A BUSINESS MODEL FOR SUSTAINABLE SMME PIG FARMING IN THE CENTRAL FREE STATE OF SOUTH AFRICA

Abstract

The lack of a reliable organisational approach and dearth of knowledge regarding a more effective business model resulted in cases of phenomenal business failures amongst pig farming SMMEs in the Central Free State Province of South Africa, as empirical evidence show. Therefore, this study develops a Commonage Cooperative Model (CCM) to enhance consistency in performance and sustainability. It expounds on the economics of scale derived through resourcing amongst the alliances of wider stakeholders. Hence, it advances existing models in agribusiness-related strategic management that supports Local Economic Development (LED). Being driven by the government policies on cooperative development, the model encompasses a value chain of small-scale pig farming SMMEs that can cooperate to improve competition. A sequential application of questionnaire survey and interview approaches was used on 144 pig farming SMMEs across 4 district municipalities and 1 metro. Results justified the acceptance of 4 hypotheses and rejection of 9 others. Findings were based on marketing management activities, innovation management activities, performance and sustainability, and agricultural background of the Province. All null hypotheses were tested to determine if a number of variables were significantly associated with performance and sustainability. H01 was rejected when test results revealed that there was no significant association in terms of sales growth, and return-on-investment over the past 5 years. Regarding size of operation in terms of enterprise’s gross profit (before tax) over the past 1-5 years, the null hypothesis was accepted. H02 was rejected when test results indicated that, with respect to enterprise diversification as well as enterprise indebtedness, significant associations existed between these variables and performance and sustainability. Existing marketing strategies had a significant impact on the performance and sustainability amongst the pig farming SMMEs; hence, H03 was rejected when results revealed that there was no significant association. H04 was rejected when test results indicated that there was a significant association between increasing partners of the business and enterprise performance and sustainability. H05 was rejected when test results showed that there was a significant association between the use of services of government Agricultural Extension Officers and performance and sustainability. H06 was rejected when test results showed that there was a significant association between innovation management activities and enterprise performance and sustainability. H07 was accepted when results indicated that there was no significant association between size categories and enterprise indebtedness. H08 was accepted given that there was no significant association between form of a business organization and enterprise current indebtedness. H09 was accepted based on test results indicating that there was no significant association between current life cycle stage and enterprises currently indebted amongst pig farming SMMEs in the Central Free State. The implications of these results are that the pig farming SMMEs need to adapt to a redefined and result-oriented organisational approach that increases their capabilities in the livestock business. Hence, the Commonage Cooperative Model promotes collective risk and diversity, which was lacking amongst the majority of them, and low resource commitment affected capabilities in many ways. Future research is recommended concerning the dynamics of parameter changes in the model.