Commercial Agriculture in the Western Cape: Macroeconomic Analysis with a Social Accounting Matrix

A social accounting matrix was developed for the Western Cape to meet growing needs forquantitative analysis of the agricultural sector. Twenty-five farm commodities and seven agribusinesses are explicitly included in the model. The coloured and black populations dominate provincial expenditure on fresh and processed farm commodities, suggesting thatfuture demand growth depends on income increases among these household groups. In the aggregate, agriculture’s contributions to job creation, value added and government revenue significantly exceed those of the nonagricultural sectors; agribusiness exceeds other nonagricultural sectors because of their backward links to production agriculture. Within agriculture, horticulture and livestock subsectors make the most significant contributions to the macro economy. Similar patterns are found with respect to generating household incomes, and in the equality with which such incomes are distributed. Household economic behaviour is explicit. Spending by the poor is found to be more labour intensive than spending by the rich, and generates greater impacts on value added (GGP), gross operating surplus and the demand for most farm and non-farm commodities. A composite ranking of macroeconomic contributions to development is constructed. Nine horticultural enterprises and broilers comprise the ten top sectors.