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Agricultural policy reform in South Africa

Policy Brief

Organisation for Economic Co-operation and Development (OECD)
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April 2006

SARPN acknowledges the Organisation for Economic Co-operation and Development (OECD) as the source of this document.
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Introduction

With a surface area of 1.22 million km2 and a population of 46.9 million, South Africa is one of the largest countries on the African continent. It is also the largest African economy, with a per capita gross domestic product (GDP) of USD 3 530, more than four times the African average.

South Africa has undergone immense social and economic change over the last 20 years, following the abolition of apartheid and fundamental reforms aimed at creating a more open and market-oriented economy. Partial reforms, mainly concerning domestic markets, were implemented during the 1980s and early 1990s. The democratic elections in 1994 and the lifting of international economic sanctions against South Africa opened the way for broad liberalising reforms. An underlying principle for virtually all government policy is to bring the previously excluded black community into the mainstream economy through job creation and entrepreneurship.

The overall results of reforms to date have been positive, with a stronger and stable macro economy, better integration into the global trading system, and some progress in redressing past injustices. South African society, however, faces many challenges, including widespread unemployment and poverty, a large unskilled work force excluded from the formal economy, weak social and educational systems, a significant level of crime and a high prevalence of HIV/AIDS.

Agriculture contributes less than 4% to GDP but accounts for 10% of total reported employment. Agriculture is well-diversified with field crops, livestock and horticulture the main sectors. Wine and fruit production has seen the most dynamic development in the past ten years with a large share of total output exported, mainly to Europe.

Agricultural policy reform continues with a package of measures to address past injustices including land redistribution, agricultural support programmes to disadvantaged farming communities, and a broad based programme of economic empowerment of the black population.

This Policy Brief provides an overview of agricultural policy reform in South Africa, its impact on the sector, the challenges facing policy makers and the suggested directions for further policy reforms.



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