South African land and market reforms: Equity versus efficiency

Abstract

This study makes a contribution to the land redistribution policy, which is presently not only one of The most definitive political and development issues, but perhaps the most intractable in South Africa. The study develops and uses a mathematical model for regionalised farm-level resource use and output supply response to show that the current policy requires more economic imperatives, as it tends towards smallholder agriculture that cannot produce adequate yields to meet either domestic demand or a tradable volume. Given the challenges of a free market and the fact that the settled small-scale, resource-poor (mainly black) farmers are less efficient compared to large-scale (mainly white) farmers from whom government transfers land, the study compares and prescribes land redistribution strategy that considers equity with efficiency. The study further suggests that agricultural land may act as a safety net for the poor, where the efficiency argument does not hold.