The implications of smallholder agricultural productivity growth for poverty alleviation in post-apartheid South Africa

Abstract

The adoption of the Millennium Development Goal 1(MDG 1) of reducing the rate of poverty to half of the 1990-level by 2015 has been a challenge faced by the developing countries including South Africa. The foundations of democracy have to be continuously assessed so that the obstacles faced by South Africa as it strives towards sustainable democracy are addressed. With agricultural sector identified as having the potential to alleviate poverty compared to the mining sector, manufacturing sector and services sector, it faced the challenges that include: (i) accelerating agricultural productivity; (ii) reducing poverty and vulnerability; and (iii) narrowing rural-urban income disparities. The identification of the critical linkages in the agricultural development framework allows for effective strategic planning, effective decision making and appropriate policy formulation. Expectedly, the sector has attracted considerable fiscal policy interest and public investments. The primary aim of this research study is to assess the extent to which smallholder agricultural productivity growth alleviates poverty in South Africa. The statistical and econometric techniques namely; Johansen technique of co-integration analysis (1995), analysis of covariance and correlation, Vector Error Correction Model, are employed in this research study. The data description, data sources, expected relationship between variables and indexation of data are done. The drivers and cause-effect relationships between agriculture and poverty reduction are investigated. The employed models allowed for an exploration of plausible future growth in agricultural elasticity of poverty and the possibility of reducing poverty level in South Africa. The data is obtained from the National Department of Agriculture from 1994 -2013. The analysis of the results strongly confirms that agricultural productivity has a significant inverse relationship to the levels of poverty in South Africa. The outcome of the analysis will contribute to improved decision making on the use of public funds in agriculture.