Agriculture and poverty: Farming for food or farming for money?

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 by white farmers. This has contributed to the huge disparities in the income levels of black and white agricultural households. In this paper two South African household surveys are used to analyse agricultural inequality using various decomposition techniques. It is found that inequalities within agriculture are higher and more pronounced along racial lines than inequalities among non-agricultural households. Agricultural inequalities also differ structurally from those in the rest of society and are explained largely by differences in the ownership of income-generating assets, and less so by racial wage inequalities. Furthermore, an analysis of agricultural poverty reveals extremely high poverty rates and meagre incomes among black subsistence and small-scale farmer households. These results have important implications for the type of transformation required in the South African agricultural sector, adding weight to the notion that commercialisation is crucial if agriculture is to contribute meaningfully to poverty reduction among the rural black community.