The role of the agricultural and agro-processing sectors in reducing unemployment and poverty in the townships of Lesedi

Abstract

This dissertation analyses the role of agricultural co-operatives and agro-processing in job creation and poverty alleviation in Ratanda and lmpumelelo. The approach in the dissertation is to define poverty, measure it, and determine the profile of the poor. The study focuses on three areas, namely: I)th e theories of unemployment, poverty and agriculture; 2) the state of unemployment and poverty in Ratanda and Impumelelo; and 3) agricultural co-operatives as one of the contributors to the solution to unemployment and poverty. Unemployment is identified, amongst other factors, as a major determinant of poverty. For this reason, the chief component of any policy aimed at alleviating poverty should focus primarily on employment creation. The agricultural industry, as the most labour-intensive industry in South Africa with low capital entry requirements, creates opportunities for entrepreneurially driven employment creation in Ratanda and lmpumelelo. The approach in the dissertation is to define and measure unemployment and poverty and determine the profile of the poor population in Ratanda and Impumelelo. This is done by using household level indicators. For measuring poverty at the household level, the following tools are used: the Household Subsistence Level (HSL) as poverty line, the headcount index, and the poverty gap. Unemployment is also used to determine poverty levels. At the household level, the dissertation uses tools such as assessing the skills of the unemployed, duration of unemployment, and the qualifications of the unemployed. The dissertation shows that Ratanda and lmpumelelo experience lower unemployment rates as compared to the VTMA, Evaton West, Emfuleni township, and Bophelong. The analysis shows that a lower percentage of the households in Ratanda and lmpumelelo receive incomes that are less than the household subsistence level as compared to Evaton West, but a higher percentage as compared to Bophelong. The agricultural sector has the potential to create job opportunities in Ratanda and lmpumelelo if assistance could be offered to the poor and unemployed. The expenditure of the entire population of Ratanda and lmpumelelo on agricultural products (also considering nearby communities) shows a potential retail market for agricultural co-operatives in the township. The poor population in Ratanda and lmpumelelo townships spends an average amount of R199 per month on different agricultural products, i.e. maize meal, bread, meat and chicken, vegetables, and milk. However, if poor unemployed individuals could be assisted to produce these products through food gardens and agro-processing projects at an average income of R600 per month, the headcount index would be reduced from .49 to .26, meaning that poverty would be reduced by 46 percent in general by establishing food production in the hands of the unemployed poor. The surplus produce could be sold and the income earned could be used to pay for basic production inputs. The dissertation concludes that agricultural co-operatives can indeed create job ( opportunities and alleviate poverty, but assistance from different structures wouId 1 be required. The dissertation suggests that institutions like DACEL-DAG, local authorities and training institutions can play a key role in this process. Finally, the dissertation presents recommendations. It is proposed that one of the major solutions in dealing with poverty is to consider the establishment of agricultural co-operatives and food gardens that facilitate the employment of less skilled residents. These projects are deemed successful if they act as catalysts in the reduction of poverty and the creation of new jobs. In particular, the development of urban agriculture and the formation of co-operatives are proposed.