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Agricultural efficiency and welfare in South Africa

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  • Kalie Pauw
  • Scott Mcdonald
  • Cecilia Punt

Abstract

Agricultural and food commodity price declines associated with domestic and international agricultural efficiency gains can have important welfare effects for a country. While food price reductions benefit low-income consumers in particular, they may also cause declines in agricultural employment, leading to some resistance to technological change as a policy goal. The simulations reported here use a South African Computable General Equilibrium model with highly disaggregated food and agricultural sectors to illustrate the various effects of such agricultural efficiency gains. The results suggest that technological advances in agriculture should not be resisted because of their negative impact on agricultural employment; the welfare gains from declining prices are too important, while employment gains in other (growing) sectors are likely to outweigh the loss of agricultural employment. In the face of increasing international efficiency South African agriculture should be encouraged to respond by also increasing its efficiency, despite the negative consequences for employment in the industry, as a failure to do so may be even more detrimental to the poor in terms of overall employment.

Suggested Citation

  • Kalie Pauw & Scott Mcdonald & Cecilia Punt, 2007. "Agricultural efficiency and welfare in South Africa," Development Southern Africa, Taylor & Francis Journals, vol. 24(2), pages 309-333.
    • Handle: RePEc:taf:deveza:v:24:y:2007:i:2:p:309-333
    DOI: 10.1080/03768350701327236
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    References listed on IDEAS

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    1. Özler, Berk, 2007. "Not Separate, Not Equal: Poverty and Inequality in Post-apartheid South Africa," Economic Development and Cultural Change, University of Chicago Press, vol. 55(3), pages 487-529, April.
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    1. Bahta, Yonas T. & van Niekerk, Walter, 2019. "Resources use, technical efficiency of maize industry and performance of the South African economy," 22nd Congress, Tasmania, Australia, March 3-8, 2019 345878, International Farm Management Association.
    2. Carlos Pestana Barros & Emanuel Reis Leão & Nkanga Pedro João Macanda & Zorro Mendes, 2016. "A Bayesian Efficiency Analysis of Angolan Banks," South African Journal of Economics, Economic Society of South Africa, vol. 84(3), pages 484-498, September.
    3. Lin, Yu-Hui & Chen, Dickens & Chang, Ching-Cheng & Hsu, Shih-Hsun, 2010. "The Impacts of Direct Tax Reform on Taiwan's Economy-A Computable General Equilibrium Analysis," Conference papers 332029, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    4. Becerra-Perez, Luis & Lopez-Reyes, Luis, 2017. "Technical efficiency of corn production in Sinaloa, Mexico," Conference papers 332904, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    5. Ramigo Pfunzo & Yonas T. Bahta & Henry Jordaan, 2024. "Insights into the Impact of Irrigation Agriculture on the Economy of the Limpopo Province, South Africa: A Social Accounting Matrix Multiplier Analysis," Agriculture, MDPI, vol. 14(7), pages 1-27, July.

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