The role of grants in helping emerging South African farmers to access agricultural markets

M.Com. (Development Economics)Abstract: The aim of this minor dissertation is to explore the nature of the relationship between social grants and the commercialisation of emerging farmers in South Africa. The use of social grants is not subject to any conditions, though they are intended to support the basic needs of the recipients. These basic needs include food security, which is a function of agricultural production. Therefore, social grants can be utilised to meet both the basic needs of households and assist emerging farmers to increase their production and market access. There are more than 17 million ─ approximately one third of the population ─ of vulnerable people in South Africa who receive social grants, which makes it the type of cash transfer that is ideal for investigating the unintended benefits. The literature on the proposed topic is extremely sparse, especially in South Africa. The only other study found, analysed a single province in South Africa and made use of cross-sectional data, with a questionable dependent variable (the proportion of cultivated land area as a proxy for market commercialisation). Other studies investigated the relationship between other cash transfers or access to credit and market commercialisation or the welfare of farmers. The estimation methods are mostly limited to Probit, Logit or Tobit models and rarely used the double-hurdle models. These gaps are addressed in the current study. The double-hurdle mode