Macroeconomic strategies, agriculture and rural poverty in post ...

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targets agro-industry, creates new jobs and improves rural livelihoods, according to Merg, has the potential of stimulating the economy as a whole: Dynamic interactions may be anticipated between expanded demand in the agricultural sector, increased agro-industry output and increased output from a range of other manufacturing sub-sectors. Growing output and rates of capacity utilisation, especially in the food processing components of agro-industry should lower the real price of basic goods, resulting in an increase in the proportion of their incomes that the mass of the rural population can devote to the purchase of manufactures (Merg 1993, 170). The International Labour Office’s (ILO) report on labour markets in South Africa has pursued this argument in more detail, but also in the context of a better understanding of rural poverty and rural livelihoods (Standing et al 1996). Using the PSLSD data, as well as other surveys which seem more representative of the income earning strategies of the rural poor, they support Merg’s emphasis on rural job creation and the possibilities it has for the economy as a whole. The recent surveys suggest that income from agricultural wage employment - however poorly paid and insecure - remains the most important livelihood strategy for the rural poor and especially rural women. Income generated from the informal sector and from farming represent a negligible portion of the total income earned by poor rural households. The PSLSD profile of the households that do earn an income from farming is very significant. It suggests that those households making money from agriculture also earn income from the primary labour market, in other words jobs that are relatively secure and well paid. In contrast, the poorest rural households are unable to generate income from agricultural production and rely instead on wage income from farm work or domestic service (May, Carter and Posel 1995). The importance of rural wage work is given further weight by the finding that remittances to rural households come mainly from wages earned within rural areas. This overturns the conventional wisdom that remittances to rural households are transferred from wage earners located in the main metropolitan areas and strengthens the case for a policy which improves rural employment opportunities. The Merg/ILO approach depends, of course, on improving working conditions in rural areas and especially employment practices on white commercial farms. While workers in agro-processing industries and forest plantations are often organised and enjoy competitive wages and adequate working conditions, wages for farm workers are notoriously low, working hours extend beyond the legal limit, and violence remains a form of coercion on some farms. On farms in the former bantustans conditions are variable: while sugar cane farmers in the Mpumalanga lowveld pay wages to farm labour and apparently have ‘good relations’ with their workers (Vaughan and McIntosh 1995), in other regions of the country, conditions are worse and payment in kind appears to be the most common form of remuneration. The recent extension of the Labour Relations Act (LRA) to farm workers has focused attention on the possibilities of organising farm workers with a view to improving working conditions and wages (Murphy 1995). Unfortunately, the experience of unions has been disappointing: it has proved extremely difficult to organise farm workers in the context of high rural unemployment, and farmer reluctance to permit organisers access to workers. The South African Agricultural Union and the National Department of Agriculture have come out against labour legislation, arguing that it will encourage farmers to decrease the number of workers on farms and accelerate the trend away from maize production (Nampo 1993; Department of Agriculture 1996). And while the LRA may make it easier for unions to organise workers, commercial farmers remain protected by pieces of legislation like the Trespass Act, which they can use to evict union organisers from their land. Those farms that 5
are organised have normally had the cooperation of the owner. They also tend to be larger operations - ‘factory farms’ - and often grow labour intensive crops like citrus, deciduous fruit and vegetables. It has been far more difficult for unions to organise workers on smaller and less labour intensive farms. The ILO’s macroeconomic solution to rural poverty (Standing et al 1996, 262) - “that tackling rural poverty requires interventions to improve the wages and working conditions of the unemployed, as well as policies designed to increase and widen access to rural wage employment opportunities” - depends on the ability of unions to improve conditions and on the effectiveness of state interventions to realise the ‘dynamic linkages’ between agriculture and the rest of the economy. Significantly, unlike the World Bank approach, it depends much less on the potential of an emerging class of black farmers. How does Gear propose to alleviate and ultimately eradicate rural poverty? Gear and agriculture Gear has an impressive set of goals which include a projected 6 percent per annum growth and the creation of 400,000 jobs per annum by the year 2000. The success of the strategy is based on two main pillars, the transformation to a globally competitive, outward oriented economy and the creation of a stable economic and political environment for private investment. The growth of exports will be based on a powerful ‘expansion in the tradeable goods sector.’ This export sector will play a crucial role towards realising the targets of 6% GDP growth and 400,000 jobs per annum by the year 2000. The state’s role in this expansionary thrust is facilitatory: it will set up preferential trade agreements with large international trading blocks, it will assist in opening new markets for exports, and it will encourage greater regional economic integration in Southern Africa. It will also ensure a stable exchange rate and will contain inflation to provide the necessary stability for ‘a concerted expansion of export industries.’ The second policy initiative to enable an outward oriented economy involves removing a series of ‘constraints’ which, once eliminated, will ‘catapult the economy to the higher levels of growth, development and employment needed to provide a better life for all South Africans’. One of these constraints is tariffs on imported goods and the strategy commits itself to tariff liberalisation with a view to controlling input costs, containing inflation, stimulating foreign investment, and indirectly contributing to more moderate wage demands. Tariffs and subsidies have in the past, according to Gear, had the effect of increasing producer prices; their intention is to shift the focus towards ‘supply side measures designed to lower consumer costs and expedite progress up the value chain’. To this end the strategy will not only half the number of tariff lines, it will also abolish import surcharges and proceed with the phasing out of the general export incentive scheme. The implications of these initiatives for manufacturers will apparently be lower input prices and therefore more competitive products for local and international markets. While domestic agricultural policies do not feature as one of the ‘constraints’ hampering the economy, the implications of the policy for agriculture are clear. Tariffs, subsidies, quotas and exchange controls played an important role in preventing farmers from becoming export oriented and, together with the policy of apartheid, ensured that agriculture remained focused on local markets to ensure national self-sufficiency (Fallon and Pereira da Silva 1994). It is very unlikely that the strategy will reverse the erosion - that has occurred since the 1980s - of these interventions in the ‘market’; on the contrary, it almost certainly implies that this erosion should be accelerated as part of a process leading to an agricultural sector that is more export oriented. 6
Page 1 and 2: Macroeconomic strategies, agricultu
Page 3 and 4: line. 2 The nature of poverty in So
Page 5: 20,000 people would lose their jobs
Page 9 and 10: 1980s and 1990s. While non-gold exp
Page 11 and 12: 10 Despite not receiving the attent
Page 13 and 14: produced after 1994. Gear’s appro
Page 15 and 16: organised by the private sector and
Page 17 and 18: poverty. Current estimates suggest
Page 19 and 20: Bell, T. 1996. Creating rural livel
Page 21: Rustomjee, Z. 1993: Is there a manu

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