Socio-Economic Analysis and Policy Implications of the Roles of Agriculture in Developing Countries...

Socio-Economic Analysis and Policy

Implications of the Roles of Agriculture in Developing

Countries

Country sythesis report: South Africa

Nick Vink

Johann Kirsten

Introduction

Dualism

Three institutional sectors:

Commercial farming

Traditional rural

Other rural: closer settlements, etc.

South African agriculture and agricultural policies

Macroeconomic trends• GDP growth• Export growth• Inflation lower• Exchange rate• No employment

growth

Agriculture• Location of production• Contribution to GDP• Composition of

production• Employment in

agriculture

Policy shifts in agriculture

Monetary and fiscal policyMarketing policyLand reformInstitutional restructuring in the public sectorWater law reformLabour market policyTrade policy

Policy shifts in agriculture

State support to agricultureState support for rural infrastructureSoil conservation measuresThe maintenance of biodiversitySocial security policiesCulture

Sectoral effects of deregulation

Producer Support Estimate (PSE) lower than all countries other than New Zealand.

Increased Total Factor Productivity (TFP)

Decreasing capital intensity

Increasing mobility of factors of production

Decline in real price of food in the rural areas

Policy effects on the mode of production

Employment

Field crops

Policy effects on the location and composition of production

Field crops• Wheat, maize out of marginal areas• Sugar

Livestock• Feedlots• Dairy

Horticulture• New areas (Orange river, wine expansion)• New varieties

Other policy effects

Policy effects on farm size structure

Policy effects on export orientation

Policy effects on the rural economy Increased opportunities for SMME

Increase in agro-tourism

Better market access for small-scale farmers

Structural effects on the roles of agriculture

Environmental The overexploitation of groundwater;The effects of soil degradation;Positive effects of the switch to minimum and low tillage production systems;Loss of biodiversity because of bush encroachment, alien plant invasion and deforestation;Working for Water: greater availability of water and increases in biodiversity.


Social, poverty and food securityA small but important buffer against poverty for some householdsA cushion for the poorestA strategy for wealth creation for wealthier households. As the most important determinant of food security is cash in hand rather than the ability to produce food, unless agricultural production moves out of subsistence, little impact is possible on food insecurity and poverty.


In the Western Cape, where export growth stimulates economic activity, the incomes of skilled workers have increased relative to urban incomes, suggesting a positive impact on rural poverty;Households involved in agriculture have a better nutritional status, thus the improvement of agricultural productivity has the potential to improve household and child nutritional status;The withdrawal of labour intensive public works programmes in rural areas has not only reduced employment but also failed to deliver much-needed infrastructure;


Structural changes impact positively on the livelihoods of: Permanent workers on commercial farms, Participants in small grower schemesThose who benefit from up-stream employment associated with the value chains of export sectors.

Structural changes impact negatively on The victims of casualisation and externalisationThose who lose from competition for part-time and seasonal work and from the shift from rural to urban areas of up-stream jobs.


Commercial farming provides institutional capacity to facilitate state delivery of social services or provides such services directly. This ensures greater household security and stability than in the traditional sector;In the traditional sector, institutional authority is crumbling as the agrarian economy continues to deteriorate;Migration has a number of effects on the sending and receiving communities. In the former, lower population pressure favours those left behind, although migration of the able bodied leaves them vulnerable. In the latter, the effect depends on the destination. In most cases, people end up in the ‘other rural’ areas, hence are likely to remain unemployed and poor.


CulturalAgriculture did not contribute to ‘sameness’ in the past, nor is it contributing now. Strategies to get access to land are dividing people;Agriculture can contribute to greater connectedness, as there is a growing consensus among white and black farmers on the need for successful land reform and for support from white farmers; Connectedness through agriculture will depend on how Government manages the tempo of land reform.

Positive and negative complementarities

Positive complementarities include:The environmental benefits from lower population pressure in the former homelands because of the collapse of agriculture. Less cropping has allowed land to revert to a more pristine state.The food security benefits, better access to social services and lower poverty rates for those farm workers lucky enough to remain in full time employment;The positive effect on livelihood strategies for some poor households who can are able to supplement their income from agriculture


Positive complementarities include:That some black farmers are successful has a positive effect on attitudes among black and white farmers and farm workers, and fosters connectedness;Working for Water not only reduces alien invasions, but also increases food security.Adherence to environmental and socially friendly production has contributed to increased export earnings with some positive employment and poverty impacts, especially in the horticultural industry.


Negative complementarities include:

Weakened food security, access to social services and poverty for unemployed farm workers who find themselves in the ‘other rural’ sector, sometimes as seasonal workers;The less invasive cropping patterns in commercial farming have beneficial environmental effects but have resulted in unemployment for especially unskilled workers, with adverse social consequences;The deleterious impact on women of the loss of biodiversity and the social implications from reliance on firewood as a source of fuel.

Synthesis: Commercial farming

Field cropsAn increase in productivity

A geographic and sectoral shift in the multiplier effect

A positive influence on the environment

A negative social impact

An ambiguous impact on culture.

Sequencing of policyInstitutional restructuring – lack of farmer support

ESTA and BCEA (minimum wage)

Land taxes

Lack of SMME support

Synthesis: Commercial farming

HorticultureGreater access to export markets

A shift in the location of production

Replanting of established production areas.

Adoption of IPM

Compliance with standards of importing supermarkets

Sequencing of policyHigher barriers to entry (interest rates, food safety)

Driving higher wages and diversification e.g. agro-tourism

Lack of SMME support

Synthesis: traditional sector

Socio-Economic Analysis and Policy Implications of the Roles of Agriculture in Developing Countries...

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