Determinant of farmers’ ability to pay for improved irrigation water supply in rural KwaZulu-Natal, South Africa

Abstract

The aim of this study was to determine smallholder farmers’ ability to pay (ATP) for improved irrigation water supply, using their gross margins, in rural KwaZulu-Natal, South Africa. The analysis was conducted on a sample of 161 irrigators. Production data were collected from the irrigators and the residual imputation method (RIM) was used to calculate the gross margins that the farmers realised. An ordinary least squares regression was used to investigate factors affecting ATP. Results indicate that factors such as labour, training, household assets and road conditions positively influence ATP. The study highlights the importance of support to farmers and their institutions. The study also concludes that farmers are making profits from their irrigated crops, especially tomatoes, and therefore recommends that farmers start paying for the water used for their crops.

Keywords: smallholder irrigation, ability to pay, residual imputation method, gross margins, OLS regression