Behind some of the policy proposals and discussions on land redistribution in SA is a persistent notion that the country should establish “small-scale farms” so there can be more participants and an increase in productivity. This view was shared by some participants at a conference organised by the Institute for Poverty, Land and Agrarian Studies at the University of the Western Cape on February 4-5.
What we drew from the discussions is that this notion of small-scale farms arises from the perception that most commercial farms in SA are large-scale and perceived to be inefficient compared to their smaller counterparts, implying that large-scale farms should be capped and subdivided. What the proponents of the small-scale farms notion often forget is that small-scale family farms have been the dominant form of farming in SA commercial agriculture since the early years among all racial groups.
The general wisdom in SA regarding farm sizes is that most large-scale commercial farmers are white and most small-scale farmers are black — as if there are no white small-scale commercial farmers and no black farmers farming on a larger scale. We have discussed what makes commercial farms small scale in Business Day before, generally arguing that turnover, or rather the level of net farm income, determines the farm size category, not the land size.
Before we digress, the data in the accompanying table tells us that for most of the 20th century about half of the large-scale white commercial farmers operated on farm holdings smaller than 428ha on average (with more than 12,000 units below 86ha in 1993). Obviously, these aggregate numbers do not tell us where these farms are located, since many large-scale operators could farm on as small an area as 20ha, while very small businesses could be operated on very large tracts of land. So we always need to caution against using land size as a starting point of debate.
Most of these small family farms only survived through extensive government support programmes in the form of various subsidies, exploitative labour legislation and practices, and controlled marketing. But also, and very critically, expansive and well-staffed agricultural technical service centres in each farming district. The extension service and other government programmes supported these farmers and helped them eke out a simple, but decent, livelihood. It was enough to sustain families and send children to local schools and universities.
Afrikaner empowerment through the apartheid system also helped these poor rural families to climb the social ladder and eventually move to nonagricultural jobs, selling family farms to more successful neighbours. This led to consolidation, increases in the size of farming units, concentration of farm ownership and eventually an ever increasing depopulation of the former “white” rural areas. Banks, businesses and schools closed down as more families urbanised.
The agricultural census reports since 1993 have not presented any details on farm size and it is therefore not possible to track farm numbers and farm sizes. It is nevertheless true that there has been some form of consolidation, but how much that has increased farm sizes is not known since the data is not available. This situation is due to the fact that Stats SA has included only farmers registered to pay VAT in its more recent census reports: the most recent, for example, only reported 39,900 farms. When one accounts for non-VAT registered farms (VAT registration is only compulsory if the business turnover exceeds R1m), the total number of commercial farmers is closer to 69,000.
This number of 39,000 farmers has been quoted widely as the illustration of a drop in farm numbers — from 57,000 in 1993 to 39,000 in 2007. This naturally then leads to the logic that farm sizes have increased. The reality is — as we argue above — that this is not correct, since the 39,000 only refer to VAT-paying farmers. Interestingly, the Stats SA sample frame for the 2018/2019 agricultural census is again based on the register of VAT-paying farmers. This is now a total of 57,000, which suggests there has been no drop in the number of commercial farmers since 1993.
However, it is true that there has been an increase in farm sizes for a small number of extensive grain and extensive grazing regions. But for the rest, farm sizes remain the same, although the scale of the businesses has increased rapidly due to vertical expansion, vertical integration and, very importantly, an increase in on-farm productivity through technological change and more sustainable practices.
Herein lies the theoretical trap most commentators fall into when they talk of farm sizes — land versus business size. Classifying the scale of farming operations (small-scale versus large-scale) merely based on the size of the farm land also does not make sense due to the variation of land quality and the productive potential of different pieces of land. For that reason, the assessment of turnover provides a much better indication of the scale of the farm operation.
Fortunately, all the agricultural censuses and surveys in recent years have used gross farm income (or turnover) to classify commercial farms. If we apply the department of trade & industry’s official definition of small, medium and micro-sized enterprises — a turnover of R5m or less — 96% of all commercial farmers can officially be classified as small or medium-sized enterprises.
This confirms again that SA is a nation of relatively small family farms, many of them not providing full-time livelihoods to their owners. Theargument that SA is dominated by large commercial farms simply ignores the data or evidence, and is therefore misplaced.
• Kirsten is director of the Bureau for Economic Research at Stellenbosch University, and Sihlobo head of research at the Agricultural Business Chamber of SA.
