W. Lieb Nieuwoudt

Socio-economic dimensions of small-scale agriculture: A principal component analysis

In order to study the different dimensions of small-scale farmers in KwaZulu-Natal, a principal component analysis was conducted on data obtained from a sample survey of 160 households. The following socio-economic components were extracted: Component 1 is an emerging commercial and mechanised household (i.e. it uses machinery), while Component 2 is a landless farm household that is more educated and earns more non-farm income, largely from contractor services. Component 3 is a non-farm female-headed household that depends on income from land renting and a non-farm job. This is a resource-poor household. Component 4 is a small intensive garden farmer household headed by a more educated female with better access to institutional services. Component 5 is a less educated, female-headed and land-poor household that rents in more land and is an intensive producer. Component 6 is a land-less household that rents in land and is also involved in contractor services. The implication is that policies aimed at assisting small-scale farmers should take into account the different dimensions of farmers, as economic policies may influence different households differently.

Tenure security and productivity in small‐scale agriculture in Zimbabwe: Implications for South Africa

This article tests empirically the interaction between land tenure security and agricultural productivity in small-scale agriculture in Zimbabwe. Data for the analysis were gathered during April and August of 1995 by means of an interview survey of farmers in the small-scale commercial sector, communal area and Model A resettlement area of Zimbabwe. Two-stage least squares regression estimates reveal that land tenure security has a positive and significant influence on investment incentives and agricultural productivity in the sample. This result has two important implications for proposed land reforms in South .. Africa. Firstly, the result lends support to the notion that indigenous tenure institutions in communal areas of South Africa are a constraint on agricultural development. Secondly, it is clear that a national land redistribution policy must be accompanied by innovative tenure institutions which facilitate economic interaction and internalise externalities on land resettled by individuals and groups. This is particularly important in South Africa where groups of up to 300 families are being settled on commercial farms under a group ownership model.

WATER MARKETING IN THE CROCODILE RIVER, SOUTH AFRICA

Abstract Transfers of water in the Crocodile River above and below the gorge (near Nelspruit and Malelane) were studied based on a survey in the area during November 2003, followed up by telephonic interviewing during March 2004. Almost all the water trades (permanent and rentals) observed in this study were from farmers above the gorge to farmers below the gorge. In order to study whether the water market promotes efficiency the data were subjected to several statistical analyses (Principal Components, Ridge Regression, Logit). It is concluded that in the transfer of water some attributes in the purchasing area such as lower production risk (sugar cane) and lower financial risk and better cashflow (bananas and sugar cane) were more important than the income per cubic meter of water. Water supply in this area is highly irregular while farmers were found to be extremely risk averse especially as far as down-side risk is concerned. The average water price in this area in recent years (2002 to 2003) was between R2,000 and R3,000 per ha (1ha = 8,000 cubic meter). Buyers are large progressive farmers that purchase (and rent) from many sellers (or lessees). It is concluded that information (sale prices and rents) is asymmetrical. Few permanent transfers have taken place in the Crocodile River in recent years. It is concluded that there are reasons why transfers at present are not processed and role players should discuss these reasons and possible solutions before further action is taken.

Farming without drought relief: Time to revisit an income equalisation deposit scheme?

In a recent report to government, an Income Equalisation Deposit (IED) Scheme for commercial farmers and crop insurance for small scale farmers have been recommended as risk management strategies. An IED has been considered in the past in South Africa but rejected largely due to tax implications. Conditions have now changed as various countries (Australia, Canada and USA) strongly promote such a scheme as a risk management strategy while the South African crop insurance program has failed to attract farmers. A main criticism of an IED in the past was that if it is used in conjunction with the In/Out farmer’ tax provision, that farmers can obtain tax benefits if they destabilise their incomes. This can be avoided by adopting a tax rule that farmers may only invest the positive difference between their current taxable income and their moving average taxable income in an IED. It is further recommended that the Land Bank deposit scheme (Income Tax Paragraph 13A) be abolished and be replaced by an IED that covers both livestock, crops and horticulture.

AN ECONOMIC ANALYSIS OF RESTRUCTURING THE SOUTH AFRICAN HAKE QUOTA MARKET

Hake is the most valuable fisheries species in South Africa, with an estimated landed value of R658 million in 1997. The fishery is presently managed under an individual quota system, where total allowable catch (TAC) is set annually and divided up amongst quota holders according to past performance, without quota holders having to pay for it. Fundamental restructuring of the South African hake quota market is however due to take place in the near future as recommended by the White Paper on Marine Fisheries Policy (1997). Factor analysis of data collected from a postal survey of existing South African hake quota holders and rejected hake quota applicants suggests that distinct differences in attitudes towards restructuring exist amongst respondents. Four factors, representing groups of respondents defined as (1) applicants, (2) quota holders, (3) small scale respondents (comprising of both applicants and quota holders), and (4) larger, longer established quota holders, sharing similar attitudes towards restructuring were extracted. It was also calculated that a substantial annual rent of approximately R279 million is generated by the South African hake industry, which is presently harvested free of charge by those issued with quota. It is stated policy of the White Paper to capture these rents, however methods of accomplishing this have not been well accepted by the industry. This study aims at providing some solutions to these problems of restructuring.

Incentive Distortions in Developing Agriculture in South Africa and Implications for Tenure Reform

The political transformation in South Africa is a political marvel. One reason why this was accomplished is that potential conflict areas were diffused by pre-emptive steps taken before democratic elections. In terms of land distribution, mechanisms were set in place allowing for land transfers from state and predominantly white-owned commercial farms to small-scale black farmers. These steps are required to alleviate the extreme skewedness of land access, reflected by the fact that the white minority owns about 87 per cent of South Africa’s agricultural land. The new government has proposed various resettlement models to achieve land transfers to previously disenfranchised black farmers, ranging from private ownership to group resettlement (LAPC, 1993).