A workshop was held in Amatikulu in 2009 to identify problems contributing to the “downward
spiral” scenario faced by the KwaZulu-Natal Small-Scale Sugarcane growing sector of South Africa.
Not only have the number of Small-Scale Growers (SSGs) declined but their average area under
sugarcane and average yield per hectare have also dropped. One of the issues agreed upon at the
workshop is the need to improve co-operation between the SSGs and their Contractors with particular
focus on overall institutional change. Promoting an “Upward Spiral” scenario for both SSG’s and
Contractors includes dealing largely with institutional reform in which bargaining power imbalances
are corrected. High transactional costs faced by SSG’s necessitate good institutional reform where
organizing parties, in an effort to reduce transaction costs and allow a fair negotiation platform, is
discussed. For institutional reform to be successfully adopted, support structures are required to
continually educate on the importance of various factors including economies of scale to Contractors,
or the effect contractor inefficiencies (high burn-harvest-to-crush delays) have on SSG revenue, of
which many are largely unaware. Institutions should be correctly structured so that within a free
market system SSG sectors are able to survive given their importance in rural income contributions.