The main objective of this study was to determine or establish the role which the DAFF should play in strengthening the existing second-tier agricultural cooperatives in South Africa. According to Myeni (personal interview), Head of the Cooperatives Unit within DAFF, the role of DAFF in promoting and supporting agricultural cooperatives in general needs to be looked at within the context of the so called “Polokwane Resolutions” taken at the 52nd National Conference of the African National Congress in 2007, in Polokwane, Limpopo province.
140 One of the key resolutions of the conference relevant to the role of DAFF in promoting and supporting cooperatives is the one on rural development, land reform and agrarian change. The conference noted that the challenges of urban poverty and migration to cities are inseparably bound with the struggle to defeat poverty, create work and build a better life in rural South Africa and further believed that the agricultural sector is critical for the economic development of rural areas and the entire country (ANC, 2007: 13-14).
With the above in mind, the conference resolved to embark on an integrated programme of rural development, land reform and agrarian change based on four pillars, one of which is the agrarian change with a view to supporting subsistence food production, expanding the role and productivity of modern smallholder farming and maintaining a vibrant and competitive agricultural sector (ANC, 2007:15).
Directly linked to the role of DAFF in promoting and supporting cooperatives is the resolution to support the growth of rural market institutions, including through the provision of infrastructure and by helping rural communities and small farmers to build organisations which help them to access markets, build links with the formal sector value chains and coordinate their activities to realise economies of scale. The resolution went further to say that such organisations may include producer cooperatives, smallholder associations, inputs supply cooperatives, marketing cooperatives and/or state regulated institutions designed to support and promote market access and collective action among small rural producers (ANC, 2007:15).
Myeni (personal interview) further says that the role of DAFF in promoting and supporting cooperatives is to ensure that where they exist, in particular second-tier cooperatives, they are strengthened through, among other things, the provision of infrastructure (marketing, processing, transport and storage facilities), intensifying capacity-building programmes to these cooperatives and facilitating linkages with the formal sector and value chains ensuring that the existing second-tier cooperatives are able to assist smallholder farmers’ cooperatives realise economies of scale.
141 The local agricultural managers in Zululand share the above sentiments in terms of the role of DAFF in promoting and supporting cooperatives, particularly with the aim of strengthening the existing second-tier cooperatives. Their emphasis is on DAFF ensuring that there is strong capacity in the second-tier cooperatives in the areas of governance and financial management. Financial support has also come up as one of the key ingredient of ensuring that the second-tier cooperatives are strengthened.
However, there appears to be some form of confusion or uncertainty as to the role and responsibilities of the various government departments, in particular, the Department of Agriculture and the Department of Economic Development in provinces with regard to the cooperative development function. Some local managers believe that the cooperative development is the sole responsibility of the department of economic development with agriculture only assisting with financial support and skills development. This confusion might be blamed on the lack of a sectoral cooperative development strategy that guides national and provincial departments of agriculture on how to approach the issue of cooperative development in the sector.
While on the role of DAFF in strengthening the existing second-tier cooperatives, respondents to the questionnaire for second-tier cooperatives indicated that the DAFF should recognise the existence of this level of cooperatives as alternative organisations for poverty reduction and provide the necessary support. The nature of support indicated includes but not limited to the provision of infrastructure (marketing and agro-processing facilities, storage and transport), technical support, awareness on labour, tax, auditing and procurements issues, financial support, good agricultural practices, quality and standards.
To conclude this section on the role of the DAFF in promoting and supporting second-tier cooperatives, a list of common services provided by this level of cooperatives in agriculture to their primary members was provided and respondents asked to indicate what they thought should be the role of DAFF
142 for each service listed. Table 5.24 below provides a summary of responses by participants:
Nature of service
provided by second-tier cooperatives (agriculture)
What should be the role of the Department of Agriculture, Forestry and Fisheries
Procurement if inputs DAFF should facilitate bulk procurement of inputs and ensure that quality inputs are procured for the benefit of members
Marketing of products Provision of adequate marketing infrastructure, linking second-tier cooperatives with tangible and working markerts (domestic and export) and ensure that second- tier coops understand food safety and quality issues). Storage and transport
facilities
As part of providing adequate infrastructure to ensure market access to products of smallholder farmers in rural areas, storage and transport logistics should be made available to second-tier agricultural cooperatives
Education and training Central to the support of second-tier agricultural cooperatives is capacity building and skills development. If these cooperatives are to be strengthened, their capacity should be strengthened, particularly in the areas of financial management, general business management, good agricultural practices, food safety and quality assurance to ensure that they are able to transfer these skills to their primary members. DAFF should initiate collaborations with SEDA and the agricultural colleges. Infrastructure Second-tier agricultural cooperatives should be assisted
with agro-processing facilities, storage and transport. Agro-processing facilities Same as in above.
Preferential procurement In line with Cabinet decision on 7 November 2007, that stipulated that 85% of expenditure on 10 listed products and services be secured from SMME, including cooperatives, DAFF should ensure that second-tier
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agricultural cooperatives have an adequate understanding of procurement related issues and available opportunities made known to them. One of the 10 listed category of products is food, perishables and supplies.
Access to finance Accessibility to finance has been identified as one of the critical factors and key ingredient towards the success of any cooperative development strategy. In this case, respondents were unanimous in saying that DAFF should work towards finding an effective financing model for smallholder cooperatives delivered through well structured second-tier cooperatives. DAFF should also encourage second-tier cooperatives to establish village banks through mobilisation of members’ savings.
Auditing Auditing of cooperative books is one of compliance issues in terms of the Cooperatives Act of 2005 and a number of cooperatives are being deregistered due to non- compliance, among others, because they cannot produce audited financial statements. To ensure that smallholder cooperatives have the ability to do their books, second- tier cooperatives need capacity to provide this function to members and DAFF should play a critical role in providing capacity to the second-tier agricultural cooperatives. Tax Government regulations stipulate that any business
generating revenue has to pay tax. Like any other form of business enterprise, cooperatives are required by law to submit tax returns annually and the majority of smallholder cooperatives are challenged by this requirement mainly because of the fact that the majority of them are small in size and have lesser volumes of products. It is in this regard that DAFF in collaboration with SARS needs to run awareness campaigns and further build capacity on tax issues in second-tier
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cooperatives to ensure that they are able to provide this function to their primary members.
Labour issues As employers, cooperatives are also required to comply with the country’s labour laws. Smallholder cooperatives find it difficult to comply and adhere to labour laws. Their main focus is on production. Second-tier cooperatives need to be capacitated to ensure that they are better equipped to provide this function or service to their members.
Table 5.24: The role of DAFF as perceived by respondents
According to table 5.24, respondents indicated that DAFF should play a critical role through the provision of infrastructure such as pack houses, storage and transport facilities, as well as value adding and agro-processing facilities. DAFF should also play a role in ensuring that second-tier cooperatives are capacitated in both technical and business skills.