). In 2007

the Cacadu municipality included ostrich-leather manufacturing in their sector

development for manufacturing. Together with Ostrimark the Makana

Municipality they jointly lobbied for funding to develop an ostrich-leather

processing plant in Makana.

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3.5 ECONOMIC OVERVIEW OF THE EASTERN CAPE

In 2010 the Eastern Cape produced 7.8 percent of the South African GDP,

although some 13.5 percent of South Africans resided in the province. The per

capita gross value added is therefore among the lowest in South Africa

(ECSECC, 2012:6). The economy is characterised by levels of irregular

development which is apparent in the contrasting developed urban industrial

manufacturing nodes and the poverty-stricken rural regions of the Eastern

Cape. This is particularly evident in the former homeland areas (PGDP,

2004:21). The Human Development Index in the Eastern Cape has been

lower than South Africa’s Human Development Index since 1995 and has

dropped from 0.582 (1995) to 0.513 (2010), exhibiting a downward trend for

the past fifteen years (ECSECC, 2012:3). A report by Statistics South Africa

(2002:20) on the survey of large and small-scale agriculture, found that in the

former homelands, the participants’ houses had the highest value (44,3

percent), followed by their land (22,7 percent) and then livestock, poultry and

other animals (19,7 percent). However, for the rest of South Africa, agricultural

land had the highest market value (40,7 percent) followed by livestock (10,7

percent) and life insurance (9,4 percent). A report by the Eastern Cape

Provincial Growth and Development Plan 2004–2014 (PGDP, 2004:23)

indicated that the Cacadu district accounted for more than one third of Gross

Value Added in the primary sector. The transport sub-sector accounted for

just over one quarter in the secondary sector while the tertiary sector was

organised around education.

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The agricultural sector only contributed just over 2 percent to the gross value

added, however it is an important sector that feeds into the food-manufacturing

industry (ECSECC, 2012:7). According to the Eastern Cape Provincial Growth

and Development Plan (PGDP, 2004:56) the former homelands constitute

about 30 percent of the total area of the Eastern Province, but are home to 67

percent of the population and provide about 45 percent of the arable land. The

highest number of poultry-keeping and cattle operations were those found in

the Transkei and Ciskei areas (Aihoon, Gideon, Mukwene and Mukwene,

2009:2). The Eastern Cape currently has 436 000 people engaged in small-

scale and subsistence farming and 70 000 farmworkers employed on

commercial farms. The Eastern Cape has high levels of livestock compared to

other provinces of the country, which represents 21 percent of South Africa's

cattle, 28 percent of sheep and 46 percent of goats (Eastern Cape

Development Corporation, 2013a:para. 1). The Eastern Cape economy differs

structurally from the rest of the other provinces in terms of absence of a mining

sector and having a larger tertiary sector. There has been a general downward

trend in agriculture since the 1990s and most growth within the primary sector

has come from fishing and forestry (PGDP, 2004:21).

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3.6 RURAL DEVELOPMENT AND SOCIAL SUPPORT INTERVENTIONS

The foreign direct investment in South Africa has remained weak which has

resulted in a declining urban economy in South Africa over the past decade.

This has influenced increased movement of unemployed people back to the

rural sector (Ainslie, 2005:130). The rural economies have become dependent

on off-farm payout interventions from the government’s welfare programme

leading to a survivalist application of natural resources (Andrew, Ainslie and

Shackleton, 2003:2). This reliance on sources of income derived from outside

includes old-age, disability, pensions, child support grants, and grants for

people infected with HIV/Aids. During 1994 the Reconstruction and

Development Programme was developed for post-election economic and social

policies. The main aim in developing and implementing the Reconstruction and

Development Programme was to address the socio-economic problems

brought about by the apartheid regime. However, according to the Eastern

Cape Provincial Growth and Development Plan (PGDP, 2004:37), a growing

lack of resources has failed to address infrastructure and services backlogs in

the Eastern Cape. The Reconstruction and Development Programme set out

policy programmes to achieve meeting of basic needs, developing human

resources, building the economy and democratizing the state and society

(African National Congress, 1994:8). However, the inequalities remain in rural

areas and many development programmes have not yet had the desired

results. As a result rural development emerged as a national policy priority as

large numbers of South Africans live in rural areas. According to Rooyen,

Groenewald, Ngqangweni and Fenyes (1998:17), the Reconstruction and

Development Programme scantily refers to agricultural issues and rather

focuses on redistribution of inhabited land to those previously deprived of

access and compensation for those who lost land due to the apartheid regime.

Other rural development interventions include the Agrarian Transformation and

Rural Development system which became an important development strategy

to reduce poverty in rural areas (ECRDS, 2010:9).

65

In South Africa’s Provincial Growth and Development Plan, the core section

was the agrarian transformation programme aimed at strengthening household

food security through agricultural production, employment and incomes of the

poorest households, particularly in the former Ciskei and Transkei areas

(DARD, 2009:27). The South African Government programmes assembled

mainly around three areas of involvement, namely

• promoting food security through increased smallholder production;

• increasing the asset base of the poor through land tenure reform; and

• increasing the use of land for commercial agriculture in the former

homelands.

Poverty and inequality in the Eastern Cape have become serious and

extensive. The majority of the poor in the Eastern Cape are black and live in the

former homeland rural areas of the province. The Nelson Mandela Metro and

Cacadu District are the only municipalities in which fewer than 50 percent of

households live in poverty. Social grants have contributed considerably to

reducing poverty in South Africa since 1994. Approximately R12 billion in social

grants was to be paid out to EC beneficiaries in the 2007/2008 financial year

(Mkhize, 2011:238). It is estimated that 64 percent of households are

dependent on grant recipients (ECSECC, 2012). From 1996 the right to social

security was provided for in section 27(1) of the Constitution, which states:

"Everyone has the right to have access to social security, including if they are

unable to support themselves and their dependants, and appropriate social

assistance".

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Since its inception the social grant system has experienced problems in the

Eastern Cape (Joseph 2005, cited in Mkhize, 2011:240) due to poor service

levels and failure at delivery sites (Overy and Zuma, 2004:5). Access to

pay-points for grants from rural areas were challenging due to lack of

infrastructure which meant that rural recipients did not have full access to

amenities at pay-points (Mkhize, 2011:247), indicating poor administration of

the social grant systems in the Eastern Cape. The South African Ministry of

Public Service and Administration highlighted the extent of administrative

incapacity in the Eastern Cape, reporting that strategic planning at provincial

level was weak and poorly implemented (Niekerk, 2011:71). According to

Baden and Harvey (2011:2), rural areas have for a long time suffered from lack

of investment in infrastructure and essential basic services which has not only

denied poor rural people and their families basic rights, but has also limited the

capacity of poorer farmers to participate fully in development. Poor rural people

are also often the most vulnerable to crises and impacts of climate-related

risks. The shift of power in the agricultural sectors toward large businesses and

the decrease of donors that support the smallholder farmer has left the

smallholder farmers in a susceptible position.

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3.7 RELATED RESEARCH ON EMERGING FARMER PROGRAMMES

The approach to this section of study was twofold: firstly, the section provides

a brief synopsis on related emerging farmers programmes in the Eastern Cape

and concludes with a study conducted by Oxfam’s Global agricultural scale-up

initiative (GASUI). Secondly, it describes findings from consultation with the

Amathole Economic Development Agency (Aspire). Aspire are involved with

developing markets and regeneration programmes for socially and

economically disadvantaged groups in the Eastern Cape. This part of the

chapter was intended to assist formulation of questionnaires, to synthesize

results and to provide final discussions related to the study. The synopsis

included evaluation on farming systems, paying particular attention to

constraints and barriers that could potentially influence participation. Below is a

summary of relevant information found from the case histories of the emerging

farmers and the consultation with Aspire.

3.7.1 Technical constraints on market access

What follows is an outline from a study by Obi and Pote (2012:107-109) on the

technical constraints to market access for crop and livestock farmers in

Nkonkobe Municipality. The following key findings and recommendations were

identified:

Farmers were unable to access the credit needed for inputs such as fertilisers and mechanical technologies;

Access to the appropriate information was lacking;

The farmers required more production capacity to enhance market participation;

There was a need to identify strategic partners for agricultural support; and

Farmers should avoid exploitation and possible conflicts of interests on the part of the strategic partners.

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3.7.2 Challenges and recommendations in emerging farmer co-operatives

An outline follows from a study by the Co-operative and Policy Alternative

Centre (COPAC, 2010:21-99) on the main challenges and recommendations

from a multi- case study on twenty co-operatives in the Amathole District.

3.7.2.1 Challenges

The main challenges identified in the study were the following:

Need for education and training, particularly in financial management,

business management and on how co-operatives work;

Insufficient commitment and buy-in from the young members of the families;

Disagreements and conflict between beneficiaries;

Poor communication from management;

Lack of supporting infrastructures;

Delays of payment from buyers resulting in irregular payment of salaries;

Expensive and high electricity consumption;

Shortage of nearby processing facilities and value-adding facilities;

High mortalities of livestock;

Programmes were conceived in a top-down approach and there was a dependency on government for opportunities;

Inability to break into appropriate markets;

Crime affecting production;

Absence of effective agricultural extension services;

Climate change affecting rainfall patterns and water sources;

Lack of a coherent set of co-operative practices by farmers;

Fraudulent activities and embezzling of finances from members;

Short-term contracts with customers resulted in insufficient time to accumulate reserves; and

High level of informality in the operations and instituting arrangements.

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3.7.2.2 Findings

Strategic partners were important for support;

Income should be sufficient to cover debt, running costs and provide attractive salaries;

There should be access to working capital and agricultural equipment;

Transparent cash-flow management is essential;

Exposure to new and appropriate information to assist farming;

Need to provide for community and generate local employment;

Building relationships with support institutions is important;

Membership size dimension can be advantageous and also be a constraint;

Financial support from government grants is crucial for start-up, but exit strategies need to be built in too;

Proper organisation in decision-making process is required;

Building up of internal reserves is crucial for sustainability;

Marketing strategies and feasibility studies should be in place before initiation; and

Sufficient operational capital and profitability are necessary to utilise land fully.

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3.7.3 Contract farm modelling

An outline follows from a study by Koranteng (2010:54-57) on a contract

farming model of financing smallholder farmers at the IDC-Kat River citrus

development scheme. Owing to the long-term financial return required for

citrus, it took this model seven years for return on investment to be reached.

The farm required bridging loans in order to assist with the long-term debt and

lack of salaries in the initiating years. Farmers were not content with salaries

received for the programme, as they did not sustain their household needs.

Diversification was encouraged in order for the farmer to have another source

of income. Incentives were required to reward farmers whose performance

exceeded expectations. The farmers preferred direct communications with their

sponsors in order to have a direct channel to lay grievances. There was a lack

of transparency in usage of funds and farmers required simplified financial

statements in order to understand the farm finances.

3.7.4 Development planning

An outline follows from a study by Dirwayi (2010:119-122) on the application of

the sustainable livelihoods framework to the analysis of the provincial growth

and development plan at Nkonkobe and Buffalo City. The study found that the

following had a strong influence on participation: training, the area farmed, size

of household, amount of income obtained from livestock sales, length of time of

residence in the area, production of other agricultural crops, educational level

and age of the farmer. The grants and pensions were important sources of

livelihoods and agricultural activities were a secondary source of income. The

staple food, maize, was purchased using pension and grants, thus farming

activities concentrated on vegetable crops. The main production constraints

were lack of fertilizer, herbicides and absence of fences to prevent livestock

feeding on crops. Training and education was found to be crucial for the

development of the programme. Farmers were encouraged to sell produce in

the local community to assist learning and development of marketing skills.

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3.7.5 Influences on market aspects

An outline follows from a study conducted by Nkonki (2006: 54-58) on the

diversity of smallholder wool production at Xume. According to the researcher

the entrepreneurial opportunities were suppressed owing to the fact that they

had been excluded from the commercial stream. The main areas of influence

on this enterprise were transport, financial record-keeping, extension services,

training and access to pricing information.

Transport was a problem for the producers and affected to whom they could sell to;

Proper financial record-keeping was central to monitoring profits;

Extension services were an important aspect for the improvement of quality;

Skills come as a result of experience and are reinforced through training. This was important for maintaining quality of the product; and

Access to pricing information was important to facilitate making the correct selling decisions.

3.7.6 Linking emerging farmers with markets

An outline follows from a study conducted by Mkhabela (2010:1-12) on linking

farmers with markets in rural South Africa. The study was to assist linking

smallholder farmers to markets through supporting institutions, namely,

cooperatives, growers’ associations and contract farming. The researcher

found that linking farmers to intermediaries and appropriate markets, especially

export markets, was important for long-term sustainability. The collaboration

between government and the private sector provided the greatest potential for

value chain participation. The dissemination of information was important to

improve the availability of technologies to small-scale farmers and processors.

The government played an important role helping to identify future

vulnerabilities, build farming capacities and improve infrastructure

(transportation and communication). The study also identified that scaling-up

farmers was an essential part of the programme interventions.

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3.7.7 Scaling-up farmers

The researcher was led to further investigation into global scaling-up of farmers’

initiatives following the review of the study conducted by Mkhabela (2010:1-12).

The Oxfam’s Global agricultural scale-up initiative (GASUI) (Cano, 2011:17)

was reviewed to give a larger platform of understanding on international

programmes with small farmers’ intervention on organization and positioning in

markets.

Through this smallholders can gain greater power in the markets and can

increase their ability to access and participate in markets (Baden and Harvey,

2011:4). The initiative has been used to demonstrate to governments, donors

and development actors how agriculture can contribute to economic

development and reduction of poverty. Research done on a GASUI case study

in Honduras by Cano (2011:23-24) showed that the success of empowering

smallholders required a strategy which included the following attributes:

Securing financial resources from other actors at community, regional,

and national levels and access to credit, which contributed to training

and education of farmers, while funds were transparently managed to

ensure future investments; and

Establishing and strengthening community, municipal, and regional

institutions, with the intention of building alliances with municipal

authorities while mobilizing of civil society remained central to the

success of this campaign.

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3.7.8 Consultation with Amathole Economic Development Agency

The following are the highlights from a consultation conducted with Amathole

Economic Development Agency (Aspire). This agency had been involved with

working with socially and economically disadvantaged groups in the Eastern

Cape. The programmes initiated by Aspire in the Eastern Cape have been

location-specific so that produce was in nearby proximity to processing and

cold-storage facilities. This is especially important if produce is targeted for the

export market. According to Aspire, one of the major problems with the Eastern

Cape was the lack of carrying capacity for livestock. Other programme

challenges were insufficient economics of scale and developing

“kitchen-based” processing units into larger commercial processing units on the

farms. The lack of agricultural processing facilities is a problem in the Eastern

Cape and owing to transport limitations farmers have been unable to deliver to

these facilities. The small-scale farming also did not justify the efforts of

participating with main commercial processors. Up-scaling home gardens has

been challenging and one of the main reasons was that farmers lacked

business skills to be able to take their enterprises to the next level of

commercial farming. Some of the programmes had succumbed to imbalance of

“over investing” and producing an inefficient amount of produce. Large

emerging farmer programmes have not been able to procure skilled

beneficiaries to manage the dimensions of large-scale enterprises. These

programmes have resulted in poor-quality produce with small profit margins.

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The main constraints for the emerging farmer programmes have been access

to markets, too small a quantity of produce and inability to provide constant

volumes. According to Aspire, the farmers require support in terms of

scheduling production and transporting produce to market. Some farmers in the

programme were not fully aware of input costs as these had been masked by

external financial support. The farmers had been unable to continue with

projects when funders retracted financial support which led to reduction in

profits and meagre salaries. According to the Aspire, the farmers prefer ‘farm

gate sales’ and the greatest opportunity for development lies in linking small

growers from this point with processing and markets.


Rural areas are regarded as having inferior infrastructure, poor site conditions,

low earnings, poor access to health services and unreliable water sources. The

rural Eastern Cape is not only underdeveloped but also has high levels of

unemployment and poverty and has experienced a history of exclusion and

marginalization (Edwards, 2006:13). The land suffers from ecological

degradation due to topsoil erosion and overgrazing, which has made the land

unproductive. According to Nel and Davies (1999:268), the Eastern Cape’s low

rainfall and poor soil quality necessitate a reliance on extensive stock-farming,

with areas of fewer than 1 000 ha not often regarded as an economic unit.

Some communal areas are on the brink of ecological collapse due to

overstocking (Ainslie, 2002:1). Interventions to promote agriculture have been

many, but have fallen short of meeting their objectives. Although the South

African government has provided agrarian transformation and grant

programmes aimed at reducing poverty, there is a trend of declining donor and

government interventions. Government programmes have not adequately

included a way for rural people to enter the market economy in any sustainable

way. According to (Mabhena, 2011:17), agricultural production is in a declining

state because lack of support has made rural people unmotivated to participate.

Rural households in South Africa are confronted by high risks resulting in

income volatility.

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According to Obi, Van Schalkwyk and Van Tilburg (2012:25), small-scale

farmers in the Ciskei area delivered small output to diverse and informal

outlets, often with the absence of adequate co-ordination and transport. Small

farmers face challenges of lack of infrastructure in delivering produce to

markets. The profile of the majority of the small-scale farmers in the Ciskei area

is limited education, poorly resourced in terms of capital and land and lack of

access to credit or technical support (Monde, 2003:188-189). The marginal

conditions and prevalent complexities in which agriculture is practiced in the

Eastern Cape will require costly intervention. Chapter 3 has contributed to an

understanding of the Eastern Cape rural environmental influences on emerging

ostrich farmers. The next chapter will provide an introduction to rural livestock

farming in the Eastern Cape (see Figure 3.1).


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CHAPTER 4


4.1 INTRODUCTION 4.2 REVIEW OF RURAL LIVESTOCK FARMING IN THE EASTERN CAPE 4.3 ANTHROPOLOGICAL OVERVIEW OF THE ROLE OF CATTLE. 4.4 OVERVIEW OF LIVESTOCK MARKETING-CHANNEL AND

INTERVENTIONS TO ASSIST PARTICIPATION 4.5 CONCLUDING REMARKS

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CHAPTER 4


4.1 INTRODUCTION

The previous chapter reviewed the environment of the rural emerging farmers

in the Eastern Cape. The present chapter provides an overview of rural

livestock farming. Although extensive studies have been conducted on livestock

farming in the Eastern Cape, little empirical research has been done on ostrich

livestock farming by emerging farmers. A literature review of rural livestock

farming in the Eastern Cape was conducted in order to synthesize results and

discussion related to the study on rural black emerging ostrich farmers. In order

to understand the role of livestock for emerging farmers, the chapter starts with

a review of rural livestock farming in the Eastern Cape and is then narrowed

down to a review on the anthropological role of cattle in an African cultural

context. Focus has been placed on the former Transkei and Ciskei areas in

order to clarify the rural livestock environment in which Eastern Cape emerging

farmers are embedded. Then finally this chapter discusses the market

participation factors influencing smallholder farmers. This literature review

intends to facilitate insight into potential factors involved with introducing an

exotic livestock venture into an African rural context.

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4.2 REVIEW OF RURAL LIVESTOCK FARMING IN THE EASTERN CAPE

Only 14 percent of the Eastern Cape homelands (Transkei and Ciskei) are

arable enough to be suitable for livestock production. Livestock production is a

major resource and component of agricultural production because

approximately 84 percent of the areas can potentially be used only for grazing

(Bembridge, 1987:74). According to Nel and Davies (1999:269) many of the

stock farms surrounding the Transkei and Ciskei areas are in excess of 1 000

ha in size, which suggests that extensive farms are required to generate

income in these rural areas. The relative importance and potential of livestock

production in these areas is illustrated by the fact that in 2002 over 80 percent

of livestock operations in South Africa were found in the former Transkei and

Ciskei areas. It is interesting to note that although the Eastern Cape Province

has one of the highest livestock production rates, the ostrich sector represents

a smaller percentage than those of the other provinces. According to

Bembridge (1987:74), the relative importance and potential of livestock

production in the homelands areas is illustrated by the fact that 35 percent of

the cattle, 57 percent of the goats and 10 percent of the sheep population are

run in the less developed areas of southern Africa.

Livestock farming in the former homelands contributes very little to the cash

economy in terms of sales for slaughter to the market. One of the reasons for

this may be the high level of herd mortality, low reproduction rates and herd

off-take. However, the situation is similar to that found in the other less

developed countries of Africa (Bembridge, 1987:75). Livestock kept by South

African smallholders in a developed country should be seen against a

background in which both history (discussed in Chapter 3) and anthropological

influences play an important role, having had an influence on utilisation,

keeping methods and marketing of produce (Groenewald and Jooste,

2012:113). Although natural pasture is the main feed source for grazing (Suttie,

Reynolds and Batello, 2005:77) the poor utilization has had a marked influence

on land degradation in rural parts of South Africa (Nel and Davies, 1999:13).

79

Perret, Carstens, Randela and Moyo (2000:37), who researched three different

typologies in the Eastern Cape, with differentiated communities, showed how

they related to livestock farming: 5 to 15 percent were very poor households,

mostly headed by females; 15 to 20 percent were non-farming pensioners; 10

to 40 percent were adult-headed households with off-farm incomes; 12 to 25

percent were stock-keeping pensioners; 13 to 18 percent stock-keepers with

off-farm sources of income and 4 to 30 percent full-time farmers. Research

conducted by Ainslie (2002:105) on the cattle-owning households in Peddie

area found that the average age of the household heads in the survey was 61.4

years old. He states that the rural demographics in the category of 65 years old

and over, constitute some 8 percent of the rural population of Peddie district.

There are cattle-owning household heads that are particularly advanced in age

(over 80 years) and who have generally ‘retired’ from urban-based

employment. The age group from 41 to 52 years showed the least number of

cattle per household of all the age groups in the research findings, which may

have been an indication that in this group, owing to lack of state grant support,

the farmers are dependent on higher turnover of sales of cattle for livelihood

expenses. Ainslie (2002:105) confirmed the important role that social grants

played, noting that 61 percent of the households received one or more grants.

The average household size for the sample which was 6.6 people, had moved

at least twice before settling (each move resulting in loss of livestock). Only two

cases of absentee owners were recorded. None of the respondents made sales

to butchers in the Peddie district and butchers were reluctant to purchase meat

from rural farmers due to unknown health status. Livestock sales have been

mainly to auctions and white commercial enterprises in the area. Livestock is

also marketed at informal markets and to speculators. The livestock sold in

informal markets is characterised by seasonality and poor market feedback

pertaining to prices and quality requirements. Other problems experienced are

that in dealing with speculators farmers sell their livestock below market value

due to poor timing and they are usually in a weak bargaining position

(Groenewald and Jooste, 2012:123).

80

4.3 ANTHROPOLOGICAL OVERVIEW OF THE ROLE OF LIVESTOCK In terms of the monetary value, livestock is an important form of investment for

the rural households (Kepe, Ntsebeza, Ntshona and Turner, 2002:2). According

to Fafchamps, Udry and Czukas (1998:2) livestock transactions do not offer a

consumption buffer for income shortages due to village-level shocks alone

(droughts and floods) but function rather as repositories of economic utility and

act as stores or icons of cultural value (Ainslie, 2005:132).

An analysis of herd ownership in the Eastern Cape homelands by Bembridge

(1987:75) revealed that most farmers owned fewer than eight livestock units,

which he considered the minimum number necessary for primary needs of

survival and subsistence, as well as for sociological reasons. He added that the

use of manure, milk and draught animal power was important in the rural

context. According to Ainslie, Kepe, Ntsebeza, Ntshona and Turner (2002:40),

about 30 percent of families were without cattle in the late 1940s which

changed to 50 percent in the early 2000s. In addition inhabitants employed in

towns were expected to make their cattle available to contribute to their rural

homes. According to Obi (2012:203), the role of livestock in the Amathole

district in the Eastern Cape ranged from their use for draught animal power,

consumption as food and sales to raise cash for use in African traditional

ceremonies. A variety of livestock products was identified in this study, namely,

beef, chicken, eggs, mutton, pork, bacon, dairy products, wool and mohair. It is

interesting to note that no ostrich products were found in these studies. A

further study conducted by Ainslie (2005:135) on cattle ownership and cultural

politics in the Peddie district of the Eastern Cape showed that barriers to entry

into cattle ownership were reasonably low. Inhabitants were acquiring cattle not

only by purchase but by inheritance or by bride-wealth, and by 2005, 30

percent of households in the Peddie area owned cattle and nearly 54 percent

had between one and six animals. The average cattle-holding number per

household was approximately nine and Ainslie noted that households headed

by men accounted for around 79 percent of the cattle-owning households.

81

More recent research by Muchara (2011:79), into Mbozi and Ciko villages in

Mbashe Local Municipality of Eastern Cape, has shown that most livestock

farmers used livestock for domestic consumption. Forty-four percent of the

respondents keep livestock for consumption and 12 percent produce for both

marketing and consumption. Muchara did, however, find that 50 percent of the

respondents indicated their eagerness to scale up their livestock production.

Research by Mahanjana (2003) cited in Olivier (2004:31) highlights the

importance of livestock in African societies. He states:

“The communal farmers see cattle as a measure of wealth and, in some

instances cattle are regarded as their ‘children’. They therefore seldom sell

calves or oxen at livestock auctions for additional income.”

Communal cattle farming is therefore pursued mostly for their own use or for

the needs of their extended families and is largely outside the main cattle

industry of South Africa.

82

4.4 OVERVIEW OF LIVESTOCK MARKETING-CHANNEL AND

INTERVENTIONS TO ASSIST PARTICIPATION

Starting from 1910, a series of legislative policies had a restrictive effect on

black agriculturalists and commercial markets in South Africa. The Marketing

Act passed in 1937, which over the years was amended a few times, provided

support to commercial farmers; but, according to Groenewald and Jooste

(2012:113), did not support subsistence farmers. In South Africa all schemes

under the act were administered by commodity boards. The board members

were not elected but appointed by the Minister of Agriculture. According to

Groenewald and Jooste (2012:116), under the Marketing Act, most commercial

livestock holders suffered under discrimination on the main markets. The

position was a greater challenge for stockholders in the former homeland

areas. This started a dependency on speculators who bought animals in their

areas and resulted in farmers becoming price takers, and the speculators

becoming monopolists. The racial discrimination and price distortions in South

Africa were not sustainable and the pressures on South African policy makers

for a reversal of these polices began to mount during the 1980s (Vink and

Kirsten, 2000:11). This act was eventually abolished to be replaced by the

much less drastic Agricultural Products Marketing Act in 1996. The South

African Marketing Act of the 1990’s is said to have catered for the interests of

white commercial farmers to the detriment of black farmers who were left out.

The degree of monopolisation engendered and entrenched by the Marketing

Act was a source of concern (Kassier and Groenewald, 1992:22). Substantial

policy changes took place from 1995 to 1997 and in 1995 government started a

process of liberalisation of the agricultural sector which saw the abolishment of

the single-channel marketing systems.

83

A study on smallholders in the Kat River Valley, Eastern Cape by Jari and

Fraser (2012:61) showed that marketing channels were a challenge for

smallholder farmers. Before choosing a marketing channel, the smallholder

considers the costs associated with transportation, proceeds, knowledge of the

markets and level of trust among the available brokers. Jari and Fraser also

found that farmers marketed their produce through low-price channels either

because they lacked market understanding or had difficulties in accessing

rewarding markets. With reference to Figure 4.1, most produce from

smallholder farmers in South Africa is sold locally, with only a small amount

exported. Smallholder farmers need to make use of market intermediaries in

order to participate in international markets.

Figure 4.1 Marketing channels for produce from smallholder farmers

Source: Jari and Fraser (2012:61)

84

According to Ainslie (2002:121) variations of agro-ecological conditions may

render certain areas unsuitable for livestock ventures. The spatial position in

respect of infrastructure is significant, as good access to roads and markets

influences integration into a production system or supply chains. The

macro-economic profile of an area also needs to be considered. Some areas

have been disadvantaged or neglected due to political issues or have been too

time-consuming for extension service providers. According to Ainslie, some

areas however have been favoured and have been provided with

advantageous interventions of sponsored infrastructures and linkages to

livestock markets.

A study done on why smallholder farmers participated in the goat market in the

Eastern Cape (Mahanjana and Cronje, 2000:152), showed that the reasons for

sales were to pay debts or save money in 45 percent of the cases and in 27

percent of the cases was to buy other foodstuffs. The majority of sales took

place during the summer months (December and January) and the buyers used

the goats mainly for traditional ceremonies, weddings and funerals. According

to Groenewald and Jooste (2012:119), livestock farmers will sometimes sell

more livestock in years characterised by lower prices than in years with higher

prices due to weather variability. Drought years are characterised by

deterioration in natural pastures and hence a short supply of feed for the

livestock. This affects the condition of the livestock and farmers are forced to

sell the animals in order to save them from starving and release finance for

feed for the remaining animals. This results in an increased supply of livestock

and results in falling prices. According to Lent, Scogings and Van Averbeke

(2000:15), livestock farming forms part of a mixed-farming system practised by

homeland inhabitants, namely, crop production, vegetable production (home

gardens) and livestock production (mainly cattle).

85

Today many of the livestock land settlement patterns in use by the inhabitants

of the Eastern Cape homelands have been influenced by past government

interventions referred to as 'Betterment Planning’. According to Scogings and

Goqwana (1996:39), the attempts to establish ‘Betterment Planning ‘ were not

sustainable and were met with resistance which resulted in (i) the fences

dividing the camps being removed and reverting to continuous grazing; (ii)

stock-management decisions being left to the individual livestock owners; and

(iii) herders keeping animals in designated grazing areas.


Part of this literature review was to gain a basic background understanding and

flag possible issues for developing a framework to initiate ostrich farming

opportunities into the rural environment of the Eastern Cape. Cattle are

repositories of economic utility and stores or icons of cultural value. This

chapter explored why ostrich farming has not been embraced by rural farmers

as much as cattle and goats. The reasons are a) ostriches which are a non-

traditional livestock that offer three products which require processing in order

to receive full value, namely, meat, leather and feathers b) the leather and meat

have almost equal value for the farmer c) ostriches are farmed intensively for

high-value markets which require stringent biosecurity measures d) ostrich

farmers have strong dependency on intermediaries in order to participate in

international markets e) ostriches are unable to offer households with milk and

draught animal power and thus they do not offer the range of possibilities for

self-use and consumption. The worth of ostrich production for emerging farmers

lies mainly in the higher returns which are achieved only through the export

markets. However, an ostrich’s water economy is similar to that of other desert

animals and has potential for production in the semi-arid areas of the Eastern

Cape. The next chapter will discuss this topic further and elaborate on the

intensive ostrich industry and the potential of ostrich husbandry on low-potential

arable land (see Figure 4.2).

86

RFigure 4.2 Process of research design and structure of research

87

CHAPTER 5

AN INTRODUCTION TO THE OSTRICH INDUSTRY

5.1 INTRODUCTION

5.2 OVERVIEW OF THE SOUTH AFRICAN OSTRICH INDUSTRY

5.3 SOUTH AFRICAN OSTRICH INDUSTRY HISTORY

5.4 CONTENT ANALYSIS OF OSTRICH RESEARCH INTEREST

THROUGH TEXT-MINING METHOD

5.5 OVERVIEW OF OSTRICH HUSBANDRY


88

CHAPTER 5

INTRODUCTION TO THE OSTRICH INDUSTRY

5.1 INTRODUCTION

The previous chapter introduced the emerging livestock farmer in the

context of the Eastern Cape environment. This chapter introduces the

background and development stages of the ostrich industry. The aim of this

chapter is twofold: to attempt to understand what have been the main

ostrich research interests and what are the main components of ostrich

farming. It is the researcher’s hypothesis that the focus of ostrich research

has been driven by the ostrich industry challenges and threats. As part of

the literature review the text-mining method of examination of a wide range

of research articles related to ostriches will be reviewed. This will serve as

an indicator for what the industry has focus on and also review what

research, if any, has been conducted on emerging ostrich farmers. Owing to

the copious amounts of information available on ostriches, the text-mining

method will also be used to indicate topics and narrow down an overview on

husbandry aspects pertaining to this study that have hypothetically the

strongest influence on emerging ostrich farmers. This section forms part of

within-study literature analysis which involves analyzing the contents of a

specific topic (Onwuegbuzie, Leech and Collins, 2012:2).

89

5.2 OVERVIEW OF THE SOUTH AFRICAN OSTRICH INDUSTRY

History records indicate that during the early Saharan Neolithic period

(ca. 8800 to 6800 BC) ostrich eggshells were used as water containers. The

use of ostrich feathers can be traced back to the pharaohs of ancient Egypt

(ca. 1332 to 1323 BC), during which time ostriches were also hunted for

their meat and the skins were used to make protective clothing

(Shanawany, 1995:3, Manlius, 2001:245). The South African ostrich,

Struthio c. australis, was indigenous to the Cape Province and it was during

1838 that South Africa recognized the great potential value of ostrich

feathers and started to export them to Europe for the fashion industry

(NAMC, 2003:14).

The domestication of the ostrich had an important impact on ostrich farming

and by 1913 ostrich feathers were one of the most important economic

commodities for South Africa, ranked fourth on the list of South African

exports following wool, diamonds and gold (Schutte, 2008:1). These

feathers which were highly prized for ladies’ high-fashion clothing and

appealed to the wealthy (Stein, 2007:778); but the feather industry

collapsed during 1913 and only at the end of the Second World War did the

ostrich industry recover (NAMC, 2003:14). In the mid-1970s the first ostrich

tannery was built (KKI, 2003:3, Hoffman, 2008:1270). The tanning of ostrich

leather grew into a strong and high-quality focused industry from to the mid-

1990s. During this period the industry procured, processed and exported

ostrich leather successfully through a single-channel marketing system

(NAMC, 2011:7). Through this monopoly the industry developed into an

intensive agro-processing supply chain supported by select overseas

agencies that became gatekeepers to high-fashion brands. The ostrich

industry in South Africa progressed into a multi-processing business,

producing three main commodities, namely, leather, meat and feathers.

Other by-products include ostrich eggs and fat.

90

The trade in ostrich leather was greatly influenced by the worldwide luxury

market (Kriek, 2009:para. 1). This exotic leather supply chain consists of

complex production systems which include livestock husbandry, industrial

processes and marketing structures. The industry focuses on exotic leather

and meat being farmed simultaneously, resulting in an all-encompassing

production with attention focused on maximising animal weight and skin

size and preventing skin damage and diseases. The ostrich industry is

predominately export-focused with meat sold predominately into Europe

and leather sold to Europe, United States and Japan. The contribution of

the ostrich industry towards export earnings and balance of payments was

estimated at R1,2 billion per annum, representing approximately 5 percent

of the total of the South African exports (Brand and Jordaan, 2011:1).

In 2002 South Africa had 588 registered export farms (453 farms in the

Western Cape, 102 in the Eastern Cape and 33 farms in the rest of the

country) and produced approximately 340 000 slaughter birds. During this

time there were ten export-approved abattoirs (for European Union

purposes) and 15 tanneries (NAMC, 2011:5). Total employment in the

production and processing sectors of the ostrich industry was just below

20 000 workers (Cohen, 2012:1). By 2006 South Africa was continuing to

dominate production on world markets and was producing 200 000

slaughtered ostriches per year, followed by China (100 000), Brazil (50

000), Australia (22 500) and Zimbabwe (20 000) (Carbajo and Veterinarian

3rd, 2006:24). Owing to a poor economic climate, protectionist policies and

avian influenza the trade in the ostrich industry has declined so that by 2013

there were only approximately 260 registered export ostrich farms in South

Africa (du Plessis, 2013:12).

91

5.3 SOUTH AFRICAN OSTRICH INDUSTRY HISTORY

Prior to the 1860s, ostriches ran wild in large numbers in Africa. In South

Africa, the birds were hunted and killed for their feathers by Khoisan and

European settlers. According to KKI (2003:2), commercial ostrich farming

started in 1864 between the Outeniqua and Swartberg mountain ranges. In

1867, the invention of the ostrich-egg incubator in Grahamstown made

mass rearing of ostriches possible (Van der Walt, 1990:193). By the 1900s

ostrich feathers were in high demand amongst the European wealthy

(Smith, Cilliers, Mellett and Van Schalkwyk, 1995:175). The main expansion

of the ostrich industry occurred in the Cape colony (Douglas, 1906:47),

particularly around the town of Oudtshoorn, in the Western Cape region of

South Africa (Sales, 1999:6).

The value of property grew dramatically in Oudtshoorn, leading wealthier

farmers to engage in seizing land which in turn led to a rise in tenant

farming in the district (Buirski, 2001, cited in Stein, 2007:778). As a result of

their success, personal wealth increased in the Oudtshoorn region. By 1913

the ostrich-feather market reached its peak (KKI, 2003:2) and several

countries had joined the global ostrich production, namely, Egypt, Australia,

Algeria, Tunis, Sudan, Madagascar and the U.S.A (Cooper, Mahrose, El-

Shafei and Marai, 2008:349).

But some of the inhabitants in the Oudtshoorn area were economically

marginalized by this surging ostrich industry. As the ostrich industry

consumed unproductive agricultural land and other less productive

commodities, large numbers of Boers who had once worked on local

vineyards became unemployed. The unemployment was aggravated by the

fact that relative to other crops, ostriches required little labour

(Buirski, 2001, quoted by Stein, 2007:778).

92

During the economic depression of 1914 the demand for ostrich feathers

collapsed in Europe. According to KKI (2003:2) this was attributed to poorly

co-ordinated marketing and excessive supply of feathers. According to

research conducted by the National Agricultural Marketing Council

(2003:15) the main causes for this feather market collapse were that:

the European market was affected by World War I;

shipping lines could no longer access overseas markets; and

the advent of the open-top motor cars did not suit the fashion of

womens’ wide-brimmed hats.

By 1930 the ostrich population had dropped from 770 000 to 23 000

(SAOBC, 2004:para. 1), but from the 1930s the ostrich industry declining

trend turned and it started to grow steadily with the newly introduced

production systems in the agricultural industry as land became encamped

and more farming became capital-intensive. The revival of the industry

began with the forming of the Klein Karoo Agricultural Co-operative (KKC)

in 1945 and by 1959 the single-channel marketing system for ostrich

products was formed (KKI, 2003:2).

At this time the ostrich industry became very important to Oudtshoorn and

surrounding area for income and job creation. In 1964 the first ostrich

abattoir was established in Oudtshoorn, followed later by a supporting

tannery and feather plant (Wessels, 2003:40). The industry began

processing ostrich leather, which became prized for its quality and

resilience (Cloete, Van Schalkwyk, Hoffman and Meyer, 2004:80). Ostrich

skins were marketed as exotic leather to the fashion industry for their

distinctive leather nodule patterns which contributed to its novelty value.

The products for this exotic leather fashion market consist mainly of luxury

handbags, boots and small leather goods.

93

The ostrich single-marketing channel provided a protected market presence

that allowed Oudtshoorn to dominate domestically and in the global ostrich

product arena. The regulated quantity of ostrich skins from South Africa

enabled the agencies to corner the market. The single-marketing channel

co-ordinated the quantity of ostrich skins sold to the market, which

facilitated an ideal equilibrium between supply and demand for a high-value

product. This control allowed the industry to develop a strong association

with European fashion brands (Kriek, 2010:9). Other exotic leathers such as

elephant (Loxodonta africana), hippopotamus (Hippopotamus amphibius)

and African buffalo (Syncerus caffer) used in the leather industry was not

established through a single-marketing channel, but usually shared the

ostrich-processing facilities and marketing channels.

There was an increasing demand for ostrich meat at the beginning of 1990

due to the low fat, low-cholesterol and high-protein characteristics of the red

meat. The handling and processing of meat follows stringent requirements

that have to conform to the safety requirements of the EU food supply.

Farming ostriches under free-range conditions enabled the meat to be

marketed as an eco-friendly alternative to feedlot produced meat (Cooper

and Horbanczuk, 2002:167). The disadvantage of the increased demand for

meat however is that trading a perishable commodity that is eaten rather

than worn by customers, created new challenges for South African

marketers and exporters (Mather and Marshall, 2011:155). In 1993 the

single-marketing channel was deregulated and the KKC monopoly was

abolished. The KKC lost control over the ostrich industry and domestic

supply and new South African farmers entered the industry with the effect

that ostrich numbers doubled and exceeded the demand for skins

(Wessels, 2003:40).

94

The range of activities related to ostrich farming spread from the

Oudtshoorn area into the rest of the Western Cape, Free State, Gauteng,

Limpopo, Mpumalanga and Eastern Cape (Greibenow, 2003:4). In 1998 the

South African Ostrich Business Chamber was founded to promote co-

operation between stakeholders and to facilitate funding for generic

marketing. Generic material was freely exported and eggs, chick and

breeders were widely sold to international buyers. South Africa still

maintained its lead as no ostrich industry in the world had developed the

value chain from farming to slaughtering to deboning to tanning to

marketing (Greibenow, 2003:6). However, from 2001 the South African

industry faced decline and ostrich slaughter figures are decreasing due the

serious challenges to the industry, namely, producer competition and avian

influenza (Figure 5.1). The avian influenza resulted in farmers not being

able to export ostrich meat to Europe and renewed dependence on ostrich

leather to fill a void to maintain the survival of the ostrich industry (Kriek,

2012:1). The total number of ostrich farms in South Africa has dropped from

over 800 in 2011 to fewer than 400 in 2013 (du Plessis, 2013:9).

Figure 5.1 South African ostrich slaughter figures

Source: du Plessis (2013:8)

0

50000

100000

150000

200000

250000

300000

350000

400000

95

Avian influenza was detected in 2004 on an ostrich farm in the Eastern

Cape Province which resulted in euthanasia of many ostriches (Abolnik,

2010:37). This had a serious consequence for the abattoirs and tanneries in

the Eastern Cape and resulted in the main processing plants in

Grahamstown and Port Elizabeth facing closure.

5.4 CONTENT ANALYSIS OF OSTRICH RESEARCH INTERESTS

THROUGH TEXT-MINING METHOD

5.4.1 Introduction

The literature review included the text-mining method on the first 1000

ranked literature sources on Google Scholar search engine, which provides

searches across many disciplines and sources. Google Scholar grades

documents through weighing each document according to where it was

published, who it was written by, as well as how often and how recently it

has been cited in other research literature (Google, 2013:para. 1). Google

Scholar provides searches across many disciplines and sources. The

keyword search “ostrich struthio” was selected for this text-mining exercise.

The scientific name of the ostrich is Struthio camelus and ‘Struthio’ was

used as part of the search keyword in order to filter out general or

inappropriate research referring to the ostrich. It is through this technique

that the researcher broadly searched appropriate literature related to many

disciplines. This includes theses, articles, books, abstracts, professional

societies, online repositories and universities.

96

The first 1000 literature-ranked pieces were captured from the Google

Scholar search and the titles and abstract were then sorted into categories

and date clusters. These categories were ranked on a graph to determine

what main topics had been cited and to establish trends of research in the

ostrich industry. After the research studies had been collected, they were

refined by removing outliers and inappropriate research that had no direct

association with ostriches. The titles and abstracts that remained were then

coded according to common research themes.

5.4.2 Findings

The themes were sorted according to the amount of themed researched

literature found displayed in Table 5.1 and Figure 5.2.

Table 5.1 Findings of most popular research topics on ostriches

TOPIC Number of themed

research literature - N

Number of citations in other articles-

Means

Number of citations - Std.Dev.

epidemiology 145 23.76552 82.6334

eggs 108 21.12963 28.46184

physiology 91 16.38462 27.75479

reproduction 63 11.03175 8.1041

hematology 56 21.42857 31.60659

feed 48 20.02083 27.52368

historic 32 25.40625 31.47232

stomach 27 14.07407 14.93814

hydration 26 31.11538 32.00666

meat 24 16.625 13.53839

98

No research on emerging ostrich farmers was found in this analysis

and the research topics centred mainly on production practices and

animal health. The following is a summary of the main themes and topics

classified, sorted from most to least interest on Google Scholar search

engine.

epidemiology (Newcastle disease, avian influenza, inoculation),

egg characteristics (colour, recognition, morphology, hatchability,

fertility and incubation,),

physiological characteristics (physical functions, mechanics,

locomotion, muscle movement, axial skeletal),

reproduction (breeding, courtship behaviour, gender and group size),

hematology (immunoglobulin, red cell, antibodies, electrolyte

concentrations),

feed (dry-matter intake, growth rate, nutrition),

historical (fossils and Palaeolithic sites).

stomach (gastric, digestive tract, impaction, colon),

hydration (thermoregulation and water consumption),

meat (muscles make up and physical characteristics).

The themes were then compared to when and how often they had been

cited in other scholarly literature articles. A standard deviation was

determined to show variation or dispersion from the average and measure

confidence so that any extreme citations could be filtered out. The

categories were sorted onto four date clusters, namely, 1991 to 1995, 1996

to 2000, 2001 to 2005 and 2006 to 2010. The date clusters showed the

following noteworthy results (Figure 5.3):

The studies on aetiology were relatively consistent with slightly higher

interest during the 1996 to 2000 period.

The studies on ostrich eggs increased mainly during the 2001 to 2005.

100

The main research articles and literature conducted in the epidemiology

theme concerned the avian influenza virus. The most popular articles in this

theme were:

Alexander, D. J. (2000). A review of avian influenza in different bird species.

Veterinary microbiology, 74(1), 3-13. [CITED 966].

Leigh Perkins, L. E., & Swayne, D. E. (2002). Pathogenicity of a Hong

Kong-origin H5N1 highly pathogenic avian influenza virus for emus, geese,

ducks, and pigeons. Avian diseases, 46(1), 53-63. [CITED 204].

Kirkwood, J. K., & Cunningham, A. A. (1994). Epidemiological observations

on spongiform encephalopathies in captive wild animals in the British Isles.

Veterinary Record, 135(13), 296-303. . [CITED 119].

Zhou, E. M., Chan, M., Heckert, R. A., Riva, J., & Cantin, M. F. (1998).

Evaluation of a competitive ELISA for detection of antibodies against avian

influenza virus nucleoprotein. Avian diseases, 517-522. [CITED 103].

101

5.5 OVERVIEW OF OSTRICH HUSBANDRY

5.5.1 Epidemiology

Epidemiology is the study of patterns and determinants of disease

distribution in populations. It focuses on groups rather than individuals and

often takes a historical perspective in order to identify control strategies.

According to Douglas (1906:47), the rapid increase of ostrich production in

the 1800s had been due to the freedom from disease that the ostrich had

shown under domestication, while other livestock in South Africa had

required more intensive disease management under intensive conditions.

However, a disease capable of causing high mortality in birds was first

indentified in 1878 and was known as `fowl plague' (Alexander, 2000:3).

The ostrich industry also experienced high bird losses due to an unknown

epidemic in 1888 (Van der Walt, 1990:193). Since then the highly

pathogenic avian influenza (HPAI) and velogenic Newcastle disease (ND)

have been identified and have become the main devastating diseases of

poultry (Abolnik, 2007:2). It is the HPAI that has been particularly

disastrous for the ostrich industry. HPAI is on the World Organisation for

Animal Health’s list of modifiable diseases. The ostrich industry has been

susceptible to HPAI outbreaks which occurred in 2004, 2006 and 2011

(Van Helden, Grewar, Visser, Dyason and Koen, 2012:11). The dramatic

outbreak of 2004 had a considerable effect on the industry which resulted in

the culling of nearly 30 000 birds in the Eastern Cape. These losses were

particularly unfortunate as they had affected a group of farmers who had

made the first attempt to free the South African industry from the

monopolistic environment.

102

According to research by Huchzermeyer (2002:271) the avian influenza

virus is highly variable and normally carried and spread by wild birds. The

strains differ in pathogenicity among different avian species and are

classified according to the pathogenicity of poultry. However, HPAI might

not have been new to South Africa as in the late 1970s, ostrich farmers in

South Africa began reporting a disease associated with respiratory

problems, excretions from the nose and eyes and fluorescent green urine

(Mather, 2011:155). According to Mather (2011:155) the ostriches

succumbed to this disease mainly during late winter when the weather was

colder and wetter. Only in the early 1990s the syndrome associated with

green urine was brought to the attention of researchers. Analysis conducted

on infected ostriches confirmed that the cause was a low-pathogenic strain

of HPAI. According to Allwright, Burger, Geyer and Terblanche (1993:63),

the rapid spread of this disease in the ostrich population can be attributed to

the strong trade in ostrich chicks as well as the severe drought in the

Oudtshoorn area.

The isolation of a strain of HPAI resulted in a set of policy requirements and

obligations for South Africa’s National Department of Agriculture. Countries

affected by HPAI are restricted from trading any poultry products. In order to

regain ‘disease-free’ status, countries are obliged to prove the reliability and

effectiveness of their reporting, surveillance and eradication systems

(Mather and Marshall, 2011:158).

103

Since the disease outbreaks in the ostrich industry could have had

devastating effects on the poultry industry, DAFF was quick to deal with

HPAI outbreaks. About 320 000 ostriches were slaughtered worldwide

between 2010 to 2011, of which about 211 000 were slaughtered in South

Africa. Recently South Africa has experienced a drop in slaughtering due to

the detection of the HPAI in April 2011, which led to a ban on ostrich meat

exports (DAFF, 2012:63). However, according to Benson (2004:49) , the

Eastern Cape producers immediately euthanizes on farm all infected

ostriches, which affected a large number of breeder birds. The same

requirements were not applied to the producers in the Western Cape, the

majority of whom supply the KKI. According to a Western Cape Department

of Agriculture annual report (2012:9) the avian influenza outbreak since

April 2011 caused a complete standstill of the R1.2 billion-a-year ostrich

industry. The meat export ban losses were amounting to R108 million per

month. In accordance with EU regulations forced slaughtering is required on

farms testing positive for the avian influenza virus and more than 40 000

ostriches were culled in the Oudtshoorn area. The National Minister of the

DAFF approved compensation to farmers for forced culled birds to the

amount of more than R50 million.

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5.5.2 Genetics

According to Benson and Holle (2004:7) “the right genetics are critical in

any livestock programme and are key areas to cut the costs of production”.

The South African Black-neck (S.c. domesticus), which is the main type of

ostrich farmed in South Africa, is a cross between the Southern African

native Blue-neck sub-species (S.C. australis) and the North African Red-

neck subspecies (S.c. camelus). This strain has double the amount of barb

feathers along the ribs (Shanawany and Dingle, 1999:169). Research on

the Zimbabwe Blue (ZB) and the South African Black (SAB) showed

differences in their physical but not in sensory meat characteristics

(Hoffman, 2008:1273). Moreover, there are clear strain differences between

the SAB and ZB in live weight traits in favour of the ZB and reproduction in

favour of the SAB (Hoffman, Brand, Muller and Cloete, 2008:257). The SAB

has probably been domesticated for a longer period and may therefore

handle slaughter stress better than its contemporaries of the other strains.

5.5.3 Breeding

Ostriches are generally regarded as seasonal breeders, with the breeding

season coinciding with an increase in photoperiod (Ipek and Şahan,

2004:643). The breeding cycles therefore have an impact on yearly egg and

chick availability. This then determines how the supply of the season’s stock

is going to affect the logistics of production at abattoirs and tanneries. The

flow of meat and leather then require strict co-ordination between

processors and international orders. But these orders for fashion or apparel

cycles do not necessarily synchronize with the production cycle and may

affect stock levels and availability.

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According to Brand (2012:5), there are different structured breeder systems

used on commercial ostrich farms. Eighty percent of the national ostrich

breeding population is maintained in breeding colonies, ranging from

50 - 100 birds at a ratio of 5 - 6 males for every 10 females. Under a

pen-breeding regime, breeding duos, or preferably trios, would be kept on

0.25 ha. The pen-breeding system requires higher capital and management

costs for pen construction than other methods.

5.5.4 Incubation and rearing of chicks

The production of ostriches starts at artificial incubation, which has become

an integral part of any commercial poultry enterprise (Badley, 1997:53).

Despite substantial advances in incubator design and incubation techniques

since the ostrich industry began in South Africa during the 1800s, problems

with embryonic mortality during artificial incubation is still one of the main

constraints to the development of the ostrich industry worldwide (Deeming

and Ar, 1999:159). As with other species of birds, the physiological

requirements of the developing ostrich embryo can be met during artificial

incubation by providing an appropriate temperature (Van Schalkwyk, Brand,

Cloete and Brown, 1999:155), the correct gaseous environment (Van

Schalkwyk, Brown and Cloete, 2002:122) and the proper turning of eggs in

automatic incubators (Van Schalkwyk, Cloete, Brown and Brand, 2000:47).

The four main ostrich production activities are breeding, rearing chicks,

raising birds and producing them for slaughter. Research conducted by

Brand (2012:2) found that methods of incubation and chick rearing were

among the most important limitations on the development of the ostrich

industry.

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Extensive research has been conducted on determining the influence of

genetics on mortality. Combinations of South African Black (SAB) male

ostriches crossed with Zimbabwean Blue (ZB) female ostriches experienced

losses of 45.7 percent. Losses experienced in SAB or ZB breeding birds

subjected to pure breeding was around 33 to 34 percent, but embryonic

mortality decreased in eggs produced by ZB males and SAB female

crosses (27 percent). Female age had a significant effect on the proportion

of chicks pipped, as well as on early and late embryonic mortalities. High

chick mortality affects the whole value chain adversely and can be

financially threatening for both the farmer and the processor. Stages of

production are usually divided into sub-stages, namely, hatching of eggs

and rearing of chicks to 3 months, 6 months or 8 months. Producers have

an option to contract rearing of chicks out to other producers that specialise

or have better facilities. These "out-growers" generally raise day-old chicks

to 13 weeks (3 months). This time of rapid growth of the ostrich chicks is

ensured with "grower rations" to optimise feed conversion.

5.5.5 Feed management

According to Brand and Jordaan (2011:4) the feed costs normally

contributes 75 to 80 percent of the total cost of ostrich production. As with

other livestock development strategies feed and nutrition are important

factors in animal growth. Nutrition, feed management, farm management

and genetics all work together and in that order to influence feed

conversion. Good animal husbandry is essential to the quality of products

throughout the supply chain. Ostrich feed is mainly made up of mixes of

lucern, grain and oilseed products. Finisher rations are of very low nutrient

density as they are low production rations (Benson and Holle, 2004:7).

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According to the National Agriculture Marketing Council report there have

been shortcomings in the specifications for ostrich production feed

requirements (NAMC, 2003:33). These requirements should be reviewed to

enable ostrich production to be more cost-effective.

Nutrition and feed are important inputs for growth (Kritzinger, 2011:32).

South Africa was one of the few countries to have slaughtered ostriches on

a commercial basis before 1993, but after deregulation many countries

attempted to compete with the South African standards in the farming of

ostriches, which was known to have the best feed-to-weight-gain ratio

(NAMC, 2003:15). Although ostriches are extensively farmed on the land

(Brand and Gous, 2006:144), they are fed optimally so that they attain the

ideal slaughter weight for the meat market (Aganga, Aganga and Omphile,

2003:60).

5.5.6 Animal behaviour

Meyer, Cloete, Brown and Van Schalkwyk (2002:193) identified the

following categories of behavior: inactive, locomotion, ingestive, ground

pecking, object pecking, preening, aggressive forms of hissing, chest

ramming and kicking. Of these behaviours aggression is a farmer’s main

concern. Although ostriches have been domesticated for over a century

they still react or behave aggressively which makes handling and

management of skin quality challenging (Douglas, 1906:50). This

aggression can be manifested toward other ostriches or the producer, such

as when one bird will intensely pursue and attempt to kick another bird

which is most frequently observed with the onset of puberty (Samson,

1996:412).

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5.5.7 Farming systems

There are three stages of ostrich farming, namely, hatching chicks, raising

chicks till 5-6 months and growing the ostrich birds to slaughter weight

(Olivier, 2012:12). There are three types of ostrich farming systems used in

ostrich production, namely, extensive, semi-intensive and intensive. The

type of system used is determined by land value, scale of production, labour

and feed costs. Extensive farming systems (> 40 ha) are generally on large

farms with birds raised on natural habitat and hatching their own eggs.

According to Shanawany and Dingle (1999:38) in the semi-intensive

farming systems (20 to 60 ha), the ostriches are kept in small camps with

their feeding requirements supplied from pastures. Supplementary feeding

is provided to ensure that the nutritional requirements of the birds are met.

The cost of intensive farming systems (<20 ha) are higher and capital

investment is greater. More than 80 percent of ostrich farming is not done

on high-potential arable land (du Plessis, 2013:18). Thus the production of

ostriches is mainly based on the feedlot system (intensive farming system).

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Chapter five has contributed to gaining an increased understanding of the

ostrich industry. The main influences on the ostrich industry have been the

loss of the feather market, deregulation of the industry and the ostrich-meat

ban due to avian influenza. The chapter explained the influences and

reasons for decline in the industry.

The text-mining study showed that past research conducted on ostriches

was predominantly on epidemiology and avian influenza. The research on

epidemiology increased in 1996 to 2000 which may have been attributed to

the outbreak of Newcastle disease which was of great concern to the

ostrich industry in the 1990s (Alexander, 2000:96). However, during this

period Verwoerd (2000:638) stated that the scientific knowledge of ostrich

diseases is incomplete and information on diagnostics is absent in many

cases. The ostrich diseases have had the most impact on the industry and

require continuous prevention, monitoring and control. During 2001 to 2005

the research focus on ostrich egg characteristics increased, which was

influenced by the start of the open market for egg exports and increased

global reproduction after the deregulation of the South African industry. The

results from the text-mining study led the researcher to do further literature

reviews on the main ostrich husbandry topics of production, namely,

epidemiology, genetics, breeding, incubation and rearing, feed

management, animal behaviour and farming systems.

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The literature review highlighted the relationship between genetics and

production. The husbandry section also gave a brief review of the intensive

pen-breeding and incubation systems. There were two main findings from

this chapter, namely, ostrich feed is a noteworthy factor in ostrich

production costs and ostriches can be farmed in an intensive environment

on low-potential arable land, which makes this farm animal an important

alternative form of extensive livestock farming. In the next chapter the

exotic-leather supply chain will be discussed with focus on the importance

of governance in the ostrich-industry supply chain and an overview of

ostrich production and processing (see Figure 5.4).


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CHAPTER 6

REVIEW OF THE OSTRICH INDUSTRY SUPPLY CHAIN AND

INTRODUCTION TO THE CASE STUDIES

6.1 INTRODUCTION 6.2 INTRODUCTION TO SUPPLY CHAINS 6.3 GOVERNANCE IN SUPPLY CHAINS 6.4 LIVESTOCK FARMING SUPPLY CHAINS IN THE DEVELOPING

WORLD 6.5 THE OSTRICH INDUSTRY SUPPLY-CHAIN RELATIONSHIP MAP 6.6 OSTRICH INDUSTRY SERVICE PROVIDERS 6.7 OSTRICH PRODUCTION AND PROCESSING IN SOUTH AFRICA 6.8 EASTERN CAPE OSTRICH PRODUCTION 6.9 BACKGROUND TO EMERGING FARMER CASE STUDIES 6.10 RELATIONSHIP MAPPING OF CASE STUDIES 6.11 CONCLUDING REMARKS

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CHAPTER 6

REVIEW OF THE OSTRICH INDUSTRY SUPPLY CHAIN AND

BACKGROUND TO THE CASE STUDIES

6.1 INTRODUCTION

Since animal skins and leather are generally by-products of breeding livestock

for meat consumption, hides and skins are mainly received as by-products from

abattoirs or farms. Because the leather industry depends on the receipt of skins

from livestock, the supply of skins depends on the available numbers of

animals and size of the skin recovered. However, exotic leather, unlike other

livestock leather, is not a by-product of meat production, but forms part of an

interdependent relationship between leather and meat which is simultaneously

farmed with production focused on both commodities. The previous chapter

described the history of the ostrich industry and what ostrich husbandry

entailed. This chapter explores the exotic leather supply chain which consists of

complex production systems which include incubation, phases of weight gain,

industrial processing and export logistics. The chapter starts with an

introduction to supply chains, governance in the supply chain and European

retailer supply chains. Following this section is an overview of the livestock

supply chains in a developing world context and then a discussion on the

leather and meat industry in South Africa. There is limited information

describing the ‘current state’ of how the whole supply chain and the structures

support the ostrich industry, ‘from egg to fork’; but this information is essential

in order to suggest potential collaboration opportunities that can be identified for

new farmers. It is therefore a prerequisite to understand the scope of the

processes, participation of different role players and service providers and

which companies or institutions are part of the networks and linkages. The

chapter concludes with the description of the case studies and supply chain

linkages in the Eastern Cape.

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6.2 INTRODUCTION TO SUPPLY CHAINS

According to Maloni and Benton (2000:3), “the concept of logistics has evolved

since the 1970's as the strategic coordination of traditional corporate cost

centres such as purchasing, manufacturing, transportation and warehousing.

The objective of such co-ordination is to recognize functional synergies within

the firm to fulfill customer requirements better”. Logistics and supply-chain

research during this time focused on alignment initiatives with the overall

business strategy of a company. Then in the 1980s supply chain management

emerged to manage the flow of goods from suppliers to the ultimate end user

(Feller, Shunk and Callarman, 2006:3). La Londe and Masters (1994:35)

defined the supply chain as a group of firms that passed materials forward. It

included several independent firms involved in manufacturing a product and

placing it in the hands of the customer. Lambert, Stock and Ellram (1998), as

quoted by Verma and Seth (2011:6), defined a supply chain as the alignment of

firms that brings products or services to market. Chopra, Lovejoy and Yano,

(2004:13) described the supply chain as “the management of all aspects of

providing goods to a consumer, from extraction of raw materials to end-of life

disposal and recycling, including manufacturing, physical logistics, and

after-sale service and warranty issues”. Supply chains therefore have a focus

more on operational issues and provision of raw materials, while value chains

have been more focused on innovation, product development, marketing and

on customer requirements (Feller et al., 2006:2). Value chains integrate

supply-chain activities to position organizations in the supply chain to achieve

the highest possible levels of customer satisfaction and value while

manipulating the abilities of all the entities in the supply chain (Handfield and

Nichols, 2002:12). Supply chains are susceptible to environmental change in

the global arena and today the supply-driven ostrich industry is reliant on the

EU demand.

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6.3 GOVERNANCE IN SUPPLY CHAINS

Farmers and producers in developing countries are involved in the earlier

stages of international supply chains. The current trend of globalisation required

that companies to pursue flexibility, lowest raw material prices and cheap

labour which is in some cases to the detriment of small producers (Traidcraft

Exchange, 2005:1) and contributed to increasing poverty (UNCTAD, 2004:123).

The influence and capability of different forces to exercise power in supply

chains differ considerably according to the sources of their power as well as

structural constraints (Fuchs and Glaab, 2011:1). Hess (2008:452) defined

‘power’ as a ‘centred’ concept, which allowed the capacity of some individuals,

institutions and actors to dominate others. The changing power asymmetries in

supply chains have also been a cause for concern among African agricultural

exporters (Rich, Ross, Baker and Negassa, 2011:214). The inequities in power

relationships based on the governance of the supply chain have highlighted

potential points of entry or exclusion for smallholders (Hess, 2008:452).

The focus in value chains has been on increasing competitiveness and

performance, and on providing effective technologies. While governments have

the ability to determine trade regulations, agricultural subsidies or market

access, private actors manipulate these public regulations to suit their own

ends or create rules and standards which suit themselves (Clapp and Fuchs,

2009:109). The area of governance in value chains to smallholder producers

has not received much attention. “Good governance in value chains, however,

harbours a significant potential for capacity building of smallholders within the

value chain through lead actors which will allow small producers to strengthen

their position in value chains” (Dietz, 2012:1). In a concentrated processing

sector for high value goods, oligopoly power can be at the origin of the produce

and on the other hand the downstream firms can act as oligopsonists in

procuring produce from farmers, intermediaries and processors (Moir, 2006:1).

Farmers and especially smallholders that are price takers can often be victims

of this scenario. These actors can influence prices downwards and upwards to

enhance profit at the expense of players that have less leverage in the chain.

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With reference to Figure 6.1, Gereffi, Humphrey and Sturgeon (2005:90-94)

differentiate five value chains by governance systems. In the Market Model the

thin lined arrows represent exchange based on price while the thicker arrows in

the Relational Model represent larger flows of information and governance. In

the case of modular global value chains, wider information flows are narrowed

down leaving each partner to manage unstated information within its own

enterprises boundaries. The Relational Model occurs when buyers and sellers

rely on multifaceted information that is not easily transmitted, and where rapid

changes may be required. Close working partnerships with suppliers are

important for sustainability in turbulent environments. The Captive Model

identifies small suppliers as those that are dependent on a few buyers who

influence by power and control. Such models are frequently characterized by a

high degree of monitoring and control by the buyer. The Hierarchical Model

defines chains as those that are characterized by vertical integration that

develops and manufactures products in-house. It is the researcher’s view that

due to complex ostrich out-grower regulations the ostrich industry is moving

towards a Hierachical Model, which will be discussed further in Chapter 11.

Figure 6.1 Typology of governance systems in value chains

Source: Gereffi et al. (2005:89)

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6.4 LIVESTOCK FARMING SUPPLY CHAINS IN THE DEVELOPING WORLD

The livestock sector is characterized by long market chains that employ at least

1.3 billion people globally and directly support the livelihoods of 600 million poor

smallholder farmers in the developing world (Thornton, 2010:2853). Livestock is

vital to the economies of many developing countries for the animals are a

source of food, income and employment. For the poor, livestock serves as a

symbol of wealth and provides draught power and fertilizer (Pica-Ciamarra,

2005:1). The total meat production in the developing world tripled between

1980 and 2002, from 45 to 134 million tons (World Bank, 2009:1-2). This

growth was concentrated in developing countries that experienced rapid

economic growth and focused on farming poultry and pigs. According to Jones

and Thornton (2009:427) the impacts of climate change are expected to have a

substantial influence on agriculture in many areas of sub-Saharan Africa. The

warming may reduce crop yields between 10 to 20 percent by 2050 which is

why livestock is becoming an alternative to cropping.

The ostrich’s tolerance to aridity makes it a strong livestock candidate for the

future drying landscapes of sub-Saharan Africa (Shanawany, 1995:8). African

producers face increasing competition from low-cost farmers in India and South

America that have low-cost production systems, economies of scale and highly

sophisticated supply chains for the distribution of a diversity of different

products (Swanepoel, Stroebel and Moyo, 2010:157). According to Lynam and

Theus (2009:10), value chains are often aimed towards more formalised,

vertically integrated supply chains, suggesting that effective coordination and

organisation within the value chain are crucial for success.

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Small livestock on South African rural farms is usually farmed in close proximity

to the farmer’s home and therefore the farmer and family have substantial

contact with the livestock. Research conducted by Randolph et al (2007:2788)

on the role of livestock in human nutrition and health for relieving poverty in

developing countries, indicated the risk livestock farmers faced of transmission

of zoonic diseases. This concern is particularly applicable to rearing ostrich

chicks close to homes and the potential these birds have to transmit avian

influenza to the farmer or other poultry. This was a concern expressed by the

South African Department of Agriculture, Forestry and Fisheries and National

Directorate of Animal Health in 2012. When the standards for the requirements,

registration and maintenance of registration and official control of ostrich

compartments in South Africa were enforced (VPN/04/2012-01, revision 6.0),

this meant that ostrich farmers could no longer keep the ostrich chicks near to

their homes and were required to have compartments separate from chickens

(backyard poultry). These bio-security measures have had an impact on the

farm management and have intensified the supply chain. Whether the rural

farmer will be willing to adopt these requirements and efforts in his supply chain

is still to be determined.

6.5 THE OSTRICH INDUSTRY SUPPLY-CHAIN RELATIONSHIP MAP

In order to understand which actors are involved in the process, and what

relationship they have with one another it is helpful to construct a relationship

map to understand the flow among the groups and players (Handfield and

Nichols, 2002:44). A relationship map provides a useful model for

conceptualising the performance of various parts of the ostrich industry within

the context of South Africa’s entry into the global economy. The map does not

consider specific activities, but concentrates on linkages between main groups.

The ostrich-industry supply chain can be defined as a wide range of activities

required to bring products (leather, meat, feathers and eggs) to the final

consumer.

118

It is an integration and linkage of suppliers, manufacturing, distribution and

customers in which raw material runs from suppliers to processors who prepare

them for the customer’s requirements. The linkages are becoming more

complex in global supply chains, while the standardisation and food-safety

requirements imposed are making it increasingly difficult for emerging farmers

to participate in the supply chain. Transformation and development

interventions are required from all the stakeholders if emerging farmers are to

successfully participate in these changing agri-food supply chains (Louw et al,

2008:305).

With reference to the ostrich-industry relationship map (Figure 6.2), the ostrich-

industry supply chain starts with the hatching of chicks on the farm (F). As

discussed in Chapter 5, the ostrich chicks are reared till 3 or 6 months of age

and then moved to a phase of growing to ideal slaughter weight. It is at this

point that farmers sell the chicks to other farmers or continue to grow for

themselves. Once the birds have reached ideal weight the birds are taken to

the abattoirs (A), which should be in close proximity in order to prevent damage

to the skins. In Figure 6.2, t1 represents the transportation of birds to abattoir

and t2 represents the transport for export. DAFF has restricted movement

during these points of the supply chain. The abattoir signifies the beginning of

the processing phase of removing the skins, meat and feathers. The skins are

then tanned and the feathers dyed and these processes occur in separate

venues. Once the carcases have been deboned the meat goes to be heat

treated.

The leather, meat and feathers are then packed and distributed by agencies or

cooperatives. The majority of the ostrich skins and leather supplied are co-

ordinated by account managers of cooperatives or agencies for export markets.

The orders, co-ordination and logistics for ostrich exports are run by a handful

of account managers in South Africa. The small-volume by-products are

derived mainly from the processing plant and distributed amongst local

markets, crafts and ecotourism. The supply chain includes a traceability system

and has to comply with regulations stipulated by the British Retail Consortium

and International Food Standards (KKI, 2013:para. 6).

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Eighty percent of ostrich products are exported to manufactures or

wholesalers/supermarkets before reaching the end customer. In Figure 6.2 the

left column represents the main commercial transactions, namely, technical

value which is the resource value (Tv), organisational value which includes

reliability (Ov), brand, company reputation and the personal value which are the

relationships that are involved with exchange of resources (Pv) (Feller et al.,

2006:2).

Each of these commercial transactions represents the main areas where value-

adding takes place. The darker shade of the left column indicates increased

value-adding. The thicker arrows in the map demarcate where there is

increased vertical integration in the industry. The darker circles indicate where

the governance of the supply chain lies. The primary infrastructure on the left

hand side represents where the main capital is required for production and

processing.

Key for Figure 6.2

Skins (Sk) Meat (Me) Feathers (Fe)

Tanned (Tn) Local (L) Buyer (Buy)

Auction (Au) Dyed (Dy) Transport (t1 / t2)

Heat treated (Ht) Agencies (Ag) End customer (EC)

By-products (By) Manufacturers (M/F) Wholesaler/Supermarket (W/SP)

Incubation (in) Chick-rearing (Ck) Ostriches at full weight (Gr)

Resource value (Rv) Eco-tourism (Eco) Personal value (Pv)

Technical value (Tv)

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The EU supermarket chains have a strong market share in all but three EU

countries, namely, Spain, Greece and Italy (Baas, Van Potten and

Zwanenberg, 1998:25-27). Since the establishment of the first South African

ostrich abattoir in 1965, South Africa began with marketing and export of ostrich

meat into Europe (Wessels, 2003:40). France and Belgium were two of the first

countries to consume ostrich-meat on a noteworthy scale (Shanawany and

Dingle, 1999:148) and these countries developed into South Africa’s main

ostrich meat trading partners (DAFF, 2011b:9). South Africa has also benefited

from a preferential tariff rate when exporting to these EU countries. The multiple

European retailers such as Tesco and Marks & Spencer adopted ostrich meat

as one of their alternatives to red meat; but in order to gain access to these

European markets, South African ostrich farmers have to adhere to strict food-

safety regulations and requirements. Food safety is closely linked to traceability

requirements and often requires further stronger linkages with the value-chain

members (Grunert, 2005:371).

The traceability and food-safety assurance are monitored at all critical points

(HACCP). Ostrich meat processors have ostrich specialist veterinarians, fully

equipped laboratories, microbiologists and food technologists that maintain

traceability and food safety. The ostrich-industry supply chain has become

increasingly dependent on the European market for leather and meat sales.

According to Shanawany and Dingle (1999:147), the EU offers the best export

market for ostrich meat because the large populations and sophisticated eating

patterns suggest that ostrich meat has great potential, but transparency and

understanding of the environment of supply chains need to be understood by

all the role players for fair governance and mutual benefit. There is a lack of

supply-chain analysis to help decision-makers evaluate the impact that the EU

regulations and export policies have had on the ostrich industry and specifically

on how this has affected the emerging farmer’s potential for entry into the

market.

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6.6 OSTRICH INDUSTRY SERVICE PROVIDERS

This section is an outline of the influences affecting supporting role players and

their interaction in shaping the ostrich industry and value chain (Figure 6.3).

Fig 6.3 South African Ostrich Business Chamber linkage to stakeholders

Sourced from South African Ostrich Business Chamber (2013)

6.6.1 The South African Ostrich Business Chamber (SAOBC):

The SAOBC, which was established in 1998 in Oudsthoorn, is regarded as the

umbrella body for the South African ostrich industry. The SAOBC is a ‘Section

21 Company’ which represents the interests of the South African ostrich

industry. Its main function is to ensure the sustainability and profitability of the

industry. The SAOBC represents two main member organizations, namely, the

South African Ostrich Producers Organisation (SAOPO) and National Ostrich

Processors of South Africa (NOPSA). There is no emerging ostrich farmer

association in the SAOBC stakeholder linkage chart.

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The SAOBC has been instrumental in co-ordinating veterinary services,

European export protocols, a biodiversity management unit and AgriBEE

model. The ostrich is regarded as a game animal and therefore the meat is

referred to as game meat (Fajardo, González, Rojas, García and Martín,

2010:409).

The objectives of the SAOBC include the following:

promoting, co-ordinating, supervising and securing the interests of all

registered businesses involved in the production and processing of ostriches

and ostrich products;

fostering proficiency of production;

fostering and promoting relations between the roleplayers in the industry;

encouraging a code of conduct;

contributing towards the creation of an international environment suitable for

export;

communicating with government, government agencies and other

directly affected groups;

identifying and promoting initiatives aimed at improving the status of the

ostrich industry;

securing solidarity of the organisations in the ostrich industry;

providing a discussion forum;

supporting or opposing any proposed legislation; and

administering fees for the purpose of carrying out the objectives of the ostrich

industry.

The South African Ostrich Business Chamber has been authorised by DAFF to

enforce movement control of ostriches and provide authorization when

ostriches require movement (DAFF, 2012:28).

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6.6.2 National Ostrich Processors of South African: (NOPSA)

NOPSA was established in 1995, its role being to unite the interests and efforts

of processors. It has 21 members and has existed since 1995. The objectives

of the NOPSA include:

promoting the interests of the ostrich processing industry;

approaching Government to coordinate any matter directly or indirectly;

affecting the affairs of the ostrich processing industry;

collecting and circulating market information and statistics;

serving as a forum for constant dialogue amongst its members; and

promoting public interest in ostrich products by way of advertising and

marketing assistance.

NOPSA has the following members:

Camexo SA Ltd.: Graaff-Reinet (meat)

Klein Karoo International (PTY) LTD: Oudtshoorn ( meat, leather and

feathers)

Ostriswell (Pty) Ltd: Swellendam (meat, leather and feathers)

Gondwana Marketing: Magaliesburg (Oryx Game and Ostrich Abattoir)

Mosstrich Ltd. : Mossel Bay (meat )

Rancho las plumas: Oudtshoorn (feathers)

South Cape Ostrich Tanning: Mossel Bay (leather)

Swartland Volstruise: Somerset West (meat and leather)

None of these processes represents full AgriBEE ownership and the majority of

the processes were established before deregulation.

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6.6.3 South African Ostrich Producers Organisation (SAOPO) The South African Ostrich Producer’s Organisation which is represented by

seven provincial members works along provincial lines. Ostrich producers

throughout South Africa register as members through their respective provincial

ostrich-producer organizations.

6.6.4 South African Ostrich Breeders Association The Ostrich Breeders’ Association was established in 1995 and registered with

the South African Stud Book and Livestock Improvement Association. The

South African Ostrich Breeders’ Association has been instrumental in the

ostrich industry with developing the definitions on Norms of Excellence in

Ostrich Breeding.

6.6.5 Department of Agriculture, Forestry and Fisheries (DAFF/NDA)

DAFF and Provincial Departments of Agriculture fulfill the roles of responsible

functioning and auditing as outlined in the Meat Safety and Animal Health Acts

and the Constitution of South Africa. They are responsible for the slaughter of

animals within approved abattoirs through its Sub-directorate of Veterinary

Public Health and for import and export control of meat. The Department of

Health, through its Directorates of Food Control and Environmental Health, is

responsible for the control of meat once it leaves the abattoir. The role of a

central veterinary office is to liaise and coordinate with importing countries, as

well as with international regulatory organisations, such as the Organisation

International des Epizooties (OIE).The Veterinary Animal Health and Disease

Control is an important part of the ostrich supply chain as veterinary export

certification is a necessity for all exports and trade with ostrich meat with the

European Union. The meat-quality assurance mechanisms are put in place in

order to comply with traceability and the HACCP programme. State Veterinary

services are responsible for the disease surveillance programme and that it is

kept in place.

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The provincial veterinary services represent the veterinary services of South

Africa and the correct protocol and appointment of state veterinarians at export

abattoirs is important for ensuring South Africa’s export status.

The veterinary services are to prevent and control animal diseases, facilitate

the exports of animals and animal products, render veterinary diagnostic

services and ensure the safety of meat and meat products. This is governed by

the Meat Safety Act (Act 40 of 2000) and the Animal Diseases Act (Act 35 of

1984).

6.6.6 National Residue Monitoring Programme (NRMP)

The NRMP has a service contract for the residue-monitoring programme with

the Onderstepoort Veterinary Institute to ensure reliability of the system.

6.6.7 EU Agricultural attaché (ATTC)

The responsibility of the EU Agricultural attaché is to collect and act on

information on agriculture, agribusiness, food and other related spheres in a

foreign country supporting trade negotiations and is instrumental in mediating

or representing EU regulations and policies.

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6.7 OSTRICH PRODUCTION AND PROCESSING IN SOUTH AFRICA

Commercial ostrich farming became an important component of South Africa’s

livestock industry. The growth of the industry has been through increases in

numbers of the ostriches and the development of infrastructure to support the

industry. By 2010 South Africa had seven EU abattoirs for the export of ostrich

meat. The dominant player is Klein Karoo International (KKI) with abattoirs at

Oudtshoorn, Swellendam and Graaff-Reinet. According to a study conducted

by the National Agricultural Marketing Council (NAMC, 2010:5), KKI had a

throughput estimated at 140 000 ostriches per year with a slaughter capacity of

200 000. Other approved EU abattoirs are at Makwe, Grahamstown and

Mossel Bay. The ostrich abattoir at Mossel Bay has the second largest capacity

of 70 000 birds per year.

Figure 6.5 Spatial distribution of primary ostrich production and

processing in South Africa


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6.8 EASTERN CAPE OSTRICH PRODUCTION

According to the South African Department of Agriculture, Forestry and

Fisheries (DAFF, 2011b:5), 17 percent of the South African ostrich industry is

found in the Eastern Cape (see figure Fig 6.6). In 2009 there were 102

registered farms for export in the Eastern Cape (total 588 nationwide). The

Eastern Cape has exported between 9 and 21 percent of South African ostrich

meat in the 2001 to 2010 period. The transport and export routes are further

apart in the Eastern Cape than those in the Western Cape, as most exports are

done via Cape Town and Johannesburg. The Eastern Cape has the largest

black ostrich empowerment project in South Africa, the AgriBEE project which

formed part of Integrated Meat Processors of the Eastern Cape and which had

a focus on community development and also providing otriches for the

Grahamstown ostrich-processing hub. Approximately 100 small-scale rural

black farmers participated in this programme.

Figure 6.6 Ostrich production per province

Source: (DAFF, 2011a:5)

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In 2009 the Eastern Cape Ostrich industry had 38 000 birds in production of the

total of 220 000 birds in commercial ostrich production. According to the East

London Agro-processing report (Ettmayr, 2009:42), the Eastern Cape exported

170 000 skins in 2009. This figure does not correspond to the total number of

ostriches in production of the area. The following scenarios could be

contributing to the Eastern Cape Industry exporting more than the Province is

producing.

• The high stock levels of the past have been sold;

• imported skins have contributed to this number;

• the Eastern Cape industry is procuring from other farmers in other provinces;

and

• the total skin number could be including body skins and leg skins.

The Eastern Cape Ostrich industry was concentrated around two ostrich

infrastructure processing hubs, namely Graaff-Reinet and Grahamstown. In

Grahamstown the infrastructure consisted of an EU abattoir, deboning plant,

tanneries and marketing offices. In Graaff-Reinet the facilities included an EU

abattoir and meat deboning factory. Because of the EU meat requirements

most of the meat was exported via the above abattoir value chain. According to

the South African Shoes and Views Leather Directory in 2010 the following

were the main ostrich enterprises in the Eastern Cape: Woods Tanning cc,

Ostrich Emporium SA, Exotan, IMPEC Integrated Meat, Ostrimark SA (Pty)

Ltd, Philippe Exotic Leathers (Pty) Ltd and Camdeboo Meat processors (Shoes

and Views Leather Directory, 2010:2-17).

Avian influenza was detected in 2004 on an ostrich farm in the Eastern Cape

Province which resulted in the implementation of control measures and

euthanasia of 30 000 infected and in-contact ostriches (Abolnik, 2010:37). This

had a negative effect on production in the abattoirs and tanneries in the area.

The Eastern Cape did not recover and experienced closure and buy-outs of its

main ostrich abattoirs and tanneries from 2004-2010.

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The following changes occurred: The Camexo SA Ltd group was purchased by

KKI (Leather International, 2005:para.1). Ostrimark in Grahamastown was

purchased by Jonker Holdings (Oudtshoorn) and the Philipe Tannery faced

closure. The closure of IMPEC Ostrich and Grahamstown Ostrich Abattoir

resulted in only one EU abattoir remaining in the Graaff-Reinet area which was

part of the Camdeboo Meat Processors (Sipondo and King, 2012:1). Woods

tanning was reduced to small volumes and diversified more into game skins.

These changes in the Eastern Cape ostrich industry resulted in the Eastern

Cape no longer being independent of the Western Cape ostrich industry. The

last remaining tannery (Ostrimark) was now under the management of the

Oudsthoorn company, Jonker Holdings and Camdeboo ostrich abattoir was

owned by KKI and the Eastern Cape emerging ostrich farmer programme was

being co-coordinated by KKI and Agri Klein Karoo Business Centre (head office

in Oudtshoorn).

6.9 BACKGROUND TO EMERGING FARMER CASE STUDIES

6.9.1 Peddie Ostrich Programme Salem Agribusiness Mentorship Company (SAMC) initiated a pilot ostrich

programme in 2002 at Pikoli and Ndlambe villages in the Great Fish River

Valley, Amathole District. SAMC forms part of the larger networks of the

organisation Khula Sizwe, which is a Christian development organisation that is

active in Zimbabwe and Mozambique in promoting rural development through

mentorship. Since 2004 the programme has received support from the Eastern

Cape Rural Financing Corporation (Uvimba Finance) and the Departments of

Agriculture and Land Affairs. The programme started with 12 farmers, each

raising 100 ostriches from day-old to six months at their homes. Uvimba

Finance committed R12 million in production loans to the farmers for this

programme.

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During this time the Khula Sizwe small‐scale Ostrich Farmers’ Participation

Incentive (KSSSOFPI) Trust was awarded a grant from the National AgriBEE

Fund of R9.3 million, which became 49 percent of the equity shareholding in

the R19 million Integrated Meat Processors of the Eastern Cape (IMPEC), 49

percent of the Philippe Leather Tannery as well as 44 percent of the

Grahamstown Ostrich Export Abattoir (Fick, 2009a:11). The first deboning trial

was done in January 2009. The KSSSOFPI Trust IMPEC joint venture, the

IMPEC de-boning plant and the leather tannery became important additions to

the existing Grahamstown ostrich abattoir. This ostrich-processing sector

became an important facility for all the Eastern Cape ostrich producers as they

could be independent from the Western Cape in processing meat and leather.

The Peddie ostrich programme production was an important contributor to the

volume of throughput for the Grahamstown ostrich sector. The programme

planned to reach an output of 10 000 ostriches in early 2009. Planning for the

final phase was done in collaboration with the Provincial Department of

Agriculture during 2009-2010 (Fick, 2009b:18).

However, in 2009 due to a change in the oversight at the financing corporation,

the Peddie programme no longer received financial support from Uvimba

Finance. Owing to this cessation of funds the next phases to increase the

programme and establishment of more EU-registered feedlots was not

possible. The programme target number of farmers was 170 and the number of

ostriches (20 000) was thus not achieved (PLAAS, 2013:5). The Peddie

programme formed part of the Amathole District Municipality (ADM) 2012 to

2017 integrated development plan and R1 million was allocated for this plan

from the ADM. In 2012 the Eastern Cape Rural Development and Agrarian

Reform allocated a further R3.6 million to the Peddie Ostrich Programme to

improve production and management (SAGI, 2013:para. 5). Owing to the

outbreak of avian influenza the new VPN04 bio-security protocols had to be

applied to the programme. The farmers could no longer farm the ostriches from

their homes and the ostriches had to be relocated to feedlots as per the

requirements of the new bio-security protocol (Figure 6.7).

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All the ostriches in the programme were placed in 20 adjoined ostrich feedlot

camps. The bio-security measures were strictly adhered to in order to comply

with the regulations for EU export (PLAAS, 2013:6). Avian influenza blood tests

were regularly conducted by the state veterinarian during the avian influenza

outbreak and the country’s meat ban period. This avian influenza outbreak

caused a decline in the number of ostrich farmers causing the Grahamstown

processing facility to become unsustainable due to a lack of sufficient

throughput (PLAAS, 2013:5). The closure of the IMPEC Ostrich meat processor

as well as the Grahamstown Ostrich Abattoir in 2011 resulted in this

programme being isolated from the Eastern Cape ostrich supply chain (Sipondo

and King, 2012:1). In 2011 KKI adopted the programme as an AgriBEE

programme (KKI, 2012:7) and supplied it with chicks and medicine and also

assisted with market access.

Figure 6.7 Ostrich compartments at Peddie Ostrich Programme

6.9.2 Rockhurst Ostrich Programme

In 2006 the Rockhurst farm near Grahamstown, was transferred to seven

beneficiaries and their families. The beneficiaries, who had a lease

arrangement for the land with Land Affairs, were all former employees of the

farm, and had been involved in ostrich farming. The farm’s primary production

was for beef and mohair.

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During 2008 the Makana Municipality initiated a programme for the women on

the farm and donated R350 000 to assist them in starting an ostrich-egg-laying

programme. In 2010 the farm had 50 ostriches, 1 586 sheep, 985 angora goats

and 67 boer goats. The women, who had acquired ostrich rearing experience

under the previous owner, were responsible for 50 ostrich breeders for egg-

laying. The Department of Agriculture arranged for a mentor who assisted with

inoculating, feed, sales, transport and monitoring of diseases. This mentor had

been involved with the Peddie Ostrich Programme and had over 10 years of

experience in the ostrich industry. In 2010 the Department of Social

Development in the Eastern Cape Province donated an additional R500 000 to

the programme, which was used to purchase 50 more ostrich breeders for the

programme. The production system required that eggs be collected from the

ostrich breeders, then hatched with incubators and the day-old chicks sold to

other farmers.

The chicks were sold to two farming enterprises, namely, a Cradock farmer and

the Hlumani Co-operative in Bathurst. The programme had successfully reared

a total of 300 chicks and the mortalities that occurred were mainly due to

deformities and heat exposure. Lucerne was not grown on the Rockhurst farm

and the farmers made an arrangement with one of their clients to supply feed in

return for ostrich chicks. By 2010 the total number of breeders on the farm was

96 (28 were male and 68 female). It was then realised that the number of eggs

produced was not sufficient to cover the running costs of the programme. The

mentor arranged for a larger incubator so that more eggs could be produced

(Figure 6.8), but the electricity infrastructure was unable to cope with the

demand of the larger incubator and the Department of Agriculture supplied a

diesel generator. During this time some of the beneficiaries indicated that they

were no longer interested in participating in the programme. When the mentor’s

contract expired, the farmers had not fully acquired the knowledge and skills

needed to run the programme on their own. There was no leadership structure

put in place to co-ordinate and direct the group and to conduct day-to-day

business.

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The programme was discontinued in 2010 when finances and commitment from

the participants dwindled. The fencing around the breeder camps was no

longer maintained and the ostriches escaped onto the open land. One of the

beneficiaries subsequently used the facilities to start a

small-scale poultry enterprise.

Figure 6.8 Rockhurst ostrich-egg electronic incubators

6.9.3 Hlumani Ostrich Co-operative

In 2009 the Hlumani Co-operative Bathurst programme in the Cacadu District,

was initiated by two beneficiaries from the Bathurst area who involved a further

eight people from the Bathurst Township so that sufficient numbers would

qualify them to receive the LRAD grant. According to the two initiators, the

other eight beneficiaries did not have an interest in farming but were interested

in participating and benefiting from the programme. The Department of Social

Development provided ostrich pens, feedlot camps and a livestock loading

ramp (Figure 6.9). The Department of Agriculture arranged for a mentor on a

three-year contract. The mentor’s responsibility was to arrange feed,

medication, delivery of chicks and sale of ostriches. The ostrich chicks were

purchased from the Rockhurst Ostrich Programme and were received during

the December-January period.

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In 2009, when a high mortality rate of 30 percent was experienced in the first

year’s production, the participants commented that they felt that they had

received third-grade chicks as they were in poor condition. The second batch of

ostriches experienced 19 percent mortality and the third batch 13 percent

mortality. During the fourth year the farmers failed to gain market access to sell

their ostriches. At this time the avian influenza outbreak had resulted in the

DAFF enforcing restrictions on movement of ostriches. The farmers had not

kept sufficient records of inoculation and the state veterinarian was not

permitted to issue them with a livestock movement permit. This led to an

extended feeding cycle and the programme did not have sufficient funds to

continue farming. The Port Alfred SPCA issued several warnings to the farmers

to feed the starving ostriches and fix the fencing. In 2012 the Port Alfred

magistrate issued a court order to euthanize the suffering ostriches. The area

veterinarian commented, "I have been a vet for 18 years and I have never seen

a case of chronic malnutrition like this.” High levels of atrophy were found in the

muscles indicating that the ostriches had gone without food for more than six

weeks (Macgregor, 2012:para. 1). The farmers had started with 150 ostriches

in January 2012 and the final 25 adult ostriches were culled on 22 August

2012. The ostrich programme discontinued, but the two original farmers still

occupied the farm house in 2013 and had started small scale poultry farming.

Figure 6.9 Bathurst ostrich chick raising structures

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6.9.4 Zamukwanda Ostrich Programme

In 2005 the Somerset Municipality received an application from six youths for

the lease of agriculture land near Pearston, Cacadu District. It was arranged

that one of the Grahamstown ostrich processes would support the initiative as

an AgriBEE initiative. In 2007 the Department of Agriculture spent R2 million on

the construction of six ostrich camps, storage containers, watering facilities and

accommodation (Figure 6.10). Blue Crane Route Municipality built a staff house

for the beneficiaries, supplied river sand and constructed a livestock loading

ramp, but the Grahamstown ostrich enterprise was unable to partner with this

project and the programme was decommissioned. DAFF then later initiated an

out-growers programme with a local commercial ostrich farmer and mentors.

The mentors provided the equipment (feeders, water troughs, rings, bedding,

sacks, blankets and medication). The beneficiaries received 758 ostrich chicks

in total for the programme and achieved a mortality rate of 19 percent. In 2010

the first batch of 74 chickens averaged a weight of 52 kg and the group sold

them for R15 000 (R202.70 per ostrich). The programme had the potential to

provide the beneficiaries with an income of R22 828 per annum at an average

of R1 900 per month over a twelve-month period.

Figure 6.10 Pearston ostrich compartments

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One of the arrangements for this joint venture was that the group would have a

timetable to do daily or weekly duties, would compile reports and attend weekly

meetings with mentors. The mentors were given liberty to use the beneficiaries

as labour. The perception of the beneficiaries was that they were partners and

not labourers. This misunderstanding resulted in conflict between mentors and

beneficiaries. The beneficiaries were supposed to be available after hours or at

weekends, but unfortunately owing to the distance from their homes their farm

attendance and punctuality were sometimes compromised. The commercial

farmers were unable to accommodate this tardy commitment and decided to

decline renewal of the out-growers contract. In 2011, when the ostrich

programme was discontinued, the beneficiaries still had a contractual

agreement for use of the land and infrastructure. No other form of farming

commenced after the end of this ostrich programme.

6.9.5 Mimosadale Ostrich Farm

A German development agency and Eyethru Small Farmers’ Association

supported previously disadvantaged Graaff-Reinet communities to set up

farming programmes. One beneficiary was assisted in setting up a 4 ha ostrich-

rearing operation on commonage ground, supported by local commercial

farmers and an area extension officer. The municipality contributed by

constructing a shed for the chicks for the out-grower programme. Commercial

farmers supplied day-old chicks and then purchased the ostriches after three

months. Owing to high mortalities and problems with payment from one of the

farmers, the programme changed the farming system to rearing ostriches

starting at three months old. The ostriches were then sold directly to the ostrich

abattoir in Graaff-Reinet. The abattoir provided technical advice and assisted

with bio-security requirements.

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One of the main constraints experienced was that the prices were not

negotiable and the farmer did not have any other market to sell to. In 2009 the

stricter EU restrictions and protocols became too difficult for the beneficiary to

comply with and he decided to terminate ostrich farming and shifted his focus to

small livestock farming.

6.10 RELATIONSHIP MAPPING OF CASE STUDIES Figure 6.11 shows the linkages between programmes during inception. Initially,

Rockhurst (Rock) was Hlumani Co-operative’s main supplier of ostrich chicks.

The Grahamstown processors were instrumental in setting up the Hlumani,

Peddie and Zamukwanda (Zamu) programmes with the intention of these

programmes becoming part of their supply chain. Mimosadale (Mimosa) initially

supplied ostriches directly to commercial Graaff-Reinet farmers in the area.

Due to the closure of the Grahamstown ostrich industry and KKI’s purchase of

Camexo, the Oudtshoorn ostrich industry had taken ownership over the main

vertical ostrich set-up in the Eastern Cape. Thus, Hlumani Co-operative, Peddie

and Zamukwanda formed part of the new Oudtshoorn / Graaff-Reinet ostrich

industry supply chain. Mimosadale shifted from supplying Graaff-Reinet

commercial farmers to supplying directly to the Graaff-Reinet abattoir (Figure

9.6). Peddie is the only surviving programme and was integrated into the

Oudtshoorn ostrich industry supply chain in 2011.

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Figure 6.11 Programmes linkage to supply chain during initiation.

Figure 6.12 Programmes linkage to supply chain on final year of production

141

6.11 CONCLUDING REMARKS Chapter 6 contributed to the understanding of the ostrich supply chain which

requires a wide range of activities to bring products to the final consumer. This

chapter presented an overview of the different supporting service providers in

the supply chain. The Eastern Cape’s ostrich supply chain has undergone

radical changes in the past five years and the integration and linkage of

suppliers, manufacturing and distribution is almost non-existent. The “current

state” of the Eastern Cape supply chain leaves limited collaboration

opportunities in the Eastern Cape for new farmers. Therefore under these

conditions the Western Cape ostrich industry is more likely to “adopt” the

Eastern Cape emerging ostrich farmer producing for international markets. This

chapter has contributed to giving a background on the case studies and

research localities. The next chapter focuses on how the emerging ostrich

farmer programmes have achieved participation and integration into the supply

chain, with special attention to AgriBEE initiatives (see Figure 6.13).


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CHAPTER 7

BLACK ECONOMIC EMPOWERMENT STIMULUS

IN THE OSTRICH INDUSTRY

7.1 INTRODUCTION 7.2 INTRODUCTION TO BLACK ECONOMIC EMPOWERMENT 7.3 INTRODUCTION TO BLACK ECONOMIC EMPOWERMENT IN

AGRICULTURE

7.4 COMMODITY PROJECT ALLOCATION COMMITTEE FOR THE

OSTRICH INDUSTRY 7.5 OVERVIEW OF THE NATIONAL FRAMEWORKS

UNDERPINNING LEGISLATION AND POLICY FRAMEWORKS OF THE OSTRICH INDUSTRY

7.6 OSTRICH INDUSTRY AGRIBEE INITIATIVES 7.7 CONCLUDING REMARKS

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CHAPTER 7

BLACK ECONOMIC EMPOWERMENT STIMULUS

IN THE OSTRICH INDUSTRY

7.1 INTRODUCTION

During the explorative investigation the extent of influence that the Black

Economic Empowerment programmes (BEE) and other economic

empowerment incentives had on the ostrich industry became apparent. It

was found that intervention from CASP and Eastern Cape Rural Finance

Corporation has been instrumental in the development in the Peddie

Ostrich Programme (Amathole District Municipality, 2012:192) and three

of the five programmes identified for this study had benefited from the

governmental LRAD scheme. Thus these findings led the researcher to

review how the South African government BEE agricultural schemes have

been used as interventions for participation of emerging ostrich

programmes in the ostrich industry.

South Africa’s previous regime before 1994 orchestrated a bimodal

agricultural system that was characterised by an apartheid state.

According to Lepheane (2007:6), this agricultural system offered subsidies

mainly to the white minority population to the detriment of the majority of

the black population. To address the atrocities of the past and bridge the

gap of the bimodal agricultural system, the South African government has

initiated and enforced reform programmes for the “historically

disadvantaged”. BEE initiatives concerning land reform made use of

Agricultural Broad-based Black Economic charter programmes (AgriBEE)

and Land reform for Agricultural Development (LRAD) in the agriculture

sector. The AgriBEE was intended to enable black South Africans to

participate actively in the country’s agriculture sector.

144

The South African government has had a long history of efforts to uplift the

black population socially through the farmers’ support programmes which

were intended to improve economic and market development, ensure

sustainable on-farm incomes and promote economic progress and change

in the agricultural sector (United Nations, 1992:5). The role of AgriBEE

was primarily to redistribute land back to black South Africans. The LRAD

scheme differs from AgriBEE in that it requires beneficiaries to make their

own contribution in order to qualify for a certain grant amount (Richards,

2011:30).

7.2 INTRODUCTION TO BLACK ECONOMIC EMPOWERMENT

Owing to apartheid, most South African firms were owned and run by the

white population and in 1990 the black population occupied fewer than 3

percent of management positions (Gray and Karp, 1993:1). According to

Esterhuizen, Doyer and Van Rooyen (2008:1), the exclusion of black

people from the South African economy was a process that restricted

prosperity creation, resulted in underdevelopment and took advantage of

the black population to ensure that they were available as a supply of

low-cost labour. Since the end of apartheid in South Africa, enterprises

have been stimulated to participate in the governmental objective of

increasing participation of the black population through black economic

empowerment (BEE). According to Southall (2005:457), BEE centres

around "a sociological perspective which focuses on the increase of black

ownership, control and management of state, parastatal and private

economic activity in the formal sector". In 2003, the Broad-based Black

Economic Empowerment Act (BBEE) was initiated to address the

segregation of black South Africans from participation in business.

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The BBEE Codes of Good Practice were published in the Government

Gazette in 2007 and then implemented in all sectors of the South African

economy in 2008. The BBEE has been seen as an integrated socio-

economic development that will contribute to the transformation of South

Africa and to promote increased numbers of black people into

management and ownership and at the same time correct the restrictive

policies of the past. However, according to Hall (2004:220) agricultural

land has not been a top priority for BBEE programmes and the reform has

been more actively pursued in the high value sectors of the economy such

as mining.

7.3 INTRODUCTION TO BLACK ECONOMIC EMPOWERMENT IN

AGRICULTURE

The Broad-based Black Economic Empowerment programme directed the

development of the AgriBEE Charter which has linkages with the Strategic

Plan for South African Agriculture. The charter is designed to address the

following challenges:

constrained global competitiveness,

low profitability,

skewed participation,

low investor confidence,

inadequate support and delivery systems and

poor and unsustainable management of natural resources.

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This AgriBEE charter’s function was to ensure increased access to, and

participation in, the agricultural sector by introducing initiatives to include

black South Africans at all levels of agricultural business and activities

through:

promoting access and participation in value chains;

de-racialising land and enterprise ownership;

unlocking the full entrepreneurial skills and potential of black people;

facilitating structural changes in support systems and development

initiatives;

socially uplifting and restoring the dignity of black South Africans;

increasing the extent to which communities, workers, co-operatives and

other collective enterprises owned and managed agricultural

enterprises ;

empowering rural and local communities to have access to agricultural

economic activities, land, agricultural infrastructure, ownership and

skills;

improving living and working conditions and promoting decent living

and working conditions for farm workers; and

improving protection and standards of land rights and tenure security

for labour tenants, farm workers and other vulnerable farm

stakeholders.

In South African enterprises’ AgriBEE status is measured against a

‘Scorecard’ and if the enterprise’s score is not high enough the enterprise

may be excluded from access to government business or contracts

(Williams, 2005:12). The ‘Scorecard’ consists of evaluation of the

following seven key elements: ownership, management control,

employment equity, skills development, preferential procurement and

enterprise development.

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The AgriBEE inception was intended to apply to the entire agricultural

value chain, including activities relating to the provision of inputs, services,

farming, processing, distribution, logistics and supporting services

(Commission for Gender Equality, 2009:66). According to Esterhuizen,

Doyer and van Rooyen (2008:3), the main obstacles to implementation of

AgriBEE were management control, employment equity and preferential

procurement. Other obstacles to AgriBEE implementation were: inability to

find qualified female and disabled staff, finding suitable BEE senior

managers and sourcing equity partners who had sufficient funding. What

was also highlighted in the findings of Esterhuizen et al (2008:3) was that

there was still confusion in the agricultural sector around the AgriBEE

scorecard due to it not aligning itself with the needs of the agricultural

sector.

7.4 COMMODITY PROJECT ALLOCATION COMMITTEE FOR THE

OSTRICH INDUSTRY

The role of the Commodity Project Allocation Committee (CPAC) of the

Western Cape Ostrich Industry is to consult and make recommendations

in terms of the project implementation and allocation of project funds to

enable new farmers to achieve their goals within the broader commodity

partnership with the Department. This committee has been supported by

the Cape Agency for Sustainable Integrated Development in Rural Areas

(CASIDRA).

The CPAC Committee was represented by

the South African Ostrich Business Chamber,

the South African Ostrich Producers’ Association,

the National Ostrich Processors of South Africa,

the Emerging producers / labour,

the Department of Agriculture: Western Cape, and

Casidra implementing agency.

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7.5 OVERVIEW OF THE NATIONAL FRAMEWORKS UNDERPINNING

LEGISLATION AND POLICY FRAMEWORKS OF THE OSTRICH

INDUSTRY

7.5.1 Comprehensive Agricultural Support Programme

The Broadening of Access to Agriculture Trust (BATAT), which was

initiated in 1994, has focused on agricultural development in the Rural

Development Programme (RDP) and was “intended to kick-start a shift

away from white dominance in agriculture and attempted to assess the

needs of black agriculture, existing and new black farmers, and identify

development priorities and strategies to improve their access to

agriculture” (Oettle and Britain, 1998:50).

Unfortunately BATAT had not met its objectives and so corrective action in

the form of the Comprehensive Agricultural Support Programme (CASP)

was proposed. CASP, which was implemented during 2004, included six

joint working groups focusing on the six areas of: on-farm and off-farm

infrastructure; advisory and regulatory services; capacity building;

information and training; market development; and financial services

(Department of Agriculture, 2006:6). While BATAT was aimed at ‘black

farmers’ in general, CASP intended to focus on land reform beneficiaries

(Vink, van Rooyen and Karaan, 2012:1). The deterioration of support

service programmes for farmers left agriculture in the rural areas of the

former homelands (Eastern Cape) in a precarious position. Despite

dedicated government funding there was still an inability of the provinces

to implement CASP (Vink et al., 2012:1). The Financial Service pillar of

CASP is the Micro-Agricultural Financial Institutions of South Africa

(MAFISA) which provides loans to appropriate farmers (Parliamentary

Monitoring Group, 2012:1).

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7.5.2 Land and Agrarian Reform Project

In 2007, the South African government recognised the need to devise

initiatives that would impact on the reduction of poverty, job creation and

economic growth, with special focus on vulnerable groups (women and

children). The Land and Agrarian Reform Project (LARP) was formulated

to provide a structure for alliance with land reform and agricultural support

to quicken the rate of transformation. The objectives of the Land and

Agrarian Reform Project are the following:

redistributing agricultural land to new agricultural producers;

increasing black entrepreneurs in the agribusiness industry;

providing access to agricultural support services for the new

producers;

increasing agricultural production on unproductive land; and

increasing agricultural trade.

7.5.3 Comprehensive Rural Development Programme

The Comprehensive Rural Development Programme (CRDP) is a rural

development programme that develops through the Medium Term

Strategic Framework and the government’s Programme of Action. The

CRDP consists of three units, namely, agrarian transformation, rural

development and land reform. The agrarian transformation is to provide

fast transformation in the areas of land, livestock, cropping and community

(MRDLR, 2009:3). The rural development focus was on improving the

standard of living of communities in non-urban areas. The focus is

generally on small populations of inhabitants in wide open spaces and

where agricultural activities are noticeable. In these areas economic

activities relate mainly to subsistence farming.

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The Rural Development Programme is aimed at “enabling rural people to

take control of their destiny, thereby dealing effectively with rural poverty

through the optimal use and management of natural resources” (MRDLR,

2009:14). CRDP has contributed to the BEE mandate by ensuring a more

equitable dissemination of the benefits of economic growth and reduction

of inequality.

7.5.4 Strategic Plan for South African Agriculture

The Strategic Plan for South African Agriculture initiated in 2001 was an

agreement between the government and the agricultural sector which

hoped to address reduction of profitability and growth of the agricultural

sector. It also aimed to address the fact that the majority of South Africa’s

population was still marginalised from conventional agriculture

(Sebakwane, 2009:4). The Strategic Plan for Agriculture is regarded as

the key to success for agricultural development. Of the strategic goals,

increased contribution to economic growth and development pertains

mostly to the BEE policy (DAFF, 2013:19). The South African Strategic

Plan for Agriculture has however drawn criticism that the Plan had no

mechanism in place to organize the implementation. This has been as a

result of lack of a dedicated structure responsible for administration of the

plan (Sebakwane, 2009:11).

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7.5.5 Eastern Cape Rural Development Strategy

According to the Eastern Cape Rural Development strategy (RDS), the

hundreds of years of colonial and apartheid policies have resulted in an

enduring environment of underdevelopment in the Eastern Cape Province

(ECRDS, 2010:13). The province is characterised by infrastructure and

service backlogs which are most severe in the rural areas of the former

homelands. This underdevelopment has been deepened by the current

economic downturn which has resulted in limited economic options. It is

through the RDS that sustainable growth and development for improved

quality of life for the rural communities in the Eastern Cape is hoped to be

achieved. The RDS strategy has the following sections:

land reform,

agrarian transformation and food security,

non-farm rural economy,

infrastructure,

social and human development and

providing an empowering environment.

7.6 OSTRICH INDUSTRY AGRIBEE INITIATIVES

The South African ostrich industry has been instrumental in complying

with the aims of Broad-Based Black Economic Empowerment. In order to

comply with the AgriBEE guidelines, the South African Ostrich Business

Chamber (SAOBC) established an OstriBEE scheme that focused on the

ostrich value chain. The programme identified and implemented its two

potential entry levels for new participants as producers or processors.

Through this initiative the ostrich industry was aiming to increase

participants’ income and standard of living, giving access to capital and

natural resources.

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The programme wanted to increase the number of black managers and

supply skills-training through artisans’ opportunities at ostrich abattoirs

and ostrich tanneries, mentorship programmes and various development

programmes. Black economic empowerment initiatives in the ostrich

industry have been supported by the private and public-sector, the

government, SAOBC and industry. The following initiatives have been

allocated a reference number illustrated on a spatial distribution map in

Figure 7.1.

7.6.1 Western Cape

Klein-Karoo Agri-Business Centre (1) in Oudtshoorn is a project that

was initiated and sponsored by ABSA, Land Bank and the Klein-Karoo

Group. The purpose of this project was to create an information centre

for business plans and provide support with funding applications.

Klein-Karoo Feather-sorting Project (2) in Dysselsdorp is an

independent project which is run by its members and which employs

100 people in the Dysselsdorp area. The programme involves grading

and sorting of feathers which are sold to KKI.

De Hoop Craft Project (3) in de Hoop consists of a feather and eggshell

craft programme run by women.

Klein Karoo Leather Goods Project (4) in Oudtshoorn initially started as

a small business leather-goods manufacturing centre using low value

raw material, but this has developed through mentorship, into the

manufacturing of high-quality leather goods for the export markets. The

products are being sold by the Klein Karoo Boutique in Oudthoorn. This

project employs 15 people from previously disadvantaged groups.

Mossel Bay Leather Goods (5) in Mossel Bay is an initiative launched

by Southern Cape Ostrich Tannery (SCOT) through which unemployed

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women in the Mossel Bay area are trained in the manufacture of leather

articles which are sold in the tourism industry.

Mosstrich BEE Trust in Mossel Bay (6) offers 6000 shares representing

6.5 % of the issued share capital to the 250 employees. The employees

share annually in the company’s profits.

Chandelier ostrich show farm (7) is involved with developing black tour

guides and co-ordinates a BEE craft facility that decorates ostrich eggs.

Olienhoutskloof BEE (8) farm near Dysselsdorp transferred 49% of its

ownership to farm workers. The enterprise provides training and

support and extends help to other small farmers.

7.6.2 Northern Cape

The Kuruman project (9) is run by a group of 30 black farmers that have

started an ostrich farming venture.

The de Aar Ostrich-rearing Project (10) is a project involved in the

raising of day-old birds. The programme is run by women, who also

own their feed mill and source feed from Oranje.

7.6.3 Eastern Cape

Rockhurst ostrich project (11) is an ostrich incubation project run by

fifteen women on the farm. Day-old chicks are sold to surrounding

commercial ostrich farmers.

Hlumani Co-operative (12) in Bathurst was established by ten

beneficiaries. The project involves growing ostrich chicks to 8 months

for Grahamstown ostrich enterprises.

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The Zamukwanda Ostrich project (13) farm near Pearston was

established by six beneficiaries. The project involves growing ostrich

chicks to 8 months for the Grahamstown abattoir.

Mimosadale Ostrich Growers (14) is run by a manager and two staff

members. The project involves growing ostrich chicks to 8 months for

the Graaff-Reinet abattoir.

Peddie ostrich project (15) in the Eastern Cape is focused on

community development. There are sixty-two black farmers who are

raising ostriches from day-old chicks.

Integrated Meat Processors of the Eastern Cape (IMPEC) is a BEE-

compliant enterprise (16) that employs previously disadvantaged

individuals and supports the Salem ostrich project by processing and

marketing their ostriches.

Camexo, who are suppliers of game industry products in Graaff–

Reinet area (17), initiated an ostrich programme and gave 400

ostriches to a group of black producers who function on their own as

independent producers.

With reference to Figure 7.1, the AgriBEE programmes (numbered 1 – 17)

have been concentrated around the main ostrich-processing hubs,

namely, Oudsthoorn, Mossel Bay and Grahamstown. One of the main

drivers for the programmes has been that they provide localized poverty

relief, job creation and economic growth around these hubs. Sourcing of

raw material such as tanned leather and feathers can be procured more

easily when in close proximity to the processing plants. The craft and

tourism businesses are centred around the Oudtshoorn area and have

benefited from the strongly developed ostrich tourism route.

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Figure 7.1 Spatial distribution of AgriBEE projects in the ostrich industry in

2010


156


The land reform policy in South Africa has been focused on land

distribution, land tenure and land restitution. These three programmes

have mainly dealt with readdressing injustices of the past, relieving

poverty and contributing to the economy. According to Williams

(2005:476) “empowering the poor is a slow and difficult process because it

is easier to assist the rich selectively or to enable a small number to

become rich”. The BEE programmes are intended to provide a vehicle of

support for black South Africans to enable them to participate actively in

the country’s agricultural sector. However, there has been deliberation on

the way BEE has been applied, as some researchers feel that it has

assisted transfer of ownership of enterprises without addressing the

economic emancipation of the majority of black disadvantaged people.

Some enterprises in South Africa view the BEE programme as an

increased cost and risk factor. South African international corporations

had to meet these BEE requirements with increased challenges posed by

an extremely competitive, globalised environment while at the same time

coping with the economically disadvantaged black population (Southall,

Daniel and Lutchman, 2005:455). Further to this, companies have

engaged in practices known as ‘fronting’ and the deliberate circumvention

of the provisions of the Broad Based Black Economic Empowerment,

which has been recently recognised as a form of fraud in South Africa

(Cohen, 2013:para 3).

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This chapter acknowledged the main interventions on how emerging

ostrich farmers and other related BEE programmes achieved participation

into the ostrich industry supply chain. It has been identified that BEE

serves as an important pro-poor policy to accelerate emerging ostrich

farmers into participation into a well-established ostrich industry. As

discussed in Chapter 3, intervention from the private sector and

governmental supporting services is also an essential part of supporting

the emerging farmers’ development. The next chapter presents the results

and findings from a situational analysis of the ostrich industry (see Figure

7.2).


158

CHAPTER 8


8.1 INTRODUCTION

8.2 CONTENT ANALYSIS OF INDUSTRY ARTICLES

8.3 MICRO ENVIRONMENT INFLUENCES

8.4 MACRO ENVIRONMENT INFLUENCES

8.5 STAKEHOLDER INTERVIEWS


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CHAPTER 8


8.1 INTRODUCTION

A situational analysis is a collection of methods to identify trends,

forces and conditions with the potential to influence the performance of

a business (AMA, 2013:para. 22). The aim of this chapter is to report

on the present state of the ostrich industry using several dimensions of

analysis. Firstly, the chapter examines findings from content analysis

of a sample batch of ostrich-industry magazine articles. The objective

of this analysis was to examine main topics of interest on the ostrich

industry which was to serve as an indicator of key industry issues.

Secondly, the chapter defines the micro influences in the ostrich

industry using Porter’s (2008:29) ‘Typical Steps in Industry Analysis’

process. The third section presents a comprehensive analysis of the

ostrich industry through reviewing macro environmental influences

through PESTEL analysis (political, economic, social, technological,

legal and environmental). Finally the chapter concludes with an

analysis of explorative interviews with key stakeholders in the Eastern

Cape ostrich industry. This study has several dimensions in order to

attempt to profile the ostrich industry and forms the preamble to the

research on the Eastern Cape emerging ostrich farmer case studies.

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8.2 CONTENT ANALYSIS OF INDUSTRY ARTICLES

8.2.1 Introduction

Content analysis provides an empirical starting point for generating

new research evidence about the nature of communications (Kolbe

and Burnett, 1991). Owing to limited research information about the

South African ostrich industry, a sample frame of 100 magazine

articles was selected for content analysis from three popular ostrich-

industry communication contributors between 2005 and 2013. The

main communication contributors selected were the SAOBC website,

the South African Farmer’s Weekly magazine and the Shoes and

Views magazine. These three magazines have been the most prolific

with communicating pressing issues in the ostrich industry. The

study’s aim was to illustrate key influences in the ostrich industry

through this process. After the articles had been collated, they were

refined by removing outliers and inappropriate articles that had no

direct bearing on the ostrich industry. Seventy-three remaining articles

were then coded according to common themes.

8.2.2 Synopsis of main themes from content analysis

The themes found in the literature were sorted according to popularity

(Figure 8.1). Seven main themes were identified as central topics in

the ostrich industry, namely, avian influenza, European export

protocols, government involvement, ostrich products, new markets,

industry scale and AgriBEE.

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Table 8.1 Main themes from content analysis of magazine articles

related to the ostrich industry.

Themes Number of

articles

Avian influenza 14

European export protocols 7

Government involvement 7

Ostrich products 7

New markets 6

Industry scale 5

AgriBEE 3

Biodiversity management 2

Competition 2

Conservation 2

Genetics 2

Global economy 2

New products 2

Processors 2

Production 2

Tourism 2

Bio-security 1

Customer preference 1

Disease 1

Feeding 1

Exchange rate 1

Research 1

Grand total 73

8.2.2.1 Avian influenza

Avian influenza was found to be the most popular theme for articles

written about the ostrich industry. Within this theme the outbreak

updates and control of the problem were main topics of discussion.

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8.2.2.2 European export protocols

The avian influenza outbreak and meat ban led to further articles on

the European meat protocol requirements and industry strategies to

maintain exports.

8.2.2.3 Government involvement

Most of the articles related to the South African government were on

export ban updates and the importance of cohesion between the

ostrich industry and the government.

8.2.2.4 Ostrich products

This theme included ostrich products advancements, such as ostrich

leather product developments, new leather markets and pre-heating

meat programmes.

8.2.2.5 Industry scale

The theme related to industry scale was found in articles that

discussed the declining numbers of South African ostriches and the

need for ostrich farmers to restock.

8.2.2.6 AgriBEE

The AgriBEE articles’ main themes were on new programmes and

success stories in the industry.

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8.3 MICRO ENVIRONMENT INFLUENCES

8.3.1 Introduction

Porter (2008:29) contends that “defining the industry in which

competition actually takes place is important for good industry

analysis, not to mention for developing strategy and setting business

unit boundaries”. Porter also described these competitive forces as the

micro environment influences. Porter’s ‘Typical Steps in Industry

Analysis’ framework was used in the current study to explore the micro

environmental influences in the ostrich industry as follows:

To define the products in the industry and to determine the

geographic importance and scope of competition; and

To assess the underlying drivers of each competitive force such as

the threat of new entrants, the threat of substitute products, the

bargaining power of customers, the bargaining power of suppliers

and the intensity of competitive rivalry.

8.3.2 Industry product characteristics

8.3.2.1 Ostrich leather

The production of leather finds itself at the end of the farming livestock

value-chain, which is divided into animal husbandry, the procurement

of hides from farms and processing of the skins into leather at

tanneries. This requires substantial technology know-how and

equipment, the manufacturing of ostrich leather products in factories or

workshops and the marketing and distribution of the end products.

164

Tannery throughput is vital to achieve volumes for competitive

production costs. In the ostrich industry there is a strong export-

orientation of the commodities rather than for finished ostrich leather

goods. The value of ostrich leather is based on its uniqueness (exotic

nature) and only during the 1930s did producers start to realise this.

During the feather boom and the export of feathers to Europe, feathers

were attached to raw ostrich skins. Some European traders

recognised the leather potential, so limited numbers of these skins

were being tanned in England and the Netherlands for the leather

market. The market was negligible as supply was irregular and skins

contained defects which required high pigmented tanning (Gast,

2012:pers. comm.,16 October ).

After deregulation the ostrich industry changed from a demand-driven

to a supply-driven leather industry, resulting in greater trade and

pricing vulnerability. In the ostrich industry the export classification of

ostrich leather includes the ostrich body skins and ostrich leg skins.

Both of these are finished in different tanning stages of wet blue,

chrome crust or tanned finish. According to DAFF ostrich leather is

seven times stronger than bovine hide (DAFF, 2011b:4) and has been

predominantly marketed to the fashion industry for its distinctive quill

patterns and novelty value. The quill pattern on the ostrich skin has a

unique diamond-shaped pattern which spreads from the neck and

down to the wings and the flank areas. According to SCOT

(2011:para. 1) for the ostrich leather grading system the skin is divided

into four quarters, which are each approximately 25 cm wide. The

vertical line runs from the base of the neck between the wings. The

horizontal line runs between the widest parts of the skin from either

side of the crown area.

165

The extent of damage with reference to the size and position in these

quadrants determines the grade and ultimately the price of the ostrich

leather. The ostrich leather prices are also affected by nodule size and

shape (Kritzinger, 2011:21). According to SCOT (2013:para. 5) a high

grade is recommended in order to cover a large areas (grades 1 to 2)

and if you need to cover a smaller areas then a lower grade (grades 3

to 5) is adequate.

The nodules that form the pattern are the result of the removal of the

feather quills from the skin which gives it the exotic appearance.

Nodules are also the factor that distinguishes ostrich leather from

competing "flat leathers". Although no formal standards are available,

the size, shape and distribution of the nodules and pattern have an

influence on the marketability of the leather (Cloete, Van Schalkwyk,

Hoffman and Meyer, 2004:80). Research conducted by Van

Schalkwyk, Hoffman, Cloete and Engelbrecht (2010:3) showed that

grading of ostrich skins had undergone drastic changes over the last

decade due to changes in the ostrich production industry. Today the

requirement for ostrich leather is that it is free from defects and

damage in order to merit the full price.

It is this changing grading system that makes the price of ostrich

leather subjective and payments to farmers inconsistent. The price can

vary dependant on the buying graders’ perception and the intended

end product. The different nodule sizes on the ostrich skin can also

have an influence on how customers purchase according to design

and vamp placement for end-product cutting. The exotic leather

fashion market consists mainly of luxury handbags, boots and small

leather goods. Exotic animal leather makes up approximately 10

percent of the total revenue from handbag sales for luxury brands

(Kew and Roberts, 2013:para. 3). It is the ostrich quill or nodules on

the luxury items which defines ostrich leather as exotic. Recent

research shows that the ideal quill shape and size could be achieved

at 11 months of age (Van Schalkwyk, 2008:4).

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The thicker ostrich skins tend to produce larger nodules which are

more sought after for the cowboy boot market. The thinner skins are

more sought after by the garment manufacturers as they are more

pliable and also have better tanning colour consistencies than the

thicker skins.

Research conducted by Van Schalkwyk et al. (2010:20) observed

increased incidence of tick marks, white spots and pitting over the

years. The aetiology of pitting and white spots in the industry is poorly

understood. Any marking on skins has an effect on downgrading of

skins which a result in lower prices for the farmer. This also includes

damage from farm fencing or thorny vegetation.

The age of slaughter has important cost implications for the meat and

leather. Skin damage increases with age which results in severe

downgrading of skins when they reach 14 months old. Farmers who at

times delayed slaughter in the hope of obtaining better prices have

borne the consequences of more damage to the skins. Van Schalkwyk

et al. (2010:21) also showed that there is a marked variation in skin

value between producers, which suggested that better farm

management resulted in better quality leather.

What is relevant for marketing channels is that exotic leather is

purchased in “lots” of leather and has a grading percent spread such

as 20/30/40/10 (grade1/2/3/4/5). The European buyers opt mainly for

grades 1 and 2 (the top grades), which leave marketers with the

dilemma to find markets for the remaining low grades. This situation

has led to overstocking of low grades and required flushing out or

“closeouts” sales. However, when exotic leather was in limited supply,

priority was given to higher return markets. Sales were concentrated

around these markets and sometimes this was to the detriment of low-

end customers and the domestic market.

167

With reference to Figure 8.1 South Africa currently exports ostrich

leather to the following countries: Korea, USA, Europe, Mexico, China

and Japan.

Figure 8.1. South African ostrich leather exports by destination.

Source: SARS (2012:1)

8.3.2.2 Ostrich meat

The genetics of ostriches have had a influence on meat value.

According to Hoffman, Brand, Muller and Cloete (2008:257) the South

African Black ostriches had the lowest live and carcass weights,

compared to Zimbabwean Blue Necks. The crossbred birds resembled

Zimbabwean Blue Necks more closely with preferable meat traits.

According to Wessels (2003:60), ostrich meat has a wide selection of

meat cuts. The prime cuts of the meat are obtained from the

drumstick, neck and the rump. De-boned cuts are used for cold meats

and lower quality meat serves mainly for the domestic inexpensive

market. The cured meat is also very popular especially because of

their low fat content.

0%

5%

10%

15%

20%

25%

30%

35%

40%

KOREA USA EUROPE MEXICO CHINA JAPAN

2008

2009

2010

2011

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According to Benson and Holle (2004:15) some of the factors

influencing the value of ostrich meat are:

Yield – The increasing meat yield will improve the total revenue per

ostrich for the producer while reducing the bird processing costs at

the same time;

Muscle size - Optimum muscle size is required by processors in

order to prevent loss of revenue;

Grade – Quality inputs and management affect the quality of meat,

namely, colour, flavour and aroma, tenderness, pH, water-holding

capacity and drip loss, shelf-life and microbial load, cold shortening

and cooking losses.

The ostrich meat industry has had a strong focus on the European

market who perceive ostrich meat to be of high value due to low levels

of cholesterol (Cooper, 1999:389). Europe is currently the biggest

world market for ostrich meat, importing it mainly from South Africa,

Israel and even Australia (Horbanczuk, Tomasik and Cooper,

2008:65).

During the second outbreak of Bovine spongiform encephalopathy in

Europe in 2000, the demand for ostrich meat increased significantly

(Hoffman, 2008:1270) as the consumption of beef in Europe at that

time declined and consumers started to look for alternative kinds of

red meat. The multiple European retailers began to stock vacuum-

packed ostrich steak cuts. Tesco, Britain’s largest supermarket chain,

which pioneered the introduction of ostrich meat, carried the product in

300 stores across the UK. Marks and Spencer supermarkets, however

did not sell ostrich meat as according to them there was insufficient

demand to make ostrich meat a profitable product.

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The South African domestic meat market has become an important

alternate offloading outlet and a long-term strategy is required to

develop this market as repeated international meat bans due to avian

influenza impact negatively on stability in ostrich meat sales. In 2012

the domestic sales of raw meat were approximately 15 tons a week,

70 percent more than in 2010 while the optimum according to KKI was

30 to 40 tons a week (Stumpf, 2012b:1). Ostrich meat is now sold

through 1 041 chain retail outlets in South Africa and 541 wholesalers

and other outlets. KKI has the most comprehensive meat distribution

operation in the South African domestic market.

During Europe’s ostrich meat ban after 2011, KKI succeeded in local

market sales through a combination of new marketing strategies,

increased number of outlets and downward adjustment of prices to a

more competitive level with beef (KKI, 2012:3). The ostrich industry

initiated heat treating or par-cooked the ostrich meat in order to export

the meat. This was done in an effort to stop the fluctuation in exports,

because the risk of relying on raw meat exports was too high. Many

ostrich farmers do however not agree with this strategy because heat-

treated ostrich meat sells at a discount due to the operational costs

and yield-losses in the treatment. This method results in the farmer

receiving approximately R1 000 for the ostrich, which some say is still

not viable (Payne, 2012:sec. 4). The standards of processing of South

African ostrich abattoirs are the same as or even higher than those for

high-quality other livestock. South Africa was one of the first countries

that were granted authorisation to export ostrich meat into Europe

(NAMC, 2003:34).

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Figure 8.2 South African ostrich meat exports by destination.

Source: NAMC (2011:10-11)

8.3.2.3 By-products

The ostrich by-products (feathers, eggs, pet food and fat) provide the

farmer with a way of spreading the dependency risk on the primary

products (ostrich leather and meat). The understanding of the

interdependency relationship between the primary products and its by-

products is important in order to facilitate changes in market and

prices. Ostrich feathers have a wide variety of applications used in the

domestic market, namely, feather dusters, automobile manufacturing,

fashion accessories and decoration for interiors. Ostrich feathers are

also exported to the South American costume markets for the carnival

in Rio de Janeiro. The empty egg-shells are purchased primarily for

art work, decoupage and tourism items. The Graaff-Reinet ostrich

abattoir has established a dog food ostrich line from meat waste and

bones to pets. The ostrich fat is used by the cosmetic industry and

there has also been limited interest in the use of ostrich fat for bio-fuel.

0%

5%

10%

15%

20%

25%

30%

35%

40%

2007

2008

2009

2010

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8.3.2.4 Relationship between ostrich products

The main determinants of profitability in the ostrich production are:

Feed conversion to live weight, Yield of meat at slaughter, High quality leather, and Yield of feathers.

In 1993 ostrich meat was primarily the by-product of ostrich processing

as it accounted for only between 10 to 15 percent of the income from

an ostrich (Wessels, 2003:40). With reference to Figure 8.2, from 2002

to 2003 this percentage reached between 30 percent and 45 percent

and between 2007 and 2008 accounted for more than 50 percent of

the income from an ostrich. According to a ratite feeding specialist

(Benson and Holle, 2004:1), “the South African ostrich industry is

moving from a controlled skin supply market to a market-driven

livestock production industry, which includes the marketing of high-

quality meat”.

Figure 8.3: Ostrich product earnings 2003 - 2013

Source: Du Plessis (2013:6)

R ‐ R 200 R 400 R 600 R 800

R 1 000 R 1 200 R 1 400 R 1 600

01/2003

06/2003

11/2003

04/2004

09/2004

02/2005

07/2005

12/2005

05/2006

10/2006

03/2007

08/2007

01/2008

05/2008

11/2008

04/2009

09/2009

02/2010

07/2010

12/2010

05/2011

10/2011

03/2012

08/2012

01/2013

Meat Feathers Skins

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Ostrich farming has been attractive because of its higher and faster

financial returns as compared to those of traditional livestock. A cow

produces a calf which reaches marketing weight after 654 days from

conception (yielding approximately 250 kg of meat) while an ostrich

can produce up to 40 chicks annually that reach marketing age after

only 407 days from conception (42 days of incubation and 365 days of

age) and yield 1 800 kg of meat (Shanawany and Dingle, 1999:141).

The farming process from egg laying to slaughter takes approximately

10 months. The tanning process takes approximately a further eight

weeks after slaughter at the abattoir. The delay in payment for skins is

one of the reasons why farmers prefer farming mainly for meat as they

receive the payment faster than for the leather sales.

A balance exists between meat and skins, as developing a market for

meat without developing an improved market for leather could result in

oversupply of leather and thus fail to maintain the exclusivity of the

exotic leather. Some role players in the industry have indicated that an

ostrich should be slaughtered at the optimum feed conversion stage of

between eight and nine months of age and not at the slaughter age of

eleven months. The optimal slaughter weight can be achieved through

quality feeding programmes and genetic selection (Van Schalkwyk,

2008:77).

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8.3.3 Geographic competitive considerations

The ostrich industry competitive market strength originates from its

historic monopolistic position in the global market and that it had

exclusive control over the ostrich farming sector in South Africa. The

following section discusses how the ostrich-industry competitiveness

evolved in the Oudtshoorn area. Today the infrastructures in

Oudtshoorn consist of multi-million Rand tanneries, abattoirs,

deboning plants, feather sorting and dying, craft factories, marketing

and co-operative and tourism outlets. As with most agricultural

commodities, ostrich farming is influenced by the climatic environment.

Wessels (2003:47) stated that there is a correlation between droughts,

floods and other extreme climatic conditions and the numbers of

ostriches offered for market. Usually extreme weather can have an

effect on the following year’s ostrich numbers.

Oudtshoorn lies at an altitude of 314 m above sea level and receives

an average annual rainfall of 239 mm. The low rainfall has contributed

to the Klein Karoo having a semi-arid climate. The irrigation water in

most areas around Oudtshoorn contains brak water, which means that

the extensive cultivation of crops is not feasible (SAOBCBU, 2009:37).

As there is a limitation on land livestock capacity, ostrich farming has

become the main livestock farmed in the areas and the largest

contributor to the economy of the Klein Karoo and the private sector

has become reliant on it for economic growth and job creation

(SAOBCBU, 2009:8).

One of the main reasons why farming ostriches in this region was

considered, was because of its tolerance to heat. The high summer

temperatures reach a maximum average of 31 °C around Oudtshoorn.

The ostrich has a remarkable ability to withstand air temperatures of

up to 56 °C without undue stress. Heat is expelled by rapid panting via

the well-developed air sac system that avoids over-ventilation and

dehydration, therefore ostriches can thrive is a dry and warm climate

(Jones, 1982:1411).

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The biological survival mechanism of the ostrich allows it also to adapt

to extremely fluctuating environmental conditions. Therefore it can

withstand the cold winters in the region together with the heat of

summers. Since ostriches have a preference for open land with short

grasses, and semi-arid regions they survive in places that are prone to

water scarcity (Cooper, Mahrose, Horbańczuk, Villegas-Vizcaíno,

Sebei and Mohammed, 2009:1675).

The Oudtshoorn area has been prone to drought since the 1860s

(SAWRC, 2010:20) and the semi-arid environment has made pastoral

farming reliant on farm dams and efficient irrigation methods. Other

environmental factors that contributed to Oudtshoorn being an ostrich

farming district, were the fact that the soils were well suited for

farming lucern. According to Evans quoted by Stein (2007:781) the

levels of lime in the alluvial soil of the region’s river valleys presented

ideal conditions for lucern, which in turn provided superb nourishment

for ostriches and allowed for intensive farming.

Important transport infrastructure was provided to the Oudtshoorn area

which contributed to its development, namely, the Meiringspoort

cutting in 1857 provided access to the main route to the North and the

railway line to George was completed in 1913 (Van Der Walt,

1990:194). Later with the onset of the growing overseas markets for

meat and leather the international airports of George and Cape Town

were conveniently accessible for cold storage and timeous transport.

175

The ostrich production in the southern Cape relies heavily on the

availability of pastures as an affordable source of roughage (Van

Schalkwyk et al., 2010:22), the state-sponsored Kamanassie irrigation

scheme was initiated in 1913 with the emphasis on Oudtshoorn’s

vulnerability to drought and the need for more lucerne-bearing land

However, according to a 1913 Agricultural Journal of the Union of

South Africa quoted by Stein (2007:780), the dry Oudtshoorn climate

allowed ostrich farmers to pluck feathers from birds three times in two

years in Oudtshoorn, but this frequency of feather harvesting was not

possible in other areas with higher rainfall such as Grahamstown

where ostriches are farmed.

During the feather boom of the 1900s Oudtshoorn was in the

convenient position of using two of the main ports in South Africa,

namely, Port Elizabeth and Cape Town. However, Port Elizabeth was

a dominant trading port for wool during the late 1800s, which also

contributed to the building of the Feather Market Hall which became

an important venue for public auctions for ostrich feather merchants

(Müller, 2000:37, Pudney, 2013:para. 1).

8.3.4 Competitive forces in the ostrich industry

Only South Africa, Namibia, Zimbabwe and Israel achieved the full

ostrich production chain from eggs to abattoir and processors (NAMC,

2003:36). The strength of the South African ostrich industry lay in its

ability to establish a minimal competitive environment domestically and

internationally. In 1937 the South African Marketing Act established

control boards that had the authority to regulate the marketing of the

relevant agricultural products, but in 1959 the Oudtshoorn ostrich

producers felt that they were not fully benefiting from the protection

provided by the 1937 Marketing Act. The South African ostrich industry

requested that government support the compulsory delivery and

control of a product through a designated co-operative, thus the

establishment of a one-channel marketing system from Oudtshoorn.

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In 1959 when the Klein Karoo Co-operative (KKC) single-channel

marketing system for ostrich feathers was formed all the other ostrich

products were included. Farmers motivated for KKC sole marketing

rights in order to protect the ostrich industry and give Oudtshoorn

exclusivity from the rest of South Africa. Further to that, exclusivity was

also strengthened by the fact that the ostrich farmers also had to

operate under the restrictive provisions of Section 17 of the Livestock

Improvement Act that prohibited the export of any ostrich breeding

material (NAMC, 2003:36). This assisted with restricting the

introduction of bred ostrich strains introduced to overseas markets and

maintaining South Africa's position as the number one ostrich farming

sector. This monopolistic ostrich industry became vital for the income

and job creation in the remote Oudtshoorn area.

According to NAMC (2003:25) the South African agricultural marketing

system proved to be financially and economically unsustainable. The

new marketing of Agricultural Products Act (Act 47 of 1996) was then

instituted and strived to build on the previous Act through improving

market access to all market participants, promotion of efficient

marketing of agricultural products, optimisation of export earnings from

agricultural products and enhancing the viability of the agricultural

sector.

In terms of the 1996 Act, all the schemes of the 1968 Act had to be

abolished by the start of 1998. Section 241 (3) of the Co-operatives

Act (Number 91 of 1981) was withdrawn in 1993 (NAMC, 2003:18).

This ended the single-channel marketing system in the South African

ostrich industry and introduced an unregulated and free market

system. From the early 1900 to 1993 the ostrich industry was exposed

to limited ostrich product competition. From 1993 ostrich products

were no longer marketed and exported through a single-channel

marketing system.

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Since deregulation nine new abattoirs were built, namely, Mosstrich,

Grahamstown Ostrich Abattoir, Swartland Ostriches, Camdeboo Meat

Processors Ltd, Exon, Marowe (Pty) Ltd, Philippe Genuine Ostrich

Products and Camexo (DAFF, 2011b:7). However, the South African

ostrich industry in 1995 was still able to dominate 82 percent of the

world ostrich slaughter figures.

The ostrich industry has been dependent on the export of the ostrich

leather as one of its main incomes. However, since the economic

down-turn in 2008, leather manufactures have been finding alternative

ways to substitute cost effective materials for exotic leather in their

product ranges (KKI, 2012:4). Exotic leather consumers exercise other

choices to other exotics due to unavailability of products. These

circumstances could result in permanent lower demand and loss of

shelf space. During 2008, the prices for handbags from luxury

designers fell by 20 percent and producers of main labels are finding

other means to reduce costs (Kapner, 2009:12). One of the ways is by

replacing genuine leather with faux leather which is also perceived as

a “green” alternative. According to Shane (2003:26), the market for

ostrich hides has been impacted by alternate exotic leathers,

especially from African buffalo (Syncerus caffer) and elephant

(Loxodonta africana) which are procured from culling programmes

operated from South African national game parks.

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The ostrich leather is under constant threat of substitution, unless

there is active marketing and promotions offered to the designers of

fashion houses. Fashion houses which drive the fashion in Europe

have an influence on the U.S and Far East markets. In order for

certain textiles to be used, the textile suppliers need to enter into

productive relationships with fashion designers (De la Haye, 1997:13).

Every year the high fashion designers have to create new collections

which are designed and produced according to the customer requests.

Western Wear and the Far East market sector have particular needs

to meet style requirements and are more price-sensitive.

According to Kriek (2007:6), overseas tanneries aggressively bought

raw material directly from abattoirs and farmers in South Africa. The

South African tanneries could not compete with certain European

market prices due to the high quality or finishes required, which did not

warrant the cost of production. This allowed low-cost and low-quality

tanneries to offer cheaper exotic leather, which had a negative impact

on leather prices and on South African sales, especially in upmarket

exotic leather markets.

179

The South African tanneries have experienced increasing processing

competition from Mexican and Korean tanneries. The Mexican and

Korean exotic leather tanneries have the following competitive

advantages:

They are closer to main global exotic leather markets, namely

Japan and the United States. Japan and the United States are the

largest importers of tanned ostrich skins. Japan at one stage was

importing 120,000 skins per year (Kriek, 2009b:6);

They have fewer environmental restrictions imposed on them,

which makes them very competitive. The repeated failure to control

effluent from leather tanneries in the León, Mexico, for example,

became an environmental problem during the 1980s and 1990s

(Blackman, 2008:22);

Throughput is the primary input parameter on which cost

calculations of tanneries are based (Botes, Jacobs and Pienaar,

2006:9). The Mexican and Korean tanneries are highly competitive

on the cost of processing and do not exclusively tan ostrich, but

also crocodile and snake. This means that the tanneries have

more throughput and reduced unit cost.

Since deregulation of the South African ostrich industry, competition

grew substantially and a large number of independent players joined

the ostrich industry. Wessels (2003:60) found that on the export

markets each role-player sold ostrich products independently of others

which led to the undercutting of prices in order to procure and gain

market share. According to Rayner (2005:1) all newcomers simply

went to established markets and sold at lower prices. No ‘new

markets’ were developed. Owing to this, the ostrich industry initiated a

programme called Ostrivision in 2004 to develop increased

participation of industry stakeholders for sustainable global

competitiveness (Jonker, 2008:14).

180

After deregulation, quality standards were no longer monitored by a

single-channel marketing system and standards in South Africa

became inconsistent which resulted in optimum income levels not

being realized (Wessels, 2003:60). According to a report by the South

African Marketing Council, this local competition had an especially

detrimental effect on the ostrich leather market through price

undercutting in markets resulting in lowered demand (NAMC,

2003:32). One of the largest consequences of the 2004 avian

influenza out-break was the closure of Camexo which was the largest

ostrich tannery in the Eastern Cape. The purchase price was ZAR

1.00 plus the debt, which indicated the difficulties Camexo faced in the

wake of the avian influenza outbreak. The purchase of Camexo gave

KKI the largest vertical ostrich set-up in the Eastern Cape (Leather

International, 2005:para. 1).

Although the ostrich activities spread from the Oudtshoorn area into

the rest of South Africa after deregulation (Greibenow, 2003:4), the

ostrich industry processing took a long time to establish in other areas.

Due to the constraints faced in the industry many of these processing

plants were not sustainable. The industry was limited to only a few

surviving processing plants after 2010. Thus it developed into an

oligopolistic environment in which a particular industry is controlled by

a small group of stakeholders.

The European Union (EU), a key market for the South African ostrich

industry, is progressively being eroded due to the relaxing of bilateral

agreements and the EU shifting towards new trading partners. There

is a growing tendency of increased regulation and selective limitations

of the use of chemicals which are difficult for farmers to adhere to. In

the ostrich industry, prior to 1993, the monopoly created by the single

marketing channel provided the impetus for the ostrich industry which

developed into an intensive agro-processing value chain supported by

select overseas agencies that became gatekeepers to high-fashion

brands.

181

The regulated quantity of ostrich skins from South Africa enabled the

agencies to corner the market which allowed the industry to develop a

strong association with European fashion houses and brands (Kriek,

2010:9). Kriek also stated that “The importance of fashion brands is

that they create a pull effect and industry efforts are focused to

achieve this for ostrich leather. Tanneries should, in their respective

marketing strategies, complement industry activities by working with

fashion brands and the other way around. It is therefore important that

contact with fashion brands should be absolutely professional and that

an image of ostrich leather as a niche product should be built. It is

important to have a relationship with the decision makers within the

fashion organisations rather than with a shop assistant or the person

in the warehouse taking the deliveries.

According to studies on the Jewish community in the Oudtshoorn area,

Stein (2007:784) found that during 1940, 90 percent of Oudtshoorn’s

ostrich feather merchants were from Jewish origin and that articles in

London’s Jewish Chronicle reported on Jews’ ascendancy in the trade,

noting that “this business is almost entirely in the hands of the Jews.” It

can be said that the Jews had played an important role in developing

and introducing South African ostrich feathers to Europe.

182

This was the first grounding relationship that the ostrich industry had

fostered with the European market. The South African ostrich industry

led the world in terms of production, market share and as well as in the

value-adding process. According to NAMC (2003:3), from 1993 to

2002 the South African market share in the world declined from 85

percent in 1993 to about 60 percent in 2002. With reference to Figure

8.3, the ostrich slaughter figures are in decline, but this trend is

favourable to the South African industry as this level of supply will

assist with the ostrich leather retaining its exclusivity.

Figure 8.4 Comparison of KKI and other South African production

Source KKI (2012:2)

183

No literature was found which discusses the rivalry between the

Eastern and Western Cape ostrich industries. It is the researcher’s

view that the competitive rivalry between the two provinces for markets

and farmers existed since the start of South Africa’s ostrich industry.

With reference to Figure 8.5, the evolution of the ostrich industry

originated with involvement from both Eastern Cape and Western

Cape farmers. At the start of ostrich production the main product

derived from ostrich farming was the ostrich feathers, followed then by

the leather and finally the meat. The main export transportation form

was by sea when the industry started and then changed to air cargo.

Owing to the establishment of the single-channel marketing, the

Eastern Cape was excluded from export participation from the 1950s.

Only in 1993 owing to deregulation, the Eastern Cape and other

provinces were able to again participate in the ostrich industry.

However, the outbreak of avian influenza in the Eastern Cape has

reduced the industry’s production to less than 20 percent of the

original registered farms of which today many are not exporting.

184

Figure 8.5 Provincial evolution of the South African ostrich industry


185

8.4 MACRO ENVIRONMENT INFLUENCES

8.4.1 Introduction

Changes in the macro environment indirectly affect industries and

have an influence on performance. The PESTEL analysis, which is

also referred to as PEST analysis, is a strategic management tool to

track the environment or conduct macro environmental scanning. It

also assists in identifying the main influences: political, economic,

social, technological, environmental and legal. According to Johnson

and Scholes (2008:102), the PESTEL framework also contributes to

the future impact of environmental factors. These macro

environmental factors are continually changing and the following

section explores their impact and influence on the future performance

of the ostrich industry.

8.4.2 Political influence

8.4.2.1 Supporting governmental services

The following supporting governmental services have been identified

as playing important supportive roles for the exotic livestock industry:

state veterinary services, import and export control, tariff codes and

taxes, the European Agricultural Attaché, regulatory and controlling

bodies, nature conservation, Threatened or Protected Species

(TOPS), the Convention on International Trade in Endangered

Species (CITES), international policy and representation officers. In

terms of other specialised livestock farming, the national government

and most of the provinces have incorporated the ostrich industry’s

norms and standards into the legislation for the exotic livestock

farming industry. To sell protected and exotic livestock products,

movement permits and CITES permits are required.

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The Department’s allocation of veterinary posts since 2001 at abattoirs

in South Africa has not been up to standard. During an European

Union inspection visit, it was found that several veterinary posts in

South Africa, which were budgeted for in April 2000, had as yet not

been filled. The EU inspection team expressed concern about the

inability of the NDA to coordinate between national and provincial

executive functions. The European Commission viewed this in an

extremely serious light (NAMC, 2003:50). This situation may have

been a “red flag” for Europe and led them to initiate extra caution

towards the South African ostrich industry in order to accommodate

poor application of EU standards and requirements. According to the

Western Cape Department of Agriculture (2012:39), the new

requirements for ostrich farm registrations and auditing currently

implemented for avian influenza will increase the workload of animal

health officials. The current personnel establishment is not adequate

to meet this demand.

The support, co-ordination and prompt certification of export

administration from governmental departments are vital for export-

oriented enterprises. When the European Union banned ostrich-meat

imports in 2004, following the avian influenza outbreak, it cost the

ostrich industry over R600 million in exports and resulted in the

euthanasia of about 26 000 ostriches. While many farmers recovered,

the effect of the current ban may be felt in the long term (Cohen,

2012:2). Another problem is that there is no confidence among the

farmers and breeders because they are insecure about the current AI

control strategy of DAFF. The latest detection of AI in the Southern

Cape did not come about because of movement of birds, as the

affected farms have very good bio-security measures.

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South African ostrich farmers have stated that they have no

confidence in DAFF because they are insecure over the current AI

control strategy. During a recent meeting between a SAOBC

delegation and DAFF, Piet Kleyn, the acting CEO of the SAOBC noted

that there was still a significant gap between SAOBC and DAFF, but

that there had been progress: "We didn’t have high expectations of our

meeting with DAFF, but I think that we’re moving in the right direction".

Although considerable efforts have been made to contain and reduce

movement of ostriches, Piet Kleyn stated:

Incidences of AI antibodies have continued to surface, and

the last 3 positive tests for highly pathogenic H5N2 have

been on ‘closed units’ – farms where the affected birds were

hatched and raised. While there have been instances where

exposure to the virus was from birds that had been moved,

we believe the evidence now is that most incidences are

caused by the disease entering farms from the wild, and

specifically from waterfowl, which appear to be the reservoir

of the disease.

This situation is such that the ostrich industry is governed and

controlled by government disease procedures. These laws may not be

the solution to the continued outbreak of avian influenza. According to

Mpho Maja, the minister of animal health in the Department of

Agriculture, “Progress on the side of the industry is, however,

disappointing: the re-registration of farms is stalling, the farming

practice has not changed, or at least we have not seen the proposed

changes and how they intend implementing them” (Cohen, 2012:1).

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8.4.2.2 The credibility of the South African Department of Agriculture

with the European Union (EU)

The South African government played a crucial role in the identification

and isolation of the avian influenza outbreak, which is on the list of

notifiable diseases of the World Organisation for Animal Health (Law,

2006:227). DAFF requires that the country’s credibility as an exporter

of safe food to the EU be maintained. When the first outbreak of avian

influenza occurred in 2004, DAFF notified the World Organisation for

Animal Health immediately that an avian influenza virus had been

isolated. It was insinuated that the DAFF had been to blame, but the

minister refuted allegations that the EU ban was the result of

negligence by the Department of Agriculture. In an effort to preserve

the country’s international credibility, the DAFF enforced a ban on all

poultry exports from South Africa. This was later enforced by the EU

which demanded accurate monitoring of the disease circumstances

and the measures taken to eradicate the disease.

8.4.2.3 Agricultural Broad-based Black Economic charter (AgriBEE)

The AgriBEE programmes offer little participation downstream in the

ostrich-industry value chain, namely, abattoirs, meat processing,

marketing, agencies and distribution. This participation is found in the

incubation, growing of chicks, breeders, eco-tourism, manufacturing

crafts and shareholding capacity in an ostrich tannery. It is not implied

that there is no BEE beneficiaries in these areas or that the farms are

not BEE compliant, but according to the explorative interviews and

literature study there is only a modest degree of BEE ownership and

independence of ostrich enterprises or processes. As discussed in

Chapter 7, large co-operatives in South Africa view the BEE

programme as an increased cost and risk factor. Interventions are

required to reduce insecurity which undermines the industry’s

competitiveness.

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8.4.2.4 Land reform policy

As discussed in Chapter 7, the land reform policy in South Africa has

been focused on land distribution, land tenure and land restitution.

These three drivers have mainly dealt with readdressing injustices of

the past, relieving poverty and contributing to the economy. According

to Vink (2013) cited in Erasmus (2013:para. 1), land reform has been a

failure. The problems associated with land reform have resulted in an

increase in popularity of farm worker equity-sharing schemes in South

Africa (Gray, Lyne and Ferrer, 2004:377). The land reform scheme

has not been fully implemented in the ostrich industry and has

potential as an intervention for increased emerging ostrich farmer

participation.

8.4.3 Economic influence

8.4.3.1 Farmers’ reaction to global economic downturn

Eighty percent of all processed products from the South African ostrich

industry is exported (Kriek, 2005:13). Therefore only a small amount is

destined for the domestic market, which demonstrates how much the

ostrich leather industry relies on the international market. Any

pressures experienced in the global trade have an influence on

demand, a situation that was experienced during the worldwide

recession during 2008/2009 when ostrich leather was exposed to the

discretionary income of consumers. Another factor that has had an

influence was the ZAR exchange rate. Towards the end of 2009 the

Rand firmed by more than 20 percent against the US dollar. Farmers

overreacted to these economic uncertainties and have not made

sufficient investment in new breeding livestock. This will result in a

declining stock of ostriches for the industry. With reference to the

content analysis of articles on the ostrich industry, two of the articles

were found to be encouraging famers to increase breeding stock on

the farms.

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8.4.3.2 Leather customers’ reaction to the economic downturn

Research conducted by Thorbjarnarson (1999a:469) on the American

alligator (Alligator mississippiensis) market also indicated a

relationship between a market downturn in the East and market

demand, which resulted in a reduction in the crocodile leather prices.

Woodward (1994:5) suggests that in times of economic downturn

customers are likely to delay or stop purchasing expensive exotic

leathers and substitute more affordable exotic leathers. According to

Du Plessis (2011:4), the luxury goods are susceptible to economic

cycles in the short term, but over a long period have shown economic

growth.

8.4.3.3 Volatile markets

Du Plessis (2011:6) found that, in the crocodile sector, farmers tended

to keep large stock holdings to ease impact volatility. Thus the

marketing of exotic leather for the fashion industry necessitated a

certain amount of forecast-driven supply. Research conducted by

Woodward (1994:8) revealed that, during poor crocodile market

conditions and because of the cost of maintaining stock and the need

for cash flow, farmers were forced to slaughter and market skins which

resulted in a downward pressure on the sale of skins. When the

ostrich industry was deregulated, it resulted in wider participation from

other countries, producers, exporters and agents. Buying agencies

started to withdraw from the South African single-channel marketing

system which caused reduced market retention. The ostrich industry

changed from a demand-driven to a supply-driven industry, resulting in

an ostrich leather trade that became vulnerable, with an inelastic

supply chain for an elastic market.

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8.4.3.4 Foreign exchange

In 2002, the increasing farming input costs, together with the

strengthening of the Rand compared to other foreign currencies,

continued to erode profits in the ostrich industry. This saw the start of

the ostrich processing and producers leaving the industry because of a

combination first of market conditions and then later the outbreak of

avian influenza. According to Wessels (2003:57) although the industry

developed ostrich meat as an exotic meat with a type of exclusive

niche market, it still had to compete against other commercial meats

such as beef and poultry. When the outbreak of bovine spongiform

encephalopathy was contained, the consumers in Europe turned back

to cheaper meat consumption. One of Europe’s leading supermarkets,

Tesco, subsequently failed to develop a regular ostrich meat demand

following the recovery of the beef sales and ceased carrying ostrich

meat, while other supermarkets like Sainsbury succeeded in

establishing a regular low demand (Adams and Revell, 2003:para. 5).

This state of affairs brought about a drop of 30 percent in ostrich

prices between 2002 and 2003. At the same time the exports

experienced a recovering Rand against the euro while the US dollar

also strengthened dramatically. Both these factors had a negative

impact on the shelf space and market.

192

8.4.3.5 Scale of industry

The marketing of ostrich leather was easily regulated before the

deregulation of the industry, but after deregulation the production of

ostriches increased substantially from 160 000 per annum to more

than 286 000 ostriches per annum in 1997 NAMC (2008:31). This

sudden increase in exported ostrich skins disrupted the structured

distribution channels to the extent that leather prices dropped from

$40/square foot in 1993 to below $22/square foot during the mid-

nineties. During 1997 the ostrich leather industry faced its first crisis

and this was mainly due to the overproduction of ostrich leather. The

overproduction led to lower prices and farmer liquidations in 1998 led

to reduced slaughter volumes in 1999. The drop in volumes stabilised

the markets, hence the ostrich leather price started to recover (NAMC,

2003:31).

During the outbreak of bovine spongiform encephalopathy and foot

and mouth disease in Europe in 2000, the European demand for

ostrich meat exceeded supply. According to Wessels (2003:54) this

resulted in an increase of 40 percent in ostrich meat prices between

December 2000 and September 2001. However, during this same

period ostrich leather prices dropped by 38 percent. The ostrich

leather prices battled to recover and were still around USD10 per

square foot at the beginning of 2003. This may be an indication that

the industry tried to gain a meat market share at the expense of over-

producing the exotic leather (Kriek, 2009b:6).

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The ostrich slaughter levels today are at the same levels as they were

during deregulation in 1993. According to KKI (2012:3) the day-old

chick production for the 2013/2014 slaughter year indicates a trend

that ostrich slaughter figures may drop below 150 000 per annum. In

2009 Klein Karoo International stated:

In the medium-to-long term KKI is correctly positioned to

perform well. If worldwide stock levels for exotic leather are

analysed, it appears that ostrich leather stocks are at their

lowest. KKI believes that the market development focus, as

discussed above, will contribute further towards stimulating

demand for ostrich leather” (KKI, 2009:5).

According to Benson and Holle (2004:1) ostrich production should

never become a mass livestock production industry for the meat but

should rather remain focused on skins as the primary product.

8.4.3.6 Domestic market

In research conducted on ostrich meat by Wessels (2003:44),

interviews with South African wholesale meat companies indicated

that South Africans’ meat consumption preferences do not favour

ostrich meat. The respondents in this research suggested that the

South African market prefers beef and there appeared to be a growing

tendency towards poultry meat.

194

Another finding based on some of the participants’ responses in the

above-mentioned research, was that the domestic markets need a

constant supply and that ostrich meat suppliers found it difficult to

maintain such a supply. Wessels (2003:50) found that the availability

of ostrich meat in the months between March and November was not

a problem. Owing to the seasonal slaughtering of birds, most abattoirs

operate in a cycle of full capacity between November and March.

However, during the rest of the year large overseas contracts have to

be honoured and no regular supply of meat can be guaranteed for the

domestic market. In introducing ostrich meat to other African countries

like Egypt, it was found that the Egyptian market preferred the cheaper

meats like chicken and beef (Cooper, Mahrose, El-Shafei and Marai,

2008:350).

8.4.3.7 Increasing input costs

In 2001 the input costs for ostrich production were R155.00 for

bringing an ostrich to the age of three months. This cost had escalated

within the same year to above R180.00, the main contributor of the

cost being the price of maize, which increased within 12 months from

R690/ton to R2 000/ton (NAMC, 2003:33). According to Vink (2013)

cited in Erasmus (2013:para. 1) the labour cost accounts for about 25

percent of total production costs, and added to this South African

agriculture is facing an increase in unemployment among the lowest

skilled workers. The declining profitability due to increasing input costs

will make entry for emerging farmers difficult and only those farming

with a higher scale of output will be able to withstand this increasing

burden.

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8.4.4 Socio-cultural influence

8.4.4.1 Fashion demand

According to Burger (2003:4) market trends are affected by changes in

customer desires and fashion which influence buying behaviour.

Belleau, Marquette and Summers (2004:53) found that the exotics

were primarily found in other upmarket products such as boots, belts,

handbags and other small goods. Use of exotic leather for luxury

goods started in the 1920s when the fashion house Louis Vuitton

made their luxury goods range from crocodile leather and snakeskin.

Louis Vuitton has continued to produce exotic leather goods for the

European middle class (Quilleriet, 2004:130) and the European market

for South African exotic leather is still the same. The exotic leather

market is fuelled by fashion demand (Belleau, 2002:65) for it is the

fashion houses that drive fashion in Europe.

8.4.4.2 Luxury market

According to Kriek (2009b:1) thirty percent of ostrich leather is sold to

luxury brands, which are recognised for their exotic leather ranges and

high quality. This is a sought-after market where quality matters more

than the price. Since ostrich leather demand is greatly determined by

the luxury market, future research is required to understand the

fashion trends of this luxury market and what the determinants of

these fashion cycles are in terms of ostrich leather. The luxury supply

chain is complex as demand for exotic leather goods is not based on

necessity but rather on fashion (Stumpf, 2011:4). Exotic leather is an

important segment of the global leather industry, but ostrich leather is

not the only preferred exotic leather and competes with reptile leathers

used in the luxury product line (Thorbjarnarson, 1999b:469).

196

The most critical prerequisite for supplying into the luxury market is

quality. Strict delivery dates need to be adhered to and tardy supply

can lead to materials not meeting the intended purpose in a highly

sophisticated European production line. This therefore results in skins

losing value or processors losing contracts if the above is not met.

During the economic down-turn in 2008, researchers indicated that the

luxury market would be negatively affected although less so than the

rest of the retail market. According to Kriek (2009b:1), the luxury

market was the slowest to be affected by this economic downturn and

during the upturn in the economy the luxury market quickly recovered.

8.4.4.3 Health-conscious market

The market for ostrich meat is mostly in Europe where the product is

highly appreciated as an alternative to other red meat because it is

considered to be a healthy choice. When compared to beef, ostrich

meat has a satisfactory fatty acid profile and a low fat and cholesterol

content (Sales, 1999:262). Ostrich meat has increased market

potential as consumers become more aware of its health benefits and

nutritional quality (Hoffman, Joubert, Brand and Manley, 2005:45).

8.4.5 Technological influence

8.4.5.1 Leather processing

The processing of the skins into leather in the tanneries requires

substantial technological know-how and equipment. In the tannery

beam-house, the hides are sorted, trimmed and cured. The processes

include soaking, liming, fleshing and splitting. The tannery operations

consist of de-liming, bating, pickling and tanning. Post-tanning

operations involve dyeing with dyestuffs, fat liquoring and drying. The

final stage in the process is the finishing operation, the aim of which

process is to treat the upper grain leather surface. It is during this

phase that leather gains most of its value in the value-chain.

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8.4.5.2 Meat processing

Prior to the ostrich-meat ban, the meat produced in South Africa was

exported to the European Union as chilled meat at between -2°C and

-4°C (Schutte, 2008:1). However, owing to meat export restrictions the

market risk for ostrich meat has been removed due to a heat-treated

process.

The EU meat-ban excludes meat that has been heat treated at 70°C

(Stumpf, 2012a:1). This heat-treated meat for export requires

substantial technological know-how and equipment. The heat-treated

meat process represents the future for the ostrich meat industry as it

provides defence against disease outbreaks and supports long-term

development of export markets. KKI expansion of meat heat treatment

capacity from 2 000 to 3 000 tons per year was done in order to

reduce stock build-up and to accommodate the ban on fresh meat

(KKI, 2012:3). However, this facility is limited to farmers who supply

through certain marketing channels for export.

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8.4.6 Environmental influence

8.4.6.1 Pollution reduction

While animal husbandry requires considerable water consumption and

energy expenditure, producing leather requires further intensive

industrial chemical and tanning processes. Crocodiles are raised and

farmed in confined intensive livestock operations in order to maximise

skin growth. This kind of production is typical of industrial agriculture

using technoscientific methods and with large numbers of livestock

being farmed on limited areas of land. Operations are strictly regulated

by the relevant authorities. Since both the ostrich and the crocodile

agro-processing industries produce large amounts of hazardous and

toxic waste, they require mechanisms to facilitate stringent monitoring.

Tanneries require waste disposal and effluent treatment plants in order

to comply with environmental legislation. Since 2004, more stringent

regulations have been imposed by authorities in Europe for the proper

management of effluent plants of ostrich leather tanneries in South

Africa (Schoeman, 2007:14). There are also several organisations

(Greenpeace) that exert pressure on the leather industry for its

environmental practices. This increases demands on the sale of

leather goods by fashion brands and they retaliate against the

tanneries by introducing more stringent environmental and safety

specifications (Kriek, 2011:parar. 12).

199

8.4.6.2 Conservation

Research conducted by the Food and Agriculture Organization of the

United Nations, showed that the animal agriculture sector is

responsible for 18 percent of human-induced greenhouse gas

emissions. According to Humane Society International (HSI, 2010:1),

the livestock production sector is the single largest anthropogenic user

of land, contributing to soil degradation, dwindling water supplies and

air pollution. Furthermore, it has a detrimental effect on rural and

urban communities, public health and animal welfare. Livestock

farming is largely underestimated and environmental impact on global

warming and climate change is still largely unknown.

The SAOBC obtained a grant of UD$120 000 from the Critical

Ecosystem Partnership Fund in the USA for a project to promote the

sustainability of the ostrich industry in a sensitive biodiversity region by

developing farm-level best practice guidelines and providing extension

and advisory support to ostrich farmers.

According to the Conservation of Agricultural Resources Act (No 43 of

1983), the management practices and stocking rates on all ostrich

farms should be compatible with sustainable agriculture. As the

sensitive natural veld is susceptible to the feeding habits and trampling

effect of ostriches, farmers are required to apply for permission should

they decide to use natural veld for grazing or breeding of ostriches.

Farming ostriches on natural veld necessitates that camps be well

planned to prevent soil erosion and to ensure the ecological

preservation of biodiversity.

200

A biodiversity management strategy have been implemented in the

industry and it focuses on pen breeding as the preferred alternative as

this method encourages continuous genetic improvement through

proper record-keeping and selection and shows huge potential for

increased production. The rationale behind promoting pen-breeding is

to decrease the pressure on the natural veld. If a farmer can achieve

increased production using a pen-breeding system, the ostriches will

be taken off the natural veld for breeding in pens. However, many

ostrich farmers show resistance to switching from flock breeding to

pen-breeding for various reasons, namely, lack of knowledge, costs of

pen construction and resistance to changing from the current style of

farming based on history.

8.4.6.3 Animal rights

The rearing of animals for the commercial processing and trade of

their skins is seen by some groups as an unethical activity.

Irrespective of the present situation, however, producers and suppliers

need to be aware of the potential impact of ethical trading issues

(UNIDO, 2004:48). Although the People for the Ethical Treatment of

Animals (PETA) focus is on several areas that it identifies as animal

abuse, PETA chooses to concentrate mainly on factory farms,

laboratories, the clothing trade, and the entertainment industry (Julius,

2012:44). It is the growing sensitivities towards the use of animal skin

for the clothing trade that has the greatest influence on the future of

the exotic leather trade.

201

8.4.6.4 Climate change

As early as 1994, Dean and Macdonald (1994:281) highlighted that

the production potential of drylands had decreased markedly in semi-

arid and arid rangelands throughout the Savannah, Nama-Karoo and

succulent-Karoo biomes of the Cape Province (Dean and Macdonald,

1994:281). As ostrich farming occurs predominantly in semi-arid areas

in the Western and Eastern Cape, it will continue to be under

continuous pressure for water and feed resources due to climate

change. However, according to Jones and Thornton (2009:427), the

impacts of climate change is expected to reduce crop yields between

10 and 20 percent in Africa. Therefore, marginal land for crop

production will become increasingly marginal, and livestock may

provide an alternative to cropping. Farming with ostriches which are

well suited to semi-arid areas provides an alternative option.

8.4.7 Legal influence

8.4.7.1 Veterinary Procedural Notice requirements (VPN04)

The large volume of meat exported to Europe leaves the ostrich

industry vulnerable to adjustments in the EU regulations. In 2012,

South African authorities enforced veterinary procedural standards for

the registration, maintenance of registration and official control of

ostrich compartments in South Africa (DAFF, 2012). This protocol was

issued mainly in response to the avian influenza outbreak in 2011.

According to Section 9 of the Animal Diseases Act, 1984 (No 35 of

1984), the Minister of Agriculture prescribed control measures relating

to keeping and movement of ostriches as published in the Government

Gazette No. R.29320. The VPN04 defines all ostriches “that are

reared for the production of meat or eggs for consumption, for the

production of other commercial products, for restocking supplies of

game or for breeding these categories of birds” as poultry.

202

Legally the veterinary procedural notice is authorised to enforce the

following requirements on ostrich farmers:

keeping of ostriches in approved ostrich compartments;

registration of approved ostrich compartments;

official control of registered ostrich compartments;

restricting movement of ostriches between registered ostrich

compartments;

additional requirements for the export of ostrich meat to the EU;

action to be taken in the case of disease outbreaks or suspected

disease outbreaks; and

specific disease prevention and control measures for avian

influenza to prevent as far as possible the introduction as well as

the spread of avian influenza amongst the national ostrich

population.

It is the researcher’s view that adhering to the VPN04 requirements

has assisted with maintaining exports, however, it has increased the

barriers to entry into the export industry and burdened the intensive

production system and administration.

203

8.5 STAKEHOLDER INTERVIEWS

The predetermined semi-structured interviews provided a platform for

open ended question discussion. Four interviews were conducted

with main role players that are active or have strong ties to the

Eastern Cape ostrich industry. Two participants represented larger

companies in the industry which had been involved in one channel

marketing prior to deregulation (Large_M and Large_O) and the other

two participants represented smaller companies not involved in one

channel marketing prior to deregulation (Small_P and Small_G). The

interviews were captured by audio recording and typed as transcripts

in ATLAS.ti manager. Code labels were allocated to the participants’

discussion and then these were sorted and allocated sub category

codes. All coding was grouped into so-called Code Families. Codes

were added to a data base and frequency and the linkages to other

codes were measured, for example "supply demand parameters (23-

3)" means that the code was used 23 times (grounded) for coding

and it is associated with three other codes (density). High frequencies

indicate that a high number of quotations under these code labels

have been allocated and are good candidates for a closer

examination. In Figure 8.5 the codes have been sorted according to

the frequency of use.

The following topics were broadly discussed in the explorative

interviews:

ostrich farming and production;

ostrich products;

intermediary agents;

marketing channels; and

threats to the industry.

204

8.5.1 Ostrich farming and production

When the participants were asked about the intensity of the ostrich

industry all of them agreed that it was very intensive (coded as

farming_intensive and production_intensive). The animal husbandry

requires significant attention and producing leather requires intensive

industrial tanning processes. Some comments extracted from the

transcript described the industry as:

“Too complicated and intensive farming livestock” ; and

“Very intensive form of agriculture, high density chick pens requires

checking on the chicks”.

8.5.2 Ostrich products

According to the participants, ostrich leather which is today the main

product is primarily used for the following luxury goods: handbags,

boots and small leather items (coded as Market_handbags,

Market_EU and Market_fashion house brands).

This confirmed findings by Belleau et al. (2004:53) that the exotics

were primarily found in other upmarket applications, namely boots,

belts, handbags and other small goods. The high quality skins are

being exported to Europe and low quality skins to Mexico and Korea.

Also discussed was that exotic leather industry should be working in

closer co-operation with the fashion house buyers in order to stream-

line the value chain and to mitigate fashion changes.

205

The importance of working with recognised and high value brands

was emphasised. Some comments extracted from the transcript

explained the product environment as follows:

“The handbag market is important”;

“Handbags were part of the high level market”;

“50 % of skins for handbags to Europe and 30% for the boot market

in the US.”; and

“That leather was the largest growth generator in the leather divisions

in the European fashion houses”.

8.5.3 Intermediary agents structure

The establishment of partnerships with suppliers will increase the flow

and exchange of information and the transfer of technology. However,

Memedovic (2008:515) stated that the involvement of intermediary

agents who controlled international trade skins resulted in long lead

times and increased costs. It also prevented direct contact with the

customer. The stakeholders agreed that agent structure setup by the

single-channel marketing was vital for the ostrich industry (coded

market_agent system, market_protection and market_experience).

After deregulation the market agencies started to withdraw from the

South African single-channel marketing system which resulted in

reduced market retention.

206

Some comments extracted from the transcript explained the market

agent system as:

“best distribution network of relationships in the world”;

“strong agent system”;

“Germany agency was very strong”;

“agents had control of supply”; and

“deteriorating agent structure”.

8.5.4 Marketing channels

The stakeholders explained that deregulation of the ostrich single-

channel marketing system in 1993 had a substantial effect on the

value chain on which farmers depended for market access (coded

deregulation_change). Prior to deregulation the single marketing

channel co-ordinated the quantity of ostrich skins sold to the market,

which facilitated industry equilibrium between supply and demand

(coded supply demand parameters). Deregulation influence on

changing the governance in the value chain from South Africa to

Europe was also discussed (coded value chain governance). Some

comments extracted from the transcripts gave the following views of

the influence of deregulation:

“Before deregulation, risk was different. There was only a debtors

book only for South African clients”;

“After deregulation the competition sold direct to manufacturers at

lowest price….. this resulted in many losing money after

deregulation”;

“Only after deregulation the power of the agent structure was

realised”;

“after deregulation more farmers farmed outside the Oudtshoorn

area”; and

“before deregulation the industry did not know what competition was”.

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8.5.5 Threats to the industry.

The stakeholders were not in agreement about the main threats in

the ostrich industry (coded market threats and risk). One participant

felt that the meat ban would not have such a negative impact as it

would bring down the number of skins produced which may result in

a shortage and therefore high skins prices, which the industry thrived

on before deregulation. Other main threats discussed were an over-

supply of skins and the global economic down-turn.

8.5.6 Network View

In Figure 8.6 the conceptual framework displayed in the Network

View shows the relationships between main codes as a visual format.

The codes are linked together to indicate relationship and influence.

Due to deregulation (coded deregulation_change) the main grounded

codes, namely, market protection (coded market_change), value

chain governance (coded value chain_governance) and supply

parameters (coded Supply Demand parameters), which have been

influenced by the changes in the market agent system (coded

market_agent system). The market agent system provided an

important function for market penetration (coded market_penetration)

and market experience (market_experience) into the European

fashion house market (coded market_fashion house brands). There

has been criticism of the present market structures, which have not

been able to duplicate what the industry had before deregulation

(coded market_SA method criticism).

208

Figure 8.6 List of main grounded and density of codes

Code Grounded Density

Figure 8.7 Network view of axial coding with relational linkage

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8.5.7 Analysis of Code Families

The codes were grouped to form the following main code families from

the interviews:

Farming;

Market;

Government;

Production; and

SA industry

The code families were tabled (Table 8.2) and counted to determine

frequency and significance. The stakeholders from the larger

companies (Large_M and Large_O) provided more detailed

information on markets and production. This was an indication that the

participants from larger companies had more experience and

exposure in the export value chain. However, one of the smaller

companies (Small_G) showed more emphasis on the importance of

government involvement in the ostrich industry and governmental

mediation for international issues. This was an indication of the

reliance smaller processors have on governmental support in the

ostrich industry.

Table 8.2 Analysis of Code Families between respondents

P 1:

Large_MP 2:

Large_O P 3:

Small_P P 4:

Small_G TOTALS:

Farming 4 3 1 0 8

Market 19 16 6 4 45

Government 0 2 0 7 9

Production 5 15 4 3 27

SA industry 4 8 4 8 24

TOTALS: 32 44 15 22 113

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Findings from these interviews highlighted the limited information available in literature and research on the following ostrich-industry influences:

Ostrich agent system;

Industry focus on handbags market; and

Shift in market protection.


This chapter presented a situational analysis on the ostrich industry.

The information gathered was analysed with the view to gain insight

into the present state of the ostrich industry. The following sources of

information and analysis were used: ostrich-industry magazine

articles, Porters’ Typical Steps in Industry Analysis, PESTLE analysis

and explorative interviews with key stakeholders.

Seven main themes were identified in industry magazines, namely,

avian influenza, European export protocols, government involvement,

ostrich products, new markets, industry scale and AgriBEE. It was also

found that the production and establishment of the ostrich industry in

the Oudtshoorn areas has been influenced by a supportive

environment of: veterinary and extension services, research,

development of irrigation systems and agro—processing

infrastructure. However, South Africa’s technical know-how in terms of

farming, finishing and marketing ostrich products has resulted in its

global competitive edge.

211

As the majority of South African ostrich products are being exported,

the EU regulations and the role of intermediary agencies are becoming

important factors influencing entry into the high end markets in

Europe. South African government intervention and the government’s

role in alleviating bio-security concerns have become vital to maintain

the open European market. Other forces that have had an impact on

the industry have been the lack of new markets and the global

economic downturn. The deregulation of the single-channel marketing

system in the ostrich industry had a strong effect on the industry. One

of the main recurring issues that have been highlighted is the

importance of the demand and supply equilibrium to maintain the

exotic value for the ostrich leather.

This confirms the findings by the National Agricultural Marketing

Council that “although the difference in volumes may seem irrelevant,

the international supply and demand volumes are delicately balanced

and 50 000 skins difference from the previous year has a significant

impact and there was not enough done to assist with this

transformation” (NAMC, 2003:3).

Other findings from the explorative interviews highlighted that the

deterioration of the intermediary agent structure had reduced market

penetration and protection. As discussed in Chapter 3, South Africa

has used merchant houses or agents for European trade since the

1800s. The Jewish community network had a role in grounding the

ostrich industry with the European market, which was an important

step in the founding of the ostrich industry. The agents have a great

influence in the entire international supply chain which includes

specifications, the process and the implementation of quality systems.

It is the researcher’s view that the European intermediary agents are

vital to the process of gaining new markets and to maintain

relationships and this is especially required in the sophisticated

fashion markets and highly restrictive EU food networks.

212

The change in the value chain governance after deregulation brought

about a change from a demand-driven to a supply-driven chain, which

subsequently resulted in the industry being more susceptible to the

demands of the EU. The following main drivers have been identified

as having the most impact on the ostrich industry:

Governmental support;

Land reform;

Disease (bio-security and avian influenza);

Geographic competitive considerations;

Intensive farming practices;

Pre-heating of meat;

Feed inputs;

European Union;

Economic downturn;

Intermediary agents;

Volatile markets;

Scale of industry; and

Market channels.

A relational messy map in Figure 8.6 has integrated the main

production practices identified in Chapter 5 and combined the industry

products, driving forces, micro, macro influences and findings from the

interviews. The map assists synthesis and summaries the linkage

between influences and driving forces in the ostrich industry. Due to

the numerous dimensions of this study, a word cloud format was used

to give greater prominence to words that appear more frequently from

sources of this study. The outer circles represent the main macro

influences and the inner section represents the micro influences.

214

This chapter has contributed to providing an understanding of the

complexity of the ostrich-industry environment and serves as a

backdrop for the study on the emerging ostrich farmers in the Eastern

Cape. It is the researcher’s hypothesis that the most pressing issues in

the industry have been highlighted in the yellow segments in Figure

8.6. These issues will be main areas of focus for the following

chapters. The findings will assist with identifying critical influences that

require interventions for emerging farmers in the ostrich-industry

supply chain. The next chapter will discuss the findings from emerging

ostrich farmer case studies in the Eastern Cape (see Figure 8.9).


215

CHAPTER 9

PRESENTATION OF FINDINGS:

EASTERN CAPE EMERGING OSTRICH PROGRAMMES

9.1 INTRODUCTION

9.2 QUESTIONNAIRE FINDINGS

9.3 FINDINGS FROM FOCUS GROUPS

9.4 FINAL DISCUSSION

216

CHAPTER 9

PRESENTATION OF FINDINGS:

EASTERN CAPE EMERGING OSTRICH PROGRAMMES

9.1 INTRODUCTION

The previous chapter presented the findings from the situational analysis

on the ostrich industry and its supply chain in order to set the scene for the

analysis of the emerging ostrich farmer case studies.

The objective of this chapter is to gain a greater understanding about the

emerging farmers and their participation in the ostrich industry. This

chapter presents the findings from the questionnaires administered and

focus groups conducted at the emerging ostrich farmer programmes.

9.2 QUESTIONNAIRE FINDINGS

The data collected from the questionnaires gives a brief synopsis of

demographic information, biographical information, human capital

endowments, farming systems, market access and institutional support

services. Frequency counts, percentages and descriptive statistics were

used to present the results. The questionnaires were administered to five

ostrich programmes at Peddie, Rockhurst, Hlumani Co-operative,

Zamukwanda and Mimosadale. Not all the farmers participated at Hlumani

and Zamukwanda and where possible, missing information was provided

by farmers who were present.

217

9.2.1 Profile of farmers and socio-economic aspects of programmes

The study shows that 60.9 percent of the surveyed farmers were women

while 39.1 percent were men (Table 9.1). This mean was anticipated due

to the fact that the Rockhurst programme had been primarily initiated for

women. However, the Peddie and Hlumani programme also shows that

there was more interest from women than from men to participate. Table

9.2 shows that the majority of the farmers were married and not household

heads.

Table 9.1 Farmers’ gender

Peddie Hlumani Zamu Rock Mimosa Total

N % N % N % N % N % N %

Male 10 50.0 4 40.0 3 50.0 0 0.0 1 100.0 18 39.1

Female 10 50.0 6 60.0 3 50.0 9 100.0 0 0.0 28 60.9

TOTAL 46 100 Source: Questionnaire data (2013)

Table 9.2 Farmers’ marital status


N % N % N % N % N % N %

Married 12 60.0 0 0.0 2 100.0 8 88.9 1 100.0 23 67.6

Unmarried 8 40.0 2 100.0 0 0.0 1 11.1 0 0.0 11 32.4


Table 9.3 shows that the average age of participants for all the

programmes was 45 years old. The Pearston programme was the only

one in which the participants were under 40 years old. According to Kinsey

and Binswanger (1993:19), those under 45 years old were generally the

most successful. This was probably due to greater physical vigour and

better state of health. According to research conducted by Weir (1999:25),

it was found that the older farmers became less productive as they aged.

218

The age also has an impact on managerial experience as well as attitudes

toward modernisation and risk-taking in agriculture. However, Van

Rooyen and Njobe-Mbuli (1998:129) stated that when farmers were

nearing 50 years old they might have dependants who could be involved

and which might improve the labour source. The older aged farmers

probably have their children working away from home and caring for

grandchildren, which may explain the high number of child support grants

per home (see Table 9.9).

Table 9.3 Average age of farmers

Groups Count Sum Mean Variance Min MaxPeddie 20 1002 50.1a__ 147.989474 21 64Hlumani 10 505 50.5 a_ 189.611111 21 69Zamu 6 195 32.5 b_ 9.5 28 36Rockhurst 9 393 43.7 ab 135 26 58Mimosa 1 52 52.0 ab

P-value F 0.02628311 3.0796634 46.67

Means sharing a common letter are not different at 5 percent level significance

Table 9.4 Age groups of farmers


N % N % N % N % N % N %

18-30 yrs 2 10.0 1 10.0 1 16.7 1 11.1 0 0.0 5 10.9

31- 45 yrs 4 20.0 1 10.0 5 83.3 4 44.4 0 0.0 14 30.4

> 45 yrs 14 70.0 8 80.0 0 0.0 4 44.4 1 100.0 27 58.7


Table 9.5 shows that the average period of residence for all the

programmes was 36 years. In Zamukwanda and Mimosadale there was

an association between period of residence and age, meaning that the

farmers had settled in the area from birth and had shown little migrancy.

219

Table 9.5 Average period of residence

Groups Count Sum Mean Variance Min MaxPeddie 20 797 39.9 166.3 19 64Hlumani 2 46 23.0 578.0 6 40Zamu 6 195 32.5 9.5 28 36Rockhurst 9 305 33.9 246.1 9 58Mimosa 1 52 52.0

P-value F 0.251695644 1.411872 36.7

Source: Questionnaire data (2013) Table 9.6 shows that the mean household size was 4.9. According to

Roberts (2001:20), rural households in South Africa that have a household

size between 5.01 and 4.93 are not classed as being chronically poor,

therefore the farmers participating in these programmes did not reflect

high poverty backgrounds. However, there were some of the households

in Peddie, Zamukwanda and Rockhurst that had high household sizes.

Van Rooyen and Njobe-Mbuli (1998:129) stated that the economic

performance of households has a strong association with the number of

family members who are able to work. According to Lapar, Holloway and

Ehui (2003:207), the household size affects both the participation and

sales decisions due to increased responsibilities for risk bearing.

Table 9.6 Farmers household size

Groups Count Sum Mean Variance Min MaxPeddie 20 95 4.8 3.7 1 8Hlumani 2 5 2.5 4.5 1 4Zamu 6 35 5.8 8.6 2 9Rock 9 48 5.3 3.8 3 9Mimosa 1 4 4.0

P-value F 0.371151567 1.103854 4.9

Source: Questionnaire data (2013)

220

Table 9.7 shows the contribution of the social security systems to

household income. Each of the farmer’s households had access to one

social grant which confirms findings by Andrew, Ainslie and Shackleton

(2003:2) that the majority of South Africa’s poor rural residents derive their

livelihoods from off-farm sources. Table 9.8 shows that the majority of the

grants were child support grants. According to Booysen (2004:54), the

child support grants have the lowest value of the social grants and are not

sufficient to enable households to escape poverty. The lack of available

grants may have led to the interest of these farmers in participating in the

ostrich programmes.

Table 9.7 Number of social grants in the farmer’s household

Groups Count Sum Mean Variance Min MaxPeddie 20 31 1.6 1.9 0 5Hlumani 2 3 1.5 4.5 0 3Zamu 2 0 0.0 0.0 0 0Rock 9 11 1.2 0.4 0 2Mimosa 1 0 0.0 0 0

P-value F 0.40521137 1.036722 1.32


Table 9.8 Number of child support grants in the farmer’s household

Groups Count Sum Mean Variance Min MaxPeddie 20 24 1.2 1.1 0 4Hlumani 2 3 1.5 4.5 0 3Zamu 2 0 0.0 0.0 0 0Rock 9 8 0.9 0.6 0 2Mimosa 1 0 0.0 0 0

P-value F 0.404331363 1.038525 1.03


221

9.2.2 Human capital endowments Table 9.9 shows that most of the farmers who participated in the

programme had a secondary education. Most of them had completed the

lower standards of secondary education and less than 5 percent had

completed the final year of secondary education. The younger Rockhurst

group of farmers who all had recently completed secondary education

were the highest educated of those in the case studies. According to Van

Rooyen (1995), the majority of black people in South Africa were denied

access to educational institutions and particularly agricultural institutions

during the apartheid era and therefore, the older farmers would have been

negatively influenced by these education policies. According to Evenson

(1988:25), higher levels of education are linked to better farming

performance. What was not measured was the standard of education

received and whether the education had given the farmers the required

managerial aptitude for farming.

Table 9.9 Farmers level of education


N % N % N % N % N % N %

Illiterate 2 10.0 0 0.0 0 0.0 1 11.1 0 0.0 3 7.9

Primary 9 45.0 1 50.0 0 0.0 2 22.2 0 0.0 12 31.6

Secondary 9 45.0 1 50.0 6 100.0 6 66.7 0 0.0 22 57.9

Tertiary 0 0.0 0 0.0 0 0.0 0 0.0 1 100.0 1 2.6

TOTAL 38 100.0Source: Questionnaire data (2013)

222

Table 9.10 shows that most of the farmers did not have access to

transport. According to Porter (2002:6), remote villages in rural areas are

disadvantaged in terms of both service provision and access to transport,

and such a state of affairs has an impact on livelihood opportunities.

Bailey, Barrett, Little and Chabari (1999:28) found that the most important

physical infrastructural weaknesses for the livestock marketing system

were related to transport and holding facilities. Without transport, it would

require that buyers and/or sellers need to come to the farm, which

increases dependency and creates low bargaining power for the farmer.

The closer the farmers are to the mainstream markets, the higher the

tendency for small-scale farmers to sell in the markets. Lack of transport

limits the farmers’ attendance at functions like auctions and delivery to

abattoirs. The dependency on feed companies for delivery may also limit

frequency of delivery and require minimum volumes delivered.

Table 9.10 Farmers’ access to transport


N % N % N % N % N % N %

Yes 3 15.0 0 0.0 0 0.0 0 0.0 1 100.0 4 11.8

No 17 85.0 2 100.0 2 100.0 9 100.0 0 0.0 30 88.2


Table 9.11 shows that the majority of the farmers had access to electricity.

Electricity is not only an important resource for agricultural production and

processing but it also determines the extent of levels of technology the

farm can utilise. Furthermore, Omiti et al. (2009:63) point out that

electricity is an important determinant of market access. Rural areas often

suffer shortages of electricity and, according to Gustavsson and Ellegård

(2004:1060), in the rural areas of Sub-Saharan Africa the access to

electricity is approximately only at 1–2 percent. Households with access to

electricity, good roads and mobile phones can undertake basic processing

of farm output and can access markets conveniently

223

Table 9.11 Farmers’ access to electricity


N % N % N % N % N % N %

Yes 18 90.0 1 50.0 2 100.0 9 100.0 1 100.0 31 91.2

No 2 10.0 1 50.0 0 0.0 0 0.0 0 0.0 3 8.8


9.2.3 Farming period and activities

Table 9.12 shows that the farmers farmed ostriches for 2.18 before

discontinuation. Although the Peddie programme had been initiated in

2002 very few farmers persisted with farming ostriches beyond three

years.

Table 9.12 Years of farming ostriches

Groups Count Sum Mean Variance Min MaxPeddie 20 51.2 2.56 15.0772632 0 11Bathurst 2 6 3 0 3 3Zamu 6 5.4 0.9 0.012 1 1Rockhurst 9 18 2 0 2 2Mimosa 1 2.5

P-value F 0.795703582 0.416215 2.18


Table 9.13 shows that the household economy of smallholders is often

multi-sectoral and the farm income is supplemented not only by social

grants but by other farming activities such as poultry, goats and small-

scale vegetables. Female farmers at Rockhurst were not involved in other

farming activities and the main reason why the ostrich programme was

introduced to the farm was to facilitate employment for the women.

224

Table 9.13 Farmers engaged in other farming activities


N % N % N % N % N % N %

Yes 13 65.0 1 50.0 0 0.0 0 0.0 1 100.0 15 44.1

No 7 35.0 1 50.0 2 100.0 9 100.0 0 0.0 19 55.9


9.2.4 Comparison of various variables between the case studies

Table 9.14 shows that the farmers had very little training in ostrich farming

(3-30 days) and according to the researcher’s observations and according

to findings from the questionnaires, the farmers also had very little other

experience with other livestock farming (less than 5 percent of the

respondents). As early as 1954, Lewis stated that in order to have success

in new agricultural development, the selection of the right beneficiary is

important (Lewis, 1954:4). Groenewald (2004:6) argues that success is

dependent on experience, knowledge of farming, similar social

background, sufficient capital and managerial aptitude. In programmes at

Rockhurst and Pearston beneficiaries were selected for involvement and

not out of interest in farming. Andrew, Ainslie and Shackleton (2003:21)

defined this as a ‘rent a crowd’ syndrome, meaning that beneficiaries

encourage others to sign up in order to qualify for the required grant.

According to Manie (2003:113), many of the South African farm land

beneficiaries of land reform do not necessarily want to farm. The Hlumani

Co-operative and Zamukwanda programmes have fallen victim to land

“straddling”, meaning that the farms are lying dormant and the

beneficiaries are not utilising the resources for any agricultural purposes

after the closure of the ostrich programme. Andrew et al. (2003:20)

explained that ‘straddling’ means land reform beneficiaries do not abandon

previous occupation to settle on the newly acquired land. This results in

unused land having ownership and the beneficiary having both resources

to enhance their livelihood strategies.

225

Owing to this form of ‘straddling’, both Hlumani Co-operative and

Zamukwanda programmes have become susceptible to vandalism and

deterioration of infrastructures. The only surviving ostrich programme for

emerging farmers in the Eastern Cape was the Peddie programme. The

avian influenza and bio-security requirements had an adverse influence on

all the emerging ostrich farmer programmes. After the mentors had

completed their contracts at Rockhurst, Hlumani Co-operative and

Zamukwanda the farmers were not sufficiently mentored to maintain

farming. The mentors had taken sole responsibility for procuring chicks,

medicating, arranging feed and selling of the ostriches. The farmers in

these three programmes had very limited experience in these business

dealings outside the farm programmes.

226

Table 9.14 Comparison of various variables between the case studies

Peddie Hlumani Zamu Rock Mimosa

Training Ostrich training received 3-5 days 5 days 30 days + 6 days 0 days

Farming and production

Type Chick

rearing Chick

rearing Chick

rearing Egg

incubation Chick

rearing

No. of farmers 20 10 6 9 1

Year initiated 2002 2009 2009 2008 2005

Year ceased Active 2012 2011 2010 2009 Famers with

other livestock 12 1 0 0 1 Total years

active Still active 3 yrs 2 yr 2 yrs 4 yrs Farming

system Individual / collective Shared Shared Shared Single

Land tenure system Communal Owned Leased Leased Leased

Farm area used 10 ha <1 ha 6 ha <1 ha 4 ha

Farm records kept Yes No Yes Yes Yes

Distance from farmer's home 2- 4 km 5.5 km 3.2 km 0.5 km 14 km

Distance from chick supplier +600 km 544 km 76 km NA < 20 km

Market access Distance to nearest tar road 5.2 km 3.5 km < 1 km 6.5 km < 1 km Distance to nearest town 22 km 7 km 3 km 31 km 15 km Livestock turnover pa +/- 3000 +/- 200 +/- 2000 + 500 60 -150

Buyer Abattoir Farmers Farmers Farmers Farmers / Abattoir

Distance to nearest EU abattoir 353 km 306 km 85 km 265 km 19 km

Institutional support

Mentorship yes yes yes yes no Industry

linkage yes no no no yes Commercial

farmer linkage yes no yes no yes

Source: Observations and questionnaire data (2011,2012 and 2013)

227

9.2.5 Frequency of key topics from questionnaires

Table 9.15 shows frequency of responses received in farming, financial,

production, management and open-ended question sections in the

questionnaire. The list is sorted according to response topics mentioned

more than once and from highest to lowest during the interviews. The

respondents were reluctant to disclose problems or issues about the

programmes during the one-to-one interviews. However, during the focus

groups the respondents were more confident about expressing their

opinions. The researcher found that owing to the high production

co-ordination from the mentors, the farmers were unable to contribute to

the detailed production questions in the interviews.

As indicated in table 9.15, the question of finance received the most

responses and the farmers stated that a lack of cash flow was problematic

and that the payment for sold ostriches took too long. Farm expenses

were run on separate accounts and deducted from the farmer’s income at

the end of the season. The income was calculated on the final weight of

the ostrich and therefore, the farmers had no income or cash-flow during

the cycle of the programme (January/February to October/November).

However, DAFF did arrange a stipend to assist famers with cash flow until

payments were received. Due to the high supervision required for the

farming, some of the farmers opted to arrange shifts with members of the

family. This was mainly evident with the older farmers who could not work

long hours or handle the larger ostriches. Some of the farmers also found

that the distance from their homes to the feedlots was too great. In the

evenings the farmers were unable to attend to the ostriches which left the

ostriches vulnerable to unexpected adverse weather changes. The

mentors also complained that some of the farmers were not available after

hours or when they were required to put in extra time at weekends. Before

the VPN04 requirements were enforced, farmers were permitted to keep

ostriches near to their homes. They found that this farming system was

more convenient because it enabled them to care for the livestock in close

proximity to their homes.

228

This arrangement also made greater family involvement possible and

having the ostriches close to home resulted in less mortalities. None of the

five farm programmes in the case studies had experienced avian

influenza, but the farmers were required to conform to VPN04

requirements. VPN04 requirements were essential if the farmers planned

to supply into the export supply chain. The ostriches had to be kept away

from other livestock in separate ostrich compartments. At Peddie, owing to

the long distances, some farmers had to sleep at the feedlot camps to care

for very young ostrich chicks.

On the Mimosadale farm, the farmer engaged labourers to care for his

ostriches because of the long distance from his home. Chicks were

normally received in January and February; which was during the peak

heat of summer. The Peddie programme farmers commented that the

infrastructure did not provide enough shade and they requested for more

covering to be erected. The farmers explained that it was during the hot

weather that water is essential for the ostriches and some farmers

commented that the water pump system was sometimes problematic,

putting the ostriches’ health at risk. According to some of the farmers the

heat may have contributed to the high mortalities experienced in the first

week after receiving the chicks. As shown in Table 9.14 the chicks were

transported over long distances which may have contributed to the

increased stress levels, making them susceptible to sickness and

exposure.

229

The farmers at Zamukwanda did not reside on the farm but lived in the

informal township in Pearston, which made it difficult to attend to the

ostriches immediately when required. When asked about what importance

the ostrich programmes had for the community, the farmers indicated that

the programme had brought employment to the area and that people from

the local villages had assisted with building the infrastructure. The older

male farmers explained that the programme had helped them as it had

been difficult for them to find employment in the rural areas if they had

been retrenched or resigned from jobs in nearby cities or mines. The

farmer at Mimosadale used his severance package to start farming and no

longer had a permanent job. Some of the farmers commented that the

ostrich programmes kept them busy and active.

Negative feedback on the community question was received at the Peddie

programme. The ostrich compartments were established on communal

land which had previously been used for growing maize for the village.

Some of the farmers felt that the community should also be remunerated

for the use of the land. It was suggested that the land rather be rented out

to a neighbouring tomato farmer who at times offered more seasonal

employment. With reference to market information received, most of the

farmers stated that they had not received information from the market.

However, there were some that had heard that their ostrich skins had been

good quality and the ostriches had achieved good body weights. Most of

the outside market and business communication was conducted by the

mentors on behalf of the farmers.

The farmers at Peddie also commented that the DAFF extension services

had paid little attention to or assisted in their programme after it had been

established. During the time of the interviews the departmental agricultural

services in Grahamstown and Bathurst were having problems with the

pool vehicle system and the researcher fetched them from the local DAFF

offices. The main topics identified during the individual interviews were

carried forward to the focus groups.

230

Table 9.15 Frequency of main topics raised in the farming, production, management and open ended question sections (blank cell indicates non-participation or no comment).

Qu

esti

on

nai

re

refe

ren

ce

cod

e Main topics

Ped

die

Hlu

man

i

Zam

u

Ro

ck

Mim

osa

N=20 N=2 N=2 N=9 N=1

E15.6 Lack of cash flow or delay in income

7

1 1 1

H2 Importance of family involvement

7

1

E3

Ostriches did not have sufficient protection from heat and/or heavy rainfall

6

1

H1 Conflict over communal land use 6

E15.9

Farming ostriches is more intensive than farming with other livestock

5 1

1

H1 Ostrich programmes keeps people active

5

E16 Ostrich farm too far from home 5 1

1

H1

There were other better options of employment than farming ostriches

4

F5

Feedback indicated that the ostriches had good market related weight

3

G2 Not sufficient government support after establishment

3

G1 Conflict between farmer and management or mentor

3 1 1

E15.1 / E10 Water supply problematic 3

E3 High chick mortality 3

E15.6 Ostrich payment method or arrangement vague

3

H1 / E14 Ostrich programme offers employment

3

H2

Programme helped purchase furniture for home / assist with school expenses

2

E15.9 Farming ostriches gave attractive income

2


231

9.3 FINDINGS FROM FOCUS GROUPS

A summary of the participants involved in the focus groups is detailed in

Table 9.16. Further group discussions were held on main topics revealed

in the questionnaires. To protect the confidentiality of the participants,

names have been withheld. Five separate focus groups, consisting of a

total of 41 participants, were arranged. Focus group attendance at

Hlumani and Zamukwanda was hampered as farmers who left the

programmes had no interest in participating in discussions. The focus

groups included other stakeholders who were invited as key informants

(Table 9.16). Each participant was allocated with a reference code to

assist with discussion referencing from the focus groups.

Table 9.16 Detail of focus group participants.

Programme Reference code No Role / affiliation

Peddie

P:1 19 Farmers

P:2 1 Mentor

P:3 1 Manager/farmer

Hlumani H:1 2 Farmers

H:2 3 Department of Agriculture

Zamukwanda Z:1 2 Farmers

Rockhurst R:1 9 Farmers

R:2 2 Department of Agriculture

Mimosadale M:1 1 Farmer

M:2 1 Eyethu Farmers Association

TOTAL PARTICIPANTS 41

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9.3.1 Source of feed and feeding system constraints

According to the focus group discussions, feeding the ostriches was one of

the major constraints for the programmes (H:1, M:1, R:1). According to

Aganga, Aganga and Omphile (2003:60) and Brand, Squizzato, Hoffman

and Dalle Zotte (2013:520), the cost of feeding ostriches is the largest

expenditure of ostrich production. The feed costs face consistent upward

pressure due to competition between humans and ostriches for the

primary feed ingredients (including maize and fish meal). Some of the

programmes were dependent on feed companies delivering from over 200

km away. In all the programmes the ostriches were fed mainly pellets,

which made use and handling easier. The farmers had not adopted any

coping strategies for feed shortages such as growing and harvesting their

own forages. In the natural wild condition the ostrich chick learns to feed

by imitating their parents’ feeding behaviour. In the programmes it was

required that the farmers teach the young chicks how to feed (P:1, Z:1),

which increases the handling intensity of the chicks. The farmers stated

that the ostriches needed to be fed continuously and in some cases

farmers had to stay at the camps and were unable to leave the ostrich

compartments during the day (P:1). One of the farmers stated that

constant feeding cycles were important for the ostrich feed intake (M:2).

The feed costs for the breeders were to the detriment of the Rockhurst

programme. The profitability was determined by the proportion of fertile

eggs laid by each female, but due to the small number of egg sales the

income was insufficient to provide for the feed expenses. The Hlumani

programme was unable to maintain the feeding requirements and during

the avian influenza outbreak the ostriches could not be relocated, which

resulted in the ostriches starving. At the Peddie programme the feed

storage room was over 200 m away from the ostrich compartments and

some of the women farmers were unable to carry the 50 kg bags every

day (P:1). Some of the programmes were also prone to pests in the feed

storage facilities (P:1, R:1).

233

The farmers did not have facilities to formulate rations in order to provide

adequate balanced ration and fibre levels. According to ostrich feed

consultants, ostriches become market-ready at a younger age if good

feeding programmes are in place (Erasmus, 2011:para. 3; Benson, 2013:

pers. comm., 25 July). However, according to Erasmus (2011:para. 5),

accelerating ostrich growth through intensive feeding systems is only

successful if all ostriches are highly productive and from good genetic

stock, which is not always the case. Another issue that was raised was

that farmers were suspected of stealing the donated ostrich feed for resale

or for feeding other livestock at home (P:1).

9.3.2 DAFF’s contribution to the ostrich programmes A common theme highlighted by farmers was the important role DAFF had

played in the establishment and support of the ostrich programmes in the

Eastern Cape (P:1, H:1, Z:1, R:1, M:1). The emerging ostrich farmer

programmes were instigated and supported by DAFF primarily during the

2008/2009 period (H:2, R:2). This support from DAFF was essentially in

establishing infrastructures, providing equipment, procuring mentors and

feed supply (P:1, H:1, Z:1, R:1, M:1). The Mimosadale farmer received

valuable assistance from the area extension officer, but after the mentor

immigrated the farmer did not receive the same technical assistance from

replacements (M:1). With reference to the questionnaire findings, some of

the farmers commented that the extension officer rarely visited them after

the programmes had been developed (P:1). This may have been because

of the strong mentorship presence.

234

The farmers commented that when the programmes were considered,

DAFF had encouraged the farming of ostriches (H:1, M:1, Z:1). During the

establishment of the Hlumani programme, DAFF informed them that land

capability was not suited for goat farming and that one of the

Grahamstown ostrich processors had recommended that the land rather

be used for intensive ostrich farming (H:1). At Zamukwanda the ostrich

programme was the preferred livestock programme because the poultry

programmes in the area had reached saturation (Z:1). However, one of the

farmers stated that the government was reconsidering continuing support

for the ostrich programmes in view of the finances spent on the avian

influenza outbreak (Z:1). This was because during the 2011 avian

influenza outbreak, DAFF had paid out R17.078 million for culling

ostriches in the Oudtshoorn district (Western Cape Department of

Agriculture, 2012:102).

9.3.3 Intensity of ostrich farming constraints

Members of the community had warned the farmers that ostrich farming

was intensive and that it would take time to develop the skills required for

this type of husbandry (P:1, M:1, Z:1). The high chick mortalities were a

main concern for the farmers (P:1, H:1, M:1). The farmer at Mimosadale

commented that the acceptable mortality rate was unknown. According to

the questionnaires the main problems experienced with mortalities were

stress caused by the transportation of ostrich chicks over long distances,

leg deformities, lack of functional development of the digestive tract and an

inability to adapt to the rearing environment. When the ostrich chicks

received, they had to be encouraged to be feed. Farmers used different

techniques to encourage appetite such as mixing feed with cabbage off-

cuts. The first few days after receipt was the most intensive time and skill

was required to handle the chicks at this vulnerable stage (P:1, Z:1). Few

of the farmers had received training in feeding day old ostrich chicks and

required instruction from the mentors (P:3). Some of the women famers

explained that they were unable to do some of the tasks and needed

assistance from male farmers in handling the aggressive ostrich breeders

(R:1).

235

According to Jefferey (1999:2) and Malecki, Cloete, Gertenbach and

Martin (2005:163), the adult male ostriches become territorial and may

become aggressive, which is dangerous during capture. The ostrich egg

hatcheries were technically complex and expensive (R:1, M:2). The

electricity at Rockhurst was not sufficient to run the new hatchery. The

farmers stated that they received the new egg hatchery but then resorted

to continuing with the original one that was on the farm. Ostrich incubators

require intensive supervision as they are operated at 36 °C and

24 percent relative humidity in order to limit evaporative water loss of

approximately 15 percent. The eggs are also turned hourly (Van

Schalkwyk et al 2000:47).

9.3.4 Financial constraints

The income for rearing ostrich chicks was received at the end of each

season. It would take four to six months to rear ostriches before they were

at the ideal weight to sell to the next farmer for the ‘finishing stage’ or to

the abattoir for culling. The farmers were therefore only paid at the end of

each cycle. If the buyers supplied feed and medication, they deducted the

relevant costs from the final payment for the ostrich chick. The farmers ran

the risk of high mortalities and therefore it was possible that no payment

would be received at the end of the cycle. This financial arrangement

resulted in weak income for some farmers whose ostriches had not

achieved good weight, had used excessive feed or experienced high

mortalities (H:1, R:1). Some of the farmers questioned the method of

payments and were also apprehensive that the mentor was receiving the

money on their behalf (P:1, H:1). In the Rockhurst case, the farmers got

very little income and only drew funds once or twice a year during holiday

time (R:1). According to the farmers at Hlumani, each farmer had only

received R2 000 for the full cycle (year). The farmers complained about

the delay in monthly stipend payments and stated that they had at times

looked after the ostriches for months without any income (P:1, H:1, R:1).

The farmer at Mimosadale stated that he had not received payment from

the farmer to whom he sold his ostriches (M:1).

236

Farmers that managed to sell directly to the abattoir stated that payments

took long (> 90 days) and they were unhappy about the prices received for

the meat (M:1, M:2). One of the DAFF representatives commented that he

felt that the farmers who were involved in the ostrich programme should

rather be paid wages and incentive bonuses to assist them with cash flow

(R:2). During periods when they did not receive any income the farmers

were dependent on other income such as grants and income from other

livestock. According to Barrett, Clark, Clay and Reardon (2005:14),

dependency on non-farm income is a typical scenario of agro-ecologies of

lowest potential.

9.3.5 Mentors and leadership

The researcher observed that four out of the five programmes revealed

tension between the mentors and the farmers. At one of the focus group

meetings, the programme mentor chose not to participate in the

discussions. At two of the programmes the mentors had their own ostrich

compartments alongside the farmers. This situation led to tension because

the farmers felt that it was unfair to receive income as a mentor and also to

benefit as farmer (P:1, Z:1). The Pearston programme experienced the

highest disagreements between the mentor and the farmers (Z:1). This

situation eventually led to the withdrawal of the supporting commercial

farmer. Some of the farmers at Peddie stated that the manager and

mentor did not respond adequately to their complaints or needs. A DAFF

representative advised that mentors or managers should be selected from

outside of the community as it was difficult for the farmers to receive

instruction from people from their own community (R:2).

237


The question arises: what criteria differentiates the Peddie programme

from the other programmes and makes it successful? Firstly, each of the

farmers at Peddie was each given his/her own flock of ostriches to

manage (between 100 and 200 chicks each). Therefore each farmer was

responsible for feeding and caring for his/her own ostriches. The farmers’

income was dependent on how many ostriches he/she had and what

weight the ostriches were after eight months. The other ostrich

programmes shared the flock of ostriches and this resulted in ‘free riders’

(where one or more members did not do their fair share of the work on the

farm). In a shared system there was no accountability if problems or

losses arose. On the Mimosadale farm, the farmer was left to his own

devices and did not have the collective benefits of working with a group.

However, he did have the benefit of a commercial farmer and extension

officer assisting him, but he did not have a full-time mentor assisting on the

farm. In the Peddie programme, although the farmers were responsible for

their own ostriches they worked collectively to arrange feed, equipment

and transport. Secondly, the Peddie ostrich programme had a full-time

mentor, as well as support from industry and commercial farmers. The

next chapter will explore an instrument to measure and improve the

potential of emerging farmer programmes to participate in intensive ostrich

farming (see Figure 9.1).

238


239

CHAPTER 10


10.1 INTRODUCTION

10.2 INSTRUMENT FORMULATION

10.2 LOCAL VULNERABILITY INDEX FINDINGS

10.3 HUMAN CAPACITY INDEX FINDINGS

10.4 AGRARIAN CAPACITY INDEX FINDINGS

10.5 MARKET-ACCESS CAPACITY INDEX FINDINGS


240

CHAPTER 10


10.1 INTRODUCTION

The participation capacity instrument was developed to assist in

articulating and then assessing the potential of programmes for emerging

farmers to participate in intensive ostrich farming. This chapter contributes

to answering the main research problem pertaining to what interventions

could improve and sustain supply-chain participation for the Eastern Cape

emerging ostrich farmers. The data used in the instrument was collected

from the researcher’s observations, questionnaires and focus groups. The

objective of this explorative investigation was to develop an instrument that

has potential value for other emerging farmer programmes. This is not a

scientifically developed and validated measurement instrument but acts as

a step towards measuring emerging farmers’ likelihood of sustained

participation in the supply chain. It will contribute to understanding of what

interventions are required to improve and sustain supply-chain

participation. The instrument, which was used to compare between case

studies, was adapted from the Agrarforschung, Koenig, Blatt, Brakel,

Kloss, Nilges and Woellert (2008:143) calculation of scoring methods used

in research of market-driven development and poverty reduction in the

value chain analysis of fresh vegetables in Africa. The instrument consists

of a number of indexes which together form a total score representative of

the farmers’ capacity to participate. Each of these indexes was

hypothetically weighted according to a pre-determined rating of influence.

241

Because this instrument has the potential to be evaluated at regular

intervals, it has potential to plot out the path of progress across different

indexes over a period of time. The simple instrument design is such that it

can be easy to administer and analyse by a wide range of users. An

instrument of this nature may allow donors or government policy to focus

support more appropriately on high scoring or resilient farming

programmes. The instrument could assist in determining potential mobility

for supply chain participation.

The instrument was also used as a capacity indicator of emerging ostrich

farmer programmes in the final chapter. The instrument consists of the

four Indexes in each case study which were hypothetically weighted,

namely, Local Vulnerability Index, Human Capacity Index, Agrarian

Capacity Index and Market-Access Capacity Index.

The following key capacity indexes were selected to compare capacity

between the four case studies:

Local Vulnerability Index;

Human Capacity Index;

Agrarian Capacity Index; and

Market Access Capacity Index.

242

10.2 INSTRUMENT FORMULATION

10.2.1 Local Vulnerability Index

This Local Vulnerability Index (LVI) was primarily a risk measurement of

geographic position influence on industry participation. Naudé, McGillivray

and Rossouw (2008:9) constructed potential relevance vulnerability on a

sub-national level using the following indicators: size of the local

economy, structure of the local economy, international trade capacity,

peripherality or remoteness, development level of a district, income

volatility, demography and health, governance, environment and

geographical matters. The LVI is a point of reference for remoteness and

environmental fragility of the programmes. Each case study was allocated

the LVI of the nearest recorded index available. According to the research

done by Naudé, McGillivray and Rossouw (2008:9) the lowest vulnerability

rating that can be achieved is 354.

10.2.2 Human Capacity Index

The Human Capacity Index (HCI) was intended to measure the emerging

farmers’ productivity and capacities to participate. The criteria listed below

were adapted from research conducted by Kinsey and Binswanger

(1993:19) on resettlement programmes and the Rooyen et al (1998:129)

productive weighing system. The electricity score represents the potential

for economic development. The farmer’s age is considered to represent

physical vigour and state of health. The agricultural and educational

experience is used to predict potential performance. The Senior Certificate

Examination (SCR) is a uniform national set of examinations in key

subjects set by the Department of Education and is therefore given a

separate score.

Electricity: yes = 4, otherwise = 0

Age: 17-28 yrs old and > 45 yrs old = 1, 30-45yrs old = 2

Agricultural experience: 1-2 yrs = 1, 3–4 yrs = 2, > 4 = 3

Education level: Illiterate=0, primary/secondary = 1, SCR= 2, tertiary = 3

243

10.2.4 Agrarian Capacity Index

The Agrarian Capacity Index (ACI) consisted of indicators which were

constructed from sustainable agriculture research conducted by Allen, Van

Dusen, Lundy and Gliessman (1993:1). The following key themes were

deliberated: environmental soundness, economic viability and social equity

(access to livelihood, resources participation in the community; and

self-determination in meeting fundamental needs.). Each indicator was

measured by the criteria listed below. The ratings were as follows:

weak (score = 1); moderate (score = 2); strong (score = 3).

Institutional support;

Scale of production required for sector;

Independence from mentorship;

Training programme;

Supply chain engagement;

Land agricultural capability;

Economic strength of the post-farm gate;

Influence on decisions post-farm gate;

Contractual linkages with value chain;

Community acceptance;

Collective action;

Independence from donor assets;

Dependence on government or extension involvement;

Access to credit;

Independence from non-farm income;

Governance on the supply chain;

Price leverage;

Farm record keeping;

Programme leadership;

Home-to-farm distance; and

Programme income

244

10.2.5 Market Access Capacity Index

The Market Access Capacity Index (MACI) was constructed from literature

research conducted on determinants on smallholder participation in

Chapter 2. The criteria and scoring are listed below.

Sufficient infrastructure: yes = 1, otherwise = 0

Sufficient equipment: yes = 1, otherwise = 0

Owns transport: yes = 1, otherwise = 0

Owns a mobile phone: yes = 1, otherwise = 0

Engaged with market channel: yes = 1, otherwise = 0

Market information feedback: yes = 1, otherwise = 0

Distance to market: >100 km = 1, 21–100 km = 2, 0-20 km = 3

Distance to nearest town: >100 km = 1, 21–100 km = 2, 0-20 km = 3

Agricultural experience: 1-2 yrs = 1, 3–4 yrs = 2, > 4 = 3

Education level: illiterate=0, primary= 1, secondary = 2, tertiary = 3

Collective action: yes = 1, otherwise = 0

Access to information: yes = 1, otherwise = 0

245

10.3 LOCAL VULNERABILITY INDEX FINDINGS

With reference to the research of Naudé et al. (2008:8) on the

classification of a South African Local Vulnerability Index, the case studies

were rated from lowest to highest vulnerability. According to Table 10.1,

the Peddie and Zamukwanda case studies showed the highest

vulnerability in terms of remoteness and environmental fragility. In

contrast, it is the researcher’s observation that Rockhurst’s remoteness

could have been higher as it was situated furthest from the closest town

and had the longest dirt road to access the farm. Peddie and

Zamukwandu were also below the LVI 177; but they were not as remote

as Rockhurst and their index was influenced by their proximity to small

rural towns with low growth potential.

The employment profile of the area or district is often a function of its

relative proximity to nearby towns or cities. The upward mobility potential

and economic opportunities that people have can influence the

participation and commitment to new ventures (Ainslie, 2002:121).

Table 10.1 Local Vulnerability Index for case studies

Case Studies LVI

Max (354)

Mimosadale (Graaff-Reinet LVI) 264

Hlumani Co-operative (Bathurst LVI) 256

Rockhurst (Bedford LVI) 119

Peddie (Peddie LVI) 109

Zamukwanda (Pearston LVI) 91

Source: Naudé et al. (2008)

246

10.3 HUMAN CAPACITY INDEX

According to Table 10.2, the Rockhurst farm showed the greatest human

capacity for ostrich farming, while Peddie and Hlumani had the weakest

aptitude for farming in this index. These two programmes had been

disadvantaged due to older age group of the farmers, lack of previous

livestock experience and low educational level.

Table 10.2 Calculation of human capacity scoring

Criteria

Max

imu

m

Ped

die

Hlu

man

i

Zam

u

Ro

ck

Mim

osa

Electricity 4 4 4 4 4 4

Age 2 1 1 2 2 1

Agricultural experience 3 1 0 0 3 0

Educational level 3 1 1 2 1 3

TOTAL 11 7 6 8 10 8

Source: Researchers own outline

247

10.4 AGRARIAN CAPACITY INDEX

According to Table 10.3, the Peddie and Mimosa programmes showed the

strongest agrarian capacity. In Peddie’s programme, the main criteria

contributing to this index were the strong institutional support, scale of

production and strong collective action. However, Peddie exhibited the

highest disharmony from its community regarding the use of land. The

Peddie and Mimosa case studies both showed strength in contractual

linkages with the value chain, farm record-keeping and programme

leadership. However, the programmes all exhibited an index scoring of

less than 60% for the hypothetical agrarian capacity. The excessive

dependency on mentors also made the programmes vulnerable in the

following capacities, namely, weak supply-chain engagement, influence on

decisions post-farm gate and price leverage. Most of these functions were

conducted by the mentor on behalf of the farmers programme.

The agricultural capabilities of the land and home-to-farm distances are

predetermined and will therefore always have bearing on the capacity to

farm. At a macro level, the influences of economic strength from post-farm

gate, access to credit and governance in the supply chain will take time to

establish. The farmers do not have any value-adding processing facilities

and will always be dependent on external processing and marketing

channels. These are weak areas within the agrarian capacity and could be

accelerated by political intervention and agricultural business development

services. Institutional development services are important to strengthen

linkages and operational systems, while financial services play a critical

role in assisting in the credit and financial development (Miller and Jones,

2010:24).

248

Table 10.3 Calculation of agrarian capacity scoring

Criteria

Max

imu

m

Ped

die

Hlu

man

i

Zam

u

Ro

ck

Mim

osa

Institutional support (industry) 3 3 1 1 1 3

Scale of production required for sector

3 3 1 1 2 2

Independence from mentorship 3 1 1 1 1 3

Training programme 3 1 1 2 1 1

Supply chain engagement 3 1 1 1 1 1

Agricultural capabilities of the land

3 2 1 1 2 2

Economic strength post-farm gate

3 1 1 1 1 2

Influence on decisions post-farm gate

3 1 1 1 1 1

Contractual linkages with value chain

3 3 1 1 1 2

Community acceptance 3 2 3 3 3 3

Collective action strength 3 3 1 1 2 1

Independence from donors 3 1 1 1 1 1

Access to credit 3 1 1 1 1 1

Independence from non-farm income

3 1 1 1 1 1

Governance on the supply chain 3 1 1 1 1 1

Price leverage 3 1 1 1 1 1

Farm record-keeping 3 3 1 3 3 3

Programme leadership 3 3 2 2 2 3

Home-to-farm distance 3 1 1 1 3 1

Programme income 3 2 1 2 1 2

TOTAL 60 35 23 27 30 35

Source: Researcher’s own outline

249

10.5 MARKET-ACCESS CAPACITY INDEX

Rockhurst’s shortage of electricity resulted in the inability to hatch more

ostrich chicks and affected programme growth and economics of scale.

The lack of independent transport for all the programmes resulted in

programmes that were dependent on external service providers to procure

chicks, ostrich medicine and feed. Without transport these programmes

have transactional dependency which puts them in a “captive” position.

Another criterion which requires improvement is access to market

information. Access to market information assists the farmer in

determining when and how to participate. According to Steinfeld

(2003:4058), lack of market information increases the business’s

transactional costs. The dependency on the mentors has made the

programmes vulnerable to lack of market engagement and receiving

market information.

Table 10.4 Calculation of market access scoring

Criteria

Max

imu

m

Ped

die

Hlu

man

i

Zam

u

Ro

ck

Mim

osa

Sufficient infrastructure 1 1 1 1 0 1

Sufficient equipment 1 1 1 1 0 1

Owns transport 1 0 0 0 0 0

Owns a mobile phone 1 1 1 1 1 1

Engaged with market 1 0 0 0 0 1

Market information feedback 1 0 0 0 0 1

Distance to market 3 1 1 1 1 1

Distance to nearest town 3 3 3 3 3 3

Agricultural experience 3 1 0 0 3 0

Educational level 3 1 1 2 1 3

Collective action present 1 1 1 1 1 0

Access to market information 1 0 0 0 0 1

TOTAL 20 10 9 10 10 13

250


Figure 10.1 and Table 10.5 show a summary of data comparing the

different indexes between the case studies. Almost all of Mimosa indexes

scored over 60 percent and this programme indicated the most promising

representation for capacity.

Figure 10.1 Bar chart comparison between five case studies

Table 10.5 Percentage comparison between five case studies

Ped

die

Hlu

man

i

Zam

u

Ro

ck

Mim

osa

Local Vulnerability Index 31% 72% 26% 34% 75%

Human Capacity Index 64% 55% 73% 91% 73%

Agrarian Capacity Index 58% 38% 45% 50% 58%

Market Access Capacity Index 50% 45% 50% 50% 65%

0%

20%

40%

60%

80%

100%

Peddie Hlumani Zamu Rock Mimosa

% LVI

% HCI

% ACI

% MACI

251

Each of these indexes has an ideal score and in Table 10.6 the ideal

accumulative index score as been calculated. The researcher has

indicated a predetermined hypothetical ideal capacity score for

comparison against the case studies. According to the hypothetical ideal

capacity score, it is the researcher’s theory that none of the programmes

has sufficient capacity for sustainable ostrich farming and will require

considerable inputs to make them viable. Without appropriate interventions

it is therefore unlikely that these programmes will reach full commercial

farmer status.

Table 10.6 Accumulative percentage comparison between five case studies

LVI + HCI + ACI + MACI

Mimosa 75% 148% 206% 271%

Hlumani 72% 127% 165% 210%

Rockhurst 34% 125% 175% 225%

Peddie 31% 95% 153% 203%

Zamukwanda 26% 99% 144% 194%

Hypothetical ideal capacity 50% 150% 225% 300%

The data is represented as five radar charts in Figure 10.2 to articulate

and assess the four indexes’ multivariate data. The radii represent each

Index and the length of a spoke represents the proportion in percentage. A

line is drawn connecting the data values for each radius to display area in

a star like shape. The radar charts represent the following:

Similarity between case studies;

Identification of outliers;

Measurement of relative strength and weakness; and

Potential integration into the supply chain.

252

Figure 10.2 Radar chart comparison between five case studies

Source: Researcher’s own outline

253

In Figure 10.2, the larger the star area is, the greater the hypothetical

capacity for intensive ostrich farming and mobility into the supply chain.

Peddie, Rockhurst and Mimosadale showed the strongest total of human,

agrarian and market access indexes (above 50%). However, for Peddie

and Rockhurst the local vulnerability index indicates negative influence

due to remoteness and environmental fragility. The larger star shape area

for Mimodadale represented the highest potential for mobilisation into the

ostrich supply chain. The Mimosadale farm’s environment, location and

farmer’s managerial aptitude indicated the most potential and resilience

towards intensive ostrich farming.

Chapter 10 indicated how the participation capacity instrument has the

potential to measure the likelihood of sustained participation. In the same

way this intervention can be used to measure and evaluate programmes at

regular intervals to assist in progress across different indexes over a

period of time. An instrument of this nature may allow donors or

government policy to focus support more appropriately on high scoring or

resilient farming programmes. The next chapter will present the summary,

conclusions and recommendations of the research (see Figure 10.3).


253

CHAPTER 11


11.1 INTRODUCTION

11.2 SUMMARY OF MAIN FINDINGS


11.4 RECOMMENDED INTERVENTIONS

11.5 OPPORTUNITIES FOR FURTHER RESEARCH

11.6 CONCLUSION

254

CHAPTER 11


11.1 INTRODUCTION

The main hypothesis of this study was that participation in the mainstream

supply chain for emerging ostrich farmers in the Eastern Cape is currently

unsustainable. If any meaningful solution or proposed development path were

to be modelled, the first step would be to gain an understanding of the present

ostrich industry and then to place the emerging farmers in the context of this

environment. Through this understanding a contribution to the body of

knowledge would be achieved by providing mechanisms for Eastern Cape

emerging farmers to participate in the South African ostrich industry.

The main thrust of this chapter was to explore interventions for the participation

of emerging farmers in the Eastern Cape ostrich-industry supply chain. These

interventions are to facilitate the transition from subsistence to commercial

ostrich farming for high-value export markets for the rural ostrich farmers. The

study adopted two approaches to answer this question, namely, to determine

the required capacity to participate in the supply chain and to determine

what mechanisms would support emerging ostrich farmers in integrating

successfully into the ostrich-industry supply chain. Few studies, if any,

have specifically examined what opportunities Eastern Cape emerging farmers

have to participate in the South African ostrich industry. This chapter provides a

brief overview of the main findings of each of the previous chapters,

followed by conclusions and then finally recommendations for proposed

emerging ostrich farmer interventions.

255

11.2 SUMMARY OF MAIN FINDINGS

11.2.1 Livestock farming in the rural environment of the Eastern Cape

This study commenced by examining the semi-arid environment of the Eastern

Cape and the study showed the important roles that livestock has played

socially and economically in the rural context. Examination of the history of

South Africa and monopolistic market channels were identified as possible

reasons why emerging farmers have been marginalised in the ostrich supply

chain. The findings that follow answer the main research questions pertaining

to the environmental influences affecting emerging ostrich farmers and why

ostrich farming has not been embraced by Eastern Cape emerging farmers.

The main rural Eastern Cape agrarian limitations derive from limiting soils and a

variable climate. Agro-climatic conditions, social security, local economy and

environment have had a challenging influence on the capacity of emerging

farmers to farm in the Eastern Cape. The formation of the Ciskei and Transkei

homelands compounded problems due to land degradation, lack of arable land,

poverty, infrastructure backlogs, underdevelopment and unsustainable local

economies.

The new South African legislation that was implemented in the first decade of

the 21st century had little influence to improve the position of emerging farmers

in the Eastern Cape. However, the grant support system intervention to the

rural economy has become a regular and reliable provider into the rural

economy and constitutes a critical component that underpins the rural

livelihoods. Ostrich livestock operations represent a smaller percentage of

livestock farming in the Eastern Cape than in some of the other provinces. The

potential contribution of the small-scale intensive livestock in the Eastern Cape

has generally been neglected. Marketing livestock has been a challenge for

black emerging farmers who have little access to support and to markets.

256

Although livestock plays an important role in terms of draught animal power,

consumption as food, sales to raise cash and use in African traditional

ceremonies, the ostrich does not have the equivalent cultural importance and

relevance in rural ownership. The series of national legislative policies had a

restrictive effect on black agriculturalists and commercial markets in the

apartheid era and only after 1995 did the process of liberalisation of the

agricultural sector start. Owing to apartheid and market isolation the emerging

farmers have been handicapped in dealing with this liberal market environment

and they have also been by-passed by globalisation.

11.2.2 The present state of the ostrich industry

The following findings answered the main research question pertaining to what

is known about the ostrich industry. Today the ostrich industry has complex

production systems which include livestock husbandry, industrial processes

and marketing structures. Ostrich farming has been an attractive form of highly

intensive agriculture as it offered higher and faster financial returns as

compared to those of traditional livestock. As a predominantly export-focused

industry, it has been susceptible to poorly co-ordinated marketing and bull-whip

supply chains. In the past the industry relied strongly on a one-channel market

system that protected market presence. This resulted in domination in domestic

business and in the global ostrich export arena. Producers of other South

African exotic leathers and game skins benefitted from using the ostrich-

processing facilities and marketing channels. The SAOBC in Oudtshoorn is an

important stakeholder which assists in mediating and controlling operations

between stakeholders, government and farmers. The intensive ostrich

production necessitated continuous genetic improvement through proper record

keeping, intensive egg incubation methods, high-maintenance chick rearing

and ostrich handling, while minimising feed costs throughout this process. The

enforcement of recent VPN04 regulations and control of movement of ostriches

has intensified management and record-keeping requirements for the ostrich

farmers.

257

Global ostrich research themes concentrated mainly on production practices

and animal health. Diseases, reproduction and feed were the main topics on

which ostrich research focused in the past. The studies on aetiology were of the

greatest interest and other main studies concentrated on reproduction after

deregulation of South Africa’s ostrich industry. Domestic articles in magazines

focused on avian influenza, European export protocols, government

involvement, ostrich products, new markets, industry scale and AgriBEE. The

Oudtshoorn district is South Africa’s main ostrich-producing area. This semi-

arid area has very low rainfall and the pastoral farming is dependent on reliable

water sources and irrigation for lucern production. Over the past century the

state contributed to developing Oudtshoorn with strong transport infrastructure

which assisted the ostrich industry. The ostrich farming and processing industry

has such an economic impact that it has become vital for income generation

and job creation in this region.

The ostrich-processing industry has developed into an intensive

agro-processing value chain which is supported by select overseas agencies.

The ostrich industry has been dependant on strong networks and relationships

to deal with the European market. Without linkage into this value chain it is

challenging to gain entry into the European markets. The industry was initially

established by the Jewish community in Oudtshoorn who had strong ties to

Europe. After the feather boom, the ostrich leather became dependent on a

network of agencies in Europe for distribution and networking with the fashion

houses. The recent meat exports have seen a growing dependency on the

DAFF and the veterinary relationship with their European counterparts for the

unbanning of ostrich meat during the avian influenza outbreaks.

258

The South African government departments played a crucial role in identifying

and isolating avian influenza outbreaks in South Africa. The way in which this

situation was dealt with had a major impact on the extent of the market ban.

After deregulation many of the farmers left the industry because of a

combination of market conditions, increased domestic competition, the slow

establishment of new markets which led to market cannibalism, and finally an

outbreak of avian influenza. The ostrich industry has changed from a demand-

driven to a supply-driven industry, resulting in an ostrich leather trade that has

become vulnerable, with an inelastic supply chain for an elastic market.

Leather processing and meat treatment requires considerable know-how and

technical inputs. South African ostrich abattoirs are required to adhere to bio-

security requirements, and their standards of processing are high. The

processing of the leather and meat produces large amounts of hazardous and

toxic waste, so these processes require monitoring and stringent disposal

mechanisms. The disposal of such waste is expensive and requires capital-

intensive systems to reduce environmental contamination.

The South African ostrich industry is one of the few agricultural sectors in which

South Africa has achieved dominance and a considerable market share in the

global arena. Although the South African industry dominates the global market,

the market share has shown a downward trend. The industry faces

overproduction, lower prices and farmer liquidations, which are all resulting in

lower slaughter volumes. However, lower volumes have stabilised markets and

improved prices in the past, but the ostrich leather is under constant threat of

substitution from other leathers or exotic materials. The South African tanneries

have also experienced increasing processing competition from other low-cost

global tanneries. Quality standards are no longer monitored by a single-channel

marketing enterprise and lower grades have led to lower prices and increasing

volumes. The ostrich-processing plants face severe constraints which have

resulted in many not enduring the post-deregulation era. The industry was

limited to only a few surviving processing plants after 2010 and this resulted in

an oligopolistic processing and marketing environment.

259

The ostrich leather industry is greatly influenced by the export luxury and

fashion markets in Europe. The ostrich meat industry has also focused strongly

on the European market which is aware of the health benefits of the meat. In

the South African domestic market, the promotion of ostrich meat has become

an important long-term strategy, but ostrich leather has limited scope. The

domestic market is still small in comparison to the 80 percent share being

exported. There is a sensitive balance between meat and skins, as developing

a market for meat without developing an outlet market for the leather leads to

oversupply of leather, making it impossible to maintain the exclusivity of the

exotic leather.

The predetermined semi-structured interviews showed that ostrich husbandry

required substantial management input and the processing of ostrich products

required intensive industrial capacity. The participants agreed that the ostrich

leather was primarily used for luxury goods and closer co-operation with the

fashion house buyers was required. The participants also agreed that the

intermediary agent network developed by the single-channel marketing system

was vital for the ostrich industry. A schematic Network View indicated a strong

relationship between deregulation and a change in market protection, value

chain governance and supply parameters. This meant that deregulation had

influenced market protection for producers, affected the demand and supply

equilibrium and the governance in the value chain changed from South African

role players to European buyers and consumers. These changes took place as

a result of the deteriorating market-agent structure. The participants were not in

agreement about the main threats to the ostrich industry as some felt that the

meat ban would not have such a negative impact as it would cause a shortage

of skins which might result in high prices. Others felt that an over-supply of

skins and the global economic downturn were the industry’s greatest threats.

260

11.2.3 Ostrich-industry supply chain

The following findings answered the main research questions pertaining to what

is known about the ostrich-industry supply chain. The ostrich-industry supply

chain can be defined as a wide range of activities required to bring products to

the final consumer. The supply chain requires strong integration to

manufacturing, distribution and customers in which raw material runs from

suppliers to processors who prepare them for the customer’s requirements. The

current bio-security and food safety requirements are making it increasingly

difficult for emerging farmers to participate in the supply chain. In order to

participate and offer food-safety assurance, institutions require veterinarians, a

fully-equipped laboratory, microbiologists and food technologists in order to

maintain traceability and food safety. The supply chain requires strong linkages

with supporting institutions and role players, namely, the SAOBC, the National

Ostrich Processors of South Africa, the South African Ostrich Producers’

Organisation, the South African Ostrich Breeders’ Association, DAFF, the

National Residue Monitoring Programme and the EU Agricultural attaché. The

ostrich-industry supply chain in the Eastern Cape is concentrated around two

ostrich infrastructure processing hubs, namely Graaff-Reinet and

Grahamstown. Since the outbreak of avian influenza the ostrich-industry supply

chain in the Eastern Cape has deteriorated and is almost non-existent. Most of

the commercial farmers are no longer farming ostriches commercially and the

processing hub around Grahamstown has been acquired by Western Cape

ostrich enterprises. The current state of the Eastern Cape supply chain leaves

limited collaboration opportunities for new farmers. As concluded in Chapter 6,

the Western Cape ostrich industry is now the dominant recipient of all produce

from ostrich farmers in the Eastern Cape.

261

11.2.4 Present emerging ostrich-farmer interventions for participation in the

ostrich industry

The following findings answered the main research questions pertaining to what

is known about the ostrich industry interventions and what have been the most

influential interventions. The AgriBEE programmes gave previously

disadvantaged South African citizens opportunities to participate in various

areas of the ostrich industry supply chain, namely, incubation, growing of

chicks, breeders, eco-tourism, manufacturing crafts and shareholding capacity

in an ostrich tannery. However, the AgriBEE programmes had little participation

downstream in the value chain, namely, abattoirs, meat processing, marketing,

agencies and distribution. There were only two ostrich-farming AgriBEE

programmes listed with the SAOBC, namely, the Peddie and Kuruman ostrich

programmes. However, the Kuruman programme was not successful and left

the Peddie programme as the only remaining emerging ostrich-farmer

programme with full ownership in the Eastern Cape and possibly the only one

in South Africa.

The ostrich AgriBEE programmes have been concentrated around the main

ostrich-processing hubs, namely, Oudtshoorn, Mossel Bay and Grahamstown.

The main reason for the close proximity between farm and processor has been

that materials were procured more easily and that participants were able to

benefit from the indirect opportunities such as tourism and the need for labour

intensive processes. Out of the seventeen AgriBEE programmes, seven had

been discontinued by 2013. Most of these failed programmes were emerging

ostrich farmers who had not been able to comply with the standards or sustain

the farming activities through constraints or had been insufficiently equipped to

become independent. However, the Peddie ostrich programme has become

one of the most successful emerging farmer programmes in South Africa. It has

recently been integrated into the KKI supply chain and is a recognised AgriBEE

programme for South Africa’s main ostrich processor. There are, however, few

ostrich AgriBEE programmes that are involved with the main value chain and

have independent ownership.

262

11.2.5 Synopsis regarding the emerging ostrich farmers in the Eastern Cape with emphasis on main constraints

This section of the study contributed to the main research problems pertaining

to what is known about the emerging farmers in the ostrich industry and what

the main constraints are that prevent them from participating. The following is a

summary of the main characteristics of the case studies with emphasis on the

main barriers influencing sustainable participation.

11.2.5.1 Peddie Programme

In 2002 the Peddie ostrich out-grower programme was initiated by a Christian

organisation from Zimbabwe. The intention was to replicate the successful

emerging ostrich-farm models that were running at Bulawayo. The programme

started with twelve participants, each raising 100 ostriches from day-old to 6

months at their homes. By 2009 over 70 emerging farmers were producing over

5 000 ostriches. The beneficiaries, who were from local villages, consisted

mainly of elderly and unemployed people with access to off-farm income

sources or pay-outs from the government’s welfare programmes. As part of the

state’s initiatives for economic development and reduction of poverty the

Peddie programme was strongly supported and became a flagship for the

Amathole District. The programme also formed part of the government-

sponsored Integrated Meat Processors in Grahamstown.

The programme’s main constraints included lack of transport, weak Local

Vulnerability Index, dependency on feed supply and land disputes. In 2008,

owing to changes in the governmental leadership, the programme was no

longer supported under the new governance and the sponsorship was not

renewed, but the strengths of the Peddie programme were that it was strongly

supported by the Salem Agribusiness Mentorship Company and the

Grahamstown ostrich-processing hub. The avian influenza outbreak in 2011 in

the Western Cape resulted in the suspension of poultry meat exports from

South Africa.

263

The avian influenza outbreak and DAFF’s self-imposed poultry ban on

exporting meat to Europe was one of the reasons that three ostrich-related

businesses in Grahamstown faced closure. DAFF imposed new VPN04 bio-

security protocols on the ostrich farmers and these changes required that

ostriches had to be removed from home camps and set up away from the

farmers and other livestock. The changes in the requirements for farming

ostriches resulted in the farming programme being reduced to twenty farmers

and the camps were clustered together on nearby communal land. The

changes in the system of farming resulted in many of the original emerging

farmers no longer participating in the farming programme. In 2011 South

Africa’s largest commercial exporter of ostrich products in Oudtshoorn adopted

the programme as an AgriBEE initiative and this was to a large extent the

critical linkage for its survival.

11.2.5.2 Rockhurst Ostrich Programme

In 2006 the Rockhurst mohair farm was transferred to seven beneficiaries and

their families. The programme’s value was to provide employment for women

on the remote farm outside Grahamstown. The beneficiaries stayed on the farm

and consisted mainly of elderly and unemployed people receiving off-farm

income sources and pay-outs from the government’s welfare programmes. The

farming system consisted of 97 ostrich breeders and one ostrich-egg electronic

incubator. It formed part of the supply chain of ostrich chicks to the emerging

farmer programme at Bathurst and nearby commercial farmers. However, the

egg production did not produce enough income to cover the feed costs of the

ostrich breeders. After the mentor’s contract expired and the farmers were

unable to manage the newly installed incubator, the programme ran out of

funds and it was eventually terminated.

264

The main constraints of the programme included conflict between the

beneficiaries, weak economics of scale, insufficient electricity for operating

equipment, dependency on the mentorship and feed supply, weak Local

Vulnerability Index and lack of transport. However, the programme had the

necessary support from the farm’s community and had a high Human Capacity

Index due to past ostrich rearing experience with the previous farmer.

11.2.5.3 Hlumani Ostrich Co-operative

In 2009 the Hlumani programme was initiated by two individuals from the

Bathurst community who formed a co-operative with eight others from the local

community to apply for benefits from the Land Distribution for Agricultural

Development programmes (LRAD). The programme’s value was predominantly

to provide a form of livestock farming on the sponsored land. The beneficiaries

consisted of mainly elderly and unemployed people. The group was awarded a

LRAD grant for land near the Bathurst township and was supported by

Department of Social Development with structures, feedlot camps and a

livestock loading ramp. DAFF co-ordinated the linkage between the ostrich out-

grower farming system and the Grahamstown processor. DAFF also arranged

a mentor and procurement of ostrich chicks from the Rockhurst ostrich

programme. During 2011 the avian influenza outbreak caused a restriction on

all movement of ostriches in South Africa. The group was unable to produce the

necessary records to allow ostriches to be transported off the farm. Owing to

no sales the co-operative had no income and was unable to provide feed for

the ostriches. This resulted in the ostriches starving and led to euthanasia

intervention by the Bathurst Society for the Prevention of Cruelty to Animals.

265

The main constraints of the programme were that the beneficiaries lacked

agricultural experience (low Agrarian Capacity Index), there was conflict

between the group (some did not participate), the management of finances

lacked transparency, distances between farm and beneficiaries’ homes were

great, there was weak industry linkage, weak Market Access Capacity Index

and poor record keeping. The programme did have strong leadership and the

geographical position near the coastal tourist route may have made it possible

to expand into eco-tourism. This was because the farm was near a coastal

resort with linkage to a nearby agriculture and tourism hub of economic activity

(preferable score on the Local Vulnerability Index).

11.2.5.4 Zamukwanda Ostrich Programme

The programme was initiated in 2009 by six individuals from the town of

Pearston. The group applied for and was awarded a long-term land contract on

nearby farm land at Pearston. The beneficiaries consisted of mainly local

youths who had been well educated at a nearby secondary school. The

programme’s value was to provide employment and predominantly to initiate a

form of livestock farming on a dormant piece of municipal land outside

Pearston. DAFF assisted with setting up an out-growers system and arranged

linkage with the Grahamstown ostrich processing hub. The proposed linkage

with Grahamstown did not materialise, so DAFF arranged for local commercial

farmers to run the programme. The commercial farmers nominated their own

mentors to supervise and train the beneficiaries of the programme. The chicks

were supplied by the commercial farmers and the equipment by the mentors.

The mentors were given liberty to use the beneficiaries as labour. Conflicts

occurred between the mentors and labourers on the working arrangements and

resulted in the commercial farmers not renewing their contract with the

beneficiaries. The limitations of the programme were low Local Vulnerability

Index, conflict between farmers and mentors and weak industry linkage.

However, the programme had potential for high production due to the

secondary education of all the beneficiaries.

266

11.2.5.5 Mimosadale Ostrich Farm

In 2005 a business man was assisted by the Graaff-Reinet Municipality and by

DAFF to set up an out-grower operation on commonage ground outside Graaff-

Reinet. DAFF provided technical support and feed for the ostriches. The

Municipality contributed by constructing a shed and making provision for water.

During production the farmer experienced problems with payments from buyers

and high chick mortalities. The farmer altered the farming system to growing

ostriches from three months old and then sold directly to the Graaff-Reinet

abattoir. In 2009 the farmer decided to terminate farming ostriches and the

main reasons for ending was that the ostrich prices were not negotiable,

making the farmer a price taker and the stricter EU restrictions where becoming

difficult to adhere to. The main programme constraint was that the farmer was

often absent from the farm and he had to rely on inadequate labour, which may

have contributed to the high ostrich mortalities. Although the farmer was

relatively close to Graaff-Reinet, he functioned on his own and not as a co-

operative. This may at some time have been a limitation when the farm needed

to increase the scale of farming. The farmer had to rely on a particular

extension officer and his resignation from the local office may have contributed

to reducing the farmer’s access to technical know-how. The strengths of the

programme were that it rated high on most of the indexes, namely, Human

Capacity Index, Agrarian Capacity Index and Market Access Capacity Index.

267

11.2.6 Contributory value of programmes

The programmes have offered the following contributory value to the ostrich

industry and the agriculture sector:

Through the programmes it was established that ostriches have potential

for the semi-arid Eastern Cape environment and can play a role in small-

scale land redistribution programmes. The ostrich’s water economy

enhances the potential for production in the semi-arid areas of the

Eastern Cape and it is evident that ostrich farming is possible in small

areas on low-potential arable land. The ostrich farming model could be a

vehicle for promoting economic development in the Eastern Cape and

amongst land reform beneficiaries where other agricultural commodities

could not be possible.

Most of the ostrich programmes studied can be categorised as

infrastructural projects and it was planned that spontaneous

development would arise due to the inputs. The programmes have not

been focused on farming ostriches but rather vehicles for poverty

reduction and job creation in the rural areas.

It was found that most of the emerging ostrich-farming systems

established in the Eastern Cape had been out-grower systems. This is

an intensive part of the supply chain and the farming system requires

high levels of labour. Many commercial ostrich farmers in the Western

Cape rely on external contract farmers to fulfil this segment. As

discussed in Chapter 2, the three stages of ostrich production are

hatching, raising chicks and growing ostriches to slaughter weight. It is

the second stage which is demanding to manage in order to reduce

mortalities and maintain the good animal health required in the initial

years for optimum growth rate. In this second stage small-scale farmers

can participate and be of value to commercial farmers.

268


Findings from this study provide evidence to accept the hypothesis that

participation in mainstream supply chain for emerging ostrich farmers in

the Eastern Cape is currently unsustainable.

The economic and social environment, the agrarian constraints and bio-security

protocols have contributed powerfully to ruling out participation by black

emerging ostrich farmers. The formation of the Klein Karoo Agricultural

Co-operative played an important part in unifying commercial ostrich farmers

mainly in the Western Cape. Since 1945 the farmers’ co-operation has been

recognised in the ostrich industry as a strong mechanism of improving access

to agricultural services and market orientation for selected farmers. This study

highlights the complexity of the ostrich industry and the importance of breeding,

nutrition and animal health which contribute to intensive ostrich production.

However, the requirements of VPN04 bio-security and disease control demand

a higher level of record-keeping for EU markets and are prohibitively

expensive for poor rural emerging farmers in the Eastern Cape.

Today the ostrich-industry slaughter numbers are declining and the number of

ostrich farms in South Africa have halved from 2011 to 2013. Many of the

remaining ostrich farms are not actively trading in ostrich products in the supply

chain. The industry is heavily dependent on the existing Western Cape

oligopolistic market channels for export. These marketing channels are co-

ordinated by a few employed individuals who are not ostrich farmers or have

limited long-term vested interest in the value chain.

The ostrich leather export is influenced mainly by, and susceptible to, the

vagaries in the fashion industry and economic climate, and ostrich meat

production is predominantly influenced by, and susceptible to, avian

influenza outbreaks and bio-security regulations.

269

Further research is needed to determine whether the EU meat ban was

imposed as a result of human health concerns or whether it was influenced by

EU protectionist economic policies. Since the first recorded South African

ostrich avian influenza outbreak in 2004 no ostrich-to-human transfer of avian

influenza has been recorded. The outbreak of avian influenza has not only

been a major constraint for the emerging farmers but also for the industry

as a whole.

The ostrich industry started investing in a value-adding process to pre-heat

ostrich meat in order to maintain export and EU shelf space. However, this

facility is only available to farmers who conform to VPN04 and have officially

registered farms with the SAOBC in Oudtshoorn. Although DAFF has

undertaken an intensive epidemiological investigation to determine the origin of

avian influenza, this has still not been determined, thus the risk of outbreaks will

continue to be a problem for the industry. The relationship between the ostrich

industry and government is becoming a central issue to export sustainability.

The South African authorities are highly protective of the South African poultry

industry which has led to serious restrictions on movement of ostriches. This

has hindered small ostrich-chick farmers from trading freely and the larger

commercial farmers have resolved to adopt this out-grower segment into their

farming programme. Thus it could be said that VPN04’s influence on the supply

chain has resulted in the commercial ostrich farmers and processors

becoming more vertically integrated into a Hierachical Model to the

detriment of the smaller out-grower ostrich farmers.

Based on the researcher’s pilot study, it is estimated that there are fewer than

10 emerging farmer ostrich programmes in Southern Africa participating in the

export supply chain. From the five case studies it was found that the main

impetus for three was not farming ostriches but land ownership and job

creation. The case studies showed that the participants were not originally

ostrich farmers as such and only one of the cases had participants with past

livestock experience. The programme beneficiaries in two out of the five case

studies were not interested in participating in any agricultural activities after the

ostrich programmes were discontinued.

270

The main driver for three of these case studies was land ownership and

that ostrich farming was a recommended means of activity for income on

the awarded land. Therefore most of the ostrich programmes studied can be

categorised as humanitarian projects with the main aim of alleviation of

immediate deprivation (Botha and Lombard, 1992:283).

Many emerging farmers had agreed to farm due to hearsay that ostrich farming

had strong returns. It is the researcher’s observation that the beneficiaries did

not know the true extent of the intensity of management inputs required when

farming ostriches. DAFF, which has a mandate to act in accordance with the

Strategic Plan for Supporting Smallholder Producers to improve the success

and number of smallholder producers, recognised that the Eastern Cape ostrich

processes needed throughput. Thus from 2008 to 2009 ostrich farming

provided an alternative use for small pieces of agricultural land in the Eastern

Cape. The emerging ostrich farmer programmes required tremendous

intervention from actors, namely, municipalities, government, social

development, commercial farmers, mentors, infrastructure developers,

processors, extension officers and feed companies. However, it is the

researcher’s opinion that in some cases the service providers may have

benefited more than the emerging farmers who were participating in these

programmes.

The formation of co-operatives will assist emerging farmers in achieving

the economics of scale required for integrating into the ostrich-industry

supply chain. However, as seen in some of the case studies, the promotion of

large groups for increased volume may be to the detriment of group cohesion.

The establishment of co-operatives for emerging ostrich farmers will assist with

pooling resources, establishing processing operations and coping with the

capital intensity of the industry. Capital can become a binding constraint which

may influence the success at the development stages. However, emerging

farmers with little available land, sponsored infrastructure and low risk-

bearing ability may be able to adopt capital-intensive ostrich farming

more easily.

271

The benefits of economies of scale have built up a stronghold which

provides the Oudtshoorn ostrich industry node with a possible indefinite

competitive advantage over all future new players. In the past the parastatal

marketing boards assisted with developing capacity and international trade

networks for a few selected farmers and the structures have long excluded the

emerging ostrich farmers from participating. Duplicating a separate processing

node with market channels for emerging ostrich farmers would not be possible

as it would require considerable capital. Therefore emerging farmers could be

susceptible to being price-takers in an oligopolistic industry with intensive

processing and market-controlled products. In this market environment it is

not only required to compete on price, but also on factors such as

product quality, livestock weight and volume.

This research confirms the statement by the SAOBC (2010:para. 5) that access

to land, capital, disease control and slow return are the main entry barriers for

emerging ostrich farmers. The high entry costs into the industry, through

intensive agriculture, high capital investments, VPN04 bio-security regulations,

processing know-how and EU relations tend to limit the industry’s competition

and profits. Furthermore, the introduction of EU heat-treated ostrich meat

has increased the complexity of the value chain and restricted export by

those who do not have access to this facility.

11.4 RECOMMENDED INTERVENTIONS

One of the objectives of this study was to devise a development path for

improved smallholder participation in the ostrich industry. The endogenous

development path is intended to contribute to planning and give direction for

emerging farmers. A sustainable design is essential in order to plot progress to

empowerment and participation in the supply chain. The following section

introduces a proposed development path with interventions to facilitate the

transition from subsistence to commercial ostrich farming (Figure 11.1).

272

The initial phase of the path requires impetus to overcome entry-level

constraints identified in this study, namely, dependency on mentors or DAFF,

limited knowledge of the supply chain, financial security and limited training and

market information. This is a decisive phase in which the private sector and

government can play an important role to help the farmers progress over the

threshold into the commercial farming arena. This phase is where government

legislation and black economic empowerment can provide the impetus for

programmes in the commercial industry. The Local Vulnerability Index provides

an indication of the scale of inputs and resources required. As discussed in this

study, the AgriBEE vehicle plays an important part in unlocking access to and

participation in supply chains and promoting entrepreneurial skills of black

people.

In Figure 11.1 the secondary axis represents the accumulative percent

according to the capacity instrument. The orange dotted line represents the

ideal capacity required for supply chain participation. This ideal capacity is the

total percentage of the four indexes, namely, LVI, HCI, ACI and MACI. The

greater the total of the index, the greater the potential capacity for participation

in the supply chain. The LVI and HCI are often in most cases difficult to change,

however the ACI and MACI indexes have the greatest opportunities for

improvement from interventions. With appropriate and timeous interventions

applied to the ideal capacity trajectory the farmers should develop and be

empowered to achieve the commercial farming arena.

274

The following interventions have been identified to empower emerging ostrich

farmers and to address the main forces on the development path:

11.4.1 Feasibility study of programmes and review of location selection

before initiation

In a rural environment the Local Vulnerability Index will have an influence on

required financial input for the establishment of emerging ostrich-farmer

programmes. Furthermore, modernisation is important if the farmers are to be

economically competitive while applying environmentally-sustainable farming

systems. The geographical considerations and industry development had an

important influence on the development of the ostrich industry. The processing

facilities, such as the abattoir, de-boning plant and tannery have been critical in

the development of the industry as a world leader. The network of farming

infrastructure, the agro-processing node, supporting enterprises, eco-tourism

and institutional support from a co-operative are worth billions of Rands. There

is only one processing node for ostrich products in the Eastern Cape, namely,

Graaff-Reinet, which is not in close proximity to the emerging farmers who

consequently face the detrimental effects of travel stress on skins and meat.

11.4.2 Providing supportive interventions for programme start-ups

None of the five case studies researched had received any support from the

ostrich industry for land and infrastructure development. Out-growers had

received their own infrastructure and feed from sponsors, which gave them a

competitive advantage which in turn resulted in a competitive product for

commercial farmers. Owing to the recent increase in labour wages in South

Africa, out-growers may also provide an alternative labour cost-saving for

commercial farmers. The governmental involvement and supporting service

providers had been central in initiating and maintaining the programmes.

However, few of the emerging ostrich farmers in these programmes have

managed to engage independently with the private sector.

275

DAFF facilitated most of the linkages with public-private partnership. This

intervention from both the governmental and the private sector is an important

part of facilitating the development process by involving investors so that they

can assist, identify and provide confidence in the programmes.

11.4.3 Improved selection of programme beneficiaries

According to LADR (2011:41), “farmers assisted should be selected on merit,

as not all farmers have the ability or desire to succeed”. More effort is required

to develop capacity and preparedness amongst candidates that have no

intention to participate or have little farming experience. The question is why

applicants in the cases studied have not been able to find employment and if

there have been limitations in their capabilities, whether these beneficiaries

have the capacity for intensive ostrich farming.

It is the researcher’s observation that in some cases studied the land

applications were primarily done to meet the procedural requirements for

access to finance. In three out of the five case studies the land beneficiaries

chose ostrich farming as a livestock option for land use, it was never the

intention to farm ostriches as a first option. The right selection of farmers is an

important start to programmes as it determines the abilities, knowledge,

leadership and the type of beneficiaries that will be able to overcome the high

entry costs. Intervention mechanisms such as the participation capacity

instrument have value in aiding the selection of candidates and could contribute

towards programme sustainability. The lower the farmer rating is on the

capacity instrument, the harder it will be for government and the private sector

to promote emerging farmers over the threshold into the advanced farming

arena.

276

11.4.4 Improved structure of emerging farmers’ co-operatives

Emerging farmers in a co-operative who face the same constraints will have a

greater advantage in approaching solutions to their common constraints

through collective action. Through an association they can pool resources and

benefit from shared market-orientation and supply chain governance. However,

it was found that with larger memberships, decision making was problematic

and the lack of cohesion increased the level of informality in the operations. It is

recommended that smaller groups should rather be formed and that a

constitution be adopted to govern procedures dealing with community issues

such as, finances, conflict and eviction of non-participating farmers. The

leadership of the programmes has had a strong influence on record-keeping,

financial decisions, budgeting and personnel co-ordination. The case studies

found that it was difficult for the farmers to receive instructions from people from

their own community. It was suggested that leadership within the co-operative

environment should originate from outside the community.

11.4.5 On-going and appropriate training for emerging ostrich farmers

Farming of ostriches is intensive and farmers require continuous guidance,

training and development in order to overcome constraints and achieve

independence from mentors and government interventions. Key areas for

ostrich farming discussed in this study that require strong understanding have

been: production records, financial records, breeding stock, disease prevention

and control, ostrich handling and feeding. The extent and level of training will

depend on the level of Human Capacity Index (discussed in Chapter 10). It is

recommended that farmers receive training in accordance to their capacity to

receive and apply the new knowledge or skills.

277

11.4.6 The role of government and mentors needs to be defined

The case studies suggested that the emerging ostrich farmers had a strong

dependence on mentors and DAFF and were unable to run the programmes

independently. It is at this threshold that emerging ostrich farmers need to

become independent and find a way to manage the bio-security requirements

on their own. This is vital if emerging farmers were to aspire to reach a

sustainable and advanced form of farming. In order for farmers to move away

from dependence they need to feel that they have ownership and are part of

the decision-making process. It is suggested that the mentors and DAFF need

to recognise the importance of timing in releasing emerging farmers into

sustainable independence and that this exit phase needs to be clearly defined

and communicated. In the pre-1994 period the ostrich industry built on strong

governmental market-protective policies, a highly-regulated agricultural industry

and the provision of state-sponsored irrigation schemes for a challenging

pastoral agro-ecosystem. It is the researcher’s observation that it would be

impossible to duplicate elsewhere the sizeable ostrich industry found in the

Oudtshoorn area in South Africa today.

The ostrich farming system is capital-intensive with high entry costs. Most of

the case studies revealed that the high entry costs had been sponsored by

local municipalities, social development and DAFF. However, it is the

researcher’s observation that this was not sufficient to enable farmers to reach

the advanced farming phase and achieve sustainable linkage to high-end

markets.

278

11.4.7 Reducing feed costs

Ostrich production is feed-based and will struggle to maintain profitability due to

increasing feed costs. Feed and nutrition are important influential factors in

animal growth. Since 70 percent of ostrich-farming costs are attributed to feed

inputs there is a need for further research into alternative feeds. Benson

(2013:1) claims that it is possible to develop feeds that farmers can produce on

their farms, but the farmers will need to be trained on how to utilise the crops to

ensure that they mix the rations correctly and that the rations are appropriate

for each ostrich growth cycle. The most appropriate type of product in this case

would be a supplement that includes the protein and the necessary vitamins

and minerals to mix with the lucern and maize produced on the farm.

11.4.8 Establishing programmes linkages to informal markets and

facilitating increased self-consumption

Since emerging ostrich farmers are largely dependent on the South African

ostrich industry oligopolistic market structures, interventions are needed to

provide further outlets for farmers to trade in the informal market. As a result of

the main ostrich industry a mature level of tourism has developed around the

Oudtshoorn area and the ostrich tourism industry has become an important

contributor to the local economics. Yet none of the cases studied had

diversified into this opportunity for eco-tourism income. Rural citizens who lack

skills or education or who are unable to engage in strenuous labour can benefit

by tapping into the potential that the ostrich-related arts and crafts have for job

creation and employment. It is suggested that further research be conducted on

opportunities for emerging farmers to exploit the tourist market by means of arts

and crafts.

279

An arts and crafts industry will provide further trade opportunities and improved

cash flow for the farmer. Important aspects of rural livestock tradition are the

ability to barter, the value of sales and self-consumption of livestock. In the

case studies there was no report of self-consumption of ostriches or use of any

of the ostrich by-products by the farmers. The ostriches were sold live to

commercial farmers or abattoirs without any consumption of products by the

farmer. This is contrary to the anthropological tradition of farming livestock in

rural areas. The dependence on distant marketing channels and export markets

with no domestic outlet has placed the rural farmer in a vulnerable position. It is

recommended that the emerging farmers involved in contract-farming

arrangements be given the option of benefiting from the by-products.

Furthermore, they should have facilities to produce products that can be sold at

informal markets, such as, biltong, feather crafts and eggs, but training and a

development platform will be required to stimulate this.

11.4.9 Developing new export markets

The bio-security requirements to export to Europe may be too far-reaching for

some of the emerging farmers. The results of the study indicated that most of

the farmers were not aware of the VPN04 regulations and it was not a main

topic of concern. The farmers were more aware of the consequences of the

VPNO4, namely, restricted ostrich movement, record-keeping, keeping

ostriches isolated from homes and sanitation requirements. However, it is the

researcher’s view that the influence of VPN04 may result in larger commercial

farmers no longer contracting to out-growers due to the restrictions and

cumbersome administration. This will see an increase in vertical integration

from hatchery to growing the birds to slaughter weight and increased exclusion

of emerging farmers. Stronger partnerships and interventions between out-

growers and commercial farmers are needed. There is a dependency on the

European market and alternative markets such as the BRICS nations, should

be considered, as some do not require the stringent bio-security measures or

pre-heating of high-risk meat. This will make marketing conditions easier for the

emerging ostrich farmers.

280

11.4.10 Alternative finance for the no-income months

One of the main constraints found in this study was the lack of cash flow for the

emerging farmers. Development funds assisted with establishing infrastructure,

however, the farmers were not accountable for the debt for the capital outlay. It

was noted that with no consistent monthly income, the emerging farmers found

it challenging to cover the costs between each production cycle. The out-

grower emerging-farmer system was unable to provide finance for the day-to-

day rural needs. The onus was on the farmers to plan financially for the five no-

income months and this situation was challenging for some farmers who were

financially illiterate. Therefore some of the farmers were dependent on grants or

non-farm income. Income interventions are therefore required to assist out-

grower farmers to bridge the gap from day-old ostriches to final payment. It

would also be advisable for farmers to diversify into other farming operations in

order to have proceeds for the lean months. It is also recommended that the

mentorship facility also act as an advisory institution to render financial advice

to the farmers.

11.4.11 Alternative marketing channels to export markets

Owing to the complex production systems, industrial processes and marketing

structures, ostrich farming is considered a highly intensive form of agriculture.

The production and process involved require a higher level of sophistication

and experience than those smallholder farmers were capable of. The ostrich

industry has been dependent on strong market channels and relationships to

deal with the European market. The EU protectionist economic policies have

limited the development of the agricultural sector by restricting market access

and this state of affairs has been detrimental to rural development (ICTSD,

2011:14). Owing to the limited ostrich-processing facilities in South Africa, the

emerging ostrich farmers will be dependent on the oligopolistic market channels

and will have to prove their efficiency and ability to produce quality products in

order to gain entry into these supply chains.

281

11.4.12 Representation of emerging farmers in the ostrich-industry

leadership structures

As discussed in Chapter 6, the emerging farmers do not have strong

representation in the SAOBC stakeholder structures. The emerging farmers

require a co-ordinating body that can serve as a mouthpiece in the greater

context. During the monopoly era the strategic decisions were taken by one

enterprise. After deregulation the entry of new role players and wider

participation resulted in loss of control in pursuing this agenda. A collective

approach of all the players (emerging and commercial) is required to maintain

the intellectual capital of the ostrich industry and share the national strategies

and risks, such as the bio-security requirements.

11.5 OPPORTUNITIES FOR FURTHER RESEARCH

Given the gaps identified by this study, the following areas for further research

and development have been identified:

New approaches in prevention and treatment of avian influenza;

Cost effective methods of pre-heating ostrich meat for export;

Alternative feed and reducing feed costs for ostriches;

Investigating reasons for the EU ostrich bans;

Opportunities for emerging farmers to exploit the tourist market by

means of arts and crafts;

Further testing of the participation instrument developed in this study

and refining of the ideal percent thresholds; and

Development of new markets for the South African ostrich industry.

282

11.6 CONCLUSION

The aim of the study was to explore interventions that could support the

transition from subsistence to commercial ostrich farming for high-value export

markets. According to the data from five case studies using a conceptual

participation capacity instrument, the ostrich farming programmes did not

achieve a high level of capacity to participate fully in the ostrich-industry supply

chain. The data showed that the emerging ostrich farmers had limited farming

knowledge, weak supply-chain leverage and had received limited training in

ostrich husbandry. Other constraints included; poor selection of beneficiaries,

conflict between participants, a lack of feasibility planning, weak economies of

scale, dependency on mentors and high feed costs.

The constraints were revealed using the participation capacity instrument

indexes developed by the researcher, namely, the Human Capacity, Agrarian

Capacity and Market-Access Capacity Indexes. The main forces which had an

influence on participation were the weak Local Vulnerability Index, high entry

costs, bio-security requirements, market conditions, limited marketing channels

and economic conditions. The case study programmes were discontinued when

the emerging farmers were unable to overcome certain constraints and/or

forces. It is the researcher’s view that the farmers in the five case studies

investigated did not overcome the initial phase of development and did not

progress to the commercial farmer stage. The private sector, commercial

farmers, mentors and DAFF played an important role in helping to overcome

the high entry costs and weak Local Vulnerability Index.

283

The following is a summary of the interventions suggested from this study:

Feasibility study of programmes and review of location selection before

initiation;

Providing supportive interventions for programme start-ups;

Improved selection of programme beneficiaries;

Improved structure of emerging farmers’ co-operatives;

On-going and appropriate training for emerging ostrich farmers;

The role of government and mentors needs to be defined;

Reducing feed costs;

Establishing programmes linkages to informal markets and facilitating

increased self-consumption;

Developing new export markets;

Alternative finance for the no-income months;

Alternative marketing channels to export markets; and

Representation of emerging farmers in the ostrich-industry leadership

structures.

The development path mapping and participation capacity instrument were

introduced as mechanisms for developing emerging farmer programme growth

and empowerment. The developmental path would facilitate and assist planning

through the ostrich-industry constraints and forces. As discussed, the capacity

instrument has the potential to measure the likelihood of sustained participation

in other agricultural sectors. In the same way this intervention can be used to

measure and evaluate programmes at regular intervals to assist in progress

across different programmes over a period of time

284

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