Analysing the competitiveness of the agribusiness sector in Swaziland

Businesses in Swaziland have been somewhat cushioned against the impact of world trade liberation and least as far as home and regional markets are concerned (Ministry of Enterprise and Employment, 2005: 18). The country's position with the Southern African Customs Union (SACU) affords temporary protection against the competition felt by economies elsewhere in Africa. Furthermore, with limited domestic markets, export-oriented industries are the backbone of Swaziland's economy (Thompson, 2010:19). Trade vibrancy caused by globalisation, health standards requirements and other factors has started affecting export industries. It is therefore, important that the businesses in Swaziland prepare for more intense competition in the future. This could be achieved through improved management and improved productivity which would then enhance competitiveness. The decrease of foreign direct investment in the agricultural sector, the removal of trade preferences among top export industries (sugar, textile), decrease in demand for export products (as a result of economic downturn), indicates that there is a problem of competitiveness in the Swaziland agribusiness sector. Therefore, the objectives of the study are; to determine the constraining and enhancing factors of competitiveness of the agribusiness sector of Swaziland and to develop the strategies to improve competitiveness of the sector. A structured questionnaire adapted from the Agricultural Business Chambers (ABC) of South Africa was used to collect the data through face-to-face interviews. Porter's (1998) theory for the determinant of competitive advantage was used as a base in designing the questionnaire in order to capture the constraining and enhancing factors influencing competitive advantage. The target group comprised decisionmakers (chief executive, managing directors) for agribusiness firms, including in the following industries: dairy, sugar, animal feed, maize, livestock and poultry, textile. The data was analysed using the statistical package for social science (SPSS) and was presented in tableau and figure format. The scale of classification used when analysing the determinants of competitiveness was; a mean score of 1 meant constraining competitiveness success; a mean score of 3 meant moderate effect and a mean score of 5 meant enhancing competitiveness success. Most of the determinants [factor (2.72), demand (2.64), related and supporting industries (2.29), chance (2.46) and government conditions (2.48)] were constraining competitiveness. The top three factors contributing to this are: unavailability of professional labour (1.63), costs of inputs and supplies (1.69), incompetent (1.69) and ineffective public sector personnel (1.88) and small local market size (1.88). The only determinant that has the ability to enhance competitiveness is the firm's strategy, structure and rivalry conditions, as indicated by a moderate mean score of 3.38. The top three factors enhancing competitiveness success of the agribusiness sector are; production of high quality affordable products (4.19), availability of water for production and processing purposes (4.00), and the cost of unskilled or semiskilled labour (3.94). The Porter analysis indicated that the competitive environment in which the sector operates in is unfavourable and does not enhance competitiveness. An analysis of the interviewed industries revealed that the overall performance of each industry, particularly the sugar, dairy and maize industries are moderately competitive compared to the other ones. This is supported by the finding that these industries have three determinants of comparative advantage enhancing competitiveness. Special attention, through implementation of strategies to enhance the competitiveness of the agribusiness sector is necessary. This could be achieved though collaboration and intervention by all participants in the sector. The strategies are explained in terms of roles that could be played by the agribusinesses and the government. Strategies involve; industry coordination to minimise costs, market orientation strategy, HIV/AIDS services at company level, encouraging sustainable investments, products diversification and promoting internship and graduate training programmes. CopyrightDissertation (MSc(Agric))--University of Pretoria, 2012.Agricultural Economics, Extension and Rural Developmentunrestricte

Economic analysis of supermarkets as a marketing channel choice for fresh produce smallholder farmers in Eswatini.

Doctoral Degree. University of KwaZulu-Natal, Pietermaritzburg.The growth of supermarkets in Eswatini has been dominated by South African supermarket chains that typically have access to established procurement channels from South Africa. Whilst some supermarkets do procure some fresh produce from local farmers, others exclusively procure from South Africa. This facilitation of market access for imported fresh produce in Eswatini – a threat for local farmers - differentiates this study from previous research on the impacts of supermarkets on farmers in developing countries. In particular, supermarket requirements imposed on producers in conjunction with competition from imports has important implications for local farmers’ direct access to these markets, the types of fresh produce procured, and the relationships formed, which therefore, impact on farm incomes of smallholder farmers in Eswatini. Therefore, the primary objectives of the study are to show the procurement system of vegetables in Eswatini as a complex system; analyse the nature of the farmer-buyer relationships; determine the factors affecting the choice of marketing outlets; and estimate the impact of supermarket participation on income of smallholders in Eswatini. The study focused on the procurement of fresh produce, namely cabbages, spinach and lettuce from Hhohho and Manzini, where the majority of supermarkets in Eswatini are located. A combination of sampling methods has been used in the study. A random sampling method was used to select a sample of 110 smallholder farmers supplying vegetables to traditional markets and NAMBoard, (a parastatal that, amongst other functions, assists farmers with production, processing, storage, transportation, distribution of their produce and the sale of scheduled products) and about 60 smallholders were supplying supermarkets. Informants from the vegetable supply chain were purposely selected with the view of being directly and indirectly, involved in the chain. The thesis is structured as four research papers that address the above-stated objectives. The first research paper examines the procurement system of vegetables in Eswatini as a complex system using the Theme Network Analysis (TNA). TNA allows for the identification of linkages of key themes associated with the procurement of vegetables by formal markets and other pertinent themes that can be further investigated for solutions to the system. In the second paper, factor analysis and discriminant analysis were used to determine farmer-buyer relationships between informal and formal marketing channels based on relationship satisfaction, trust and commitment. Results from the discriminant analysis revealed that there is a statistical significant difference between formal and informal marketing channels, and those farmers supplying formal markets perceived levels of satisfaction, trust, and commitment better than for informal markets. The third research paper involved the application of the Multivariate Probit (MVP) model to estimate the factors influencing the choice of marketing outlet selection strategies. The marketing outlets observed were supermarkets, NAMBoard and traditional markets, and the results showed that these outlets were substitutes. This implies that when it comes to marketing outlet selection, farmers would select one outlet over the other based on economic and practical factors; if the conditions for supplying one market outlet are inaccessible for smallholders, another market will be selected. The selection decision is influenced by risk attitude, assets ownership, institutional variables, transaction costs and market attributes. Lastly, the fourth paper involved the application of the Endogenous Switching Regression model to determine the factors influencing participation in supermarkets and the effect participation has on income of suppliers. The results revealed structural differences between farmers supplying supermarkets and traditional markets, particularly with respect to the size of the farm and off-farm income. The result also revealed that smallholders supplying supermarkets earned a relatively higher income than those supplying traditional participants. The main conclusions of the study are as follows: the characteristics of supermarkets and farmers, as well as the nature of the product, add to the complexity of the procurement system. The TNA enhanced the understanding of the identified issues contributing to the complex procurement systems; hence, strategies for improvement can be investigated. The key challenges identified were inconsistent supply of produce, lack of finance, and transport, high procurement requirements and high transaction costs. The social responsibility approach that supermarkets use for smallholders is attributed to these procurement challenges, which means that buying from local smallholders is not one of the business strategies for retailers. Therefore, policy regulations set to limit imports and encourage domestic procurement while developing smallholders to be able meet procurement requirements are necessary. The introduction of such policies may reduce imports, which are regarded as a threat to local farmers. Secondly, the nature of the buyer-seller relationships between the marketing channels is discrete, which is characterised by flexibility and lack of commitment between farmers and the buyers. The factors affecting the choice of marketing outlets and the effect on supermarket participation are crucial for the sustainable growth of smallholder vegetable farmers in Eswatini. The farmers’ risk preference, different assets owned, institutional factors, and the duration the marketing outlet takes to make payment for produce influence supermarket channel selection decisions. The implications of these results (factors) provide empirical guidelines necessary for farmers when selecting marketing channels. Policies aimed at the commercialization of smallholder farmers involving the establishment of institutions and the acquisitions of assets such as the provision of education (skills training), improved market information, extension services, mobile phone, transportation and farm size to produce marketable surplus are critical for the improvement of supermarket participation leading to improvement of farmers’ income. The study, therefore, recommends a coordinated and comprehensive supply chain approach, which will enhance a broader understanding of the vegetable marketing system and the achievement of a mutually beneficial relationship that will enhance smallholder farmers’ access to markets and further improve their household welfare from income earned from participating in these markets

Factors affecting the competitiveness of the agribusiness sector in Swaziland

Identifying the factors that influence competitiveness is imperative in order, to appreciate the position of the firm in relation to its environment and to propose appropriate measures and strategies for increasing competitiveness of agribusiness firms. The study sought to determine the competitiveness of the agribusiness sector in Swaziland and to identify the factors affecting competitiveness. Porter’s (1998) theory of the determinants of competitive advantage was applied in the analysis. Data were analysed using descriptive statistics. The results indicated that the top 3 constraining factors to competitiveness were: the unavailability of professional labour (mean = 1.63); high cost of supplies/inputs (mean = 1.69); incompetence of public sector personnel (mean = 1.69); ineffective public sector personnel (mean = 1.88) and the size of the local market (mean = 1.88). The enhancing factors to competitiveness were: production of affordable high quality products (mean = 4.19); availability of water for industrial purposes (mean = 4.00) and affordable cost of unskilled labour (mean = 3.94). The results further indicate that the agribusiness sector is constrained, suggesting that the environment is not enabling for agribusinesses to be competitive. It is recommended that other markets be explored in order to expand the export base, which could be carried out through product diversification.http://www.macrothink.org/jashb201

Factors Affecting the Competitiveness of the Agribusiness Sector in Swaziland

Identifying the factors that influence competitiveness is imperative in order, to appreciate the position of the firm in relation to its environment and to propose appropriate measures and strategies for increasing competitiveness of agribusiness firms. The study sought to determine the competitiveness of the agribusiness sector in Swaziland and to identify the factors affecting competitiveness. Porter’s (1998) theory of the determinants of competitive advantage was applied in the analysis. Data were analysed using descriptive statistics. The results indicated that the top 3 constraining factors to competitiveness were: the unavailability of professional labour (mean = 1.63); high cost of supplies/inputs (mean = 1.69); incompetence of public sector personnel (mean = 1.69); ineffective public sector personnel (mean = 1.88) and the size of the local market (mean = 1.88). The enhancing factors to competitiveness were: production of affordable high quality products (mean = 4.19); availability of water for industrial purposes (mean = 4.00) and affordable cost of unskilled labour (mean = 3.94). The results further indicate that the agribusiness sector is constrained, suggesting that the environment is not enabling for agribusinesses to be competitive. It is recommended that other markets be explored in order to expand the export base, which could be carried out through product diversification.http://www.macrothink.org/jashb201