MSU Agricultural, Food, and Resource Economics
With the end of Apartheid, the South African Government created and corrected agricultural factor and product market failures in its attempt to improve the distribution of wealth and incorporate previously disadvantaged farmers into the mainstream of agricultural activities. Some commercial farmers responded strategically to the new equity-based policies on factor and product markets by initiating equity-schemes with farm workers in order to maintain/increase their profits given the new local economic and political environment and global competition. Hence, most equity-schemes are organized according to the commercial farmers' capacities. The purpose of this paper is to analyze the organizational structure of the equity-schemes as a function of the commercial farmers strategy (production vs. marketing).
This study is based on interviews of emerging farmers, former and present farm workers, commercial farmers, non-Governmental Organizations and Governmental agencies. The results show that equity-schemes tend to benefit commercial farmers but the degree to which farm workers' gain access to factor and product markets depends on commercial farmers' strategy. Then, the paper assesses alternative organizational structures of equity-schemes to maximize the benefits delivered to farm workers. Finally, utilizing the Peterson-Wysocki-Harsh Model, the issues of why the Government policies have not accomplished its objectives are discussed and recommendations to broaden the implementation of equity-schemes are suggested.