Measurement and Analysis of Rural Household Income in a Dualistic
Economy: The Case of South Africa

**Johann Kirsten**

**Department of Agricultural Economics, Extension and Rural
Development**

**University of Pretoria, Pretoria, South Africa**

**and**

**Walter Moldenhauer**

**Directorate Agricultural Statistics**

**Department of Agriculture, South Africa**

# Abstract

Government Departments in South African utilizes a number of different
data sets on income of rural households. These include the Population
Census, the October Household survey of 1995 and 2000, the Rural
Household Survey of 1997 and then the various agricultural censuses
(1996 and 2003). All of these use different approaches in obtaining
household income. The agricultural census for example only reports on
farm income -- excluding the non-farm income. This paper reviews the
different sources of household income data, their measurement techniques
and their utilization. The difference in application of various surveys
in the former homeland areas and the so-called commercial farming areas
are also shown. In the case of the former homeland areas integrated
rural household data is used for poverty measurement purposes. The
context and methodologies of these surveys are discussed in detail.

# 1. Introduction

South Africa currently celebrates its 10^th^ year of democracy following
the historic elections in 1994. Although the country experiences
remarkable political and economic stability one important challenge
remains, namely that of addressing poverty and integrating the so-called
'second economy' into the advanced and rapidly growing first world
economy of the country. The challenge to rid South Africa of its dualism
is not only relevant for the economy at large but even more so in the
agricultural sector and the rural economy where the legacy of apartheid
is physically visible. Regions characterized by poverty, unemployment,
food insecurity, large migrant communities, poor infrastructure,
traditional tenure and subsistence agriculture are bordered by regions
within the same province characterized by freehold tenure, large
commercial farming operations, mainly white land owners, good
infrastructure, etc. The policy of apartheid created 'two agricultures':
the one largely neglected, backward and subsistence oriented and located
in the former homeland areas and the other developed, export oriented
and well supported by government systems and located in the 'former
white South Africa'.

This situation also applied and still applies to South Africa's
agricultural statistics. Given the statutory control of agricultural
marketing (which required statutory measures on records and returns)
from 1937 to 1997 a good solid database was generated on agricultural
production, sales, gross value of production, exports, imports, etc.
Regular agricultural censuses and intermittent agricultural surveys
provided a relatively good overview of farm income, assets, land size,
etc. in the so-called 'commercial sector'. Only very limited statistics
on farm household activities, sales, income was available from the
agricultural sector in the 'former homelands'. None of the agricultural
censuses in the pre-1994 years covered these regions resulting in only a
one-sided picture of the total agricultural sector and also a total data
void on rural households and livelihoods.

One of the first efforts during the transition years of the early 1990s
to address this void was the "Project for Statistics on Living Standards
and Development' implemented by the Southern Africa Labor and
Development Research Unit (SALDRU) in 1993. For the first time this
survey tried to assess the living conditions, source of household income
and a range of other household statistics of a representative sample
across the whole of South Africa. A large portion of the sampled
households was drawn from the rural areas of the 'former homelands'.

Given this background and the continued effort by the South African
government to address rural poverty and obtaining a better picture of
the real living standards of rural households, a number of surveys
during the 10-year period following democracy have been conducted. This
paper reviews the different surveys of rural and farm households since
1994 and highlights the different approaches in measuring household
income of rural and farm households.

2.  **AGRICULTURAL CENSUSES AND SURVEYS**

Since 1965 regular censuses of the agricultural sector were undertaken.
This was complimented with 'agricultural surveys' based on a
representative sample survey of 10% of all farming units implemented
during the intermittent years almost annually up to 1996. The most
recent comprehensive data base on the 'commercial' agricultural sector
originated from the agricultural censuses of 1988 and 1993. The results
of the 1993 census were only made available in 1997. The new
agricultural census of 2002 is still in progress and results will only
be made available early 2005. This section briefly describes the nature
(and where applicable) some key results of the 1993 and 2002 census and
the 1994, 1995 and 1996 agricultural surveys.

# 2.1 Agricultural Census of 1993

In 1993, the former Central Statistics Service, now Statistics South
Africa, conducted a Census of Agriculture covering all commercial
farming units in South Africa. The farmers in the former homelands were
excluded from the census. Farmers were requested to provide information
regarding production and financial activities for the year between 1
March 1992 and 28 February 1993. The Census data were obtained by means
of a mail questionnaire that was mailed to farmers who were requested to
complete and return the questionnaire. A total of 57 980 questionnaires
were sent out to farming units and only 39 821 were completed and
returned -- implying a non-response rate of 32.1%.

The gross farm income estimated from the 1993 census of agriculture
comprises only of income earned from agricultural activities and largely
ignored non-farm income. This was partly a function of the fact that
farming was considered to be full-time occupation and thus only
full-time farmers were included in the sampling frame. Table 1 contains
a summary of the main findings of the census with specific reference to
the number of farms and gross farm income.

Table 1: The number of farming units and gross income from the results
of the 1993 census of agriculture

+---------------------------+-------------+-------------+-------------+
| ***Province***            | ***Number   | ### L       | ***Gross    |
|                           | of farming  | and surface | Income***   |
|                           | units***    |             |             |
+---------------------------+-------------+-------------+-------------+
|                           |             | ***1 000    | ***R 1      |
|                           |             | Ha***       | 000***      |
+---------------------------+-------------+-------------+-------------+
| **Total**                 | **57 980**  | **82 759**  | **19 620**  |
+---------------------------+-------------+-------------+-------------+
| Western Cape              | 8 352       | 10 250      | 4 394       |
+---------------------------+-------------+-------------+-------------+
| Eastern Cape              | 6 106       | 10 320      | 1 204       |
+---------------------------+-------------+-------------+-------------+
| Northern Cape             | 6 593       | 29 962      | 1 032       |
+---------------------------+-------------+-------------+-------------+
| Free State                | 10 252      | 11 321      | 2 492       |
+---------------------------+-------------+-------------+-------------+
| KwaZulu-Natal             | 6 080       | 4 064       | 3 163       |
+---------------------------+-------------+-------------+-------------+
| North West                | 7 638       | 6 184       | 1 910       |
+---------------------------+-------------+-------------+-------------+
| Gauteng                   | 2 500       | 675         | 1 387       |
+---------------------------+-------------+-------------+-------------+
| Mpumalanga                | 5 406       | 4 648       | 2 754       |
+---------------------------+-------------+-------------+-------------+
| Limpopo                   | 5 035       | 5 335       | 1 285       |
+---------------------------+-------------+-------------+-------------+

*Source: Census of Agriculture, 1993*

## **2.2 Agricultural Surveys of 1994, 1995 and 1996**

Statistics South Africa conducted annual agricultural surveys from 1994
to 1996. The surveys were conducted in the commercial agricultural
sector and again excluded the former homelands. The purpose of the
surveys was to collect useful information for national and provincial
planning, development, policy formulation and marketing. The information
obtained from the surveys was primarily used for benchmarking and
re-basing of the quarterly Gross Domestic product as well as for the
calculation of the Gross Geographic Product.

The surveys were conducted in the same manner as the agricultural census
of 1993 except that it was only sample surveys of around 6 300 farmers
or roughly 10% all farming units and thus not a census. The surveys
were, therefore, not representative of the total population of farming
units in the commercial agricultural sector of South Africa. The
response rate for these surveys was, however, much better than with the
1993 census: 78.5% in 1994, 76.0% in 1995 and 74.2% in 1996.

Gross income as reflected in the results in Table 2 below was once again
defined as income earned from agricultural products sold and insurance
payments for cattle and harvest losses. No reference was made to
non-farm income earned for the respective periods.

Table 2: The number of farming units, land surface and gross income for
1994, 1995 and 1996

  ---------------------------------- ------------ ------------ ------------
  ***Item***                         ***1994***   ***1995***   ***1996***

  Number of farming units            60 901       59 828       60 938

  Total farm area (1 000 Ha)         81 862       82 139       82 210

  Gross income from agricultural     27 014 299   30 552 513   32 931 236
  sales (R 1000)                                               
  ---------------------------------- ------------ ------------ ------------

*Source: Agricultural surveys 1994, 1995 and 1996*

# 2.3 Survey of large and small-scale agriculture, 2000

The agricultural censuses and surveys during the 1990s continued the
practice of earlier surveys and clearly provided no information on
farming activities of small-scale and subsistence farms in the former
homeland areas. To address this data void Statistics South Africa
conducted a survey on large and small-scale agriculture in August 2000
as an attempt to collect data on the small-scale and subsistence farming
sector in the country.

## Sampling Methodology

A master sample was created which was based on enumeration areas (EAs)
from the 1996 Census as well as a sampling frame from the National
Department of Agriculture. Approximately 1 500 Primary Sampling Units
(PSUs) were selected from the former South Africa and the former
homelands. The apartheid-based political geography of the country, prior
to democracy, was very important to the survey. Large-scale commercial
farming operations in South Africa were mostly under white ownership.
This was in contrast to the mainly small-scale and subsistence farming
operations of the former homelands. Consequently, different sampling
designs had to be used for the different types of farming operations,
one for the former South Africa and one for the former homelands.

A household was defined as a farming operation if it met at least of one
of the following specifications:

a)  It had access to land for farming purposes,

b)  It had livestock,

c)  It cultivated crops, and

d)  The respondent considered the household or a member of the household
    to be a farming operation.

If the respondent did not consider the household to be a farming
operation (d), it was classified as a farming operation if it complied
with at least one of the following:

a)  It had sold crops, livestock or other agricultural products produced
    on or by the operation, during the 12 months prior to the survey,

b)  It had access to 0.5 hectares or more of cropland,

c)  It produced enough crops and livestock to feed household members for
    six months or more,

d)  It five or more of any of the following animals: cattle, sheep,
    goats, pigs, mules or donkeys, or

e)  It had 25 or more chickens.

Of the households that qualified as farming operations in the former
homelands using the above criteria, 15% were systematically selected in
each EA or PSU. Tenant farmers were found in both the former South
Africa as well as the former homelands. In cases where tenant farmers
were identified, they were all sampled.

## Questionnaire design and data collection

The survey questionnaire was designed by the National Department of
Agriculture in consultation with the United States Department of
Agriculture's Statistical Agency. Face-tot-face interviews were used as
the data collection method. Trained fieldworkers collected the data from
14 August to 18 September 2000 in all nine provinces.

In this survey total income was defined as the total amount generated
from agricultural and non-agricultural activities. This includes income
generated from sales of crops, livestock, and poultry, products from
crops, livestock and poultry, other farm income (e.g. hiring out of
livestock for drafting and letting farm property to others) and non-farm
income (e.g. cash gifts, grants, pension or retirement annuities).
Farming income was defined as the income earned from agricultural
products sold, such as field crop products, animals and animal products,
while farming turnover referred to the total amount generated from
agricultural activities, including farm-related income such as hiring
out of livestock for drafting purposes and the letting of farm property
to others, but excluding non-farm income such as grants, gifts cash
gifts, remittances and pensions. If one considers the other farm-related
income the largest share came form 'custom work for others and machine
hire', sales of machinery' and letting farm property.

## A brief overview of the findings

It was estimated that there were 1.1 million farming operations in South
Africa in August 2000. This number consisted of 150 000 farming
operations in the former South Africa (including tenant farmers) and 943
000 farming operations in the former homelands (see Table 3). One should
be careful in comparing these results with that of the 1993 census and
the agricultural surveys since they only considered commercial
agriculture. Small plots and weekend farms purchased by urban investors
also now entered the definition resulting in the larger number of
farming units in the former 'South Africa' reflected in Table 3.

Table 3 indicates that of the estimated 1.1 million farming operations
in South Africa in August 2000, 698 000 kept livestock and poultry, 855
000 cultivated cereals, tubers and roots, 349 000 grew vegetables and
245 000 grew fruit. Most of the farming operations in the former
homelands cultivated cereals, tubers and roots whereas the majority of
the farming operations in the former South Africa kept livestock.

Table 3: Number of farming operations by type of farming activity and
geographical location

  ------------------------- --------------- --------------- ---------------
  ***Type of farming        ***Former South ***Former       ***South Africa
  activity***               Africa***       Homelands***    (total)***

  **Total**                 **150 000**     **943 000**     **1 093 000**

  Livestock and poultry     84 000          614 000         698 000

  Cereal, tuber and root    56 000          799 000         855 000
  crops                                                     

  Vegetable crops           19 000          330 000         349 000

  Fruit crops               17 000          228 000         245 000
  ------------------------- --------------- --------------- ---------------

*Source: Survey on large and small-scale agriculture, 2000*

## 

The results of the survey also contained information on the total
income, farming turnover, farming expenses, debt, and farming profit and
total profit. This information was useful to estimate the amount of
non-farm income received by farming operations in South Africa, the
former South Africa and the former homelands. Figure 1 illustrates farm
income and non-farm income as a percentage of total income for South
Africa, the former South Africa and the former homelands. It indicates
that, for commercial farm households in the former South Africa farm
income is the main source of income whereas non-farm income is a far
more important source of income for farming operations in the former
homelands. This is confirmed by the discussion later on the surveys of
poor rural households.

![](media/image1.wmf){width="5.552083333333333in"
height="3.4166666666666665in"}

Figure 1: Farming income and non-farm income as a percentage of total
income of farm households in South Africa

*Source: Survey of Large and Small-scale agriculture, 2000*

The results from the survey also reveal that only 13.72% of the total
number of farming operations was situated in the former South Africa,
but received 98.85% of the total farm income in South Africa. The 943
000 farming operations in the former homelands covered a total land
surface of 97,3 million hectares while the 150 000 farming operations in
the former South Africa covered a total land surface of 217,98 million
hectares (Figure 2).

![](media/image2.wmf){width="5.333333333333333in"
height="3.229861111111111in"}

Figure 2: Total land surface of farming operations according to
geographical location

#### Source: Survey of Large and Small-scale agriculture, 2000 

**2.4 The Census of Commercial Agriculture, 2002**

The Census of Commercial Agriculture of 2002, conducted for the
financial year 1 March 2001 to 28 February 2002 (which is still being
conducted and processed) once again only covers the activities on
commercial farms in South Africa. For the purposes of the census, a
commercial farm was defined as a farm that is registered for Value Added
Tax (VAT).

The questionnaire consists of a 24-page booklet with questions ordered
into 15 sections. Section 6 captures all the income from farming
activities while Section 7 covered all the other sources of income. This
included income received for work done for other / fellow farmers such
as ploughing, harvesting, threshing, baling, picking, spraying shearing,
water drilling, earth moving and transport. It also included income
generate from the leasing of farming equipment, leasing of land and the
sales of fixed assets, vehicles, machinery, equipment and tools. As
indicated in the extract from the census questionnaire (Box 1)
respondents were also asked to specify the income earned from a range of
other non-farm income sources. The biggest problem here lies in the last
question: 'other sources of income'. It is not clear whether salaries
from non-farm employment were captured here.
![](media/image3.png){width="5.416666666666667in"
height="3.620833333333333in"}

##### Box 1: Extract from Census of Commercial Agriculture, 2002

**3. RURAL INDICATORS/SURVEYS**

# 

An often forgotten but very important outcome of apartheid and the
previous apartheid regime has been the absence of credible and
comprehensive data on which policy, such as poverty reduction
strategies, can be based. The previous government had little interest in
collecting information on this nature. For most of the pre-1994 years
official statistics excluded any information from the former homelands.
This meant that the large proportion of the poor was automatically
excluded from official statistics, since most of the poor population
resided in the homelands.

Although surveys were undertaken in these areas, the commissioning and
release of both reports and data were often subject to the whims of
governments from these independent state and territories. Various
studies and data 'panel-beating' exercises, such as those undertaken by
the Development Bank of Southern Africa \[DBSA, 1987a, 1987b, 1991,
1994\], tried to fill this information gap. It was not until the 1993
Project for Statistics and Living Standards and Development (PSLSD) that
a comprehensive household database for development was created.

**3.1 PSLSD, 1993**

The first South African national household survey, the Project for
Statistics and Living Standards and Development (PSLSD) was undertaken
in the last half of 1993 by a consortium of South African survey groups
and universities under leadership of the South African Labor and
Development Research Unit (SALDRU) at the University of Cape Town (UCT),
with financial and technical support from the World Bank and the
governments of Denmark, The Netherlands, and Norway \[PSLSD, 1994\].

The PSLSD was a comprehensive household survey collecting a broad array
of information on the socio-economic conditions of households. It
includes sections on household demographics, household environment,
education, food and non-food expenditures, remittances, employment and
income, agricultural activities, health and anthropometry. In addition
to the household questionnaire, a community questionnaire was also
administered in each cluster of the sample to collect information common
to households such as school availability, health care facilities and
prices of various commodities.

An important component of the design, as with any household survey, was
the definition of a household. In order to account for the complexity of
the South African situation with its history of residential restrictions
and migrant labor, a two-tiered definition for household members,
resident or non-resident, was formulated based on time spent in
residence. Only a limited amount of information was collected from
non-resident household members.

PSLSD has had an important role in guiding policy. The allocation of
state revenue between South Africa's nine provinces has drawn
extensively on the data from the PSLSD survey, so to, target poverty
programs such as the Community Based Public Works Programs.

The 1993 PSLSD survey is, therefore, an example of a cross-sectional
survey -- a one time representative survey -- and continues to serve as
a benchmark for related studies in South Africa.

**3.2 KIDS 1993 -- 1998**

With the aim of addressing research questions in South Africa concerning
the dynamics of poverty, households surveyed by the PSLSD in
KwaZulu-Natal province were re-surveyed from March to June 1998. The
re-survey was directed by a research consortium including the University
of Natal, the University of Wisconsin, and the International Food Policy
Research Institute and was known as the KwaZulu-Natal Income Dynamics
Survey (KIDS). KwaZulu-Natal was chosen partly because of practical
considerations and because of the feasibility of locating the households
interviewed during the 1993 PSLSD survey.

The 1993 PSLSD sample was representative on a provincial level for
KwaZulu-Natal. However, this was conditional on the accuracy of the 1991
census and other information used as the sampling frame. The sample
contained 1 558 households of all race groups. It was decided not to
re-survey white and colored households in 1998. In order to ensure
comparability, the 1998 household questionnaire largely followed the
1993 version. There were however, some important changes. One of these
was a greater focus on individual ownership of assets and control over
their use so that gender-differentiated analysis is possible. A second
underlying change was an expanded emphasis on the set of individuals not
living in the household but economically linked to it. Four new sections
were added including economic shocks, social capital, assets brought to
marriage, and household decision-making.

# The rural survey of 1997

In 1997, Statistics South Africa (STATSSA) conducted a survey of
households in rural areas. In common with the population census, the
rural survey included a number of questions regarding living conditions
of households engaged mainly in subsistence and small-scale farming. The
survey was specifically designed to provide in-depth information about
living conditions of rural households in the former homelands of South
Africa.

The database established during the 1996 populations census constituted
the sampling frame for the selecting Enumerator Areas (EA). The EAs was
restricted to the former homeland areas. A total of 600 EAs were drawn
and 10 households were selected from each EA. This yielded a sample of
approximately 6 000 households. The sample selection was carried out
independently in each stratum. A two stage sampling procedure was
applied. In the first stage, systematic sample of EAs followed by the
second stage in which a systematic sample of households within the
selected EAs were drawn.

Although the 1997 rural survey produced a myriad of results, only some
of the key findings are presented here. In June 1997, about 12.7 million
people, or 31.4% of the total South African population, lived in rural
areas of the former homelands of South Africa. Access to farmland is
crucial for these rural households since they either depend entirely on
farming activities for their survival and generation of income, or
depend on these activities to supplement their main source or sources of
income.

Since this paper is primarily concerned with household income of farm
households, we briefly review some of the results on income from the
1997 rural survey Selected households were asked to state their most
important source of income during the past 12 months prior to the
survey.

As many as 71% of the 2.4 million households (approximately 1.7 million)
in the rural areas in the former homelands had access to land for
farming purposes. About 800 000 households who had access to land,
reported that the farming land that were cultivated for crops in the
past year was smaller than one hectare. The majority of households (93%)
were engaged in subsistence farming with very little income generated
from the sale of crops, livestock and animal products. Only 3% of the
2.4 million households in the sample relied on farming activities as
their main source of income. Household income was mostly generated from
household members' salaries and wages and pensions received by the
senior citizens of the household as illustrated by Figure 3.

Approximately 71% of the 1.7 million households, who had access to land,
received some form of assistance with regards to crop production or
animal herding. Employment from these activities were either for family
members or in kind payments or access to land rather than cash payments.

![](media/image4.wmf)

Figure 3: Most important sources of income of households in rural areas

*Source: Rural Survey, 1997*

**4. Conclusion**

Apart from the rural surveys discussed in section 3 it seems that there
has been very little effort in South Africa to obtain information on
agricultural activities amongst disadvantaged communities located in the
former homelands. The agricultural statistics landscape mirrored to a
great degree the dualism in the sector and even the most recent census
only focus on commercial agriculture. Only two 'official' surveys have
been conducted since 1994 to get some sense of agricultural activities
in the former homeland areas. In these surveys a lot of effort was put
in to get a sense of the level of household income acknowledging that
most of these households have multiple livelihood strategies with
agriculture generally playing a small role in the household. This data
is critical for poverty alleviation polices and to identify the most
appropriate target group for agricultural interventions.

The agricultural census and surveys were not representative of the
entire agricultural sector. This makes it very difficult to compare more
recent results with previous censuses and surveys. The exclusion of
non-farm income is also problematic, especially if one wants to analyze
the effect of deregulation on farm household income.

Table 4 provides a summary of how different surveys have treated
household income. This shows that South Africa has applied a mix bag of
definitions for household income. Commercial agriculture operations were
generally considered to be full-time farmers and thus only farm and
farm-related income were included. However, surveys of small-scale
farmers in the former homelands generally considered household income to
be consisting of large number of sources.

Table 4: Treatment of household income in different agricultural and
rural surveys

  ----------------------- ----------------------- -----------------------
  **Survey/Census**       **Coverage**            **Income definition**

  Agricultural census     Only commercial farms   Sales of farm products
  1993                    in former 'white' South and farm-related income
                          Africa                  

  Agricultural census     Only commercial farms   Sales of farm products
  2000                    (farms registered for   and farm-related income
                          VAT)                    PLUS other income

  Agricultural surveys:   10% of commercial farms Sales of farm products
  1994, 1995, 1996        in former 'white' South and farm-related income
                          Africa                  

  Survey of large and     Farm households in      Total income from
  small scale             'former homelands' and  agricultural and
  agriculture, 2000       commercial farms        non-agricultural
                                                  activities

  PLSDS 1993              Sample of 9000 urban    Total income from
                          and rural households    agricultural and
                                                  non-agricultural
                                                  activities

  KIDS, 1998              Same households from    Total income from
                          PSLDS in KwaZulu-Natal  agricultural and
                                                  non-agricultural
                                                  activities

  Rural Survey, 1997      Households in former    Total income from
                          homelands               agricultural and
                                                  non-agricultural
                                                  activities
  ----------------------- ----------------------- -----------------------

# References

Statistics South Africa, 1999. *Rural Survey, 1997*, Statistical Release
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Statistics South Africa, 1999. *The People of South Africa, Population
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Department of Labor, 2001. *Determination of Employment Conditions in
South Africa.* Government Gazette, Vol. 455, Pretoria, 13 September
2001, No. 22648.

University of Natal, 1998. *KwaZulu-Natal Income Dynamics Study (KIDS)*.
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Wisconsin and the International Food Policy Research Institute. Durban:
University of Natal.

South African Labor and development research unit (SALDRU), 1993 *South
African Project for Statistics on Living Standards and Development
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Statistics South Africa, 2002. Report on the Survey of Large and Small
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CARTER, M & MAY, J, 1999. *One kind of freedom: poverty dynamics in
pos-apartheid South Africa*. Mimeo, Department of Agricultural and
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CENTRAL STATISTICS SERVICE, 1998. *Census of Agriculture 1993, Financial
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