[South Africa] Land reform not cure-all for poverty - OECD

from Reuters South Africa

By Gershwin Wanneburg

JOHANNESBURG (Reuters) - Handing more agricultural land to South Africa's black majority is not enough to cure the country of widespread poverty, especially in underdeveloped rural areas, a report by the OECD said on Wednesday.

South Africa has highlighted its land reform programme as a key means of reducing poverty, especially in rural areas, as it tries to reverse unequal land distribution created by apartheid and colonial laws.

But the Paris-based Organisation for Economic Development and Cooperation said given its limited resources of water and arable land, South Africa should focus more on improving social services and infrastructure in impoverished rural areas.


"Rural economic infrastructure, such as rural transport, telecommunication and information technologies, is crucial for the development of economic activities in rural areas, including commercially sustainable farming," the OECD said.

"Equally important are the provision of social services and investments in infrastructure that will provide a knowledgeable, skilled, healthy, economically active society in rural areas," it said in a first report on South Africa's agricultural sector.

South Africa, the continent's biggest economy, wants to put 30 percent of farm land in black hands by 2014 in a bid to return blacks to land forcibly taken from them under white minority rule.

So far, the government has reached just under four percent of its target.

The report echoed frequent criticism that lack of official skills and support for new farmers had hampered transformation in agriculture and resulted in a number of black farmers failing. It also pinpointed a lack of funding.

Some agriculture officials have acknowledged the government's shortcomings and said they hoped to enlist the expertise of established white farmers, asking them to help fund projects.

FARMERS ADAPATING

The 185-page report said the agricultural sector contributed under four percent to gross domestic product (GDP) in 2001/02 versus around 6 percent in the 1980s. But despite its declining economic significance, the industry remains resilient.

It attributed this to market reforms that followed democracy in 1994, when the government did away with apartheid-era policies like production quotas and limits on the number of processors and traders that created monopolies.

Farmers have complained that they are being battered by the reforms -- which have resulted in price fluctuations in the market for the food staple maize in particular -- and called on the government to step in to assist them.

But the OECD said farmers had adapted well to the changes, tripling exports and resulting in a positive agricultural trade balance of around $1 billion per year since 2000.

"Within the last 10 years, South Africa's commercial agricultural sector has adapted well to the policy reforms which liberalised markets and reduced support to commercial farming," it said.

"In general, commercial producers tend to be highly competitive, market oriented, and profit focused, responding to local, regional and market opportunities."