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AGRICULTURE IN A DEVELOPMENTAL STATEFinding Nexus for A Developmental Agricultural EconomistsDr Moraka N MAKHURA
FR Tomlinson Commemorative LectureBolivia Lodge, Polokwane, 1 December 2015
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Thank You Limpopo and AEASA•Origin from high agricultural potential village•Eminent agricultural economists from Limpopo•Right time for AEASA Limpopo Chapter•Serving AEASA for 25 years
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Tribute to Sethodi Maggie MAKHURA•My farmer
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People who keep me going!Name
1 KOMAPE Brinah Aunt and Peppadew farmer2 MAKHURA Mochipisi P Brother and emerging livestock farmer 3 RIBA Bolale S Brother-in-law , former Extension Officer / veg farmer4 MAKHURA Manai P &
Mrs MAKHURABrother, former teacher of Agricultural Science / livestock farmer
5 MAKHURA Moloko P Brother, former school mate & aspiring farmer6 MALATJI Mariam Cousin, motivator and “MY” Peppadew farmer7 MAMABOLO Priscilla Peppadew farmer8 KLOPPER Phillip Friend and Founder of Farming 4 JESUS!9 RIBA Mabu C Niece & mentee10 RIBA Mogolo G Nephew & Director of MOGGOD Purified Water &
Beverages11 MAKHURA Nthabi Niece & Agricultural student12 MAKHURA Sello I Nephew & Agricultural student13 KLOPPER Schalk A 10 year old farm enthusiast & No 2 Friend of the
Farmer! 5
About the FR Tomlinson Lecture
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CONTRIBUTIONAGRICULTURE
DEVELOPMENTAL STATE
FARMER
The Developmental State•government is intimately involved in the macro- and micro-economic planning to grow the economy •balance economic growth and social development•Uses state resources and state influence to attack poverty and expand economic opportunities•12 outcome for priority areas
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Developmental State Priorities & Agriculture ResponseNational Policy Instruments Agricultural Sector Policy InstrumentsReconstruction and Development Programme (RDP)
Broadening Access to Agriculture Thrust(1994)
Constitution of the Republic of South Africa
White Paper on Agriculture (1995)Policy on Land Reform (1995)
Growth, Employment and Redistribution (GEAR)
Agricultural Sector Strategy (2001)Integrated Sustainable Rural DevelopmentStrategy (ISRDS) – 200?
(BEE) /(BBBEE) AgriBEEASGISA LARPNew Growth Path Comprehensive Rural Development
ProgrammeIndustrial Policy Action Plan (IPAP) Integrated Growth & Development PlanNational Development Plan (NDP) Agricultural Policy Action Plan (APAP)
Revised Land Reform8
Stages of Agricultural TransformationSTAGE ATTRIBUTESGetting Agriculture Moving Through institutional change, technology, incentives
and infrastructure (Mosher)
Making Agriculture Contribute to the Economy
Linkages with industry, create healthy agriculturalsector and mobilise resources (Johnston-Mellor)
Integrating Agriculture into the Macro-economy
Responding to macro-economic instruments,efficiency, resources out, and rural/urban disparities(Schultz-Ruttan)
Agriculture in Industrial Economies
Small share of agriculture, unemployment and need forlabour in agriculture, with disparities (DG Johnson)
AGRICULTURE IN A DEVELOPMENTAL STATE
Agriculture contributing to food security, providingstrong forward & backward linkages, creatingemployment, instrument of transformation
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Conventional Contribution of Agriculture2014 2004 1994 Around 1954
GDP (% share) 2.4 3.1 4.6 12 - 18Employed in Agriculture 686 000 767 000 921 700 + 1 300 000
Share of Employment (%) 5 6 20-30Foreign Exchange (x-m) 20 262,7 6 241,2 3 160,9Import/Export Dependency 75% 73% 61%Net Farm Income 65 953.4 16 252.6 6 768.1Taxes
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Extended Contribution of Agriculture•Value of agriculture•Backward linkages•Forward linkages•Volume of trade (Exports + Imports)•Patterns of Trading Partner•Food security state
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Output markets
Input markets
Food production stability and profit era:
Agric output markets value increasing
Use of cheaper and accessible input
Focus on production
Cost price squeeze:
Inputs becoming more expensive than output price
Support & incentives sustained agriculture contribution
Focus on production
Output market deregulation:
Output markets becoming volatile
Output market intelligence guiding decision making
Focus on profit
Agric in market economy
Output /input markets becoming volatile & cyclical
Forward decision making
Vulnerability to food availability due to focus on profit
1994 2004?1954?
Marke
t value
/insta
bility
International vs domestic dev
Intensify agri support
E Farmers outputmarket
No developmental pressure
Emerging developmental needs
Focus on developmental needs
Evolution of Agriculture in South Africa
Agricultural Economists and the Developmental Mission• The practice then and now
• Focus on agricultural development projects (pre 1994)• Focus on agribusiness / farm business analysis• Need to scale up viability analysis
• AEASA attitude to developmental priorities• AEASA Conference themes• Simon Brand Lecture• FR Tomlinson Memorial Lecture• Agrekon Articles since NDP
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In Search of a Prosperous Farmer! The Friend of The Farmer Economist• Evaluation of Agricultural Development Projects• Farm management for developing farmers• Commercialisation of small scale farmers• Transaction costs and institutional barriers• Making agricultural economic work accessible / communicating the message• The New Old Theory of Commercialisation for PROSPERITY• The Rural Economist
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Farmer settlement on agricultural development projectsFarmer Scenario Type
Description Number Settled
Commercial Risk Taker
No support; Farmer responsible for all cost (x) 0Limited Support Farmer
Fixed (subsidised) wages; Farmer responsible for other costs
0Free Farmer No govt involvement; market wages + family
labour (fewer farmers)1
Free & Supported Farmer
Market prices + family; subsidies; (more farmers settled)
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Free & Efficient Farmer
Market wages, productive workers; Seeks better prices
12Free, Efficient & Supported Farmer
Market wages; productive workers; better market arrangements; Govt & Service Centre Support
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In Search of a Prosperous Farmer! The Friend of The Farmer Economist• Evaluation of Agricultural Development Projects• Farm management for developing farmers• Commercialisation of small scale farmers• Transaction costs and institutional barriers• Making agricultural economic work accessible / communicating the message• The New Old Theory of Commercialisation for PROSPERITY• The Rural Economist
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Concepts of commercialisation Concept AttributesCommercialise Surplus (Fisk)
Consume what is produced
Maximize opportunities (Nakajima; Louw)
Production linked with markets
Risk in Commercialisation (Von Bron)
Production & market risks
Commercialise to Access other goods & Services (Makhura, 1994)
Farmers integrated to other economic activities
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In Search of a Prosperous Farmer! The Friend of The Farmer Economist• Evaluation of Agricultural Development Projects• Farm management for developing farmers• Commercialisation of small scale farmers• Transaction costs and institutional barriers• Making agricultural economic work accessible / communicating the message• The New Old Theory of Commercialisation for PROSPERITY• The Rural Economist
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Kirsten, Makhura & Delgado at IFPRI, Washington DC (2000): after finding the hidden transaction cost of market participations!
Finding the Nexus for the Developmental Agricultural Economists•Towards a new Developmental Agricultural Economist•Friendship with the Farmer•Economics of Family Farming•Viability on land reform project ex ante•The Spirit of Farming or Farming Spirit
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STATE OF AGRICULTURE
DEVELOPMENTAL STATE / ECONOMY
PROSPEROUS FARMER
DAE
The Role of DAE in a Developmental State
Finding the Nexus for the Developmental Agricultural Economists•Towards a new Developmental Agricultural Economist•Friendship with the Farmer•Economics of Family Farming•Viability on land reform project ex ante•The Spirit of Farming or Farming Spirit
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Conclusions•Developmental state may stay with us for a while.•Agriculture will have to shape accordingly to support the Dev State•Preparation and reorientation of agricultural economists•The future lies in the youth
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The Future of the Developmental State lies in the SEED ……….shhhhh! Don’t tell everyone