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South Africa has relatively low and declining levels of support. The relatively high share of the most distorting forms of support has to be interpreted against the low level of support as measured by the Producer Support Estimate (PSE).
The level of price distortions has been low and in current years domestic prices were almost aligned to world price levels as documented by the Nominal Protection Coefficient (NPC). Most of the budgetary payments are related to the implementation of the land reform and assistance to emerging farmers.
- Policy changes from the mid-1990s resulted in deregulation of the marketing of agricultural products, liberalisation of domestic markets, and reduced barriers to agricultural trade. These reforms reduced market price support and budgetary support to commercial farming. In contrast, increased budgetary spending went to financing the land reform process and supports its beneficiaries, and the smallholder sub-sector. The average level of support in South Africa, as measured by the Producer Support Estimate (%PSE), indicates a relatively low degree of policy intervention. The overall trend shows a reduction of this support between 1994 and 2010, although with some fluctuation due to Market Price Support variations.
- The main agricultural policy developments and the main challenges relate to the implementation of the land reform programme. During 2008-10, new policies were implemented to enhance the pace of land redistribution and to ensure the viability of the emerging farms. They include the Pro-Active Land Acquisition Strategy, and a new focus on bringing strategic partners from private stakeholders to assist in the capacity building process and in the gradual implementation of Rural Development Programmes in the Provinces.
- The black population in rural areas is the target of land redistribution, but adequate supporting infrastructure and human capital formation must also be in place if these new entrepreneurs are to survive. The government is striving to address these issues by implementing well targeted support programmes and services (including research and development) tailored to the needs of the emerging farmers. In this regard, the involvement of private stakeholders in the process of the land reform may be an efficient way to engage resources and address weaknesses in supporting programmes and services from public authorities. Also the setting of Rural Development Programme can contribute to address the problems in rural areas in a broader perspective.
South Africa: OECD Producer Support Estimates (PSE)
Level and composition by support categories, 1995-2010
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