FREE-RIDER PROBLEMS IN AN ORGANIC CERTIFIED SMALLHOLDER GROUP IN SOUTH AFRICA
This paper investigates the prevalence and determinants of free-riding in the Ezemvelo Farmers Organisation (EFO), an organic certified smallholder group in South Africa, using data gathered in a census survey of its 151 partially and fully certified members. An index of free-riding behaviour was constructed using principal component analysis. Members scores on this index suggested that free-riders posed a serious threat to the groups collective marketing efforts. Regression analysis showed that members who were male, poorly educated, partially certified, aware of loopholes in the grading system, and who did not trust the buyer were more likely to free-ride. In the longer-term, EFO should address institutionalised free-riding by re-organising along the lines of an investor-owned firm that issues tradable ownership rights proportional to individual investment. In the short-term, EFO must engage with the pack house (buyer) to remove flaws in the grading process that conceal the origin of low quality produce. Transparent and mediated negotiations leading to an incentive compliant contract with the buyer may also help to build trust and reduce free-riding within EFO.
Lyne, M.C., Gadzikwa, L. and Hendriks, S. (2008). FREE-RIDER PROBLEMS IN AN ORGANIC CERTIFIED SMALLHOLDER GROUP IN SOUTH AFRICA. Acta Hortic. 794, 183-190
smallholders, organic crops, collective marketing, free-rider problems