**4. Discussion**

*Agricultural Economics - Current Issues*

was not there.

regulate the food supply.

consumers, to encourage farmers to use CA.

free or organic produce, but not CA produce.

**3.4 Supermarkets**

While one trader believed that this situation would not change for them in the near future, the second trader said that they would switch over to GMO-free, once the majority of farmers did so as well and reliable volumes and batches could be processed in that way. However, in contrast to GMO-free, CA was not at all on the radar for them, as the market did not understand what it meant, and the demand

Around the question of how government could get involved with creating a supportive framework for CA, both responded very similarly in that open market principles of supply and demand should prevail and government should not interfere with legislation or policy. One of the traders said that they did not want a duty on maize, as it existed with wheat, especially where the duty funds disappear and are not invested back into agriculture. This interview participant said that if ever government were to think about a maize duty on such a large staple, it should be used to flow back to agriculture to change the farmers' minds to do CA. One trader responded that government should be careful not to 'play' around with the basic food needs of a nation, and should let free market forces of supply and demand

Similar to traders, were supermarkets to support CA through preferential procurement could likely attach a sense of sustainability to their brand and grow also an awareness amongst their consumers for being ecologically just and fair to the planet's recourse base. The question arises whether this is a valid and sufficient argument for retailers, who compared to traders have a direct engagement with end

We interviewed three major retailers in South Africa, all of whom had some form of sustainably farmed produce on their shelves already. The interview was conducted with senior employees of these organisations who were responsible for, or involved with, the purchasing of farm produce. During the interview, the respondents tended to focus their answers more around sustainably farmed products than specifically CA produce. The retailers, as became clear, have not been confronted with CA produce specifically, but usually with a host of differently and

The retailers did not have dedicated shelves that sold CA produce, as most of them had for organic products; they would either be on the same shelf and branded differently or altogether placed somewhere else. None of the retailers had CA farmed maize in their portfolio, and when asked whether they would buy CA produce if it were readily available, two of the three retailers would probably purchase CA products if there were a demand for CA produce. One retailer said it would be pointless to buy it, if the consumer did not understand what it was. To that retailer, the average consumers was more likely to understand, or have heard about GMO-

All three retailers agreed that there was very little understanding from the consumer side about CA, and that it was unlikely to change in future. The retailers said that a lot more education would need to take place for the average consumers to understand CA, or even organic farming, and until then, the demand is low and is

However, one retailer said that it saw CA practices amongst farmers increasing, independent from market demand. They could see it, for example, through produce like sweet corn, with very successful farmers doing no-till sweet corn. To them, the increase in CA seemed likely, and it would be driven from the farmer side, as the benefits of CA were for the farmer and less for the consumer, at least at this stage.

sustainably farmed produce, ranging from organic to low carbon etc.

**76**

likely to stay low.

### **4.1 Summary of data**

From both the grounded theory used to analyse the qualitative interview data and the qualitative data collected we have generated **Table 1**. There are four major themes that we could identify using coding principles of grounded theory and **Table 1** shows for each of those themes how each of the VCPs is positioned against a theme.

While some retailers supported organic products, none of the VCP had any form of products which supported CA and with exception to one bank, next to none of the VCP were thinking of or prepared to develop products related to CA. This notion also closely relates to the last column on the right, where all retailers and traders indicated that if they were to choose to support either organic or CA, they would support organic because it is an established brand. In other words, no one was prepared to engage in establishing another brand around CA.

Both retailers and traders also indicated that it is very unlikely that any of their clients would demand CA farmed produce as they were also very unlikely to understand what CA was about in first place. Across the board of all interviewed VCPs there was very little support for CA or to drive a change to more CA farming practices.


**Table 1.**

*Summary of responses around CA (sample sizes in brackets).*

#### **4.2 Policy discussion**

Generally, there was a broad confusion amongst all respondents around what CA meant, and how that related to organics and GMO. Even a retailer that was well versed in the procurement of foods from more sustainable farming practices was not sure what was meant with CA. Many interviewees believed a lot of consumer education efforts would need to happen before they could drive CA from a marketing perspective.

While the retailers did have sustainable products like organic, branding a second sustainability label did not make sense and therefore they also did not put pressure on traders and millers to supply them with CA products. The opinion amongst the retailers and traders was that maize was purchased from other traders, cooperatives and silo owners, where there was no control over the separation of CA maize and non-CA maize. The traders agreed that it would be cumbersome and expensive to try to keep CA maize separate, and it would only ever work if most farmers were to switch over to CA farming.

The feeling from one trader was that generally, government should not get involved in regulating the market, as it did with the duty on wheat. If, however, any duty was to be imposed, the funds from such a duty could be used to fund agriculture and be used to possibly support CA through extension for example. On the discussion of GMO-free products, the traders would not change their operations or invest heavily for a small consumer group perceived to have 'upper-class angst'. The retailers also showed an unwillingness to start branding another sustainable method next to organic produce, which by now only a few consumers understood.

The feeling amongst the banks was that they do not get involved with what is fundamentally a farm production level decision which was to be made by the farmer himself. In any event, lender's liability principles would not allow them to dictate any form of farming operations when giving a credit. Banks argued that if CA mitigated risk, it would automatically show on a farmer's balance sheet, and subsequently affect the risk profile and credibility of the farmer to his benefit; although most respondents agreed that it would take years for a farmer to see such benefits reflecting on his credit profile. While one bank was sure to create a product that in future would assist farmers converting to CA, two more hinted that there was the possibility of a future product that assisted farmers going CA and supported them through a potential initial cash-dip, if CA research proved to be less risky and more productive for farming in the South African context. Policy could therefore support more research into CA benefits for individual regions of South Africa.

All the interviewed insurers seemed to know about research that evidenced that CA resulted in more climate resilience and less water stress. Similar to banks the

**79**

*Value Chain-Induced Constraints Limiting Scale of Conservation Agriculture in South Africa*

insurers argued that by the nature of their business model and the way in which the underwriting process works, calculating policy premiums, farmers would automatically benefit if they chose better farming practices that resulted in more consistent yields with decreased risk of crop loss. None of the insurers were also supporting the notion of developing a future product that supported CA. Because mitigating risk is the insurer's business, they would not insure a new system based on a promise that it might mitigate drought in years to come. For one insurer drought risk was a small exposure and therefore drought risk mitigation was for them less high on the agenda. Because, as argued above, there is an attractive financial argument in favour of CA, farmers are likely inclined to take up CA as a farming practice for their own future financial benefits. With less 'draught risky' farming practices this in turn would position these more favourably in front of financial institutions such as banks and insurers. Yet such a transition would be driven by the farmer and not VCP or policy, in contrast, because almost all VCP showed little interest in developing CA targeting products, a policy driving CA support through the VCPs would likely

Based on our findings a key implication is that government policy concerning CA should endeavour to provide an enabling environment for the future uptake of CA. We suggest that a slow process of change is the route that policy should take, with key aspects focussing on policy enabling training and capacity development of farmers, through field extension and agricultural schools, to adopt CA. Because CA is also a cheaper production system and needs less external inputs, focus should be

Over time, a policy that favourably supports CA would grow the farming user base; and in doing so end-consumers would automatically get access on a broader base to more sustainably farmed products without any system change in the value chain, in which the value chain participants have clearly indicated not to drive CA

We have argued that CvF practices have high external input costs and a substantial impact on natural ecosystems, ecosystem services, soil erosion, and CO2 emissions. These are results of a conventional industrial agricultural complex that also dominates the modern South African agricultural food value chain. We have argued that more sustainable farming practices such as CA are more climate resilient and supply more nutritional value, both of which favourably impact long term food

We have raised the question whether South Africa's current food system has the ability to sustain long-term food security and if changes in the existing food value chain complex would be able to drive a transition into a more sustainable and food

From the research data we can conclude that none of the respondents had a product that supported CA and the general inclination of most interviewed was not particularly in favour to support CA through new product development in their respective institutions. Mostly it was argued that it would either interfere with their specific business-client integrity, or it would not fit into their specific business model or alternatively be too difficult to sell to the end consumer, who understood organic but not CA. The traders argued that with the large volumes and silos they

For the respondents from the financial institutions CA had the potential to mitigate risk, however in the eyes of most of the respondents there was yet not

worked in, keeping CA produce separate would be very costly.

on smallholder farmers who mostly struggle with access to external inputs.

*DOI: http://dx.doi.org/10.5772/intechopen.84499*

yield little impact.

as a system.

security.

secure alternative such as CA.

**5. Conclusion**

#### *Value Chain-Induced Constraints Limiting Scale of Conservation Agriculture in South Africa DOI: http://dx.doi.org/10.5772/intechopen.84499*

insurers argued that by the nature of their business model and the way in which the underwriting process works, calculating policy premiums, farmers would automatically benefit if they chose better farming practices that resulted in more consistent yields with decreased risk of crop loss. None of the insurers were also supporting the notion of developing a future product that supported CA. Because mitigating risk is the insurer's business, they would not insure a new system based on a promise that it might mitigate drought in years to come. For one insurer drought risk was a small exposure and therefore drought risk mitigation was for them less high on the agenda.

Because, as argued above, there is an attractive financial argument in favour of CA, farmers are likely inclined to take up CA as a farming practice for their own future financial benefits. With less 'draught risky' farming practices this in turn would position these more favourably in front of financial institutions such as banks and insurers. Yet such a transition would be driven by the farmer and not VCP or policy, in contrast, because almost all VCP showed little interest in developing CA targeting products, a policy driving CA support through the VCPs would likely yield little impact.

Based on our findings a key implication is that government policy concerning CA should endeavour to provide an enabling environment for the future uptake of CA. We suggest that a slow process of change is the route that policy should take, with key aspects focussing on policy enabling training and capacity development of farmers, through field extension and agricultural schools, to adopt CA. Because CA is also a cheaper production system and needs less external inputs, focus should be on smallholder farmers who mostly struggle with access to external inputs.

Over time, a policy that favourably supports CA would grow the farming user base; and in doing so end-consumers would automatically get access on a broader base to more sustainably farmed products without any system change in the value chain, in which the value chain participants have clearly indicated not to drive CA as a system.

## **5. Conclusion**

*Agricultural Economics - Current Issues*

**Do you have a CA product?**

*Summary of responses around CA (sample sizes in brackets).*

**4.2 Policy discussion**

**Table 1.**

ing perspective.

switch over to CA farming.

Generally, there was a broad confusion amongst all respondents around what CA meant, and how that related to organics and GMO. Even a retailer that was well versed in the procurement of foods from more sustainable farming practices was not sure what was meant with CA. Many interviewees believed a lot of consumer education efforts would need to happen before they could drive CA from a market-

**Do you plan for a future CA product?**

Banks (4) 0.0% 100.0% 25.0% 75.0% n.a. n.a. n.a. n.a. Insurers (3) 0.0% 100.0% 0.0% 100.0% n.a. n.a. n.a. n.a. Traders (2) 0.0% 100.0% 0.0% 100.0% 0.0% 100.0% 0.0% 100.0% Retailers (3) 0.0% 100.0% 0.0% 100.0% 0.0% 100.0% 0.0% 100.0% Total 0.0% 100.0% 6.3% 93.8% 0.0% 100.0% 0.0% 100.0%

**Yes No Yes No Yes No CA Organic**

**Do consumers demand CA?**

**What are you inclined to support?**

While the retailers did have sustainable products like organic, branding a second sustainability label did not make sense and therefore they also did not put pressure on traders and millers to supply them with CA products. The opinion amongst the retailers and traders was that maize was purchased from other traders, cooperatives and silo owners, where there was no control over the separation of CA maize and non-CA maize. The traders agreed that it would be cumbersome and expensive to try to keep CA maize separate, and it would only ever work if most farmers were to

The feeling from one trader was that generally, government should not get involved in regulating the market, as it did with the duty on wheat. If, however, any duty was to be imposed, the funds from such a duty could be used to fund agriculture and be used to possibly support CA through extension for example. On the discussion of GMO-free products, the traders would not change their operations or invest heavily for a small consumer group perceived to have 'upper-class angst'. The retailers also showed an unwillingness to start branding another sustainable method

next to organic produce, which by now only a few consumers understood.

more research into CA benefits for individual regions of South Africa.

The feeling amongst the banks was that they do not get involved with what is fundamentally a farm production level decision which was to be made by the farmer himself. In any event, lender's liability principles would not allow them to dictate any form of farming operations when giving a credit. Banks argued that if CA mitigated risk, it would automatically show on a farmer's balance sheet, and subsequently affect the risk profile and credibility of the farmer to his benefit; although most respondents agreed that it would take years for a farmer to see such benefits reflecting on his credit profile. While one bank was sure to create a product that in future would assist farmers converting to CA, two more hinted that there was the possibility of a future product that assisted farmers going CA and supported them through a potential initial cash-dip, if CA research proved to be less risky and more productive for farming in the South African context. Policy could therefore support

All the interviewed insurers seemed to know about research that evidenced that CA resulted in more climate resilience and less water stress. Similar to banks the

**78**

We have argued that CvF practices have high external input costs and a substantial impact on natural ecosystems, ecosystem services, soil erosion, and CO2 emissions. These are results of a conventional industrial agricultural complex that also dominates the modern South African agricultural food value chain. We have argued that more sustainable farming practices such as CA are more climate resilient and supply more nutritional value, both of which favourably impact long term food security.

We have raised the question whether South Africa's current food system has the ability to sustain long-term food security and if changes in the existing food value chain complex would be able to drive a transition into a more sustainable and food secure alternative such as CA.

From the research data we can conclude that none of the respondents had a product that supported CA and the general inclination of most interviewed was not particularly in favour to support CA through new product development in their respective institutions. Mostly it was argued that it would either interfere with their specific business-client integrity, or it would not fit into their specific business model or alternatively be too difficult to sell to the end consumer, who understood organic but not CA. The traders argued that with the large volumes and silos they worked in, keeping CA produce separate would be very costly.

For the respondents from the financial institutions CA had the potential to mitigate risk, however in the eyes of most of the respondents there was yet not enough evidence to prove solid risk mitigation. Therefore, they argued, it would be better for them to rely on the existing business model and underwriting process, which would feedback a preferential pricing to a farmer automatically, were he able to use a production system that reduced risk. Subsequently the development of new products to drive the support of CA would not be required. Of the 12 respondents only one indicated that it would develop a product in future that would specifically support the adoption of CA on farmer side. Most retailers and traders indicated that if they were to drive anything sustainable they would support organic which was already an established 'sustainability' brand and needed far less effort to communicate to end consumers.

We can conclude that South Africa's VCPs are neither a support network today, nor will they be one tomorrow; therefore they are not a potential channel to drive a transition. However, while the VCPs were generally supportive of sustainable production methods (such as CA), from an operational perspective and from within their existing business models, VCPs are unlikely become initiators of a sustainable transition driven by CA supportive products. For policy purposes we may deduct that efforts for a transition and required training of farmers would need to focus on education rather than enforcing policy on value chains and their existing business models.
