61

3. LAND REFORM AND AGRICULTURAL DEVELOPMENT

Introduction

This chapter investigates the relationship between agriculture and land reform and
attempts to determine what “type”1 of land reform programme (1) would be appropriate
to South African agriculture. (2) Is most likely to maintain/ increase current levels of
agricultural production and, (3) will alleviate poverty in rural areas through agriculture
(should this be possible).

Section one, therefore, sets out to illustrate the importance of the South African
agricultural sector - some international examples are also listed - in economic growth,
employment and poverty alleviation. Section two lists a number of international
examples, which highlight the close relationship between land reform and agricultural
production, but does not provide clear guidelines on which reform policies will increase
production and which will not. Therefore, in an attempt to establish guidelines for
appropriate land reform policies in South Africa, sections three, four and five, seek to
understand the nature of the agricultural sector in South Africa. As a result of Apartheid
policies, the South African agricultural sector can loosely be divided into two sectors –
the white commercial agricultural sector and the black communal/ small-scale/
subsistence agricultural sector. This part of the chapter also includes a discussion of the
changes (liberalisation and deregulation) that have taken place in the overall agricultural
sector in the last couple of decades (section 4) and the actors and thinking involved in this
process – with particular emphasis on the World Bank.

Having provided a context and account of the nature of the South African agricultural
sector(s), section six gives and exposition and analysis of the debates, between the
advocates of the relative efficiency of small-scale farming as opposed to large-scale
farming (as the basic structure of a land reform programme). Section six also looks at
alternative ways in which to interpret the empirical evidence for the arguable inverse
relationship between farm size and efficiency. In this regard, section 6.5 and 6.6 are the
most important parts of this chapter and discuss the factors that influence the success or
failure of small-scale farmers, as well as, whether small-scale farming can alleviate
poverty for the poorest sectors of South African rural society. These sections are based
on a wide range of international case studies (approximately 17 countries).

The final section of this chapter highlights some pertinent questions. For example, do
South Africa’s potential land reform beneficiaries want to farm? If insufficient numbers
of people are interested in farming, should the land reform programme emphasise
agriculture? Or, should land reform emphasise restitution, justice, housing, vegetable
gardens and financial compensation? How many households can be satisfactorily
1
For example, does the land reform programme promote large or small-scale farming? Or, is the
programme supply or demand driven? Or, is the programme supported by government policies that
emphasise assistance to emerging farmers? Or, is it a state-led reform programme or, is it a market-based
reform programme. As the discussions throughout this thesis will show, these are all factors that have an
impact on the success of land/ agrarian reform programmes, on whether these programmes alleviate
poverty and, on which groups, in any particular society, benefit from the land reform programme
 62

supported by the available land? Will farming generate sufficient income (i.e. alleviate
poverty)? And, what impediments are there to the development of African large/ small-
scale agriculture?

1. The importance of agriculture

Land reform programmes have the potential to increase or decrease agricultural

production. Given the importance of the agricultural sector in economic growth,
employment and poverty alleviation in rural areas, it is crucial that land reform
contributes to increased (or at least sustained) levels of agricultural production. A large
percentage of people in African countries, including South Africa, live in rural areas and
depend on agricultural activity for their livelihoods. This is the case in South Africa
where 46.3% of the population live in rural areas2, Botswana (86% in 1985), Kenya (80%
in 1985), Tanzania (86% in 1985), Mozambique (82% in 1985) and Zimbabwe (73% in
1985).3 In addition, these are countries that generally have inadequate food security,
inequitable distribution of resources and high unemployment rates. Agricultural sector
development (given the industry’s forward and backward linkages in the economy) can
contribute to urban and rural development, increased food security and employment and
income generation.

In 1997, directly and indirectly, the South African agricultural sector sustained more than
25% of total employment, accounted for 13% of the Gross National Product, provided
32% of the total inputs used by the food sector and contributed 9.2% of total exports.4
The agricultural sector has important forward and backward linkages – supplying raw
material to the secondary and tertiary industries and in turn providing a market for goods
and services – which are of immense significance to both the rural and urban economies.5
For example, in 1992/3, farmers spent approximately R503 million on packaging
materials, R1 419 million on fuel, R1 069 million on fertiliser and R882 million on dips
and sprays. They further invested R931 million in tractors, machinery and implements
and another R835 million on fixed property improvements.6

The South African agricultural sector is also extremely important in providing

employment. With the exception of the construction industry, agriculture created the
greatest number of employment opportunities in 1981 and 1985 per unit increase in
capital.7 In 1996, 32% of the rural population and 1.9% of the urban population were
employed in the agricultural, forestry and fishing sectors.8 Furthermore, an investment of
2
Central Statistics Service, The people of South Africa Population Census, 1996, Report 03-01-19, 1996
3
Rumulika K, "Participatory Democracy in the Agricultural Sector as a Strategy for controlling Africa's
crisis", Alternative Strategies for Africa Volume 2, Suliman M (Ed.), IFAA, London, 1991, p. 42
4
Nomvete B.D, Maasdorp G.G & Thomas D (Eds.), Growth with Equity, Africa Institute for Policy
Analysis and Economic Integration, Cape Town, 1997, p. 48
5
Nomvete B.D, Maasdorp G.G & Thomas D (Eds.), Growth with Equity, Africa Institute for Policy
Analysis and Economic Integration, Cape Town, 1997, p. 48 - 52
6
Department of Agriculture, Abstract of Agricultural Statistics, Pretoria, 1994
7
Kirsten J & Van Zyl J, "Agricultural Growth Linkages: international experience and some South African
estimates", Agricultural Land Reform in South Africa, Van Zyl J, Kirsten J & Binswanger H (Eds.), Oxford
University Press, Cape Town, 1996, p. 349
8
Central Statistics Service, The people of South Africa Population Census, 1996, Report 03-01-19, 1996
 63

R1 million in agriculture will generate twice as many jobs as an equivalent investment in

the manufacturing sector, and nine out of ten of the country’s top employment generators
are to be found in agricultural industries.9

(Agriculture also dominates the Zimbabwean economy, despite the fact that agriculture’s
contribution to the Gross National Product, in most years, is less than 20%. The
agricultural sector in Zimbabwe provides an income to almost 75% of the population,
accounts for 30% of formal sector employment and 40% of total national exports.
Furthermore, manufacturing is partly dependent on the agricultural sector as a source of
raw materials and 70% of consumer expenditure is on products derived directly from
agriculture.10 In fact, there is such a close relationship between agricultural development
and national development in Zimbabwe that national growth rates closely mirror annual
rainfall variations. For instance, in 1987, when annual rainfall was low and the
agricultural sector experienced a negative growth rate of 18.1%, the economy also
suffered and recorded a negative growth rate of 0.7%. In 1988, when rainfall figures
were high and agriculture grew by 25.5%, the economy grew by 6.3%.11)

In brief, agriculture can contribute to economic development in four ways. Firstly,

through product contribution, for example, food production. Secondly, through market
contribution, for example, providing a market for produced goods. Thirdly, a factor
contribution, for example, providing employment and finally, a foreign capital
contribution through export earnings.12

2. The relationship between agriculture and land reform

Many critics of land reform base their arguments on the need to sustain agricultural
production and the belief that land reform involves too radical an alteration of the
production structure for output to be maintained.13 Evidence from international case
studies supports both detractors and proponents of land reform. In Mexico, following the
land reform attempts of the Cardenas government in the 1930s, the agricultural sector in
1940 was “at an all time low” and “was not even producing enough to feed itself”.14 In
Tanzania, the introduction of the villagisation programme was followed by a major food
crisis in 1974 and 1975. The production of food crops for internal consumption as well
as the production of export crops for foreign exchange earnings declined dramatically.
The villagisation programme contributed to resource destruction and a decrease in
agricultural production because of a lack of incentives for farmers to produce. The
9
Nomvete B.D, Maasdorp G.G & Thomas D (Eds.), Growth with Equity, Africa Institute for Policy
Analysis and Economic Integration, Cape Town, 1997, p. 49
10
Muir R, “Agriculture in Zimbabwe”, Zimbabwe’s Agricultural Revolution, Rukuni M & Eicher C.K
(Eds.) University of Zimbabwe Publications, 1994
11
Chidzero B, “Macro-economic adjustment and trade liberalisation”, in Zimbabwe’s Agricultural
Revolution, Rukuni M & Eicher C.K (Eds.) University of Zimbabwe Publications, 1994
12
Ghatak S & Ingersent K, "Role of Agriculture in Economic Development", Agriculture and Economic
Development, Harvester, Sussex, 1984
13
Thiesenhusen W.C, "Introduction", Searching for Agrarian Reform in Latin America, Unwin Hyman,
London, 1989
14
Cline F.H, "Agrarianism: A Basic Revolutionary Goal", Mexico: Revolution to Evolution 1940 -1960,
Oxford University Press, London, 1962
 64

consequent crisis in agricultural production underpinned the collapse of the industrial

economy (where capacity utilisation decreased by 30%), the crisis in the marketing
system and the degeneration of the transport system. The gross domestic product
declined by 1.7% in 1981 and by 3.4% in 1982.15

Allende’s socialist government introduced a land reform programme in Chile in 1970 that
achieved a significant amount of redistribution of wealth and income, dramatic changes
in rural social relations, important advances in participatory development and significant
increases in employment.16 The effect on agricultural production was, however, “little
short of disaster”. Output declined by 3.6% in the 1971 – 1972 crop year and by 13.7%
in the 1972 – 1973 crop year. Food imports increased by 60% in 1971, 91% in 1972 and
27% in 1973 (compared to 1970).17

The rural development and land reform programme introduced by the Mao government in
China was based on the collectivisation of agriculture, the mass mobilisation of rural
labour through labour intensive investments (irrigation, flood control, land reclamation)
and attempts to increase yields per hectare.18 In the early period of collective farming
(1950), agricultural production levels remained high and China became one of the
world’s largest grain producers – capable of providing food for one fifth of the world’s
population on one fifteenth of the world’s arable land.19 The gross value of agriculture
measured in 1952 prices increased by 27.8% and grain output increased by 21.9% in the
same period.20 By 1961, however, China had changed from a grain exporter to a grain
importer even though consumption levels had remained stable. Grain yields had fallen by
25% and wheat by 41%. Production levels of coarse grains like sorghum, millet and corn
were lower than 1949 levels. Oil-seed production was down by 64%, cotton by 41% and
textiles by more than 50%. The number of pigs had fallen from 146 million in 1957 to
approximately 75 million in 1961.21 It was only after 1978, following a policy shift
towards private land ownership, that grain production increased by 45%.22

On the other hand, there are a number of examples where land reform programmes led to
increased agricultural production, notably Cuba, Egypt and Zimbabwe. Land reform in
Cuba resulted in increased agricultural production. Despite a drought in 1961, a

15
Shao J, “Politics and the Food Production Crisis in Tanzania”, Commins S.K, Lofchie M.F & Payne R
(Eds.), African Agrarian Crisis, Lynne Rienner Publishers, Colorado, 1986
16
Brown M.R, "Radical Reform in Chile 1964-1973", Searching for Agrarian Reform in Latin America,
Thiesenhusen W.C (Ed.), Unwin Hyman, London, 1989
17
Schuh E, "Approaches to Basic Needs and to Equity that Distort Incentives in Agriculture", Distortions
of Agricultural Incentives, Schultz T.W (Ed.), Indiana Press, London, 1978
18
Lin Y.Z, "Institutional Reform and Chinese Agriculture: Retrospect and Prospect", Economic Reform in
China: Problems and Prospects, Dorn J.A & Xi W (Eds.), University of Chicago Press, Chicago, 1989
19
Selden M, "Marxism and the Peasantry: Collectivisation and Strategies for Socialist Agrarian
Development", The Political Economy of Chinese Socialism, Sharpe M.E, Armonk, 1988
20
Lin Y.Z, "Institutional Reform and Chinese Agriculture: Retrospect and Prospect", Economic Reform in
China: Problems and Prospects, Dorn J.A & Xi W (Eds.), University of Chicago Press, Chicago, 1989
21
All statistics on agricultural decline from Becker J, Hungry Ghosts: China's Secret Famine, John Murray,
London, 1996
22
Lin Y.Z, "Institutional Reform and Chinese Agriculture: Retrospect and Prospect", Economic Reform in
China: Problems and Prospects, Dorn J.A & Xi W (Eds.), University of Chicago Press, Chicago, 1989
 65

hurricane in 1963 and the emigration of many technical staff to the United States,
agricultural production grew by 3.9% in the 1960s and 3.4% in the 1970s. Cereal
production grew by 12% between 1970 and 1980. Furthermore, overall investment in
agriculture increased by 130% between 1970 and 1983.23

One of the factors that served as motivation for the introduction of a land reform
programme in Egypt was the continued decrease in agricultural production in the 1940s.
The consequent land reform programme resulted in an overall increase in agricultural
production. Between 1952 and 1962, food production increased at an average annual rate
of 3.5%. Furthermore, cotton, sugarcane and maize yields were increasing faster in the
land reform sectors than in the rest of Egypt – probably because of state investments in
these areas. Agricultural growth rates were maintained in the 1970s.24

There are also examples where agricultural production levels remained more or less
constant before and after land reform. Following the land reform programme introduced
by the military government of Juan Velasco Alvardo in Peru in 1969, which redistributed
approximately 40% of agricultural land, agricultural output levels were maintained at
levels similar to those in the pre-reform period.25 In Japan, agricultural production levels
remained stable pre and post land reform, partly because of investments in infrastructure
and the provision of support services to land reform beneficiaries.

The nature26 of the land reform policy and the economic and social contexts are therefore
factors that determine the effect of a land reform programme on agricultural production.
It is therefore important to understand the history and nature of the South African
agricultural sector, as well as the major policy debates around agrarian reform (i.e. large-
scale versus small-scale agricultural production). Nevertheless, even effective and well-
implemented land reform programmes are socially and economically disruptive and it is
very likely that agricultural production will temporarily decrease in the period
immediately following redistribution.

3. Development of the white commercial agricultural sector

Throughout the 19th century, successive white governments’ policies contributed to the
development of the white commercial agricultural sector and the demise of African
agriculture. These policies had three central elements – dispossession, coercive labour

23
El-Ghonemy M.R, "Cuba", The Political Economy of Rural Poverty, Routledge, London, 1990
24
Figures for Egypt from El-Ghonemy M.R, "Egypt", The Political Economy of Rural Poverty, Routledge,
London, 1990
25
Lastarria-Cornhiels, "Agrarian Reforms of the 1960's and 1970'2 in Peru", Searching for Agrarian
Reform in Latin America, Thiesenhusen W.C (Ed.), Unwin Hyman, London, 1989
26
For example, does the land reform programme promote large or small-scale farming? Or, is the
programme supply or demand drive? Or, is the programme supported by government policies that
emphasise assistance to emergent farmers? Or, is it a state-led reform programme or is it a market-based
reform programme. As the discussions throughout this thesis will show, these are all factors that have an
impact on the success of land/ agrarian reform programmes, on whether these programmes alleviate
poverty and, on which groups, in any particular society, benefit from the land reform programme.
 66

legislation and financial support.27 The protracted and violent process of dispossession
and territorial segregation28 resulted in a significant increase in the total value of
agricultural output by white farmers – from 29 million pounds in 1911, to 200 million
pounds in 1948 and 385 million pounds in 1959.29 The state’s active role in the labour
market since the early development of capitalist agriculture ensured that white farmers
had access to a constant supply of cheap labour.30 Coercive labour legislation included
the Native Labour Regulation Act of 1911 that banned “non-farm” labour recruiters from
white farming areas, pass laws and influx control, the exclusion of agricultural workers
from protective legislation and collective bargaining statutes, the homeland (migrant
labour) system and the anti-squatting provisions of the 1936 Native Trust and Land Act.
As the commercial agricultural sector began to mechanise, agricultural employment
began to decrease (2.67% annually between 1970 and 1980).31

Financial support to the white commercial agricultural sector included the provision of
infrastructure, subsidies, guaranteed sales and artificially high prices, marketing facilities,
agricultural research and credit. Subsidised irrigation, transport32 and fencing as well as
education and electricity were all routinely provided to white farmers. Legislation
affected all aspects of agriculture and production including prices (increasing under the
Pact government). By 1936, state intervention in the agricultural sector focussed on
marketing arrangements and price controls. The Marketing Act 26 of 1937 established
the marketing boards, which had far ranging powers that included “powers to regulate
production and prices for both internal consumption and export, and to restrict or
prohibit imports”.33 The Meat Board, for example, regulated almost all aspects of the
meat industry including supply and demand, production, distribution and processing.34
Maize was marketed through a statutory single channel marketing scheme, operated by
the Maize Board, which was dominated by white farmers and held by co-operatives who
owned many of the grain silos, channelled credit to maize farmers and supplied them
with inputs such as seed, fertiliser, machinery and fuel.35 As was the case in Zimbabwe,
state monopoly marketing systems conferred structural advantages on the large-scale

27
Bernstein H, “Social change in the South African countryside? Land and production, poverty and
power”, PLAAS, UWC, 2000
28
Refer to Chapter 1
29
Jeeves A.H & Crush J (Eds.), “Introduction”, White Farms, Black Labour, University of Natal Press,
Pietermaritzburg, 1997
30
Hamman J, “The impact of labour policy on rural livelihoods on Western Cape Wine and Fruit Farms”,
Land, Labour and Livelihoods, Volume One, Lipton M, De Klerk M & Lipton M (Eds.), Indicator Press,
1996
31
Kirsten J & Van Zyl J, "The Contemporary agricultural policy environment: undoing the legacy of the
past", Agricultural Land Reform in South Africa, Van Zyl J, Kirsten J & Binswanger H (Eds.), Oxford
University Press, Cape Town, 1996, p. 199 & 200
32
For example, the introduction of tariffs by the Pact government in order to subsidise the transport of
agricultural products.
33
Kirsten J & Van Zyl J, "The Contemporary agricultural policy environment: undoing the legacy of the
past", Agricultural Land Reform in South Africa, Van Zyl J, Kirsten J & Binswanger H (Eds.), Oxford
University Press, Cape Town, 1996, p. 203 & 208
34
Eales K, "The Commercial Agricultural Sector", Down to Earth, Marcus T, Eales K & Wildshut A
(Eds.), LAPC, Indicator Press, Natal, March 1996, p. 98 & 99
35
Eales K, "The Commercial Agricultural Sector", Down to Earth, Marcus T, Eales K & Wildshut A
(Eds.), LAPC, Indicator Press, Natal, March 1996, p. 100 - 101
 67

white commercial agricultural sector, distorted prices and acted as a drain on government
funds. In Zimbabwe, for example, annual losses of the marketing parastatals were
estimated at Z$820 million in 1986.36

Agricultural research in South Africa has always (and to a large extent still is) focussed
on issues and problems pertaining to large-scale white commercial agriculture. These
include initiatives to improve stockbreeding, to raise crop yields and to fight diseases.37
Agricultural policies included the provision of cheap subsidised credit and direct state
grants and loans to white farmers. Marcus argues that this is partly what kept successive
generations of white farmers on the land.38 These credit policies also had negative
consequences including the distortion of land and input prices and high levels of debt and
default.39

Polices designed to protect and develop white/settler agriculture are not particular to
South Africa. In Zimbabwe, white farmers were given access to training, generous loans,
cheap labour, technology and a wide range of extension facilities.40 As a result, the white
commercial agricultural sector in Zimbabwe came to dominate agricultural production.
By 1980, white commercial farmers produced an estimated 75% of total agricultural
output and 96% of agricultural sales.41 In Tanzania (1921 – 1967), the British colonial
government encouraged the development of the settler commercial agricultural sector at
the expense of indigenous Tanzanian agricultural production by means of racial
discrimination and preferential policies. These included price subsidies, preferential crop
and transport prices, soft credit, research and extensions services and the monopolisation
of the most fertile land.42 A process of land alienation and protection for settler
agriculture in Kenya had similar consequences. The white agricultural sector was
protected by an extensive structure of marketing boards and market controls as well as,
for example, the Coffee Plantations Ordinance of 1918 that prevented Africans from
growing coffee and the Native Produce Ordinance Act of 1935, which confined
marketing rights to Europeans and Asians.43

36
Binswanger H & Deininger K, "South African Land Policy: the legacy of history and current options", in
Agricultural Reform in South Africa, Van Zyl J, Kirsten J & Binswanger H (Eds.), Oxford University
Press, Cape Town, 1996, p. 87 - 93
37
Jeeves A.H & Crush J (Eds.), “Introduction”, White Farms, Black Labour, University of Natal Press,
Pietermaritzburg, 1997
38
Marcus T, "White Farmers and corporate agriculture", Down to Earth, Marcus T, Eales K & Wildschut A
(Eds.), Land and Agricultural Policy Centre, Indicator Press, Natal, March 1996, p. 71
39
Eales K, "The Commercial Agricultural Sector", Down to Earth, Marcus T, Eales K & Wildshut A
(Eds.), LAPC, Indicator Press, Natal, March 1996, p. 104
40
Palmer R, Land and Racial Domination in Rhodesia, University of California Press, Berkeley, 1977
41
Bratton M, “Land Redistribution 1980 to 1990”, Zimbabwe’s Agricultural Revolution, Rukuni M &
Eicher E (Eds.) University of Zimbabwe Press, 1994
42
Mbilinyi M, "Restructuring Gender and Agriculture in Tanzania", African Perspectives on Development ,
Himmelstand U, Kinyanjui K & Mburugu E (Eds.), James Currey Ltd, London, 1994, p. 166 - 173
43
Alila P.O, "Smallholder credit for rural development in Kenya", in African Perspectives on
Development, Himmelstand U, Kinyanjui K & Mburugu E (Eds.), James Currey Ltd, London, 1994, p. 107
- 116
 68

What is important in South Africa is that these policies resulted in the concentration of
political and economic power in the hands of a small group of white commercial farmers.
This ensured the National Party government of the sector’s political support but also
enabled the sector to resist policy changes that they perceived to be detrimental to white
agricultural production.44

Although some liberalising policies had already been proposed and implemented in the
1940s and 1950s, the 1980s were characterised by the increased liberalisation of the
white agricultural sector and a move away from subsidies and market regulation.
Arguably, agricultural policies based on racial discrimination and price distortions were
no longer viable. Changes included a weakening of the Rand that resulted in input prices
rising faster than output prices, a decrease of budgetary allocations to white farmers by
50% in 1987, extensive deregulation of controlled marketing, the abolition of price
controls in some sectors and the termination of consumer subsidies for maize meal and
bread.45 The commercial agricultural sector became increasingly indebted. In 1976, an
average farm was worth R250 000 with an average debt of R30 000. In 1985, the value
of the average farm had risen by nearly 200% to R730 000, while the average debt had
increased by over 500% to R184 000.46 A rise in interest rates made it impossible for the
Land Bank to continue subsidising white farmers’ debt repayments and bankruptcies
started to increase – from 144 in 1985, to 412 in 1987 and as many as 3 000 white
farmers on the verge of sequestration in 1988.47 By 1987, the total debt of the white
farming sector was over R11 billion, exceeding the total income of the agricultural sector
with interest payments alone at nearly R2 billion.48

This is not to say that state support for and involvement in the agricultural sector ceased
in the 1980s and early 1990s. In fact, National Party support for the white agricultural
sector appears to have peaked during the early 1990s. Between 1981 and 1987, the NP
government embarked upon debt consolidation policies that amounted to R344 million,
paid drought relief amounting to R120 million and disbursed crop production loans worth
over R470 million.49 Large subsidies were paid to individual farmers and industries
throughout the 1980s. In 1987, R1.7 billion of the R2.1 billion budget for the 14

44
For further analysis of the development of the white commercial agricultural sector see Morris M,
“Apartheid, Agriculture and the State: The Farm Labour Question”, Working Paper, Southern African
Labour and Development Research Unit, July 1977
45
Kirsten J & Van Zyl J, "The Contemporary agricultural policy environment: undoing the legacy of the
past", Agricultural Land Reform in South Africa, Van Zyl J, Kirsten J & Binswanger H (Eds.), Oxford
University Press, Cape Town, 1996, p. 210 - 212
46
Mbongwa M, “The Political Economy of Post-1960 Dispossession in South Africa, Paper presented at a
conference of the Newick Park Initiative, Land Reform and Agricultural Development, UK, October 1990,
Jubilee Centre Publications
47
Dolny H, Banking on Change, Penguin Books, South Africa, 2001, p. 70 - 73
48
Mbongwa M, “The Political Economy of Post-1960 Dispossession in South Africa, Paper presented at a
conference of the Newick Park Initiative, Land Reform and Agricultural Development, UK, October 1990,
Jubilee Centre Publications
49
Eales K, "The Commercial Agricultural Sector", Down to Earth, Marcus T, Eales K & Wildshut A
(Eds.), LAPC, Indicator Press, Natal, March 1996, p. 97 - 112
 69

Agricultural Departments was still allocated to white agriculture50 and in 1992, white
farmers received R2.4 billion in drought relief.51 Thus, by 1993, 95% of the value of
agricultural production in South Africa still originated from the white commercial
agricultural sector.52 And, by 1996, 55 000 white farmers still owned 102 million
hectares of land, while 1.2 million small-scale farmers had access to approximately 17
million hectares in the former homelands.53 Further legislative changes were introduced
in the early 1990s. These included the abolition of influx control and the Land Acts, as
well as, extending the Basic Conditions of Employment Act to farm workers in May
1993.

4. Influence of the World Bank

The World Bank began to play a visible and key role in agricultural policy development
in September 1993 when it set out its recommendations in Options for Land and Rural
Restructuring54 at a conference organised by the Land and Agricultural Policy Centre.
World Bank representatives55 argued that South Africa was one of a group of countries56
that had inherited extremely inequitable systems of land ownership after the Second
World War and in which the bulk of public sector support was concentrated on large-
scale farming. This resulted in the development of a relatively successful, highly
mechanised, large-scale commercial agricultural sector, but at a heavy an unsustainable
fiscal cost. At the same time, small-scale farmers sank deeper into poverty.
Mechanisation also resulted in the premature shedding of labour and the creation of urban
slums where crime and violence were prevalent.57 Options stated that its “guiding
principle” was “political and economic liberalisation”.58 Therefore, the Bank called for
an extension of the policies initiated in the 1980s – abolishing subsidies and fixed prices
and ending market regulation. World Bank representatives argued that this would
contribute to greater productive efficiency as well as level the playing fields for emerging
black farmers.

50
Njobe B, Criteria for Participation, Paper for the World Bank & LAPC conference in September 1993,
Swaziland
51
Moloi D, "Levelling the ploughing fields", Land and Rural Digest, Vol.1, No.3, October/ November
1998
52
Njobe B, Criteria for Participation, Paper for the World Bank & LAPC conference in September 1993,
Swaziland
53
Eales K, "The Commercial Agricultural Sector", Down to Earth, Marcus T, Eales K & Wildshut A
(Eds.), LAPC, Indicator Press, Natal, March 1996, p. 97 - 112
54
“Options” is based on a relatively large number of papers presented at the conference by World Bank
delegates and World Bank sponsored South African academics. For a critical analysis of Options with
regard to small-scale farming also see Hart G, “The Agrarian Question and Industrial Dispersal in South
Africa: Agro-Industrial Linkages Through Asian Lenses”, in Bernstein H (ed.), The Agrarian Question in
South Africa, Frank Cass, London, Portland, 1996
55
Binswanger H.P, Agricultural and Rural Development: Painful Lessons”, World Bank Workshop,
September, 1993
56
Other countries included Brazil, Colombia and Guatemala
57
Binswanger H.P, Agricultural and Rural Development: Painful Lessons”, World Bank Workshop,
September, 1993 & Lipton M, De Klerk M & Lipton M, “Introduction”, Land, Labour and Livelihoods,
Volume One, Indicator Press, Durban, 1996
58
Williams G, Ewert J, Hamann J & Vink N, “Liberalising markets and reforming land in South Africa”,
Journal of Contemporary African Studies, 16.1, 1996
 70

The World Bank’s influence and the commitment to liberalisation was reflected in the
RDP and the signing of the Uruguay Round of the General Agreement on Trade and
Tariffs (GATT) in 1994. The RDP emphasised agricultural productivity and the
importance of agriculture to general economic development.59 The RDP stated that the
present agricultural sector would remain an important provider of employment and
foreign exchange and that the “RDP must provide a framework for improving
performance by removing unnecessary controls and levies as well as unsustainable
subsidies”.60 The signing of GATT committed the South African government to altering
the forms of import protection from state monopolies to tariff regulation.61

Accordingly the ANC set out on a policy of economic liberalisation that went even
further. In 1996, the Marketing Act of 1937 and the monopoly on deciduous fruit exports
were abolished. The maize and wheat boards were abolished in 1997. By 1999, all
domestic agricultural markets, with the exception of sugar, had been fully deregulated
and government subsidies to commercial farmers had ceased.62 (Despite these measures,
Cosatu claimed in March 2003 that three privatised co-operatives still controlled 72% of
all maize storage silos, four handlers controlled milling and three retail groups had 88%
of the maize market share.63)

The basic motivation for the liberalisation policies was the belief that deregulation would
result in the relatively large-scale failure of the white commercial agricultural sector
(particularly as a result of unserviceable debts). This would release a significant amount
of land for redistribution on the one hand and, increase the economic efficiency of the
remaining white farmers on the other.64 It was also assumed that once the legal
restrictions of Apartheid in terms of access to land and resources and the competitive
advantage of white farmers had been removed, African farming would be reanimated. To
some extent, this assumption was correct. During the 1980s, the white commercial
agricultural sector did experience a decrease in profits and an increase in debts and
bankruptcies (exacerbated by drought and high inflation).65 By August 2001, the sector
was facing record debts of R30 billion.66

59
Section [Link] of the RDP of 1994
60
Section [Link] of the RDP
61
Williams G, Ewert J, Hamann J & Vink N, “Liberalising markets and reforming land in South Africa”,
Journal of Contemporary African Studies, 16.1, 1996
62
Eales K, "The Commercial Agricultural Sector", Down to Earth, Marcus T, Eales K & Wildshut A
(Eds.), LAPC, Indicator Press, Natal, March 1996, p. 97 - 112
63
Mail & Guardian, “Cosatu hits out on food “, March 14 – 19, 2003
64
One of the proponents of this argument was M. Mbongwa, see Mbongwa M, “The Political Economy of
Post-1960 Dispossession in South Africa, Paper presented at a conference of the Newick Park Initiative,
Land Reform and Agricultural Development, UK, October 1990, Jubilee Center Publications
65
Kirsten J & Van Zyl J, "The Contemporary agricultural policy environment: undoing the legacy of the
past", Agricultural Land Reform in South Africa, Van Zyl J, Kirsten J & Binswanger H (Eds.), Oxford
University Press, Cape Town, 1996, p. 199 - 233
66
Business Day, “Black Farmers are the Future”, August 24, 2001
 71

Broadly speaking, however, the reality was different. Despite having the world’s “freest
agricultural markets, with no subsidies or government intervention”67, in 1996,
approximately 90% of South Africa’s agricultural production still came from the white
commercial agricultural sector, which still owned 85% of the agricultural land.68
According to Schirmer,69 this continued (and expanded) level of production was the
result of the dual strategy followed by the National Party government in the 1980s (as
reflected in the 1984 White Paper on Agriculture). This strategy included liberalisation
policies to support more efficient farmers as well as sufficient support to help farmers
through the transition and the difficult natural conditions of the time (e.g. drought relief).
Schirmer found that the commercial agricultural sector was able to adapt to the transition
in a variety of ways. Some farmers opted for part-time farming, some sold excess land
and many converted to more financially viable crops – either more lucrative crops like
horticulture production or options requiring fewer inputs like game and livestock
farming.70 Statistics provided by the Department of Agriculture and Statistics South
Africa support Schirmer’s argument. The statistics show a small but consistent increase
in livestock production from 1978 to 1998, while the number of hectares under livestock
production decreased. The total volume of horticultural production also increased.
Another indication of the strategies utilised by the commercial agricultural sector to adapt
to the increasing liberalisation of the economy is the 27% decrease in farm size, from an
average of 1 356 hectares in 1988 to 1 320 hectares in 1992.71

A Markinor Survey conducted in mid-2000 found that 57% of farmers believed that
commercial farmers had adapted to a deregulated marketing environment and that 67%
believed that farming could still be pursued profitably in South Africa.72 According to
the commodity organisation, Grain South Africa, the “free-market system has stabilised
the production areas and the market is in a degree of equilibrium” and despite many
financial casualties the agricultural sector “has emerged leaner and more competitive”.73
The competitive index for agriculture drawn up by the Agricultural Business Chamber
showed a steady improvement from 0.16 in 1992 to 0.46 in 2000, and processed
agricultural products for export rose 16.79% in value in 1999/2000.74 In June 2002,
following the devaluation of the currency, agricultural exports had increased by 28.8%
from R17 424 million in 2000/01 to R22 341 million for 2001/02.75 The Department of
Agriculture’s 2002 review showed that the commercial agricultural sector’s income had
risen by 53% between June 2001 and June 2002.76

67
Mail & Guardian, “White farming groups critical of state intervention”, June 14 – 20, 2002
68
Cowling R, "Options for rural land use in Southern Africa: An Ecological Perspective", in A Harvest of
Discontent: The Land Question in South Africa, De Klerk M (Ed.), Idasa, Cape Town, 1991, p. 15
69
Schirmer S, “Policy visions and historical realities: Land reform in the context of recent agricultural
developments”, African Studies, 59, 1, 2000
70
Statistics provided by the Department of Agriculture and Statistics South Africa in “Agriculture
Historical Table”, Pretoria, 2000.
71
Farmworkers’ Research and Resource Project, Farm Labour Review, November 1996
72
Mbeki T, “Strong support from all side for meaningful land reform”, Land Info, Volume 8, no.1, 2001
73
Mail & Guardian, “White farming groups critical of state intervention”, June 14 – 20, 2002
74
Mail & Guardian, “White farming groups critical of state intervention”, June 14 – 20, 2002
75
Mail & Guardian, “Food prices rocket out of control”, September 13 – 19, 2002
76
Barnard D, Interview with Laurie Bosman, Deputy President of Agri South Africa, SAFM, September
20, 2002
 72

In fact, the commitment to economic liberalisation and the protection of property rights in
the 1996 Constitution enabled the white commercial agricultural sector to “stake its place
in the new South Africa on the claim of its efficiency in a non-racial capitalism, while
white farmers retain a de facto monopoly of resources and institutional, as well as
economic power in the countryside”.77 The confidence of the large-scale white
commercial agricultural sector is also evident in the sector’s response to and involvement
in land reform. Some white farmers have expressed that they are prepared to accept land
reform and aid emerging black farmers but, the broad sector has generally tried to
minimise reform. In late 2002, the Agri Business Chamber – which represents 90
businesses with a combined turnover of R23 billion per annum – conceded that the
response from members, to a call to participate in the linking of black farmers to
commercial farming, was poor.78 A Markinor Survey in 2000 found that 63% of white
farmers thought that land reform was indispensable for peaceful coexistence in South
Africa and that 82% felt that land reform would fail without input from commercial
farmers. However, only 6% felt that the government’s agricultural policies were in touch
with the realities experienced by people actually involved in agriculture.79

In terms of African agriculture, the expected revival did not take place. A lack of
resources and a harsh and competitive agricultural environment were partly to blame. A
key report on a comprehensive strategy for the agricultural sector, released late in 2001,
cites uncertainty in land ownership and lack of access to land as the main factors that
hinder black empowerment in the agricultural sector.80 Further obstacles identified in the
report include skills deficiencies, the absence of suitable markets and unrealistic business
plans. More fundamentally, the report says that agricultural liberalisation policies did not
address the fact that systematic support to white farmers had placed them in a dominant
position that they were able to maintain. Emerging farmers, without access to statutory
privileges, could not compete with the dominant and established agricultural sector.

After eight years of land and agrarian reform, South Africa still has two very distinct
agricultural sectors, similar to the Zimbabwean sector that began to disintegrate in mid
2000 (i.e. a large-scale white commercial agricultural sector and impoverished small-
scale black farmers in the former homelands). After two decades of land reform,
Zimbabwe still had an unequal economy where 4 500 (white) commercial farmers on 11
million hectares of privately owned land produced 70% of the value of agricultural
output, and one million households engaged in small-scale farming in communal or
resettled lands. It is in this context that the South African Department of Agriculture
proposed to renew statutory controls and re-regulate agricultural marketing in July 2002.
Penned by the Deputy Director General of Agriculture, the document envisaged the
creation of an “independent national statutory institution representative of all major
commodity groupings in the sector, to carry out the functions that the market would not
77
Bernstein H, “Social change in the South African countryside? Land and production, poverty and
power”, PLAAS, UWC, 2000
78
Business Day, “Black Farmers are the Future”, August 24, 2001
79
Mbeki T, “Strong support from all sides for meaningful land reform”, Land Info, Volume 8, no.1, 2001
80
At this stage less than 2% of agricultural land had been redistributed. Source for report Business Day,
“Black Farmers are the Future”, August 24, 2001
 73

be willing or able to do on its own”.81 The document was heavily criticised by the former
Minister of Agriculture and Land Affairs, Derek Hanekom, who said that “returning to
market controls . . . would undermine our hard-won competitiveness and would not be in
the interest of the economy”.82 Representatives from (white) organised agriculture called
the document “outlandish” and “outmoded”. Predictably, the National African Farmers’
Union expressed support for the policy shift arguing that government intervention was
necessary to “level the playing fields”.

5. Agriculture in the former homelands

On the other hand of the social equation, Apartheid policies have forced 15 million83
Africans into the overcrowded former homelands where poverty is widespread.
Estimates indicate that 40% of the former homelands’ population live below the
household subsistence level.84 In the Ciskei, for example, Operation Hunger was feeding
150 000 people per day in 1984, and estimated that 62% of children in the homeland
were malnourished.85 As early as 1953, the Commission for the Socio-Economic
Development of the Bantu Areas (Tomlison Commission) concluded that the existing
homeland areas could accommodate only 307 000 full-time farming families (51% of the
population at the time). Between 1919 and 1974, the homeland population increased by
280%, thereby exacerbating problems related to overcrowding.86 Given the absence of
good infrastructure and limited access to markets, credit, land and water, agricultural
production in the former homelands steadily declined throughout the 1970s and 1980s.
Agricultural output in the homelands, for example, declined from two bags of cereal per
capita in 1919/1923 to 0.55 bags in 1971/1974. By the early 1990s, homeland areas
produced only 6% of the gross value of agricultural production – little of which reached
commercial markets.87 An increase in commercial agricultural production from R56.2
million in 1970 to R163 million in 1985 did occur, but this mostly took place within the
South African Development Bank’s estate schemes.88 In 1994, farming in the homelands
represented about 10% of national agricultural output.89

81
Mail & Guardian, “White farming groups critical of state intervention”, June 14 – 20, 2002
82
Mail & Guardian, “Agriculture officials sent mixed messages”, July 19 – 25, 2002
83
Figure for 1994.
84
Porteus D, “Land Reform: Potential and Priorities for South Africa”, Paper presented at a conference of
the Newick Park Initiative, Land Reform and Agricultural Development, UK, October 1990, Jubilee Centre
Publications
85
Turshen M, “Food and Hunger in the Ciskei”, World Recession and the Food Crisis in Africa, Lawrence
P (Ed.), James Currey, London, 1986
86
Porteus D, “Land Reform: Potential and Priorities for South Africa”, Paper presented at a conference of
the Newick Park Initiative, Land Reform and Agricultural Development, UK, October 1990, Jubilee Centre
Publications
87
Porteus D, “Land Reform: Potential and Priorities for South Africa”, Paper presented at a conference of
the Newick Park Initiative, Land Reform and Agricultural Development, UK, October 1990, Jubilee Centre
Publications
88
Schirmer S, “Policy visions and historical realities: Land reform in the context of recent agricultural
developments”, African Studies, 59, 1, 2000
89
Lodge T, Politics in South Africa, David Phillip, Cape Town, 2002, p. 70 - 75
 74

A degree of state support was extended to homeland farmers before 1994, mainly through
the South African Development Bank – between 1987 and 1992, 25 000 farmers each
received R50 000 from this source.90 The costs of supporting these farmers were very
high and met with limited success. The biggest successes were achieved with small-scale
sugarcane growers in KwaZulu-Natal.91 Policies of agricultural liberalisation and
deregulation also meant a loss of state support for small-scale farmers in the homelands.
In Bophuthatswana, for example, support institutions that provided resources to a small
group of elite farmers were weakened and subsidies were reduced. AGRICOR, the major
institution of support in Bophuthatswana, was phased out in 1994 and replaced by
AGRISERVE. AGRICOR previously provided loans to farmers via AGRIBANK, cheap
access to farming inputs such as seed and fertiliser and in the case of state farms provided
the heavy machinery and implements required for farming. AGRICOR’s functions were
supposed to be taken over by the Department of Agriculture, but by early 2000 there were
almost no extension services in the area.92

As suggested estimates indicate very low levels of agricultural production in former

homeland areas. Estimates for the Ciskei indicate that only 8% of the former homeland’s
inhabitants were engaged in subsistence farming in the 1980s, 30% of whom could be
classified destitute. Furthermore, only 36% of the income earned by residents of the
Ciskei came from inside the former homeland in the 1980s, whereas commuters or
migrant workers earned 64% of income.93 However, a number of factors make it
extremely difficult to obtain accurate production statistics for the former homelands.
Firstly, as Beinart94 points out, because it is difficult to quantify production in an agrarian
system where the producers consume much of the produce. Secondly, Beinart points out
that surveys tend not to take account of the range of crops produced. In the Transkei, for
example, surveys often omit at least two important crops – marijuana and wattle. Beinart
argues that these crops do not necessarily have cash value (although marijuana probably
does95) but that the cost of not producing these crops would be high. With regard to
wattle, Beinart explains that “in itself, the cash value of the trees is not significant. But
the costs of not having then – both the extra labour costs involved in collecting firewood
and the financial costs of purchasing fuel – can be very high”.96 In a very interesting
study conducted in the maize producing Willowvale district of the former Transkei, in

90
Lodge T, Politics in South Africa, David Phillip, Cape Town, 2002, p. 70 - 75
91
See next section on small-scale versus large-scale farming for more detail.
92
Discussion of AGRICOR from Mathoho M & Schmitz T, Poverty, civil society and patronage: A study
of two farmers’ associations in North West Province, Centre for Policy Studies, Report no. 80, JHB, June
2001
93
Turshen M, “Food and Hunger in the Ciskei”, World Recession and the Food Crisis in Africa, Lawrence
P (Ed.), James Currey, London, 1986
94
Beinart W, “Transkeien smallholders and agrarian reform”, Journal of Contemporary African Studies,
Vol. 11, no. 2, 1
95
For an account of the cash value of marijuana crops as well as the impact of marijuana production on
rural poverty in South Africa see Leggett T, Rainbow Vice, David Phillip, Cape Town, 2001, p. 22 – 40 &
178 - 179
96
Beinart W, “Transkeien smallholders and agrarian reform”, Journal of Contemporary African Studies,
Vol. 11, no. 2, 1
 75

2000, McAllister97 argues that the conventional view – that subsistence agriculture in the
Transkei is very unproductive – is based on survey data that is “incomplete”, “unreliable”
and “utterly misleading”. By questioning the meaning of basic words like harvest, maize,
and even bag, McAllister shows that past survey evidence probably underestimates
production levels and the role that agriculture plays in the lives of these communities.98

In the homelands, approximately 1.7 million households had access to an average of

between five and eight hectares of farming land, but about 70% of these used less than
one hectare of their land allocation.99 Village level studies indicate that the average
landholding in the former homelands is no higher than 1.5 hectares per household and
that around one third of rural households have no access to land.100 In comparison,
small-scale farmers/households in Zimbabwe’s communal areas have access to an
average of two hectares of arable land, half a hectare for residential land and
approximately 15 hectares of grazing land.101 Only a small minority of the homeland
population derives a significant part of their income from agricultural activities.
Agricultural production contributed an average of R171 per annum to homeland
households’ incomes in 1985 and agricultural earnings were a mere 10% of total
household earnings.102 Figures from the Transkei indicate that the contribution of
farming to family income has steadily decreased over the last couple of decades and that
poverty has increased significantly.103 In 1994, only approximately 3% of the homeland
population could make a living from farming and those with access to external off-farm
income were the most likely to use their land fully.104 This is supported by a 1976 study
conducted in the Transkei, which found a strong correlation between access to wage
income and agricultural output – the higher the income from non-agricultural sources, the
higher the agricultural output.105
97
McAllister P, Maize yields in the Transkei: How productive is subsistence cultivation?”, Occasional
Paper Series, Number 14, PLAAS, UWC, 2000
98
Examples include (1) for cultural reasons people in the area tend to understate their yields. (2) The land
area under cultivation differs significantly each year. (3) Maize is seldom the only crop grown, but is the
only crop counted in previous surveys. (4) Most families collect green maize prior to the actual harvest and
this is not included in survey material. (5) When asked “how much maize did you harvest” respondents
only provided information of the maize “harvested” in the period May to June that was threshed and stored
and did not include the maize used for household consumption or the lesser quality maize used to feed their
animals. (6) There are major issues around measuring, with some “bags” literally much bigger than others,
and others using sleds or baskets to measure.
99
Schlemmer L, “The situation in South Africa with special reference to rural productivity”, in Vorster S,
Land Reform in Southern Africa, Conference Paper, Democratic Union of Africa, Cape Town, 2001, p. 41
100
Porteus D, “Land Reform: Potential and Priorities for South Africa”, Paper presented at a conference of
the Newick Park Initiative, Land Reform and Agricultural Development, UK, October 1990, Jubilee Centre
Publications
101
Moyo S, Rutherford B & Amanor-Wilks D, “Land reform and changing social relations for farm
workers in Zimbabwe”, Review of African Political Economy, 84, 2000
102
Schirmer S, “Policy visions and historical realities: Land reform in the context of recent agricultural
developments”, African Studies, 59, 1, 2000
103
Beinart W, “Transkeien smallholders and agrarian reform”, Journal of Contemporary African Studies,
Vol. 11, no. 2, 1
104
Schlemmer L, “The situation in South Africa with special reference to rural productivity”, in Vorster S,
Land Reform in Southern Africa, Conference Paper, Democratic Union of Africa, Cape Town, 2001, p. 41
105
Beinart W, “Transkeien smallholders and agrarian reform”, Journal of Contemporary African Studies,
Vol. 11, no. 2, 1
 76

Nevertheless, agriculture and access to land continues to play an important role in general
economic survival as is evidenced in Cross et al’s106 findings on the importance of garden
plots. Cross et all identified a trend towards cultivating high value crops like vegetables
on garden plots. Vegetables require less labour time (i.e. no processing) than maize, and
by substituting vegetables rather than staples for what they would otherwise buy, these
families saved both labour time and income. Thus, while these households were not
integrated into the cash economy they continued to depend on agriculture for their
economic survival. What is also important (and according to the 1992 SALDRU survey)
is that the poorest 20% of households derived 35% of their income from agricultural
resources, which was significantly higher than the average of 15% for all households.107
Furthermore, although agricultural production is an important aspect of land reform,
policies need to take account of the intrinsic value of land (discussed in chapter one).
People demand land for reasons other than agricultural production - residential land,
justice, to achieve a sense of belonging, to build or maintain identity, as a pension scheme
for old age, and/or to enhance overall household income.

In terms of agricultural production, significant variations exist between former

homelands based primarily on the differences in natural resource distribution, which, in
turn, have an effect on household earnings and the nature and effect of land reform
policies. The Eastern Cape and KwaZulu-Natal, with better agricultural land, earned
more from agriculture than the areas in the Northern and North West Provinces. In the
Transkei in 1985, agriculture made up 31% of household earnings, while the figures for
Qwa-Qwa and KwaNdebele were 4% and 1% respectively.108

The populations of the former homelands are highly differentiated in terms of gender,
class, and agricultural production, as well as, between urban and rural, as a result of
forced removals and displaced urbanisation. A large proportion of the homeland
population is not rural, based on “any meaningful criteria” and is concentrated in “sites of
displaced urbanisation, in many cases supplying labour to large and small industry”.109
Furthermore, some 40% of homeland populations reside in urban environments (85% in
the case of Qwa Qwa, KaNgwane and KwaNdebele).110 As Weiner et al111 argued, it is
the failure of policy developers to take adequate account of the significant variations in

106
Cross C, Mngadi T, Sibanda S & Jama V, “Making a living under land reform: weighing up the chances
in KwaZulu-Natal”, Land, Labour and Livelihoods in Rural South Africa, Volume 2, Lipton M, Ellis F &
Lipton M (Eds.) Indicator Press, December, 1996
107
Schirmer S, “Policy visions and historical realities: Land reform in the context of recent agricultural
developments”, African Studies, 59, 1, 2000
108
Schirmer S, “Policy visions and historical realities: Land reform in the context of recent agricultural
developments”, African Studies, 59, 1, 2000
109
Bernstein H, “Social change in the South African countryside? Land and production, poverty and
power”, PLAAS, UWC, 2000
110
Porteus D, “Land Reform: Potential and Priorities for South Africa”, Paper presented at a conference of
the Newick Park Initiative, Land Reform and Agricultural Development, UK, October 1990, Jubilee Centre
Publications
111
Weiner D, Levin R and Chimere-Dan O, “Understanding the Bantustans through Socio-Economic
Surveys” in Levin R, Weiner D, No More Tears . . . Struggles for Land in Mpumalanga, South Africa,
Africa World Press Inc., Asmara, Eritrea, 1997
 77

people’s socio-economic condition, skills, desires and aspirations, that contribute to

failed reform/ development policies. It is, therefore, imperative that the agricultural
policies developed and implemented in South Africa take account of these differences.
For example, the large proportion of the former homeland population that is effectively
urban, probably do not require/ demand land for agricultural production.

6. The Efficiency Debate: Small-scale versus large-scale agriculture

“The discourses of economists have come to dominate debate of agricultural policy in

South Africa, subordinating issues of democratic politics to contending calculations of
efficiency while simultaneously sowing ideological confusion and demoralisation.”112

The debate around agrarian and land reform in South Africa has largely been defined by
two opposing positions, those advocating large-scale farming and those advocating small-
scale farming. The limited nature of this debate has ensured that many of the
complexities around land and agrarian reform have been omitted from the development
of land reform policies and strategies that aim to increase agricultural production.

6.1. Advocating large-scale agriculture

The belief in the superiority and greater efficiency of large-scale farming has a long
history dating back to colonial land and agrarian policies. In South Africa, it has
“become so deeply embedded in the subconscious that it is beyond the powers of
persuasion even of the World Bank experts to convince many practitioners otherwise”.113
Many South African agricultural and economic researchers continue to have (often
justifiable) reservations about small-scale farming.114 One of the arguments most
frequently employed against land reform based on small-scale agriculture (and land
reform in general) - particularly in South Africa and Zimbabwe - is that countries’
economies depend heavily on the export earnings generated by large-scale farming. Some
argue that small-scale farmers tend to consume their own output and therefore reduce the
marketed surplus.115 Furthermore, if export oriented large-scale farms were redistributed
to small-scale farmers (understood as subsistence farmers), it would have a negative
impact on the economy in terms of export earnings and a consequent decline in the trade
balance.116 This argument is questionable in South Africa where statistical evidence
points to the fact that quite a large number of white farmers are making no significant
contribution to agricultural production. Towards the late 1970s, the top 5% of white farm
units accounted for about 45% of white farmland, while the share of 50% of white farm
units was a mere 5% of white farmland. The top 20% of white farm units accounted for

112
Bernstein H, “Social change in the South African countryside? Land and production, poverty and
power”, PLAAS, UWC, 2000
113
Cliffe L, “Land Reform in South Africa”, Review of African Political Economy, No. 84, 2000
114
See the following arguments for details
115
Hatch G, “Livestock and Rural Livelihoods in KwaZulu-Natal”, Land, Labour and Livelihoods in Rural
South Africa, Volume 2, Lipton M, Ellis F & Lipton M (Eds.), Indicator Press, December, 1996
116
McKenzie C, “Providing access to commercial farming in the Western Cape: An analysis of the fiscal
performance of alternative farm models”, Land, Labour and Livelihoods Volume 1, Lipton M, Ellis F &
Lipton M (Eds.), Indicator Press, December, 1996
 78

about 75% of white farmland. The top 1% of farm enterprises produced 16% of total
farm income in 1983, the top 6% produced 40% and, about one third produced three
quarters of the total income.117 Studies, in 1986, indicated that 590 farmers generated
16% of gross agricultural income, 3 500 farmers generated 40% and 17 000 farmers
generated 75%. Further studies in 1988, indicated that 70% of farmers generated only
25% of income, and 50% of farmers generated only 10% of income.118

Secondly, it is argued that well over half the rural population of South Africa depends on
agricultural wage employment for survival and, therefore, investment in “labour
intensive” and “internationally competitive” farming will generate more rural
employment than land reform based on small-scale production.119 Empirical evidence for
the above argument is drawn mainly from the capital and labour intensive farming
regions – high rainfall and irrigated areas in the north-eastern Lowveld, the Western Cape
and the most fertile parts of the eastern Highveld.120

Thirdly, many authors121 maintain that Africans are not interested in farming (particularly
younger people) and that those who are interested in farming have lost the skills and
resources required to farm. The argument is that Africans are not likely to return to rural
work because decades of participation in urban labour markets, lack of opportunities in
rural areas, poverty and the experience of dispossession have destroyed agricultural skills
and accustomed people to a lifestyle with regular incomes.

Fourthly, there is the economies of scale argument, which points to the existence of
lumpy inputs that cannot be used efficiently below a certain minimum level, such as
machinery and management skills. The argument is that lumpy inputs reach their lowest
cost of operation per unit in large areas.122 Fifthly, it is argued that large-scale farmers
are superior to small-scale farmers in their ability to adopt new technology.

Sixth, is the argument that small-scale farmers are more risk averse than large-scale
farmers are. Agriculture is, by nature, a risky enterprise. Thomas123 argues that the risk
associated with agriculture is amplified in the case of small-scale or resource poor
farmers, which suggests an inability and/or unwillingness to increase investment. The

117
Statistics from the 1970s and early 1980s from Mbongwa M, “The Political Economy of Post-1960
Dispossession in South Africa, Paper presented at a conference of the Newick Park Initiative, Land Reform
and Agricultural Development, UK, October 1990, Jubilee Centre Publications
118
Figures from Venter A, “Die herverdeling van landbougrond in Suid Afrika”, Politieke verandering in
Suid Afrika, Kriek D & Labuschagne J (Eds.), RGN, Pretoria, 1996
119
Macroeconomic Research Group (MERG), Making Democracy Work: A Framework for
Macroeconomic policy in South Africa, Belville, UWC, 1993
120
Bernstein H, “Social change in the South African countryside? Land and production, poverty and
power”, PLAAS, UWC, 2000
121
For example Cross C, Mngadi T, Sibanda S & Jama V, “Making a living under land reform: weighing
up the chances in KwaZulu-Natal”, Land, Labour and Livelihoods in Rural South Africa, Volume 2, Lipton
M, Ellis F & Lipton M (Eds.) Indicator Press, December, 1996
122
Van Zyl J, "The farm-size efficiency relationship", Agricultural Land Reform in South Africa, Van Zyl
J, Kirsten J & Binswanger H (Eds.), Oxford University Press, Cape Town, 1996
123
Thomas D.J.J, A critical assessment of the promotion of small-holder agriculture in South Africa, MA,
University of the Witwatersrand, Johannesburg, 1994
 79

argument is that small-scale/resource poor farmers derive a larger proportion of their

income from farming than is the case with large-scale farmers, who generally diversify
their investment portfolios. A 1974 Kenyan survey, for example, found that innovation
in the small-scale agricultural sector has been undertaken principally by the wealthier
farmers who were able to overcome the capital constraints and risk associated with
innovative investment.124 A similar phenomenon was evident in Mozambique in the
early 1980s, where part-time farmers with access to non-farm income invested heavily in
agriculture, while poor farmers tended to spend their income on their families’ needs and
not on agricultural investment.125 Empirical evidence from Kenya supports reservations
about a small-scale agricultural strategy. In 1976, agriculture employed 85% of Kenya’s
labour force, contributed 29% of the GDP and accounted for 69% of total exports.126
Land reform policies had created 1.5 million small farms (average 2.3 hectares)
accounting for 11 million people. Although smallholders’ share of agricultural
production increased from 20% in 1960 to 51% in 1976, smallholder production still
lagged behind the production on large-scale farms.127

Finally, it is argued that redistributing land to small-scale farmers would place an

insurmountable financial burden on the government. A small-scale agricultural strategy
would have to include the provision of physical infrastructure, training, extension
services, credit and financial grants.128 Such support would be required because small-
scale farmers would be unable to compete with large-scale farmers in a free-market
system in terms of access to land, agricultural inputs, credit, high transaction costs,
information and technology and, would be forced out of the agricultural sector unless
they received assistance.129

Examples of this can be found in the emerging small-scale farming sector in South
Africa. In many cases where small-scale farmers have been able to access land, they have
been unable to engage in productive activity. In some cases, small-scale farmers have not
had adequate resources after land purchase to clear the acquired land for productive use
and certainly have not had the capital necessary for investment and development. Lack
of access to water is a major impediment. The lack of access to infrastructure, to
transport, to necessary equipment and agricultural supplies and, the distance from
markets are further limiting the efforts of South Africa’s small-scale farmers. There are
cases in Gauteng, for example, where farmers have to travel 340km to obtain fertiliser,

124
Peterson S, “Neglecting the Poor: State Policy Toward the Smallholder in Kenya”, in Commins S.K,
Lofchie M.F & Payne R (Eds.), African Agrarian Crisis, Lynne Rienner Publishers, Colorado, 1986
125
Wenzel H.J & Weyl U, The Sector of Small-Scale Farmers in Mozambique, August 1992
126
Anderson M.B, "Kenya: Eagerton College", Gender Roles in Development Projects, Overholt C,
Anderson M.K, Cloud K & Austin J.E (Eds.), Kumarian Press, Connecticut, 1985
127
Anderson M.B, "Kenya: Eagerton College", Gender Roles in Development Projects, Overholt C,
Anderson M.K, Cloud K & Austin J.E (Eds.), Kumarian Press, Connecticut, 1985
128
McKenzie C, “Providing access to commercial farming in the Western Cape: An analysis of the fiscal
performance of alternative farm models”, Land, Labour and Livelihoods Volume 1, Lipton M, Ellis F &
Lipton M (Eds.), Indicator Press, December, 1996
129
Lyne M & Ortmann G, “Estimating the potential for creating additional livelihoods on commercial
farmland in KwaZulu-Natal”, Land, Labour and Livelihoods Volume 1 Lipton M, Ellis K, & Lipton Merle
(Eds.), Indicator Press, December, 1996
 80

seed and diesel.130 In terms of credit, large-scale farmers are considered less risky by
debtors and, therefore, acquire easier access to formal lending institutions at lower
interest rates.131 Furthermore, land reform will have to compete with other sectors of the
economy that require government resources such as education, housing, health and
service provision.

6.2. Countering the arguments for large-scale agriculture

Some proponents132 of small-scale agriculture argue that small-scale farming will only
result in a decline in the trade balance if export orientated agriculture is the main target of
land reform policies and/or if land reform beneficiaries engage in subsistence farming
and abandon the production of valuable crops (which has not been the case in many
Asian, African and Latin American countries). In a study to estimate the effects of a
change in the distribution of farm size on agricultural livelihoods in KwaZulu-Natal,
Lyne and Ortmann found that land redistribution from large to smaller farms could, other
things being equal, produce a moderate increase in rural livelihoods without diminishing
the range and quantity of agricultural commodities currently produced in KwaZulu-
Natal.133

Bernstein134 questions the MERG report’s claims that large-scale farming could generate
more employment and argues that this is probably only applicable to highly fertile,
capital-intensive agricultural areas, particularly the Western Cape. However, in the
Western Cape, where farm employment grew by 3.3% between 1980 and 1992, average
wages per worker declined by 12% in real terms. Bernstein argues that this reflects the
tendency in the “most dynamic sectors of capitalist agriculture to reduce the ratio of
permanent farm workers to seasonal and casual workers, who are subject to greater
insecurity, lower rates of pay and much lower annual earnings”.135

It is clear from numerous case studies and surveys136 that many rural Africans
(particularly younger people) are not interested in farming. However, in an improved
environment, which includes better service provision and security of tenure, this might
change. Furthermore, in the absence of economic opportunities elsewhere in the South
African economy, small-scale farming might be the only available livelihood strategy for
some. Farm workers, labour tenants, female subsistence farmers and the small number of
commercial African farmers have retained agricultural skills. Skills training programmes
130
Mosoang K & Manye Mangene V, "Not yet uhuru for emerging farmers", Land and Rural Digest, Vol.1,
No.3, October/ November 1998
131
See chapter 4
132
Lipton M, De Klerk M & Lipton M, “Introduction”, Land, Labour and Livelihoods, Volume One,
Indicator Press, Durban, 1996
133
Lyne M & Ortmann G, “Estimating the potential for creating additional livelihoods on commercial
farmland in KwaZulu-Natal”, Land, Labour and Livelihoods Volume 1 Lipton M, Ellis K, & Lipton Merle
(Eds.), Indicator Press, December, 1996
134
Bernstein H, “Social change in the South African countryside? Land and production, poverty and
power”, PLAAS, UWC, 2000
135
Bernstein H, “Social change in the South African countryside? Land and production, poverty and
power”, PLAAS, UWC, 2000
136
See next section, Who wants to farm?
 81

and extension services to small-scale farmers will of course also address this problem.
Finally, it is not necessary for small-scale agriculture to provide total livelihoods, and it
would be sufficient if it made a significant contribution to overall household income.137

Binswanger138 argues that genuine economies of scale exist only in plantation crops
(sugarcane, tea and bananas) and that such economies of scale emerge from economies of
scale in processing and transport and not from farming. Out-grower and contract farming
schemes, for example, sugarcane in South Africa, can circumvent such economies of
scale. In terms of lumpy inputs, machine rental, for example, can allow small-scale
farmers to circumvent the economies of scale advantages.139 Others argue that an
efficiency problem of large-scale agriculture is, in fact, the under-utilisation of
machinery. “A combine harvester can permit uniform harvesting of a grain crop in two
days; but if the machine then remains idle for the year, the social cost per ton harvested
may be much higher than would be incurred by harvesting with hired labour and less
machinery, especially if there is unemployment”.140

In terms of responsiveness of small-scale farmers to technological change, studies

conducted in India, Brazil and the Philippines indicate that small-scale farmers are at
least as adaptive to technological change as their large-scale counterparts.141 The
adoption of green revolution technologies by small-scale farmers in Asia, Latin America
and North Africa also indicate that small-scale farmers are adaptive to technological
change.142 The fact that small-scale farmers in Kenya lagged behind large-scale farmers
in terms of production can, in part, be explained by the fact that the Kenyan
government’s agricultural policy at the time promoted the interests of large-scale farmers
and the more progressive strata of smallholders.143

The other objections to small-scale agriculture are not as easily met. As long as small-
scale farmers are poor and marginalised, they will continue to be averse to risk.
Furthermore, a small-scale farming strategy probably cannot be successful without
significant government spending to develop and support the sector. This places an
enormous financial burden on the state but it certainly is not insurmountable. As will be
discussed, empirical evidence suggests that the success of small-scale farming is partially
determined by the level of state and/or institutional support extended to farmers. Small-

137
Lipton M, De Klerk M & Lipton M, “Introduction”, Land, Labour and Livelihoods, Volume One,
Indicator Press, Durban, 1996
138
Binswanger H.P, Agricultural and Rural Development: Painful Lessons”, Address to the Agricultural
Economics Association of South Africa, Pretoria, September, 1994
139
El-Ghonemy M.R, "Large Estates: Issues in efficiency and employment", The Political Economy of
Rural Poverty, Routledge, London, 1990
140
Lipton M, De Klerk M & Lipton M, “Introduction”, Land, Labour and Livelihoods, Volume One,
Indicator Press, Durban, 1996
141
El-Ghonemy M.R, "Large Estates: Issues in efficiency and employment", The Political Economy of
Rural Poverty, Routledge, London, 1990
142
Binswanger H, "Patterns of Rural Development: Painful Lessons", in Agricultural Land Reform in
South Africa, Van Zyl J, Kirsten J & Binswanger H (Eds.), Oxford University Press, Cape Town, 1996, p.
21
143
Peterson S, “Neglecting the Poor: State Policy Toward the Smallholder in Kenya”, in Commins S.K,
Lofchie M.F & Payne R (Eds.), African Agrarian Crisis, Lynne Rienner Publishers, Colorado, 1986
 82

scale farmers in Tanzania, for example, were able to increase production between 1967
and 1978 – a period during which they received extensive state support. This included
the construction of market and transport systems to reach formerly isolated areas, crop
schemes and rural development programmes to generate capital, as well as the provision
of extension services and farm inputs to groups that were previously excluded.
Following the 1978 foreign exchange crisis in Tanzania and the consequent drop in donor
and foreign funding for the land reform programme, the Tanzanian government’s ability
to sustain this support was undermined and consequently production in the small-scale
agricultural sector decreased.144

6.3. Advocating small-scale agriculture

World Bank representatives145 in South Africa have consistently argued that a land
reform programme must address justice, equity and efficiency. Efficiency in agriculture
would be achieved by redistributing land to small-scale farmers.146 A number of South
African academics147 and researchers have also argued that land reform based on small-
scale farming would be uniquely able to achieve both equity and efficiency in South
Africa’s rural areas. Proponents of a land reform programme based on small-scale
agriculture have argued that large-scale farming undermines economic development, is
not sustainable, is ecologically destructive148 and uses resources (including labour)
inefficiently. They argue that the poor performance of the small-scale agricultural sector
in a number of countries, including South Africa, is the result of agricultural and
economic policies with an urban bias. Such policies take predominantly two forms and
are based on the assumption that large-scale farming is more efficient than small-scale
farming. The first version is anti-agricultural bias that involves policies to industrialise at
the expense of agriculture by worsening its terms of trade (e.g. Bulgaria and
Argentina).149 The second version is intra-agricultural bias that involves laws and
institutions that favour large-scale farming and discriminate against small-scale farming
(e.g. South Africa).

The result of policies with an urban bias is the emergence of large-scale mechanised
farms that are often not viable without continued state support (price supports, subsidies
and debt relief).150 The results are similar in state-controlled and free-market systems.

144
Mbilinyi M, "Restructuring Gender and Agriculture in Tanzania", African Perspectives on
Development, Himmelstand U, Kinyanjui K & Mburugu E (Eds.), James Currey Ltd, London, 1994
145
Notably Hans Binswanger a senior policy advisor for the World Bank on agriculture and natural
resource issues.
146
See Hart G, “The Agrarian Question and Industrial Dispersal in South Africa: Agro-Industrial Linkages
Through Asian Lenses”, in Bernstein H (ed.), The Agrarian Question in South Africa, Frank Cass, London,
Portland, 1996, for more on the World Bank’s commitment to small-scale farming.
147
Notably Johan Van Zyl, Frank Ellis and Merle and Michael Lipton. Michael Lipton has also worked
with the World Bank and as Director of Food Consumption and Nutrition Programme at the International
Food Policy Research Institute.
148
See section on environmental sustainability in chapter 2
149
Lipton M, De Klerk M & Lipton M, “Introduction”, Land, Labour and Livelihoods, Volume One,
Indicator Press, Durban, 1996
150
Binswanger H.P & Deininger K, “South African Land Policy: The legacy of history and current
options”, Paper presented to the World Bank & UNDP workshop, Swaziland, November 1992
 83

According to Binswanger151, one of the reasons for the failed collectivisation of

agriculture in communist countries was the assumption that large-scale farming is more
efficient than small-scale farming. Evidence from the Soviet Union (1970s) supports the
argument that collectivisation (a form of large-scale agriculture) can result in a decline in
agricultural production. According to Laird and Laird, however, the causes for decreased
agricultural production lie not so much in collectivisation or the size of farms, but in
“problems of farm organisation”, incentive structures, inappropriate technology and
“central interference in farm decision-making”.152 The authors point out that agricultural
production levels were maintained (or increased) in the Soviet Union in the 1920s partly
because Lenin’s policy was that collectivisation should be voluntary. It was only in
1928, after the introduction of forced collectivisation policies under Stalin’s leadership
that the first major crisis in agricultural production took place – a man-made famine in
which millions lost their lives. Production continued to decline in the 1930s due to
inefficiencies on the large-scale state farms, despite state investment in agriculture and
the development of rural areas. The authors explain the decline in agricultural production
as a result of the fact that peasants had little or no influence over the management and
operation of farms. The problem with collectivisation was, therefore, that human attitudes
and skills were not taken into account - i.e. farm management, workers’ skills and
incentives were not taken into account in agricultural policy formation. Whereas,
management and sufficient interest in, and motivation to farm, are crucial factors in the
success of agricultural enterprises.153

In market economies, Binswanger argues, the belief in the superiority of large-scale

agriculture led to costly policies and programmes (often unsustainable) to support large-
scale commercial agriculture. Similar policies in sub-Saharan Africa led to
unprecedented falls in per capita income and food production, a rise in unemployment
and fiscal and balance of payment deficits.154 In South Africa (predominantly intra-
agricultural) policies led to the emergence of an impoverished, almost non-existent small-
scale farming sector (African) and a large-scale capital intensive farming sector (white).
This led, not only to inequality, but was also economically irrational. South Africa failed
to utilise its increasing labour supply and, although the subsidised white large-scale farms
continued to provide food, they did so at an increasingly unsustainable cost.155

Proponents of a land reform/rural development programme based on small-scale

agriculture argue that this will lead to a decrease in poverty, an increase in employment,
greater equity and improved productive efficiency. The argument is based on three basic
tenets. The first is that small-scale farming is more labour intensive and generates more
employment than its large-scale counterpart. Because small farmers have less access to
capital and credit, labour constitutes a greater part of their input mix (i.e. substitute labour

151
Binswanger H.P, Agricultural and Rural Development: Painful Lessons”, Address to the Agricultural
Economics Association of South Africa, Pretoria, September, 1994
152
Laird R.D & Laird B.A, Soviet Communism and Agrarian Revolution, Penguin Books, 1970, p. 26 & 27
& 31 & 36
153
Laird R.D & Laird B.A, Soviet Communism and Agrarian Revolution, Penguin Books, 1970, p. 40 - 90
154
Binswanger H.P, Agricultural and Rural Development: Painful Lessons”, Address to the Agricultural
Economics Association of South Africa, Pretoria, September, 1994
155
See section on the White Commercial Agricultural Sector
 84

for equipment). It is also argued that increasing employment through small-scale

agriculture in South Africa will be cheaper and more extensive than through industry or
mining.156 This relates to the argument that small-scale farmers use resources more
efficiently. Van Zyl points out that numerous studies provide empirical evidence at the
micro-level of the existence of an inverse relationship between farm size and efficient
resource use.157 Secondly, small-scale agricultural growth can contribute to overall
economic development through increased employment and forward and backward
consumer linkages – particularly increased consumer demand for rural goods. It is
argued that small farmers tend to spend their money locally (in rural areas) whereas
richer farmers spend extra money on urban products.158

In addition, small-scale farmers produce more efficiently than their large-scale

counterparts because,
(a) they choose a wider variety of crops to reduce the risks associated with mono-
cropping,
(b) because of a constant supply of family labour they use their land productively for
larger parts of the year,
(c) labour relations are better organised because the owner is the operator and family
labour requires less administration and management and,
(d) family labour implies greater incentive because workers (family members) receive a
share of the profits.159
Proponents, of the greater productive efficiency of small-scale farmers, rely largely on
international empirical evidence to support the argument for the inverse relationship
between farm-size and efficiency.

6.4. Empirical evidence for the greater efficiency of small-scale farming

Empirical evidence for the inverse relationship is drawn from a wide range of studies and
countries in Sub-Saharan Africa, Asia and Latin America. El-Ghonemy argues, based on
a number of studies, that with slight variation, output per unit of land in all countries
declines systematically with the rise in farm size.160 The studies include;
(a) A joint study by Peter Donner and Don Kenel, in 1971, in which the findings of
surveys in seven countries were analysed. These are India 1955 – 60, Japan 1960,
Mexico 1960, Brazil 1963, the Philippines 1963 –64, Taiwan 1965 and Colombia
1996.

156
Lipton M, De Klerk M & Lipton M, “Introduction”, Land, Labour and Livelihoods, Volume One,
Indicator Press, Durban, 1996
157
Van Zyl J, "The farm-size efficiency relationship", Agricultural Land Reform in South Africa, Van Zyl
J, Kirsten J & Binswanger H (Eds.), Oxford University Press, Cape Town, 1996, p. 266
158
Lipton M, De Klerk M & Lipton M, “Introduction”, Land, Labour and Livelihoods, Volume One,
Indicator Press, Durban, 1996
159
Points (a) and (b) from Lipton M, De Klerk M & Lipton M, “Introduction”, Land, Labour and
Livelihoods, Volume One, Indicator Press, Durban, 1996, and points (c) and (d) from Van Zyl J, "The
farm-size efficiency relationship", Agricultural Land Reform in South Africa, Van Zyl J, Kirsten J &
Binswanger H (Eds.), Oxford University Press, Cape Town, 1996
160
El-Ghonemy M.R, "Large Estates: Issues in efficiency and employment", The Political Economy of
Rural Poverty, Routledge, London, 1990
 85

(b) A study of seven Latin American countries; Argentina, Brazil, Chile, Ecuador,
Guatemala and Peru, carried out between 1963 and 1966, by CIDA.
(c) Berry and Cline’s 1974 cross-country comparison with the use of regression analysis
from 30 countries and,
(d) Giovanni Cornia’s 1985 comprehensive analysis of data taken from 15 countries by
the United Nations Food and Agriculture Organisation (FAO).
These studies also indicate that labour intensity per unit of land is positively correlated
with land use intensity and negatively correlated with farm size. The Liptons161 draw
similar conclusions from evidence in Kenya, Taiwan, the Punjab, Zimbabwe, South
Korea and mainland China.

For example, in Tanzania, where agriculture contributes approximately 46% of the GDP
and 75% of total export earnings (1991), agriculture is carried out primarily by small-
scale farmers on plots averaging less than 2.2 hectares.162 Kenya has also witnessed an
increase in the number of economically successful small-scale farmers following policies
of land registration and consolidation. By 1986, on holdings under five hectares, output
per hectare was 19 times higher and employment 30 times greater than on holdings over
eight hectares.163 Kenya provides a particularly interesting example, because the Kenyan
government consistently argued (throughout the 1960s and 1970s) that large-scale
farming was more efficient than small-scale farming. Kenyan authorities also believed
that the maintenance of the large-scale commercial agricultural sector in Kenya was
crucial for economic growth and sustainability, for the export economy, as well as for
food security. Agricultural policies were designed to assist and benefit large-scale
farmers on low-density schemes, while small-scale farming on high-density schemes was
discouraged. Despite this policy bias, the Kenyan government’s Economic Appraisal of
Settlement Schemes showed that from 1964 to 1968, farm profits per hectare grew
considerably faster in small-scale farming areas than in large-scale farming areas and,
that although small-scale farmers began the period with lower profits, they ended with
higher profits.164 The results in two further categories of comparison – the proportion of
farms achieving a positive cash surplus and the proportion reaching target incomes –
failed to reveal any superiority in the performance of large-scale/low density settlement
schemes.165 By 1974, the Kenyan authorities had changed their policy and investment
approach to focus on the development of small-scale agriculture.

In the first decade of Zimbabwe’s independence, small-scale maize and cotton production
increased dramatically. Prior to independence, small-scale farmers in Zimbabwe’s
communal areas contributed approximately 10% of total maize and less than 25% of

161
Lipton M, De Klerk M & Lipton M, “Introduction”, Land, Labour and Livelihoods, Volume One,
Indicator Press, Durban, 1996
162
Banyikwa W.F, "Construction on Subsistence Use of Natural Resources in Tanzania", Alternative
Strategies for Africa Volume 2, Suliman M (Ed.), IFAA, London, 1991
163
Peterson S, “Neglecting the Poor: State Policy Toward the Smallholder in Kenya”, in Commins S.K,
Lofchie M.F & Payne R (Eds.), African Agrarian Crisis, Lynne Rienner Publishers, Colorado, 1986
164
Leo C, Land and Class in Kenya, Chapter 8, University of Toronto Press, Toronto, 1984
165
Leo C, Land and Class in Kenya, Chapter 8, University of Toronto Press, Toronto, 1984
 86

cotton production. Eight years later, this had increased to 40% and 50% respectively.166
In the 1980s, Zimbabwe’s small-scale cotton and maize farmers were also responsible for
a “mini productive revolution”.167

During the colonial period in Mozambique, small-scale farmers produced one third of
marketed yields and three quarters of total agricultural production.168 Following
independence, the Mozambican government embarked on a policy of agricultural
nationalisation and consequently, approximately 90% of agricultural funds were spent on
the development of large-scale agriculture, while the small-scale sector was almost totally
neglected. Nevertheless, when the Mozambican government admitted to the failure of
the large-scale farm sector in 1983, the small-scale sector was still producing one third of
all agricultural products.169 By 1996, small-scale farmers in Mozambique accounted for
50% of the GDP and a significant share of Mozambican exports.170

In 1973, in Chile, a CIDA report showed that family units - i.e. those with enough land to
maintain a family - produced 30% more per arable hectare than medium units employing
up to 12 workers and 50% more than those with more than 12 workers.171 By 1958, the
ejido sector in Mexico accounted for 28 058 communities and 3.1 million households.
Heath argues that given the vast area occupied by ejidos (family farms operated on partly
communal basis), it is highly probable that if these ejidos were less efficient than (large)
private farms they would act as a drag on overall production. Nevertheless, agricultural
output rose faster than the population, enabling Mexico to become self-sufficient in basic
foodstuffs by the late 1950s.172

Following a land reform programme based primarily on the development of small-scale

agriculture, Taiwan achieved significant economic growth (an average rate of 9% from
1952 to 1990) and greater equity (the land reform programme of the 1940s and 50s made
landowners out of almost half of Taiwan’s rural households).173 Data on a hundred Polish
state farms, in the late 1960s, shows that when divided into groups according to size, on
all accounts measured, the smaller farms are more efficient than the larger farms.174 The
increases in Egyptian agricultural production, referred to earlier, occurred in a context
where the number of smallholdings (0.42 hectares) nearly doubled, while the number of
large-scale landholdings decreased considerably, in terms of number, as well as in total

166
Maganya E.N, "Of Large Scale and Small Farms", African Perspectives on Development , Himmelstand
U, Kinyanjui K & Mburugu E (Eds.), James Currey Ltd, London, 1994
167
Rukuni M, “The Evolution of Agricultural Policy”, Zimbabwe’s Agricultural Revolution, Rukuni M &
Eicher C.K (Eds.) University of Zimbabwe Publications, 1994
168
Wenzel H.J & Weyl U, The Sector of Small-Scale Farmers in Mozambique, August 1992
169
Wenzel H.J & Weyl U, The Sector of Small-Scale Farmers in Mozambique, August 1992
170
Tanner C, "The Land Question in Mozambique: Elements for Discussion", Land Tenure Service, FAO
Rural Development Division, December 18 1996
171
Castillo L & Lehmann D, “Agrarian Reform and Structural Change in Chile 1965 to 1979”, in Agrarian
Reform in Contemporary Developing Countries, Ghose A.K (Ed.), St. Martin’s Press, New York, 1983
172
Heath J.R, "Evaluating the Impact of Mexico's Land Reform on Agricultural Productivity", World
Development, Vol.20, No.5 1992
173
Adams D.W, Chen H.Y & Lamberte M.B, “Differences in Used Rural Financial Markets in Taiwan and
the Philippines”, World Development, 21 (4), 1993
174
Laird R.D & Laird B.A, Soviet Communism and Agrarian Revolution, Penguin Books, 1970, p. 93 & 94
 87

land area.175 Other countries that are often cited, particularly by the World Bank, are
Vietnam, Indonesia and Malaysia.

Given the history of discrimination in South Africa, empirical evidence for the greater
efficiency of small-scale agriculture is harder to observe, but it does exist. Using
statistics from the 1988 Census of Agriculture, Van Zyl states that
a) 50% of farming units owning only 6% of the farmland, with farm sizes of less than
500 hectares, were responsible for 30% of gross farm income, 32% of net farm
income, 32% of capital investment and 29% of farm debt. The larger farms (1 000
hectares), comprising a third of all farming units, collectively owned more than 50%
of the total farm debt but, were only responsible for 53% of total gross farm income.
b) Farm workers earned 16% of the gross income on small farms but, only 10% and 9%
of the gross income on middle and larger farms.
c) Smaller farms’ total expenditure was nearly R5 000 per hectare whereas middle farms
spent only R177 and R55 per hectare respectively.
d) Small farms employed 632 workers per 1 000 hectares compared to 27 and 29
workers per 1 000 hectares for middle and large farms respectively.176

The sugar industry, based on out-grower schemes, is often held up as a successful

example of small-scale farming in South Africa. These schemes are most prevalent in
KwaZulu-Natal where small-scale farmers produce on a contract basis. A number of
major events over the past 35 years have contributed towards the “success” of small-scale
farmers in the sugar industry. In 1973, financial assistance was provided to these farmers
for the first time with the establishment of the Small Growers’ Financial Aid Fund.177 In
1990, deregulation measures gave potential small-scale farmers free entry into the
industry and by August 1991, the sugar industry was spending R14.6 million per annum
on administering development and extension services to small-growers.178 In May 1992,
a Small Grower Development Trust was launched. The Trust was formed to facilitate
institutional and community development, to improve extension services to small
growers and to provide alternative sources of finance and development.179 From 1993,
the sugar industry was also offering training programmes to small-scale sugar-cane
growers. In 1994, new provisions removed most of the restrictions to entry by small-
scale farmers into the sugar industry.180 A particularly successful example can be found
in Komatipoort (Kangwane), where some 1 000 small-scale farmers, who were once
either formerly unemployed or engaged in low paying manual labour, now earn between
R80 000 and R100 000 per annum.181

175
Christodoulou D, "Agrarian Reform: Solution, Holding Operation or Trojan Horse", The Unpromised
Land, Zed Books, London, 1990
176
Van Zyl J, "The farm-size efficiency relationship", Agricultural Land Reform in South Africa, Van Zyl
J, Kirsten J & Binswanger H (Eds.), Oxford University Press, Cape Town, 1996, p. 268 - 271
177
Dewey G, ‘Wilson Luthuli: Championing the Cause of Small Growers”, South African Sugar Journal,
February 1993
178
South African Sugar Journal, "R67m Loan for Small Grower Development", August 1991
179
South African Sugar Journal, "Small Growers Development Trust Launched", May 1992
180
Nourse P, "Removal of Entry Restrictions to Cane Growing", South African Sugar Journal, September
1994
181
Paton C, "Sweet Sweet Success", Sunday Times, June 28, 1998
 88

6.5. Interpreting the empirical evidence for small-scale agriculture

Although there is much empirical evidence for the inverse relationship between size and
efficiency, it requires careful interpretation. In Kenya, growth within the small-scale
agricultural sector has generated uneven and inequitable development. Many small-scale
farmers remain extremely poor. This is partly a result of government policies that sought
to assist large-scale and more “progressive” small-scale farmers (anti- and intra-
agricultural policies). Credit programmes, agricultural research and extension services
and infrastructure provision, undertaken by the post-independence Kenyan government,
favoured large-scale and progressive small-scale farmers. According to a 1974 rural
survey in Kenya, most of the gains in economic growth had gone to the upper 60% of
small-scale farmers, while the poorest 40% had experienced little gain in real income.182
Furthermore, although agricultural production has increased, it has done so at levels
consistently below population growth rates. Increased agricultural production and related
economic growth in Egypt also favoured the middle classes (particularly in urban areas)
while contributing to the increased marginalisation of the poor (particularly in rural
areas).183

What the increase in maize and cotton production in Zimbabwe’s communal areas
indicates is that small-scale farmers are capable of very efficient production if (and
probably only if) they are given a “package of prime movers184”. This package included
the provision of new and appropriate technology (i.e. hybrid seeds), credit, effective
marketing and service institutions and a favourable price and economic environment.
The political context (i.e. peace in rural areas after the liberation war) also formed part of
the package that contributed to increased production. Secondly, increased participation
in agricultural production amongst small-scale farmers in Zimbabwe’s rural areas since
independence appears to be restricted to those with access to some cash or credit, or those
located in the areas with greater soil fertility and higher rainfall.185 In fact, the bulk of the
maize is produced by the 15 to 20% of smallholders located in favourable natural
resource areas.186 Furthermore, within favourable maize production areas, those
households with greater resources (i.e. land, oxen and credit) contributed most to
aggregate maize production and sales in the 1980s.187 Initial increases in agricultural
production amongst land reform beneficiaries was partly a result of the fact that under-
utilised and unutilised land was brought under cultivation. As soon as this source of land

182
Peterson S, “Neglecting the Poor: State Policy Toward the Smallholder in Kenya”, in Commins S.K,
Lofchie M.F & Payne R (Eds.), African Agrarian Crisis, Lynne Rienner Publishers, Colorado, 1986
183
Christodoulou D, "Agrarian Reform: Solution, Holding Operation or Trojan Horse", The Unpromised
Land, Zed Books, London, 1990
184
Rukuni M, “The Evolution of Agricultural Policy”, Zimbabwe’s Agricultural Revolution, Rukuni M &
Eicher C.K (Eds.) University of Zimbabwe Publications, 1994
185
Muir R, “Agriculture in Zimbabwe”, Zimbabwe’s Agricultural Revolution, Rukuni M & Eicher C.K
(Eds.) University of Zimbabwe Publications, 1994
186
Takavarasha T, “Agricultural Pricing Policy”, Zimbabwe’s Agricultural Revolution, Rukuni M & Eicher
C.K (Eds.) University of Zimbabwe Publications, 1994
187
Stack J, “The Distributional Consequences of the Smallholder Maize Revolution”, Rukuni M & Eicher
C.K (Eds.), Zimbabwe’s Agricultural Revolution, University of Zimbabwe Publications, 1994
 89

had been (essentially) exhausted, increases in yields also dropped.188 (The argument
made here, is that small-scale farmers in Zimbabwe’s communal areas were able to
increase production, but that this increase was based on favourable political, social and
environmental conditions and supportive government policies. Therefore, as stated
before small-scale farmers are capable of very efficient production if - and probably only
if - they are given a “package of prime movers”189. Should the state, for example,
withdraw support, or not maintain transport structures, or should a drought occur, or any
of a number of possible changes in the “package of prime movers”, small-scale farmers
will probably not be able to sustain the high-levels of production.)

In Chile, figures from the early 1970s that indicated the inverse relationship between
farm-size and efficiency, resulted in the adoption of a “structuralist” economic approach
by the military government that took power in 1973. The structuralist argument was that
redistributing land from those who used it extensively to those who used it intensively
would “expand the internal market for manufacturers through raising the incomes of the
new property holders” and “would fuel economic growth in general and reduce
inflation”.190 The military government therefore proceeded to distribute land into family-
sized units (defined between 6.75 hectares and 10.1 hectares). By the late 70s, however,
agricultural production remained depressed and only those farmers producing for the
export market were relatively successful. Producing for the export market required
significant capital investment. Hence, it was really only the upper income medium-scale
farmers that benefited from the land distribution programme.191

Mexican land reform (between 1900 and 1940) was based on the development of small-
scale and medium-scale sized holdings. Individuals in the ejido sector received on
average 2.2 hectares and the minifundistas 1.5 hectares.192 By 1940, however, agricultural
production was at an all time low. This can partly be explained by the fact that small-
scale farmers were generally awarded inferior quality land. Legislation allowed
landowners to select the location of land that would be exempt from expropriation under
the land ceiling system, naturally choosing the best (irrigated) land. The result was a
“crazy quilt of ejidal and private lands that broke up productive units” and afforded
former large-scale landowners the opportunity to sabotage collective lands (in many
cases) by destroying irrigation systems.193 Thirdly, the ejido sector never really attained
tenure security – by 1984, 86% of parcelled ejidos lacked title certificates.194 Small-scale

188
Land and Rural Digest, “Zimbabwe’s frustrations”, July/August, 2000
189
Rukuni M, “The Evolution of Agricultural Policy”, Zimbabwe’s Agricultural Revolution, Rukuni M &
Eicher C.K (Eds.) University of Zimbabwe Publications, 1994
190
Castillo L & Lehmann D, “Agrarian Reform and Structural Change in Chile 1965 to 1979”, in Agrarian
Reform in Contemporary Developing Countries, Ghose A.K (Ed.), St. Martin’s Press, New York, 1983
191
The whole argument is based on the article by Castillo L & Lehmann D, “Agrarian Reform and
Structural Change in Chile 1965 to 1979”, in Agrarian Reform in Contemporary Developing Countries,
Ghose A.K (Ed.), St. Martin’s Press, New York, 1983
192
Cline F.H, "Agrarianism: A Basic Revolutionary Goal", Mexico: Revolution to Evolution 1940 -1960,
Oxford University Press, London, 1962
193
Markiewicz D, "Agrarian Structure, politics and economic development", The Mexican Revolution and
the Limits of Agrarian Reform 1915 - 1946, Lynne Rienner Publishers, London, 1993
194
Heath J.R, "Evaluating the Impact of Mexico's Land Reform on Agricultural Productivity", World
Development, Vol.20, No.5 1992
 90

farmers received virtually no assistance and remained dependent on former large-scale

farmers for access to infrastructure, resources and credit.195 As stated previously, there
was an increase in agricultural production in the 1950s. However, this increase was
largely based on the expanding amount of land being cultivated and, could not be
sustained in the 1960s, when land became a scarce resource. By the early 1970s, Mexico
had become one of the most malnourished countries in Latin America.196

The success of the small-scale agricultural sector in Taiwan was based on massive state
support and assistance. This included extensive investment in rural infrastructure and
education, the provision of social services, credit and an effective marketing
infrastructure. Rapid expansion in urban and non-farm employment also contributed to
this success and the consequent economic development in Taiwan. By 1989, the average
family made less than one third of its income from farming.197

The Taiwanese experience (and East Asia in general) is often held up as an example of a
successful land reform programme, but its applicability to the South African case is
questionable. The land to the tiller reform programme (used in Taiwan and South Korea)
has little relevance in South Africa, where the white commercial agricultural sector is
highly mechanised and the number of farm workers and labour tenants is relatively small.
Beneficiaries in Taiwan already had access to agricultural inputs such as implements and
animals and, since they did not have to be relocated, they already knew the agricultural
climate. Taiwan also has a high degree of rural urbanisation i.e. small-scale farmers in
rural areas tend to be engaged in other business activities as well; and the distinction
between urban and rural areas is less apparent than in, for example, South Africa.
Production could continue without disruption. In South Africa, the relatively small
number of labour tenants and farm workers implies the need for relocation. Furthermore,
farm workers and other prospective land reform beneficiaries lack access to agricultural
inputs and the financial resources necessary to acquire them. The main lesson to be
learnt from the East Asian experience is that “given an opportunity, smallholders can
produce their way out of poverty and feed their countries. Opportunity is the operative
word. Access to land, investment in infrastructure, access to credit and savings
institutions and protection from unfair competition are all elements in the range of
smallholder strategies developed in East Asia”.198

The South Korean land reform programme was comparatively very successful, with 28%
of the total agricultural area redistributed from landlords to tenants (573 000 hectares)
and a further 245 554 hectares from Japanese settlers to tenants. The Korean government

195
Otero G, "Agrarian Reform in Mexico: Capitalism and the State", Searching for Agrarian Reform in
Latin America, Thiesenhusen W.C (Ed.), Unwin Hyman, 1989
196
Heath J.R, "Evaluating the Impact of Mexico's Land Reform on Agricultural Productivity", World
Development, Vol.20, No.5 1992
197
Adams D.W, Chen H.Y & Lamberte M.B, “Differences in Used Rural Financial Markets in Taiwan and
the Philippines”, World Development, 21 (4), 1993
198
Oxfam, "Rural development through redistribution", Growth with Equity, Oxfam International, UK,
1997. Also see Hart G, “The Agrarian Question and Industrial Dispersal in South Africa: Agro-Industrial
Linkages Through Asian Lenses”, in Bernstein H (ed.), The Agrarian Question in South Africa, Frank
Cass, London, Portland, 1996
 91

also purchased a further 332 000 hectares for redistribution, bringing the total number of
hectares redistributed to 1 150 554.199 A wide range of factors contributed to the success
of the programme. The programme was centrally planned and controlled by the United
States military government, which administered South Korea from 1945 to 1948.
Secondly, the land reform programme occurred in a context of large-scale rural to urban
migration (with a relatively small rural population to begin with) and economic
opportunities elsewhere in the economy.200 Thirdly, political stability and a favourable
economic policy contributed to the success of small-scale farmers. Other factors include
improved tenure security and extensive support given to land reform beneficiaries.

The Japanese land reform programme involved redistributing small farms (between 0.8
and one hectare) to beneficiaries. What emerged was a system consisting of numerous
fragmented small farms that has acted as a constraint on sustainable development.
Despite government support for the small-scale agricultural sector, ranging from new
technology and the provision of infrastructure to education and training, the small-scale
sector failed to achieve an increase in production in the early 1960s.201

In the Indian Punjab, the success of small-scale farmers depended largely on the
introduction of “green revolution” technology (i.e. hybrid seeds and fertiliser). The
successful adoption of “green revolution” technology, however, depended on access to
irrigated land. Bernstein argues that it is this need for irrigation that focuses the
Liptons’202 attention on precisely those high potential farming areas that attract the claims
of proponents for large-scale agriculture.203

In a study conducted in rural Egypt, Dyer found that in Giza, where technology was
largely absent, the inverse relationship between farm-size and efficiency was strong. In a
context where most farmers followed the same productive procedure and the land quality
was consistent, labour and land use were crucial factors in production. In Quena, where
significant advancements in technology had occurred, the inverse relationship was
reversed – the larger the farm, the higher the yield. Dyer therefore argues that the inverse
relationship holds only in static conditions and that as soon as advances in technology
occur, the relation breaks down. This is because larger (wealthier) farmers are able to
access and appropriate new technology that small-scale (poorer) farmers cannot afford.204

In South Africa, a defining characteristic of successful farmers is a substantial non-

agricultural source of income. Schirmer argues that the characteristic feature of
successful white farmers in the Lydenberg district, during the early and mid 1900s, was

199
El-Ghonemy M R, "South Korea", The Political Economy of Rural Poverty, Routledge, London, 1990
200
El-Ghonemy M R, "South Korea", The Political Economy of Rural Poverty, Routledge, London, 1990
201
Zhou J, A New Proposal for Land Consolidation and Expansion in Japan and Other Economies,
European University Institute, Italy, October 1997
202
Lipton M, Ellis F & Lipton M (Eds.), Land, Labour and Livelihoods, Volume One & Two, Indicator
Press, Durban, 1996
203
Bernstein H, “Social change in the South African countryside? Land and production, poverty and
power”, PLAAS, UWC, 2000
204
Dyer G, “Farm-size – Farm Productivity Re-examined: Evidence from rural Egypt”, Journal of Peasant
Studies, Volume 19, 1, 1991
 92

that they had access to non-farm sources of income and that it was this characteristic that
was responsible for their willingness to invest in agriculture.205 Thomas found similar
evidence among small-scale farmers in the former homelands, where access to regular
remittance income has given some households the ability to accumulate capital and invest
in agriculture.206 Thomas also argues that the constraint that lack of access to remittance
income has on household farming capacity is illustrated by the poverty of female-headed
households who tend to engage in subsistence farming only. The implication of this
argument is that successful small-scale farming will, in fact, preclude the poorest
households from participating because all methods aimed at increasing production require
resources.

The sugar industry, which is often held up as the most successful example of small-scale
farming in South Africa, is also subject to interpretation. Small-scale sugar farmers have
thus far been unable to replicate the economies of scale of large-scale commercial
farmers in KwaZulu- Natal.207 Although sugar out-grower schemes tend to significantly
increase household income, they generally do not take households out of poverty.
Marcus conducted a study in the Umvoti Valley and found that although income from
sugar-cane production contributed 19% of overall household income, it did not push
average overall income above the primary subsistence level.208 Marcus also found that
out-grower schemes were often plagued by inefficiency (e.g. in some cases fertiliser was
delivered too late in the production process to be of any use). Producers were further
constrained by a lack of capital and machinery and poor infrastructure.

In a 1982 study of two sugar producing communities209 in KwaZulu, Cobbett210 found

that, given the unequal distribution of arable holdings in both communities, only a small
percentage of smallholders could expect monthly earnings equivalent to the household
subsistence level. Cobbett found that, although sugarcane contracting created
employment opportunities for several well-to-do adult males, the majority of
smallholders continued to rely on migrant remittances and for most the cultivation of
sugarcane proved to be economically non-viable.211 Furthermore, the relationship
between small-scale farmers and the major sugar companies (Tongaat Hullet and Illovo)
has not been without conflict. The KwaZulu-Natal Sugarcane Growers Association

205
Schirmer S, “Policy visions and historical realities: Land reform in the context of recent agricultural
developments”, African Studies, 59, 1, 2000
206
Thomas D.J.J, A critical assessment of the promotion of small-holder agriculture in South Africa, MA,
University of the Witwatersrand, Johannesburg, 1994
207
Business Day, “Coca-Cola slams farmers”, November 29, 2001
208
Marcus T, "Black Micro, Surplus and Commercial Producers", Down to Earth, Marcus T, Eales K &
Wildschut A (Eds.), Land and Agricultural Policy Centre, Indicator Press, Natal, March 1996, p. 62 - 67
209
The two communities are Newspaper and Nqunquma.
210
Cobbett M, Sugarcane farming in KwaZulu: Two communities investigated, Carnegie Conference
Paper, No. 58, Cape Town, April 1982
211
Cobbett M, Sugarcane farming in KwaZulu: Two communities investigated, Carnegie Conference
Paper, No. 58, Cape Town, April 1982, p. 1 & 15
 93

(representing 45 000 small-scale farmers) publicly criticised the South African Sugar
Association (SASA) in July 2000 for “operating in a highly protective environment”.212

It is also questionable whether the sugar-cane experience can be repeated elsewhere in

South Africa. Firstly, small-scale sugar-cane farmers have received tremendous support
(including training, the establishment of infrastructure and the provision of credit
services) from the South African Sugar Association. Whether the South African
government will be able to replicate this kind of support is debatable. Thomas identifies
three other factors that contributed to the development of the sector that are not likely to
be replicated elsewhere. These are (a) the lack of white-owned land within economically
viable distances from the sugar mills, (b) the existence of a representative marketing
organisation and a relatively stable market and (c) suitable agro-ecological conditions.213
The reasons why the Komatipoort farmers were so successful, for example, include the
fact that a real demand for their crop and an accessible means of marketing it through the
SASA to local mills existed. Secondly, the Komatipoort farmers received a multitude of
extension services and technical support from the Transvaal Sugar Association, the
Mpumalanga Development Corporation and the Development Bank.214 Finally, the
system of communal tenure in Komatipoort meant that small-scale farmers in the area did
not face the capital constraints experienced by farmers who have to purchase land.

Some authors215 have pointed out that the introduction of commercial agricultural
production tends to exacerbate social differentiation and income inequalities in rural
areas.216 The international cases studies discussed previously, as well as Cobbett’s study
in KwaZulu, support this argument. Cobbett found that the cultivation of sugarcane in
both study areas (Newspaper and Nqunquma in KwaZulu) contributed to the
development of four social strata. In the poorest group (40%), households earned, on
average, between R11 and R28 per month from sugarcane production and had access to
less than one hectare of land. In the wealthiest group (a small minority – less than 10% -
including the chief and some businessmen) earned more than R200 per month and sought
to accumulate capital and equipment.217

Thus, although significant empirical evidence exists to support the farm-size efficiency
relationship, it is less compelling than it might appear at first. Figures indicating
increases in production need to be placed in a context. Once this is done, it becomes
apparent that increases in small-scale agricultural production are often not sustainable
212
The South African Sugar Association is the sole marketer of sugar and until early 2001 was responsible
for setting the domestic sugar price. Quote comes from Seccombe A, “Black sugar farmers seek new
order”, Reuters News, July 25, 2000
213
Thomas D.J.J, A critical assessment of the promotion of small-holder agriculture in South Africa, MA,
University of the Witwatersrand, Johannesburg, 1994
214
Paton C, "Sweet Sweet Success", Sunday Times, June 28, 1998
215
Notably Lenin VI, The Development of Capitalism in Russia: Collected Works, Volume 3, Lawrence
and Wishart, London, 1977 & Abdel-Fadil M, Development, Income Distribution and Social Change in
Rural Egypt (1952 – 1979), Cambridge University Press, 1975
216
Also see the Egyptian and South African examples on pages 91 & 92 of this chapter.
217
Abdel-Fadil M, Development, Income Distribution and Social Change in Rural Egypt (1952 – 1979),
Cambridge University Press, 1975, p. 17 – 19. Also see Cobbett M, Agricultural and Social Change in
KwaZulu: the impact of sugarcane farming in the Noodsberg sub-region, PhD, London University, 1982
 94

without state support and, can increase social differentiation. In Kenya, for example, the
population growth rate was higher than the increases in production. Increased production
amongst land reform beneficiaries, in Zimbabwe218 and Mexico, was based on an
increased amount of land brought under cultivation. As soon as the supply of land
decreased, increases in production ceased. (In chapter two in the section on land reform
and poverty alleviation it was argued (following Kinsey) that the benefits of land reform
in Zimbabwe only became apparent over the long-term which suggests sustainability.
However, when one considers Kinsey’s sample and argument, there is clearly not a
contradiction here. Kinsey, first of all, compares the levels of relative poverty and not the
levels of production. Also, he compares small-scale farmers in communal areas with
small-scale farmers in land reform projects, and not small-scale farmers with large-scale
farmers - as is the case in this chapter). Experiences in South Africa indicate that
increases in yields and income do not necessarily lift people out of poverty. People can
continue to live below the poverty line even with a significant increase in their household
incomes.

It appears that the farm-size efficiency relationship only applies when certain conditions
are met. The most important necessary condition for successful small-scale agriculture is
the provision of support. Support includes the provision of training, research and
extension services219, education and other social services, infrastructure (roads), new and
appropriate technology, credit, marketing infrastructure and irrigation. This is evident
from the discussions on Zimbabwe, Mexico, Taiwan, India, Korea and South Africa.
Other necessary conditions are a stable political environment and a favourable economic
policy (where the creation of employment elsewhere in the economy also plays a central
role).

It is also questionable whether a land reform programme based on small-scale agriculture

will significantly alleviate poverty. On investigation, the evidence from Kenya,
Zimbabwe, Chile, Egypt and South Africa indicate that the poorest households are not
likely to benefit significantly from a land reform programme based on small-scale
agriculture. The evidence suggests that those who already have access to some resources
(whether land, capital, credit, natural resources or other agricultural inputs) stand to
benefit most from such a programme. It therefore stands to reason that a land reform
programme based on small-scale agriculture could contribute to greater inequities among
rural people (as was the case in all five of the above mentioned countries).

The primary reason for this “elite capture”220 of the benefits of land reform is the failure
of land reform or agricultural development policies to take account of social

218
Kinsey B.H, “Land Reform, Growth and Equity: Emerging evidence from Zimbabwe’s resettlement
programme”, Journal of Southern Africans Studies, Volume 25, number 2, June 1999
219
Agricultural extension is the process of transferring information and technology to farmers for use in the
production process and similarly transferring information from farmers to researchers to solve the problems
of farmers.
220
By “elite capture” I simply mean the “wealthier” or more organised farmers (or groups of farmers) in
rural areas – i.e. earning R500 a month cash wage could qualify you as a wealthier farmer, compared to
someone who does not have access to such a cash wage.
 95

differentiation in rural areas. “Wealthier”221 or more organised farmers are able to

benefit, not because they are necessarily better farmers, but because (as Bernstein
argues222), they have political influence. “Wealthier” farmers are especially likely to
capture the benefits of demand-driven reform programmes, because, by definition, they
are more capable of expressing their demands than the most marginalised (i.e. not
organised, isolated, illiterate, possibly no access to land) inhabitants of rural areas.
Access to cash wages, for example, is a crucial determinant of rural social differentiation.
Access to wages allow farmers (or any other individuals) to accumulate resources that
will enhance their chances to benefit from reform programmes (i.e. to acquire agricultural
equipment that increase production or, to acquire education that will increase their ability
to access agricultural development institutions and organisations). A similar argument is
made in chapter 10, where the failure of reform programmes to differentiate between men
and women has contributed to the failure of these programmes, as well as, in chapter
seven where it is argued that marginalised communities and individuals cannot
sufficiently access demand-driven land reform programmes.

It is a central argument of this thesis, that social mobilisation/direct action is required to

overcome the failure of reform policies to reach the poorest sectors of society. As Levin
et al argue, “If the most oppressed and exploited rural groups, including women, are to
benefit from rural land reform, the social structures of poverty and oppression, which are
rooted in the South African rural political economy will have to be transformed. This will
entail a political programme of democratic mass-based participation, which requires a
systematic and place-based analysis of class and gender-based differentiation”.223

It is necessary to explain why (1) this farm-size efficiency relationship exists and (2) why
this relationship has the potentially negative consequences discussed above.

6.6. Why are small farms more efficient? What does ‘efficient’ really mean?

Some proponents of small-scale agriculture argue that the perceived greater efficiency of
small-scale farmers is based on their utilisation of labour (i.e. labour is substituted for
machinery, the costs of family labour are far lower than that of hired labour and family
members have greater incentives to produce). But, Thomas argues that the reliance on
family labour does not explain the perceived greater efficiency of small-scale agriculture.
Thomas cites a study in India that distinguished between family-labour farms (where the
family provided 90% of the labour employed) and hired-labour farms (where less than
90% of the labour employed was provided by the family). The study found that labour
inputs and outputs for the two types of farms were not significantly different. Thomas,
therefore, argues that the labour-based theory for the inverse relationship between farm
size and productivity does not explain why the inverse relationship still holds with regard
to hired labour.
221
See previous footnote
222
Bernstein H, “South Africa’s Agrarian Question: Extreme and Exceptional?”, in Bernstein H (ed.), The
Agrarian Question in South Africa, Frank Cass, London, Portland, 1996
223
Levin R, Russon R & Weiner D, “Class, gender and the Politics of Rural Land Reform” in Levin R &
Weiner D (eds.), No More Tears . . . Struggles for Land in Mpumalanga, South Africa, Africa World Press
Inc., Asmara, Eritrea, 1997
 96

Another argument is that small-scale farmers are more productive because they use
resources more efficiently (i.e. they use more of their land more of the time). But again,
Thomas argues that this is not a reflection of greater economic efficiency but rather a
reflection of a survival strategy – without this intensive use of productive resources
(including labour) small-scale farmers simply could not survive. “The inverse
relationship is an index of poverty”.224 Dyer supports this argument, arguing that as
poorer households end up with smaller and smaller pieces of land they are forced to
intensify their resource use (land and labour) in order to survive. “Far from being an
index of efficiency, the inverse relation reflects the desperate struggle of poor and
marginal peasants to scratch a bare subsistence from inadequate patches of land. If we
were to follow the neo-populist prescription to redistribute land to high-yield family
farms the rural population should consist entirely of half-starved agricultural labour
households”.225 Dyer further argues (in line with arguments made in the previous section
of this chapter) that the idea that productivity is dependent on farm-size is conceptually
and methodologically flawed. Rather, farm size depends on productivity e.g. the more
fertile the land the smaller the farms. The inverse relationship is thus rather between soil
fertility (productivity) and farm-size.226

The implication, for South Africa, of the arguments made by Thomas, Dyer and this
thesis, is that the meaning of indicators such as “efficiency” need to be carefully
interpreted. For example, a small-scale farmer, may be using 100% of his/her land, 100%
of the time, and producing twice as much per square metre as a large-scale farmer who
uses 50% of his/her land, 50% of the time. However, the large-scale farmer could
increase production by, for example, expanding the area under cultivation. The small-
scale farmer, however, may not be able to even meet the subsistence needs of him/herself
or her/his family, unless s/he maintains the level of output suggested above. One of the
dangers (if this is correct) of employing land reform strategies based largely on
redistribution to a small-scale agricultural sector, is that it might create a group of people
who are literally working themselves to death, in order to stay alive.

7. Predicament?

South Africa has limited amounts of land available for agriculture. Only about 16% of
South Africa’s land is considered arable and, of this, only 8% is considered high potential
agricultural land.227 At the same time, the former homelands are severely overcrowded
and the large-scale commercial agricultural sector is inefficient. In addition,
impoverished people in rural areas will clearly not be able to acquire large farms within a
free-market system. There is thus a very clear need to redistribute land and to allocate

224
Thomas D.J.J, A critical assessment of the promotion of small-holder agriculture in South Africa, MA,
University of the Witwatersrand, Johannesburg, 1994
225
Dyer G, “Farm-size – Farm Productivity Re-examined: Evidence from rural Egypt”, Journal of Peasant
Studies, Volume 19, 1, 1991
226
Dyer G, “Farm-size – Farm Productivity Re-examined: Evidence from rural Egypt”, Journal of Peasant
Studies, Volume 19, 1, 1991
227
Schoeman J.L & Scotney D. M, “Agricultural Potential as determined by soil terrain and climate”,
South African Journal of Science, volume 86, 1987
 97

smaller land parcels than is the norm. The provision of support and assistance to
emerging farmers (whether small or medium-scale) is of utmost importance as indicated
by the case studies.

Despite the World Bank’s emphasis on the small-farmer path to development, there
appears to have been very little discussion of the issue within the Department of Land
Affairs - as is reflected in the omission of the debate from DLA policies. The Land
Reform for Agricultural Development Programme, with it greater focus on emerging
black farmers, has committed the DLA to “facilitate structural change over the long term
by assisting black people who want to establish small and medium sized farms”.228 This
leaves options open for a wide variety of farm-sizes and seems reasonable given the
preceding discussion. It seems that flexibility with respect to farm size it one of the
conditions for a successful land reform programme. On the other hand, this will do very
little to address the plight of the poorest rural households, who cannot engage in
commercial production.

7.1. Who wants to farm?

The efficiency debate does highlight a couple of important questions. Firstly, do poor
South Africans want to farm? (This question is particularly important when considering
that only an estimated 20% of rural households can be satisfactorily supported by the land
area of the former homelands. As well as, estimates that in the Ciskei, for example, only
20% of households are said to have an active interest in farming.229) Second, will they
generate sufficient income if they do farm? What are the impediments to the
development of black (small-scale or large-scale) agricultural production? What should
agrarian reform achieve – poverty alleviation, or significant increases in agricultural
production, or both? Finally, how do we ensure sustainable agricultural development?

South Africa’s rural population is by no means homogenous and is stratified by area, date
of arrival, class, gender and access to resources (including land). People engage in varied
and multiple livelihood strategies, which sometimes include agricultural production and
sometimes do not. In Ditsobotla, (North West Province), an estimated 60% of the
population are pensioners and, for many households this income (R300 per month in
1995 and increased to R620 per month in 2002230) is their only regular and predictable
source of funds.231 In KwaZulu-Natal there are some small-scale sugar farmers who
produce commercially but, in most cases, people’s incomes derive from a range of
resources mostly coming from urban areas in the form of wages, remittances and

228
DLA, Executive Summary of LRAD, Land Info, vol.8, no.1, 2001
229
Porteus D, “Land Reform: Potential and Priorities for South Africa”, Paper presented at a conference of
the Newick Park Initiative, Land Reform and Agricultural Development, UK, October 1990, Jubilee Centre
Publications
230
Manuel TA (Minister of Finance), Budget Speech 2002, February 20, 2002, available at
[Link]
231
Francis E, “Learning from the local: Rural livelihoods in Ditsobotla, North West Province in South
Africa”, Journal of Contemporary African Studies, 17,1, 1999
 98

pensions. In 1996, May232 found that in KwaZulu-Natal 62.5% of all households

participated in agriculture to some degree and yet, agricultural production was only one
of a wide range of income strategies that included state pensions and remittances. In
addition, when households differentiated between livelihood packages, agriculture
became a minor income source and most stable household incomes were obtained in
households with one or more members with permanent formal-sector wage-work.233
Hatch supports this finding, pointing out that agricultural needs in KwaZulu-Natal rank
far below more pressing needs for water provision, roads, housing and medical care
because, only between 5 and 10% of income is derived from agriculture.234

Rural people also have varied demands for land and there is substantial evidence
indicating that South Africa’s rural poor may not be interested in farming. For many, the
most pressing need is for employment. A study, in the Ditsobotla district of the North
West Province, demonstrated that people were reluctant to commit resources to
community or agricultural development projects because past experiences had made them
suspicious of state institutions and state intervention.235 Studies conducted by the
Liptons also showed that people living in the former homelands prioritised the provision
of piped water, housing and education over access to agricultural land.236 Results from
the interviews237 I conducted with the Sheba community in Mpumalanga indicated that,
despite some experience in farming activities, only a small proportion (less than 8% and
mostly elderly men) of community members were interested in full-time farming.
Women and younger members of the community expressed a greater need for
employment and the provision of services, particularly water.238

Indications that younger generations are not interested in farming have serious
implications for land reform and/or the development of African agriculture, whether large
or small-scale. This becomes particularly obvious when one takes account of the fact that
approximately 70% of South Africa’s population is under the age of 30.239 As Beauty
Dandala, a relatively successful small-scale farmer in the Eastern Cape explains, “our
cattle died, our children went to school and after that some went to work. But, they did
not buy cattle, they only bought cars. Since children have become educated, it has been
hard to interest them in agriculture. I have been here since 1957. We were ploughing
for my grandmother. But now, when you ask the children to get involved in ploughing
they will say that they are abused. They do not want to work. They just go drinking all

232
May J, “Assets, Income and Livelihoods in rural KwaZulu-Natal”, Land, Labour and Livelihoods in
rural South Africa, Volume 2, Lipton M, Ellis K, & Lipton Merle (Eds.), Indicator Press, December, 1996
233
May J, “Assets, Income and Livelihoods in rural KwaZulu-Natal”, Land, Labour and Livelihoods in
rural South Africa, Volume 2, Lipton M, Ellis K, & Lipton Merle (Eds.), Indicator Press, December, 1996
234
Hatch G, “Livestock and Rural Livelihoods in KwaZulu-Natal”, Land, Labour and Livelihoods in Rural
South Africa, Volume 2, Lipton M, Ellis F & Lipton M (Eds.), Indicator Press, December, 1996
235
Francis E, “Learning from the local: Rural livelihoods in Ditsobotla, North West Province in South
Africa”, Journal of Contemporary African Studies, 17,1, 1999
236
Lipton M, De Klerk M & Lipton M, “Introduction”, Land, Labour and Livelihoods, Volume One,
Indicator Press, Durban, 1996
237
See Appendix 1 & 2
238
Interviews with Sheba community members, June 27,28 & 29, 2001
239
Central Statistics Service, The people of South Africa Population Census, 1996, Report 03-01-19, 1996
 99

the time”.240 Furthermore, most of the land claims in South Africa’s restitution
programme were for urban and not agricultural land and land needs in rural areas are
often for residential rather than productive land.241

Part of the reason why people appear unwilling to engage in agricultural production lies
in their past experiences (forced removals, betterment planning and harsh conditions on
white-owned farms) and the stigma attached to farm work. In Jamaica, for example, the
association of sugar cane work with slavery resulted in people refusing to work on sugar
plantations after independence, despite high levels of unemployment.242 Apart from a
mindset that “militates against a willingness to commit themselves”243 to agriculture,
rural people also know that remittances from urban employment are more certain and
have less risk attached to them than small-scale agriculture.

The motto of the Department of Land Affairs is “Back to the Land”, but the notion of a
hardy peasant class building the rural economy appears somewhat romantic in light of the
previous discussion. Nevertheless, in the absence of employment opportunities
elsewhere, efforts should be made to encourage and assist South Africa’s rural poor and
prospective entrepreneurs to engage in agricultural production. As the Liptons put it,
“the unemployed cannot actually choose the work that they want to do”.244 Despite the
relatively little cash income that seems to be generated by agriculture, it does continue to
play an important role in the lives and economic survival of rural people. In KwaZulu-
Natal, for example, livestock generates very little cash income but provides a variety of
products that are vital to households – including milk and as a store for wealth.245 In
addition, the Department of Land Affairs’ Land Reform Research Programme’s samples
suggested that 67.7% of African rural households desire farmland.

Another related question is: will small-scale farming generate sufficient income? An
agricultural specialist hired to build agricultural capacity in land reform projects in
Mpumalanga argues that subsistence/small-scale farming and commercial success are
mutually exclusive concepts.246 He points to two “land reform myths”. This first is the
belief that a farm that previously employed 30 people can now sustain and provide
employment for 200 people. The second relates to the profitability of agriculture. He
argues that (in very generous terms) the return on capital outlay in agriculture is around
8% - very little if the initial investment consists of the R16 000 Settlement/Land
Acquisition Grant. Furthermore, the small-scale versus large-scale efficiency debate has
240
Sunday Times, August 4, 2002
241
Marcus T, "Demand for Land", Down to Earth, Marcus T, Eales K & Wildschut A (Eds.), Land and
Agricultural Policy Centre, Indicator Press, Natal, March 1996, p. 1 - 12
242
Lipton M, De Klerk M & Lipton M, “Introduction”, Land, Labour and Livelihoods, Volume One,
Indicator Press, Durban, 1996
243
Zulu P, “The Political Economy of rural livelihoods in KwaZulu-Natal”, Land, Labour and Livelihoods
in Rural South Africa, Vol.2, Lipton M, Ellis F & Lipton M (Eds.) Indicator Press, December 1996
244
Lipton M, De Klerk M & Lipton M, “Introduction”, Land, Labour and Livelihoods, Volume One,
Indicator Press, Durban, 1996
245
Hatch G, “Livestock and Rural Livelihoods in KwaZulu-Natal”, Land, Labour and Livelihoods in Rural
South Africa, Volume 2, Lipton M, Ellis F & Lipton M (Eds.), Indicator Press, December, 1996
246
Swanby, “Communal Property Associations: The Jury is Still Out”, Land and Rural Digest, July/August
2001
 100

indicated that successful small-scale farming is premised upon significant state and
institutional support, as well as, potential beneficiaries having access to start-up capital.

Furthermore, agriculture is by nature a risky investment (partly as result of its

dependence on uncontrollable factors such as weather patterns) and in many international
cases farmers succeed by engaging in a wide range of commercial activities. As Helena
Dolny put it, “farmers in Europe and the United Kingdom derive only 50% of their
income from farming, the other 50% comes from off-farm activities. Nobody is actually
stupid enough to engage in farming 100%. One can be successful, but only if one is
engaged in high-value industrial crop production or if one is producing for a niche
market like wine”.247 In fact, approximately 70% of the income of the farming
community of the United States is derived from off-farm sources and 45% of farmers
engage in agriculture on a part-time basis. In Europe, one third of farmers are part-time
and in Japan the figure is 87%. In South Africa, an estimated 20% of commercial
farmers farm part-time.248

If land reform is going to contribute to agricultural production and, particularly, to the

emergence of a black farming class (whether small or large-scale) the impediments to
these aims need to be identified and addressed. Two of the biggest impediments249 are
lack of access to land and insecure land tenure. Other problems include theft of produce
and cattle, the price of fuel and flooded markets.250 An Eastern Cape study highlighted
the importance of access to oxen and tractors or the capital to rent either. In an area in
the Eastern Cape (Elugewheni), where the majority of farmers have abandoned their land
and where only three families farmed successfully in 2002, those who succeeded did so
because they had access to tractors.251 A lack of co-operation between land reform
beneficiaries also hampers agricultural development. In Haarlem in the Western Cape,
for example, the MEC cancelled all state development aid to a group of farmers in 1998
because, the planned fruit export project “was getting nowhere” due to “factions forming
amongst the farmers”.252 The group of 28 small-scale fruit farmers would have earned an
estimated net profit of R450 000 annually, once the government had completed an
irrigation scheme and built a fruit packing facility on the redistributed farm.

Rukuni and Eicher identify five basic “prime movers” that have to be developed and co-
ordinated to achieve agricultural development.253
1) New technology produced by public and private investments in agricultural research
or imported from the global research system and adapted to local conditions.

247
Interview with Helena Dolny (Former Director of Land Bank), June 22, 2001
248
Figures for part-time farming from De Klerk M, “Opening Access: An assessment of market-based
options for land reform in South Africa”, Paper presented at a conference of the Newick Park Initiative,
Land Reform and Agricultural Development, UK, October 1990, Jubilee Centre Publications
249
excluding those listed in preceding sections of this chapter
250
Kretzman S, “Eastern Cape farmers: some big chances, some big parties, but no big plans”, Land and
Rural Digest, 9, July/August, 2001
251
Sunday Times, August 4, 2002
252
Cook L, "Local government cancels Haarlem farmers development aid", Business Day, March 2, 1998
253
Rukuni M & Eicher C.K (Eds.), “Introduction”, Zimbabwe’s Agricultural Revolution, University of
Zimbabwe Publications, 1994
 101

2) Human capital in the form of professional, managerial and technical skills produced
by investment in schools, agricultural colleges, faculties of agriculture and on the job
training and experience.
3) Sustained growth of biological capital (genetic and husbandry improvements of
crops, livestock and forests) and physical capital investment in dams, irrigation and
roads.
4) Improvements in the performance of institutions such as marketing, credit, research
and extension and settlement.
5) Favourable economic policy environment and political support for agriculture in the
long-term.

It is obviously important that investments in agriculture and land reform result in

sustainable development. In this regard, Whiteside254 argues that governments must
recognise that the achievement of sustainable increased agricultural production is a long-
term commitment that requires long-term stability in socio-economic conditions, efforts
to reduce transaction costs and to facilitate private enterprise and more information
sharing, particularly with emerging farmers regarding long-term development and
production plans. Whiteside continues that government research and extension services
should redress existing biases by prioritising long-term sustainability and bringing low
external input techniques into the mainstream. In addition, changes caused by a
liberalised economic environment need to be actively managed to minimise economic
hardship and environmental damage. Both Whiteside and the National Land Committee
argue that continued emphasis is needed on building community capacity and
involvement. International experience supports this (i.e. Brazil) and also suggests that a
move away from bureaucratisation and excessive centralisation is desirable because, this
can make land reform programmes more responsive to the diversity of local conditions
and communities.

8. Conclusion

The agricultural sector clearly plays a very important role in the overall South African
economy, particularly, with regard to employment creation and income from export
earnings. Further, there is a clear link between land reform and agricultural production.
Given the existence of the two very different agricultural sectors, I argue that South
Africa has to develop a land reform policy that achieves the following; (1) ensures that
the “white” commercial agricultural sector is competitive and efficient and employs
people in accordance with the Basic Conditions of Employment Act as extended to rural
areas in 1993. (2) Agriculture in the former homeland areas must be developed to
alleviate poverty in some cases, but also to generate income from profitable commercial
small-scale farming in others. (3) The land or agrarian reform policy that is implemented
should maintain or increase current levels of production in the agricultural sector. The
debate about the “type” of land/ agrarian reform policy, which should be implemented (as
it relates to agriculture), has centred on the large-scale versus small-scale farming debate.
The discussion in this chapter shows that (as will be explained below) an “either or”

254
Whiteside W, "Encouraging Sustainable Smallholder Agriculture in Southern Africa in the Context of
Agricultural Services Reform", Natural Resource Perspectives, No.34, July 1998
 102

approach to farm size is inappropriate, and that the DLA’s approach to land reform (i.e.
promoting a range of farm sizes depending on the people, area and resources involved) is
the most likely to achieve the objectives listed above. This argument is based on four of
the themes that emerge from this chapter. These are, firstly, given the sector’s
contribution to the South African economy it would be sensible to maintain a large-scale
commercial sector (obviously not a “white” sector) and to encourage efficiency and good
employment practices in the sector. Second, the development of small-scale commercial
agriculture in the former homeland areas (and elsewhere) is hampered by a number of
factors, al of which point to the need for significant statutory support. Third, small-scale
farmers are capable of efficient production if (and probably only if) they are given a
“package of prime movers”. Related to this is the argument that the empirical evidence
for the inverse relationship between farm-size and efficiency, is not necessarily an
indication of better entrepreneurial efforts, but rather, could be an indication of poverty.
And, finally, the apparent assumption (among the protagonists on both sides of the farm
size debate) that land reform should focus on agricultural development may be
unrealistic, given the socio-economic differences among the inhabitants of South Africa’s
rural areas. The implications of socio-economic differentiation include the fact that
successful small-scale agricultural development programmes are not likely to benefit the
poor. Furthermore, the emphasis on agricultural development as a primary goal of land
reform may be inappropriate given the fact that a large percentage of “rural” people
(particularly young people) do not want to farm.

The liberalisation and deregulation policies that have been implemented and have been
affecting the white commercial agricultural sector should (and have) contributed to
greater efficiency. The Basic Conditions of Employment Act has also been extended to
rural areas, although there are some questions about the impact that this will have on
employment (see chapter nine).

The development of small-scale commercial agriculture in the former homelands is

hampered by a number of factors. In some cases, individuals lack access to land. In
those cases where people do have access to land, the constraints on development include
a lack of capital and the necessary agricultural equipment, inability to access cheap
credit, the absence of infrastructure, water, transport and (accessible) markets.

Further constraints include tenure insecurity, skills deficiencies and having to compete on
an unequal footing in a relatively harsh agricultural and economic environment.
Agricultural liberalisation policies did not “level the playing fields” because these
policies do not address the fact that systematic support to white farmers have placed them
in a dominant position that, for the various reasons discussed in the section on the white
commercial agricultural sector, they were able to maintain. Emerging farmers, without
the same access to statutory privileges, cannot compete with the dominant and
established agricultural sector. This suggests that without substantial state support and
involvement, small-scale commercial agriculture in South Africa’s former homeland
areas is not likely to succeed.
 103

The discussion throughout this chapter (but particularly section 6.5) shows that, based on
evidence from Mexico, Tanzania, Chile, China, Cuba, Egypt, Zimbabwe, Peru, Japan,
South Africa, Vietnam, Indonesia, Malaysia, Taiwan, Mozambique, Kenya, Brazil, the
Philippines and Colombia, small-scale farmers are capable of efficient production if (and
probably only if) they are given a “package of prime movers”. The “package of prime
movers” includes a favourable political (e.g. peaceful) and economic environment (e.g.
that includes good prices for agricultural produce and accessible and functioning
markets). It includes state investment in (and provision of) appropriate technology,
appropriate agricultural research, social services in rural areas, infrastructure, education
and training, extension services, cheap credit, water and transport. In addition, small-
scale farmers require access to sufficient amounts of good quality land, the necessary
skills (e.g. management and entrepreneurial) and the necessary agricultural equipment
and supplies (e.g. seeds, fertiliser, fencing materials, insecticides and machinery).
Therefore, a land reform programme based on redistribution to small-scale farmers can
succeed if (and probably only if) there is significant state support for (and investment in)
the small-scale agricultural sector.

This thesis accepts the empirical evidence, which shows that small-scale farmers are
more efficient (in terms of output per square metre/ hectare etc) if they have the
necessary support. What the thesis questions, is whether this greater output is the
consequence of entrepreneurial ingenuity, more efficient labour usage or, whether it is an
indication of poverty. For example, a farmer with a small piece of land, may be using the
entire piece of land, all year, and may be producing twice as much per square metre as a
farmer with more land, where parts of the land is idle for some/all of the year. But, this
apparent greater efficiency may be an indication of poverty. In the sense that, while the
large-scale farmer could still increase production by expanding the amount of land under
cultivation or employing more labour, the small-scale farmer may literally starve is s/he
does not use 100% of her/his land, 100% of the time. Furthermore, variations in levels of
production may have more to do with soil quality, or individual characteristics and
talents, than with farm size.

The argument made in this section is that policies that recommend small-scale farming as
an exclusive strategy for land reform and agricultural development do not take
cognisance of the level of socio-economic differentiation in South Africa’s rural areas,
and are therefore unrealistic. It is estimated that almost half of South Africa’s population
live in rural areas and that between one quarter and one third of people living in the
former homelands are destitute. It seems reasonable, therefore, that agricultural
development should be the priority of any land reform programme. However, given the
discussion on socio-economic differentiation below, it seems that even with sufficient
statutory support the poorest households (destitute) will not benefit. If this is the case, it
might be more appropriate to promote production for household consumption on garden-
sized plots (i.e. emphasise survival as well as commercial production). This is supported
by the data that indicates that many of the households who have access to land in South
Africa’s former homeland areas are not using it productively (probably because they
require substantial statutory support), that only three percent of the of the population of
the former homelands are making a living from agriculture, and that income from
 104

agriculture accounts for only 10% of total household earnings in the former
homelands255. Further, people often demand land for residential (including as a form of
security in old age) and not agricultural purposes. The demand for land is also often
driven by psychological reasons that include a desire to create an identity, or to
experience a sense of justice. May256 and Hatch257 both show that people obtain
livelihoods from a wide range of sources, that farming is relatively insignificant, and that
people often demand employment, water, housing and medical care, long before they
articulate a demand for farming land. In addition, 40% of the population of the former
homelands are functionally urban and are not interested in farming. It is also clear from
numerous case studies and surveys including my fieldwork, that many rural Africans
(particularly younger people) are not interested in farming. Furthermore, South Africa
actually has limited amounts of land available for agriculture – only about 16 percent of
South African land is considered arable and of this, only eight percent is high potential
agricultural land258. (This is not to say that the number of people interested in farming
will not increase. In particular, statutory support and service provision may promote a
new interest in agriculture, and for many agriculture (at least subsistence production)
provides a very important part of their overall livelihood package.)

Further, it seems that the development of agriculture (small-scale or large-scale) in the

former homeland areas will not necessarily alleviate poverty and is far less likely to
generate the level of income required to lift households out of poverty. Support for large-
scale agriculture is not going to alleviate poverty unless it is accompanied by effectively
implemented labour legislation (see chapter nine). With regard to small-scale farming, it
is argued in this chapter that small-scale farming can alleviate poverty (as claimed by
World Bank representatives and the proponents of the small farmer strategy), but will not
alleviate poverty for the poorest sectors of South Africa’s rural areas. (Also see chapter
two where I argue that land reform can alleviate poverty under certain conditions).

This is because the degree of socio-economic differentiation in South Africa’s rural areas
is not reflected in policy approaches. For example, we saw in section five of this chapter
(following Schlemmer259) that only approximately 3% of the homeland population are
making a living from farming and that the households who are managing to do so, are
also the households who have access to off-farm income. In the discussion on the small –
scale sugar farming industry, Thomas260 (1994) also found that it was the households who
had access to remittance incomes that were able to accumulate the capital required and
invest in agriculture. Thomas also argues that the constraint that lack of access to
255
Schlemmer L, “The situation in South Africa with special reference to rural productivity”, in Vorster S,
Land Reform in Southern Africa, Conference Paper, Democratic Union of Africa, Cape Town, 2001
256
May J, “Assets, Income and Livelihoods in rural KwaZulu-Natal”, Land, Labour and Livelihoods in
rural South Africa, Volume 2, Lipton M, Ellis K, & Lipton Merle (Eds.), Indicator Press, December, 1996
257
Hatch G, “Livestock and Rural Livelihoods in KwaZulu-Natal”, Land, Labour and Livelihoods in Rural
South Africa, Volume 2, Lipton M, Ellis F & Lipton M (Eds.), Indicator Press, December, 1996
258
Schoeman J.L & Scotney D. M, “Agricultural Potential as determined by soil terrain and climate”,
South African Journal of Science, volume 86, 1987
259
Schlemmer L, “The situation in South Africa with special reference to rural productivity”, in Vorster S,
Land Reform in Southern Africa, Conference Paper, Democratic Union of Africa, Cape Town, 2001
260
Thomas D.J.J, A critical assessment of the promotion of small-holder agriculture in South Africa, MA,
University of the Witwatersrand, Johannesburg, 1994
 105

remittance income has on household farming capacity is illustrated by the poverty of

female-headed households who tend to engage in subsistence production only. The
implication is that it is virtually impossible for the poorest sectors of rural society to
engage in profitable farming because all the methods aimed at increasing production,
require resources. While households that are “better-off”, or rather, households that have
access to regular and predictable wage remittances can plan and invest the money in
agriculture.

The debate between the advocates of large-scale vs. small-scale agriculture as the
primary strategy of a land reform programme appears to be almost dogmatic. Given the
preceding discussion, the idea of a hardy peasant class of wealthy small-scale farmers
seems unrealistic – unless these farmers have access to high levels of state support, which
South Africa probably cannot afford. It is important, however, not to promote the “large-
scale is efficient” bias that kept arguably inefficient large-scale white commercial farmers
on the land for decades. At the same time, not all large-scale farmers are inefficient, and
redistributing large-scale farms to small-scale producers (who do not have access to
significant state support) may result in, as Dyer puts it, a rural population consisting of
“half-starved agricultural labour households”. The point is that South Africa should be
developing policies that (1) take account of socio-economic differences in the “rural”
population and (2) facilitate efficient agriculture irrespective of the farm size and (3)
address the inequitable distribution of land and agricultural income according to race.