Entrepreneurship concepts/theories and smallholder agriculture: insights from the literature with empirical evidence from KwaZulu-Natal, South Africa

Abstract

Unlocking on-farm entrepreneurship is said to be fundamental for employment creation in the smallholder sector and for rural poverty reduction. However, policy-relevant knowledge to enhance smallholders’ entrepreneurial activities and transform the sector is scant. This paper draws from a systematic literature review and recent survey data from South Africa to interrogate entrepreneurship concepts and theories in the context of smallholder farmers. The evidence shows that smallholders and their features do not conform to the growth-oriented concept of entrepreneurship. The external locus of control, reliance on unearned and external income, the absence of a business mindset and the lack of risk-taking propensity are the key challenges to realising entrepreneurship in the context of South African smallholder agriculture. It is possible to be a survival or subsistence entrepreneur without necessarily maximising profit. If such entrepreneurial activities are to flourish, there is a need to focus on farmers’ mindset, nurture self-reliance and take advantage of indigenised local knowledge. To this end, a paradigm shift is required in designing financial grants and inputs or farm service support programs. Government and rural development partners must be mindful of the long-term behavioural impacts (on farmers) of their actions so that they render support without nurturing a culture of entitlement and expectations by farmers. At a structural level, the structure of smallholder income will have to change in South Africa to enhance the internal locus of control and realise the transformation agenda in the sector. Future research should focus on the theory and practice of entrepreneurship in the context of smallholder agriculture.

Keywords:

• entrepreneurship
• smallholder agriculture
• psychological capital
• behavioral economics
• South Africa

AKNOWLEDGEMENTS

The authors thank the Water Research Commission for funding this study (Contract No.: K5/2278/4), which was undertaken as part of a project titled “Water use productivity associated with appropriate entrepreneurial development paths in the transition from homestead food gardening to smallholder irrigation crop farming in KwaZulu-Natal Province.” The final report is available at www.wrc.org.za as “WRC Report No. 2278/1/18.” Useful comments of an anonymous reviewer on the previous version of the manuscript are gratefully acknowledged.

DISCLOSURE STATEMENT

No potential conflict of interest was reported by the author(s).

Notes

1 See Wale & Chipfupa (2018).

2 In this context, transformation refers to commercialising and improving the market orientation of smallholder farmers.

3 Options selected in a way that they can be adjusted or reversed over time when additional information becomes available or when circumstances change.

4 Options effective in a wide range of socio-technical-environmental conditions.

5 One can imagine what would have happened if this loss was incurred by a multinational company or a big agribusiness company.

6 For exactly the same reason, few young people are interested in smallholder agriculture (White, 2012).