,v. A .GOMPAMIWE mwrsss or CORN pikoatms Andria: PatruiSchQfl: 1961 V mmmma m a.» m THE UNION OF .so'u'm mm MICNIGAN sure unwmm‘ Mn yams ENTHE UNITED sum. L a . . : , I .- ,u» .\.. J. . .. .u 3-... l....:~...:- .1 . . 1. lo.5..,..:.08\-nn. ( . V I 4?}... .. r n? 3.5.. .l\. Hut... 1. 2 . 'I.;.n|v Ix--.v.LL ....p....fi&h.hkhnhwdil. I, v.1.— .. all . . . . - \ A. u ' . y - . , ~ . . . .¢ .l .3.1. . 1‘ . . Hulk... In “JIMVK .n H.) s 3..., - . Hit... 1 11.! . .1. 5.. .. :15. . “aquaujyflnllvu‘ 9314‘ A u . .I . .3 Ulw J.L§I.U.r! s...atw‘l.l..a~.uvodznv.m..u? ? ,..u..c§u.uw..$...:...€9\‘k awéwifiuvifiwmwafigg} «5.5. .. ,5. U. _ . .. . . .. . , . a VHI‘L-‘ig nunmmmmmmnmmm' 3 1293 00663 9920 This is to certify that the thesis entitled A Comparative Analysis of Corn Problems ani Programs in the United States and the Union of South Africa presented by Andrics Petrus Scholtz has been accepted towards fulfillment of the requirements for Pad). degree in Economics ( 2' f‘ I’ r / [/1 Major professor 1).“, 11+ February 195-1 0-169 LIBRARY Michigan State University - l5 . I H \ Clmcm.puerp. 0 PLACE IN RETURN BOX to remove this checkout from your record. TO AVOID FINES return on or before date due. DATE DUE DATE DUE DATE DUE I 1295‘ ll l|__ MSU Is An Affirmative Action/Equal Opportunity Institution . crummms-m ABSTRACT A COMPARATIVE ANALYSIS OF CORN PROBLEMS AND PROGRAMS IN THE UNITED STATES AND THE UNION OF SOUTH AFRICA by Andries P. Scholtz The corn industry in South Africa has experienced con- siderable growth since 1949/50. The situation has changed frmn one of impending shortages to one of perennial surpluses that have to be exported at a loss. The current government program to stabilize the corn industry was instituted during times of shortages and has remained basically unchanged despite the marked change in the actual situation. This has not encouraged an adjustment be- tween supply and demand. Since the United States also has been experiencing problems with corn surpluses, it was felt that a compa- rison of the problems and programs for corn in the two countries per- haps would provide useful pointers for future policy in South Africa. The approach followed was to examine in detail the under- lying factors, which have led to the current situation in South Africa. Delays in the publication of Census data have proved a limiting factor in this investigation. The programs evolved in South Africa and the United States, respectively, were then described and evaluated. Finally the experience of the two countries was com- pared and the relative merits of the main props in their programs examined. Andries P. Scholtz. An examination of the South African situation shows that the increase in corn production was the result of technolo- gical advances aided by favourable price levels for corn and in- creased stability of corn prices. The chances of an increase in domestic consumption in the short run are small, but increased use of corn as animal feed holds some promise for the long run. The Board's price policy has not aimed at bringing supply into line with domestic demand. The current situation requires a reconsideration of the Board's price policy as well as the basic form of control. More attention will have to be paid to stabilizing incomes, since increased mechanization has in- creased farmers' needs for minimum levels of cash returns. An evaluation of the price support program in the United States reveals the following: that equity of income dis- tribution within agriculture has not been improved; that agri- culture's share of the total income has been prevented from fal- ling off as rapidly as would otherwise have happened; that ef- fective supply control is essential if support levels are high, but this has been impossible to achieve in practice. Price support programs should be designed to encourage adjustment be- tween supply and demand, but they cannot be expected by themselves to bring about an adjustment of the magnitude required in present circumstances. In South Africa it is not clear whether the main problem is connected with the allocation of resources between agriculture Andries P. Scholtz. and the rest of the economy or with the allocation of resources within agriculture. The latter type of adjustment falls more within the scope of the price mechanism, and the Board therefore needs to reappraise its price policy. A less comprehensive form of control seems to be advisable; in this respect a floor price system such as in the United States holds promise. The Board al- so should take a more definite stand with respect to the increased surplus production of corn. Not only should the producers' levy be employed as a signal for production, but the gross producers' price should reflect the adjustment in supply desired by the Board. If prices are to be maintained above the level justified by local conditions relative to world prices, effective control over supply would become a necessity. The United States' experience clearly shows that acreage control is impractical and control over the quantity marketed seems to be the only alternative with a chance of success. A COMPARATIVE ANALYSIS OF CORN PROBLEMS AND PROGRAMS IN THE UNITED STATES AND THE UNION OF SOUTH AFRICA By +fu5 Andries P? Scholtz A THESIS Submitted to Michigan State University in partial fulfillment of the requirements for the degree of DOCTOR OF PHILOSOPHY Department of Economics 1961 ACKNOWLEDGEMENTS. This study was made possible through a scholarship for overseas study awarded to the author by the Corn Control Board of South Africa. To the Board my sincere thanks for the financial assistance provided during my stay in the United States as well as for making available its internal records for research purposes. I also wish to express my appreciation for the encourage- ment received from faculty members of the Departments of Economics and Agricultural Economics of Michigan State University. In par- ticular I am indebted to Professors Vic Smith and Larry Witt for advice in the preparation of this dissertation. To graduate stu- dents in both Departments I can only say: Thanks for making a stranger feel at home. Nearer home: thanks to Mrs. S. van der Vyver of Pretoria who completed typing of the final draft under very difficult condi- tions. my wife, who remained helpful and of good cheer through all the years of hard work, deserves a special word of thanks. Finally, since I know what a proud moment this would have been for them, I dedicate this work to the memory of my parents. ii CONTENTS. ‘ I. The Purpose and Rationale of the Study 1 II. Developments in the Corn Industry in South Africa since 1959/40, with Emphasis on the Period since 1949/50 11 III. A Description and Evaluation of Corn Control Prograns in the Union of South Africa 86 IV. United States Programs for Corn 144 V. Critical Analysis and Evaluation of United States' Programs for Corn 169 VI. A Comparison of the Programs and Results Achieved in Each Country 203 iii 10 11 12 13 14 15 16 17 LIST OF TABLES. Average production and consumption of corn in southAfricaOOOOOOOOOOOOOOOOOO...OOOOIOOOOOOOOOOOOOOO. Number of farms and average size of farms owned by Whites COOOOOOOOOOOOOOOOO0.00.00.00.0000000000000000000 Numbers of whites and non-whites living on farms of Whites (thousandS) OOOIOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO Number of tractors on farms of whites ................. Area under cultivation in the Union (farms of whites only> OOOOOOOCCOOOOOOOOOOOOIOOOOOOOOOOOOOOOOOOOOOOOOOOO Indices of the volume of agricultural production (1936/37-1958/59 = 100) ............................... Population of the Union of South Africa ............... Total farm population in 1950 and 1955 ................ Numbers of white and non-white labourers on farms owned by whites, as on Blst August of 1950 and 1955 ......... Average wages for the month of August, 1950 and 1955 (£) Gross capital formation in agriculture, mining and manufacturing, 1948-1957 eeeeeeoeeeeeeeeeeeeeeeeeeeeeee Relative importance of certain commodities in the to- tal farm value of all agricultural products during the periods 1936/37-1958/39. 1948/49-1952/53 and 1955/56- 1957 58 ............................................... Production of corn by white farmers, Bantu labourers on farms of whites and Bantu in Bantu areas - 1955/56 pmduction yearOOOOOCOCOOOOOOOOOOOOOOOOOCOOCOOOOOOOOOO Five-year averages of total corn production and yields per morgen in 200 lb. bags (whites on farms of whites OHIY) OOOOOOOOOCOOOOOOOOOOOOOOO00......OOOOOOOOOOOOOOOO Number of tractors on farms of whites ................. Application of fertilizer - pounds per morgen ......... Hybrid seed corn distributed for planting (bags of 200 lb.) .............................................. iv 11 13 14 14 15 l6 17 18 20 23 26 28 31 56 58 4o 18 19 20 21 22 25 24 25 26 27 28 29 30 31 32 Average corn yields in years of high total production Total morgen planted to corn, whites on farms of whites only - five-year averages (production years).. Percentage changes in the average number of cattle per farm owned by whites and percentage changes in average number of morgen planted to corn ............ Indices of two-year averages of producers' prices for corn, wheat, groundnuts, sunflower seed and kaffir- corn (1954/55-1955/56 as percentages of 1949/50- 1950 51 ............................................ Average gross returns per morgen planted in 1954/55- 1955/56 as percentage of the figures for 1949/50- 1950 51 ............................................. Gross capital formation in agriculture 1948-1957 in £million O...0..O...000......OOOOOOOOOOOOOOIOOOOOOO. Fluctuation of corn production on farms of whites during the marketing seasons 1949/50-1958/59 ........ Domestic consumption of corn in South Africa, in total 811d per capita 0.0.0......OIOIOCOOOOOOOOOOOO... Quantities of corn retained on farms (thousand bags, 2001b. ea-Ch) COO...0.....O............0............. Quantity of corn retained on farms and fed to live- StOCk inA-I‘eaAC.0..0....0.0..OOOOOOOOOOOOOOOOOOOOO. Distribution of ownership of cattle and pigs in South Africa in 1950 and 1955 (thousands) ................. Per capita personal income and per capita consumption of corn, meat and fresh milk in South Africa .. ..... . Three-year averages of total corn exports of South Africa, the United States and Argentina ('ooo tons) . Imports and exports of corn and corn products for the periods 1944/45-1948/49 and 1955/54-1957/58 ......... Average prices realized by the Board on export corn (shillings and pence per bag of 200 1b., free along- Side coastal elevator) O...00......OOOOOOOOOOOOOOOOOO 42 45 47 48 50 55 55 57 58 60 62 65 71 75 74 55 54 55 56 57 58 59 4o 41 42 43 44 45 46 47 Percentage contributions of the various branches of farming to gross farm income in representative areas . Frequency distribution of white farmers in Area A who marketed com in 1951/52000OOOOOOOOOOO0.0.0.0.0000... A summary record of the Board's activities in the marketing of the corn crop during the marketing seasons 1956/57-1958/59 .............................. Quantities of corn purchased from producers on behalf of the Corn Control Board by each type of agent during the marketing seasons 1944/45 and 1958/59 ............ Producers' prices for best grades of corn as fixed by the Corn Control Board for the marketing seasons 1949/50-1958/59 ...................................... Representative areas and details about cost of pro- duction Sllrveys O...0.0.0.000...OOOOOOOOOOOOOOOOOOOOOO Rates of contribution to the Corn Stabilization Fund . Area planted to corn by white farmers and total pro- duction by all groups for the marketing years 1957/58—1959/60 with the averages for 1952/53- 1956/57 as comparison ....................... ....... .. Storage facilities available for corn ................ Difference between the producers' prices of corn and the traders' price of sifted granulated corn meal (purchases of 1800 lb. or more) during the periods 1955/36-1939/40 and 1954/55-1958/59 ..... ............. Acreage allotments in commercial corn areas and total acreage planted (million acres) ...................... U.S. corn production statistics: Average acreage, production and yield. (Production for all purposes) Distribution of October 1 stocks in U.S. and percen- tage of crop placed under price support (million bushels) 1950-1959 .................................. Price data (annual averages) for U.S. corn 1948-1958 (dollars per buShel) .0.............................. U.S. exports of corn under specified government-fi- nanced programs, exports outside specified government- financed programs, and total exports - fiscal years 1954/55-1958/59 (in thousand bushels) ............... vi 79 80 101 102 106 107 115 128 159 141 188 189 191 194 197 1 LIST OF FIGURES. Effect of a Consumer Subsidy on Demand. vii 67 LIST OF CHARTS. Map of the Union of South Africa Average Yields in Transvaal Highveld Area Average Yields in Western Transvaal Area Average Yields in North Western Free State Area Total Average Yields viii 50 .. 119 119 119 120 Bibliography Appendix Table Appendix Table Appendix Table Appendix Table Appendix Table l. 2. LIST OF APPENDICES. Definition of regions making up Area A of the Union of South Africa Expenditures on fertilizer in cur- rent pounds and constant pounds, 1936-38 = loo Numbers of cattle, sheep and pigs owned by white farmers in 1949/50 and 1954/55 Changes in morgen planted to selected major cash crops; average 1954/55- 1955/56 over average 1949/5o—1950/51 Effect of using actual yield in stead of estimated yield ix 22O 226 227 228 229 25c CHAPTER I. THE P RPOSE AND RATIONALE OF THE STUDY. The traditional problems of instability in agriculture, under essentially free market conditions, have been wide price fluc- tuations due to unstable demand-supply relationships. These pro- _b1ems have led to government programs for the support of agricul- tural prices and incomes in many countries. The near universal concern with how this could best be accomplished is reflected in the decision of the Food and Agriculture Organization of the United Nations Organization in 1955 to set up an Expert Working Party on Systems of Price Support.l Government measures to support prices and incomes cover a wide range of possible actions. These can be roughly classified as follows: (1) Measures to support the general level of farm prices but which do not involve price guarantees; for example the regulation of international trade; promoting the organization of marketing, such as marketing co-Operatives; or government purchases for stock- piling. (2) Measures consisting mainly of price guarantees to far- mers - the guarantees could be in the nature of minimum prices, price ranges, or fixed prices. (5) Measures to raise incomes without regulating prices but which would reduce production costs and/or increase productivity, 1"Report of the Expert Working Party on Agricultural Support Measures", Monthly Bulletin of Agricultural Economics and Statis- tics, Vol. VI, No. 5, March, 1957. 1 2 concessions, crop insurance schemes, land improvement, subsidized production of farm supplies, etc. In the Union of South Africa legislation for the establish- ment of comprehensive government programs to support agriculture dates back to the Marketing Act of 1957,2 as amended. The Act provided for the establishment of a number of control boards to regulate the pro- duction and sale of certain important agricultural commodities. The activities of these control boards were and are supervised and co-ordi- nated by a National Marketing Council. Corn, as the major cash grain crop in South Africa, was one of the commodities for which a board of control was established.5 A detailed description of developments in the corn industry in South AfriCa will be presented later. At this stage a brief outline of the current situation and the salient features of the corn industry will suffice. The production of corn is concentrated in the provinces of Transvaal and Orange Free State. It is generally the main field crOp and many farms specialize completely in the production of corn. The annual value of the crOp averages about 50 per cent of the total value of all field crops, and about 15 per cent of the value of total farm production. Corn also is of major importance in direct human consump- tion, providing 57 per cent of the average per capita calorie-intake. 2Act No. 26 of 1957. 5As shown in Chapter II, an experimental advisory board, of much the same kind as the statutory board, was established in 1955. 5 It is particularly important in the diet of the low-income groups. In terms of the present support program administered by the Corn Control Board, the Board is the sole purchaser of corn from pro- ducers; the Board also fixes the producers' prices of corn as well as maximum.prices for the wholesale and retail trades. The Board does not participate in the physical handling of the crop, but controls and supervises the activities of its appointed agents such as grain mer- chants and farmer co-Operatives. Up to the present time there have been.no attempts to restrict production or the quantities marketed directly. Table 1 clearly reflects the significant growth experienced by the corn industry since 1957. Not only has the area planted ex- panded but yields also have improved. As is indicated in the table, production exceeded domestic consumption by substantial quantities. For the five marketing seasons 1955/56 - 1959/60 the average annual domestic surplus actually amounted to 10.6 million bags. Scuth.Africa has regularly exported corn, except for a few years during and just after world war II, but it has become more and more difficult to sell these excess quantities abroad without incurring heavy losses. The Board, for instance, incurred a loss of £2.5 million on exports totalling 11.7 million bags during the 1958/59 marketing season.4 Considering the competition provided by the United States, 4 ual Re rt of the Corn Control Board for l 8 , Annexure XIII, p.42. 4 Argentina and certain European countries, a policy of simply exporting all domestic surpluses could hardly be advocated. Table 1. Average production.and consumption of corn in South Africa. Marketing Total Domestic Surplus of produc- seasons. production. consumption. tion over consump- tion. thousand bags of 200 lb. each. 1935/36-1939/40 22.000 15.000 7.000 1955/56.1959/60 39.200 28,600 10,600 Sources: (1) For the seasons up to and including 1956/57 - Aggicultural Census Repgrts, Government Printer, Pretoria. c (2) For subsequent seasons - Estimates by the Division of Economics and markets, Union Department of Agriculture, published in.the Annual Report of the Corn Control Board for 1958(59, Pretoria. The domestic demand fer corn, contrary to the situation in the United States, is dominated by the quantities demanded for direct human consumption. Since Wbrld'War II there has been a significant increase in.the indirect consumption of corn - largely for feeding purposes - but this seems to have levelled off in recent years. The result is that usually more than feur-fifths of the crop is marketed, of‘thich about one-half is intended for human.consumption. .A comparison of long-run trends in domestic consumption.and production reveals the fellowing : Average per capita consumption of corn has increased from 1.53 bags during the marketing seasons 1935/36 - 1939/40 to 2.02 bags during 1955/56 - 1959/60. This represents an increase of approximate- ly 0.023 bags per capita per'year. When broken down by uses it is feund that per capita direct consumption declined slightly from 1.27 bags to 1.19 bags over the period in question, while indirect consump- tion increased from 0.26 bags to 0.83 bags per capita. The opinion is held by many that the producers' prices for corn and other cash crops were generally fixed too high relative to livestock and dairy prices. If this is true and if the situation were corrected it can provide an important boost to the indirect consumption of corn. During this same period average per capita production in- creased from 2.24 bags to 2.77 ba8's. This represents an increase of approximately 0.025 bags per capita per year. Compared to an annual rate of increase of 0.023 bags for domestic consumption, it means that production has actually increased its lead over consumption and may continue to run ahead for the foreseeable future. This state of affairs presents a serious problem. With domestic demand at current levels and exports taking place at a 1083, it appears that an adjustment in production is called for. This could be attempted indirectly, for example by lowering the price, or directly, for example, by limiting the area cultivated and/or the quantities marketed. The Corn Control Board will have to give careful considera- tion to possible changes in.the present arrangements that may help to remedy the situation. It is a hypothesis of this study that South Africa can profit from the experience of other countries which have used diffe- rent methods in dealing with roughly similar problems. Before the Marketing Act of 1937 was enacted the various schemes proposed or in operation in overseas countries during the thirties were investigated. It seems appropriate to review these experiences for the more recent years, particularly the experience of the United States, Which also has had to deal with the problem of corn surpluses. In the United States different methods from those in South Africa were used. Corn prices were supported in the Open market through the use of minimum price guarantees based on parity levels rather than a fixed price based on costs of production. Storage-and- 1oan programs were used to remove surpluses from the market rather than using one-channel marketing schemes. Moreover during much of the time these programs were in Operation, serious attempts were made to restrict production via acreage control. The production of corn in the United States is concentrated in the North Central region, with the States of Iowa and Illinois as the most important producers. On the average only about 30 per cent of the cr0p is marketed, and the remainder is used as feed on the farm where grown. Even so, as a cash crop, corn is third in value in the list of crops. Normally about 45 per cent of the crop is fed to hogs, another 45 per cent is fed to cattle and other types of live- stock, and only 10 per cent is used for industrial purposes, human food, or seed. Like South Africa, the United States has seen production outrunning consumption in recent years. Storage stocks have been accumulating and export programs to reduce the quantity of supplies on hand became necessary. There exist important differences between the markets for corn.in the united States and in South Africa. As a result of the fact that approximately nine-tenths of the crop is used as livestock feed in.the United States, there is a very close relationship between the corn.and.livestock industries. The price of corn and the total supply affect not only the number of animals to be fed, but in the short run they also affect the level of feeding'and the age (or weight) at which animals are marketed. A well-known example is the tradi- tional importance of the hog-corn price ratios5 in explaining'fairly regular 2 - 3 year cycles in hog production.6 The question also arises as to whether it would be wise to look toward a country whose programs have not been a model of success. Although it is probably an overstatement it has been remarked that, ”For sheer size and ineffectiveness they probably have no equal".7 5The price of hogs per hundredweight divided by the price of corn per bushel. 6Nicholle W.H., A Theoretical Analysig;of Imperfect Competition with S cial A lication to the icultural Industries (The Iowa State College Press, Ames, Iowa, 1941 pp. 310-311. 7First National 0131 Bank monthly Letter, New Yerk, January, 1958, p. 90 But it is exactly under these circumstances that it is necessary to distinguish whether failure is due to the basic principles involved, or to the practical methods chosen to carry out these programs. It is possible that the differences in the corn market in the two countries would make an unsuccessful American program.fairly effective in South Africa. Even if the United States' experience may not provide the answer as to how it should be done, South Africa may learn.lhat alternative programs should not be considered in an attempt to solve its problem. The investigation into the problems and programs for corn in South Africa and the United States that is presented here, can be outlined as follows: In Chapter II developments in the corn industry in South Africa since 1939 are described, with particular emphasis on the period since 1949. This chapter is intended to provide a backdrop against which the measures of the Government to support the corn industry can be evaluated. For this reason attention is focussed chiefly on pro- duction tendencies, domestic consumption, export activities and the income position of corn farmers. Unfortunately the publication of agricultural census data is very late, but since it constitutes the only source of infbrmation on many items of major importance, detailed analyses had to be limited to the period for which census data are available - 1.9. up to 1956. The discussion in this chapter deals almost exclusively with the farming-activities of white farmers, because the data in respect of 9 white farmers are much more complete and their farming activities al- most completely dominate the commercial aspects of farming in general. Thus it can be regarded as a discussion of commercial farming in the Union. In Chapter III the history of government control measures for the corn industry in South Africa is described. The role assigned to the Corn Control Board is depicted and the results achieved by the Board are evaluated. Chapter IV contains a brief history of the United States' programs for corn, with particular emphasis upon the period since 1938. In Chapter V a critical analysis and evaluation of these pro- grams is presented. In Chapter VI the programs followed in the two countries and the results achieved are compared. Some conclusions are also drawn regarding the future application of support measures for the corn industry in South Africa. Since the units of measurement, et cetera, used in South Africa in many instances differ from those used in the United States a short glossary of terms is subjoined. GLOSSARY. Mealies or maize : Corn. Kaffircorn : Sorghums. Marketing Season/ From lst May of Year X to 30th April of Year : year X + l. Production Season/ Year Bag of corn Morgen (of land) £1 (one pound) 10 Approximately from lst October of year X to 30th April of year X + 1; thus the crop produced in production year 1958/59 corre- sponds with the crop marketed in marketing year 1959/60. 203 1b. gross weight or 200 1b. net; equals 3.571 bushels. equals approximately 2V9 morgen. South Africa's monetary unit, equal to 20 South African shillings or 240 South African pence (or pennies); exchange rate on the U.S.A., £1 = approximately $2.80. CHAPTER II. DEVELOPMENTS IN THE CORN INDUSTRY IN SOUTH AFRICA SINCE 1939/A0, WITH EMPHASIS ON THE PERIOD SINCE 1949/50. General Aspects and Structural Considerations. Before examining the changes which occurred in the corn in- dustry during'the postwar period, it is advisable to sketch briefly the general background against which these changes took place. Attention will be focussed upon certain structural changes within agriculture, as well as the general position in the allocation.of pro- ductive resources between the agricultural and non-agricultural sectors of the economy. Structural Considerations: number of farms and average farm size: It will be observed (Table 2) that the number of farms owned by whites fluctuated to some extent and that corresponding changes occurred in the average size of farms. Table 2. Number of farms and average size of farms owned by whites. * 1937 1950 1956 number of farms ............... 104,554 116,848 108,883 Average farm size (morgen) .... 956 868 943 Sources: Agicultural Census Remrts 119;. 11, g4 and 3_(_)_, Government Printer, Pretoria. ll I‘ 12 The Bureau Of Census and Statistics pointsout in its Agricultural Census Report for 1955/56, however, that an important part Of the change in the number Of farms is due to a change in the practice Of rendering returns: "Up to and including the 1953-54 census, farmers whose farming activities extended over more than one farm or tract or piece Of land within the same magisterial dis- trict were at liberty either to complete separate returns for each such farm or tract or piece Of land, or on the other hand, to con- solidate all their farming activities in one return. "With the 1954-55 census .... 'Only one form must be com- pleted in respect Of each farming unit, irrespective Of whether far- ming activities are carried on on one or more farms' ... provided the farms are situated within the same magisterial district. "The large decrease in the number Of farms since the 1952- 53 census .... is primarily due to this consolidation."l Thus the figures in Table 2 are not strictly comparable; rather would it seem that no Significant changes took place during the nineteen year period. Owner-operated versus tenant-Operated farms: An important in- crease occurred in the ratio of owner-Operated to tenant-Operated farms. In 1937 about 66.5 per cent Of the farms were owner-Operated while 27.0 per cent were tenant-Operated; in 1957 the respective figures were 79.9 per cent and 15.7 per cent.2 This may have had 1Agricultural Census Report Np. 30, pp.5-6. 2Calculated from Agricultural Census Reports Nos. 11_and _2, 13 an effect upon farm organization and farming activities, since owner- Operators are, supposedly, less inclined to concentrate on purely Short run gains at the expense Of soil fertility, etc. Farmgpopulation: The available information on farm population dates from 1949/50 only. Still it is particularly noticeable that while the number Of whites living on farms steadily declined over the five-year period covered, there occurred a Significant increase in the number Of non-whites living on farms Of whites (Table 3). The importance of this development is discussed below in the section which deals with population shifts. Table 3. Numbers Of whites and non-whites living on farms Of whites (thousands). Whites Non-whites Year Male Female Total male Female Total 1950 240 233 473 988 1,226 2,214 1955 214 198 412 1.330 1.164 2.494 Source: Agricultural Census Reports Nos. 11 and 22, Tractors on farms: One Of the most important changes in agri- culture is the rapid rate in mechanization. The great increase in the number of tractors on farms indicates the general trend towards mechanization (Table 4). The increase occurred mainly in the eight years from 1948-1955 and it underlines the speed at which adjust- ments in farming techniques have taken place. Area cultivated: Table 4. Number Of tractors on farms of whites. 14 Year. Number. 1937 6,000 1947 22,000 1955 87,000 Sources: Aggipultural Census Reports Egg, l1: 2A.and.32° Another striking feature is the expansion in area cultivated on farms of whites since 1937. In this re- spect the area planted to field crops shows the biggest absolute increase (Table 5). It is interesting to note that the ratio of land under field crOps to fallow land increased significantly between 1945/46 and 1954/55, which would indicate more intensive use of the available arable land. Table 5. Area under cultivation in the Union. (Farms of whites only). Field Fallow Other Total area Percentage cr0ps land cultivated of total farm area (thousand morgen) 1951/58 5.575 958 512 6.825 6.8 1945/46 5.655 2.149 556 8.140 7.9 1954/55 7.592 2.087 459 10.118° 9.9 Source: An Abstract of Aggicultural Statistics, Department of Agriculture, Pretoria, May 1958, p.1. 15 Eggpggs in total outpgt: In view Of some of the changes men- tioned above a change in total output could be expected. Production in all three categories of output has increased at a very rapid rate since 1946/47 (Table 6). The volume Of liveStock products has lagged considerably behind the volume of horticultural and.agricul- tural products. This reflects to a large extent the drive toward increased production which accompanied increased mechanization, par- ticularly with reference to the processes of cultivation. Table 6. Indices of the volume of agricultural production (1956/37-1938/39 . 100). -_ W _ Season Agricultural Horticultural Livestock Total products products products production 1936/37 105 98 96 100 1946/47 110 124 114 114 1956/57 182‘ 215 159 ' 176 Source: An Abstract of Agricultural Statistics 1958, p.73. Allocation.of Resources between the Farm and Non-Farm Sectors: The main factors receiving attention will be pOpulation shifts, the labour force and capital investment. Shifts in pgpplation: The pOpulation of South Africa can be divided into two main groups - whites and non-whites. A breakdown of census figures for each group into numbers resident in.urban areas and in rural areas clearly reflects a strong flow to the urban areas (Table 7). The number of whites in rural areas is actually 16 declining, while the rate of increase of non-whites is considerably lower in rural than in urban areas. From 1946 to 1951 the total nonpwhite population increased by 11 per cent, the rural non-white population by only 4 per cent, while the urban non-white pOpulation increased by as much as 27 per cent. Table 7. Pepulation of the Union Of South Africa. Whites. Nonswhites. Year (30th June) Rural Urban Urban as Rural Urban Urban as percentage percentage of totali of total3E 1956 642 1.561 68 5.741 1.845 24 1946 605 1.769 75 6.420 2.624 29 1951 571 2.071 78 5.704 3.326 33 ‘Calculated by writer. Source: Nontply Bulletin of Statistics, Bureau Of Census and Statistics, Pretoria, March, 1959. Although there can be no doubt about the tendency for both whites and nonpwhites to migrate to urban areas, the farm por- tion of the rural population shows an interesting difference in the pattern of the shift (Table 8). The white farm population declined at an average rate of 2.6 per cent per annum over the period in question; in contrast, the rate of decline for the total rural white population (calculated from Table 7) was only 1.1 per cent during the corresponding'period. r‘ 17 Table 8. Total farm population in 1950 and 1955. Year Whites Non-whites (3lst August) 1950 472,952 2,214,047 1955 411:658 294947050 Percentage change - 13 + 13 Annual rate - fl - 2.6 + 2.6 Source: Compiled from Agricultural Census Reports Nos. gfi,and.22. In actual numbers the farm pOpulation decreased at an annual rate of 12,200 while the rural population decreased at a rate of 6,400 per annum. This Shows that rural towns as well as urban areas may have attracted farm people. The numbers Of non-whites on farms Owned by whites in- creased by 2.6 per cent per annum during the period 1950-1955, while the rate of increase for the rural non-white population was only 0.8 per cent per annum. There is good reason to believe that a large proportion Of the flow of non-whites from their tribal areas is to the farms Of whites and to rural towns, and that this flow is sufficient (at present) to Offset the flow Of non-whites from farms and rural towns to the urban areas. The influence of these shifts in population is clearly noticeable in the changing pattern of employment on farms. Table 9 gives information on employment Of whites and non-whites on farms Owned by whites for 1950 and 1955. 18 Table 9. Numbers of white and non-white labourers on farms owned by whites, as on 31st August Of 1950 and 1955. Number Of Whites Non-whites non-whites per Region white labourer 1950 1955 1950 1955 1950 1955 Area 4" 5.055 2.525 557.906 594.764 67.1 169.8 Rest of the Union 8,789 5,447 298,888 317,215 34.0 58.2 Union Total 13,824 7,772 636,794 711,979 46.1 91.6 I Comprises the provinces of Transvaal and Orange Free State and the magisterial districts of Hafaking and vryburg in the Cape Province. Source: Compiled from.§ggicultural Census Reports Egg, gA_and.22, The figures indicate, first of all, that the number of white labourers on farms is small - in absolute terms as well as relative to the number of non-white labourers. And although there were as few as 13,824 white labourers to 636,794 nonswhite labour- ers on all farms owned by whites in 1950, still the number of white workers declined by 44 per cent to 7,772 in the space of five years. In contrast, the number of nonpwhites increased to 711,979, doubling the ratio of nonpwhite workers to white workers. There is also a substantial difference in the rate at which these changes have taken place in Area A as compared with the 19 rest of the country. The percentage changes in the number of workers are as fellows: White workers Non-white workers. Area A - 54.0 + 17.0 Rest of Uhion - 38.0 + 6.0 Total - 44.0 + 12.0 Area A is changing more rapidly. various factors may have con- tributed to this situation. Apart from organizational differen- ces resulting from basic differences in geographical and climatic conditions, two of the most important factors were the rapid de- velopment of new goldfields in the Western Transvaal and North western Free State and an equally rapid process of overall economic development in sparsely pOpulated rural areas of the Transvaal and Orange Free State which was triggered by the developments in the gold industry. Egggg: It would be well to keep in mind that the character of the work performed by white workers on farms differs considerably from that of the average non-white worker. White workers more commonly act as assistants to farmeowners, thus performing over- seeing and co-ordinating duties rather than heavy manual labour. The latter tasks are performed.mainly by non-white workers, although those showing’the necessary aptitude are usually promoted to "boss- boy” (foreman) and are also employed to Operate farm machinery such as tractors, lorries, etc. 20 wages paid to farm workers (inclusive Of payments in kind) showed important increases during'the period 1950-1955, but were still relatively low (Table 10). The data for the four major corn producing areas are listed separately; wage rates fOr both white and non-white workers were higher in the Transvaal areas than in the Orange Free State. Despite the higher percen- tage increases over the 5 year period for the Free State areas com- pared with the Transvaal areas, the spread between the highest and lowest average rates remained almost unchanged. Table 10. Average wages for the month of August, 1950 and 1955 (a). White workers NOn-white workers Region 1950 1955 73111- 1950 1955 76 in- crease crease Transvaal Highveld 24.85 38.86 56.4 3.23 4.00 23.8 western Transvaal 30.19 42.92 42.2 3.28 4.21 28.4 North Western nee State 16.90 32009 8909 204-4 3059 4701 North Eastern Free State 20.14 38.04 88.9 2.52 3.30 31.0 Area A 23.80 37.10 55.9 2.83 3.66 29.3 Rest of the Union 19.10 32.50 70.2 3.88 5.05 30.2 Total average 20.79 33.87 62.9 3.16 4.28 35.4 Source: Compiled from Agricultural Census Reportg Nos. 24 and 29. It is also important to note that in all areas the per- centage increase in wages of white workers exceeded by far the 21 corresponding figures for non-white workers. This is in line with expectations based on the pattern of pOpulation Shifts described earlier. Table 10 furthermore reflects higher wages for white wor- kers in Area A than in the rest of the Union. This also is consis- tent with the pattern described earlier, namely a more rapid decline in the number Of white workers in Area A combined with more attrac- tive alternative employment Opportunities. The opposite is true in respect of non-white workers; namely, wage rates were lower in Area A than in the rest Of the Union. This is mainly due to the fact that Asiatics and Coloureds (pe0ple of mixed descent) normally receive higher wages than Bantu workers and.that the first mentioned group is numerically of much greater significance in the rest of the Union than in Area A. An important fact which emerges from.the preceding examina- tion is that the volume of employment has increased in Spite of an increase in capital investment in agriculture. It is, therefOre, not clear to what extent capital has replaced labour in the factor- mix. It is difficult to believe that the volume of farming activi- ties increased to such an extent that all of the labour displaced by labour-saving machinery, and more, could be absorbed by other branches of agriculture. Neither could this phenomenon be explained in terms of differences in productivity between the out—going and in-coming labour, even though many farm labourers eventually move to rural towns and cities while they are replaced by virtually untrained help on the farm. It is more likely that a certain amount of superfluous 22 labour is present in agriculture, and that this has a detrimental effect upon the cost structure of agriculture. It should be pointed out that the increased mechanization was confined almost exclusively to the process of cultivation, and that the picking process in harvesting Operations is still per- formed mainly by manual labour. Recent estimates by the Division of Economics and markets indicate that harvesting Operations took up an average of 60 per cent of the total labour required in the 3 complete process of producing corn. In view of the problems ex- perienced by farmers in obtaining enough seasonal labour at harvest time, it is likely that the permanent labour fOrce "carries" a cer- tain number of workers fer the main purpose Of ensuring more de- pendable help at harvest time. These workers will be under-employed during*the nine months of the year in.which no harvesting is done. Since specialized harvesting equipment also has to be "carried" all year in.order to be available at harvest time, the queStion arises whether partially unemployed machinery is cheaper than partially unemployed men. It is therefore of the utmost importance for in- creased efficiency that the economic aspects Of mechanized harvesting be thoroughly explored. Capital: Attention has been focussed on the rapid rate at which mechanization took place since WOrld war II, and it is to be expected that investment in machinery and equipment represented a major proportion of total gross capital fOrmation in agriculture. 3M311er C.A.,'Mechanization of the Harvesting of Maize an Urgent Necessity," Farmin in South Africa, V01. 35, No. 10, January, 1960, pp. 27-28. 23 It is of interest to compare the volume Of gross investment in agri- culture with the volume Of gross investment in some Of the other important branches of the South African economy (Table 11). Table 11. Gross capital formation in agriculture, mining and manufacturing, 1948 - 1957. Total for Agriculture Mining Manufacturing private enterprise £mi11ion 1948 44 23 52 280 1949 34 34 33 265 1950 35 46 49 274 1951 65 59 75 401 1952 58 69 32 341 1953 53 59 37 432 1954 60 65 53 474 1955 59 56 84 494 1956 60 54 73 495 1957 63 53 78 541 Total 1948-1957 531 518 555 3.997 Source: gaggterly Bulletin Of Statistics, South African Reserve Bank, Pretoria, September, 1959. Although the pattern changes considerably from year to year, gross capital formation in agriculture for the 10 years 24 1948 - 1957 kept pace with that in mining and manufacturing, even though both mining'and manufacturing experienced considerable growth during the period under review. In 1948/49 mining's contribution to the total geographical income Of £898.2 million was £93.6 million (or 10.4 per cent), in 1957/58 it was 5256.8 million (or 12.9 per cent). The contribution of the manufacturing sector was 8195.4 million (or 21.8 per cent) in 1948/49 and £487.5 million (or 24.5 per cent) in 1957/58. The corresponding figures for agriculture are $121.0 million (or 13.5 per cent) and 2244.3 million (or 12.3 per cent).4 Judging by these comparisons it would seem that in the aggregate agriculture received a reasonable share of total gross investment. It is not clear, however, to what extent this was a voluntary process indicating that agriculture represented an attrac- tive field of investment5 or the result of fundamental adjustments which were forced upon farmers by rapid technologicalchanges in agriculture as well as changes in the rest of the economy. 4nggterly Bulletins of Statistics, (op. cit.). Geographical income differs from the more commonly used concept of National In- come by the income accruing to Non-Union factors of production - e.g. dividends on foreign capital invested in the Union. 51h an article recently published F. Popping has estimated that during the first decade after WOrld war II investors in agriculture received a net return of more than 30 per cent - "Some Features of Capital Investment in Agriculture ...", South African Journal of Aggicultural Science, V01. 2, NO. 3, September, 1959. 25 The Relative Position of Corn within Agriculture: The gages farm value of the annual corprcrop: The relative .position.of corn within agriculture depends not only on changes in the corn industry itself, but also on developments which take place in various other branches of the agricultural sector. The gross farm value of the annual production of a Specific crop is frequently ‘used as an indicator of its relative importance, and in terms of this criterion the relative importance of corn has remained fairly stable. Total farm value declined from 17.10 per cent of the total farm value of all agricultural products during'the period 1936/37- 1938/59 to 15.17 per cent during 1948/49-1952/53 (Table 12). For the period 1955/56-1957/58 it has remained virtually unchanged at 15.2 per cent. During this period corn was, once again, the most important of all agricultural commodities. Of the other important field crOps wheat returned to al- most its pro-war level after a slight decline during 1948/49-1952/53. Sorghums, in contrast, increased slightly in relative importance du- ring the middle period and then drOpped to just below their earlier level of importance. Groundnuts (peanuts) is the only one of these crepe which maintained a rising level of importance, although, as in the case of sorghums, it is not Of much importance in the overall picture. The relative importance of the four field crOps mentioned above, taken together, declined from 24.9 to 24.3 per cent over the period covered. In comparison the relative importance Of livestock 26 Table 12. Relative importance of certain commodities in the total farm value of all agricultural products du- ring the periods 1956/57-1958/5 . 1948/49-1952/55 and 1955/56-1957 58. Relative Importance, per cent Commodity 1956/57-1958/59 1948/49-1952/55 1955/56-1957/58 Corn 17.10 15.17 15.2 Wheat 6.35 5.70 6.2 Groundnuts 0.23 1.50 1.8 Sorghums 1.24 1.40 1.1 Beef Cattle 9.61 8.82 9.7 Sheep 5.79 4.90 509 Hogs 2.10 2.47 2.0 wool 15.21 19.28 14.9 Others! 42.37 40.76 43.2 100.00 100.00 ‘ 100.0 IIncludes no single value exceeding 7.0 per cent. Source: Calculated from information published in An Abstract of Aggigultural Statistics_195_, increased by the smallest of margins from 17.5 to 17.6 per cent. W001, due to the record prices which ruled.in the early fifties, jumped by more than 4 percentage points in relative importance during 1948/49-1952/53, but then declined to just below the earlier level during the last period. 27 Egmber39;:commerciggfigogn_producersa According to recent esti- mates of the Division of Economics and Markets there are approximate- Ly 110,000 white farmers in the Union, of whom 36,000 (or 33 per cent) are classified as commercial corn producers.6 This is a clear indication of the wide interest in corn as a cash crop. gaggiplanted to corn: Another indication of the important place occupied by corn is the fact that the area planted to corn by white farmers e.g. in 1957 amounted to almost 4 million morgen. The to- tal estimated area cultivated by white farmers is placed at 9 million morgen, which means that the area planted to corn represents 45 per cent of the total area cultivated.7 Summary: Certain.structural changes in agriculture during'the post- war period favoured an expansion of corn production, the two most important factors being a sizeable capital investment in agriculture and a tendency to concentrate more on the production of field crops. Since corn occupied a relatively important place in agriculture, and more specifically among field crops, it is only natural to expect that a good deal of the increased agricultural activity would be concentrated on the production of corn. 6Annual Repgrt of the Corn Control Board for 1251(58, p.3. 7Annual Report of the Corn Control Board for 125115 . 28 The Corn Industry after world War II,with Emphasis on the period since 1949/50: The production of corn is concentrated largely in the central and.north-eastern regions comprised of the provinces of Transvaal and Orange Free State. It will be clear from Table 13 below that producers in.these two provinces grow almost 90 per cent of the total crop. Producers are usually classified as white farmers, Bantu (coloured) labourers on farms of whites, and Bantu in Bantu areas. The respective contributions of these groups can be observed from the following table 3 Table 13. Production of corn by white farmers, Bantu labourers on farms of whites and Bantu in Bantu areas - 1955/56 production year. White Bantu labourers Bantu in Province farmers on farms of Bantu Total whites areas '000 bags of 200 1b. each. Cape 1,270 81 758 2,109 Natal 1,180 274 517 1,971 Transvaal 17,246 1,317 468 19,031 Orange Free State 12,749 1,497 22 14,268 Total 32,445 39159 1:755 37,379 Source: Agricultural Census Report No. 3_. As indicated earlier the farming activities of white far- mers so dominate the commercial aspects of farming that the discussion in the rest of this chapter will deal almost exclusively with them. 29 Increased Production of Corn: Reference has been made to the increase in the production of corn since the period just prior to World War II. It is now proposed to examine the geographical pattern of this change and to determine the influence of certain causal factors. For these pur- poses the Union has been divided into two main areas, Area A and the Rest of the Union. Area A represents the main area where corn is produced and consists of the provinces of Transvaal and Orange Free State and the magisterial districts of Nafeking and Vryburg in the Cape Province. In many instances Area A has been sub-divided into smaller regions, and in Appendix Table 1 a complete list is given of the magisterial districts comprising each of these regions.8 Also refer to Chart No. l on the following page. Data on average corn production and yields per morgen are given for the periods 1934/35-1938/39, 1945/46-1949/50 and 1951/52- 1955/56 (Table 14). Only two regions, namely the Western Middleveld and Northern Cape, reflect a decline in production over the first time interval. But in all regions the five-year averages for 1951/52-1955/56 are well above the corresponding figures for 1934/35- 1938/39. The most spectacular increase, perhaps, occurred in the Western Transvaal where production increased from 1,951,700 bags to 5,210,000 bags. The highest percentage increase (177 per cent) was registered in the Northern Cape. It is interesting to note that the increase in production has been as noticeable in the traditionally 8The breakdown is the same as that used for Area A by the Divi- sion of Crops and Markets, Department of Agriculture, for purposes of crop estimates. 30 .hwewokcwww... 05550.net alt hwuzeaock (30K .9: 02~30tfi I QUCQW. 3.30% k0 2323 .2: he mt: .u .02 LQQIU Q «on: HMSQVCSOJ \u.;euu..h c E gtI‘KSOJ «a... u: ..eebl WoubUVtSz \Cro..u..§ 0006 [.3 tuiut so .6 mamas -sLe£\ .«m . Define \ \\\\\ otcc. \ b \ \ are R e 0d». quSOtm mktU \ chtetvwbo 0.x A§th2txtuum 0°" - Q3