The Economic Contribution of Home Production for Home Consumption in South African Agriculture

This study discusses the importance of home production for home consumption (HPHC) and its economic contribution to South African Agriculture. The Income and Expenditure survey 2000 (IES 2000) dataset is used to draw conclusions in this study. IES 2000 contains a section on HPHC. HPHC aims to capture information on the quantities and values of home produce consumed and sold to the market. Home production often forms an important part of the livelihood strategies of rural households in developing countries. The study focuses on rural households of two provinces, namely the Eastern Cape and KwaZulu-Natal. Although HPHC is also practiced by many households in the Limpopo province a decision was taken to only focus on KwaZulu-Natal and Eastern Cape since these two provinces jointly form the East Coast region in the PROVIDE Project databases. As such the study is useful as it feeds directly into the mentioned projects, regional outputs. The software used during data analysis was Stata. Some calculations were not possible with Stata due to inconsistencies in the IES 2000 dataset. Therefore, the study firstly discusses inconsistencies in the dataset and the way they were corrected to make calculations in Stata possible. The data on HPHC also contain statistics from large producers who are seen as commercial farmers and, as such, are not supposed to be part of this study. Therefore, an effort was made to remove them from the dataset on home production for home consumption. Valuing produce and livestock consumed at home is also difficult. The method followed in this study, in an attempt to value HPHC, is the calculation of implicit price using the median market prices of the value of sales. This method was used in an attempt to gauge how much produce and livestock consumed at home contribute in monetary value. Literature about small-scale farming and its contribution to home consumption was reviewed. However, the main findings of this thesis are based on the IES 2000 HPHC database. In summary, the study assesses the economic value of produce and livestock in terms of their contribution to consumption and income. The findings reveal that there is very little contribution in terms of income made by HPHC. It was found that in Eastern Cape households HPHC contributes 12.0 percent of the total income, and in KwaZulu-Natal households it contributes 6.7 percent of the total income. In this study it was found that in terms of the types of produce that rural households produce, maize is by far the most important. Many (46.1 percent) of South African households are engaged in maize production, even though, in terms of consumption value, it contributes little (R256.65 per annum) when converted to a monetary value. Milk production was found to contribute more than any other kind of produce in Eastern Cape households in terms of monetary value per annum (R1112.51) even though the number of households involved account for only 6.3 percent. The consumption value of vegetables on average is R237.18 per annum and 24.1 percent of South Africa households are involved in its production. The value of cattle and sheep consumed at home by Eastern Cape households found to be R806.50 and R800.33 per annum per household, respectively; although, it is very rare for an African household to slaughter cattle at home just for food. Pigs which are more likely to be consumed merely as food, only contribute (R141.47) per annum, and poultry contributes R78.99 on average per annum.