The impact of outsourced extension services on the performance of smallholder farmers in Msinga, KwaZulu-Natal, South Africa.

Master of Science in Agricultural Economics. University of KwaZulu-Natal, Pietermaritzburg, 2018.Smallholder farmers are considered the potential drivers of growth and poverty eradication in Africa. Agricultural extension services play a vital role in linking farmers to information, adoption of new technologies, access to markets and so on. In recent years, there has been a shift from purely public extension to a more pluralistic approach, with the private sector providing extension services in specific project areas. The aim of this study was to assess the impact of outsourced extension services on the performance of smallholder farmers in Msinga, KwaZulu-Natal. The study also sought to estimate the indirect impact of outsourced extension services by investigating the presence of positive externalities among the sampled farmers. A random sampling technique was used to sample 300 smallholder farmers in the study area. Descriptive statistics were used to compare the differences between farmers who are beneficiaries of Lima Rural Development Foundation extension services and those who are non-beneficiaries. Factors such as years of farming experience, years of formal schooling, the amount of labour available to a household, livestock value, ownership of an irrigation tool and access to credit influenced participation in Lima extension services. The Propensity Score Matching (PSM) method was employed to estimate the impact of the outsourced extension services provided by Lima Rural Development Foundation on the farmers’ performance, measured by farm income per smallholder farmer. Various estimators, namely the Kernel, nearest neighbour and stratification, were used to ensure the robustness of the obtained results. Also, a Rosenbaum bounds sensitivity analysis test (rbounds) was done to test the data’s level of sensitivity to unobserved heterogeneity. The results of the econometric model indicated that outsourced extension services have a positive impact on smallholder farmers’ performance. Private extension services have a positive and significant impact on household crop income, net crop income and the inputs and services purchased. When compared to farmers who were not beneficiaries of Lima extension services, Lima beneficiaries received R3000 and R2600 more for total crop and net crop income per year respectively. Further analysis showed an evidence of positive externalities of outsourced extensions, due to farmer-to-farmer interactions and contact. Farmers who had received help or advice from a Lima beneficiary appeared to have an income that was an average R2 400 higher than the income of non-Lima beneficiaries. The results suggest that private extension services play a crucial role in improving the performance of smallholder farmers, and highlight the need for improved access to inputs and markets. The study recommends that the involvement of the private sector in smallholder support programmes is encouraged and sustained. Furthermore, the formation of structures such as co-operatives that encourage farmer interactions should be promoted and should be farmer led and farmer driven