4.4 D ISCUSSION OF R ESOURCE S HARING AND P OTENTIAL OF W ATER T RADING TO E NHANCE E MPOWERMENT
4.4.2 Empowerment through Increasing Competence
108 water at that point in time are large scale sugar cane farmers who can create “favourable returns from irrigation” (Armitage et al., 1999; 107), and these farmers also tend to “have a greater portion of their total arable area that can be developed for irrigation purposes than non-buyers”.
This scenario would suit the sugar value chain as a whole as the development of water infrastructure in non-serviced areas would allow small scale farmers to enter into the value chain, thus expanding the supply base for the processors, increasing the viability of the industry and complying with NWA of 1998 framework and legislation. The same result was not found for citrus, but this is an indication of prohibitive additional capital requirements, skills for production and access to technology.
d) Encouraging resource sharing through empowerment allows the rural communities the potential to access more functions of the water sector value chains and, through vertical linkages and integration, allows the lower level actors in the chain to upgrade themselves (see Figure 10), and increase their horizontal linkages into other value chains, thus participating in collective value adding to water resources. The ability to trade water allocations would enable small growers to apply for allocation, knowing they have the opportunity to participate in the value chain without necessarily having access to the key economic factors of production, thus creating a revenue stream, whilst slowly gaining power through controlling key assets.
109 4.4.2.1 Status of Empowerment Through Competence
a) The current level of participation of the rural communities in the primary production functions only of the agricultural value chain implies that this group not only lacks the resource empowerment necessary to increase their levels of participation (discussed in the previous section), but the level at which they participate requires has relatively low levels of competence in terms of knowledge and skills. In fact, as (Mpongose, 2006) remarked “most rural communities have knowledge of farming, but what they do not have are the knowledge and skills to make decisions on what to plant and where to sell it”, and under the current water allocation mechanism of compulsory licensing in the Mhlatuze Catchment, the main sources of knowledge for rural communities are mainly of a scientific nature, thus justifying state control over resource allocation. The exclusion of new actors restricts the flow of information and introduction of different views, thus creating a vicious circle of lack of knowledge resulting in exclusion, and exclusion inhibiting levels of knowledge.
The number of vertical linkages between actors operating within different functions will result in dissipation of required knowledge up and down the value chain. In other words, the coordination of functions within the agricultural value chain ensures that lower level
suppliers meet the requirements set by the higher level processors, resulting in the high level actors creating a path of knowledge to enable producers to deliver the product they require to sustain their existence in the value chain.
Figure 11 illustrates the lack of linkages between rural communities and support services such as extension assistance both private and government, low levels of interaction with input providers who impart knowledge regarding the production functions as part of their business, low levels of interaction with direct markets who impart knowledge and skills in order to maintain supply. Knowledge is vital to the determination of how benefits can be created from water resource allocation and access, and the institutional nodes and geographic nodes illustrated in the sector map (Figure 8) also present bottlenecks for the distribution of knowledge resulting from lack of participation in these functions by the rural communities.
The low numbers of linkages between rural groups and other groups and supporting actors
110 in the value chain has led to instances of mistrust, as indicated in Table 12. There is a lack of trust with actors operating at higher levels of the value chain, such as wholesalers, due to lack of information on market pricing. Processors, particularly in the sugar cane, citrus and forestry value chains (Matthews, 2008), such as in the Mhlatuze Catchment, traditionally operate on a delivery contract basis in order to ensure supply. These contracts are based on quantity, quality and price of produce delivered, and can be used as a form of collateral, or risk minimisation strategy by financial and credit companies to support the producer. The results in Table 13 indicate that there is a lack of trust between the processors and rural farmers in terms of failure to deliver according to contract. This becomes an additional constraint to existing participants and a barrier to entry for potential participants.
b) Power distribution is acting as a barrier to entry for active participation of the rural
communities, but participation is the only means of increasing power for lower level actors through increasing their activity (agency) in functions of the value chain (vertical linkages) and increasing their access and use of water resources (horizontal growth in the sector and the horizontal linkages with supporting actors). The inhibition of agency, or active
participation, in the water sector is demonstrated by the low level of benefits created from large numbers of rural communities involved agriculture (Strandberg, 2001). This is
demonstrated by the skewed distribution of power (Table 13) where lack of benefits created, more than lack of access to key value chain governors, is an indication that power
distribution in the Mhlatuze catchment reflects more on the capacity to utilise resources rather than ownership of them.
c) The current levels of participation of rural communities and farmers has been discussed as a part of determining their levels of resource empowerment, but this section discusses the position of these groups in the context of attitude towards participation, or decision-making.
The lack of participation in the decision making functions regarding the allocation of water resources (institutional and geographic nodes), and the low levels of co-ordinated decision making in the governance of the value chain (rural community participation only in the primary production function of the usage of water) is an indication of the reliance of the rural groups on centralised authority to take decisions. This is endemic of their acceptance of low levels of agency, as one rural respondent mentioned:
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“we do not have the power to participate in the decision making in meetings for allocation of water because we are too small, but the government has promised we will have land and water”
The skewed power distribution within the agricultural value chain towards large processing companies and their traditional commercial supply chain acts as a barrier to entry as the direct nature of the value chain ensures historical relationships are held sacred (Matthews, 2008) and new relationships are hard to foster. This creates an attitude amongst non- participants, as Mpongose (2006) mentioned, of hopelessness in terms of potential to break into the supply chain, also backed up by the data contained in Table 12. This non-committal attitude is also noticeable in the low levels of integration within the decision making allocation functions. This can lead to a spiral of mistrust of the system of allocation and limited interaction with the participating actors.
4.4.2.2 Potential Solutions offered by Water Trading as an Allocation Mechanism a) Knowledge sharing and trust between actors in a value chain are essential to fostering
participation at all levels of the value chain, and encouraging resource sharing amongst participants. The ownership of a tradable allocation, as mentioned in the section on resource empowerment, allows the entitlement holder to make decisions regarding usage or trade of that resource. A tradable resource would create more asset based leverage for interactions between actors and supporters of the value chain in terms of ownership of production functions reducing the risk of reneging on contractual obligations, increased asset base for credit, and reduced risk for establishment of relationships and linkages. Tradability also would increase the levels of contract or cooperation (see Figure 10) through negotiation with actors possessing greater knowledge and skill levels, which filter down to the supplier of resources as a part of ensuring supply. Therefore, by using the water trading allocation mechanism, the rural actors would be more confident in entering the value chain.
b) Distribution of power issues within the agricultural value chain, explained in part b) above, are a function of non-participation in the areas of bottlenecks (allocation and delivery) and lack of vertical linkages and interaction to create benefits. By encouraging rural entities to enter into the value chains and participate in greater functions, the distribution of power will change. The concentration of power in the water sector illustrated in Table13 indicates that
112 by increasing the level of water resource sharing in favour of the rural actors, the additional margins accruing to these numbers of farmers from agricultural use, or trading of water allocations, could substantially improve the equity of distribution of power. The water trading mechanism would enable these rural actors to utilise their allocations to the best benefit, whilst still making the resource available at realistic economic cost for other participants to rent or buy, thus not affecting the efficiency of the value chain.
c) A paradigm change is needed where existing participants need to realise that the
encouragement of a participation of more diverse groups of actors will benefit the water sector as a whole, as participation would result in greater dissemination of information, knowledge, will to increase skill levels and ultimately efficiency through more equitable levels of resource sharing. The attitudes of those currently with greatest resource access, control of key assets in the value chain are seen as vital to their survival. In fact, if water was allocated under the trading mechanism, this would not be so much of an issue as the actual pricing of the water. Malcolm Easton (2006) from the Heatonville Irrigation Board revealed that the issue of additional actors in the water sector for the existing power base was more based on sharing finite supplies with more users. Whilst this is a valid point, the economics of market based goods would ensure that the water use would tend towards the highest benefit, whether it be economic or social, and thus there would be water available for use, but with higher opportunity costs attached due to increased variability of use for tradable allocations. In the Mhlatuze Catchment, according to Pott et al. (2005), there is a case of over-allocation of water due to it’s’ non-economically driven cost base, and so the scenario of water trading should lead to more efficient overall use of water, whilst encouraging participation of new actors.