Quantifying the Economic Divide in South African Agriculture: An Income-Side Analysis

Abstract

The dualistic nature of the South African economy manifests itself to a large extent in the agricultural sector, where ownership and access to land was previously reserved and is still mainly controlled today by white farmers. As a result black farmers were prevented from sharing in the profits derived from a thriving agricultural sector, contributing to the large disparities between the income levels of white and black agricultural households. In this paper the inequality in the distribution of income between the black and white agricultural populations is quantified using various decomposition and data exploratory techniques. Analyses of data from the Income and Expenditure Survey of 2000 and the Labour Force Survey of September 2000 (Statistics South Africa) suggest that not only are inequalities within agriculture higher and more pronounced along racial lines than inequalities within non-agriculture, but these inequalities can be explained to a large extent by differences in the ownership of income-generating assets such as land and productive capital. However, given the high poverty rates and meagre incomes among black subsistence and small-scale farmer households, much needs to be done in order to increase returns to non-commercial agriculture before it will become a solution to poverty reduction.