Agricultural technology, productivity and employment: Policies for poverty reduction

Abstract

I have cherished the ideal of a democratic and free society in which all persons live together in harmony with equal opportunities. It is an ideal, which I hope to live for, and to see realised. But my lord, if needs be, it is an ideal for which I am prepared to die.

Nelson Mandela, 20^th April 1964, Johannesburg

This paper begins by arguing that agricultural economics has an important contribution to make to the economic transition of the new democratic South Africa. Policies are required to reduce unemployment, poverty and inequality, but does the work of agricultural economists provide the policy makers with the information necessary to make the correct choices? In this context, we update our recent work on technology, efficiency and productivity in South African agriculture, for both the commercial and smallholder sub-sectors. For the commercial sector, this means extending the total factor productivity index and estimates of the demand for labour. For the smallholder sector, there are new results on the impacts of GM cotton and white maize on output and employment. However, this piecemeal approach treats the two sectors as entirely separate, when they are actually interdependent. Thus, a Ricardian model of dualistic agriculture is used to explain the historical development of dualism in agriculture, especially how the native agriculturalists were impoverished by the colonists. Then this model is adapted to resemble the Harris-Todaro model of urban unemployment is order to represent the present dual agricultural sector. This allows the current policy options to be compared, although real data is needed to estimate the relationships and so the full analysis remains incomplete.