The eight biggest co-operatives and agribusinesses in Western Cape and KwaZulu-Natal were selected for a survey to determine the current and future level of R&D expenditure and human resources allocated to R&D. Furthermore, the survey assessed the perceptions of management and members/shareholders of the co-operatives/agribusinesses on the innovativeness, quality of R&D and the R&D capacity of their organisations and of the government and other private sector R&D institutions. The survey also covered the degree of satisfaction expressed by members/shareholders concerning their influence in determining the research agenda, as well as their opinion regarding the private sector's responsibility to finance R&D. The results show that current expenditure on agricultural R&D as a percentage of annual turnover by the majority of co-operatives and agribusinesses in the Western Cape and Kwazulu-Natal is far below the international norm for companies trying to be internationally competitive. _According _ to the perceptions of producers as members/shareholders of agricultural co-operatives/agribusinesses, as well as the management of these organisations the amount and the quality of R&D support by the South African Government to the commercial agricultural sector decreased. They have a negative view of the innovative capacity _of the government R&D institutions in comparison with the capacities of their own organisations' or private sector organisations in general. They accept private sector's responsibility to finance R&D on a larger scale and intend to increase their own spending over the next five years. Thee reported perceptions suggest that agricultural co­operatives/agribusinesses have not compensated sufficiently for the decreasing government supported R&D and should develop a strong strategic R&D orientation to investigate potentially new production, processing and marketing activities continuously.