Inequality and agricultural production: Evidence from aggregate agriculture and sugarcane farms in South Africa

This article explores the determinants of inequality in productivity in South African agriculture and differentiates between small-scale and large-scale farms in the sugarcane sector. The findings suggest that inequality slows down productivity and that land redistribution slightly improves it. Farm type-specific effects reveal that redistribution per se does not lead to higher production, but only improves production for those who farm the land effectively and go on to harvest the crop. Much of the difference in land productivity between the two farm types arises from disparity in input use, particularly fertilizer and irrigation. Some mutually beneficial collaboration between the two types is possible, skewed in favor of small farms. For small-scale farmers, access to land is necessary but not sufficient: other factors such as fertilizer, irrigation, chemicals and human capital (particularly literacy) must be prioritized. Any policy that creates conflicts between the two types will jeopardize agricultural production, to the detriment of small-scale producers.