Literature is awash with strategies of how the farm productivity of the smallholder agricultural sector can be transformed to equal that of the commercial sector. Policy options that have been suggested to transform smallholder agriculture have centred on increasing state financial investments in areas such as infrastructural development, mechanisation and market access. However, this paper provides a practical demonstration of how prioritising investment in research and development (R&D can achieve this goal. It particularly focuses on how consistent funding towards breeding can lead to the establishment of a strong industry that can remain productive in face of various changes in the market, production environment and institutional domains. Using the Cost-Benefit variation of the Economic Surplus Approach, the paper shows that the use of new locally bred peach varieties, as opposed to obsolete and imported varieties has yielded benefits estimated to range around R61.2 million (inflation adjusted to 2013 values). The results suggest two conclusions. First, R&D investment plays a pivotal role in enabling agricultural production to remain lucrative through various industry dynamics and will be important in the transformation of the smallholder agricultural sector. Second, increasing research investment can help countries achieve goals of economic growth in the domestic economy as the benefits of breeding investment were found to benefit local producers. Recommendations are made encouraging the prioritisation of R&D investment in all African agricultural industries as locally developed technologies are more likely to address Africa’s production problems rather than imported technologies.


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