Collective action and rural poverty reduction: Empirical evidence from KwaZulu-Natal, South Africa

ABSTRACT

Organising smallholder farmers into groups has become an important and preferred mechanism through which the South African government and other rural development agencies seek to address rural poverty and household food insecurity. This study investigates whether collective action through farmer groups has improved incomes among rural farming households in South Africa. The propensity score matching (PSM) method and the treatment effect approach were used to analyse a sample of 984 rural households from four districts in KwaZulu-Natal. The PSM results indicated that participation in farmer groups significantly and positively influenced household incomes. Group membership increased the average household incomes per adult equivalent by about R3000. However, the Rosenbaum bounds tests indicated that the impact estimates obtained using the PSM approach were not robust to hidden bias. The treatment effect regression model, which controls for hidden bias, was estimated, and the results supported those of PSM. The results also indicated that groups benefit more those who are educated and are males, suggesting a bias against the females and those less educated. The results suggest that organising smallholder farmers into groups can play a positive role in rural poverty reduction. For greater impact, policy makers should promote group formation and participation among smallholder farmers as well as introduce adult literacy classes to improve education levels.

KEYWORDS:

• collective action
• farmer groups
• rural poverty
• KwaZulu-Natal

JEL Classification:

• I32
• Q13