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AGRICULTURE IN A DEVELOPMENTAL STATEFinding Nexus for A Developmental Agricultural EconomistsDr Moraka N MAKHURA

FR Tomlinson Commemorative LectureBolivia Lodge, Polokwane, 1 December 2015

Thank You Limpopo and AEASA•Origin from high agricultural potential village•Eminent agricultural economists from Limpopo•Right time for AEASA Limpopo Chapter•Serving AEASA for 25 years

Tribute to Sethodi Maggie MAKHURA•My farmer

People who keep me going!Name

1 KOMAPE Brinah Aunt and Peppadew farmer2 MAKHURA Mochipisi P Brother and emerging livestock farmer 3 RIBA Bolale S Brother-in-law , former Extension Officer / veg farmer4 MAKHURA Manai P &

Mrs MAKHURABrother, former teacher of Agricultural Science / livestock farmer

5 MAKHURA Moloko P Brother, former school mate & aspiring farmer6 MALATJI Mariam Cousin, motivator and “MY” Peppadew farmer7 MAMABOLO Priscilla Peppadew farmer8 KLOPPER Phillip Friend and Founder of Farming 4 JESUS!9 RIBA Mabu C Niece & mentee10 RIBA Mogolo G Nephew & Director of MOGGOD Purified Water &

Beverages11 MAKHURA Nthabi Niece & Agricultural student12 MAKHURA Sello I Nephew & Agricultural student13 KLOPPER Schalk A 10 year old farm enthusiast & No 2 Friend of the

Farmer! 5

About the FR Tomlinson Lecture

CONTRIBUTIONAGRICULTURE

DEVELOPMENTAL STATE

FARMER

The Developmental State•government is intimately involved in the macro- and micro-economic planning to grow the economy •balance economic growth and social development•Uses state resources and state influence to attack poverty and expand economic opportunities•12 outcome for priority areas

Developmental State Priorities & Agriculture ResponseNational Policy Instruments Agricultural Sector Policy InstrumentsReconstruction and Development Programme (RDP)

Broadening Access to Agriculture Thrust(1994)

Constitution of the Republic of South Africa

White Paper on Agriculture (1995)Policy on Land Reform (1995)

Growth, Employment and Redistribution (GEAR)

Agricultural Sector Strategy (2001)Integrated Sustainable Rural DevelopmentStrategy (ISRDS) – 200?

(BEE) /(BBBEE) AgriBEEASGISA LARPNew Growth Path Comprehensive Rural Development

ProgrammeIndustrial Policy Action Plan (IPAP) Integrated Growth & Development PlanNational Development Plan (NDP) Agricultural Policy Action Plan (APAP)

Revised Land Reform8

Stages of Agricultural TransformationSTAGE ATTRIBUTESGetting Agriculture Moving Through institutional change, technology, incentives

and infrastructure (Mosher)

Making Agriculture Contribute to the Economy

Linkages with industry, create healthy agriculturalsector and mobilise resources (Johnston-Mellor)

Integrating Agriculture into the Macro-economy

Responding to macro-economic instruments,efficiency, resources out, and rural/urban disparities(Schultz-Ruttan)

Agriculture in Industrial Economies

Small share of agriculture, unemployment and need forlabour in agriculture, with disparities (DG Johnson)

AGRICULTURE IN A DEVELOPMENTAL STATE

Agriculture contributing to food security, providingstrong forward & backward linkages, creatingemployment, instrument of transformation

Conventional Contribution of Agriculture2014 2004 1994 Around 1954

GDP (% share) 2.4 3.1 4.6 12 - 18Employed in Agriculture 686 000 767 000 921 700 + 1 300 000

Share of Employment (%) 5 6 20-30Foreign Exchange (x-m) 20 262,7 6 241,2 3 160,9Import/Export Dependency 75% 73% 61%Net Farm Income 65 953.4 16 252.6 6 768.1Taxes

Extended Contribution of Agriculture•Value of agriculture•Backward linkages•Forward linkages•Volume of trade (Exports + Imports)•Patterns of Trading Partner•Food security state

Output markets

Input markets

Food production stability and profit era:

Agric output markets value increasing

Use of cheaper and accessible input

Focus on production

Cost price squeeze:

Inputs becoming more expensive than output price

Support & incentives sustained agriculture contribution

Focus on production

Output market deregulation:

Output markets becoming volatile

Output market intelligence guiding decision making

Focus on profit

Agric in market economy

Output /input markets becoming volatile & cyclical

Forward decision making

Vulnerability to food availability due to focus on profit

1994 2004?1954?

t value

/insta

bility

International vs domestic dev

Intensify agri support

E Farmers outputmarket

No developmental pressure

Emerging developmental needs

Focus on developmental needs

Evolution of Agriculture in South Africa

Agricultural Economists and the Developmental Mission• The practice then and now

• Focus on agricultural development projects (pre 1994)• Focus on agribusiness / farm business analysis• Need to scale up viability analysis

• AEASA attitude to developmental priorities• AEASA Conference themes• Simon Brand Lecture• FR Tomlinson Memorial Lecture• Agrekon Articles since NDP

In Search of a Prosperous Farmer! The Friend of The Farmer Economist• Evaluation of Agricultural Development Projects• Farm management for developing farmers• Commercialisation of small scale farmers• Transaction costs and institutional barriers• Making agricultural economic work accessible / communicating the message• The New Old Theory of Commercialisation for PROSPERITY• The Rural Economist

Farmer settlement on agricultural development projectsFarmer Scenario Type

Description Number Settled

Commercial Risk Taker

No support; Farmer responsible for all cost (x) 0Limited Support Farmer

Fixed (subsidised) wages; Farmer responsible for other costs

0Free Farmer No govt involvement; market wages + family

labour (fewer farmers)1

Free & Supported Farmer

Market prices + family; subsidies; (more farmers settled)

Free & Efficient Farmer

Market wages, productive workers; Seeks better prices

12Free, Efficient & Supported Farmer

Market wages; productive workers; better market arrangements; Govt & Service Centre Support

Concepts of commercialisation Concept AttributesCommercialise Surplus (Fisk)

Consume what is produced

Maximize opportunities (Nakajima; Louw)

Production linked with markets

Risk in Commercialisation (Von Bron)

Production & market risks

Commercialise to Access other goods & Services (Makhura, 1994)

Farmers integrated to other economic activities

Kirsten, Makhura & Delgado at IFPRI, Washington DC (2000): after finding the hidden transaction cost of market participations!

Finding the Nexus for the Developmental Agricultural Economists•Towards a new Developmental Agricultural Economist•Friendship with the Farmer•Economics of Family Farming•Viability on land reform project ex ante•The Spirit of Farming or Farming Spirit

STATE OF AGRICULTURE

DEVELOPMENTAL STATE / ECONOMY

PROSPEROUS FARMER

The Role of DAE in a Developmental State

Finding the Nexus for the Developmental Agricultural Economists•Towards a new Developmental Agricultural Economist•Friendship with the Farmer•Economics of Family Farming•Viability on land reform project ex ante•The Spirit of Farming or Farming Spirit

Conclusions•Developmental state may stay with us for a while.•Agriculture will have to shape accordingly to support the Dev State•Preparation and reorientation of agricultural economists•The future lies in the youth

The Future of the Developmental State lies in the SEED ……….shhhhh! Don’t tell everyone

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