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Agriculture and poverty in South Africa: can agriculture reduce poverty?

Charles Machethe

Paper presented at the Overcoming Underdevelopment Conference held in Pretoria, 28-29 October 2004

This paper was presented the conference on Overcoming Underdevelopment held in Pretoria from 28/29 October.
SARPN acknowledges permission from Marie Kirstein at the DBSA for permission to post this paper.
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Introduction

Between 40 and 50 percent of South Africa's population can be classified as living in poverty (Terreblanche, 2002; Woolard and Leibbrandt cited in FAO, 2004) while 25 percent of the population can be categorised as ultra-poor. Although the country is self-sufficient in food production, about 14 million people are said to be vulnerable to food insecurity and 43 percent of households suffer from food poverty (National Treasury, 2003).

South Africa is classified as an upper middle-income country with one of the most skewed distribution of income in the world. The country's Gini coefficient is estimated at 0.68 calculated from the 1996 Population Census data (Marais cited in FAO, 2004). This is higher than the Gini coefficient of 0.58 during the mid-1990s. The large income gap between the rich and poor is a matter that is receiving attention from the government. A number of policies aimed at inter alia bridging the income gap and promoting economic empowerment of previously disadvantaged communities are in place. These include the recently promulgated Broad-based Black Economic Empowerment Act of 2003.

Poverty is more pervasive in rural areas particularly in the former homelands. The majority (65 percent) of the poor are found in rural areas and 78 percent of those likely to be chronically poor are also in rural areas (Woolard and Leibbrandt cited in FAO, 2004). Commenting on poverty in developing countries, Ashley and Maxwell (2001:395) state that "Poverty is not only widespread in rural areas, but most poverty is rural, …. Yet this core problem appears to be neglected". They further note that there has been a decline in resource flows to the rural sector and this applies more to agriculture than it does to other sectors.

In rural development literature, agriculture is considered as the best vehicle to reduce rural poverty. In most developing countries, agriculture and agriculture-related activities provide most of the employment in rural areas. The implication is that agricultural workers are poorly paid and that most of the employees in the agricultural sector are unskilled. This also means "that increasing agricultural growth may have a large positive impact on poverty" (Lopez, 2002). In South Africa, 42 percent of the total population were in rural areas in 2001 (World Bank, 2003). Given that a significant proportion of the South African population are in rural areas and 65 percent of the poverty is rural, can agriculture play a major role in poverty alleviation? How can agriculture's role in poverty alleviation be enhanced? What has been done to enhance agriculture's role and what could be done to increase agriculture's contribution to poverty alleviation? These are some of the question this paper will address. The focus will be on the role of smallholder agriculture in poverty alleviation.

The remainder of the paper is organised as follows. The second section presents some theoretical aspects of agriculture's contribution to poverty alleviation. It outlines the role of agriculture in poverty alleviation as described in the literature on agricultural and rural development. Section three examines the role played by smallholder agriculture in improving livelihoods in South Africa. Section four outlines government initiatives aimed at promoting smallholder agricultural development and the rationale for these initiatives. Section five addresses the issue of what needs to be done to maximise agriculture's contribution to poverty alleviation.



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