Equitable land redistribution in the South African agricultural sector investigating production structure and economic effects

This study seeks to understand and quantify the economic effects of equitable land redistribution in the South African agricultural sector and the associated impact on agricultural productivity and food security. The analysis starts by quantifying the total factor productivity (TFP) of the South African agricultural sector using time series data for the period 1980 to 2019. A growth accounting framework is applied, which entails estimating a Cobb-Douglas production function augmented with human capital and productive land to determine the time-varying factor contributions for capital, land and labour through recursive estimation of the production function.

The results reveal that the effects of land reform policy are minimal but positive at the aggregate economic level across the two scenarios in the long term. It is important to note that the analysis did not account for the costs of purchasing land by the state, however, the farmer support provided is accounted for in the Second Scenario. In scenario 1, the land loses productivity, which subsequently limits the production capacity and slows economic growth relative to the baseline the short-term results are negative because of the loss in land productivity with the transfer to new farmers. This translates to export decline and a drop in employment, in particular in labour-intensive agricultural industries like fruits, vegetables and part of grains.