Labour-Related Structural Trends in South African Maize Production¶
Van Zyl, J.; Vink, N.; Fenyes, T.I. (1987). Labour-Related Structural Trends in South African Maize Production. Agricultural Economics, 1. Elsevier Science Publishers B.V., Amsterdam.
| Type | journal article |
| Scope | Economics and economic history of apartheid |
| Method | descriptive quantitative |
| Period studied | 1945–1985 |
| Regions | North-Western Free State, Western Transvaal, Transvaal Highveld, South Africa (commercial agriculture) |
| Themes | agriculture land, labour markets wages, inequality poverty unemployment, business and state, demography urbanisation |
| Citation key | vanzyl1987 |
Argument¶
The authors argue that farm labour use in South African summer-rainfall maize production rose until about 1970, when tractors replaced draught oxen and expanded cultivation, and harvesting stayed manual. After 1970, mechanization, especially combine harvesting, turned capital and labour from complements into substitutes, and employees per 1000 ha under cultivation fell. They attribute the speed of this shift partly to policy distortions: tax write-offs, subsidized and controlled interest rates, and general farm subsidies that cheapened capital relative to abundant unskilled labour. They conclude that farms are probably over-mechanized and that policy should be reviewed to favour labour-using technology and job creation. The case rests on exponential growth rates fitted to farm cost-survey data for 1945-1985, supplemented by a harvesting-adoption survey and elasticity estimates from other work.
Evidence and method¶
Department of Agriculture maize production cost surveys (random samples of about 80 farmers each, with more than 100 ha under maize) for three regions, 1945-1985. Also Abstract of Agricultural Statistics, Reserve Bank data, De Klerk's (1983) survey of maize harvesting methods in the Western Transvaal 1968-1981, Joubert and Van Wyk (1984), Fenyes (1983), and elasticity estimates from Van Zyl (1986b).
Place in the debates¶
- Causes of farm mechanization and labour shedding (see Farm labour: mechanisation, labour shedding, wages and labour control). Attributes the post-1970 fall in labour per cultivated hectare mainly to mechanization of harvesting. The authors say tax concessions, interest-rate subsidies and general agricultural subsidies accelerated it, with urbanization a contributing factor. They stress factor-price distortions over labour-supply or political explanations.
- Factor-price distortion and over-mechanization (Habakkuk-type factor-scarcity reading) (see Farm labour: mechanisation, labour shedding, wages and labour control). Argues capital is scarce and unskilled labour abundant in South Africa, so subsidized capital produced over-mechanization that departs from the economic optimum. It recommends policy reform towards labour-using technology.
- Farm wage levels and the 'neo-feudal' payment-in-kind system (see Farm labour: mechanisation, labour shedding, wages and labour control). Finds real cash and in-kind pay both rising, with cash faster. Real total farm pay grew faster than average real income per worker nationally over 1970-1985, which cuts against the claim of stagnant farm wages, though levels are not analysed.
Findings¶
-
Capital formation in commercial agriculture grew far faster than farm employment between 1950 and 1980. (p. 2)
capital formation has increased by 4.0% per annum between 1950 and 1980, compared with an increase of 0. 71% per annum in the number of farm employees in the same period
-
Commercial farm consolidation: fewer, larger farms between 1968 and 1980. (p. 3)
The number of commercial farms has decreased from 91 855 in 1968 to 69 372 in 1980; the average size increased from 970 ha to 1 235 ha over the same period.
-
Agriculture's share of employment fell sharply, while commercial agriculture remained a large employer. (p. 3)
At present, the commercial agricultural sector employs 15.4% of the total labour force and produce about 6% of the gross national product
-
Maize harvesting was mechanized rapidly in the Western Transvaal after 1968, reducing demand for (especially seasonal) labour. (p. 7)
the majority of farmers in the Western Transvaal have already changed to mechanized harvesting, and this process must have contributed to a decline in the quantity of labour demanded, especially seasonal labour.
-
Capital and labour moved from complements (1945-70) to substitutes (post-1970) in crop production. (p. 7)
illustrate a substitution of capital for labour in crop production since 1970 in all three regions.
-
Real farm pay rose faster than average incomes nationally and for black workers in 1970-1985. (p. 10)
These figures compare favourably with the increase of only 1.92% in real total income per worker for the whole of the R.S.A. and the 2.54% for black workers over the same period.
-
The Ishikawa two-phase curve is said to fit South African maize: labour-using technology dominated before 1970. (p. 10)
Before 1970 the effect of labour-using technology outweighed the effect of labour-saving technological factors with the result that labour utilization increased.
-
Tax write-offs and subsidized interest rates are blamed for over-mechanization, a departure from the cost-minimizing optimum. (p. 13)
Tax provisions which enabled farmers to write off 100% of capital costs against taxes in the year of purchase, as well as subsidized interest rates have contributed to this overreaction
-
The estimated elasticity of substitution switches from complementarity (-0.814 for 1945-70) to substitution (+0.734 for 1970-85). (p. 14)
Labour and machinery were thus highly significantly inelastic complements during the period 1945-1970, but became highly significantly inelastic substitutes during 1970-1985.
-
Policy measures keeping capital cheap are identified and recommended for review. (p. 17)
The major measures that kept the cost of capital relatively low were the control of interest rates in general, the subsidization of interest rates in agriculture, and tax concessions on capital investment.
-
Two-phase narrative: tractors replacing oxen expanded cultivation and labour demand, and combine harvesters then removed the harvest labour bottleneck. (p. 17)
The period 1945-1970 witnessed a large expansion in cultivated farm area, probably because tractors replaced draught oxen.
Evidence ledger¶
Sources used¶
| Source | Kind | Period | How used |
|---|---|---|---|
| Maize production cost surveys, Department of Agriculture and Water Supply (rotation basis; ~80 random farmers each with >100 ha maize; NW Free State, Western Transvaal, Transvaal Highveld) | official statistical series | 1945-1985 | Core dataset for farm-level labour use, remuneration, machinery investment, costs, income and productivity trends fitted with exponential growth curves. |
| Unpublished reports of the Department of Agriculture (annual levels of parameters) | commission or official report | 1945-1985 | Cited as the location of the exact yearly levels of parameters underlying the trend analysis. |
| Fenyes (1983), The Use and Compensation of Farm Labour in South African Agriculture, Department of Agriculture | secondary literature compilation | 1945-1980s | Source of annual parameter levels from the cost surveys and corroboration that cash pay is replacing in-kind pay. |
| Abstract of Agricultural Statistics 1986 (Anon., 1986), Directorate Agricultural Economic Trends | official statistical series | 1950-1985 | Source for national farm employment, real gross capital formation (Table 1), farm numbers, size, labour per farm, and maize area share. |
| Joubert and Van Wyk (1984), Labour in South African Agriculture, AGROCON 1984 | secondary literature compilation | 1968-1980 | Provides data on declines in seasonal workers per farm and per hectare and labour per hectare vs. farm size. |
| De Klerk (1983) sample survey of Western Transvaal maize farmers on harvesting mechanization, 1968-1981 | secondary literature compilation | 1968-1981 | Table 3 adoption rates of mechanized maize harvesting used as evidence that mechanization reduced labour demand, especially seasonal. |
| Fenyes and Van Rooyen (1985), South African agriculture and migrant labour (1982 composition of agricultural workforce; 1970 employment share) | secondary literature compilation | 1970, 1982 | Provides the composition of the farm workforce and the 1970 share of agriculture in economically active population. |
| South African Reserve Bank Quarterly Bulletin, March 1986 | national accounts macro | 1986 | Source for agriculture's share of labour force (15.4%) and GNP (about 6%). |
| South African Statistics 1980, Department of Statistics | official statistical series | 1980 | Supports the claim that commercial agriculture employs over half the economically active population in rural regions. |
| Van Zyl (1986b), Duality and elasticities of substitution II (Shadow elasticity of substitution estimates) | secondary literature compilation | 1945-1985 | Provides the estimated long-term elasticities of substitution between labour and capital (-0.814 for 1945-70, +0.734 for 1970-85). |
| Wilson, Kooy and Hendrie (1977), Farm Labour in South Africa; Antrobus (1984) thesis on Albany farm wages | secondary literature compilation | 1950s-1970s | Cited for the debate on farm worker pay, in-kind payment, and comparability of wage measures. |
| National real total income per worker comparisons (R.S.A. and black workers), 1970-1985 | official statistical series | 1970-1985 | Benchmark against which farm remuneration growth (2.55-3.50%) is compared. |
Inference¶
Quantification: Statistical analysis.
Time-series trend analysis: exponential functions fitted with time as the sole independent variable to farm-level regional survey series for 1945-1970, 1970-1985 and 1945-1985, comparing growth rates across three maize regions and periods; capital-labour substitution is inferred from sign changes in growth rates, supplemented by an external elasticity-of-substitution estimate and mechanization adoption data. Causal attributions (tax concessions, subsidies, urbanization) are inferred qualitatively.
Key claims¶
| Claim | Basis | Strength |
|---|---|---|
| Farm employees per 1000 ha under cultivation rose until 1970 and declined thereafter, driven by mechanization (especially harvesting) and capital-labour substitution. (p. 246) | Table 2 growth rates from the cost-survey series, Table 4 machinery investment, and De Klerk's Table 3 harvesting adoption rates. | Partial data |
| Mechanized maize harvesting spread rapidly in the Western Transvaal between 1968 and 1981, reducing demand for seasonal labour. (p. 246) | De Klerk (1983) sample of farmers (Table 3), supported by Joubert and Van Wyk on seasonal workers. | Partial data |
| Real remuneration per farm worker, especially cash pay, rose in 1970-1985 faster than national average real income per worker. (p. 249) | Table 5 growth rates from cost surveys compared with national figures (source unspecified). | Partial data |
| Labour's share in total farm costs, gross income and machinery costs fell over time, contrary to the equilibrium prediction, implying over-mechanization encouraged by tax write-offs and subsidized interest. (p. 252) | Tables 6 and 7 from the cost surveys; over-mechanization asserted via Biggs and others, with no direct test of tax effects. | Partial data |
| Labour and machinery were inelastic complements in 1945-1970 and became inelastic substitutes in 1970-1985. (p. 253) | Shadow elasticity of substitution estimate from Van Zyl (1986b); not shown in this paper. | Partial data |
| Capital formation in commercial agriculture grew much faster (4.0% p.a. 1950-80) than farm employment (0.71% p.a.), reflecting policy favouring capital intensity. (p. 243) | Table 1 from the Abstract of Agricultural Statistics; policy cause asserted. | Partial data |
| Labour productivity grew faster than machinery productivity but more slowly than real remuneration per labourer. (p. 254) | Table 8 productivity indices from cost-survey output/input values. | Partial data |
The author's caveats¶
Authors note that only trends and annual changes are analysed, not levels, and that comparisons of farm and non-farm remuneration must be treated cautiously because of different calculation methods, especially for payment in kind. They also note that the dualistic homeland sector is excluded and needs a separate study.
Gaps in the evidence¶
The analysis uses bivariate time trends with no controls, so attributions to tax concessions, interest subsidies and urbanization are not tested; farm-level data on credit, tax allowances and labour supply (influx control, homeland migration) would be needed. Sample sizes, sampling frame changes across surveys, and deflators are not documented, and the underlying survey microdata are in Department of Agriculture files. Evidence for homeland and labour-supply effects, and farm-level panel data, exist in archives and later censuses, and could allow regression tests.
Replicability: Data poorly documented.