VOL. 8 No. 2 APRIL, 1969
Editorial Committee: A.J. du Plessis (chairman), Dr. A.P. Scholtz, H.J. van Rensburg and O.E. Burger Editor: Dr. A.J. Beyleveld Technical editing: Q. Momberg
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Articles in the field of agricultural economics, suitable for publication in the journal, will be welcomed.
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The dates of publication are January, April, July and October.
"AGREKON" is also published in Afrikaans. Page I. EDITORIAL 1 II. ECONOMIC TENDENCIES IN THE SOUTH AFRICAN AGRICULTURE .• • 2
III. ARTICLES
1. Decentralization of activities 4 P.S. Rautenbach, Planning advisor to the Prime Minister
2. Principles of rural development 10 P.C. Fourie, Chairman, Planning and Development Advisor Board of the Orange Free State, and
D.J. G. Smith, Director, Institute for Social and Economic Research, University of the Orange Free State
3. Social and demographic characteristics of rural areas 14 SP. Cilliers, Professor in Sociology, University of Stellenbosch
4. The organisational structure for the planning of national and sub-national development 24 Viljoen, Department of Urban and Regional Planning, University of Pretoria
5. Features of the economic growth and development of rural areas .• • 27 H. A. Kotze, Professor of Agricultural Economics, University of the Orange Free State
6. Service areas and rural development 40 P.J.D. du Toit, Senior Lecturer, Institute for Social and Economic Research, University .of the Orange Free State
7. Farm management - a prerequisite for sound agricultural development 54 H.S. Hattingh, Assistant Chief, Division of Agricultural Production Economics
IV. STATISTICS 60
11 ved em Rural Areas I is Features of the Economic Growth and Development of ent re- To- tee by uld ds. H.AAI_COTZE, ire ire Professor of Agricultural Economics, lso University of the Orange Free State ent lar ids economic activi- 1. THE GENERAL NATURE OF complexes with their various rst into fairly distinct THE PROBLEM ties have divided the country urban and rural areas. In many areas depopu- .11y lation has taken place. While certain places gle opportunities, such opportu- In South Africa as well as abroad people lacked employment the other places. Differential have recently developed greater consciousness nities were abundant in rt- developed. Improved of the economic status of their environments. income opportunities have ion systems have de- This consciousness arises mainly from the rapid transport and communication ion parts of the country Pace of change which has taken place in all veloped, more so in some , I has generally become Spheres. Large and rapid changes in the economic than in others. Farming well as mechanised. field is a normal feature in South Africa at more commercialised as farms have also taken present. These changes are spectacular and par- Changes in the size of areas there has been ticularly obvious in the larger urban centres, place. In certain farming type of farming to- a although the rural areas have not remained un- a complete change in the towards larger farming iis influenced in the process. In fact, many rural gether with the tendency life has not remained ,ed communities are experiencing changes which units. The rural mode of means of communi- it- Penetrate the very core of their economic exis- unchanged. Through modern iii tence. cation and other factors farmers have become he less secluded and came in closer contact with longer satisfied with During the past few decades there has been the cities. They Are no secluded existence of led ,Freater realization that "economic development inferior services and the populations demand better on is. never an even process."1) Some old indus- the past. The rural hospital and other ser- ity tries have expanded greatly, new ones have been roads, schools, medical, are prepared to travel longer he established and have developed rapidly through vices. Farmers sell or attend to other he the growing prosperity which has created new distances to purchase, be demands for commodities, while there are others needs. s- Which have stagnated or even disappeared.2) it S imilarly economic development has not proceed- In many rural areas a feeling has taken root !al ed at the same pace in a geographical sense. that they have not kept pace with areas which rn Certain areas in South Africa have developed have experienced population concentrations and ,a, as a more rapidly than the rate for the country offer a variety of economic activities. Under al Whole, while others have developed at a slower such circumstances reference has been made - rate. In some areas there has been no growth to economic backwardness. It is wrong simply or the growth has even been negative. to brand an area as economically backward with- lg out first making a careful evaluation of the re- 1- These changes are revealed in the large levant situation. PoPulation movements which have taken place iii South Africa, particularly as from the second out that retarded economic half of the nineteenth century.3) Large urban Robertson points development is a symptom found in many coun- )- tries. "Significant regional differences in income ig and employment levels exist in even the most highly developed economies, and may be the re- it or depression. The 1) Robertson, B.C. Regional Development in the sult of underdevelopment region, with little or no European Economic Community, Political and typical underdeveloped td high proportion of its Economic Planning, 16 Queen Anne's Gate, industry, has an extremely in agriculture; income London, 1962, p. 13. active population engaged 1, is and underemployment rather 2) per head low, Schultz, T.W. The Economic Organization of. than employment tends to be the problem.") Ti Agriculture. McGraw Hill Book Co., Inc., ,o New York, 1953, p. 146. 3) Grosskopf, J.F.W., "Plattelandse verarming en plaasverlating". Die Armblanke-vraagstuk Suid-Afrika. Verslag van die Carnegie- p. 13. Kommissie, Deel I. Stellenbosch, 1932. 4) Robertson, B.C., op. cit.,
27 This description of an underdeveloped area The phenomenon of sub-national differential clearly emphasises low per capita income and economic development is a difficult problem which underemployment found in areas with little or no is becoming more pronounced. There is an in- industry, where the entire or majority of the creasing need for more knowledge of, and better population is engaged in agriculture. It must insight into, the causes, the nature, the extent be borne in mind that such an area may within and implications of this problem of uneven de- the overall national development programme, velopment between specific areas. "This is a have outstanding latent development possibilities field in which action programs seem to have which for some reason or other have remained grown at a much faster rate than the underlying unexploited. Welch stressed the complex nature knowledge essential to their effectiveness.") ha of the problem of retarded economic development There are approximately 45 regional development found in sub-national areas as follows: "The associations in South Africa whose object it is ru web of causation is so intricate and to cultivate an awareness and a sense of regional an runs off is in so many directions that one is hard development in their communities, to promote put to ha say anything intelligent about it. It is at once the, development of their regions and to present In a problem of education, a problem of political a co-ordinated view to all responsible bodies ru organization, a problem of culture and social in their areas. These development associations ha interaction of people, a problem of motivations, were established through the initiative of private th a problem of science and technology and their individuals and local bodies. It is essential that adaptability to local conditions and also a problem these associations should gain knowledge of the of low quality and limited resources in relation development potential of their own regions. "In 2, to population as well as philosophies and order to determine and outline broadly the de- values". 5) sirable direction of development, all knowledge concerning the available and potential natural resources must be pooled. Where such knowledge All rural areas where farming is the main is insufficient - as it is in many countries, and industry and where the largest portion of the especially in a young country like the Union - re- population is concerned with agriculture should o: search is a necessary prerequisite in establishing however not be classified as areas fi subject to the basic facts before the co-ordinated pattern retarded economic development. There are agri- of resources development can emerge".8) cultural areas where the level of prosperity safe- a ly enables such areas to be classified as economi- t: cally developed. Such areas do, however, have In order to promote the optimum develop- a their development problems which need to be ment of a particular rural area it is essential identified and solved. One must thus distinguish that on the basis of a complete evaluation of the between areas with development problems, as situation, the adaptation to changed circumstances mentioned, and those areas which are burdened must not be delayed, but must be undertaken with retarded economic development. The former with the least possible disruption. With this in region or area is one which is well developed view the following aspects should be investigated: so that its problems are those of adapting to 1 further national economic progress6) and the (i) The underlying economic forces which may utilisation of new possibilities for development influence such a region must be identified; which may arise. On the other hand, the pro- blems of the latter areas, viz, those with re- 1 tarded economic development, are far more dif- (ii) the nature, scope and implications of the ficult. development tendencies of such a region must be analysed;
(iii) the role of the agricultural industry in the economic life of the region must be es- tablished;
(iv) an analysis should be made of anticipated 5) Welch, F., "The Evolving Low-Income Pro- trends of agricultural development, while blems in Agriculture", American Economic factors which may impede agricultural de- Review, May, 1960. velopment, should be identified; 6) Economic progress may be defined as "an increase in the net national product per head, either of the active population or of the total population. This concept also contains non- economic elements such as level of education, 7) Perloff, H.S., Dunn, E.S. Lampard, E. E., evolution of legal systems, mobility of labour, and Muth, R.F., Regions, Resources and degree of unemployment, length of working Economic Growth. The Johns Hopkins Press, hours etc." Roger, C Secretary of the "Coun- Baltimore, 1960, p. v. cil Central de L' economie", Social and Cul- tural Factors in Economic Development. Pa- 8) Du Toit, F.J., "Resources Development in per prepared for the National Development South Africa". Finance and Trade Review, and Management Foundation of South Africa, Volkskas Limited, Pretoria, July 1955, IN Johannesburg 35.
28 with which industries (v) attention must be drawn to implications in costs change, in accordance Consequently labour and the development trends for the region; and grow at different rates. capital should flow from the slower to the more in order to even out (vi) guidance for the formulation of a develop- rapidly growing industries The degree of growth ment policy and the suggestion of methods the distribution of income. account of the national- by which hindrances could be removed, experienced by a region on ly growing nature of the industries located in it should be given. growth. is called the composition effect of regional Certain aspects will be considered which are based upon the results of investigations in two rural areas, namely the Upper Orange Region The extent to which a particular region will arid East Griqualand.9) The Upper Orange Region attract new industries and promote the growth is a rural area which during the past decades of existing industries, will be determined by the has experienced practically no quantitative econo- nature and locality of the region. "The producer nlic growth, in contrast to East Griqualand, a endeavours to select that production place where rural area which during the corresponding period he can produce most profitably. The cost of pro- has experienced a higher rate of economic growth duction and income differs, however, from place avail- than that of the country as a whole. a to place depending upon differences in the and ability of inputs of the means of production which services and the accessibility to markets 2. FACTORS WHICH INFLUENCE are important for those particular production which THE DEVELOPMENT OF REGIONS enterprises".11) (Translation). Factors must be taken into account, are the supply of in- puts, and the quality and quantity to supplementary to An outline of the factors which influence the service industries, the economic distances d internal evelopment of regions will clarify the question various markets, the development of the of differential rates of growth.10) Regions grow structure of the region, the scope, composition firstly through the localisation of nationally fast- and buying power of the population of the region growing industries and secondly through the and the living conditions in the region for new a region attraction of an increasing share of such indus- entrants. The amount of growth which es it offers tries. On the one extreme a region may have will ex erience throu h the advanta is called growing share of a rapidly developing national for the rowth of articular industries, i By ndustry while on the other extreme a region may the local-factor effect of regional growth. effects a better un- have a declining share of a slow growing na- measuring these two _growth _particular region tional industry. The forces which therefore cause derstanding of thgrowth of a different industries to grow on the national level can be obtained. 12) at different rates and which influence the es- tablishment and growth of industries in particu- lar regions, will be reviewed more closely. The fact that a growing industry is established imply within a particular area does not, however, of other industries will on The influencing the growth of indus- that the establishment factors stimulated. The extent to which tries on a national level, are productivity and this account be industry will stimulate the establish- technological development on the supply side, a growing of other industries will depend and income elasticity and increases in incomes ment and growth and scope of that industry. O n the side. Since the rate of technolo- upon the nature demand an area is started through gical differs in various fields so Economic growth in development industries within the area, which also does the rate of productivity differ. On the interaction of by an increase in demand outside Other hand differences in the income elasticity is determined result is an extension of economic 0.f. demand between products cause dispropor- the area. The particularly in local commercial and telonate shifts in demand to occur with rising activities, service industries, through a cumulative process. incomes. The result is that relative prices and is The extent of developing an "export industry" demand an important determining factor in the a for materials and services and is therefore stimulus towards the development of comple- mentary industries. The nature of the "export such industry" will however determine, where industries will be located. An 9) complementary Le Clus, C. F., Unpublished results of re- industry which employs a large amount of un- - search for a M.Sc. Agric. thesis, De- skilled labour and which obtains little raw ma partment of Agricultural Economics. Uni- versity of the Orange Free State. Bloem- fontein, 1968. 10) These factors are set out in detail by: Kotze 'n Studie van die ekonomie van Noord- oos-Kaap met besondere verwysing na die 11) Ibid. p. 19. landbou. Unpublished D.Sc.Agric. thesis, U. al., op. cit., p. 74. 0.F.S., Bloemfontein, 1966, pp. 15-54. 12) Perloff, H.S., et.
29 terial and services from within the area, and TABLE 1 - A comparison of the percentage con- whose profits are distributed to persons out- tribution to total income by produc- 1€ side the area will not offer much incentive for tion branches, between the Upper the establishment and development of local eco- Orange Region and East Griqualand nomic activity.13) A situation where there are and the Republic, few persons with high incomes and a large low averages of the income group might even tend to retard rather period 1954/55 to 1959/60 than stimulate the development of a region. On the other hand an "export industry" which en- Upper East Re- courages a even distribution more of income Production Orange Griqua- pub- within a region, tends to establish a much greater Region land demand for and services lic goods within that region, . and can stimulate economic activity. - Agriculture, forestry % % % and fisheries 47.8 40.1 13.1 "The investment which is stimulated by the Mining and quarrying - - 12.1 'export industry' also has an important effect Manufacturing, con- on the economic growth of the area. If the 'ex- struction, electricity, port industry' necessitates considerable invest- gas and water 4.9 7.7 24.8 ti ment in transport and storage facilities etc., Transport, storage and external economies are created which are es- communication sential before other industries can develop. Where 10.5 9.6 9.6 the 'export industry' stimulates the growth of Commerce 8. 7 16.8 14.0 supplementary industries and where such in- Financial institutions dustries can preferably be established locally, and fixed property 2. 3 2.2 3.5 their development will lead to further growth". Ownership of dwellings 5.1 3. 2 3.4 14) (Translation). 'The extent of economic growth General public services 9.8 the which may result in an area from its "export 13.4 9.6 Other Services industry", is summarised as follows by North: 10. 9 7. 0 9. 9 "In summary the disposition of income earned - from export industry plays a decisive role in Total 100.0 100.0 100.0 the growth of a region. Related to this argument - is the region's propensity to import".I5) If Source: Department of Planning, Pretoria. the income earned by the "export industry" is used to import goods and services from other regions, growth will be stimulated elsewhere via the working of the regional multiplier and the regional accelerator.
3. DEVELOPMENT TENDENCIES IN THE UPPER ORANGE REGION AND IN The income Upper EAST GRIQUALAND of the Orange Region show- ed no increase during this period, while income in East Griqualand increased considerably.(Table 2). During the same period income of the Re- Characteristic of the economies of the two public increased appreciably. regions under consideration, is the relatively insignificant magnitude of economic activity, through it's insignificant contribution to total national income per square mile; as compared with certain other sub-national regions. TABEL 2 - Regional income of the Upper Orange According to the relative contributions of Region and East Griqualand, 1954/55 the various branches production total of to the to 1959/60 regional income, agriculture is in both regions by far the greatest contributor as against a Accrued Gross Value comparatively small contribution to the Republic Year as a whole. (Table 1.) Upper Orange East Region Griqualand
R1,000 13) North, D.C., "Agriculture in Regional Eco- nomic Growth", Agriculture in Economic 1954/55 28,255 5,936 Development, Edited by C. Eicher and L. 1955/56 29,950 6,596 Witt, McGraw Hill Book Co., New York 1956/57 36,980 6,916 1964, p. 72. 1957/58 31, 354 7,223 14) Kotze, H.A., op. cit., p. 51. 1958/59 26,651 5, 786 1959/60 29,287 10,137 15) North, D.C., op.cit., pp. 71 to 72.
30 economic growth. If local con- In addition to this there are important dif- have experienced rapid fast growth of agri- oduc- ferences between the economic structures of conditions do not favour the nature that agricul- )per the two regions and that of the country in general. culture, or are of such a declines any rapid quanti- Lland Where agriculture is the most important single ture stagnates or even be excluded in such Production branch in the economy of the two re- tative economic growth would rate of agriculture's gions, it plays a relatively small role in the an economic structure. The should necessaril be economy of the country as a whole. Manufacturing rowth in these re•ons, determine what the growth Contributed very little to the income of these measured in order to economic terms. This 3- regions, but makes a relatively important con- rate is in quantitative b- tribution to the income of the country in general.. growth effect is known as the local lac-tor effect. These regions dispose of practically no secon- dary industrial. development.
3. 1 An analysis of the economic-structural The result of the two growth effects, namely 2. 1 changes of the South African economy over the (a) the composition effect and (b) the local-factor Past number of decades show (Figure I) that effect together determine the quantitative econo- the .share of agriculture in the total national mic growth which has occured in a region. These income has declined sharply. It also shows that measured. The composition 1.8 growth effects can be -t1. contribution of the secondary_industrial sec- effect is measured by a proportional shift in -9_1zt increased significantly.• income and the local factor effect by the dif- ). 6 ferential shift in income. The sum of the two 1. 0 differential) is equal , While the actual income from all the pro- shifts (proportional and duction branches increased,the income from agri- to the shift in total income. 3.5 culture increased at a slower rate than that of 3.4 Inanufacturing industries. From this it follows that ). 6 agriculture is a slow growth industry in. th.e South African economy and that manufactu- ). 9 position of an area Iling is a rapid growth industry. In order to evaluate the with regard to the different growth possibilities imperative to define ). 0 The fact that the two areas specialise in a which could exist, it is which are the result slow-growing industry does not, necessarily im- the various possibilities on the quantitative Ply that the amount of economic growth is slow of the two growth effects area. The growth pos- °r insignificant. If agriculture experienced a economic growth .of an as follows: fast enough growth rate the two areas would still sibilities can be described
Now 1920
ow-. )me ible Re-
Manufacturing
6 6 3 6 P national income, 7 igure 1 - Share of agriculture, manufacturing and other production branches in the 1920 and now
31 specialise (i) A region may in fast growing TABLE 3 - Various growth possibilities which TA] industries and these industries could grow at a a region may experience within the faster rate than that of the country as a whole. Such a region experiences a net proportional national context and differential upward shift in income which together contributes to a net upward shift in Propor- Differen- Total vol total income. tional tial growth ume of Growth growth as as a re- growth possibili- a result of suit of the (Propor- ties the corn- local fac- tonal ai (ii) A region may specialise in fast growing industries which will result in a net proportional position tor effect differen- Net upward shift in income, but these industries might effect tial) grow at a slower rate than in other regions sh and for the country as a whole which would 1 + + + Net result in a net downward differential shift in 2 + - + sh income. Should the net downward differential 3 + - - Net shift in income, however, be less than the net 4 - + r€ upward proportional shift, such a region will 5 still experience a net upward shift in total in- - + - Sou come. Should the net downward differential shift 6 - - - in income be greater than the net upward pro- portional shift, the region would experience a TABLE 4 - Differential shift in regional income net downward shift in total income. of the Upper Orange and East Griqua' land regions, 1954/55 to 1959/60 gro (iii) A region may specialise in slow-growing Shift absi industries which would result in a net down- Production sector ward proportional shift in income. These in- Upper East Griqua dustries may, however, grow at a faster rate Orange dist than the rate for the country as a whole so that land ed the region will experience a net upward dif- /nal ferential shift in income. If the net upward dif- R1, 000 not( ferential shift in income is less than the net agr downward proportional shift the region will ex- Agriculture, forestry and tho; perience a net downward shift in income. If fisheries - 1,627 + 2,564 sho the net upward differential shift in income is Mining and quarying + 3 (gri greater than the net downward shift in income, Manufacturing, construc- tho; the region will experience a net upward shift tion, electricity, gas rat in total income. tieE and water 179 + 471 Transport, storage and communication _ 15 TA (iv) A last possibility occurs where a region Commerce 182 _ 155 specialises in a slow-growing industry which Financial institutions and grows at a slower rate than the growth rate of fixed property 28 171 that industry for the country as a whole. Such Ownership of dwellings 37 37 a region will net experience a downward pro- General public services 28 168 portional and differential shift in income and Other 18 166 thus a net downward shift in total income. services Total differential net shift - 2,063 + 2,658 in regional income
These different growth possibilities are illu- Source: Calculated from data supplied by the strated in Table 3. Department of Planning, Pretoria
The extent of economic growth of East Gri' qualand is represented by growth possibility 4' The volume of economic growth in the Upper Table 3. Because of the composition effect th15 Orange Region is typified by growth possibility area reveals a negative proportional shift 11; (iv) above or 6 in Table 3. As a result this re- income. Through exceptionally favourable locai gion has shown a negative net proportional shift growth conditions agriculture has grown con' in income amounting to R1,363,000 during the siderably. The result is that the region ha!t period under review. (Table 5.) In addition, this experienced a positive net differential grov0 dominating production sector was responsible for which more than compensates for the negativet 80 per cent of the negative differential downward proportional growth, to the extent that a ne shift in income. The total negative net differential upward total shift in income of R2,253,000 h 15 shift in income was R2,063,000 (Table 4). been realised. (Refer to Table 4 and 5). RapidlY
32 that: jch TABLE 5 - Shift in total regional income caused The foregoing exposition emphasizes the by differential and proportional shifts in income for the Upper Orange and 1954/ East Griqualand Regions from 1. All sub-national areas cannot experience ol- 55 to 1959/60 the same growth rate in quantitative econo- mic activities; Shift in regional Upper East r- income Orange Griqualand and 2. two growth factors, namely the composition local-factor effect constitute n- effect and the the total growth of areas; Net differential Shift in income - 2,063,000 + 2,658,000 Net proportional 3. agriculture is a slow-growing industry in shift in income - 1,363,000 - 405,000 the national economy; Net shift in total regional income - 3,426,000 + 2,253,000 4. all areas in which agriculture plays an im- portant role, will experience a downward Source: Calculated from data furnished by the proportional shift in income; and Department of Planning, Pretoria
5. the total amount of growth of such areas need not necessarily show negative shifts, but will depend upon differential shifts in 5. growing manufacturing industries are practically income, as shown in Table absent in both regions.
The growth possibilities of the respective aa- FACTORS OF GROWTH districts in the Central Region were also measur- 4. ANALYSIS OF THE ed and are shown in Table 6, as well as on the To obtain a better understanding it can be noted that quantitative growth in all regions where however, to merely identify agriculture predominates can be divided into (a) It is not enough, mentioned. The underlying those which grow relatively slowly, those which the growth effects i4 taken into account in order show no growth and those with negative growth factors must also be of the economic growth 3 (growth possibilities - - - and - -) and (b) to obtain a clear picture particular area. These factors are those that grow relatively faster than the growth pattern of a of the situation found in the rate for the country as a whole (growth possibili- dealt with in terms ties - Upper Orange and East Griqualand regions. .71 +)• 15 TABLE 6 - Growth possibilities of the central region 1954/55 to 1958/59, measured by regional income 55 Growth possibilities Districts 71 Proportional Differential Total 37 Odendaalsrus, Sasolburg, Vir- 68 + + + Bloemfontein, ginia, Welkom, Kimberley, Barkly East, Post- 66 masburg.
58 Hoop- - + + Boshof, Bothaville, Bultfontein, Jacobsdal, stad, Wesselsbron, Kuruman, Vryburg, Mafeking the _ + _ Parys, Ventersburg, Warrenton, Herbert.
;r1' _ _ _ Bethlehem, Bethulie, Brandfort, Clocolan, De- 4, V wetsdorp, Edenburg, Fauresmith, Ficksburg, thi5 Harrismith, Heilbron, ; IC Fourieburg, Frankfort, Lindley, Mar- )Cal Koppies, Kroonstad, Ladybrand, guard, Philippolis, Reddersburg, Reitz, Roux- ville, Senekal, Smithfield, Thaba Nchu, Theunis- th sen, Trompsburg, Viljoenskroon, Vrede, Vrede- tie fort, Zastron, Gordonia, Ken net Wepener, Winburg, hardt, Hay, Prieska, Hopetown, Britstown, De 10-5 and ic1131 Aar Philipstown.
33 MIDDE-STREEK:EKONOMIESE GROEIMOONTLIKHEDE (VERGELYK TEKS)/CENTRAL REGION:ECONOMIC GROWTH POSSIBILITIES (REFER TO TEXT)
SleutelALegend
Groeimoontlikheid/ Growth possibility 1 (+44)
Groeimoontlikheid/ 4 Growth possibility (-++)
Groeimoontlikheid/ 5 Growth possibility (-+-)
Groeimoontlikheid/ Growth possibility 6 (---)
q:s c;f 0t3 P.' 5' and fencing has of late in- 4.1 Agricultural development medies, waterworks creased considerably, while the use of labour shows little change.
Two questions must be answered, namely Why is agriculture a slow-growing industry in The result of these trends is that the gross inter- the national economy and why has this particular *value of agricultural output per Rand of prices industry not grown at the same rate in the two mediate goods and services at 1954/55 from regions. has declined between 1954/55 and 1959/60 whether R3.20 to R2.60. The question arises as to of the decrease in productivity is the result - development or that is has Regarding the first question it may be briefly delayed technological desired results. Farmers have that the decline in the share of agricul- not produced the stated practices and techniques on ture in the South African economy, which has applied up to date a considerable extent but every- taken place over the years, has been caused by their farms to not succeeded in applying these effective- important long-term demand and supply changes. one has a co-ordinated manner. Farmers who These areas must acce t the influence of the ly or in have shown success were not only economically zr_aportional growth effect on their respective higher efficient, but also realised a considerably economies. This helps to explain the dynamic inefficient output per unit than the economically ___-§_pects of their economies, but these areas can- current farmers. A more efficient application of not themselves brin about a chan e in the trends. possi- practices and techniques certainly offers Region. bilities for growth in the Upper Orange possibility The processes by which such a growth nature With regard to the second question, an insight could be attained are, however, by their into the local circumstances of agricultural pro- slow and the extent is restricted. duction explains the differential growth effect Which influenced the amount of the economic the result of local growth of the areas. It is effects of the growth in some areas As distinct from the factors which are more favourable sustained quantitative factors are for possibilities mentioned, than in others. Among these upon the extent to which a larger utilisation economic growth depends example the possibility of development is available. of a larger applicable technological of primary resources, the possibility technological developments primary sources (the result of greater The most important output from which have been responsible other inputs such as of industrial of the past decades utilisation of agricultural output, e.g. mechani- origin), development and the for increases in technological and seed, have benefitted field The availability, adop- zation, fertilizers qualities of management. particular, but were only applicable t application and applicability of new tech- crop areas in ion, extent in the greater part of the niques differ widely between various fields of to a limited true that mechanization, fertilization Production. This results in differences in the area. It is increased but this has not resulted in Production potential of respective areas. In ad- etc. has per unit, causing a decline in agri- dition there are the influences which changing higher output income and a net downward differential Price relationships exert on profitability. All cultural income of the Upper Orange Region. these factors can lead to changes in agricultural shift in the Production and must be taken into account when analysing the differential rates of growth in dif- ferent rural areas. The price relationship between output and in- put has also become less favourable and has in- accounted for a decline in the agricultural of the area. Unless higher productivity in In the Upper Orange Region the possibility come be attained which would reduce unit Of an increase in agricultural output by utilising farming can costs to such an extent that it would More land for agricultural purposes is restricted. production for the unfavourable price relation- In addition the possibilities of field crop pro- compensate of the area will continue to show is limited due to various natural factors. ship, the income duction shift. In addition a favourable T.he horizontal expansion in this field is also a net downward output/input price relationship could limited. It is an area where stock-farming pre- change in the the net downward shift in in- dominates, but the possibility of increasing the help to counteract total agricultural output through increasing the come. amount of livestock is excluded. Unit output of the most important branches of :agriculture has East also not increased over the years. Available In contrast to the Upper Orange Region, s returns tatistics indicate that the physical volume of Griqualand is still in a stage of constant that it total field crop and livestock production has not to scale. From this it can be concluded increased. should be possible to further increase the volume extent of agricultural output in the area. The to which the application of each production factor will however depend upon Contrary to the trend of agricultural out- should be increased the marginal product value Put, the use of various inputs like fertilizers, the difference between factor and the marginal cost fuel, machinery and tools, fodder, livestock re- of the production
35 thereof. The production factor capital is already There are a considerable number of simi- of eff applied to the extent where these two marginal lar areas in South Africa as indicated for the larger values are equal (marginal value of production- Central Area. To ensure a per capita income that a price of capital). Labour and short-term capital which will keep abreast with incomes elsewhere, dards inputs still offer much scope for expansion. These the consolidation of farms is a prerequisite. be ac findings presume a constant level of management This process is taking place but for known rea- self o efficiency and constant techniques. Should ma- sons, too slowly, and is not keeping pace with succe nagement and techniques be improved, the mar- general economic development. It is especially ginal product values of the three categories of in similar areas where the problem of farming inputs mentioned can be increased at constant units which are too small is most acute. It is levels of cost. Besides this the expansion of agri- therefore necessary that the authorities should cultural production will further be aided should take action and expedite the process of adjust- TI Of the input/output price ralationships become more ment in such a manner that it is accompanied po'. favourable. It must be emphasised, however, that by the least possible social disruption. Such dispri The r this growth pattern can only prevail as long as programmes will not be successfully carried farm( the local growth factors remain favourable. If out should it be forced onto the communities, this does not take place the area will revert to but they will have to be planned and executed meas. but relatively slow growth or even negative growth. in co-operation with communities. Rightly so: tl termi "Every region in the country cannot hope to ex- perience rapid increases in the volume of and t economic activities and in population. But every evalu visab region can hope to enjoy a high and rising level It is now clear that the adjustments required of per capita income (as long as the nation's out- to cc by the local communities in the two areas differ tion put and productivity increases) if it is willing I widely. A uniform development policy is thus to face up to the decidedly unsuitable. need for a relative 'emptying out' when the overall situation with regard to relative advantages among regions calls for it."16) Of th, The downward trend in agricultural income Similar regions to that of East Griqualand, farm in the Upper Orange Region results in a decline where agriculture reveals positive growth, re- Preh in the income per unit of area, and should the quire programmes which will do justice to the woul number of farmers remain constant, the income existing growth potentialities. Where stagnant \\tic per farmer will decrease. Even if agricultural or slow-growing areas require programmes which all f income increases over time but at a slower rate are more of a sociological nature, these areas than the income from all sections of production also require similar programmes, but toget- for the country as a whole, it will still experience of t her with essential education of a highly tech- deve a net downward shift. In these circumstances it nological/economic nature. Provision can at this will mean that in a given production area with stage be made to prevent these regions from a given number offarmers, the income per farmer slipping on account of the badly judged sub- will decline in relation to farming in general division of farms in the present favourable sit- and the per capita income in the rest of the eco- uation, over-optimism regarding structure nomy. The trends mentioned require that certain the /Tian of land prices etc., which could ultimately create adjustments in the agricultural industry of the the situations similar to those in the mentioned region would have to be made. Should it be ac- first dep( regions. In contrast:"corrective" measures apply cepted as an objective that the rate of increase in higi to the one region and "preventitive" measures per capita income of farmers in the region must °tat to the other. This means that devel- keep pace with that of farmers in the rest of a negative for/ opment movement requires and the country as well as that of persons engaged positive thought tion action and only positive ensure in other activities, such income trends will measures will that a positive necessitate that farming units must be enlarged development movement will con- thal tinue to remain and the number of farmers reduced. positive. ser The agriculturist is not the inventor of new technologies, but rightly the innovator of them. Consequently the level of management in a par- Such a process of adjustment is already taking ticular region will determine the extent to which place, but the extent of and rate at which it should new developments in the field of technology in ele take place differs for various parts of the area. agriculture can be applied successfully. In this Cie On account of the effect of output/input price respect it is found that greater economic activity rue relationships which are becomming less favour- of larger farming units could inter alia also be vat able and at the present level of technological ascribed to the better management qualities of sir development in farming, it can be expected that large scale farmers as against small ones. Tb this process of adjustment will be greater in Besides this it was also found that to ensure tic, the sour veld parts than in the mixed and par- a decent existence on a large farm, the owner du, ticularly sweet veld parts. In those parts of the has to comply with definite standards of efficient so, region where most farming units are too small management. Only farmers with a high degree no to ensure an adequate standard of living as su measured against the present standards of liv- a ing of South Africa's White population, the need be for this type of adjustment will be great. 16) Perloff, H.S., et, al., op. cit., pp. 105-106. as
36 be applied in accor- of attained a higher net income on case of physical measures efficiency principle. Where the Should there be any indication dance with the marginal larger farms. are lacking to such that a small farmer does not meet certain stan- sound qualities mentioned objective of conservation can- dards of efficient management it cannot simply an extent that the the fostering of these qualities 12L__.ssf_pted that if he were to establish him- not be realised, priority in the drafting and lf on a large farm that he would be financially should receive high of the conservation programme successful. implementation and should be recognised as such in the alloca-_-_ tion of funds and man-power.
These findings involve important implications Of policy to obtain a solution to the problem of There is a strong correlation between the disproportionate distribution of farm income. qualities mentioned and the fi- The position is particularly complicated for small social/cultural success of farmers. Most of the econo- farmers with low economic efficiency. Special nancial mically efficient farmers had enjoyed better edu- Measures are needed to assist these farmers, cation, showed a positive attitude towards agri- these must be preceded by a scientific de- and training, had high aspira- the farmer's managerial ability cultural science ItlInination of the outside world, sub- and j_le of his farm. An. tions and contact with production potentialities periodicals, were mem- determine the ad- scribed to agricultural evaluation of this nature would associations and had a small farmer bers of various farmers' visability of persuading such training. The presence to employment as a solu- wives with a good school consider alternative factors apparently con- tion to his problem. of these social/cultural tributed much towards good management and the carrying out of decisions. All this signifies that the personal qualities of the farmer entails im- portant economic implications for agriculture. The foregoing emphasizes that the solution Agricultural economic policy must definitely take of the complex problems arising from uneconomic account of these factors. farming units requires the application of a com- Prehensive development program. Provision &19.._uld have to be made for a variety of measures su lement each other to overcome facets of the problem. The _problem of dis- ro ortionate distribution of farm income is one 4.2 Secondary and tertiary development 2S___ the hidden elements of retarded economic de•___17.2152pment of rural areas.
Agricultural development does not necessarily spectacular secondary and tertiary Soil conservation is also closely tied to the encourage Nor is such development a magic managerial ability of the farmer. Apparently development. can solve the problems of slow- the application of physical conservation measures formula which stagnating rural areas. Too often Pends upon certain sound qualities such as a growing or South Africa have called for 111..gh standard of general education, wide asso- rural areas in as a solution to their pro- ciation various sources of scientific in- smoking chimneys with quite so simple. The extent fo. and a high aspira- blems. It is not rmation, progressiveness development can take place in rural !ion The human element has a far greater to which such level. upon various factors. The im- i on the attainment of the set objective areas depends nfluence factors differ between regions than has thus far been recognised in soil con- pact of these established for each region. servation measures. and must be
Attention has thus been drawn to a neglected frequently true that the develop- e has seriously affected the effi- While it is !ernent which industry in rural areas is elencY of soil conservation efforts. The employ- ment of secondary possibility of processing local illent of funds and man-power applied to conser- insignificant, the the local demand for cer- va. tion have not brought about the de- raw materials to meet measures and services, is being ,slred results and were to a large extent wasted. tain industrial products extent. The scope for further element will have to receive atten- utilised to a large human development is not excluded, Lion so as decline of future pro- secondary industrial to prevent the attention to the - pattern duction. It will require measures to develop the but would necessitate development in South Africa. Spec- oUnd qualities mentioned so that farmers would of industrial industrial development, based nc3t, only establish physical conservation mea- tacular secondary raw materials cannot take sures, but will also manage their farms in such on local agricultural place and further secondary indus- a, way that the objectives of conservation will everywhere maintained economic growth ue realised. Such measures should be recognised trial development and depend upon the feasibility as conservation measures and should as in the in rural areas will
37 of establishing such industries. In the present areas and their surrounding rural areas (i.e. stage of development of the South African econom farms) must be approached as an integrated com- fii the biggest development will probably be in re- munity and be organised and planned in terms spect of industries processing basic and inter- of the total potential of that greater community ar mediary raw materials. To determine where and not merely in terms of economic farming co co future secondary economic growth might take units. In fact as our regional development or- place, it would be necessary to determine where ganizations and movements show, it becomes ba these industries could be located. Many of these clearer and more necessary that the individual vi. an industries lend themselves to decentralization towns and their adjoining rural areas be regarded and could create new growth points. The areas as a total combination of integrated and related sa with comparative advantages for the establish- regions or zones, and be planned and developed rE ment of industries processing basic and inter- accordingly. ... Without the hinterland of a healthy su mediary raw materials, may thus develop into rural population the large commercial and in- (Yu new growth areas. Regions with little primary dustrial centres cannot in the long run continue raw materials but which have a large labour to exist".17) (Translation). force can attract industries which are not bound to a particular locality. Should such industries, however, cause a concentration of Bantu labour- ers in White rural regions, their establishment cannot be justified. This means that while labour was historically considered the mobile produc- 5. CONCLUSION tion factor, capital and the entrepreneur must now be viewed as the mobile factors.
The responsibility for solving these problems rests firstly with the local communities. Active A further important aspect, with which Mr. steps should be taken in an organised manner P.J.D. du Toit will deal, will only be referred by the communities to evaluate the economic sta- to briefly. Significant changes are taking place tus of their areas. There is an urgent need for in the pattern of rural service centres. Various comprehensive development programmes for our factors underlie these changes of which the most rural areas which would contribute in a proper important are improvements in the systems of manner to the solution of their problems and the transportation and communication and the in- enlargement of their economies. It is essential creased size of farming units. Improved trans- that in the development of rural areas account port has made it possible for farmers to travel must be taken of the interdependence of a large longer distances to larger centres for business diversity of factors which have a determining purposes. In addition farmers on larger farms influence on the material and spiritual welfare purchase more of their requirements in distant of their communities. Therefore it cannot be and larger centres than those on smaller farms. overemphasized that the efficiency of a develop- Many of the smaller service centres thus no ment programme will be determined largely by longer enjoy the full advantages of the buying the extent to which proper account is taken of power of their localities. This development is the role played by the diversity of factors both causing the decline of smaller rural centres and singularly and collectively. the development of a few as service centres.
One thing is clear and that is that the pro- blems of an area cannot be solved by ad hoc measures. A serious warning must sounded Service centres must take account of this. Schemes be against the application of patchwork measures must not be introduced which are out of propor- which are nothing but examples of lack of tion with the potentialities and possible future a insight into the complete scope and complexity expansion of a service area. It is therefore es- of the problems, as well as their, integrated sential that each service centre should have a nature. An investment in measures will correct image of its functions and recognise such not prove profitable. the underlying forces which influence the demand for its services.
The present and growing tendency to deter- mine the worth of the rural areas in the national 17) Keyter, J. de W., Sosiologiese aspekte van economy and to select the methods of planning die Suidoos-Vrystaat. Vierde verslag, for development merely in terms of economic Streeksopname van die Suidoos-Vrystaat, farming units, is one-sided and spells danger Universiteit van die Oranje-Vrystaat. 1963, for the future. "... the development of the town p. 135.
38 A regional development programme must munity and under co-ordinated and expert gui- firstly be founded on those basic values which dance. are indispensible for the maintenance of a mature community in the true sense of the word. Se- condly such a programme must be drafted and based on an intimate knowledge of all the acti- From the foregoing it is clear that the ef- vities of the local community in their separate ficient preparation and execution of a regional and combined context. Thirdly it will be neces- development programme constitutes a compre- sary to evaluate the function of a particular hensive and complicated task which demands region in its wider national context. Finally knowledge and experience of a special nature. such a development programme must be carried In this respect we still have a serious backlog out with the full collaboration of the local com- in South Africa.
39