Introduction

Over the past years agricultural policy and practice has radically changed in order to accommodate the increasing demands made from the globalising world economy. Regulations governing trade have resulted in dramatic adjustments in the industry. This combined with a global focus on consumer satisfaction and seeking efficiency in supply chains has contributed to a dramatic redefinition of competitiveness and has meant that farm producers and agribusinesses have had to become more business-driven competitors in a fiercely competitive global market. The agribusiness environment has been further impacted the need to link and empower previously disadvantaged groups within the agriculture sector. These changes have allowed for many opportunities and adjustments, particularly through linkage. To address issues facing agribusiness in rural areas, government and private sector are combining efforts to increase quality production of agricultural products and assist emerging farmers make the transition into the commercial market. This has created a number of new challenges associated with the increasing importance of public and private standards in regulating trade. Rural farmers traditionally have decided on what produce they grow and sell, and what they keep for home consumption. Their decisions would largely be based on their experience of what grows in particular seasons on their farms and what products sell at the local markets. Sales would therefore have centered on local markets and it would have been rare to find a farmer in search of new market opportunities or to consider developing new, higher value products. However, as rural communities have been integrated into the global economy, they have had to change their traditional forms of agriculture in response to increased competition and demand for high quality products. The market has shifted so that producers no longer market their products, it is now retailers who drive the supply chain and so the previous producer market power has given way to retailer buying power. Processes of urbanization and the increased demand for food has resulted in a sophisticated arrangement of stakeholders involved in the supply chain of agricultural products including transportation, storage, wholesaling, processing, and retailing and all this processes are developing the rural areas in return. Governments, donors and

development organizations that aim to support rural development projects with a focus on raising household incomes are increasingly playing a vital part in ensuring sustainable livelihoods within the agricultural sector. To ensure these development projects have a long-term impact, it is imperative that the stakeholders include all aspects of the market chain so that they essentially become self-sustainable entities. The increasing importance of supermarkets in the retailing of fresh and processed food has led to substantial reorganization of agribusiness supply systems, particularly in terms of the relationships built between retailers and producers. A good instance of a MARKET-BASED COMMERCIAL AGRICULTURE is the Public-Private Partnership (PPP) between the Limpopo Department of Agriculture, GTZ and Pick n Pay that aims to set up a sustainable partnership between a suppliers and buyers of the agriculture value chain in Limpopo to decrease the transition costs and address some of the market entry barriers that face the rural area when engaging in commercial agriculture.

Background to the Project

The project began as a result of the long-term partnership built between GTZ and the Limpopo Department of Agriculture (LDA) through the implementation of the BASED (Broadening Agricultural Services & Extension Delivery) project in Limpopo Province. The BASED project was established in 1998 with the key objective to mobilize and organize rural farmers into cooperatives and provide them with the necessary skills in order to engage in commercial agriculture. While the project could boast many achievements and positive outcomes, the project partners felt that more could be done to link farmers into supply chains and ensure sustainability. As one of South Africas leading retailers of fresh produce, Pick n Pay was identified as a key role player in the development of agricultural value chains in the province and indeed the country. The company was approached to be a partner in this project to provide the commercial market needed to link the identified farmer groups to the fresh produce supply chain. Through the GTZ-supported BASED Programme, the Limpopo Department of Agriculture (LDA) has enhanced capacity and skills to provide demanddriven services and extension advice to small-scale farmers and land reform beneficiaries within the Province. The BASED programme has built a working

relationship between the LDA and GTZ and emerging farmers. The results of the project have provided the opportunity to build on this platform and have lead to the establishment of this PPP project. In many instances, Public-Private Partnerships (PPP) in South Africa have been constituted as the out sourcing of public services to private companies. This also includes infrastructure development. There are generally two reasons why a government considers entering into a PPP: firstly as a means of raising the money required for basic infrastructure development and secondly, because it does not have the expertise needed for efficient service delivery. In some cases it is a combination of both. South African Laws now define a PPP as a contract between a public sector institution/municipality and a private party, in which the private party assumes substantial financial, technical and operational risk in the design, financing, building and operation of a project.

Overview of the Partnership

The Public Private Partnership (PPP) between Pick n Pay, GTZ and the Limpopo Department of Agriculture (LDA) was initiated as an opportunity to foster linkages between emerging small-scale farmers and Pick n Pay. The partnership was built on the success of the GTZ supported BASED (Broadening Agricultural Services & Extension Delivery) Programme in Limpopo. While the PPP is a pilot that aims to bring a relatively small group of farmers into the supply chain, the real aim is to build long term linkages between the farmers and Pick n Pay nationwide. Discussions began in early 2006 between GTZ, the LDA and Pick n Pay Foundation. Initially the project aimed at small-scale farmers supplying Pick n Pay with organic produce but as the project developed, it was agreed that producers would supply Pick n Pay with a range of fresh produce to meet their national supply chain requirements. Profile of each partner and the role they play in the partnership Limpopo Department of Agriculture The Limpopo Province covers an area of 12, 46 million hectares which accounts for 10. 2% of the total area of South Africa. The Province is rich in agricultural resources and is one of the countrys prime agricultural regions noted for the production of livestock, fruits and vegetables although the province is water-scarce. The varying climates experienced in the province allows for a wide variety of agricultural products.

Dualism is declining due to Land Reform outcomes and involvement of Black entrepreneurs in the agribusiness value chain. Two distinct types of agricultural production systems, namely large-scale commercial farming and small-scale holder farming make up the agriculture sector of the economy in Limpopo. These two systems have evolved as a result of past policies of the previous governments under the apartheid regime. Land Reform and the acquisition of interests by Black entrepreneurs in agribusiness will over time remove this anomaly. According to Statistics South Africa in 2002, there are approximately 5 000 commercial farming units across the Province, occupying 70% of the total land area. The smallholder farm occupies the remaining 30% and is characterized by low levels of production technology. As most of the province is classified as rural, agriculture plays a major role in the economic development of rural areas of the province. Agriculture is a major contributor of the gross geographic Product (GGP) of the province. The Agricultural sector also employs a large portion of the economically active population and as well as the informal or subsistence smallholder farming subsector, thus making agriculture the most important provider of employment in the Limpopo Province. Agriculture is interrelated to most of the other sectors of Limpopo economy such as manufacturing (agro-processing) and trade. These intersectoral linkages reveal the importance of agriculture to other sectors of the Limpopo economy. The agricultural sector encompasses not only the primary agricultural production but the pre-input and input sectors. The diverse soils provide variety in productivity and require appropriate management strategies to maintain high quality produce. The Department of Agriculture have been actively involved in the planning of the project and are able to play an important role in the implementation by coordinating farmer training, and providing organizational development. A number of specialist services are available within the department and have been provided to the project. These include services and support related to crop production, agronomics, and agribusiness. There are a number of extension officers that operate through the department and have been trained in facilitation skills to engage with communities across the province. GTZ have provided many resources towards developing capacity within the department through the BASED programme, and so the knowledge and skills developed can be implemented in the PPP project with Pick n Pay. The LDA is a well-

structured department and is fully committed to the project. Pick n Pay was established in 1967 when four small stores were purchased in the Western Cape. The Group was listed on the JSE Securities Exchange South Africa in 1968 as Pick n Pay Stores Limited and quickly expanded across the country where there are now 464 stores employing over 30 000 staff successfully. Once the farmers are aware of the product specifications required by Pick n Pay, the two stakeholder groups can negotiate fresh produce supply agreements which would be subject to quality and quantity specifications at market prices. Furthermore, Pick n Pay are in a position to be able to advise farmers on other possible market linkages to increase their marketability and to enhance competitive advantage of the sector, and advise farmers on value-adding avenues for their products. Through the companys corporate social responsibility portfolio, Pick n Pay is able to increase the visibility of the project through various marketing and branding activities. Through the BASED project, GTZ have together with the LDA been able to identify specific individuals and farmer groups as beneficiaries of the project. Furthermore GTZ have been responsible for farmer group management and that decision-making processes are in place. Their role has been to ensure that the process is participatory and that the views and opinions of the farmers are reflected in the implementation process. Small Growers A number of farmers have been identified through this project as areas that could be used as a pilot in this project. Malavuwe has 10 farmers, Rambuda has 25 farmers, Lambani has 10 farmers and Mulodi has 5 farmers, bring the total number top 50. These farmers have been identified due to the existing infrastructure on the farms in terms of factors such as irrigation and packhouse/cooling facilities. An extension officer from the Department of Agriculture is assigned to assist these farmers and coordinate progress within the area. The crops that are currently being planted on the farms include spinach, butternut, onion and sweet potato. Not all farmers plant their entire farm, and land exists to expand and plant more should there be a demand for more produce. Most of the crops are sold to local markets and transport the goods using wheel burrows or their own vehicles. Some farmers supply to the local Shoprite and Spar, but the produce is taken on consignment, and the farmers are asked to remove the products that werent sold at the end of a given period. As a result, the farmers are

left with very little income after all their expenses are deducted. The farmers face a number of challenges, which include transportation, and technical challenges associated with farming such as expiry dates of pesticides. When the farmers are in the position to start supplying to Pick n Pay, their products will be distributed regionally. This means that the products will have to be taken to their distribution facility in Johannesburg. While only some farmers have vehicles, none of the farmers have cooling facilities on their trucks. This would then limit the types of fresh produce they can supply to Pick n Pay that have a longer shelf-life such as butternut. The Department of Agriculture are able to provide technical support to the farmers in terms of crop production and agronomy when they are aware of the product specifications required by Pick n Pay. Pick n Pay are a powerful market link for the farmers and provide a crucial aspect of the value chain. The Department of Agriculture are able to provide skills and capacity to the farmers needed to engage in commercial. Effective Market Linkages By increasing the capacity of producers to meet the technical requirements of Pick n Pay, lesser resources need to be invested in monitoring their performance. When GTZ withdraw from the project at the end of 2008, the emerging farmers should be in a position to continue working directly with Pick n Pay. The capacity and skills invested in the farmers should provide them with the ability to continue providing fresh produce to the market as well as be able to adapt to any changes in the market when they happen. The importance of connecting farmers directly to Pick n Pay cannot be stressed enough.

Capacity Development
It seems apparent that each partner, and the farmers as the project beneficiaries, has the skills andcapacity to engage in this project successfully.

Conclusion

The project currently has all the right ingredients in place to be a success. Better coordination between the partners will ensure that the objectives are reached within the given time frame. However the real value will be in the extension of this project and to see it replicated in other provinces. Furthermore, once the relationship between the farmers and Pick n Pay is established, the project could be extended so that it includes processing to the products and adds value to what the farmers produce. The real benefit of this project would be when the emerging farmers are in the position to provide a regular supply of fresh produce to Pick n Pay and other national retailers on a regular basis, but to also be in the position to process their products that would ultimately see them competitively placed in the formal economy.

REFERENCES Bernstein, H. 1978. Underdeveloped and Development: The Third World Today. Suffolk, England: Clay Ltd. Federal Government of Nigeria. 1962. First National Development Plan (1962-68). Lagos: Federal Ministry of Information. Federal Government of Nigeria. 1970. Second National Development Plan (1970-74). Lagos: Federal Ministry of Finance. Federal Government of Nigeria. 1975. Third National Development Plan (1975-80).Lagos: Federal Ministry of Finance. Federal Government of Nigeria. 1981. Fourth National Development Plan (1981-85).Lagos: National Plan Office. Kahn, A. 1979. Social Policy and Social Services. 2nd Ed. New YorkRandoHouse. Mabogunje, A.L. 1974. Infrastructure in Planning Process. Town and Country Planning Summer School. England: University of London. Okafor F.C. 1985. Basic Needs in Rural Nigeria. Social Indicators Research, 17: 115-125. Olatunbosun, D. 1975. Nigerias Neglected Rural Majority. Ibadan: Oxford University Pre