Small-Scale Farming and Food Security: The Enabling Role of Cash Transfers in South Africa's Former Homelands

48 Pages Posted: 5 Dec 2016

See all articles by Dieter von Fintel

Dieter von Fintel

Stellenbosch University

Louw Pienaar

University of the Western Cape

Abstract

Cash transfers successfully alleviate poverty in many developing countries. South Africa is a case in point, implementing one of the largest unconditional cash transfer programmes internationally, and with substantial benefits to household well-being along multiple dimensions. Yet, grants discourage formal labour market attachment, creating dependencies on the fiscus. This study uses a fuzzy regression discontinuity design to establish that state-funded Old Age Pensions encourage non-market economic activity (in the form of small-scale farming), and improve the self-reported food security of rural households that farm, vis-à-vis those that do not. However, only non-farming households increase market food expenditure and consume more diverse diets from market-sourced foods: diet quality improves with greater spending, while food sufficiency remains unaffected. Farmers, on the other hand, do not change food spending patterns, but self-rated food sufficiency improves due to greater levels and diversity in home production. The role of small-scale farming is of broader interest in rural development, given the context of the 1913 and 1936 Land Acts that constrained this form of livelihood in former apartheid homelands. This paper's contribution is two-fold: grants are an effective channel to actively promote rural development through small-scale farming, and they improve food security by non-market mechanisms.

Keywords: cash transfers, small-scale farming, food security, South Africa, Apartheid homelands, regression discontinuity design

JEL Classification: Q12, Q18, Q15, D13, C26

Suggested Citation

von Fintel, Dieter and Pienaar, Louw, Small-Scale Farming and Food Security: The Enabling Role of Cash Transfers in South Africa's Former Homelands. Available at SSRN: https://ssrn.com/abstract=2879784 or http://dx.doi.org/10.2139/ssrn.2879784

Dieter Von Fintel (Contact Author)

Stellenbosch University ( email )

Louw Pienaar

University of the Western Cape

Robert Sobukwe Road
Bellville, 7535
South Africa

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