THE IMPACT OF INFRASTRUCTURE ON THE SUNFLOWER VALUE CHAIN IN

SOUTH AFRICA

BY
ASANDA SHIBANE
STUDENT NUMBER:2016326981

BACHELOR OF AGRICULTURE HONOURS IN AGRICULTURAL MANAGEMENT

Department of Agricultural Management
Faculty of Natural and Agricultural Science

University of the Free State

Bloemfontein
Table of Content
List of figures
Chapter 1: Introduction
1.1 Introduction and Background

A value chain is a set of activities aimed at creating and increasing value for a
product within this chain by analyzing the opportunity cost of a new cycle and
the value of the product (Lee, Szapiro, and Mao, 2018). It is important to note
that the sunflower value chain significantly reduces poverty where most
people depend personally or indirectly on agriculture. A simple value chain
might include a primary manufacturer, a central processor, and a distributor
(Kaplinsky, Morris 2001). Sunflowers are an important crop in South Africa and
the value chain includes the production, processing, and sale of sunflower
seeds, oil, and flour. The existing infrastructure in the country plays a key role
in the development and success of the sunflower value chain. Infrastructure
refers to the basic physical and organizational structure and facilities required
for a business to function, such as B. transport system, communication
network, and energy sources. The availability and quality of infrastructure can
significantly affect sunflowers' production, processing, and distribution, which
in turn can impact the entire value chain. In an emerging country like South
Africa, state investment is one of the most effective tools the government can
use to achieve its development goals. Investment in soft infrastructure
(education and health) and hard infrastructure (roads and irrigation) pointedly
impact sunflower productivity. The relationship between infrastructural
development and sunflower productivity can be understood in the fact that
sunflower-linked infrastructure is likely to cut farmers’ costs in the
development of value-added and fast-track output and produce further
employment opportunities in the sunflower area with development in the
value of the roads (Adesina, 2017). Moreover, the world bank (2018) said that
telecommunication, roads, electricity supplies, and other infrastructure are
vital stimulants to the sunflower value chain and production, particularly in
rural areas. Literature shows that rural infrastructure adapts physical
connectivity and helps improved the integration of rural and sunflower areas
with increasing urban markets, which are related to the global exchange
markets, thus inspiring economic growth. The government’s failure to finance
heavily in inadequate infrastructure and irrigation systems, expensive
electricity, and poor rural roads which have contributed to reduced
productivity and levels of wealth in rural sunflower value chain processes
(Chakwizira, Masiri (2010). In South Africa, several studies have concentrated
on infrastructure, farming, and economic growth, but the impact of
infrastructure on the sunflower value chain hasn’t been particularly
considered.
Sunflower is a major cash crop in South Africa and a major contributor to the
country's agricultural sector. However, the sunflower value chain in South
Africa faces several infrastructural challenges that affect its efficiency and the
profitability of its production. These challenges include inadequate
transportation, storage, and processing equipment, which contribute to post-
harvest losses and reduce crop quality. Inadequate infrastructure in rural
areas, where most sunflower production occurs, also restricts access to
markets and reduces the bargaining power of small farmers. This research aims
to examine the impact of infrastructure on the production efficiency and
profitability of the sunflower value chain in South Africa. The results of the
study can provide insight into the potential benefits of infrastructure
improvements and identify areas where these improvements are most needed
to support the growth and development of the industry.
Background: Sunflower is an important crop in South Africa with an average
production of 500 000-700 000 tons annually(Grain SA, 2017). The crops are
primarily produced in the Free State, North West, and Mpumalanga provinces,
which account for 80% of national production. The sunflower value chain in
South Africa is dominated by small farmers who account for 60% of total
production. The remaining 40% is produced by commercial farmers. The
sunflower value chain in South Africa faces several infrastructural challenges.
Sunflowers are often transported from farm to processing plant in low-quality
trucks, which contributes to high post-harvest losses. In addition, storage
facilities and processing equipment are inadequate in many areas, leading to
poor crop quality and further post-harvest losses. Even small farmers have
difficulty reaching markets due to poor road networks and inadequate
warehouses. The importance of the sunflower value chain to the agricultural
sector in South Africa makes it important to address the infrastructure
challenges that hamper the sector's competitiveness and profitability.
Improving infrastructure can lead to higher production efficiencies, higher
yields, better crop quality, and reduced post-harvest losses. Such
improvements can also reduce transportation costs and improve market
access, ultimately leading to greater profitability in the sunflower value chain.
1.2 Problem Statement
The sunflower value chain in South Africa faces infrastructural challenges that
affect its productivity and profitability. Poor transportation, storage, and
processing equipment contribute to post-harvest losses, reduce crop quality,
and increase transaction costs, ultimately affecting the competitiveness of the
sunflower sector in the global market. Inadequate infrastructure in rural areas,
where most sunflower production occurs, restricts access to markets and
reduces the bargaining power of small farmers, who find it difficult to get their
produce to markets and add value to their produce. As a result, the sunflower
supply chain in South Africa could miss out on growth and development
opportunities.
The importance of the sunflower value chain to the agricultural sector in South
Africa makes it important to address infrastructure challenges that hamper the
sector's competitiveness and profitability. Infrastructure improvements such as
upgrading transportation, storage, and processing equipment can result in
higher production efficiencies, higher yields, higher quality crops, and reduced
post-harvest losses. Such improvements can also reduce transportation costs
and improve market access, ultimately leading to higher profitability in the
sunflower value chain.
However, further research is needed to examine the impact of infrastructure
on the sunflower value chain in South Africa. This study aims to fulfil this gap
by assessing the state of infrastructure in the sunflower value chain and its
impact on production efficiency and profitability. The results of the study can
provide insight into the potential benefits of infrastructure improvements and
identify areas where these improvements are most needed to support the
growth and development of the industry.
1.3 Research Question
The analysis seeks to address the question of which: what impact does
infrastructure have on the production efficiency and profitability of the
sunflower value chain in South Africa? This research question aims to explore
the relationship between infrastructure and two key outcomes of the
sunflower value chain: production efficiency and profitability. By examining the
state of infrastructure in the value chain and its impact on these outcomes, the
study can provide insight into the potential benefits of infrastructure
improvements and indicate where those improvements are most needed.
1.4 Research Objectives
The following research objectives are possible to study the impact of
infrastructure on the sunflower value chain in South Africa: Analysis of the
impact of infrastructure on production efficiency in the sunflower value chain,
including factors such as yield, post-harvest losses, and crop quality. Identify
infrastructural challenges and opportunities in the sunflower value chain,
particularly in rural areas where most of the sunflower production takes place.
1.5 Research Hypothesis
Ho: The infrastructure improvements will have a positive impact on the
production efficiencies and profitability of the sunflower value chain in South
Africa.
Hi: The infrastructure improvements will have a negative impact on the
production efficiencies and profitability of the sunflower value chain in South
Africa.
1.6 Methodology and data
The figures that will be applied for this analysis will be quantitative data which
is collected from secondary data such as statistical reports obtained from
Statista using sunflower prices from the years 2000-2019. This data is used to
identify trends and patterns in the sunflower value chain, including production
and processing. It is also used to determine how infrastructure affects different
stages of the value chain.
1.7 Significance of the Study
Improving infrastructure can help increase productivity, reduce costs, and
make the sector more competitive, leading to economic growth and job
creation. Improving infrastructure can help ensure efficient transportation,
storage, and processing of food, reduce the risk of spoilage, and increase food
availability in the country. Policy implications, the results of the study could
provide valuable insights for policymakers and other stakeholders on the need
for investment in infrastructure to support the growth and development of the
sunflower value chain in South Africa. The study can provide insights into
policies and strategies to improve infrastructure, increase productivity and
increase the competitiveness of the sector.

1.8 Expected results.

The quality and efficiency of the infrastructure show that the current state of
the sunflower value chain infrastructure in South Africa is inadequate and
inefficient, leading to high transport costs, low storage capacity, and long
processing times, which can affect the overall value efficiency. The profitability
shows that infrastructure improvements can also have a positive impact on the
profitability of the Sunflower value chain. This may be due to increased
production efficiency, reduced transportation costs, and improved market
access. Overall, the study is expected to provide important insights into the
purpose of infrastructure in the sunflower value chain in South Africa and
highlight the need for improvements to support the growth and development
of the sector.
1.9 Outline of the study
The research is parted into five chapters. Chapter one provides a direct
indication of the importance of infrastructure in agricultural value chains to
explain the focus on the South African sunflower value chain. The second
chapter gives an overview of the role of infrastructure in the sunflower value
chain, including transport, storage, processing, and commercialization. The
third chapter gives an overview of the data collection, an explanation of the
variables to be measured, and the statistical methods for data analysis.
Chapter 4 presents the findings on the current state of infrastructure in the
sunflower value chain in South Africa, along with an indication of the main
challenges and opportunities for improvement. Finally, Chapter 5 summarizes
the most important results and recommendations of the study.