AGRICULTURE AND POVERTY IN SOUTH AFRICA: CAN

AGRICULTURE REDUCE POVERTY?1

Charles L Machethe

Department of Agricultural Economics, Extension and Rural Development and

Postgraduate School of Agriculture and Rural Development, University of Pretoria
______________________________________________________________________

The decisive factors of production in improving the welfare of poor people are not space,
energy and cropland; the decisive factors are the improvement in population quality and
advances in knowledge (Schultz, 1981).

1. INTRODUCTION

Between 40 and 50 percent of South Africa’s population can be classified as living in

poverty (Terreblanche, 2002; Woolard and Leibbrandt cited in FAO, 2004) while 25
percent of the population can be categorised as ultra-poor. Although the country is self-
sufficient in food production, about 14 million people are said to be vulnerable to food
insecurity and 43 percent of households suffer from food poverty (National Treasury,
2003).

South Africa is classified as an upper middle-income country with one of the most
skewed distribution of income in the world. The country’s Gini coefficient is estimated at
0.68 calculated from the 1996 Population Census data (Marais cited in FAO, 2004).
This is higher than the Gini coefficient of 0.58 during the mid-1990s. The large income
gap between the rich and poor is a matter that is receiving attention from the
government. A number of policies aimed at inter alia bridging the income gap and
promoting economic empowerment of previously disadvantaged communities are in
place. These include the recently promulgated Broad-based Black Economic
Empowerment Act of 2003.

Poverty is more pervasive in rural areas particularly in the former homelands. The
majority (65 percent) of the poor are found in rural areas and 78 percent of those likely to
be chronically poor are also in rural areas (Woolard and Leibbrandt cited in FAO, 2004).
Commenting on poverty in developing countries, Ashley and Maxwell (2001:395) state
that “Poverty is not only widespread in rural areas, but most poverty is rural, …. Yet this
core problem appears to be neglected”. They further note that there has been a decline
in resource flows to the rural sector and this applies more to agriculture than it does to
other sectors.

In rural development literature, agriculture is considered as the best vehicle to reduce

rural poverty. In most developing countries, agriculture and agriculture-related activities
provide most of the employment in rural areas. The implication is that agricultural
workers are poorly paid and that most of the employees in the agricultural sector are
unskilled. This also means “that increasing agricultural growth may have a large positive

1
Paper presented at the Overcoming Underdevelopment Conference held in Pretoria, 28-29 October 2004.

1
impact on poverty” (Lopez, 2002). In South Africa, 42 percent of the total population
were in rural areas in 2001 (World Bank, 2003). Given that a significant proportion of the
South African population are in rural areas and 65 percent of the poverty is rural, can
agriculture play a major role in poverty alleviation? How can agriculture’s role in poverty
alleviation be enhanced? What has been done to enhance agriculture’s role and what
could be done to increase agriculture’s contribution to poverty alleviation? These are
some of the question this paper will address. The focus will be on the role of smallholder
agriculture in poverty alleviation.

The remainder of the paper is organised as follows. The second section presents some
theoretical aspects of agriculture’s contribution to poverty alleviation. It outlines the role
of agriculture in poverty alleviation as described in the literature on agricultural and rural
development. Section three examines the role played by smallholder agriculture in
improving livelihoods in South Africa. Section four outlines government initiatives aimed
at promoting smallholder agricultural development and the rationale for these initiatives.
Section five addresses the issue of what needs to be done to maximise agriculture’s
contribution to poverty alleviation.

2. THE ROLE OF AGRICULTURE IN POVERTY ALLEVIATION: THEORETICAL

CONSIDERATIONS

The role of agriculture in the economy is generally acknowledged. However, there is no

consensus on the issue of whether agriculture is the most appropriate way to fight
poverty in developing countries. One school of thought argues that since the majority of
people in most developing countries are in rural areas and most of them are engaged in
agricultural production or agriculture-related activities, agriculture is the most effective
way to reduce poverty. The second school of thought recognises the contribution of
agriculture to poverty alleviation but attaches more importance to non-agricultural
activities (e.g. rural non-farm enterprises and social services). For example, McIntosh
and Vaughan (1996:91) state that “… the notion that a broadly based smallholder
agriculture can be created, and that it can transform the character of the agricultural
production system is an inappropriate premise on which to build policy frameworks
designed to improve livelihoods” in South Africa. Noting these divergent views on the
role of smallholder agriculture in poverty alleviation, the following section outlines the
positive contribution of agriculture, especially smallholder agriculture, to poverty
alleviation.

The rural sector can be considered to consist of three sub-sectors: (a) the smallholder
(subsistence or semi-subsistence) sector consisting of self-employed farmers producing
staple food and some commercial goods; (b) the commercial farm sector comprised of
medium and large size farmers and provides employment to a significant number of the
landless; and (c) the rural non-farm sector.

Delgado (1998:1) argues that “Smallholder agriculture is simply too important to

employment, human welfare, and political stability in Sub-Saharan Africa to be either
ignored or treated as just another small adjusting sector of a market economy ….”
During the 1960s, many African governments paid more attention to large-scale farmers
with the encouragement of donors (Eicher, 1994). Middle or ‘progressive’ and
smallholder farmers were not given any attention. Because of the high failure rate of
these schemes, many donors turned their attention and financial support to smallholder
agriculture in the 1970s. Eicher (1994:87) argues that middle farmers should be “viewed

2
as a positive force in ‘getting agriculture moving’”. He suggests that African
governments should give priority to the development of both smallholder and middle
farmers. With the necessary support, smallholder farmers have the potential to produce
a marketable surplus. Smallholder farmers in Kenya with farms of less than two
hectares have increased their share of national agricultural production from four percent
in 1965 to 49 percent in 1985 (Lele and Agarwal, 1989). Zimbabwe’s remarkable
increases in maize production by smallholder farmers in the 1980s is another example
and is often referred to as Africa’s green revolution success story (Eicher, 1994).
Smallholder farmers in Zimbabwe tripled maize production between 1980 and 1987 and
increased their share of the national marketable maize surplus from ten percent in 1980
to 40 percent in 1987 (Eicher, 1994). This success was attributed to the launch of a
government programme to boost maize and cotton production and development of
hybrid maize varieties.

Agriculture contributes to poverty alleviation at rural, urban and national levels in three
ways: (a) reducing food prices; (b) employment creation; (c) increasing real wages; and
(d) improving farm income. Results of studies conducted in several countries indicate
that the “pro-poor role of agricultural growth can be dramatic, and much more effective
than other sectors at reducing poverty and hunger in both urban and rural areas.
Agricultural growth has strong and positive impact on poverty often significantly greater
than that of other economic sectors” (FAO, 2004:12). Irz et al. (2001) analysed the
relationship between agricultural growth and rural poverty. The results show the
poverty-alleviation effects of agricultural growth to be strong. For example, a one-third
increase in yield was expected to reduce the number of poor people by a quarter or
more.

With regard to food security, the studies conclude that growing the agricultural sector is
the primary channel for achieving household food security. The studies also conclude
that unless agriculture reaches some degree of commercialisation, the impact of
agricultural growth on food insecurity and poverty alleviation is limited. Another
important observation from the studies is that households (in the rural sector) engaged in
agricultural activities tend to be less poor and have better nutritional status than other
households. A study conducted in Indonesia found that agricultural growth reduced the
depth of poverty by 50 percent in rural areas while the percentage for urban areas was
36 (FAO, 2004).

The above analysis presents a strong case for agriculture’s role in reducing poverty.
However, it should be noted that the nonfarm sector also plays a key role in poverty
alleviation. Furthermore, a growing nonfarm sector is important for promoting growth in
the agricultural sector.

3. WHAT IS THE CONTRIBUTION OF SMALLHOLDER AGRICULTURE TO

POVERTY ALLEVIATION IN SOUTH AFRICA?2

One way to assess the contribution of agriculture to poverty is to look at its share of the
total household income. In a study involving 138 smallholder irrigation farmers in
Limpopo Province by Machethe et al. (2004), household income sources were divided
into two broad categories of farm and non-farm sources. Farm income included income
derived from the sale of farm produce (no livestock income is included as the

2
This section relies heavily on Machethe et al. (2004).

3
households did not have any livestock). Non-farm sources included old-age pension,
remittances, wages, family business and other sources. Table 1 outlines the various
household income sources and the contribution of each to total household income.

Farming is the greatest contributor to household income -- more than 40 percent of total
household income is generated from farming. Old-age pension is the second most
important source of household income with a contribution of about 25 percent to total
household income followed by wages contributing about 20 percent to household
income. Non-farm income sources as a category contribute more to household income
than farming – about 60 percent of total household income is from non-farm sources.

Table 1. Sources of income and contribution to total household income

Income source Average monthly income (R) Contribution as % of total

household income

Farming 545 41.0

Pension 329 24.8
Wages 258 19.4
Remittances 165 12.4
Family business 19 1.4
Other non-farm income 13 1.0

Total 1329 100

Source: Machethe et al. (2004)

Categorizing the households into “poor” and “rich” and analyzing the contribution of the
various sources of income to total household income provide some interesting results.
This is done in Table 2 using the median income to divide the households into “poor”
and “rich”. “Rich” households include those with total household income above the
median income for all households while those whose income falls below the median
income are considered to be “poor”.

Table 2. Sources of income and contribution to total household income for poor
households (using median income for categorisation)

Income source Average monthly income (R) Contribution as % of total

household income

Farming 62 27.7
Remittances 53 23.6
Wages 52 23.1
Pension 37 16.5
Family business 19 8.2
Other non-farm income 2 0.9

Total 225 100

Source: Machethe et al. (2004)

4
Farming is the most important source of income for “poor” rural households –
contributing approximately 28 percent to total household income. Remittances and
wages are the second and third most important sources of income, respectively, for poor
households -- contributing just over 23 percent each to total household income. These
results are similar to those presented above for all households as they also indicate that
non-farm sources of income contribute more to household income than farm sources.
However, farming contributes more to household income than all individual non-farm
sources of income.

Table 3. Sources of income and contribution to total household income for richer
households (using median income for categorization)

Income source Average monthly income (R) Contribution as % of total

household income

Farming 745 42.9

Pension 395 22.7
Wages 344 19.8
Remittances 215 12.4
Family business 21 1.21
Other non-farm income 17 0.98

Total 1737 100

Source: Machethe et al. (2004)

A breakdown of income sources and their contribution to total household income for
“rich” households is provided in Table 3. Although farming is the most important source
of income for “rich” households, non-farm sources as a category contribute more to total
household income. Table 3 also indicates that “rich” households depend more on
farming for their income than “poor” households. Furthermore, pension and wages are
the most important non-farm sources of income for “rich” households. These results
also confirm the important role of farming as a contributor to household income. The
results further indicate that the role of agriculture as a source of household income is
more pronounced in the case of “rich” households than it is for “poor” households.

Categorisation of the households into “rich” and “poor” using the household subsistence
level of R250 per adult equivalent per month (Table 4) indicates that farming is the most
important source of income for rich households while pension is the most important
source of income for “poor” households. Farming plays a more dominant role as a
source of household income for “rich” households and its contribution to household
income exceeds the total contribution of all non-farm income sources combined. Non-
farm sources contribute more to household income for “poor” households than farming.
Except for the results indicating that pension is the most important source of income for
“poor” households, the results are similar to those presented in previous sections. Even
in “poor” households, farming is the second most important source of income confirming
its importance as a contributor to household income (Table 5).

5
Table 4. Sources of income and contribution to total household income for richer
households (using household subsistence level of R250 per
month/person)

Income source Average monthly income (R) Contribution as % of

total household income

Farming 1821 56.4

Wages 553 17.1
Pension 452 14.0
Remittances 359 11.1
Family business 28 0.9
Other non-farm income 18 0.6

Total 3231 100

Source: Machethe et al. (2004)

Table 5. Sources of income and contribution to total household income for poor
households (using household subsistence level of R250 per
month/person)

Income source Average monthly income (R) Contribution as % of

total household income

Pension 297 37.0

Farming 191 23.8
Wages 175 21.8
Remittances 111 13.8
Family business 17 2.1
Other non-farm income 11 1.4

Total 802 100

Source: Machethe et al. (2004)

The above analysis indicates that agriculture plays a key role in poverty alleviation in
rural areas. Agriculture is not only a major contributor to total household income but the
contribution seems to increase as households become richer.

Another study involving 1031 households by May et al. (reported in FAO, 2004)
conducted in KwaZulu-Natal confirms the important role of agriculture in poverty
alleviation. The study concludes that households engaging in agricultural activities tend
to be less poor than those not participating in agricultural production. Furthermore, the
study notes that the level of farm income increases with total household income
suggesting that agriculture remains an important source of income even for households
deriving a significant proportion of their income from nonfarm sources. The study also

6
found that some households that were engaged in informal activities moved to
agriculture suggesting that agriculture was a better option as a source of income for
these households than informal activities.

4. GOVERNMENT EFFORTS TO PROMOTE SMALLHOLDER AGRICULTURAL

DEVELOPMENT IN SOUTH AFRICA

Many of the services required to promote smallholder agricultural development are

public goods. Therefore, little progress can be expected in achieving the objectives of
agricultural development without government involvement. Some of the initiatives of the
South African government aimed at promoting smallholder agricultural development are
outlined in this section.

Land Reform

Access to land for production purposes is an essential requirement for the poor to enjoy
the benefits of agricultural growth. The government has since 1995 when the
Settlement/Land Acquisition Grant (SLAG) programme was launched made efforts to
improve access to land for productive purposes. The rationale for this programme was
that if black people were provided with financial assistance, they would be able to
purchase land on willing-seller-willing-buyer basis allowing market forces to play their
role and, thus, minimize the role of government. The SLAG did not live up to
expectations and a new programme, Land Redistribution for Agricultural Development
(LRAD), was introduced in 2000. However, Deininger and May (2000) conclude that the
land reform programme was able to target the poor and was successful in combining
equity and efficiency. A study by Hall et al. (2003) indicates that the pace of land reform
has increased since 2000 in terms of the amount of land redistributed but the number of
beneficiaries has declined. A major criticism of the land reform programme is that little
attention has been given to the provision of farmer support services to land reform
beneficiaries. Global experience shows that it is fruitless to embark on a land reform
programme without ensuring access to farmer support services (Eicher and Rukuni,
1996).

Agricultural Credit

Improving access to credit is often regarded as one of the key elements in raising
agricultural productivity. The establishment of parastatal institutions with a mandate to
channel credit to smallholder farmers is one of the approaches used by governments in
developing countries to promote smallholder agricultural development. In South Africa,
such parastatals were established in the former homelands. On the other, the Land
Bank and the defunct Agricultural Credit Board were established to address the credit
needs of commercial farmers. Some of the parastatals that were established in the
former homelands have collapsed as the result of the transformation of agriculture in the
country leaving smallholder farmers without access to credit services. The Land Bank
was expected to fill the vacuum created by the demise of homeland parastatals. The
mandate of the Land Bank has been broadened to include persons that were previously
excluded from enjoying the services the bank provided. While the Land Bank has
succeeded in reaching more smallholder farmers with loans, the majority of these
farmers still do not have access to credit. In its 2003 annual report, the Land Bank
reported that R2 billion was advanced to some 15 000 black farmers and that the
number was increasing by 80 percent annually. Furthermore, 130 000 microenterprise

7
entrepreneurs are reported to have received loans from the Land Bank. The Land Bank
has also increased the number of branches to more than 80 outlets, including 20 mobile
outlets serving rural areas (Land Bank, 2003).

The realisation that insufficient progress has been made with regard to improving access
to credit for smallholder farmers has prompted the government to establish the
Agricultural Credit Scheme. The scheme is supposed to address the credit needs of
smallholder farmers while the Land Bank concentrates on lending to established
commercial farmers. A major challenge will be to simultaneously achieve the objectives
of improving access to credit for smallholder farmers and ensuring the financial
sustainability of the scheme.

Infrastructure

High transaction costs is one of the major factors constraining the growth of smallholder
agriculture in African countries and this can largely be attributed to poor infrastructure.
An analysis of the experience of any country that has successfully developed its
agriculture will always identify the provision of good infrastructure as a requirement for
achieving higher levels of agricultural productivity and profitability. This is true whether
one is looking at the development of American agriculture or the green revolution
experience of Asian countries. Commenting on the American agricultural development
experience, Cochrane (1993) concludes that there can be no agricultural development
without the services that flow from the required infrastructural elements. A careful
analysis of the Asian green revolution reveals that physical infrastructure (irrigation,
roads, storage, etc.) was a key element in the success achieved.

Inadequate physical infrastructure in rural areas, particularly in the former homeland

areas, remains a major obstacle to smallholder agricultural growth in South Africa.
Despite government initiatives to improve the quality and quantity of infrastructure in the
rural areas through programmes such as Community Based Public Works Programme,
Consolidated Municipal Infrastructure Programme, and Poverty Relief and Infrastructure
Investment Fund, the impact on the lives of many rural people has been limited (Everatt
and Zulu, 2001).

In the area of smallholder irrigation in the former homelands, South Africa has made
large investments but many of the irrigation schemes are not performing optimally
(Machethe et al., 2004). In addition, the withdrawal from service provision by provincial
governments and the collapse/withdrawal of parastatals that were responsible for
operation and maintenance of irrigation infrastructure is threatening the viability of the
irrigation schemes. In Limpopo Province, the provincial department of agriculture has
initiated a process of rehabilitation of the irrigation schemes and intends to hand over the
management of the schemes to smallholder farmers once the process is complete.

Comprehensive Farmer Support Services

Smallholder agricultural growth cannot be achieved without access to farmer support

services. International experience has shown that, with adequate access to farmer
support services, smallholder farmers can significantly increase agricultural productivity
and production. For example, smallholder farmers in Zimbabwe doubled maize and
cotton production in the 1980s when extension, finance and marketing services were
provided (Rukuni and Eicher, 1994). Similar results were achieved in Southeast Asia

8
when access to farmer support services was improved (Purcell, 1994). It is worth noting
that in these examples of successful efforts to raise smallholder agricultural productivity,
a variety of farmer support services were provided simultaneously. To emphasise the
need to view these services as a package, Mosher (1971) refers to them as “elements of
a progressive rural structure”.

A look at agricultural development strategies in the 1960s is helpful in avoiding some of

the pitfalls. During the 1960s, large investments were made in agricultural research,
especially the introduction of high-yielding varieties. Despite all these investments, there
was little improvement in the productivity and incomes of the majority of resource-poor
farmers (ODI, 1979). Two factors are attributed to this relative failure. The emphasis on
crop production technology failed to recognise that farmers were facing a multitude of
constraints and lack of access to technology was just one of these. Increasing
agricultural productivity required addressing all of these constraints which included
health, education, physical infrastructure, etc. These problems needed to be attacked
simultaneously. A second reason for the failure of efforts to increase agricultural
productivity in the 1960s was that the benefits from programmes based upon the
provision of a particular agricultural input were often captured by progressive farmers at
the expense of poor ones. Therefore, it was necessary to act simultaneously on
agricultural and non-agricultural factors to increase agricultural productivity; and to
integrate agricultural inputs into the neglected resource-poor farming sector.

The Comprehensive Agricultural Support Programme3 introduced in South Africa to

address the problem of lack of access to farmer support services appears to have
incorporated some of the lessons from the agricultural development experience of the
1960s. This observation is based on the fact that the programme attempts to provide a
wide range of services simultaneously rather than emphasising one of the elements of a
progressive rural structure. This approach is likely to contribute to the success of the
land reform programme which has been criticised for failing to provide farmer support
services after farmers have been settled on new farms. The approach needs to be
broadened to include smallholder agriculture in the former homelands where farmers
require comprehensive farmer support services. Currently, these services are not
available to the majority of smallholder farmers. Where farmer support services are
available, often only a single (e.g. extension) or a few of the services will be provided
rather than adopting a comprehensive approach.

5. WHAT NEEDS TO BE DONE TO INCREASE THE CONTRIBUTION OF

AGRICULTURE TO POVERTY ALLEVIATION?

Increasing the contribution of agriculture to poverty alleviation implies raising the

incomes of smallholder farmers. This requires promoting the growth of smallholder
agriculture. The problems of increasing incomes in smallholder agriculture in Africa
have been examined in the literature on agricultural and rural development. The
consensus reached on how to promote growth in smallholder agriculture is that it (a) is
not easy; (b) will require overcoming structural constraints arising from history and
geography; and (c) will require more than market reforms (Eicher, 1994; Delgado, 1995).
This section attempts to (a) identify areas of investment likely to impact positively on

3
The Comprehensive Agricultural Support Programme is a programme of the National
Department of Agriculture aimed at providing post-settlement support to land reform beneficiaries.

9
smallholder agricultural productivity; and (b) outline some of the principles to be
observed if smallholder agriculture is to increase its contribution to poverty alleviation.

5.1 Investing in the Prime Movers of Agricultural Development

Significant achievements can be made in agricultural development by creating a
favourable economic environment and investing in the ‘prime movers’ of agricultural
development: human capital, agricultural research, biophysical capital formation, and
rural institutions (Eicher, 1994). Asia’s experience of changing the long-term
comparative advantage in export commodities clearly indicates that major achievements
in smallholder agriculture can be made by investing in the above areas. South Africa
has invested in these areas over the years and this is a major explanation for the country
to have one of the most developed commercial agricultural sectors in the world. The
challenge now is to make similar investments to get the smallholder agricultural sector
moving. The human capital and institutional base of smallholder agriculture must be
strengthened for long-term growth in this sector and to attack rural poverty in a
sustainable manner. Investments in science and technology and the quality of people
have become major determinants of comparative advantage surpassing the role of
natural resource endowments.

5.2 Drawing Lessons from Global Experience

South Africa can draw lessons from Asia’s green revolution experience. The main
ingredients of the green revolution were (a) physical infrastructure (irrigation, roads,
storage, etc.); (b) technological innovation and diffusion (modern varieties, extension
services); and (c) fertilizer and chemical application. An analysis of the development of
American agriculture by Cochrane (1993) indicates that the same factors were largely
responsible for the development of the agricultural sector. Focusing on the above
ingredients of the green revolution is likely to result in a greater impact on agricultural
productivity in the former homeland areas. More needs to be done to improve access to
improved technology for smallholder farmers and increasing the area of land under
irrigation.

5.3 Production of High Value-added Products

Staple food crops such as maize dominate the production systems of smallholder
farmers in the former homelands. Increasingly, the view that smallholder farmers should
engage in the production of high value-added products such as animal products,
horticulture and beverage crops is gaining momentum (Jaffee and Morton, 1995).
Delgado and Siamwalla (1997) conclude that promoting growth in smallholder
agriculture through participation in world markets (by selling high value-added items) will
require significant vertical integration of smallholder farmers to processing and marketing
firms. In addition, smallholder farmers will need to gain access to assets, information,
infrastructure, and remunerative markets. All of these elements are either lacking or
insufficient in the former homeland areas.

5.4 Strengthening Farm/Nonfarm Linkages

The promotion of farm/non-farm linkages is one aspect that has received little attention
in strategies for promoting smallholder agricultural growth in South Africa. Yet
strengthening these linkages has proved effective in generating employment and income
in other countries (Machethe et al., 1997). The development of small agroindustrial

10
businesses in the former homelands would generate employment and income by (a)
providing inputs to smallholder farmers; and (b) adding value to products of smallholder
farmers through processing and distribution. The potential for such agroindustrial
businesses appears to be enormous in a province like Limpopo whose agricultural
economy is largely based on the production of horticultural and livestock products.

5.5 Not Every Rural Resident is or should be a Farmer

Strategies for smallholder agricultural development need to take cognisance of the fact
that the skills and interests of rural residents are not the same. Not every rural resident
should be treated like a farmer and not all rural residents are interested or skilled in
improving their livelihood through farming. Therefore, it is important to ensure that
government initiatives to reduce poverty through smallholder agricultural development
focus on those that are interested and/or have the necessary skills to farm successfully.
Other rural development strategies should be developed for those interested in nonfarm
activities.

5.6 Smallholder Farmers and Farming Areas are not Homogeneous

Any attempt to increase the contribution of agriculture to poverty reduction needs to

appreciate that farmers are not a homogeneous group. An effective smallholder
agricultural development strategy will recognise that there are different categories of
smallholder farmers requiring different approaches. “An agricultural strategy that relies
on a standard package of ‘technological bullets’ is too narrow to assist the diverse
agrarian structure in Africa today” (Eicher, 1994:87). Technological and institutional
packages should be tailored for each category of farmers. Likewise, farming areas in
the former homelands do not have the same agricultural potential. Therefore, diverse
strategies will need to be developed to ensure that each farming area is assisted to
reach its agricultural potential.

6. CONCLUSION

Poverty and income inequality persist in South Africa despite efforts to eliminate them.
The poverty problem in South Africa is largely rural. Promoting smallholder agricultural
growth can be an effective strategy to reduce rural poverty and income inequality.
Evidence from other countries shows that, with the necessary support, smallholder
agriculture can contribute significantly to poverty alleviation by raising agricultural
productivity and rural incomes. Farming constitutes a major source of income for many
rural communities in South Africa and, therefore, plays a major role in poverty alleviation.
This role can be enhanced by making appropriate investments in the prime movers of
agricultural development: human capital, agricultural research, biophysical capital
formation, and rural institutions. Such investments have proved effective in promoting
smallholder agricultural growth in other countries and largely explain the success
achieved in developing the commercial agricultural sector in South Africa.

Access to agricultural support services remains a major factor constraining the growth of
smallholder agriculture in the former homelands. Experience from other countries
indicates that a comprehensive approach to the provision of farmer support services is
required to achieve growth in the smallholder agricultural sector. This approach has
been embraced in South Africa as demonstrated by the launch of the Comprehensive
Agricultural Support Programme. This programme is expected to address the problem

11
of lack of access to farmer support services especially for land reform beneficiaries. To
achieve a broad-based smallholder agricultural development, it will be necessary to
broaden the scope of the programme to include smallholder farmers in the former
homelands.

While agriculture plays a major role in poverty alleviation, the poverty problem in South
Africa cannot be solved by promoting smallholder agricultural growth alone. More
attention should also be given to the promotion of nonfarm activities (e.g. agroindustry),
particularly those that are linked to the smallholder agricultural sector. A strategy that
pays attention to the strengthening of farm/nonfarm linkages is likely to yield better
results in terms of employment and income generation.

12
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