Rural economic growth and small-scale poultry production : the economic and technical constraints.

Abstract

Small-scale commercial poultry enterprises are often used in development projects to (a) improve food self-sufficiency, and (b) to generate income. The analysis of survey data gathered from the rural areas of KwaZulu-Natal shows that the majority of small-scale poultry producers come from previously disadvantaged communities and have significantly lower enterprise growth rates than larger producers. Principal Component Analysis is used to determine underlying "dimensions" of the main technical poultry production parameters, which with the aid of a t-test indicate that management practices and equipment use are significantly different for small-scale and larger producers but that feed utilisation and disease reduction practices are similar. The results of a block-recursive regression analysis indicate that enterprise growth rate is constrained by poor access to credit, high transaction costs and unreliable local markets. Using growth linkage concepts it was found that smallscale poultry enterprises have the potential to initiate economic growth by drawing under-utilised resources such as labour into production when their products are "exported". The impact of the subsequent multiplier effect is strongest in the nontradable, non-agricultural sector. To enhance this multiplier through increased rural economic growth government policies should focus on reducing transaction costs by improving education and physical infrastructure, sponsoring training and assisting with mentoring services. Facilitating the development of appropriate business institutions capable of managing co-owned resources is particularly important as well as legal and fmancial management instruction. Economic growth also requires a stable, equitable and well-adapted institutional environment where the potential threat of a functional and affordable conflict resolution mechanism is crucial to discourage opportunistic behaviour. Many disputes associated with poultry production in KwaZulu-Natal currently remain unresolved because legal court action is prohibitively expensive and legal uncertainty arises where informal tribal authorities administer conflicts. Setting up small-claims courts is one option of correcting these inefficiencies; the desired effect would be to strengthen property rights, reduce transaction costs and promote economic growth. Poultry has established itself as an appropriate vehicle to stimulate economic growth in rural KwaZulu-Natal and its impact is expected to be greater if growth constraints are alleviated for a large number of small enterprises rather than encouraging a few larger enterprises to grow bigger.