The contribution of agriculture to the economic growth of South Africa

M.Comm.The agricultural sector is important in South Africa, because it contributes approximately 4 percent to the country’s Gross Domestic Product. Agriculture can contribute significantly to economic growth, by means of food production and job creation, and thereby it can play an important role in reducing poverty. This paper examines the contribution of agriculture to economic growth in South Africa, and its possible role in poverty alleviation. It begins by conducting a literature review of the contribution of agriculture to economic growth. In particular, it examines two stages of farming, namely, the subsistence and commercial stages, to determine how each of these contributes to economic growth and poverty alleviation. It finds that both of these stages have undergone little improvement over the years and have performed poorly. Next, the challenges that prevent the farming sector from performing better are described and investigated in detail. Importantly, unavailability of the data in the subsistence sector makes it harder to arrive at a conclusion as to whether agriculture contributes to poverty alleviation. Despite these challenges, the study finds that agriculture remains the key to survival for most of the rural poor. Finally the paper draws conclusions and makes recommendations for policy measures to increase growth in the agricultural sector based on the findings of the research. The key conclusion emanating from this study is that agriculture does not indeed contribute to economic growth and that it is able to alleviate poverty. However, resources such as land, skilled labour, machinery and capitals are a major limiting factor. As for recommendations, a critical strategy must be to recapitalise agriculture, investing more heavily in this sector and in programmes to develop rural economic and social infrastructure. Public investment needs to be directed in particular towards promoting agricultural research and extension, improving access to financial services, providing investment incentives, and increasing access of the poor to support services and productive resources. The study concludes that data and information should be separated between subsistence and commercial farmers to be able to determine whether agriculture contributes to poverty alleviation