Market Regulation and Agricultural development

27 September 2001
Publication Type: Policy Paper
JEL Code: Q0, Q1, Q13, Q18

Those analysts who favour deregulation in South African agriculture usually assume that the very existence of regulation was sufficient to create widespread inefficiency and waste. This paper shows that various forms of government interference had mixed results and need to be more carefully examined. Some regulation initiatives had positive implications and frequently helped enterprising individuals to improve their farms. However, state regulations generally did not deliver on their full potential because they failed to deal with the challenge of conservative farmers. Such farmers were a majority who used state support to soften the impact of competition and to avoid investing in their land. The problem was that policy makers and politicians were too often influenced by populist thinking and short-term political considerations, and it was these inclinations that created much of the inefficiency and waste in South African farming. Current agricultural policy makers attempting to reduce racial inequalities could, it is argued, develop a far more constructive policy if they emphasised the positive aspects of regulation and avoided the negative mistakes of the past. The uncritical bias against agricultural regulation limits the effectiveness of many of the policies that the government is currently pursuing.

Series title: Policy Paper (Interest) 10
1 March 2000