Abstract

Imbalances and inefficiency fostered by the policies of the previous South African government necessitate changes to reduce the imbalance of the past and enhance the inclusiveness and competitiveness of the agricultural industry. Against this background, the policy of land reform was initiated. In theory, the agricultural land reform policy might appear effective; given that agriculture is a major contributor to rural economic growth and development. Broadening the economic activities of previous disadvantaged individuals through the acquisition and cultivation of land will help to rebuild and strengthen the rural communities. However, the outcomes of this policy has to date not seen the desired results regarding rural economic development and poverty reduction. Many of the foreseen positive aspects of the land reform policy are also contributors to the potentially negative outcomes of the policy. This makes this specific policy controversial and subject of heated debate. Transfers of land in the various agricultural sectors will impact differently on social- and economic factors. Unless a proper understanding of the impact of transferring land in the different agricultural sectors is established, the controversy around the potential impact of land reform will continue. To obtain a better understanding of this impact, the study employed a Social Accounting Matrix (SAM) based partial equilibrium model. Results from the model revealed that the negative impact of the land reform policy largely overshadows the positive effects. Moreover, transfers within the larger agricultural sub-sectors will result in more significant social and economic impacts. Thus, the implementation of the agricultural land reform policy needs to be radical and calculative; otherwise it will result in false expectations, hardship and poverty.

Key words: Land reform, partial equilibrium model, economic and social impacts.