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Institutional and resource constraints that affect small-scale sugarcane contractor performance in KwaZulu-Natal.

This study aims to identify constraints that inhibit the performance (such as timely haulage operations, cost effectiveness) of sugarcane contractors in the small-scale sugar industry in KwaZulu-Natal (KZN). Information is drawn from both a sample survey, conducted with 124 randomly selected contractors from 11 mill group areas, and case studies (concerning institutional issues such as organisational structures) of contractors, sub-committee members and development officers, conducted in eight mill group areas of KZN between September 2002 and February 2004. Sample statistics and case study results show that contractors face institutional constraints (work allocation limitations, lack of performance incentives and high transaction costs, such as negotiation costs, the risk of a loss in work and contract default risk), cash flow problems, poor physical infrastructure and a lack of labour. It is concluded that the promotion of a more competitive small-scale sugarcane contractor sector will alleviate many of the problems (such as work allocation limitations) faced by small-scale contractors, while providing incentives for the provision of higher quality and cheaper services to small-scale sugarcane growers. Government has a role in strategising the creation of land markets and providing improved rural infrastructure (district roads). Government also needs to ensure unbiased tribal court rulings, review the impacts of minimum wage legislation on contractors sourcing labour, and provide protection for those competing for work.