Induced Innovation and Total Factor Productivity: Has it promoted pro-poor rural outcomes in the Eastern Cape Province of SA and can it do so in the future?
This seminar presents results of PhD research conducted with the School of Economic and the Sustainable Societies Unit of the CCR at UCT. This research investigates how improving productivity in agriculture can be achieved to realise the goals set out in the National Development Plan (NDP). The main objective is to see how improvements in productivity can contribute to inclusive growth in the Eastern Cape Province of South Africa.
This is done through four substantive papers. Firstly, background to the national commercial agricultural performance is given, followed by an updated Total Factor Productivity (TFP) analysis from 1980-2015, which extends the work of Thirtle et al (1993), who measure TFP from 1947-1991, using the Torqvist-Theil approximation of the Divisia Index. This paper concludes that even though there has been moderate productivity growth over the period, national level policy focus does not bode well for promoting inclusive rural growth, as agriculture is spatially diverse, and commodity specific. Paper Two describes public expenditure on agriculture and rural development from 1970-2015, with a focus on productivity enhancing items, specifically farmer support and development and extension services. It concludes that the declining expenditure does not reconcile with the stated goals in the national policy plans regarding agriculture. In Paper Three, TFP is measured at the magisterial district, statistical region and provincial level for the Eastern Cape, following the methodology employed by Conradie et al (2008, 2009). As for the national level analysis, the Torqvist-Theil approximation of the Divisia Index is used to measure productivity growth from 1952-2002. It concludes that TFP growth was slow in the province and most of the districts, and that the strong growth seen in certain districts and regions in the Western Cape (WC), won’t be replicable in the EC due to different agro-ecological conditions and specifically, output mixes. Thus, national level prescriptions of the NDP pushing for expanding horticultural production is not relevant to the EC, which has extensive livestock production as its dominant commodities, as opposed to the Western Cape. In Paper Four, the wool industry, which is a dominant commodity in the Eastern Cape, is used as a case study to show where institutional innovation in agricultural advisory services has promoted pro-poor rural outcomes. The National Wool Growers Association (NWGA), in partnership with the provincial department of agriculture, has been providing market access, shearing sheds and other means of support and extension to communal farmers in different areas of the former Transkei. A Data Envelopment Analysis was run for a study group of these communal farmers which received mentorship from the NWGA, followed by a Benefit Cost Analysis of the intervention from the perspective of the participants of the programme. The paper concludes that agriculture as a potential route out of poverty is clearly a distinct possibility if the ideal institutional environment is setup that allows for innovative ways with which communal farmers can be empowered to enter formal marketing activities and improve their livelihoods.