OUTPUTS, INPUTS AND THE STRUCTURE OF AGRICULTURE

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INTRODUCTION

With the democratization of South Africa in 1994 and the introduction of land reform and farmer settlement programs to redress past injustices, the issue of finding appropriate support structures and service delivery mechanisms for South African agriculture has resurfaced in public policy debates. In the hundred years since the establishment of the Union of South Africa in 1910, the country’s agricultural sector and the structures governing and supporting it have changed significantly. A hundred years ago agriculture played a pivotal role in addressing the country’s rural poverty problems while also contributing substantially to the country’s overall economic growth. This was achieved through substantive and sustained public support by way of investments in rural infrastructure development, comprehensive farmer support programs, education and training programmes and a dedicated drive toward the industrialization of production agriculture. Since 1994 the agricultural sector has again been expected to serve as a source of employment with an added emphasis on income redistribution (along with other sectors in the economy). While the pressures for that are clear and compelling, the approaches followed appear to be undermining the overall growth and productivity performance of the sector. If history is any guide to the future, it is the nature and pace of productivity growth that will largely ultimately determine the employment and income generating capacity of South African agriculture in a rapidly changing global agricultural environment. In broad terms, the agricultural sector has gone through four policy phases during the past century of development, and the sector’s institutional structures have evolved in line with this (Vink 1993). Initially, the main focus of government was to consolidate all government functions related to agriculture and agricultural education within a single Ministry of Agriculture, a process that took almost 30 years to complete. This included scholarship programs to develop staff capacity in agricultural extension and scientific research. This phase contrasts with the following phases in that policy administration, regulatory services and research and extension were all part of the same
department. Throughout this phase high levels of poverty, frequent droughts and recurring recessions (even a depression) were salient features of the agricultural economy.

RESEARCH QUESTIONS

Investments in organized agricultural R&D are deemed the principle source of innovations and technical changes that spur productivity and output growth in agriculture over the long-run (Pardey, Alston and Ruttan 2010). However, the production and productivity consequences of R&D take considerable time — typically decades, not merely years — to be realized, making it imperative that a study of these processes encompass a long-run span of data. In addition, a host of factors, including changes in scale and scope of farm operations and the amount and composition of inputs and outputs can confound efforts to disentangle the effects of R&D from other sources of change in aggregate agricultural output (Alston et al. 2010). It is exactly this long-run scope of the data that presents a challenge in the South African context, as much of the primary data are subject to changes over time in methods of measurement and composition of what was reported. Equally so, the process of institutional and policy evolution has affected our measured understanding of the R&D services in terms of its investment/expenditure trends. The question here is thus, that by extending the period of focus to more fully capture the pre-world war II period, by forming the input and output quantity indexes from the detailed underlying price and quantity data on production and input use, updating the productivity analysis to include the years since democratization in 1994 and with a more detailed accounting of the public investment in agricultural development (and specifically the research and extension services) would it improve our qualitative and quantitative perspectives on South African agricultural productivity growth?

 Agricultural employment; regular and seasonal labour trends

The total number of people employed on South African farms (excluding domestic workers) increased from 781,359 in 1910 to a peak of 1,801,525 in 19611. Thereafter, it decreased to about 832,348 in 2010. The mix of regular and seasonal labour in agriculture has also undergone some marked changes over the past century. In 1910 it is estimated that seasonal labour represented about 35.6 percent of the hired labour force. This grew to about 50.8 percent in 1970, whereafter it decreased to about 32.4 percent of the hired labour force of 0.89 million in 1994. Thereafter it increased to 53.4 percent in 2010, the first time in history that seasonal labour represented a larger share of the hired labour force.

VALUE AND COMPOSITION OF AGRICULTURAL PRODUCTION

The analysis of the structural changes in the South African economy discussed in Chapter 2 was based on the gross value of production and agricultural GDP statistics estimated by the Department of Agriculture. In this chapter and the remainder of this thesis a new set of data on agricultural production is used that address a number of problems in the previously published official estimates, not the least the inconsistent inclusion of homeland agriculture. Two of the more significant, additional, problems in the official estimates that are corrected here are a) a failure to include egg output in the gross value of livestock production estimates, and b) corrections for a clearly upwardly biased estimate of the quantity of milk production.

Declaration
Abstract
Chapter 1 Introduction
1.1 Historical
1.2 Research Questions
1.3 Objectives
1.4 Hypothesis
1.5 Outline of the Study
PART I OUTPUTS, INPUTS AND THE STRUCTURE OF AGRICULTURE
Chapter 2 Structure of Production Agriculture
2.1 Early Events Impacting on Agricultural Development in South Africa
2.2 Changes in the South African Economy
2.3 The Evolution of South African Agriculture
2.3.1 Changing composition of the agricultural economy
2.3.2 Agricultural employment; regular and seasonal labour trends
2.3.3 Farm number, size and ownership trends
2.3.4 Black versus white sub sectors
2.3.5 Shifting patterns in area planted and production
2.4 The Measurement of South African Agriculture
Chapter 3 Agriculture Outputs
3.1 Introduction
3.2 Data Development and Sources
3.3 Indexing Methodology
3.4 Value and Composition of Agricultural Production
3.4.1 Long-term trends
3.4.2 Production trends in the former homelands
3.5 Indexes of the Quantity and Price of Agricultural Output
3.5.1 National trends in agricultural output: different indexing methods
3.5.2 National quantity of output trends for commodities
3.5.3 Trends in commodity price indexes
3.6 Conclusion
Chapter 4 Agriculture Inputs
4.1 Introduction
4.2 Reported Trends in Capital Stocks and Capital Formation
4.2.1 Revising the reported data
4.2.2 Revised capital investment series
4.3 Some Specific Measurement Issues
4.3.1 Market valuation and the rental rate of capital
4.3.2 Inferring capital stocks and service flows
4.3.3 Estimates of cost of capital services
4.3.4 Indexes of capital input use
4.4 Land Use in Agriculture
4.4.1 Data Sources
4.4.2 Land in farming, cultivated land, irrigated and planted pastures
4.4.3 Land rental rates
4.4.4 Indexes of the quantity and rental rate of land
4.5 Labour use in Agriculture
4.5.1 Data: Its sources and treatment
4.5.2 Quantity and cost of labour indexes
4.6 The composition of Purchased Inputs
4.6.1 Data limitations
4.6.2 Trends in composition of purchased inputs
4.6.3 Quantity indexes of purchased inputs
4.7 Indexes of the Quantity and Price of Aggregate Agricultural Inputs
4.8 Changing Composition of Input Use
4.9 Conclusion
PART II PUBLIC SECTOR SUPPORT
Chapter 5 Public Institutions, Policies and Spending on Agriculture
5.1 Introduction
5.2 Government Expenditure on Agriculture
5.3 Support Programmes
5.4 Farmer Settlement and Assistance Schemes
5.4.1 Three Schemes
5.4.2 Activities
5.5 Conclusion
Chapter 6 Agricultural Research and Development
6.1 Introduction
6.2 General Science and Technology Developments
6.3 Performance of Public Agricultural R&D
6.3.1 Institutional history
6.3.2 More contemporary developments
6.4 General Science and Technology Trends
6.5 Agricultural R&D Spending
6.5.1 Long-run trends
6.5.2 Research intensities
6.5.3 International intensity relativities
6.6 Scientist Trends
6.7 Funding Public Research
6.7.1 Overview
6.7.2 Non-government sources of support
6.8 Conclusion
PART III AGRICULTURAL PRODUCTIVITY AND THE STRUCTURE OFPRODUCTION
Chapter 7 Agricultural Productivity Patterns
7.1 Introduction
7.2 Prior Evidence
7.3 Partial Factor Productivity
7.3.1 Long run average crop yields
7.3.2 Land, labour and capital productivity trends
7.3.3 Capital and purchased inputs productivity trends
7.3.3 Land and labour productivities
7.4 Multi-Factor Productivity Measures
7.4.1 Output, input and MFP trends and growth rates
7.4.2 Alternative measures and measurement methods
7.5 Accounting for Output Growth
7.5.1 The value of productivity growth
7.6 Conclusion
Chapter 8 Summary and Conclusions
8.1 Introduction
8.2 Summary of Results
8.3 Conclusions
8.4 Limitations of The Study
8.5 Implications For Future Research
References

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South African Agricultural Production, Productivity and Research Performance in the 20th Century