Measurement and Analysis of Rural Household Income in a Dualistic Economy: The Case of South Africa Johann Kirsten University of Pretoria & Walter Moldenhauer Department of Agriculture

Essence of the problem Regular agricultural censuses and intermittent agricultural surveys provided a relatively good overview of farm income, assets, land size, etc. in the so-called ‘commercial sector’. Only very limited statistics on farm household activities, sales, income was available from the agricultural sector in the ‘former homelands’.

Essence of the problem None of the agricultural censuses in the pre years covered these regions resulting in only a one-sided picture of the total agricultural sector and also a total data void on rural households and livelihoods in the ‘former homelands’.

Tools for Rural Income Measurement & Analysis Agricultural censuses & surveys Rural indicators / surveys

Agricultural Censuses & Surveys Main information source on farming income. Did not consider total household income. The censuses & surveys were regularly conducted. Were mainly based on mail questionnaires, which farmers had to complete. Results were fairly aggregated.

Agricultural Censuses & Surveys (2) It only covered the so-called ‘commercial sector.’ Farmers in the homelands were excluded from the censuses & surveys. Had a fairly good coverage. Income were measured solely on income earned from agricultural activities. Partly because farming was considered a full-time activity.

Agricultural Censuses & surveys (3) The censuses and surveys continued to exclude farmers from the former homelands. Hence, the vital information needed to steer policy in the new democracy was not available.

Survey of Large & Small-scale Agriculture 2000 This was Statistics South Africa’s first attempt to collect data on the small-scale and subsistence farming sector in south Africa. Divided the farming sector into a former south Africa and a former homelands region. Former SA: large-scale commercial farms. Former homelands: small & subsistence farms from the former homelands.

Survey of Large & Small-scale Agriculture 2000 (Income) This was the first attempt to measure income as the amount generated from agricultural and non-agricultural activities. Results contained information on total income, farming turnover, expenses, debt, farming profit and total profit. Information was useful to estimate non- farm income for the 2 regions.

Farming Income and Non-farm Income As a Percentage of Total Income of Farm Households in South Africa

Results Results revealed that only 13.7% of total farming operations were situated in the Former SA, received 98.8% of total farm income. Non-farm income was far more important in the former homelands. The farming operations in the former homelands covered a total land surface of 97,3 million hectares while the farming operations in the former South Africa covered a total land surface of 217,98 million hectares.

Total land surface of farming operations according to geographical location

Census of Commercial Agriculture 2002 Once again it only covered the activities on commercial farms in South Africa. For the purposes of the census, a commercial farm was defined as a farm that is registered for Value Added Tax (VAT). As far as income is concerned, one can consider the census as step towards the right direction.

Census of Commercial Agriculture 2002 (2) The census captured all income earned from farming activities as well as other sources of income. The biggest problem here lies in the last section: ‘other sources of income’. It is not clear whether salaries from non-farm employment were captured here.

Results The preliminary findings were released on 15 September According to the results, there were active commercial farming units in South Africa in This is a decrease of farming units since the last agricultural census in Although there were fewer farming units, the gross farming income generated was R53 billion compared to the R39 billion generated in 1993 at 2002 constant prices.

Principal Statistics; 1993 & 2002 ItemUnit Farming unitsNumber EmploymentNumber Employees’ remuneration (constant 2002 prices) R Gross farming income (constant 2002 prices) R

Results Gross farming income as released on 15 Sep 2004, only includes income earned from agricultural products sold. Household income was once again not reported

Rural Indicators / Surveys Prior to democracy in 1994, government had little interest very few surveys were undertaken in the former homeland areas. Various studies and data ‘panel-beating’ exercises tried to fill this information gap.

PSLSD, 1993 The Project for Statistics and Living Standards and Development (PSLSD) was the first South African household survey. Was undertaken in the last half of 1993 by a consortium of South African survey groups and universities. It was a comprehensive household survey and collected a broad array of information on the socio-economic conditions of households.

KIDS The KwaZulu-Natal Income Dynamics Survey (KIDS) was a re-survey of households surveyed by the PSLSD in KwaZulu-Natal with the aim of addressing the dynamics of poverty in South Africa.

The Rural Survey of 1997 Was conducted by Statistics South Africa (STATSSA) in Was specifically designed to provide in-depth information about living conditions of rural households in the former homelands of South Africa. The sampling frame was derived from the 1996 population census database and yielded a sample of +/ households.

Results In June 1997, about 12.7 million people, or 31.4% of the total South African population, lived in rural areas of the former homelands of South Africa. Access to farmland is crucial for these rural households since they either depend entirely on farming activities for their survival and generation of income, or depend on these activities to supplement their main source or sources of income.

Results (2) As many as 71% of the 2.4 million households (approximately 1.7 million) in the rural areas in the former homelands had access to land for farming purposes. Only 3% of the 2.4 million households in the sample relied on farming activities as their main source of income. Household income was mostly generated from household members’ salaries and wages and pensions received by the senior citizens of the households.

Most Important Sources of Income of Households in Rural Areas

Conclusion: Treatment of household income in different agricultural and rural surveys Survey / CensusCoverageIncome definition Agricultural census 1993Only commercial farms in former ‘white’ South Africa Sales of farm products and farm- related income Agricultural census 2002Only commercial farms (farms registered for VAT) Sales of farm products and farm- related income PLUS other income Agricultural surveys: 1994, 1995, % of commercial farms in former ‘white’ South Africa Sales of farm products and farm- related income Survey of large and small scale agriculture, 2000 Farm households in ‘former homelands’ and commercial farms Total income from agricultural and non-agricultural activities PLSDS 1993Sample of 9000 urban and rural households Total income from agricultural and non-agricultural activities KIDS, 1998Same households from PSLDS in KwaZulu-Natal Total income from agricultural and non-agricultural activities Rural Survey, 1997Households in former homelandsTotal income from agricultural and non-agricultural activities